WSP Reports Robust Q1 2022 Results

MONTREAL, May 11, 2022 (GLOBE NEWSWIRE) — WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today announced financial and operating results for the first quarter ended on April 2, 2022.

A strong start to the year, with 12.7% organic net revenue growth, significant increase in backlog and solid improvement in adjusted EBITDA, adjusted EBITDA margin and adjusted net earnings per share.

FIRST QUARTER 2022 FINANCIAL HIGHLIGHTS

  • Revenues and net revenues reached $2.7 billion and $2.1 billion, up 28.8% and 26.0%, respectively, compared to the first quarter of 2021. Net revenue grew organically by 12.7%, of which approximately 4.5% is due to more billable days.
  • Backlog as at April 2, 2022 stood at $11.0 billion, representing 12.1 months of revenues. In the twelve-month period ended April 2, 2022, backlog grew organically by 15.8% across all reportable segments and by 6.2% when compared to December 31, 2021.
  • Adjusted EBITDA of $324.6 million, up 34.7%, compared to $241.0 million in the first quarter of 2021. Adjusted EBITDA margin increased to 15.5% in the first quarter of 2022, compared to 14.4% in the first quarter of 2021, an increase of 110 basis points. The improvement in adjusted EBITDA margin is mainly attributable to strong performance across the organization.
  • Earnings before net financing expense and income taxes in the first quarter of 2022 of $157.2 million, up 21.9% compared to the first quarter of 2021, mainly due to higher adjusted EBITDA, partially offset by higher acquisition, integration and reorganization costs and ERP implementation costs.
  • Adjusted net earnings in the first quarter of 2022 of $136.4 million, or $1.16 per share, up $42.2 million or $0.33 per share, compared to the first quarter of 2021. The increases of 44.8% and 39.8% in these metrics are mainly attributable to higher adjusted EBITDA.
  • Net earnings attributable to shareholders of $95.0 million in the first quarter of 2022, or $0.81 per share, up $7.1 million, or $0.04 per share, compared to the first quarter of 2021. The increase was mainly due to higher adjusted EBITDA, partially offset by higher acquisition, integration and reorganization costs and amortization and depreciation expense.
  • DSO as at April 2, 2022 stood at 70 days, compared to 68 days as at March 27, 2021.
  • Free cash outflow of $185.3 million for the three-month period. Trailing twelve-months of free cash flow amounted to $375.5 million, representing 0.8 times the net earnings attributable to shareholders. The main contributor to the variance in Q1 2022 compared to Q1 2021 is an additional period of payroll, which will reverse in the second quarter of 2022.
  • Cash outflows from operating activities of $83.0 million in the three-month period ended April 2, 2022, compared to cash inflows of $163.4 million in Q1 2021.
  • The net debt to adjusted EBITDA ratio stood at 0.8x, compared to 0.6x as at December 31, 2021, increasing mainly due to a lower level of cash, in line with expected seasonality trends in free cash flow.
  • Quarterly dividend declared of $0.375 per share, or $44.2 million, with a 49.6% Dividend Reinvestment Plan (“DRIP”) participation.

“I am very pleased with our strong start to the year,” said Alexandre L’Heureux, WSP’s President and CEO. “We had an excellent first quarter fueled by outstanding organic growth, all while building an even more robust backlog. Coupled with our increased profitability, this momentum bodes well for 2022.”

“The quarter also marked the one-year anniversary of the Golder acquisition,” Mr. L’Heureux added. “Today, Golder is fully embedded in our business allowing us to further capitalize on the thriving environmental sectors. With our healthy balance sheet, we are now well positioned to execute our 2022-2024 Global Strategic Action Plan.”

DIVIDEND
The Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about July 15, 2022, to shareholders of record at the close of business on June 30, 2022.

FINANCIAL REPORT
This release includes, by reference, the financial reports for the first quarter of 2022, including the unaudited interim consolidated financial statements and the Management’s Discussion and Analysis (“MD&A”) of the Corporation for the first quarter ended on April 2, 2022, which are available on our website at www.wsp.com. These documents are also available on SEDAR at www.sedar.com.

CONFERENCE CALL
WSP will hold a conference call and webcast from 8:00 a.m. to 9:00 a.m. (Eastern Time) on May 12, 2022, to discuss these results. To participate in the conference call, dial 1-409-216-6433 or 1-855-385-1271 (toll free). A live webcast of the conference call will also be available at www.wsp.com/investors.

A presentation of the 2022 first quarter highlights and results will be accessible on May 11, 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.

FINANCIAL HIGHLIGHTS

  First quarters ended
(in millions of dollars, except percentages, per share data, DSO and ratios) April 2, 2022
March 27, 2021
Revenues $2,711.8 $2,104.8
Net revenues(1) $2,100.0 $1,666.8
Earnings before net financing expense and income taxes $157.2 $129.0
Adjusted EBITDA(2) $324.6 $241.0
Adjusted EBITDA margin(2) 15.5% 14.4%
Net earnings attributable to shareholders of WSP Global Inc. $95.0 $87.9
Basic net earnings per share attributable to shareholders $0.81 $0.77
Adjusted net earnings(2) $136.4 $94.2
Adjusted net earnings per share(2) $1.16 $0.83
Cash inflows (outflows) from operating activities $(83.0) $163.4
Free cash flow(2) $(185.3) $85.3
     
As at April 2, 2022
March 27, 2021
Backlog(3) $11,021.4 $8,430.9
Days sales outstanding (“DSO”)(3) 70 68
     
As at April 2, 2022
December 31, 2021
Net debt to adjusted EBITDA ratio(3) 0.8 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 earnings 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 2, 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) This earnings 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 2, 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

  First quarters ended
(in millions of dollars, except number of shares and per share data) April 2, 2022 March 27, 2021
Revenues $2,711.8 $2,104.8
Less: Subconsultants and direct costs $611.8 $438.0
Net revenues $2,100.0 $1,666.8
Earnings before net financing expense and income taxes $157.2 $129.0
Net financing expense $27.1 $8.4
Earnings before income taxes $130.1 $120.6
Income tax expense $34.5 $32.6
Net earnings $95.6 $88.0
Net earnings attributable to:    
Shareholders of WSP Global Inc. $95.0 $87.9
Non-controlling interests $0.6 $0.1
Basic net earnings per share attributable to shareholders $0.81 $0.77
Diluted net earnings per share attributable to shareholders $0.80 $0.77
Basic weighted average number of shares 117,893,068 113,722,122
Diluted weighted average number of shares 118,216,762 114,053,906


CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

References to notes refer to notes in the financial statements

As at April 2, 2022 December 31, 2021
  $ $
Assets    
Current assets    
Cash and cash equivalents (note 17) 691.1 927.4
Trade receivables and other receivables 1,879.8 1,916.8
Cost and anticipated profits in excess of billings 1,348.6 1,156.4
Other financial assets 116.3 141.7
Prepaid expenses 189.8 169.6
Income taxes receivable 41.9 28.9
  4,267.5 4,340.8
Non-current assets    
Right-of-use assets (note 11) 898.3 861.5
Intangible assets 514.9 549.9
Property and equipment 349.2 363.6
Goodwill (note 12) 4,707.5 4,762.3
Deferred income tax assets 174.6 165.1
Other assets 206.7 207.2
  6,851.2 6,909.6
Total assets 11,118.7 11,250.4
     
Liabilities    
Current liabilities    
Accounts payable and accrued liabilities 2,040.5 2,217.3
Billings in excess of costs and anticipated profits 761.3 751.1
Income taxes payable 149.1 149.8
Provisions 57.9 77.5
Dividends payable to shareholders (note 16) 44.2 44.2
Current portion of lease liabilities (note 11) 269.0 254.2
Current portion of long-term debt (note 13) 311.0 297.4
  3,633.0 3,791.5
Non-current liabilities    
Long-term debt (note 13) 1,451.5 1,479.3
Lease liabilities (note 11) 780.1 766.1
Provisions 239.1 236.2
Retirement benefit obligations 190.1 212.9
Deferred income tax liabilities 103.6 99.2
  2,764.4 2,793.7
Total liabilities 6,397.4 6,585.2
     
Equity    
Equity attributable to shareholders of WSP Global Inc. 4,720.0 4,664.5
Non-controlling interests 1.3 0.7
Total equity 4,721.3 4,665.2
Total liabilities and equity 11,118.7 11,250.4


CONSOLIDATED STATEMENTS OF CASH FLOWS

References to notes refer to notes in the financial statements

  First quarters ended
  April 2, 2022 March 27, 2021
  $ $
Operating activities    
Net earnings 95.6 88.0
Adjustments (note 17) 113.8 96.8
Net financing expense (note 9) 27.1 8.4
Income tax expense 34.5 32.6
Income taxes paid (54.5) (25.6)
Change in non-cash working capital items (note 17) (299.5) (36.8)
Cash inflows (outflows) from operating activities (83.0) 163.4
Financing activities    
Lease payments (note 11) (81.4) (61.9)
Dividends paid to shareholders of WSP Global Inc. (21.4) (19.5)
Net financing expenses paid, excluding interest on lease liabilities (13.5) (4.8)
Net repayment of long-term debt (6.7) (11.9)
Issuance of common shares, net of issuance costs (note 14) 0.7 2.6
Cash outflows from financing activities (122.3) (95.5)
Investing activities    
Net disbursements related to business acquisitions (note 4) (11.0) (45.2)
Additions to property and equipment, excluding business acquisitions (18.5) (13.5)
Additions to identifiable intangible assets, excluding business acquisitions (2.9) (3.0)
Proceeds from disposal of property and equipment 0.5 0.3
Dividends received from associates 2.2
Proceeds from sale of investment in an associate 4.4
Net proceeds from disposal of businesses 1.5
Net cash received on a loan from associate 0.3 0.3
Cash outflows from investing activities (27.9) (56.7)
Effect of exchange rate change on cash and cash equivalents (3.7) (8.2)
Change in net cash and cash equivalents (236.9) 3.0
Cash and cash equivalents, net of bank overdraft – beginning of period 926.3 434.7
Cash and cash equivalents, net of bank overdraft – end of period (note 17) 689.4 437.7

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 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-IFRS 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 earnings 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 2, 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:  
    First quarters ended  
  (in millions of dollars) April 2, 2022 March 27, 2021  
  Revenues $2,711.8 $2,104.8  
  Less: Subconsultants and direct costs $611.8 $438.0  
  Net revenues* $2,100.0 $1,666.8  
  * 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 2, 2022 March 27, 2021  
  Earnings before net financing expense and income taxes $157.2 $129.0  
  Acquisition, integration and reorganization costs $20.8 $0.6  
  ERP implementation costs $10.1 $—  
  Depreciation of right-of-use assets $71.0 $61.3  
  Amortization of intangible assets $33.7 $23.4  
  Depreciation of property and equipment $28.7 $24.7  
  Share of depreciation and taxes of associates $2.8 $1.8  
  Interest income $0.3 $0.2  
  Adjusted EBITDA* $324.6 $241.0  
  * 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 2, 2022 March 27, 2021  
  Net earnings attributable to shareholders $95.0 $87.9  
  Amortization of intangible assets related to acquisitions $21.1 $13.6  
  Acquisition, integration and reorganization costs $20.8 $0.6  
  ERP implementation costs $10.1 $—  
  Gains on investments in securities related to deferred compensation obligations $7.9 $(3.4)  
  Unrealized gain on derivative financial instruments $(5.6) $(2.0)  
  Income taxes related to above items $(12.9) $(2.5)  
  Adjusted net earnings* $136.4 $94.2  
  Adjusted net earnings per share* $1.16 $0.83  
  * 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 2, 2022 March 27, 2021  
  Cash inflows (outflows) from operating activities $(83.0) $163.4  
  Lease payments in financing activities $(81.4) $(61.9)  
  Net capital expenditures* $(20.9) $(16.2)  
  Free cash flow** $(185.3) $85.3  
  * 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 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 May 11, 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; the anticipated impacts of the COVID-19 pandemic on the Corporation’s businesses, operating results, cash flows and/or financial condition, including the effect of measures implemented as a result of the COVID-19 pandemic; the expected benefits of the Golder Acquisition and other acquisitions, and the expected synergies to be realized as a result thereof.

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, including risks relating to the COVID-19 pandemic. 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 WSP
As 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 55,000 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 company’s shares are listed on the Toronto Stock Exchange (TSX: WSP). To find out more, visit wsp.com

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

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


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