WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today
announced financial and operating results for the third quarter of
fiscal 2020 ended on September 26, 2020.
THIRD QUARTER 2020 FINANCIAL
HIGHLIGHTSSolid performance in the third quarter of 2020
with an improved adjusted EBITDA margin and a strong financial
position. Backlog remains healthy.
- Revenues
and net revenues* for the quarter reached $2.1 billion and $1.7
billion, down 3.8% and 0.4%, respectively, compared to Q3 2019.
Organically, net revenues contracted 3.4% for the quarter.
- Backlog*
as at September 26, 2020 stood at $8.5 billion, reaching the
record high of 11.6 months of revenues, up $374.0 million or
4.6% from $8.1 billion as at December 31, 2019 and up
$600.1 million or 7.6% when compared to September 28,
2019. Backlog organic growth reached 3.6% compared to
December 31, 2019, and 5.2% compared to September 28,
2019.
- Adjusted
EBITDA* for the quarter of $297.1 million, up $8.9 million or 3.1%,
compared to $288.2 million in Q3 2019. Adjusted EBITDA margin
for the quarter reached 17.6%, compared to 17.0% in Q3 2019.
- Earnings
before net financing expense and income taxes in the quarter of
$144.2 million, down $24.5 million, or 14.5%, compared to Q3
2019, mainly due to severance costs of $23.5 million included in
the acquisition, integration and restructuring costs.
- Net
earnings attributable to shareholders for the quarter of $104.3
million, or $0.92 per share, up 11.3% and 3.4% respectively when
compared to Q3 2019.
- Net
financing expense for the third quarter ended September 26,
2020 was $39.4 million lower than the third quarter of 2019, mainly
attributable to lower interest expense due to lower long-term debt,
unrealized foreign exchange gains from derivative financial
instruments, and higher non-cash increases in value of investments
related to a US-employees' deferred compensation plan included in
other financial assets.
- Adjusted
net earnings* for the quarter of $118.2 million, or $1.04 per
share, up $17.5 million and $0.08, respectively, compared to Q3
2019.
- DSO* as
at September 26, 2020 stood at 72 days, the same as last
quarter and still a historical best, compared to 80 days as at
September 28, 2019.
- Cash
inflows from operating activities of $743.3 million in the
nine-month period ended September 26, 2020, compared to
$388.8 million in the comparable period in 2019.
- Free
cash flow* of $150.3 million for the quarter. Trailing
twelve-months of free cash flow amounted to $778.9 million,
representing 315% of net earnings attributable to
shareholders.
- The net
debt to adjusted EBITDA ratio stood at 0.3x. The ratio is
significantly lower than 1.1x as at December 31, 2019, due
mainly to the repayment of a portion of indebtedness under credit
facilities following strong free cash flow in 2020 and the equity
financing completed in the second quarter of 2020.
-
Quarterly dividend declared of $0.375 per share, with a 54.0%
Dividend Reinvestment Plan (“DRIP”) participation.
-
Financial outlook for 2020 issued in the Q2 2020 results press
release is reiterated, with: adjusted EBITDA anticipated to skew
towards the higher end of the range.(1)
“Our results continue to reflect the objectives
we had set at the beginning of the pandemic, which were to maintain
a good level of margins and a strong financial position,” said
Alexandre L’Heureux, WSP’s President and CEO. “We have demonstrated
our ability to be operationally resilient and to serve our clients
with high-quality services in this unprecedented time, thanks to
the adaptability and dedication of our employees. We remain agile
and focused on operational efficiency to meet client expectations
and plan for 2021,” he added.
LEADERSHIP ANNOUNCEMENTWSP
announces that Paul Dollin, our Chief Operating Officer, will be
leaving the organization at the end of the year to pursue new
professional and personal opportunities. Until then, Paul will
ensure a smooth transition of his responsibilities to current
members of the Global Leadership Team.
Paul has been a key member of our leadership
team since the acquisition of WSP Group Plc in 2012. As COO since
2014, he has been responsible for the day-to-day operations of WSP
worldwide.
“On behalf of our entire management team and the
Board of Directors, I thank Paul for his significant contribution
to making WSP the leader it has become today. Among his many
accomplishments, he has overseen the successful integration of the
numerous companies acquired by WSP during his tenure, ensuring a
common purpose, shared values and a unified corporate culture,"
said Alexandre L’Heureux, WSP’s President and Chief Executive
Officer. “We wish him the very best in his future endeavours.”
Paul Dollin commented: “I am extremely proud to
have participated in the tremendous growth of WSP over the past ten
years and of having been part of an extremely talented leadership
team. Clients around the globe trust WSP with their most complex
projects, as WSP’s unparalleled expertise is recognized worldwide.
I am truly honoured to have been part of this group of talented
professionals who challenge themselves every day to surpass their
clients’ expectations.”
DIVIDENDThe Board of WSP
declared a dividend of $0.375 per share. This dividend will be
payable on or about January 15, 2021, to shareholders of
record at the close of business on December 31, 2020.
FINANCIAL REPORTThis release
includes, by reference, the 2020 third quarter financial reports,
including the unaudited interim condensed consolidated financial
statements and the Management’s Discussion & Analysis
(“MD&A”) of the Corporation.
For a copy of our 2020 third quarter financial
results, 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 November 5,
2020 to discuss these results.To participate in the conference
call, dial 1-647-427-2309 or 1-866-521-4907 (toll free). A live
webcast of the conference call will also be available at
www.wsp.com/investors.
A presentation of the 2020 third quarter
highlights and results will be accessible on November 4, 2020 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 third quarter ended September 26, 2020.
Please refer to "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 could differ and such
differences may be material. Please refer to "Forward-looking
statements" disclaimer below.
RESULTS OF OPERATIONS
|
Third quarters ended |
Nine month periods ended |
(in millions of dollars, except number of shares and per share
data) |
September 26, 2020 |
September 28, 2019 |
September 26, 2020 |
September 28, 2019 |
Revenues |
$2,137.8 |
$2,221.5 |
$6,555.6 |
$6,706.8 |
Less:
Subconsultants and direct costs |
$450.2 |
$527.9 |
$1,384.8 |
$1,581.2 |
Net revenues* |
$1,687.6 |
$1,693.6 |
$5,170.8 |
$5,125.6 |
Earnings before net financing expense and income
taxes |
$144.2 |
$168.7 |
$354.1 |
$405.1 |
Net
financing expense |
$2.1 |
$41.5 |
$71.6 |
$73.6 |
Earnings before income taxes |
$142.1 |
$127.2 |
$282.5 |
$331.5 |
Income
tax expense |
$37.3 |
$33.5 |
$75.1 |
$86.6 |
Net earnings |
$104.8 |
$93.7 |
$207.4 |
$244.9 |
Net earnings attributable to: |
|
|
|
|
Shareholders of WSP Global
Inc. |
$104.3 |
$93.7 |
$207.1 |
$246.0 |
Non-controlling interests |
$0.5 |
$0.0 |
$0.3 |
$(1.1) |
Basic net earnings per share |
$0.92 |
$0.89 |
$1.90 |
$2.34 |
Diluted net earnings per share |
$0.92 |
$0.89 |
$1.90 |
$2.33 |
Basic weighted average number of shares |
113,197,718 |
105,317,110 |
108,793,496 |
105,012,335 |
Diluted
weighted average number of shares |
113,402,269 |
105,735,978 |
109,007,522 |
105,439,494 |
*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
third quarter ended September 26, 2020.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL
POSITIONReferences to notes refer to notes in the
financial statements
As at |
September 26, 2020 |
|
December 31, 2019 |
|
|
$ |
|
$ |
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents (note 14) |
595.4 |
|
255.6 |
|
Trade receivables and other receivables |
1,666.9 |
|
1,767.8 |
|
Cost and anticipated profits in excess of billings |
1,086.9 |
|
995.7 |
|
Other financial assets |
111.6 |
|
114.5 |
|
Prepaid expenses |
88.0 |
|
104.2 |
|
Income taxes receivable |
29.2 |
|
18.8 |
|
|
3,578.0 |
|
3,256.6 |
|
Non-current assets |
|
|
Right-of-use assets |
941.5 |
|
913.4 |
|
Property and equipment |
323.8 |
|
347.7 |
|
Intangible assets |
291.4 |
|
355.4 |
|
Goodwill (note 10) |
3,671.3 |
|
3,568.8 |
|
Deferred income tax assets |
182.1 |
|
145.8 |
|
Other assets |
121.2 |
|
88.4 |
|
|
5,531.3 |
|
5,419.5 |
|
Total assets |
9,109.3 |
|
8,676.1 |
|
|
|
|
Liabilities |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
1,735.9 |
|
1,650.7 |
|
Billings in excess of costs and anticipated profits |
699.9 |
|
629.0 |
|
Income taxes payable |
156.6 |
|
125.3 |
|
Provisions |
40.8 |
|
71.8 |
|
Dividends payable to shareholders (note 13) |
42.5 |
|
39.7 |
|
Current portion of lease liabilities |
248.1 |
|
211.7 |
|
Current portion of long-term debt (note 11) |
282.0 |
|
307.8 |
|
|
3,205.8 |
|
3,036.0 |
|
Non-current liabilities |
|
|
Long-term debt (note 11) |
610.4 |
|
1,091.9 |
|
Lease liabilities |
839.5 |
|
838.9 |
|
Provisions |
80.5 |
|
72.8 |
|
Retirement benefit obligations |
214.5 |
|
213.4 |
|
Deferred income tax liabilities |
92.3 |
|
91.2 |
|
|
1,837.2 |
|
2,308.2 |
|
Total liabilities |
5,043.0 |
|
5,344.2 |
|
|
|
|
Equity |
|
|
Equity attributable to shareholders of WSP Global Inc. |
4,066.2 |
|
3,330.8 |
|
Non-controlling interests |
0.1 |
|
1.1 |
|
Total equity |
4,066.3 |
|
3,331.9 |
|
Total liabilities and equity |
9,109.3 |
|
8,676.1 |
|
INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWSReferences to notes refer to notes in the financial
statements
|
Third quarters ended |
|
Nine month periods ended |
|
|
September 26,2020 |
|
September 28,2019 |
|
September 26,2020 |
|
September 28,2019 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Operating
activities |
|
|
|
|
|
|
|
|
Net earnings |
104.8 |
|
93.7 |
|
207.4 |
|
244.9 |
|
Adjustments (note 14) |
103.7 |
|
110.4 |
|
325.5 |
|
290.8 |
|
Net financing expense (note
7) |
2.1 |
|
41.5 |
|
71.6 |
|
73.6 |
|
Income tax expense |
37.3 |
|
29.9 |
|
75.1 |
|
86.6 |
|
Income taxes paid |
(31.7 |
) |
(21.4 |
) |
(64.9 |
) |
(68.4 |
) |
Change
in non-cash working capital items (note 14) |
17.2 |
|
6.8 |
|
128.6 |
|
(238.7 |
) |
Cash inflows from operating activities |
233.4 |
|
264.5 |
|
743.3 |
|
388.8 |
|
Financing activities |
|
|
|
|
|
|
|
|
Net repayments of long-term
debt |
(239.0 |
) |
(135.7 |
) |
(518.6 |
) |
(1.1 |
) |
Lease payments |
(71.2 |
) |
(63.7 |
) |
(213.7 |
) |
(193.7 |
) |
Net financing expenses paid,
excluding interest on lease liabilities |
(2.7 |
) |
(28.3 |
) |
(40.8 |
) |
(47.1 |
) |
Dividends paid to shareholders
of WSP Global Inc. |
(19.5 |
) |
(19.1 |
) |
(68.6 |
) |
(58.3 |
) |
Dividends paid to a
non-controlling interest |
(0.3 |
) |
(5.7 |
) |
(0.4 |
) |
(5.7 |
) |
Issuance of common shares, net of issuance costs
(note 12) |
— |
|
12.3 |
|
549.6 |
|
12.8 |
|
Cash outflows from financing activities |
(332.7 |
) |
(240.2 |
) |
(292.5 |
) |
(293.1 |
) |
Investing activities |
|
|
|
|
|
|
|
|
Net disbursements related to
business acquisitions and disposals |
(6.3 |
) |
(39.5 |
) |
(52.0 |
) |
(95.0 |
) |
Additions to property and
equipment, excluding business acquisitions |
(11.7 |
) |
(20.1 |
) |
(50.5 |
) |
(56.5 |
) |
Additions to identifiable
intangible assets, excluding business acquisitions |
(2.7 |
) |
(5.6 |
) |
(11.9 |
) |
(15.7 |
) |
Dividends received from
associates |
6.5 |
|
— |
|
10.3 |
|
— |
|
Proceeds from disposal of
property and equipment |
2.5 |
|
2.2 |
|
3.6 |
|
10.6 |
|
Proceeds from sale of
investments in associates and joint ventures |
— |
|
3.8 |
|
0.4 |
|
3.8 |
|
Cash outflows from investing activities |
(11.7 |
) |
(59.2 |
) |
(100.1 |
) |
(152.8 |
) |
Effect of exchange rate change on cash and cash equivalents |
(7.2 |
) |
(1.4 |
) |
4.2 |
|
(8.8 |
) |
Change in net cash and cash equivalents |
(118.2 |
) |
(36.3 |
) |
354.9 |
|
(65.9 |
) |
Cash
and cash equivalents, net of bank overdraft – beginning of
period |
710.4 |
|
224.3 |
|
237.3 |
|
253.9 |
|
Cash and cash equivalents, net of bank overdraft - end of
period (note 14) |
592.2 |
|
188.0 |
|
592.2 |
|
188.0 |
|
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 a reconciliation of such measures to the most
directly comparable IFRS measures, can be found in WSP’s MD&A
for the third quarter ended September 26, 2020, 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, 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 STATEMENTSCertain information
regarding WSP contained herein may constitute forward-looking
statements. Forward-looking statements may include estimates,
plans, objectives, expectations, opinions, forecasts, projections,
guidance, outlook or other statements that are not statements of
fact, including statements regarding the sufficiency of WSP’s
liquidity and working capital requirements for the foreseeable
future. 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 November 4, 2020, 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.
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
forward-looking statements 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 the amended Management’s Discussion and Analysis for
the year ended December 31, 2019 and the Management’s Discussion
and Analysis for the quarter ended September 26, 2020, which
are 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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