WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today
announced financial and operating results for the first quarter
ended on April 1, 2023.
WSP reports a strong start to 2023, with higher-than-expected
organic growth in net revenues and adjusted EBITDA in the first
quarter. Overall net revenues, adjusted EBITDA and adjusted net
earnings each increased by more than 25% relative to the first
quarter of 2022.
FIRST QUARTER OF 2023 FINANCIAL
HIGHLIGHTS
- Revenues and net revenues reached $3.49 billion and
$2.67 billion, up 28.7% and 27.0%, respectively, compared to
the first quarter of 2022. The increase in net revenue was
principally due to acquisition growth of 15.8% and organic growth
of 8.6%. Organic growth was achieved across all reportable
segments.
- Backlog as at April 1, 2023 stood at $13.8 billion,
representing 12.1 months of revenues.
- Adjusted EBITDA of $413.3 million, up 27.3%, compared to $324.6
million in the first quarter of 2022.
- Adjusted EBITDA margin of 15.5%, the same level as the
comparable period in 2022.
- Earnings before net financing expense and income taxes of
$199.9 million, up 27.2% compared to the first quarter of 2022,
mainly due to higher adjusted EBITDA, partially offset by higher
amortization of intangible assets, due to recent acquisitions, as
well as ERP implementation costs.
- Adjusted net earnings of $171.1 million, or $1.37 per share, up
$34.7 million or $0.21 per share, compared to the first quarter of
2022. The respective increases of 25.4% and 18.1% in these metrics
are mainly attributable to higher adjusted EBITDA.
- Net earnings attributable to shareholders of $112.5 million, or
$0.90 per share, up $17.5 million, or $0.09 per share,
compared to the first quarter of 2022. The increase was mainly due
to higher adjusted EBITDA, partially offset by higher net financing
expenses, amortization of intangible assets, due to recent
acquisitions and ERP implementation costs.
- DSO as at April 1, 2023 stood at 74 days, compared to 70
days as at April 2, 2022, in line with Management's outlook
target range for the year ending December 31, 2023.
- Free cash outflow of $141.1 million for the three-month
period ended April 1, 2023. Trailing twelve-months of free cash
inflow amounted to $353.2 million, representing 0.8 times the
net earnings attributable to shareholders. Improvement in free cash
flow compared to the first quarter of 2022 was mainly attributable
to the increase in adjusted EBITDA.
- Cash outflows from operating activities of $24.6 million,
compared to $83.0 million in the first quarter of 2022. The
improvement is mainly attributable to the increase in adjusted
EBITDA.
- Net debt to adjusted EBITDA ratio stood at 1.8x, compared to
1.6x as at December 31, 2022. The increase is in part due to
higher net debt balance to finance recent acquisitions.
Incorporating a full twelve months of adjusted EBITDA of all
acquired businesses, the net debt to adjusted EBITDA ratio would be
1.7x.
- Quarterly dividend declared of $0.375 per share, or $46.7
million, with a 21.6% Dividend Reinvestment Plan (“DRIP”)
participation. DRIP termination approved by the Board of Directors,
effective May 10, 2023.
- The 2023 financial outlook issued on March 8, 2023, in the Q4
2022 press release is reiterated as well as key related
assumptions.
“WSP continued to leverage its momentum and
achieved higher than expected organic growth across all our
geographies in the first quarter of 2023,” said Alexandre
L’Heureux, President and CEO of WSP. “These first quarter results
highlight the diligent execution of our robust 2022-2024 Global
Strategic Action Plan, driven by the positive industry dynamics,
our enhanced presence in key regions, and the high demand for our
services.”
DIVIDENDThe Board of WSP
declared a dividend of $0.375 per share. This dividend will be
payable on or about July 15, 2023, to shareholders of record at the
close of business on June 30, 2023.
DRIP TERMINATIONThe Corporation
also announces that its Board of Directors has approved the
termination of its Dividend Reinvestment Plan (“DRIP”) in
accordance with its terms, effective May 10, 2023 (the “Effective
Date”). Upon the termination of the DRIP, all cash dividends or
distributions on the Corporation's common shares with a record date
for payment of such dividend or distribution after the Effective
Date, including the dividend declared today and payable on or about
July 15, 2023, to shareholders of record as at the close of
business on June 30, 2023, will be paid in cash rather than in
shares of the Corporation. TSX Trust Company, as administrator of
the DRIP, will forward a notice and related documentation to all
current DRIP participants in the coming days.
FINANCIAL REPORTThis release includes, by
reference, the financial reports for the first quarter of 2023,
including the unaudited interim condensed consolidated financial
statements and the Management's Discussion and Analysis
(“MD&A”) of the Corporation for the first quarter ended on
April 1, 2023, 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 May 11, 2023, 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 first quarter of 2023 highlights and
results will be accessible on May 10, 2023 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.
FINANCIAL HIGHLIGHTS
|
First quarters ended |
(in millions of dollars, except percentages, per share data, DSO
and ratios) |
April 1, 2023 |
April 2, 2022 |
Revenues |
$3,489.5 |
$2,711.8 |
Net
revenues(1) |
$2,667.1 |
$2,100.0 |
Earnings before net financing expense and income taxes |
$199.9 |
$157.2 |
Adjusted EBITDA(2) |
$413.3 |
$324.6 |
Adjusted EBITDA margin(2) |
15.5% |
15.5% |
Net earnings attributable to
shareholders of WSP Global Inc. |
$112.5 |
$95.0 |
Basic net earnings per share
attributable to shareholders |
$0.90 |
$0.81 |
Adjusted net earnings(2) |
$171.1 |
$136.4 |
Adjusted net earnings per share(2) |
$1.37 |
$1.16 |
Cash outflows from operating activities |
$(24.6) |
$(83.0) |
Free
cash flow(2) |
$(141.1) |
$(185.3) |
|
|
|
As at |
April 1, 2023 |
April 2, 2022 |
Backlog(3) |
$13,833.7 |
$11,021.4 |
DSO(3) |
74 days |
70 days |
|
|
|
As at |
April 1, 2023 |
December 31, 2022 |
Net debt to adjusted EBITDA ratio(3) |
1.8 |
1.9 |
(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 ended
April 1, 2023, 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) |
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 ended April 1, 2023, 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
|
First quarters ended |
(in millions of dollars, except number of shares and per share
data) |
April 1, 2023 |
April 2, 2022 |
Revenues |
$3,489.5 |
$2,711.8 |
Less:
Subconsultants and direct costs |
$822.4 |
$611.8 |
Net revenues |
$2,667.1 |
$2,100.0 |
Earnings before net financing expense and income
taxes |
$199.9 |
$157.2 |
Net
financing expense |
$45.6 |
$27.1 |
Earnings before income taxes |
$154.3 |
$130.1 |
Income
tax expense |
$40.9 |
$34.5 |
Net earnings |
$113.4 |
$95.6 |
Net earnings attributable to: |
|
|
Shareholders of WSP Global Inc. |
$112.5 |
$95.0 |
Non-controlling interests |
$0.9 |
$0.6 |
Basic net earnings per share attributable to shareholders |
$0.90 |
$0.81 |
Diluted
net earnings per share attributable to shareholders |
$0.90 |
$0.80 |
Basic weighted average number of shares |
124,531,822 |
117,893,068 |
Diluted
weighted average number of shares |
124,853,450 |
118,216,762 |
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION(in millions of dollars)
References to notes refer to notes in the unaudited interim
condensed financial statements
As at |
April 1, 2023 |
December 31, 2022 |
|
$ |
$ |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents (note 14) |
321.7 |
495.6 |
Trade receivables and other receivables |
2,435.3 |
2,625.8 |
Cost and anticipated profits in excess of billings |
1,835.0 |
1,626.2 |
Prepaid expenses |
208.7 |
138.9 |
Other financial assets |
114.8 |
108.2 |
Income taxes receivable |
44.1 |
39.5 |
|
4,959.6 |
5,034.2 |
Non-current assets |
|
|
Right-of-use assets (note 9) |
949.9 |
978.9 |
Intangible assets |
1,140.6 |
1,102.6 |
Property and equipment |
422.2 |
398.9 |
Goodwill (note 10) |
6,875.9 |
6,792.2 |
Deferred income tax assets |
387.3 |
351.3 |
Other assets |
186.1 |
183.6 |
|
9,962.0 |
9,807.5 |
Total assets |
14,921.6 |
14,841.7 |
|
|
|
Liabilities and equity |
|
|
Liabilities |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
2,466.2 |
2,736.4 |
Billings in excess of costs and anticipated profits |
985.9 |
973.1 |
Income taxes payable |
254.5 |
260.4 |
Provisions |
152.3 |
152.2 |
Dividends payable to shareholders |
46.7 |
46.7 |
Current portion of lease liabilities (note 9) |
264.7 |
273.0 |
Current portion of long-term debt (note 11) |
242.0 |
173.4 |
|
4,412.3 |
4,615.2 |
Non-current liabilities |
|
|
Long-term debt (note 11) |
3,027.7 |
2,781.1 |
Lease liabilities (note 9) |
823.1 |
856.8 |
Provisions |
267.9 |
288.9 |
Retirement benefit obligations |
170.5 |
162.3 |
Deferred income tax liabilities |
134.8 |
128.3 |
|
4,424.0 |
4,217.4 |
Total liabilities |
8,836.3 |
8,832.6 |
|
|
|
Equity |
|
|
Equity attributable to shareholders of WSP Global Inc. |
6,081.3 |
6,006.0 |
Non-controlling interests |
4.0 |
3.1 |
Total equity |
6,085.3 |
6,009.1 |
Total liabilities and equity |
14,921.6 |
14,841.7 |
CONSOLIDATED STATEMENTS OF CASH
FLOWS(in millions of dollars)References to notes
refer to notes in the unaudited interim condensed financial
statements)
|
First quarters ended |
|
|
April 1, 2023 |
|
April 2, 2022 |
|
|
$ |
|
$ |
|
Operating
activities |
|
|
Net earnings |
113.4 |
|
95.6 |
|
Adjustments (note 14) |
141.4 |
|
113.8 |
|
Net financing expense (note
7) |
45.6 |
|
27.1 |
|
Income tax expense |
40.9 |
|
34.5 |
|
Income taxes paid |
(74.9 |
) |
(54.5 |
) |
Change
in non-cash working capital items (note 14) |
(291.0 |
) |
(299.5 |
) |
Cash (outflows) from operating activities |
(24.6 |
) |
(83.0 |
) |
Financing activities |
|
|
Net proceeds (repayment) of
long-term debt |
146.5 |
|
(6.7 |
) |
Lease payments (note 9) |
(94.7 |
) |
(81.4 |
) |
Net financing expenses paid,
excluding interest on lease liabilities |
(46.2 |
) |
(13.5 |
) |
Dividends paid to shareholders
of WSP Global Inc. |
(32.2 |
) |
(21.4 |
) |
Issuance of common shares, net
of issuance costs (note 12) |
0.8 |
|
0.7 |
|
Cash outflows from financing activities |
(25.8 |
) |
(122.3 |
) |
Investing activities |
|
|
Net disbursements related to
business acquisitions |
(104.2 |
) |
(11.0 |
) |
Additions to property and
equipment, excluding business acquisitions |
(17.4 |
) |
(18.5 |
) |
Additions to identifiable
intangible assets, excluding business acquisitions |
(4.9 |
) |
(2.9 |
) |
Proceeds from sale of
investment in an associate |
1.2 |
|
— |
|
Net investment increase in
associates and joint ventures |
(0.2 |
) |
— |
|
Dividends received from
associates |
0.1 |
|
2.2 |
|
Net cash received on a loan to
an associate |
— |
|
0.3 |
|
Proceeds from disposal of
property and equipment |
0.5 |
|
0.5 |
|
Net proceeds from disposal of
businesses |
— |
|
1.5 |
|
Cash outflows from investing activities |
(124.9 |
) |
(27.9 |
) |
Effect of exchange rate change on cash and cash equivalents |
(1.0 |
) |
(3.7 |
) |
Change in net cash and cash equivalents |
(176.3 |
) |
(236.9 |
) |
Cash
and cash equivalents, net of bank overdraft - beginning of the
period |
491.0 |
|
926.3 |
|
Cash and cash equivalents, net of bank overdraft - end of
period (note 14) |
314.7 |
|
689.4 |
|
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 ended April 1, 2023, 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: |
|
|
|
First quarters ended |
|
|
(in
millions of dollars) |
April 1, 2023 |
April 2, 2022 |
|
|
Revenues |
$3,489.5 |
$2,711.8 |
|
|
Less:
Subconsultants and direct costs |
$822.4 |
$611.8 |
|
|
Net revenues* |
$2,667.1 |
$2,100.0 |
|
|
* Total
of segments measure. |
|
|
Reconciliation of adjusted EBITDA |
|
|
The following
table reconciles this metric to the most comparable IFRS
measure: |
|
|
|
First quarters ended |
|
|
(in millions of dollars) |
April 1, 2023 |
April 2, 2022 |
|
|
Earnings before net financing expense and income
taxes |
$199.9 |
$157.2 |
|
|
Acquisition, integration and
reorganization costs |
$23.6 |
$20.8 |
|
|
ERP implementation costs |
$18.3 |
$10.1 |
|
|
Depreciation of right-of-use
assets |
$76.1 |
$71.0 |
|
|
Amortization of intangible
assets |
$60.0 |
$33.7 |
|
|
Depreciation of property
and equipment |
$29.8 |
$28.7 |
|
|
Share of depreciation and
taxes of associates |
$3.3 |
$2.8 |
|
|
Interest income |
$2.3 |
$0.3 |
|
|
Adjusted EBITDA* |
$413.3 |
$324.6 |
|
|
*
Non-IFRS financial measure. |
|
|
Reconciliation of adjusted net earnings |
|
|
The following
table reconciles this metric to the most comparable IFRS
measure: |
|
|
|
First quarters ended |
|
|
(in millions of dollars, except per share data) |
April 1, 2023 |
April 2, 2022 |
|
|
Net earnings attributable to shareholders |
$112.5 |
$95.0 |
|
|
Amortization of intangible assets related to acquisitions |
$49.9 |
$21.1 |
|
|
Acquisition, integration and
reorganization costs |
$23.6 |
$20.8 |
|
|
ERP implementation costs |
$18.3 |
$10.1 |
|
|
(Gains) losses on investments
in securities related to deferred compensation obligations |
$(5.4) |
$7.9 |
|
|
Unrealized gains on derivative
financial instruments |
$(7.4) |
$(5.6) |
|
|
Income
taxes related to above items |
$(20.4) |
$(12.9) |
|
|
Adjusted net earnings* |
$171.1 |
$136.4 |
|
|
Adjusted net earnings per share* |
$1.37 |
$1.16 |
|
|
*
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: |
|
|
|
First quarters ended |
|
|
(in millions of dollars) |
April 1, 2023 |
April 2, 2022 |
|
|
Cash outflows from operating activities |
$(24.6) |
$(83.0) |
|
|
Lease payments in financing
activities |
$(94.7) |
$(81.4) |
|
|
Net
capital expenditures* |
$(21.8) |
$(20.9) |
|
|
Free cash outflow** |
$(141.1) |
$(185.3) |
|
|
* 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 STATEMENTS Certain information
regarding WSP contained herein are not based on historical facts
and may constitute forward-looking statements or forward-looking
information under Canadian securities laws (collectively,
“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, prospects and expectations of this press release, and
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 May 10, 2023,
including assumptions set out through this press release and under
section 19 “Forward-Looking Statements” of WSP's MD&A for the
quarter ended April 1, 2023 which is available on SEDAR at
www.sedar.com.
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 discussed
in greater detail in section 20, “Risk factors” of WSP's MD&A
for the year ended December 31, 2022 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, accordingly, are
subject to change after such date. Except to the extent required by
applicable law, WSP does not assume any obligation to publicly
update or revise any forward-looking statements made in this press
release or otherwise, whether as a result of new information,
future events or otherwise.
ABOUT WSP
As one of the largest professional services
firms in the world, WSP exists to future-proof our cities and our
environment. It provides strategic advisory, engineering and design
services to clients seeking sustainable solutions in the
transportation, infrastructure, environment, building, energy,
water, and mining sectors. Its 67,000 trusted professionals are
united by the common purpose of creating positive, long-lasting
impacts on the communities it serves through a culture of
innovation, integrity, and inclusion. In 2022, WSP reported $11.9 B
(CAD) in revenue. The Corporation’s shares are listed on the
Toronto Stock Exchange (TSX: WSP).
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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