WSP reports Q1 2024 results and a strong start to the year

Strong first quarter results were in line with management's expectations as the Corporation achieved healthy organic growth in net revenues, combined with an increase in adjusted EBITDA margin of 50 basis points (“bps”) over the comparable quarter in 2023.

FIRST QUARTER OF 2024 FINANCIAL HIGHLIGHTS

• Revenues and net revenues for the quarter reached $3.59 billion and $2.79 billion, up 2.7% and 4.7%, respectively, compared to the first quarter of 2023. Net revenue organic growth of 4.6% in the quarter is attributable to all reportable segments. Net revenue organic growth would be approximately 6.5% if normalized for the same number of billable days compared to Q1 2023.
• Backlog as at March 30, 2024 stood at $14.2 billion, representing 11.8 months of revenues(1), with the Americas reportable segment achieving organic backlog growth of 10.3% over the last twelve months.
• Adjusted EBITDA margin for the quarter increased by 50 bps to 16.0%, compared to 15.5% in the first quarter of 2023. The increase is mainly attributable to increased productivity.
• Adjusted EBITDA in the quarter grew to $446.1 million, compared to $413.3 million in the first quarter of 2023, an increase of 7.9%. 
• Earnings before net financing expense and income taxes in the quarter stood at $244.3 million, up $44.4 million or 22.2%, compared to the first quarter of 2023, mainly due to increased adjusted EBITDA.
• Adjusted net earnings for the quarter reached $193.8 million, or $1.55 per share, up 13.3% and 13.1%, respectively, compared to the first quarter of 2023. The increase is mainly attributable to higher adjusted EBITDA.
• Net earnings attributable to shareholders for the quarter reached $126.8 million, or $1.02 per share, compared to $112.5 million, or $0.90 per share, in the first quarter of 2023. 
• DSO as at March 30, 2024 stood at 76 days, compared to 74 days as at April 1, 2023, and unchanged from 76 days as at December 31, 2023.
• Cash outflows from operating activities of $10.4 million are comparable to outflows of $24.6 million in the first quarter of 2023. Free cash outflow for the three-month period ended March 30, 2024 was $125.2 million, compared to $141.1 million in the first quarter of 2023.
• Net debt to adjusted EBITDA ratio stood at 1.6x, within Management's target range of 1.0x to 2.0x. 
• Quarterly dividend declared of $0.375 per share, or $46.8 million.  
  The 2024 financial outlook issued on February 28, 2024, in the Q4 2023 press release is reiterated as well as key related assumptions.

^{(1)Based on revenues for the trailing twelve-month period, incorporating a full twelve months of revenues for all acquisitions.}

"With the final year of our strategic cycle underway, our first quarter performance has set a solid foundation for the remainder of 2024. We continue to build upon the significant momentum we generated in 2023, supported by our exceptional teams," said Alexandre L’Heureux, President and CEO of WSP. "We are moving forward with confidence as our focus remains on delivering our ambitions, bolstered by healthy market conditions and growth opportunities. Our shared vision and collective efforts are the cornerstones of our success, and I am confident they will continue to guide us on our journey to be recognized as the undisputed leader in our industry."

DIVIDEND

The Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about July 15, 2024, to shareholders of record at the close of business on June 30, 2024.

FINANCIAL REPORT

This release includes, by reference, the financial reports for the first quarter of 2024, 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 March 30, 2024, which are available on our website at www.wsp.com. These documents are also available on SEDAR+ at www.sedarplus.ca. 

CONFERENCE CALL & WEBCAST

WSP will hold a conference call and webcast from 8:00 a.m. to 9:00 a.m. (Eastern Time) on May 9, 2024, 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. 

For those unable to attend, a replay will be available within 24 hours following the call under the "Investors" section of the website.

A presentation of the first quarter of 2024 highlights and results will be accessible on May 8, 2024, after market close under the “Investors” section of the WSP website at www.wsp.com. 

FINANCIAL HIGHLIGHTS

^{(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 first quarter ended March 30, 2024, filed on SEDAR+ at www.sedarplus.ca, 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 first quarter ended March 30, 2024, filed on SEDAR+ at www.sedarplus.ca, 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

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in millions of Canadian dollars)

References to notes refer to notes in the unaudited interim condensed consolidated financial statements of the relevant period.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of Canadian dollars)
References to notes refer to notes in the unaudited interim condensed consolidated financial statements of the relevant period.

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 MEASURES

The Corporation reports its financial results in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. 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 first quarter ended March 30, 2024, which is posted on WSP’s website at www.wsp.com, and filed on SEDAR+ at www.sedarplus.ca. 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.

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 our 2024 strategic financial ambitions, backlog and the strength of the markets across our regions, the payment of dividends, our proposed strategy, and our operating performance, financial outlook for 2024 (including net revenues, adjusted EBITDA, seasonality and adjusted EBITDA fluctuations, DSO, net capital expenditures, acquisition, integration and reorganization costs, ERP implementation costs), organic growth, effective tax rates, depreciation of right-of-use assets, property & equipment and amortization of software, head office corporate costs, a net debt to adjusted EBITDA ratios,  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 8, 2024, including economic and market assumptions regarding the competition, political environment and economic performance of each region where it operates, assumptions set out through this press release, assumptions about the state of and access to global and local capital and credit markets; interest rates; working capital requirements; the collection of accounts receivable; the Corporation obtaining new contract awards; the type of contracts entered into by the Corporation; the anticipated margins under new contract awards; the utilization of the Corporation’s workforce; the ability of the Corporation to attract new clients; the ability of the Corporation to retain current clients; changes in contract performance; project delivery; the Corporation’s competitors; the ability of the Corporation to successfully integrate acquired businesses; the acquisition and integration of businesses in the future; the Corporation’s ability to manage growth; external factors affecting the global operations of the Corporation; the current or expected state of the Corporation’s backlog; the joint arrangements into which the Corporation has or will enter; capital investments made by the public and private sectors; relationships with suppliers and subconsultants; relationships with management, key professionals and other employees of the Corporation; the maintenance of sufficient insurance; the management of environmental, social and health and safety risks; the sufficiency of the Corporation’s current and planned information systems, communications technology and other technology; compliance with laws and regulations; future legal proceedings; the sufficiency of internal and disclosure controls; the regulatory environment; impairment of goodwill; foreign currency fluctuation; the tax legislation and regulations to which the Corporation is subject and the state of the Corporation’s benefit plans.

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, and such risks include, but are not limited to, the deterioration of our financial position or net cash position; our working capital requirements; our accounts receivable; our increased indebtedness and raising capital; the impairment of long-lived assets; our foreign currency exposure; our income taxes; underfunded defined benefits obligations, and any other risk factors described under section 20 “Risk Factors” of WSP's MD&A for the fourth quarter and year ended December 31, 2023 which is available on SEDAR+ at www.sedarplus.ca. 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 fourth quarter and year ended December 31, 2023 which is available on SEDAR+ at www.sedarplus.ca. 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 67,200 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 2023, WSP reported $14.4 B (CAD) in revenue. The Corporation’s shares are listed on the Toronto Stock Exchange (TSX: WSP).

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

Alain Michaud
Chief Financial Officer
WSP Global Inc.
[email protected]  
Phone: 438-843-7317