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WSP Global beats earnings expectations, forecasts more growth this year

MONTREAL — WSP Global beat earnings expectations last quarter, boosting profits by nearly nine per cent year-over-year and forecasting a similar jump in adjusted earnings for 2024.

Organic growth at the engineering company drove $130.6 million in net earnings attributable to shareholders in its fourth quarter, versus $120.0 million a year earlier.

“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,” said chief executive Alexandre L’Heureux on Thursday, referring to WSP’s three-year growth plan.

That plan included the US$1.81-billion acquisition of U.K.-based John Wood Group’s environment and infrastructure business in September 2022. Since then, the company has snapped up four more engineering outfits based in three continents with about 1,100 employees, bringing WSP's head count to 66,500.

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Roughly 30 per cent of those employees work in the firm's earth and environment segment, which grew exponentially over the past two years to bid on contracts related to green energy, "smart infrastructure" and projects that run the gamut from building retrofits to flood risk management.

The Montreal-based company pushed its full-year order intake to a record high of $15.12 billion in 2023, leaving its backlog eight per cent bigger at $14.1 billion as of Dec. 31.

It also forecast net revenues of $11.2 billion to $11.7 billion this year for a boost of between three per cent and seven per cent.

L'Heureux said organic revenue growth in the mid-to-high single digits at the company's Canadian and U.S. operations would fuel the overall rise, as the company continues to seize on the spending unleashed by the U.S. government’s US$1.2-trillion Infrastructure Investment and Jobs Act passed in November 2021.

"We continue to see positive momentum stemming from the bipartisan infrastructure bill," L'Heureux told analysts on a conference call.

"The biggest opportunities for this bill and other stimulus programs globally are in roads, bridges and major transportation projects" — a segment that saw a big spike in organic revenue last year.

The company has also diversified its design and engineering services to meet "the hyper-growth sectors" of health care, hospitality, data centers and manufacturing, among others, L'Heureux said.

"We are future-proofing WSP to support our growth ambitions."

The company predicted adjusted earnings of between $2.05 billion and $2.13 billion this year in an expected bump of seven per cent to 11 per cent.

On Wednesday evening, WSP said revenues for the quarter ended Dec. 31 were $3.7 billion, up from $3.6 billion during the same three months in 2022.

On an adjusted basis, earnings hit $1.99 per share versus $1.68 per share the year before. The number also beat analyst expectations of $1.90 per share, according to financial markets data firm Refintiiv.

"Organic growth of 5.1 per cent came in light due to lower emergency response activity in the U.S., but WSP made it all back with better-than-expected profitability," said Raymond James analyst Frederic Bastien.

Earnings for the full financial year rose 27 per cent to $550.0 million from $431.8 million in 2022. Revenues also notched 21 per cent higher at $14.4 billion compared with $11.9 billion a year earlier.

This report by The Canadian Press was first published Feb. 29, 2024.

Companies in this story: (TSX:WSP)

Christopher Reynolds, The Canadian Press