Mr. Alexandre L'Heureux reports

WSP REPORTS STRONG 2023 RESULTS AND OUTLOOK FOR 2024

WSP Global Inc. has released financial and operating results for the fourth quarter and year ended Dec. 31, 2023.

Fiscal year 2023 financial highlights:

• Revenues and net revenues increased by 21.0 per cent and 21.7 per cent, respectively, compared with 2022, growing to $14.44-billion and $10.90-billion, respectively, reaching the high end of management's revised outlook range for the year of $10.7-billion to $11.0-billion. The increase was due to sizable acquisition growth of 12.3 per cent and healthy organic growth of 7.3 per cent, achieved across all reportable segments.
• Organic order intake reached a record high level of $15.12-billion for the year, resulting in backlog as at Dec. 31, 2023, of $14.1-billion, representing 11.8 months of revenues, up 8.2 per cent in the year.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin increased by 55 basis points to 17.6 per cent, compared with 17.1 per cent in 2022, mainly attributable to strong project performance and increased productivity, reaching beyond the higher end of the corporation's 2022 to 2024 strategic ambitions.
• Adjusted EBITDA grew to $1.92-billion, up 25.6 per cent, compared with $1.53-billion in 2022, reaching the high end of management's revised outlook range of $1.90-billion to $1.93-billion.
• Earnings before net financing expense and income taxes stood at $947.5-million, up 26.5 per cent compared with 2022, mainly due to increased adjusted EBITDA.
• Adjusted net earnings of $860.0-million, or $6.90 per share, increased by $167.4-million or $1.15 per share, compared with 2022. The respective increases of 24.2 per cent and 20.0 per cent in these metrics are mainly attributable to higher adjusted EBITDA, partially offset by higher interest on long-term debt.
• Net earnings attributable to shareholders reached $550.0-million, or $4.41 per share, up $118.2-million, or 82 cents per share, compared with 2022. The increase was mainly due to higher adjusted EBITDA, partially offset by impairment of long-lived assets resulting from continuing optimizations as part of the corporation's real estate strategy to review its footprint, realize synergies and reduce costs.
• Days sales outstanding as at Dec. 31, 2023, stood at 76 days, compared with 73 days as at Dec. 31, 2022.
• Cash inflows from operating activities were $986.3-million compared with $814.8-million in 2022. Free cash flow was $433.1-million for the year, up 40.2 per cent compared with $309.0-million in 2022. The improvement in free cash flow compared with 2022 was mainly attributable to the increase in adjusted EBITDA, partially offset by higher income taxes paid due to tax regulations in the United States, which delay the deductibility of certain expenses. Excluding the effect of the latter, free cash flow represents 1.1 times net earnings attributable to shareholders.
• Net debt to adjusted EBITDA ratio stood at 1.5 times and within management's target range of 1.0 to 2.0 times.
• The full-year dividend declared was $1.50 per share, or $186.9-million.

Fourth quarter of 2023 financial highlights:

• Revenues and net revenues for the quarter reached $3.72-billion and $2.76-billion, up 4.6 per cent and 7.9 per cent, respectively, compared with the fourth quarter of 2022. Net revenue organic growth of 5.1 per cent in the quarter is attributable to all reportable segments. Globally, net revenue organic growth would be approximately 6.5 per cent when excluding the significantly lower level of activity in its emergency response services in the U.S.
• Adjusted EBITDA margin for the quarter increased by 150 basis points to 19.0 per cent, compared with 17.5 per cent in the fourth quarter of 2022. The increase is mainly attributable to strong project performance and increased productivity.
• Adjusted EBITDA in the quarter grew to $524.9-million, compared with $446.4-million in the fourth quarter of 2022, an increase of 17.6 per cent.
• Earnings before net financing expense and income taxes in the quarter stood at $211.0-million, up $25.7-million compared with the fourth quarter of 2022, mainly due to higher adjusted EBITDA.
• Adjusted net earnings for the quarter reached $247.8-million, up $38.5-million or 18.4 per cent, compared with the fourth quarter of 2022. The increase is mainly attributable to a higher adjusted EBITDA, partially offset by higher interest on long-term debt.
• Net earnings attributable to shareholders for the quarter stood at $130.6-million, compared with $120.0-million in fourth quarter 2022.
• Cash flows from operating activities increased 28 per cent in the quarter, and free cash flow reached $610.3-million.
• The quarterly dividend declared was 37.5 cents per share, or $46.8-million.

"As I reflect on our journey, I am proud of the strides we have made and milestones we have achieved in the second year of our strategic cycle. We are concluding a year of significant growth and consolidation, and I am very pleased with the performance our team has delivered once again in 2023," said Alexandre L'Heureux, president and chief executive officer of WSP Global. "As we forge ahead and execute on our ambitions, we are entering the last year of the current strategic cycle with confidence fuelled by healthy market conditions and the continued growth opportunities that lie ahead."

Outlook for 2024

This outlook is provided as at Feb. 28, 2024, to assist analysts and shareholders in formalizing their respective views on the year ending Dec. 31, 2024. The reader is cautioned that using this information for other purposes may be inappropriate. This information constitutes forward-looking information, based on multiple estimates and assumptions about future events. Actual results may differ, and such differences may be material. Expectations are also subject to a number of risks and uncertainties as well as material assumptions contained in this press release and in WSP Global's management's discussion and analysis for the fourth quarter and year ended Dec. 31, 2023.

The corporation cautions that the assumptions used to prepare the 2024 outlook could prove to be incorrect or inaccurate. Accordingly, WSP Global's actual results could differ materially from the corporation's expectations as set out in this press release.

The target ranges were prepared assuming no fluctuations in foreign exchange rates in markets in which the corporation operates. The corporation did not consider any dispositions, mergers, business combinations or other transactions that may occur after the publication of this press release. In the 2024 target ranges, the corporation considered numerous economic and market assumptions regarding the competition, political environment and economic performance of each region where it operates.

Management expects the WSP Global's results for the year ending Dec. 31, 2024, will fall within the following ranges.

The first quarter of 2024 will have two less billable days than the first quarter of 2023 while the fourth quarter of 2024 will have two additional billable days than the fourth quarter of 2023. The impact on the quarterly organic growth is expected to be approximately 3 per cent in each of first quarter 2024 (negative approximately 3 per cent) and Q4 2024 (positive approximately 3 per cent).

The corporation anticipates organic growth in net revenues by segment will be in the mid- to high-single digits in its Canadian operations and Americas operations and the mid-single digits in its Europe, the Middle East, India and Africa, and Asia Pacific operations.

The forecasts were prepared using tax rates enacted as of Dec. 31, 2023, in the countries in which the corporation currently operates. The corporation anticipates that the effective tax rate in 2024 will fall between 25 per cent and 29 per cent.

The corporation anticipates depreciation of right-of-use assets, property and equipment, and amortization of software will be between $475-million and $500-million in 2024. The corporation anticipates amortization of intangible assets related to acquisitions will be between $180-million and $195-million.

Head office corporate costs in 2024 are expected to be between $120-million and $135-million.

The corporation intends to manage its capital structure to maintain a net debt to adjusted EBITDA ratio of between 1.0 and 2.0.

Dividend

The board of WSP Global declared a dividend of 37.5 cents per share. This dividend will be payable on or about April 15, 2024, to shareholders of record at the close of business on March 31, 2024.

Financial report

This release includes, by reference, the 2023 financial reports, including the audited consolidated financial statements for the year ended Dec. 31, 2023, and management's discussion and analysis of the corporation for the fourth quarter and year ended Dec. 31, 2023, which are available on its 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 Feb. 29, 2024, 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.

For those unable to attend, a replay will be available within 24 hours following the call under the investors section of the website.

A presentation of the fourth quarter and fiscal 2023 highlights and results will be accessible on Feb. 28, 2024, after market close under the investors section of the WSP Global 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 66,500 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 2023, WSP Global reported $14.4-billion in revenue. The corporation's shares are listed on the Toronto Stock Exchange (WSP).

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