WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today
announced financial and operating results for the second quarter
ended on June 26, 2021.
WSP reports robust results for the second
quarter of 2021 driven by strong performance from recent
acquisitions and better than anticipated organic growth, resulting
in improved adjusted EBITDA margins. Considering the results to
date and current outlook, financial guidance for fiscal 2021 is
revised upwards.
SECOND QUARTER 2021 FINANCIAL
HIGHLIGHTS
- Revenues and net
revenues* for the quarter reached $2.6 billion and $2.0 billion, up
19.3% and up 16.1%, respectively, compared to Q2 2020. The increase
was driven by acquisition growth of 18.7%, across all segments, as
well as overall organic growth of 3.6%, higher than Management's
expectations of low single-digit organic growth. Notably, our
businesses in Canada and the UK posted double-digit organic
growth.
- Golder
delivered better than anticipated results with double-digit organic
growth in the second quarter of 2021 compared to its results in
2020. Integration activities are progressing very well.
- Backlog*
as at June 26, 2021 stood at $9.6 billion, representing 11.2
months of revenues, up 14.4% in the six-month period, mainly due to
acquisition growth. On a constant currency basis, backlog grew
organically by 1.1% compared to backlog as at December 31,
2020. Overall proposal activity continues to be very robust across
the business and the volume of contract awards not yet included in
backlog is at a record-high level in our US business.
- Adjusted
EBITDA* in the quarter of $342.6 million, up $66.5 million or
24.1%, compared to $276.1 million in Q2 2020, largely due to the
contribution of recent acquisitions. No significant government
subsidies were received during the second quarter.
- Adjusted
EBITDA margin* for the quarter reached 16.9%, compared to 15.8% in
Q2 2020. The improvement in adjusted EBITDA margin is mainly
attributable to the higher margin profile of recent acquisitions
and better productivity across the regions.
- Earnings
before net financing expense and income taxes in the quarter of
$189.2 million, up $67.3 million, or 55.2%, compared to Q2 2020,
mainly due to increased adjusted EBITDA.
- Adjusted
net earnings* for the quarter of $147.3 million, or $1.26 per
share, up $40.7 million and $0.26, respectively, compared to Q2
2020. The increase in these metrics is mainly attributable to
higher adjusted EBITDA.
- Net
earnings attributable to shareholders for the quarter of $120.0
million, or $1.03 per share, up 35.4% and 24.1%, respectively, when
compared to Q2 2020. The increase is mainly attributable to higher
adjusted EBITDA and lower acquisition, integration and
restructuring costs, partially offset by higher net financing
expense.
- DSO* as
at June 26, 2021 stood at 70 days, compared to 72 days as at
June 27, 2020.
- Free
cash flow* of $137.9 million for the six-month period.
Trailing twelve-months of free cash flow amounted to
$552.7 million, representing 1.5 times net earnings
attributable to shareholders.
- Cash
inflows from operating activities of $310.8 million in the
six-month period ended June 26, 2021, compared to
$509.9 million in the comparable period in 2020. The variance
is mainly due to a normalization of collections and the fact that
Q2 2020 benefitted from a deferral of income tax and other
remittances in some
jurisdictions.
- The net
debt to adjusted EBITDA ratio* stood at 1.1x, compared to 0.1x as
at December 31, 2020, due to the Golder acquisition.
Successful issuance of senior unsecured notes in the second quarter
for aggregate gross proceeds of $500 million, further
diversifying our debt structure and extending our average debt
maturity profile.
-
Quarterly dividend declared of $0.375 per share, with a 56.2%
Dividend Reinvestment Plan (“DRIP”) participation.
-
Financial outlook for 2021 increased with an adjusted EBITDA now
expected to fall in the range of $1.275 billion to $1.325
billion (previously expected to fall in the range of $1.22 billion
to $1.29 billion).(1)
“On the basis of our strong performance, we feel
confident in revising our 2021 outlook upwards. Our recently
completed acquisitions, including the transformative addition of
Golder, are integrating well and thus far exceeding performance
expectations,” said Alexandre L’Heureux, President and CEO of WSP.
“All of this, along with recent significant wins through
competitive proposals and signs of increased investment in
infrastructure and environmental programs, makes us optimistic for
a continued positive momentum for 2021,” he added.
DIVIDENDThe Board of WSP
declared a dividend of $0.375 per share. This dividend will be
payable on or about October 15, 2021, to shareholders of record at
the close of business on September 30, 2021.
FINANCIAL REPORTThis release
includes, by reference, the financial reports for the second
quarter of 2021, including the unaudited interim condensed
consolidated financial statements and the Management’s Discussion
& Analysis (“MD&A”) of the Corporation.
For a copy of our financial reports for the
second quarter of 2021, including the MD&A and the unaudited
interim condensed consolidated financial statements, please visit
our website at www.wsp.com.
CONFERENCE CALL WSP will hold a
conference call and webcast at 8 a.m. (Eastern Time) on August 11,
2021 to discuss these results.To participate in the conference
call, dial 1-438-801-4068 or 1-888-500-2848 (toll free). A live
webcast of the conference call will also be available at
www.wsp.com/investors.
A presentation of the second quarter of 2021
highlights and results will be accessible on August 10, 2021
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.
*Non-IFRS measures. These measures are defined
in section 19, “Glossary of non-IFRS measures and segment reporting
measures” of the Corporation's Management's Discussion &
Analysis for the second quarter and six-month period ended on
June 26, 2021. Please refer to the "Non-IFRS measures"
disclaimer below.
(1)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 will differ
and such differences may be material. Please refer to the
"Forward-looking statements" disclaimer below.
RESULTS OF OPERATIONS
|
Second quarters ended |
Six month periods ended |
(in millions of dollars, except number of shares and per share
data) |
June 26, 2021 |
June 27, 2020 |
|
June 26, 2021 |
June 27, 2020 |
|
Revenues |
$2,633.1 |
$2,207.8 |
|
$4,737.9 |
$4,417.8 |
|
Less: Subconsultants and direct costs |
$604.3 |
$460.7 |
|
$1,042.3 |
$934.6 |
|
Net revenues* |
$2,028.8 |
$1,747.1 |
|
$3,695.6 |
$3,483.2 |
|
Earnings before net financing expense and income
taxes |
$189.2 |
$121.9 |
|
$318.2 |
$209.9 |
|
Net financing expense |
$23.5 |
$1.2 |
|
$31.9 |
$69.5 |
|
Earnings before income taxes |
$165.7 |
$120.7 |
|
$286.3 |
$140.4 |
|
Income tax expense |
$45.6 |
$32.4 |
|
$78.2 |
$37.8 |
|
Net earnings |
$120.1 |
$88.3 |
|
$208.1 |
$102.6 |
|
Net earnings attributable to: |
|
|
|
|
Shareholders of WSP Global Inc. |
$120.0 |
$88.6 |
|
$207.9 |
$102.8 |
|
Non-controlling interests |
$0.1 |
$(0.3 |
) |
$0.2 |
$(0.2 |
) |
Basic net earnings per share attributable to shareholders |
$1.03 |
$0.83 |
|
$1.80 |
$0.96 |
|
Diluted net earnings per share attributable to shareholders |
$1.02 |
$0.83 |
|
$1.80 |
$0.96 |
|
Basic weighted average number of shares |
116,854,428 |
107,006,730 |
|
115,332,517 |
106,554,478 |
|
Diluted weighted average number of shares |
117,205,800 |
107,205,566 |
|
115,681,656 |
106,763,220 |
|
*Non-IFRS measure. This measure is defined in
section 19, “Glossary of non-IFRS measures and segment reporting
measures” of the Corporation's Management's Discussion &
Analysis for the quarter and six-month period ended June 26,
2021.
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITIONReferences to notes refer to notes in the
financial statements
As at |
June 26, 2021 |
|
December 31, 2020 |
|
|
$ |
|
$ |
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents (note 15) |
529.3 |
|
437.1 |
|
Trade receivables and other receivables |
1,871.9 |
|
1,598.8 |
|
Cost and anticipated profits in excess of billings |
1,190.0 |
|
950.5 |
|
Other financial assets |
133.7 |
|
118.1 |
|
Prepaid expenses |
154.0 |
|
168.7 |
|
Income taxes receivable |
25.1 |
|
27.5 |
|
|
3,904.0 |
|
3,300.7 |
|
Non-current assets |
|
|
Right-of-use assets (note 10) |
948.5 |
|
894.3 |
|
Property and equipment |
354.9 |
|
314.9 |
|
Intangible assets |
504.0 |
|
275.5 |
|
Goodwill (note 11) |
4,752.0 |
|
3,731.9 |
|
Deferred income tax assets |
165.0 |
|
169.2 |
|
Other assets |
194.2 |
|
150.9 |
|
|
6,918.6 |
|
5,536.7 |
|
Total assets |
10,822.6 |
|
8,837.4 |
|
|
|
|
Liabilities |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
2,024.2 |
|
1,718.2 |
|
Billings in excess of costs and anticipated profits |
734.5 |
|
708.5 |
|
Income taxes payable |
128.1 |
|
119.1 |
|
Provisions |
48.5 |
|
71.4 |
|
Dividends payable to shareholders (note 14) |
44.0 |
|
42.5 |
|
Current portion of lease liabilities (note 10) |
257.7 |
|
233.1 |
|
Current portion of long-term debt (note 12) |
67.3 |
|
296.9 |
|
|
3,304.3 |
|
3,189.7 |
|
Non-current liabilities |
|
|
Long-term debt (note 12) |
1,722.4 |
|
277.3 |
|
Lease liabilities (note 10) |
858.8 |
|
785.3 |
|
Provisions |
189.7 |
|
180.9 |
|
Retirement benefit obligations |
214.1 |
|
232.4 |
|
Deferred income tax liabilities |
119.3 |
|
90.4 |
|
|
3,104.3 |
|
1,566.3 |
|
Total liabilities |
6,408.6 |
|
4,756.0 |
|
|
|
|
Equity |
|
|
Equity attributable to shareholders of WSP Global Inc. |
4,412.8 |
|
4,080.4 |
|
Non-controlling interests |
1.2 |
|
1.0 |
|
Total equity |
4,414.0 |
|
4,081.4 |
|
Total liabilities and equity |
10,822.6 |
|
8,837.4 |
|
CONSOLIDATED STATEMENTS OF CASH
FLOWSReferences to notes refer to notes in the financial
statements
|
Second quarters ended |
|
|
Six month periods ended |
|
|
|
June 26, 2021 |
|
|
June 27, 2020 |
|
|
June 26, 2021 |
|
|
June 27, 2020 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Operating activities |
|
|
|
|
Net earnings |
120.1 |
|
|
88.3 |
|
|
208.1 |
|
|
102.6 |
|
|
Adjustments (note 15) |
98.3 |
|
|
124.5 |
|
|
195.1 |
|
|
221.8 |
|
|
Net financing expense (note 8) |
23.5 |
|
|
1.2 |
|
|
31.9 |
|
|
69.5 |
|
|
Income tax expense |
45.6 |
|
|
32.4 |
|
|
78.2 |
|
|
37.8 |
|
|
Income taxes paid |
(46.8 |
) |
|
(8.1 |
) |
|
(72.4 |
) |
|
(33.2 |
) |
|
Change in non-cash working capital items (note 15) |
(93.3 |
) |
|
268.4 |
|
|
(130.1 |
) |
|
111.4 |
|
|
Cash inflows from operating activities |
147.4 |
|
|
506.7 |
|
|
310.8 |
|
|
509.9 |
|
|
Financing activities |
|
|
|
|
Issuance of senior unsecured notes (note 12) |
500.0 |
|
|
— |
|
|
500.0 |
|
|
— |
|
|
Net (repayment) proceeds of borrowings under credit facilities |
469.8 |
|
|
(1,082.7 |
) |
|
457.9 |
|
|
(279.6 |
) |
|
Issuance of common shares, net of issuance costs
(note 13) |
298.6 |
|
|
549.6 |
|
|
301.2 |
|
|
549.6 |
|
|
Lease payments |
(79.3 |
) |
|
(72.1 |
) |
|
(141.2 |
) |
|
(142.5 |
) |
|
Dividends paid to shareholders of WSP Global Inc. |
(21.7 |
) |
|
(26.2 |
) |
|
(41.2 |
) |
|
(49.1 |
) |
|
Net financing expenses paid, excluding interest on lease
liabilities |
(23.1 |
) |
|
(14.6 |
) |
|
(27.9 |
) |
|
(38.1 |
) |
|
Dividends paid to a non-controlling interest |
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
Cash inflows (outflows) from financing
activities |
1,144.3 |
|
|
(646.0 |
) |
|
1,048.8 |
|
|
40.2 |
|
|
Investing activities |
|
|
|
|
Net disbursements related to business acquisitions |
(1,173.3 |
) |
|
(0.9 |
) |
|
(1,218.5 |
) |
|
(45.7 |
) |
|
Additions to property and equipment, excluding business
acquisitions |
(17.4 |
) |
|
(22.3 |
) |
|
(30.9 |
) |
|
(38.8 |
) |
|
Additions to identifiable intangible assets, excluding business
acquisitions |
(6.7 |
) |
|
(2.3 |
) |
|
(9.7 |
) |
|
(9.2 |
) |
|
Proceeds from disposal of property and equipment |
8.6 |
|
|
0.8 |
|
|
8.9 |
|
|
1.1 |
|
|
Proceeds from sale of investment in an associate |
— |
|
|
0.4 |
|
|
4.4 |
|
|
0.4 |
|
|
Net increase in investments in securities |
(7.3 |
) |
|
— |
|
|
(7.3 |
) |
|
— |
|
|
Net cash received on a loan from associate |
— |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
Dividends received from associates |
0.1 |
|
|
— |
|
|
0.1 |
|
|
3.8 |
|
|
Cash outflows from investing activities |
(1,196.0 |
) |
|
(24.3 |
) |
|
(1,252.7 |
) |
|
(88.4 |
) |
|
Effect of exchange rate change on cash and cash equivalents |
(6.6 |
) |
|
(16.5 |
) |
|
(14.8 |
) |
|
11.4 |
|
|
Change in net cash and cash equivalents |
89.1 |
|
|
(180.1 |
) |
|
92.1 |
|
|
473.1 |
|
|
Cash and cash equivalents, net of bank overdraft – beginning of
period |
437.7 |
|
|
890.5 |
|
|
434.7 |
|
|
237.3 |
|
|
Cash and cash equivalents, net of bank overdraft - end of
period (note 15) |
526.8 |
|
|
710.4 |
|
|
526.8 |
|
|
710.4 |
|
|
NON-IFRS MEASURESThe
Corporation reports its financial results in accordance with IFRS.
However, in this press release, the following non-IFRS 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 measures, including reconciliations of most measures to
the most directly comparable IFRS measures, can be found in WSP’s
MD&A for the quarter and six-month period ended June 26,
2021, which is posted on WSP’s website at www.wsp.com, and filed on
SEDAR at www.sedar.com.
Management believes that these non-IFRS 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 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.
ABOUT WSPAs one of the world’s
leading professional services firms, WSP provides engineering and
design services to clients in the Transportation &
Infrastructure, Property & Buildings, Earth & Environment,
Power & Energy, Resources and Industry sectors, as well as
offering strategic advisory services. WSP's global experts include
engineers, advisors, technicians, scientists, architects, planners,
environmental specialists and surveyors, in addition to other
design, program and construction management professionals. Our
talented people are well positioned to deliver successful and
sustainable projects, wherever clients need us. wsp.com.
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 are based
on a number of assumptions believed by the Corporation to be
reasonable as at August 10, 2021, 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, the expected synergies to be realized as a
result of the Golder Acquisition. The Corporation did not consider
any dispositions, mergers, business combinations and other
transactions that may occur after August 10, 2021.
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 Management’s
Discussion and Analysis for the year ended December 31, 2020
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.
FOR ADDITIONAL INFORMATION, PLEASE
CONTACT:
Alain MichaudChief Financial
OfficerWSP Global Inc.alain.michaud@wsp.com Phone:
438-843-7317
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