WSP’s backlog grows 23.5 per cent as acquisitions lift revenue
WSP Global increased third-quarter net revenue by 22.1 per cent, with acquisitions contributing more than organic growth. Backlog reached 20,268 million Canadian dollars and adjusted earnings rose. The engineering group also reported a higher leverage ratio and lower nine-month cash generation. Management narrowed its annual net revenue and adjusted earnings forecasts.
Economics & Markets··Morning
Backlog reaches 20,268 million Canadian dollars
WSP Global, a Canadian engineering and infrastructure services group, reported third-quarter results on 4 November.[1], [2]
Its backlog increased by 23.5 per cent to 20,268 million Canadian dollars at the end of the period on 25 September. Organic backlog growth was 5 per cent. WSP described the outstanding work as equivalent to 11.6 months of revenue.[1]
Quarterly total revenue rose to 5,285.8 million Canadian dollars from 4,533.7 million Canadian dollars a year earlier. Adjusted earnings per share were 3.20 Canadian dollars. The results included a 22.1 per cent increase in net revenue to 4,227 million Canadian dollars. WSP reports this net measure separately from total revenue in its operating results.[1]
Acquisitions supply most net revenue growth
Organic net revenue growth was 5.1 per cent, with acquisitions contributing 15.3 per cent. Canada and the region covering Europe, the Middle East, India and Africa recorded double-digit organic net revenue growth. Adjusted earnings before interest, tax, depreciation and amortisation increased by 23.4 per cent to 864.6 million Canadian dollars.[1]
That adjusted margin, calculated on net revenue, rose from 20.2 per cent to 20.5 per cent. Operating income increased from 450.8 million Canadian dollars to 572.5 million Canadian dollars. Net earnings attributable to shareholders rose from 284.5 million Canadian dollars to 333.7 million Canadian dollars. Adjusted net earnings reached 430.8 million Canadian dollars.[1]
Nine-month cash flow falls as leverage rises
Quarterly operating cash flow was 495.5 million Canadian dollars and free cash flow was 333.2 million Canadian dollars. The collection period lengthened from 71 to 73 days. Over nine months, operating cash flow fell to 1,049.1 million Canadian dollars from 1,262 million Canadian dollars; the earlier period included 195 million Canadian dollars from receivables factoring. Nine-month free cash flow declined from 887.4 million Canadian dollars to 588 million Canadian dollars.[1]
The leverage ratio stood at 2.2 times, compared with 0.9 times at the previous year end. Management narrowed its annual net revenue forecast to 16.3–16.65 billion Canadian dollars and its adjusted earnings before interest, tax, depreciation and amortisation forecast to 3.11–3.15 billion Canadian dollars. The company released these annual targets alongside the quarterly results.[1]
