Mr. Alexandre L'Heureux reports

WSP REPORTS SOLID Q2 2023 RESULTS AHEAD OF EXPECTATIONS AND INCREASES FINANCIAL OUTLOOK

WSP Global Inc. has released financial and operating results for the second quarter ended on July 1, 2023.

WSP Global 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 earnings before interest, taxes, depreciation and amortization margins. WSP Global records robust backlog and record-high order intake for a quarter, which bolster confidence as WSP Global 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 per cent and 29.8 per cent, respectively, compared with the second quarter of 2022. Net revenue organic growth of 9.3 per cent in the quarter, attributable to all reportable segments, was highest in the United States, Australia, the United Kingdom and New Zealand. The acquisition of the environment and infrastructure business of John Wood Group PLC, completed in September, 2022, was the main driver of acquisition growth of 16.9 per cent.
• 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 was $461.6-million, compared with $352.2-million in the second quarter of 2022, an increase of 31.1 per cent.
• Adjusted EBITDA margin for the quarter increased to 16.9 per cent, compared with 16.7 per cent 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 with the second quarter of 2022, mainly due to higher adjusted EBITDA.
• Adjusted net earnings for the quarter were $194.7-million, or $1.56 per share, up $41.2-million and 26 cents, respectively, compared with 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 were $150.7-million, or $1.21 per share, compared with $89.3-million or 76 cents 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.
• Days sales outstanding as at July 1, 2023, stood at 75 days, compared with 73 days as at July 2, 2022.
• Cash inflows from operating activities were $60.2-million in the six-month period ended July 1, 2023, compared with $42.4-million in the first half of 2022. The improvement is mainly attributable to the increase in adjusted EBITDA. Free cash outflow was $198.3-million for the six-month period ended July 1, 2023. The continued impact of higher income taxes was due to changes in tax regulation in the United States, which delays the deductibility of certain expenses.
• The net debt to adjusted EBITDA ratio stood at 2.0 times, compared with 1.6 times as at Dec. 31, 2022. The increase is mainly due to higher net debt balance to finance recent acquisitions. Incorporating a full 12 months of adjusted EBITDA of all acquired businesses, the net debt to adjusted EBITDA ratio would be 1.9 times.
• The quarterly dividend declared was 37.5 cents per share, or $46.7-million. The dividend reinvest plan termination was approved by the board of directors, effective May 10, 2023.
• The financial outlook for 2023 increased.

                             FINANCIAL OUTLOOK FOR 2023 
 
                          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 per cent to 9 per cent         3 per cent to 6 per cent           

"I am very pleased with our second quarter performance and the successful first half of the year," said Alexandre L'Heureux, WSP Global's president and chief executive officer. "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 Global declared a dividend of 37.5 cents per share. This dividend will be payable on or about Oct. 15, 2023, to shareholders of record at the close of business on Sept. 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 management's discussion and analysis of the corporation for the second quarter ended on July 1, 2023, which are available on the company's website. These documents are also available on SEDAR+.

Conference call and webcast

WSP Global will hold a conference call and webcast from 8 a.m. to 9 a.m. Eastern Time on Aug. 9, 2023, to discuss these results. To participate in the conference call, please preregister. Registrants will receive a confirmation with dial-in details. A live webcast of the conference call will be available.

A presentation of the second quarter 2023 highlights and results will be accessible on Aug. 8, 2023, after the market close under the investors section of the WSP Global website. For those unable to attend, a replay will be available within 24 hours following the call under the investors section of the website.

About WSP Global Inc.

As one of the largest professional service firms in the world, WSP Global exists to future-proof cities and the environment. It provides strategic advisory, engineering and design services to clients seeking sustainable solutions in the transportation, infrastructure, environment, building, energy, water and mining sectors. Its 68,000 trusted professionals are united by the common purpose of creating positive, long-lasting impacts on the communities it serves through a culture of innovation, integrity and inclusion. In 2022, WSP Global reported $11.9-billion in revenue. The corporation's shares are listed on the Toronto Stock Exchange (WSP).

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