MONTREAL, Aug. 08, 2023 (GLOBE NEWSWIRE) -- WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today announced financial and operating results for the second quarter ended on July 1, 2023.
WSP reports solid results for the first half of 2023. The second quarter of 2023 showed continued strong momentum, with higher-than-expected organic growth in net revenues across all reportable segments and improved adjusted EBITDA margins. WSP records robust backlog and record-high order intake for a quarter, which bolster confidence as WSP enters the second half of the year. As a result, the financial outlook for 2023 is increased.
SECOND QUARTER OF 2023 FINANCIAL HIGHLIGHTS
- Revenues and net revenues for the quarter reached $3.63 billion and $2.74 billion, up 31.2% and 29.8%, respectively, compared to the second quarter of 2022. Net revenue organic growth of 9.3% in the quarter, attributable to all reportable segments, was highest in the USA, Australia, the UK and New Zealand. The acquisition of the Environment & Infrastructure business of John Wood Group plc, completed in September 2022, was the main driver of acquisition growth of 16.9%.
- Backlog as at July 1, 2023 stood at a record-high level of $14.3 billion, representing 12.0 months of revenues. Organic order intake in the second quarter of 2023 of $4.0 billion, represents the highest level of organic intake recorded in a quarter, which demonstrates the continued strength of the markets across key regions.
- Adjusted EBITDA in the quarter of $461.6 million, compared to $352.2 million in the second quarter of 2022, an increase of 31.1%.
- Adjusted EBITDA margin for the quarter increased to 16.9%, compared to 16.7% in the second quarter of 2022.
- Earnings before net financing expense and income taxes in the quarter of $243.9 million, up $73.7 million compared to the second quarter of 2022, mainly due to higher adjusted EBITDA.
- Adjusted net earnings for the quarter of $194.7 million, or $1.56 per share, up $41.2 million and $0.26, respectively, compared to the second quarter of 2022. The respective increases in these metrics are mainly attributable to a higher adjusted EBITDA, partially offset by higher interest on long-term debt.
- Net earnings attributable to shareholders for the quarter of $150.7 million, or $1.21 per share, compared to $89.3 million and $0.76 per share in Q2 2022. The increases are mainly attributable to higher adjusted EBITDA, partially offset by higher interest on long-term debt and income tax expense, as well as increased amortization of intangible assets due to recent acquisitions.
- DSO as at July 1, 2023 stood at 75 days, compared to 73 days as at July 2, 2022.
- Cash inflows from operating activities of $60.2 million in the six-month period ended July 1, 2023, compared to $42.4 million in the first half of 2022. The improvement is mainly attributable to the increase in adjusted EBITDA. Free cash outflow of $198.3 million for the six-month period ended July 1, 2023. Continued impact of higher income taxes due to changes in tax regulation in the US which delays the deductibility of certain expenses.
- Net debt to adjusted EBITDA ratio stood at 2.0x, compared to 1.6x as at December 31, 2022. The increase is mainly 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 1.9x.
- Quarterly dividend declared of $0.375 per share, or $46.7 million. DRIP termination was approved by the Board of Directors, effective May 10, 2023.
- Financial outlook* for 2023 increased as follows:
| Revised outlook range | Previous outlook range | |
| Net revenues | $10.7 billion to $11.0 billion | $10.0 billion to $10.6 billion |
| Adjusted EBITDA | $1.90 billion to $1.93 billion | $1.76 billion to $1.84 billion |
| Underlying assumptions: | Revised assumptions | Previous assumptions |
| Organic growth, calculated on a constant currency basis | 6% to 9% | 3% to 6% |
“I am very pleased with our second-quarter performance, and the successful first half of the year,” said Alexandre L’Heureux, WSP’s President and CEO. “Our growth has surpassed expectations and was driven by continued momentum across our business and the high demand for our services. Considering these positive trends, our record-high backlog and recent wins, we are raising our financial outlook and are moving into the second half of the year with confidence and a continued focus on rigorously executing our plan.”
DIVIDEND
The Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about October 15, 2023, to shareholders of record at the close of business on September 30, 2023.
FINANCIAL REPORT
This release includes, by reference, the financial reports for the second 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 second quarter ended on July 1, 2023, 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 August 9, 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 second quarter 2023 highlights and results will be accessible on August 8, 2023, after the market close under the “Investors” section of the WSP website at www.wsp.com. For those unable to attend, a replay will be available within 24 hours following the call under the Investors section of the website.
*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 2023 remain unchanged, except as described above.
FINANCIAL HIGHLIGHTS
| Second quarters ended | Six-month periods ended | |||||||
| (in millions of dollars, except percentages, per share data, DSO and ratios) | July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||
| Revenues | $3,626.0 | $2,764.2 | $7,115.5 | $5,476.0 | ||||
| Net revenues(1) | $2,739.1 | $2,109.6 | $5,406.2 | $4,209.6 | ||||
| Earnings before net financing expense and income taxes | $243.9 | $170.2 | $443.8 | $327.4 | ||||
| Adjusted EBITDA(2) | $461.6 | $352.2 | $874.9 | $676.8 | ||||
| Adjusted EBITDA margin(2) | 16.9 | % | 16.7 | % | 16.2 | % | 16.1 | % |
| Net earnings attributable to shareholders of WSP Global Inc. | $150.7 | $89.3 | $263.2 | $184.3 | ||||
| Basic net earnings per share attributable to shareholders | $1.21 | $0.76 | $2.11 | $1.56 | ||||
| Adjusted net earnings(2) | $194.7 | $153.5 | $365.8 | $289.9 | ||||
| Adjusted net earnings per share(2) | $1.56 | $1.30 | $2.94 | $2.46 | ||||
| Cash inflows from operating activities | $84.8 | $125.4 | $60.2 | $42.4 | ||||
| Free cash flow(2) | ($57.2 | ) | $14.9 | $(198.3 | ) | $(170.4 | ) | |
| As at | July 1, 2023 | July 2, 2022 | ||||||
| Backlog(3) | $14,311.6 | $11,448.8 | ||||||
| DSO(3) | 75 days | 73 days | ||||||
| As at | July 1, 2023 | December 31, 2022 | ||||||
| Net debt to adjusted EBITDA ratio(3) | 2.0 | 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 second quarter and six-month period ended July 1, 2023, 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 second quarter and six-month period ended July 1, 2023, 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
| Second quarters ended | Six-month periods ended | |||||||
| (in millions of dollars, except number of shares and per share data) | July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||
| Revenues | $3,626.0 | $2,764.2 | $7,115.5 | $5,476.0 | ||||
| Less: Subconsultants and direct costs | $886.9 | $654.6 | $1,709.3 | $1,266.4 | ||||
| Net revenues | $2,739.1 | $2,109.6 | $5,406.2 | $4,209.6 | ||||
| Earnings before net financing expense and income taxes | $243.9 | $170.2 | $443.8 | $327.4 | ||||
| Net financing expense | $35.0 | $45.2 | $80.6 | $72.3 | ||||
| Earnings before income taxes | $208.9 | $125.0 | $363.2 | $255.1 | ||||
| Income tax expense | $57.7 | $35.4 | $98.6 | $69.9 | ||||
| Net earnings | $151.2 | $89.6 | $264.6 | $185.2 | ||||
| Net earnings attributable to: | ||||||||
| Shareholders of WSP Global Inc. | $150.7 | $89.3 | $263.2 | $184.3 | ||||
| Non-controlling interests | $0.5 | $0.3 | $1.4 | $0.9 | ||||
| Basic net earnings per share attributable to shareholders | $1.21 | $0.76 | $2.11 | $1.56 | ||||
| Diluted net earnings per share attributable to shareholders | $1.21 | $0.75 | $2.11 | $1.56 | ||||
| Basic weighted average number of shares | 124,608,538 | 118,041,872 | 124,570,180 | 117,967,063 | ||||
| Diluted weighted average number of shares | 124,930,834 | 118,320,713 | 124,896,082 | 118,270,851 | ||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions of dollars)
References to notes refer to notes in the unaudited interim condensed financial statements
| As at | July 1, 2023 | December 31, 2022 | ||
| $ | $ | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents (note 16) | 304.3 | 495.6 | ||
| Trade receivables and other receivables | 2,519.1 | 2,625.8 | ||
| Cost and anticipated profits in excess of billings | 1,945.6 | 1,626.2 | ||
| Prepaid expenses | 188.5 | 138.9 | ||
| Other financial assets | 117.4 | 108.2 | ||
| Income taxes receivable | 46.6 | 39.5 | ||
| 5,121.5 | 5,034.2 | |||
| Non-current assets | ||||
| Right-of-use assets (note 10) | 923.3 | 978.9 | ||
| Intangible assets | 1,115.1 | 1,102.6 | ||
| Property and equipment | 428.0 | 398.9 | ||
| Goodwill (note 11) | 7,122.8 | 6,792.2 | ||
| Deferred income tax assets | 393.3 | 351.3 | ||
| Other assets | 229.4 | 183.6 | ||
| 10,211.9 | 9,807.5 | |||
| Total assets | 15,333.4 | 14,841.7 | ||
| Liabilities and equity | ||||
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | 2,412.1 | 2,736.4 | ||
| Billings in excess of costs and anticipated profits | 1,054.3 | 973.1 | ||
| Income taxes payable | 194.7 | 260.4 | ||
| Provisions | 134.5 | 152.2 | ||
| Dividends payable to shareholders | 46.7 | 46.7 | ||
| Current portion of lease liabilities (note 10) | 260.9 | 273.0 | ||
| Current portion of long-term debt (note 12) | 567.1 | 173.4 | ||
| 4,670.3 | 4,615.2 | |||
| Non-current liabilities | ||||
| Long-term debt (note 12) | 3,114.4 | 2,781.1 | ||
| Lease liabilities (note 10) | 791.5 | 856.8 | ||
| Provisions | 344.2 | 288.9 | ||
| Retirement benefit obligations | 159.8 | 162.3 | ||
| Deferred income tax liabilities | 127.8 | 128.3 | ||
| 4,537.7 | 4,217.4 | |||
| Total liabilities | 9,208.0 | 8,832.6 | ||
| Equity | ||||
| Equity attributable to shareholders of WSP Global Inc. | 6,120.9 | 6,006.0 | ||
| Non-controlling interests | 4.5 | 3.1 | ||
| Total equity | 6,125.4 | 6,009.1 | ||
