MONTREAL, Aug. 05, 2020 (GLOBE NEWSWIRE) — WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today announced financial and operating results for the second quarter of fiscal 2020 ended on June 27, 2020.
SECOND QUARTER 2020 FINANCIAL HIGHLIGHTSSolid performance in the second quarter of 2020 exceeded management’s ambitions resulting in strong free cash flow and an increased adjusted EBITDA margin.Revenues and net revenues* for the quarter reached $2.2 billion and $1.7 billion, down 4.5% and 1.2%, respectively, compared to Q2 2019. Organically, net revenues contracted 5.3% for the quarter. Good organic growth in the APAC reportable segment was offset by organic contraction in the other segments.Backlog* as at June 27, 2020 stood at $8.6 billion, another record high of 11.5 months of revenues, up $479.2 million or 5.9% from $8.1 billion as at December 31, 2019 and up $658.3 million or 8.3% when compared to June 29, 2019. Backlog organic growth reached 4.3% compared to December 31, 2019 and 5.2% compared to June 29, 2019.Adjusted EBITDA* in the quarter of $276.1 million, up $10.7 million or 4.0%, compared to $265.4 million in Q2 2019. Adjusted EBITDA margin for the quarter reached 15.8%, compared to 15.0% in Q2 2019. Improved margins in the APAC and EMEIA reportable segments were partially offset by lower margins in Canada.Earnings before net financing expense and income taxes in the quarter of $121.9 million, down $18.6 million, or 13.2%, compared to Q2 2019, mainly due to severance costs of $13.7 million included in the acquisition, integration and restructuring costs.Net earnings attributable to shareholders for the quarter of $88.6 million, or $0.83 per share, stable when compared to Q2 2019.Net financing expense for the second quarter ended June 27, 2020 was $20.2 million lower than the second quarter of 2019, mainly attributable to non-cash increases in value of investments related to a US-employees’ deferred compensation plan and foreign exchange forward contracts used to hedge future cash transactions, as well as lower interest expense on long-term debt.Adjusted net earnings* for the quarter of $92.1 million, or $0.86 per share, down $1.9 million and $0.04, respectively, compared to Q2 2019. The decrease is mainly due to higher amortization and depreciation, which offset improvements in adjusted EBITDA.DSO* as at June 27, 2020 stood at 72 days, a historical best, compared to 80 days as at June 29, 2019.Cash inflows from operating activities of $509.9 million in the six-month period ended June 27, 2020, compared to $124.3 million in the comparable period in 2019.Gross proceeds of $572.7 million from the successful equity financing completed in June 2020.Free cash flow* of $410.8 million for the quarter. Trailing twelve-months of free cash flow amounted to $805.9 million, representing 340% of net earnings attributable to shareholders.The net debt to adjusted EBITDA ratio stood at 0.4x. 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 and the issuance of common shares in the second quarter of 2020.Quarterly dividend declared of $0.375 per share, with a 53.7% Dividend Reinvestment Plan (“DRIP”) participation.In response to the pandemic, the Corporation has implemented business continuity plans and most of its people are continuing to work remotely. Leveraging technology investments, our people are collaborating to deliver projects and pursue new assignments. In most of the countries in which the Corporation operates, the collective focus has evolved to develop plans to gradually re-open offices considering our employees feedback and local governmental guidelines and regulations. As the situation continues to evolve, WSP’s primary objective remains to ensure the health and safety of its employees and their families, of its clients and of the communities in which it operates.The Corporation has proactively implemented measures to adjust its cost structures and has postponed non-essential expenditures. WSP is closely following developments in each of the regions in which it operates and will consider additional initiatives if warranted.“As COVID-19 reached pandemic status, I reaffirmed our commitment to being operationally resilient to continue meeting the needs of our clients and communities during these unprecedented times. I am pleased with our Q2 performance as we achieved solid results in addition to exceeding our cash flow and margin objectives set last quarter,” said Alexandre L’Heureux, WSP’s President and CEO. “As the initial shock of the pandemic is behind us, and our regions and markets are redefining their new normal in view of the lingering uncertainty, we are updating our outlook for the year ending December 31, 2020. Founded on the objectives set in the second quarter, this outlook is being provided as we continue to rigorously monitor the developments across our regions,” he added.OUTLOOK FOR 2020
This updated outlook is provided as at August 5, 2020 to assist analysts and shareholders in formalizing their respective views on the year ending December 31, 2020. 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 could differ and such differences may be material. Please refer to section 16, “Forward-looking statements”, of the Corporation’s MD&A for the quarter ended June 27, 2020 for the full disclaimer.Management expects that the Corporation’s results for the year ending December 31, 2020 will fall within the following ranges:*Non-IFRS measures. These measures are defined in section 22, “Glossary of non-IFRS measures and segment reporting measures” of the Corporation’s amended management’s discussion and analysis for the year ended December 31, 2019.
** Capital expenditures pertaining to property and equipment and intangible assets, net of proceeds from disposal and lease incentives received.Underlying Assumptions
The Corporation cautions that the assumptions used to prepare the updated 2020 outlook could be incorrect or inaccurate. Accordingly, the Corporation’s actual results could differ materially from the Corporation’s expectations as set out in this press release.The target ranges presented in the preceding table were prepared assuming no fluctuations in foreign exchange rates in markets in which the Corporation operates. In the updated 2020 forecasts, the Corporation did not consider any dispositions, mergers, business combinations and other transactions that may occur after the publication of this press release. In the updated 2020 target ranges, the Corporation considered numerous economic and market assumptions regarding the competition, political environment, economic performance and the anticipated COVID-19 pandemic impact in each region where it operates. In preparing its updated 2020 forecasts, the Corporation also assumed that economic factors and market competition in regions where it operates would remain stable and that no further deterioration of the COVID-19 pandemic would occur.For 2020, the Corporation anticipates organic contraction in net revenues on a constant currency basis, in the range of 1% to 5%.The forecasts were prepared using tax rates enacted as of June 27, 2020, in the countries in which the Corporation currently operates. The Corporation anticipates the effective tax rate in 2020 will range between 26% to 30%. Head office corporate costs for 2020 are expected to range between $85 million and $90 million.Management expects acquisition, integration and restructuring costs to range between $90 million and $100 million for 2020, including anticipated expenses related to adjustments to our cost structures resulting from the COVID-19 pandemic.Although, the Corporation continues to manage its capital structure to achieve a net debt to adjusted EBITDA ratio between 1.0 and 2.0, it is anticipated that the Corporation will achieve a net debt to adjusted EBITDA ratio between 0.25 and 0.75 by the end of December 31, 2020.Overall, our operations are and will continue to be impacted by the COVID-19 pandemic and while the impact on our operations follows a broadly consistent theme across the world, variances exist across each of our reportable segments and market sectors.Canada
The Corporation anticipates mid-single digit organic contraction in net revenues in Canada resulting from the combined impact of the COVID-19 pandemic and the depressed oil and gas industry.Americas
The Corporation anticipates low-single digit organic contraction in net revenues for the Americas reportable segment. In our US operations, we continue to anticipate our Transportation & Infrastructure market sector to perform well and softness in the private sector.EMEIA (Europe, Middle-East, India and Africa)
For the EMEIA reportable segment, the Corporation anticipates mid-single digit organic contraction in net revenues. We anticipate the Nordics’ performance, which has been better than anticipated in the first half of 2020, to continue to partially offset more softness in the UK and the Middle East.APAC
Given the strength of our market sectors in Australia and New Zealand and the limited impact of the COVID-19 pandemic in these countries, the Corporation anticipates mid-single digit organic growth in net revenues for the APAC reportable segment. DIVIDEND
The Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about October 15, 2020, to shareholders of record at the close of business on September 30, 2020.FINANCIAL REPORT
This release includes, by reference, the 2020 second 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 second 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 August 6, 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 second quarter highlights and results will be accessible on August 5, 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.RESULTS OF OPERATIONS*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 second quarter ended June 27, 2020.
NON-IFRS MEASURES
The 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 second quarter ended June 27, 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 WSP
As 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 STATEMENTS
Certain 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 August 5, 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 as well as a description of the relevant assumptions and risk factors likely to affect WSP’s actual or projected results 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 June 27, 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 Michaud
Chief Financial Officer
WSP Global Inc.
alain.michaud@wsp.com
Phone: 438-843-7317
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