WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today announced financial and operating results for the second quarter ended on June 26, 2021.

WSP reports robust results for the second quarter of 2021 driven by strong performance from recent acquisitions and better than anticipated organic growth, resulting in improved adjusted EBITDA margins. Considering the results to date and current outlook, financial guidance for fiscal 2021 is revised upwards.

SECOND QUARTER 2021 FINANCIAL HIGHLIGHTS

  • Revenues and net revenues* for the quarter reached $2.6 billion and $2.0 billion, up 19.3% and up 16.1%, respectively, compared to Q2 2020. The increase was driven by acquisition growth of 18.7%, across all segments, as well as overall organic growth of 3.6%, higher than Management's expectations of low single-digit organic growth. Notably, our businesses in Canada and the UK posted double-digit organic growth.
  • Golder delivered better than anticipated results with double-digit organic growth in the second quarter of 2021 compared to its results in 2020. Integration activities are progressing very well.
  • Backlog* as at June 26, 2021 stood at $9.6 billion, representing 11.2 months of revenues, up 14.4% in the six-month period, mainly due to acquisition growth. On a constant currency basis, backlog grew organically by 1.1% compared to backlog as at December 31, 2020. Overall proposal activity continues to be very robust across the business and the volume of contract awards not yet included in backlog is at a record-high level in our US business.
  • Adjusted EBITDA* in the quarter of $342.6 million, up $66.5 million or 24.1%, compared to $276.1 million in Q2 2020, largely due to the contribution of recent acquisitions. No significant government subsidies were received during the second quarter.
  • Adjusted EBITDA margin* for the quarter reached 16.9%, compared to 15.8% in Q2 2020. The improvement in adjusted EBITDA margin is mainly attributable to the higher margin profile of recent acquisitions and better productivity across the regions.
  • Earnings before net financing expense and income taxes in the quarter of $189.2 million, up $67.3 million, or 55.2%, compared to Q2 2020, mainly due to increased adjusted EBITDA.
  • Adjusted net earnings* for the quarter of $147.3 million, or $1.26 per share, up $40.7 million and $0.26, respectively, compared to Q2 2020. The increase in these metrics is mainly attributable to higher adjusted EBITDA.
  • Net earnings attributable to shareholders for the quarter of $120.0 million, or $1.03 per share, up 35.4% and 24.1%, respectively, when compared to Q2 2020. The increase is mainly attributable to higher adjusted EBITDA and lower acquisition, integration and restructuring costs, partially offset by higher net financing expense.
  • DSO* as at June 26, 2021 stood at 70 days, compared to 72 days as at June 27, 2020.
  • Free cash flow* of $137.9 million for the six-month period. Trailing twelve-months of free cash flow amounted to $552.7 million, representing 1.5 times net earnings attributable to shareholders.
  • Cash inflows from operating activities of $310.8 million in the six-month period ended June 26, 2021, compared to $509.9 million in the comparable period in 2020. The variance is mainly due to a normalization of collections and the fact that Q2 2020 benefitted from a deferral of income tax and other remittances in some jurisdictions.        
  • The net debt to adjusted EBITDA ratio* stood at 1.1x, compared to 0.1x as at December 31, 2020, due to the Golder acquisition. Successful issuance of senior unsecured notes in the second quarter for aggregate gross proceeds of $500 million, further diversifying our debt structure and extending our average debt maturity profile.
  • Quarterly dividend declared of $0.375 per share, with a 56.2% Dividend Reinvestment Plan (“DRIP”) participation.
  • Financial outlook for 2021 increased with an adjusted EBITDA now expected to fall in the range of $1.275 billion to $1.325 billion (previously expected to fall in the range of $1.22 billion to $1.29 billion).(1)

“On the basis of our strong performance, we feel confident in revising our 2021 outlook upwards. Our recently completed acquisitions, including the transformative addition of Golder, are integrating well and thus far exceeding performance expectations,” said Alexandre L’Heureux, President and CEO of WSP. “All of this, along with recent significant wins through competitive proposals and signs of increased investment in infrastructure and environmental programs, makes us optimistic for a continued positive momentum for 2021,” he added.

DIVIDENDThe Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about October 15, 2021, to shareholders of record at the close of business on September 30, 2021.

FINANCIAL REPORTThis release includes, by reference, the financial reports for the second quarter of 2021, including the unaudited interim condensed consolidated financial statements and the Management’s Discussion & Analysis (“MD&A”) of the Corporation.

For a copy of our financial reports for the second quarter of 2021, including the MD&A and the unaudited interim condensed consolidated financial statements, please visit our website at www.wsp.com. 

CONFERENCE CALL WSP will hold a conference call and webcast at 8 a.m. (Eastern Time) on August 11, 2021 to discuss these results.To participate in the conference call, dial 1-438-801-4068 or 1-888-500-2848 (toll free). A live webcast of the conference call will also be available at www.wsp.com/investors. 

A presentation of the second quarter of 2021 highlights and results will be accessible on August 10, 2021 after market close under the “Investors” section of the WSP website. For those unable to attend, a replay will be available within 24 hours following the call.

*Non-IFRS measures. These measures are defined in section 19, “Glossary of non-IFRS measures and segment reporting measures” of the Corporation's Management's Discussion & Analysis for the second quarter and six-month period ended on June 26, 2021. Please refer to the "Non-IFRS measures" disclaimer below.

(1)This information constitutes forward-looking information, based on multiple estimates and assumptions about future events. The reader is cautioned that using this information for other purposes may be inappropriate. Actual results will differ and such differences may be material. Please refer to the "Forward-looking statements" disclaimer below.

RESULTS OF OPERATIONS

  Second quarters ended Six month periods ended
(in millions of dollars, except number of shares and per share data) June 26, 2021 June 27, 2020   June 26, 2021 June 27, 2020  
Revenues $2,633.1 $2,207.8   $4,737.9 $4,417.8  
Less: Subconsultants and direct costs $604.3 $460.7   $1,042.3 $934.6  
Net revenues* $2,028.8 $1,747.1   $3,695.6 $3,483.2  
Earnings before net financing expense and income taxes $189.2 $121.9   $318.2 $209.9  
Net financing expense $23.5 $1.2   $31.9 $69.5  
Earnings before income taxes $165.7 $120.7   $286.3 $140.4  
Income tax expense $45.6 $32.4   $78.2 $37.8  
Net earnings $120.1 $88.3   $208.1 $102.6  
Net earnings attributable to:        
Shareholders of WSP Global Inc. $120.0 $88.6     $207.9   $102.8  
Non-controlling interests $0.1 $(0.3 ) $0.2 $(0.2 )
Basic net earnings per share attributable to shareholders $1.03 $0.83   $1.80 $0.96  
Diluted net earnings per share attributable to shareholders $1.02 $0.83   $1.80 $0.96  
Basic weighted average number of shares  116,854,428  107,006,730    115,332,517  106,554,478  
Diluted weighted average number of shares  117,205,800  107,205,566    115,681,656  106,763,220  

*Non-IFRS measure. This measure is defined in section 19, “Glossary of non-IFRS measures and segment reporting measures” of the Corporation's Management's Discussion & Analysis for the quarter and six-month period ended June 26, 2021.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONReferences to notes refer to notes in the financial statements

As at June 26, 2021   December 31, 2020  
  $   $  
Assets    
Current assets    
Cash and cash equivalents (note 15) 529.3   437.1  
Trade receivables and other receivables 1,871.9   1,598.8  
Cost and anticipated profits in excess of billings 1,190.0   950.5  
Other financial assets 133.7   118.1  
Prepaid expenses 154.0   168.7  
Income taxes receivable 25.1   27.5  
  3,904.0   3,300.7  
Non-current assets    
Right-of-use assets (note 10) 948.5   894.3  
Property and equipment 354.9   314.9  
Intangible assets 504.0   275.5  
Goodwill (note 11) 4,752.0   3,731.9  
Deferred income tax assets 165.0   169.2  
Other assets 194.2   150.9  
  6,918.6   5,536.7  
Total assets 10,822.6   8,837.4  
     
Liabilities    
Current liabilities    
Accounts payable and accrued liabilities 2,024.2   1,718.2  
Billings in excess of costs and anticipated profits 734.5   708.5  
Income taxes payable 128.1   119.1  
Provisions 48.5   71.4  
Dividends payable to shareholders (note 14) 44.0   42.5  
Current portion of lease liabilities (note 10) 257.7   233.1  
Current portion of long-term debt (note 12) 67.3   296.9  
  3,304.3   3,189.7  
Non-current liabilities    
Long-term debt (note 12) 1,722.4   277.3  
Lease liabilities (note 10) 858.8   785.3  
Provisions 189.7   180.9  
Retirement benefit obligations 214.1   232.4  
Deferred income tax liabilities 119.3   90.4  
  3,104.3   1,566.3  
Total liabilities 6,408.6   4,756.0  
     
Equity    
Equity attributable to shareholders of WSP Global Inc. 4,412.8   4,080.4  
Non-controlling interests 1.2   1.0  
Total equity 4,414.0   4,081.4  
Total liabilities and equity 10,822.6   8,837.4  

CONSOLIDATED STATEMENTS OF CASH FLOWSReferences to notes refer to notes in the financial statements

  Second quarters ended     Six month periods ended    
  June 26, 2021     June 27, 2020     June 26, 2021     June 27, 2020    
  $     $     $     $    
Operating activities        
Net earnings 120.1     88.3     208.1     102.6    
Adjustments (note 15) 98.3     124.5     195.1     221.8    
Net financing expense (note 8) 23.5     1.2     31.9     69.5    
Income tax expense 45.6     32.4     78.2     37.8    
Income taxes paid (46.8 )   (8.1 )   (72.4 )   (33.2 )  
Change in non-cash working capital items (note 15) (93.3 )   268.4     (130.1 )   111.4    
Cash inflows from operating activities 147.4     506.7     310.8     509.9    
Financing activities        
Issuance of senior unsecured notes (note 12) 500.0         500.0        
Net (repayment) proceeds of borrowings under credit facilities 469.8     (1,082.7 )   457.9     (279.6 )  
Issuance of common shares, net of issuance costs (note 13) 298.6     549.6     301.2     549.6    
Lease payments (79.3 )   (72.1 )   (141.2 )   (142.5 )  
Dividends paid to shareholders of WSP Global Inc. (21.7 )   (26.2 )   (41.2 )   (49.1 )  
Net financing expenses paid, excluding interest on lease liabilities (23.1 )   (14.6 )   (27.9 )   (38.1 )  
Dividends paid to a non-controlling interest             (0.1 )  
Cash inflows (outflows) from financing activities 1,144.3     (646.0 )   1,048.8     40.2    
Investing activities        
Net disbursements related to business acquisitions (1,173.3 )   (0.9 )   (1,218.5 )   (45.7 )  
Additions to property and equipment, excluding business acquisitions (17.4 )   (22.3 )   (30.9 )   (38.8 )  
Additions to identifiable intangible assets, excluding business acquisitions (6.7 )   (2.3 )   (9.7 )   (9.2 )  
Proceeds from disposal of property and equipment 8.6     0.8     8.9     1.1    
Proceeds from sale of investment in an associate     0.4     4.4     0.4    
Net increase in investments in securities (7.3 )       (7.3 )      
Net cash received on a loan from associate         0.3        
Dividends received from associates 0.1         0.1     3.8    
Cash outflows from investing activities (1,196.0 )   (24.3 )   (1,252.7 )   (88.4 )  
Effect of exchange rate change on cash and cash equivalents (6.6 )   (16.5 )   (14.8 )   11.4    
Change in net cash and cash equivalents 89.1     (180.1 )   92.1     473.1    
Cash and cash equivalents, net of bank overdraft – beginning of period 437.7     890.5     434.7     237.3    
Cash and cash equivalents, net of bank overdraft - end of period (note 15) 526.8     710.4     526.8     710.4    

NON-IFRS MEASURESThe Corporation reports its financial results in accordance with IFRS. However, in this press release, the following non-IFRS measures are used by the Corporation: net revenues; adjusted EBITDA; adjusted EBITDA margin; adjusted net earnings; adjusted net earnings per share; backlog; free cash flow; days sales outstanding (“DSO”) and net debt to adjusted EBITDA ratio. Additional details for these non-IFRS measures, including reconciliations of most measures to the most directly comparable IFRS measures, can be found in WSP’s MD&A for the quarter and six-month period ended June 26, 2021, which is posted on WSP’s website at www.wsp.com, and filed on SEDAR at www.sedar.com. 

Management believes that these non-IFRS measures provide useful information to investors regarding the Corporation’s financial condition and results of operations as they provide key metrics of its performance. These non-IFRS measures are not recognized under IFRS, do not have any standardized meanings prescribed under IFRS and may differ from similar computations as reported by other issuers, and accordingly may not be comparable. These measures should not be viewed as a substitute for the related financial information prepared in accordance with IFRS.

ABOUT WSPAs one of the world’s leading professional services firms, WSP provides engineering and design services to clients in the Transportation & Infrastructure, Property & Buildings, Earth & Environment, Power & Energy, Resources and Industry sectors, as well as offering strategic advisory services. WSP's global experts include engineers, advisors, technicians, scientists, architects, planners, environmental specialists and surveyors, in addition to other design, program and construction management professionals. Our talented people are well positioned to deliver successful and sustainable projects, wherever clients need us. wsp.com. 

FORWARD-LOOKING STATEMENTS Certain information regarding WSP contained herein may constitute forward-looking statements. Forward-looking statements may include estimates, plans, strategic ambitions, objectives, expectations, opinions, forecasts, projections, guidance, outlook or other statements that are not statements of fact. Forward-looking statements made by the Corporation in this press release are based on a number of assumptions believed by the Corporation to be reasonable as at August 10, 2021, including assumptions about general economic and political conditions; the state of the global economy and the economies of the regions in which the Corporation operates; the state of and access to global and local capital and credit markets; the anticipated impacts of the COVID-19 pandemic on the Corporation’s businesses, operating results, cash flows and/or financial condition, including the effect of measures implemented as a result of the COVID-19 pandemic; the expected benefits of the Golder Acquisition, the expected synergies to be realized as a result of the Golder Acquisition. The Corporation did not consider any dispositions, mergers, business combinations and other transactions that may occur after August 10, 2021.

Although WSP believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements, including risks relating to the COVID-19 pandemic. WSP's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The complete version of the cautionary note regarding risk factors, which, if realized, could cause the Corporation's actual results to differ materially from those expressed or implied in forward-looking statements, are included in WSP's Management’s Discussion and Analysis for the year ended December 31, 2020 which is available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and WSP does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

Alain MichaudChief Financial OfficerWSP Global Inc.alain.michaud@wsp.com Phone: 438-843-7317

WSP Global (TSX:WSP)
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