WSP Global Inc.
TSX : WSP

WSP Global Inc.

August 05, 2015 08:00 ET

WSP Reports Solid Q2 2015 Results

MONTREAL, QUEBEC--(Marketwired - Aug. 5, 2015) - WSP Global Inc. (TSX:WSP) ("WSP" or the "Corporation") today announced its financial and operating results for the second quarter and six months ended June 27, 2015. The second quarter results cover the period from March 29, 2015 to June 27, 2015.

SECOND QUARTER FINANCIAL HIGHLIGHTS

In the financial highlights, results are compared to results from Q2 2014, unless otherwise stated.

  • Revenues and net revenues of $1,497.2 million and $1,088.9 million, up 148.5% and 112.2%, respectively, mainly as a result of business acquisitions. Global organic growth of 5.0% on a constant currency basis and 13.8% including favourable foreign exchange impact.

  • Record EBITDA of $106.0 million, up $51.0 million or 92.7%. EBITDA margins at 9.7% of net revenues.

  • Net earnings attributable to shareholders, excluding non-underlying items (net of income taxes), at $45.8 million, or $0.51 per share, up 74.1% and 18.6%, respectively.

  • Net earnings attributable to shareholders, excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes), at $56.3 million, or $0.63 per share, up 82.8% and 26.0%, respectively.

  • Backlog of $4,562.0 million representing approximately 9.5 months of revenues, stable compared to Q1 2015.

  • DSO stood at 85 days, stable compared to Q1 and three days higher than in 2014.

  • Quarterly dividend declared of $0.375 per share, with a 49.6% Dividend Reinvestment Plan ("DRIP") participation.

  • Incorporating full 12-month trailing EBITDA for all acquisitions, net debt to EBITDA ratio stands at 1.8x.

  • Full year 2015 financial results outlook reiterated.

SECOND QUARTER HIGHLIGHTS

  • On May 22, 2015, WSP completed the sale of all of its shares in its associate, Multiconsult AS ("Multiconsult"), for total gross proceeds of $97 million.

  • On June 26, 2015, WSP increased its credit facility by US$200.0 million. The senior secured revolving credit facility component of the credit facility was increased from US$800.0 million to US$1,000.0 million and the maturity date was extended by one year to December 31, 2019. No changes were made to the secured non-revolving credit facility component.

  • During the quarter, WSP acquired FLK Sverige AB ("FLK"), a 50-employee Swedish firm specialized in mechanical engineering and Vicicom AB ("Vicicom"), a 35-employee firm specialized in the development of broadband and telecommunications networks for municipalities and operators, also based in Sweden.

"I am pleased with our results, as we continue to see momentum in all of our business areas and have performed strongly in terms of many of our key metrics. These results clearly demonstrate the depth of our employees' technical expertise, as underscored by recent wins such as the Pacific Highway upgrade project in Australia or the California High-Speed Rail project. By maintaining a clear focus on technical excellence, we will be recognized as the go-to firm in all of our operating sectors," said Pierre Shoiry, WSP's President and Chief Executive Officer. "We believe in the strength of our business model and the effectiveness of our growth strategy and we will remain focused on driving organic growth, leveraging our global know-how and identifying opportunities to acquire professional services firms with complementary expertise."

DIVIDEND

The Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about October 15, 2015, to shareholders of record at the close of business on September 30, 2015.

SHARE TRADING BY PRESIDENT AND CEO

Pierre Shoiry, WSP's President and CEO, who currently owns 901,812 shares of the Corporation, informed the Board of Directors that he intends to sell, over the next 12 months, a portion of his common shares in WSP for financial diversification and estate planning purposes. Mr. Shoiry plans to sell approximately 33% of this position.

FINANCIAL REPORT

This release includes, by reference, the 2015 second quarter financial reports, including the unaudited interim consolidated financial statements and the Management Discussion & Analysis ("MD&A") of the Corporation.

For a copy of our full financial results for the second quarter of 2015, including the MD&A and the unaudited interim consolidated financial statements, please visit our Website at www.wspgroup.com.

CONFERENCE CALL

WSP will hold a conference call at 4 p.m. (Eastern Time) on August 5, 2015, to discuss these results. The telephone numbers to access the conference call are 1-647-788-4922 or 1-877-223-4471 (toll-free).

A presentation of the second quarter of 2015 highlights and results will be available on the same day at www.wspgroup.com in the Investors section, under Presentations & Events.

A replay of the call will be available until August 15, 2015. The telephone numbers to access the replay of the call are 1-416-621-4642 or 1-800-585-8367 (toll-free), access code 54109894. The replay of the conference call will also be available in the Investor section of the WSP website under Presentations & Events, in the days following the call.

RESULTS OF OPERATIONS

Q2 YTD
2015 2014 2015 2014
(in millions of dollars, except number of shares and per share data) For the
period from
March 29 to
June 27
For the
period from
March 30 to
June 28
For the
period from
January 1 to
June 27
For the
period from
January 1 to
June 28
Revenues $1,497.2 $602.5 $2,900.9 $1,113.6
Less: Subconsultants and direct costs $408.3 $89.4 $787.2 $159.9
Net revenues* $1,088.9 $513.1 $2,113.7 $953.7
Personnel costs $846.1 $388.5 $1,644.7 $724.7
Other operational costs(1) $139.0 $72.7 $282.4 $138.0
Share of earnings of associates ($2.2 ) ($3.1 ) ($4.7 ) ($6.1 )
EBITDA* $106.0 $55.0 $191.3 $97.1
Non-underlying items* ($47.2 ) $2.6 ($42.5 ) $2.6
Amortization of intangible assets $18.2 $9.5 $36.5 $18.1
Depreciation of property, plant and equipment $14.5 $7.4 $28.5 $13.8
Financial expenses $14.2 $3.3 $24.9 $6.9
Share of depreciation of associates $0.5 $0.8 $0.9 $1.4
Earnings before income taxes $105.8 $31.4 $143.0 $54.3
Income tax expenses $9.8 $7.0 $18.4 $12.3
Share of tax of associates $0.5 $0.8 $1.1 $1.5
Net earnings $95.5 $23.6 $123.5 $40.5
Attributable to:
- Shareholders $95.4 $24.3 $123.7 $41.6
- Non-controlling interests $0.1 ($0.7 ) ($0.2 ) ($1.1 )
Basic net earnings per share $1.07 $0.40 $1.39 $0.73
Diluted net earnings per share $1.07 $0.40 $1.39 $0.73
Basic weighted average number of shares 89,548,573 61,403,192 89,251,117 57,092,188
Diluted weighted average number of shares 89,603,450 61,403,192 89,280,429 57,092,188
* Non-IFRS measures as described in the "Glossary" section.
(1) The Other operational costs include operation exchange loss or gain and interest income.

NON-IFRS MESURES

The Corporation reports its financial results in accordance to IFRS. However, the following non-IFRS measures are used by the Corporation: net revenues; EBITDA; EBITDA margin; adjusted EBITDA; adjusted EBITDA margin; net earnings (loss) excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes); net earnings (loss) excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes) per share; backlog; funds from operations; funds from operations per share; free cash flow; free cash flow per share; days sales outstanding ("DSO") and net debt to EBITDA.

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 do not have any standardized meaning 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.

GLOSSARY

Net revenues

Net revenues are defined as revenues less direct costs for subconsultants and other direct expenses that are recoverable directly from the clients. Net revenues are not an IFRS measure and do not have a standardized definition within IFRS. Therefore, net revenues may not be comparable to similar measures presented by other issuers. Investors are advised that net revenues should not be construed as an alternative to revenues for the period (as determined in accordance with IFRS) as an indicator of the Corporation's performance.

EBITDA

EBITDA is defined as earnings before non-underlying items, financial expenses, income tax expenses, depreciation and amortization. EBITDA is not an IFRS measure and does not have a standardized definition within IFRS. Investors are cautioned that EBITDA should not be considered an alternative to net earnings for the period (as determined in accordance with IFRS) as an indicator of the Corporation's performance, or an alternative to cash flows from operating, financing and investing activities as a measure of the liquidity and cash flows. The Corporation's method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, the Corporation's EBITDA may not be comparable to similar measures used by other issuers.

EBITDA margin

EBITDA margin is defined as EBITDA expressed as a percentage of net revenues. EBITDA margin is not an IFRS measure.

Adjusted EBITDA

Adjusted EBITDA is defined as EBITDA excluding global corporate costs. Global corporate costs are expenses and salaries related to centralized functions, such as global Finance, Human Resources and Technology teams, which are not allocated to operating segments. This measure is not an IFRS measure. It provides Management with comparability from one region to the other.

Adjusted EBITDA margin

Adjusted EBITDA margin is defined as adjusted EBITDA expressed as a percentage of net revenues. Adjusted EBITDA margin is not an IFRS measure.

Net earnings (loss) excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes) and net earnings (loss) excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes) per share

Net earnings (loss) excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes) is not an IFRS measure. It provides a comparative measure of Corporation performance in a context of significant business combinations. This measure is defined as net earnings (loss) attributable to shareholders excluding non-underlying items and the amortization expense of backlogs, customer relationships, non-competition agreements and trade names accounted for in business combinations and the income tax effects related to this amortization.

Net earnings (loss) excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes) per share is calculated using the basic weighted average number of shares.

Non-underlying items

Non-underlying items is not an IFRS measure. Non-underlying items are items of financial performance which the Corporation believes should be excluded in understanding the underlying financial performance achieved by the Corporation. Non-underlying items include transaction and integration costs related to business acquisitions as well as costs of restructuring and reorganizing existing operations. In Q2 2015, non-underlying items included a gain made on the disposal of an equity investment in an associate.

Backlog

Backlog is not an IFRS measure. It represents future revenues stemming from existing signed contracts to be completed. The Corporation's method of calculating backlog may differ from the methods used by other issuers and, accordingly, may not be comparable to similar measures used by other issuers.

Funds from operations and funds from operations per share

Funds from operations is not an IFRS measure. It provides Management and investors with a proxy for the amount of cash generated from (used in) operating activities before changes in non-cash working capital items.

Funds from operations per share is calculated using the basic weighted average number of shares.

Free cash flow and free cash flow per share

Free cash flow is not an IFRS measure. It provides a consistent and comparable measurement of free cash flow generated from operations and is used as an indicator of financial strength and performance. Free cash flow is defined as cash flows from operating activities as reported in accordance with IFRS, less capital expenditures.

Free cash flow per share is calculated using the basic weighted average number of shares.

Days Sales Outstanding ("DSO")

DSO is not an IFRS measure. It represents the average number of days to convert our trade receivables and costs and anticipated profits in excess of billings into cash, net of sales taxes. The Corporation's method of calculating DSO may differ from the methods used by other issuers and, accordingly, may not be comparable to similar measures used by other issuers.

Net debt to EBITDA

Net Debt to EBITDA is not an IFRS measure. It is a measure of our level of financial leverage net of our cash and cash equivalents and is calculated on our trailing twelve month EBITDA.

ABOUT WSP

WSP, through its acquisition of Parsons Brinckerhoff, is one of the world's leading professional services firms in its industry, working with governments, businesses, architects and planners and providing integrated solutions across many disciplines. The firm provides services to transform the built environment and restore the natural environment, and its expertise ranges from environmental remediation to urban planning, from engineering iconic buildings to designing sustainable transport networks, and from developing the energy sources of the future to enabling new ways of extracting essential resources. It has approximately 32,000 employees, including engineers, technicians, scientists, architects, planners, surveyors and environmental specialists, as well as other design, program and construction management professionals, based in more than 500 offices, across 39 countries, on 5 continents. www.wspgroup.com

Forward-looking statements

Certain information regarding WSP contained herein may constitute forward-looking statements. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. 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. 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 Management Discussion and Analysis for the fourth quarter and year ended December 31, 2014, 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.

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