Scotiabank's analyst, Jonathan Goldman, has updated his outlook on WSP Global (WSPOF, Financial), adjusting the price target from C$283 to C$287. Despite this revision, Goldman maintains an Outperform rating for the stock, indicating continued positive expectations for its performance.
WSPOF Key Business Developments
Release Date: May 08, 2025
- Net Revenue Organic Growth: 5.5% adjusted for fewer billable days in the US; 7% in Canada.
- US Revenue Contribution: 40% of net revenues with double-digit organic growth.
- EBITDA Margin: 16% for the quarter.
- Free Cash Flow: Increased by $240 million versus last year.
- DSO (Days Sales Outstanding): 70 days.
- Backlog: $16.6 billion, representing 11.3 months of revenue, up 16.6% year-over-year.
- Adjusted EBITDA: $533.9 million, up 19.7% from the previous year.
- Adjusted Net Earnings: $229 million or $1.76 per share, up 18.2% and 13.5%, respectively.
- Net Debt to Adjusted EBITDA Ratio: 1.8 times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WSP Global Inc (WSPOF, Financial) reported net revenue organic growth of approximately 5.5% for Q1 2025, with Canada achieving 7% organic growth.
- The US market, which accounts for 40% of WSP's net revenues, delivered its fourth consecutive quarter of double-digit organic growth.
- The integration of POWER Engineers is progressing well, contributing 11% organic growth and offering significant revenue synergies.
- WSP Global Inc (WSPOF) achieved a steady EBITDA margin performance of 16% for the quarter, with notable margin improvements in Canada and the Americas.
- Free cash flow increased by $240 million compared to the previous year, reflecting strong working capital management and optimization under a new ERP platform.
Negative Points
- The APAC region experienced subpar performance, although the outlook for Australia and New Zealand remains positive in the medium to long term.
- EMEA and APAC regions absorbed approximately $20 million in optimization and restructuring costs, impacting overall margins by about 50 basis points.
- There are ongoing macroeconomic uncertainties, including potential impacts from geopolitical tensions and fluctuating FX rates.
- The Asia Pacific region, particularly in transportation, has not seen the expected backlog or proposal activity level picking up as fast as desired.
- The company anticipates potential further rightsizing costs in APAC and EMEA, which could continue to impact margins.
