WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today announced financial and operating results for the third quarter ended on October 1, 2022.

WSP delivered a third quarter with continued solid organic net revenue growth across all reportable segments, and increases in adjusted EBITDA, adjusted net earnings and adjusted net earnings per share.

THIRD QUARTER 2022 FINANCIAL HIGHLIGHTS

  • Revenues and net revenues for the quarter reached $2.9 billion and $2.2 billion, up 9.3% and 8.3%, respectively, compared to Q3 2021. Net revenue organic growth of 8.2% in the quarter is attributable to all reportable segments, led by Canada, the US, the UK and Australia.
  • Backlog as at October 1, 2022 stood at $13.3 billion, representing 12.3 months of revenues. In the twelve-month period ended October 1, 2022, backlog grew organically by 15.2% across all reportable segments.
  • Since the start of the year, the number of employees has increased organically by approximately 3,200, with approximately 1,000 in the third quarter alone. Combined with our recent acquisitions, headcount increased by 10,500 in 2022.
  • Adjusted EBITDA in the quarter of $407.0 million, compared to $377.7 million in Q3 2021. Adjusted EBITDA margin for the quarter reached 18.6%, stable as compared to Q3 2021.
  • Earnings before net financing expense and income taxes in the quarter of $236.4 million, up $15.2 million compared to Q3 2021.
  • Adjusted net earnings for the quarter of $193.4 million, or $1.59 per share, up $13.7 million and $0.06, respectively, compared to Q3 2021. The respective increases in these metrics are mainly attributable to higher adjusted EBITDA.
  • Net earnings attributable to shareholders for the quarter of $127.5 million, or $1.05 per share, compared to $139.0 million and $1.18 per share in Q3 2021. The decreases are mainly attributable to higher net financing expenses, higher business acquisition and integration costs and ERP implementation costs, partially offset by higher adjusted EBITDA.
  • DSO as at October 1, 2022 stood at 75 days, compared to 73 days as at September 25, 2021, in line with our annual target range.
  • Free cash outflow of $133.7 million for the nine-month period. The main contributors to the outflow are an additional period of payroll, which will reverse in the fourth quarter of 2022, the normalization of our DSO and higher income taxes paid mainly due to changes in tax regulations in the US which delays the deductibility of certain expenses. Trailing twelve-months of free cash flow amounted to $236.2 million, representing 0.5 times the net earnings attributable to shareholders. Excluding the impact of changes in tax regulations in the US and the additional period of payroll, trailing twelve-months of free cash flow would represent approximately 0.9 times the net earnings attributable to shareholders.
  • Cash inflows from operating activities of $207.4 million in the nine-month period ended October 1, 2022, compared to $546.9 million in the corresponding period in 2021. The decrease is attributable to same elements as free cash flow listed above.
  • The net debt to adjusted EBITDA ratio stood at 2.0x, compared to 0.6x as at December 31, 2021. The increase is due to issuance of long-term debt used to finance the E&I Acquisition, while the trailing twelve-month adjusted EBITDA does not yet include the full results of recently acquired businesses. Incorporating a full twelve months of adjusted EBITDA of all acquired businesses, the net debt to adjusted EBITDA ratio would be 1.8x.
  • Quarterly dividend declared of $0.375 per share, or $46.6 million, with a 49.1% Dividend Reinvestment Plan (“DRIP”) participation.
  • Financial outlook for 2022 issued in the Q4 2021 press release is adjusted with an increased net revenues range now expected to be between $8.80 billion and $8.90 billion and an increased adjusted EBITDA range now expected to be between $1.51 billion and $1.53 billion (previously expected to fall in the range of $8.25 billion to $8.75 billion and between $1.43 to $1.49 billion respectively).*

“I am pleased with our performance in the third quarter, driven by our people’s tremendous efforts and positive momentum across the organization. Our solid organic growth in net revenue and backlog are the result of our client-focused approach and high demand for our services,” said Alexandre L’Heureux, President and Chief Executive Officer of WSP. “During the quarter, we officially welcomed over 7,300 skilled professionals from recent acquisitions who will contribute to our vision to become the undisputed leader in our industry. We are moving into the year's final stretch with confidence and a continued focus on executing our plan with discipline.”

DIVIDENDThe Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about January 15 2023, to shareholders of record at the close of business on December 30, 2022.

FINANCIAL REPORTThis release includes, by reference, the financial reports for the third quarter of 2022, including the unaudited interim consolidated financial statements and the Management's Discussion and Analysis (“MD&A”) of the Corporation for the third quarter and nine-month period ended on October 1, 2022, which are available on our website at www.wsp.com. These documents are also available on SEDAR at www.sedar.com.

CONFERENCE CALL & WEBCASTWSP will hold a conference call and webcast from 8:00 a.m. to 9:00 a.m. (Eastern Time) on November 10, 2022, to discuss these results. To participate in the conference call, please pre-register using this link. Registrants will receive a confirmation with dial-in details. A live webcast of the conference call can be accessed using this link.

A presentation of the 2022 third quarter highlights and results will be accessible on November 9, 2022, 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.

*The Corporation revised the financial outlook to take into consideration the contribution of recent acquisitions and the financial results for the first 9 months of 2022. 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 may differ and such differences may be material. Please refer to the "Forward-looking statements" disclaimer below. The assumptions underlying our previous outlook as outlined in March 2022 remain unchanged except that the Corporation has now considered all business combination to the date of this press release and all foreign exchange rate fluctuations to the date of this press release but not thereafter, and the acquisition, integration, and reorganization costs are now expected to range between $80 million to $90 million due to recent mergers and acquisitions activities.

FINANCIAL HIGHLIGHTS

  Third quarters ended   Nine-month periods ended  
(in millions of dollars, except percentages, per share data, DSO and ratios) October 1, 2022   September 25, 2021   October 1, 2022   September 25, 2021  
Revenues $ 2,896.1   $ 2,650.2   $ 8,372.1   $ 7,388.1  
Net revenues(1) $ 2,193.9   $ 2,026.6   $ 6,403.5   $ 5,722.2  
Earnings before net financing expense and income taxes $ 236.4   $ 221.2   $ 563.8   $ 539.4  
Adjusted EBITDA(2) $ 407.0   $ 377.7   $ 1,083.8   $ 961.3  
Adjusted EBITDA margin(2)   18.6 %   18.6 %   16.9 %   16.8 %
Net earnings attributable to shareholders of WSP Global Inc. $ 127.5   $ 139.0   $ 311.8   $ 346.9  
Basic net earnings per share attributable to shareholders $ 1.05   $ 1.18   $ 2.62   $ 2.99  
Adjusted net earnings(2)(3) $ 193.4   $ 179.7   $ 483.3   $ 421.2  
Adjusted net earnings per share(2)(3) $ 1.59   $ 1.53   $ 4.06   $ 3.63  
Cash inflows from operating activities $ 165.0   $ 236.1   $ 207.4   $ 546.9  
Free cash inflow (outflow)(2) $ 36.7   $ 138.3   $ (133.7 ) $ 276.2  
As at     October 1, 2022   September 25, 2021  
Backlog(4)     $ 13,253.8   $ 10,032.4  
DSO(4)     75 days   73 days  
As at     October 1, 2022   December 31, 2021  
Net debt to adjusted EBITDA ratio(4)       2.0     0.6  
(1) Quantitative reconciliations of net revenues to revenues are presented below under the caption "Non-IFRS and other financial measures".
(2) Non-IFRS financial measure or non-IFRS ratio without a standardized definition under IFRS, which may not be comparable to similar measures or ratios used by other issuers. Quantitative reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures are presented below under the caption "Non-IFRS and other financial measures". Adjusted EBITDA margin is defined as adjusted EBITDA expressed as a percentage of net revenues. Adjusted net earnings per share is the ratio of adjusted net earnings divided by the basic weighted average number of shares outstanding for the period. This press release incorporates by reference section 19, “Glossary of segment reporting, non-IFRS and other financial measures”, of WSP’s MD&A for the quarter and nine-month period ended October 1, 2022, filed on SEDAR at www.sedar.com, which includes explanations of the composition and usefulness of these non-IFRS financial measures and non-IFRS ratios.
(3) Management has amended its definition of adjusted net earnings, effective January 1, 2022, to exclude impairment charges on long-lived assets and reversals thereof. The comparative period results did not require restatement to apply the current definition as no impairment of long-lived assets was recorded in 2021 nor in the first quarter of 2022. Refer to section 8.8, “Adjusted net earnings” in WSP’s MD&A for the quarter and nine-month period ended October 1, 2022 for further explanation.
(4) This press release incorporates by reference section 19, “Glossary of segment reporting, non-IFRS and other financial measures”, of WSP’s MD&A for the quarter and nine-month period ended October 1, 2022, filed on SEDAR at www.sedar.com, which explains the composition of the supplemental financial measures, as well as the usefulness of the net debt to adjusted EBITDA ratio, which is a capital management measure composed of the ratio of net debt to adjusted EBITDA for the trailing twelve-month period. Net debt is defined as long-term debt, including current portions but excluding lease liabilities, and net of cash.

  RESULTS OF OPERATIONS

  Third quarters ended Nine-month periods ended
(in millions of dollars, except number of shares and per share data) October 1, 2022 September 25, 2021 October 1, 2022 September 25, 2021
Revenues $ 2,896.1 $ 2,650.2 $ 8,372.1 $ 7,388.1
Less: Subconsultants and direct costs $ 702.2 $ 623.6 $ 1,968.6 $ 1,665.9
Net revenues $ 2,193.9 $ 2,026.6 $ 6,403.5 $ 5,722.2
Earnings before net financing expense and income taxes $ 236.4 $ 221.2 $ 563.8 $ 539.4
Net financing expense $ 62.0 $ 33.3 $ 134.3 $ 65.2
Earnings before income taxes $ 174.4 $ 187.9 $ 429.5 $ 474.2
Income tax expense $ 45.3 $ 48.7 $ 115.2 $ 126.9
Net earnings $ 129.1 $ 139.2 $ 314.3 $ 347.3
Net earnings attributable to:        
Shareholders of WSP Global Inc. $ 127.5 $ 139.0 $ 311.8 $ 346.9
Non-controlling interests $ 1.6 $ 0.2 $ 2.5 $ 0.4
Basic net earnings per share attributable to shareholders $ 1.05 $ 1.18 $ 2.62 $ 2.99
Diluted net earnings per share attributable to shareholders $ 1.05 $ 1.18 $ 2.61 $ 2.98
Basic weighted average number of shares   121,267,806   117,450,897   119,063,307   116,051,818
Diluted weighted average number of shares   121,567,722   117,852,564   119,371,540   116,423,651

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(in millions of dollars)References to notes refer to notes in the financial statements

As at October 1, 2022 December 31, 2021
  $ $
Assets    
Current assets    
Cash and cash equivalents (note 17) 444.9 927.4
Trade receivables and other receivables 2,379.5 1,916.8
Cost and anticipated profits in excess of billings 1,743.8 1,156.4
Prepaid expenses 117.4 141.7
Other financial assets 143.6 169.6
Income taxes receivable 46.6 28.9
  4,875.8 4,340.8
Non-current assets    
Right-of-use assets (note 11) 945.1 861.5
Intangible assets 968.4 549.9
Property and equipment 378.5 363.6
Goodwill (note 12) 6,827.6 4,762.3
Deferred income tax assets 264.2 165.1
Other assets 206.4 207.2
  9,590.2 6,909.6
Total assets 14,466.0 11,250.4
     
Liabilities    
Current liabilities    
Accounts payable and accrued liabilities 2,429.0 2,217.3
Billings in excess of costs and anticipated profits 911.9 751.1
Income taxes payable 197.7 149.8
Provisions 83.2 77.5
Dividends payable to shareholders (note 16) 46.6 44.2
Current portion of lease liabilities (note 11) 280.1 254.2
Current portion of long-term debt (note 13) 487.5 297.4
  4,436.0 3,791.5
Non-current liabilities    
Long-term debt (note 13) 2,833.2 1,479.3
Lease liabilities (note 11) 827.1 766.1
Provisions 257.5 236.2
Retirement benefit obligations 182.0 212.9
Deferred income tax liabilities 119.5 99.2
  4,219.3 2,793.7
Total liabilities 8,655.3 6,585.2
     
Equity    
Equity attributable to shareholders of WSP Global Inc. 5,808.0 4,664.5
Non-controlling interests 2.7 0.7
Total equity 5,810.7 4,665.2
Total liabilities and equity 14,466.0 11,250.4

CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions of dollars)References to notes refer to notes in the financial statements)

  Third quarters ended   Nine-month periods ended  
  October 1, 2022   September 25, 2021   October 1, 2022   September 25, 2021  
  $   $   $   $  
Operating activities        
Net earnings 129.1   139.2   314.3   347.3  
Adjustments (note 17) 116.8   144.8   365.9   339.9  
Net financing expense (note 9) 62.0   33.3   134.3   65.2  
Income tax expense 45.3   48.7   115.2   126.9  
Income taxes paid (47.3 ) (27.6 ) (167.2 ) (100.0 )
Change in non-cash working capital items (note 17) (140.9 ) (102.3 ) (555.1 ) (232.4 )
Cash inflows from operating activities 165.0   236.1   207.4   546.9  
Financing activities        
Issuance of long-term debt related to business acquisition (note 13) 2,309.3     2,309.3   1,200.7  
Repayment of long-term debt following business acquisition (note 13) (1,025.8 )   (1,025.8 ) (262.7 )
Net (repayment) proceeds of other long-term debt 109.8   (14.2 ) 78.5   (494.3 )
Issuance of common shares, net of issuance costs (note 14) 882.1   2.1   882.8   303.3  
Lease payments (note 11) (87.2 ) (79.3 ) (249.4 ) (220.5 )
Dividends paid to shareholders of WSP Global Inc. (22.7 ) (19.3 ) (66.4 ) (60.5 )
Net financing expenses paid, excluding interest on lease liabilities (24.5 ) (8.8 ) (57.8 ) (36.7 )
Issuance of senior unsecured notes (note 13)       500.0  
Dividends paid to non-controlling interests   (0.8 ) (0.5 ) (0.8 )
Cash inflows (outflows) from financing activities 2,141.0   (120.3 ) 1,870.7   928.5  
Investing activities        
Net disbursements related to business acquisitions (note 4) (2,489.6 ) (1.8 ) (2,511.5 ) (1,220.3 )
Additions to property and equipment, excluding business acquisitions (39.9 ) (15.8 ) (84.1 ) (46.7 )
Additions to identifiable intangible assets, excluding business acquisitions (1.7 ) (3.2 ) (8.9 ) (12.9 )
Proceeds from disposal of property and equipment 0.5   0.5   1.3   9.4  
Dividends received from associates 4.6   4.8   7.0   4.9  
Net cash received on a loan from associate     0.4   0.3  
Proceeds from sale of investment in an associate       4.4  
Net proceeds from disposal of businesses     1.6    
Increase in investments in securities     (1.5 ) (7.3 )
Repurchase of non-controlling interest   (0.6 )   (0.6 )
Cash outflows from investing activities (2,526.1 ) (16.1 ) (2,595.7 ) (1,268.8 )
Effect of exchange rate change on cash and cash equivalents 14.4   5.6   7.2   (9.2 )
Change in net cash and cash equivalents (205.7 ) 105.3   (510.4 ) 197.4  
Cash and cash equivalents, net of bank overdraft - beginning of the period 621.6   526.8   926.3   434.7  
Cash and cash equivalents, net of bank overdraft - end of period (note 17) 415.9   632.1   415.9   632.1  

All amounts shown in this press release are expressed in Canadian dollars, unless otherwise indicated. All quarterly information disclosed in this press release is based on unaudited figures.

NON-IFRS AND OTHER FINANCIAL MEASURESThe Corporation reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). WSP uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance with IFRS. Regulation 52-112 respecting Non-GAAP and Other Financial Measures Disclosure (“Regulation 52-112”) prescribes disclosure requirements that apply to the following types of measures used by the Corporation: (i) non-IFRS financial measures; (ii) non-IFRS ratios; (iii) total of segments measures; (iv) capital management measures; and (v) supplemental financial measures.

In this press release, the following non-IFRS and other financial 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 and other financial measures can be found in section 19, “Glossary of segment reporting, non-IFRS and other financial measures” of WSP’s MD&A for the quarter and nine-month period ended October 1, 2022, which is posted on WSP’s website at www.wsp.com, and filed on SEDAR at www.sedar.com. Reconciliations of non-IFRS financial measures and total of segments measures to the most directly comparable IFRS measures are provided below.

Management believes that these non-IFRS and other financial 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 and other financial 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.

Reconciliation of net revenues
The following table reconciles net revenues to the most comparable IFRS measure:
  Third quarters ended Nine-month periods ended
(in millions of dollars) October 1, 2022 September 25, 2021 October 1, 2022 September 25, 2021
Revenues $ 2,896.1 $ 2,650.2 $ 8,372.1 $ 7,388.1
Less: Subconsultants and direct costs $ 702.2 $ 623.6 $ 1,968.6 $ 1,665.9
Net revenues* $ 2,193.9 $ 2,026.6 $ 6,403.5 $ 5,722.2
* Total of segments measure.
Reconciliation of adjusted EBITDA
The following table reconciles this metric to the most comparable IFRS measure:
  Third quarters ended Nine-month periods ended
(in millions of dollars) October 1, 2022 September 25, 2021 October 1, 2022 September 25, 2021
Earnings before net financing expense and income taxes $ 236.4 $ 221.2 $ 563.8 $ 539.4
Acquisition, integration and reorganization costs $ 22.1 $ 19.0 $ 65.8 $ 37.2
ERP implementation costs $ 8.5 $ $ 30.5 $
Depreciation of right-of-use assets $ 70.9 $ 69.6 $ 210.9 $ 200.3
Amortization of intangible assets $ 33.4 $ 34.6 $ 100.3 $ 92.3
Depreciation of property and equipment $ 28.3 $ 30.3 $ 84.0 $ 83.8
Impairment of long-lived assets $ 2.2 $ $ 16.5 $
Share of depreciation and taxes of associates $ 3.2 $ 2.7 $ 8.6 $ 7.3
Interest income $ 2.0 $ 0.3 $ 3.4 $ 1.0
Adjusted EBITDA* $ 407.0 $ 377.7 $ 1,083.8 $ 961.3
* Non-IFRS financial measure.
Reconciliation of adjusted net earnings
The following table reconciles this metric to the most comparable IFRS measure:
  Third quarters ended   Nine-month periods ended  
(in millions of dollars, except per share data) October 1, 2022   September 25, 2021   October 1, 2022   September 25, 2021  
Net earnings attributable to shareholders $ 127.5   $ 139.0   $ 311.8   $ 346.9  
Amortization of intangible assets related to acquisitions $ 21.2   $ 24.7   $ 63.3   $ 63.0  
Impairment of long-lived assets $ 2.2   $   $ 16.5   $  
Acquisition, integration and reorganization costs $ 22.1   $ 19.0   $ 65.8   $ 37.2  
ERP implementation costs $ 8.5   $   $ 30.5   $  
Losses (gains) on investments in securities related to deferred compensation obligations $ 4.7   $ 0.1   $ 27.1   $ (10.0 )
Unrealized losses on derivative financial instruments $ 27.1   $ 11.4   $ 23.6   $ 9.4  
Income taxes related to above items $ (19.9 ) $ (14.5 ) $ (55.3 ) $ (25.3 )
Adjusted net earnings* $ 193.4   $ 179.7   $ 483.3   $ 421.2  
Adjusted net earnings per share* $ 1.59   $ 1.53   $ 4.06   $ 3.63  
* Non-IFRS financial measure or non-IFRS ratio.
Reconciliation of free cash flow        
The following table reconciles this metric to the most comparable IFRS measure:
  Third quarters ended   Nine-month periods ended  
(in millions of dollars) October 1, 2022   September 25, 2021   October 1, 2022   September 25, 2021  
Cash inflows from operating activities $ 165.0   $ 236.1   $ 207.4   $ 546.9  
Lease payments in financing activities $ (87.2 ) $ (79.3 ) $ (249.4 ) $ (220.5 )
Net capital expenditures* $ (41.1 ) $ (18.5 ) $ (91.7 ) $ (50.2 )
Free cash (outflow) inflow** $ 36.7   $ 138.3   $ (133.7 ) $ 276.2  
* Capital expenditures pertaining to property and equipment and intangible assets, net of proceeds from disposal and lease incentives received.
** Non-IFRS financial measure.

FORWARD-LOOKING STATEMENTSCertain 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 include statements about the payment of dividends, our proposed strategy, and our operating performance, financial outlook and prospects, including statements about the 2022-2024 Global Strategic Action Plan. These forward-looking statements are based on a number of assumptions believed by the Corporation to be reasonable as at November 9, 2022, 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.

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. 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 MD&A for the year ended December 31, 2021 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.

ABOUT WSPAs one of the world’s leading professional services firms, WSP exists to future-proof our cities and environment. We provide strategic advisory, engineering, and design services to clients in the transportation, infrastructure, environment, building, power, energy, water, mining, and resources sectors. Our 65,000 trusted professionals are united by the common purpose of creating positive, long-lasting impacts on the communities we serve through a culture of innovation, integrity, and inclusion. Sustainability and science permeate our work. WSP derived about half of its $10.3B (CAD) 2021 revenues from clean sources. The Corporation’s shares are listed on the Toronto Stock Exchange (TSX: WSP). To find out more, please visit www.wsp.com

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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