MONTREAL, Feb. 26, 2020 (GLOBE NEWSWIRE) -- WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today announced financial and operating results for the fiscal year and fourth quarter ended on December 31, 2019.

As it completes the first year of its 2019-2021 Global Strategic Plan, WSP is pleased with its performance, which provides a solid basis for continued growth.

FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS

  • Revenues and net revenues* for the quarter reached $2.2 billion and $1.8 billion, up 8.1% and 14.3%, respectively, compared to Q4 2018. Organic growth in net revenues achieved 4.0% for the quarter, spanning across all reportable segments except EMEIA which was flat.

  • Earnings before net financing expense and income taxes in the quarter of $82.7 million, down $9.0 million, or 9.8%, compared to Q4 2018. This metric was negatively impacted by non-cash items, including a $25.3-million write-off of leasehold capital assets related to our US operations, as well as increased amortization, mainly due to the finalization of fair values of intangible assets acquired in the Louis Berger acquisition from December 2018.

  • Adjusted EBITDA* in the quarter of $266.3 million, up $96.8 million or 57.1%, compared to $169.5 million in Q4 2018.  The impact of adopting IFRS 16 - Leases, effective January 1, 2019, represents $58.4 million of the increase. The remaining increase of $38.4 million or 22.7%, compared to Q4 2018, stems mainly from an overall increase in net revenues and increased margins in Canada, the UK and Middle East, as well as lower head office corporate costs.

  • Adjusted EBITDA margin* for the quarter reached 15.1%, compared to 11.0% in Q4 2018. The impact of adopting IFRS 16 - Leases represents 3.3% of net revenues. The remaining increase, compared to Q4 2018, stems mainly from increased margins in Canada, the UK and Middle East, as well as lower head office corporate costs.

  • Net earnings attributable to shareholders for the quarter of $40.5 million, or $0.38 per share, down $2.8 million and $0.03, respectively, compared to Q4 2018. The impact of adopting IFRS 16 - Leases represents a decrease of approximately $5.9 million or $0.06 per share. Net earnings was also negatively impacted by non-cash items, including a write-off of leasehold capital assets related to US operations with after-tax impact of $18.5 million or $0.18 per share, as well as increased amortization, mainly due to the finalization of fair values of intangible assets acquired in the Louis Berger acquisition from December 2018.

  • Adjusted net earnings* for the quarter of $56.6 million, or $0.53 per share, down $2.5 million and $0.04, respectively, compared to Q4 2018. The impact of adopting IFRS 16 - Leases represents a decrease of approximately $5.9 million or $0.06 per share. Adjusted net earnings was negatively impacted by non-cash items, including a write-off of leasehold capital assets related to US operations with after-tax impact of $18.5 million or $0.18 per share, as well as increased amortization, mainly due to the finalization of fair values of intangible assets acquired in the Louis Berger acquisition from December 2018.

  • Quarterly dividend declared of $0.375 per share, with a 42.3% Dividend Reinvestment Plan (“DRIP”) participation.

FISCAL YEAR 2019 FINANCIAL HIGHLIGHTS

  • Revenues and net revenues for the year reached $8.9 billion and $6.9 billion, up 12.7% and 14.4%, respectively, compared to 2018. Organic growth in net revenues of 3.5% for the year, spanning across all reportable segments, in line with Management's expectations for the year.

  • Earnings before net financing expense and income taxes in 2019 of $487.8 million, up $89.7 million, or 22.5%, compared to 2018. This metric was negatively impacted by non-cash items, including a $25.3‑million write-off of leasehold capital assets related to US operations.

  • Adjusted EBITDA in the year of $1,036.8 million, up $376.8 million or 57.1%, compared to $660.0 million in 2018. The impact of adopting IFRS 16 - Leases, effective January 1, 2019, represents $250.1 million of the increase. The remaining increase of $126.7 million or 19.2% compared to 2018, stems mainly from an overall increase in net revenues, increased margins in Canada and lower head office corporate costs.

  • Adjusted EBITDA margin for 2019 reached 15.1%, compared to 11.0% in 2018.  The impact of adopting IFRS 16 - Leases represents 3.6% of net revenues. The remaining increase, compared to 2018, stems mainly from increased margins in Canada and lower head office corporate costs.

  • Net earnings attributable to shareholders of $286.5 million in 2019, or $2.72 per share, up $38.4 million and $0.34, respectively, compared to 2018. The impact of adopting IFRS 16 - Leases represents a decrease of approximately $23.2 million or $0.22 per share. Net earnings was also negatively impacted by non-cash items, including a write-off of leasehold capital assets related to US operations, with after tax impact of $18.5 million, or $0.18 per share.

  • Adjusted net earnings for 2019 of $326.7 million, or $3.10 per share, up $31.5 million compared to 2018.  The impact of adopting IFRS 16 - Leases represents a decrease of approximately $23.2 million or $0.22 per share. Adjusted net earnings were negatively impacted by non-cash items, including a write-off of leasehold capital assets related to US operations, with after tax impact of $18.5 million, or $0.18 per share.

  • Backlog* as at December 31, 2019 stood at $8.1 billion, representing 10.6 months of revenues, up $453.1 million or 5.9% from $7.7 billion as at December 31, 2018. Backlog organic growth reached 3.6% compared to December 31, 2018.

  • DSO* as at December 31, 2019 stood at 74 days, slightly better than 76 days as at December 31, 2018.

  • Cash inflows from operating activities of $814.3 million in the year ended December 31, 2019, compared to $669.7 million in the comparable period in 2018.

  • Free cash flow* of $441.6 million, representing 154% of net earnings attributable to shareholders.

  • Incorporating a full year adjusted EBITDA for all acquisitions*, net debt to adjusted EBITDA ratio* stood at 1.1x, within Management's 2019 outlook target range.

  • Full year dividends declared of $1.50 per share, or $158.0 million, with cash payout of $80.9 million or 51.2%.

“As we close the first year of our 2019-2021 Global Strategic Plan, I am pleased with our 2019 performance, which was fueled by both organic and acquisitive growth. I would like to thank all employees for delivering this performance and for their continued dedication to WSP. Once again, I would also like to welcome all of our new colleagues who had joined us from near and far over the last year, and whose addition will continue to evolve how we serve our clients,” said Alexandre L’Heureux, President & CEO of WSP. “With our differentiated capabilities we have built across geographies and the disciplined management of our business, we are well-positioned to continue driving sustainable, profitable growth and delivering value for our clients, people and shareholders. We remain confident in our ability to meet our 2019-2021 Global Strategic Plan ambitions by the end of 2021.”

OUTLOOK FOR 2020
This outlook is provided as at February 26, 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 will differ and such differences may be material. Please refer to section 19, "Forward-looking statements", of the Corporation's MD&A for the year ended December 31, 2019 for the full disclaimer.

Management expects the Corporation's results for the year ending December 31, 2020 will fall within the following ranges:

 2020 TARGET RANGE
Net revenues*Between $7.1 billion and $7.4 billion
Adjusted EBITDA*Between $1,070 million and $1,120 million
Seasonality and adjusted EBITDA* fluctuationsBetween 18.5% and 30.5%, Q1 being the lowest
and Q3 being the highest
DSO*75 to 80 days
Net capital expenditures**Between $140 million and $150 million
Acquisition, integration and restructuring costsBetween $40 million and $50 million


*Non-IFRS measures. These measures are defined in section 22, “Glossary of non-IFRS measures and segment reporting measures” and reconciliations to IFRS measures can be found in section 8, "Financial Review" of the 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 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 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 2020 target ranges, the Corporation considered numerous economic and market assumptions regarding the competition, political environment and economic performance of each region where it operates. In preparing its 2020 forecasts, the Corporation also assumed that economic factors and market competition in regions where it operates would remain stable.

The forecasts were prepared using tax rates enacted as of December 31, 2019, in the countries in which the Corporation currently operates. The Corporation anticipates the effective tax rate in 2020 will range between 26% to 30%.

The Corporation manages it capital structure to achieve a net debt to adjusted EBITDA ratio between 1.0 and 2.0.

For 2020, the Corporation anticipates consolidated organic growth in net revenues, spanning across all reportable segments, on a constant currency basis, in the range of 2% to 5%. Head office corporate costs for 2020 are expected to range between $90 million and $95 million.

Canada
The Corporation anticipates mid-single-digit organic growth in net revenues for its Canadian operations as Management expects public sector delays in transportation project starts in Ontario to end in 2020.

Americas (United States and Latin America)
The Corporation anticipates growth for the US operations as revenue synergies with Louis Berger operations are in the process of realization.

In Latin America, the Corporation has completed the integrations of multiple acquisitions which are expected to drive net revenue growth for 2020. Organic growth in net revenues for the region is anticipated to be in the range of low- to mid-single digits, with some improvement in operating margins.

On a consolidated basis, we anticipated mid-single-digit organic growth in net revenues for the Americas reportable segment.

EMEIA (Europe, Middle East, India and Africa)
As a whole, the EMEIA reportable segment is anticipated to deliver low-single-digit organic growth in net revenues by segment in 2020.

In the Nordics region, economic indicators continue to point towards a cooling off period. In the UK, prospects from the public sector remain solid and concerns over Brexit are diminished, but unknowns remain. Management anticipates low- to mid-single-digit organic growth in net revenues for the UK and Nordics combined.

Central Europe, the Middle East and South Africa, combined, are anticipated to deliver low-single-digit organic growth in net revenues in 2020.

APAC (Asia Pacific)
The Corporation anticipates another solid year from its Australian and New Zealand operations with mid- to high- single digit organic growth in net revenues, stemming from several large project wins and a strong pipeline.

Asian operations posted mid-single-digit organic growth in net revenues in 2019. As a whole, Management anticipates low-single-digit organic growth in net revenues for 2020 for Asia, as various concerns in the region remain.

As a whole, we anticipate the APAC region to deliver mid- to high-single-digit organic growth in net revenues in 2020.

DIVIDEND
The Board of WSP declared a dividend of $0.375 per share. This dividend will be payable on or about April 15, 2020, to shareholders of record at the close of business on March 31, 2020.

FINANCIAL REPORT
This release includes, by reference, the 2019 financial reports, including the audited consolidated financial statements and the Management’s Discussion & Analysis (“MD&A”) of the Corporation.

For a copy of our 2019 financial results, including the MD&A and the audited consolidated financial statements, please visit our website at www.wsp.com.

CONFERENCE CALL
WSP will hold a conference call at 8 a.m. (Eastern Time) on February 27, 2020 to discuss these results. To participate in the conference call, dial 1-647-427-2309 or 1-866-521-4907 (toll free).

A presentation of the 2019 fourth quarter results and fiscal highlights will be available on the same day at www.wsp.com in the Investors section, under Presentations & Events.

The conference call and slideshow presentation will also be broadcasted live and archived in the Investors section of the WSP website.


RESULTS OF OPERATIONS

 Fourth quarters endedYear ended
(in millions of dollars, except number of shares and per share data)December 31,
2019
December 31,
2018
December 31,
2019
December 31,
2018
Revenues$2,209.3$2,043.9$8,916.1$7,908.1
Less: Subconsultants and direct costs$448.6$502.9$2,029.8$1,887.5
Net revenues*$1,760.7$1,541.0$6,886.3$6,020.6
Earnings before net financing expense and income taxes$82.7$91.7$487.8$398.1
Net financing expense$28.4$32.0$102.0$68.8
Earnings before income taxes$54.3$59.7$385.8$329.3
Income tax expense$13.5$16.3$100.1$80.5
Net earnings$40.8$43.4$285.7$248.8
Net earnings attributable to:    
Shareholders of WSP Global Inc.$40.5$43.3 $286.5
$248.1 
Non-controlling interests$0.3 $0.1 $(0.8)$0.7 
Basic net earnings per share$0.38$0.41$2.72$2.38
Diluted net earnings per share$0.38$0.41$2.71$2.38
Basic weighted average number of shares 105,885,503 104,387,699 105,235,267 104,150,041
Diluted weighted average number of shares 106,076,127 104,614,276 105,613,623 104,392,368


*Non-IFRS measures. These measures are defined in section 22, “Glossary of non-IFRS measures and segment reporting measures” and reconciliations to IFRS measures can be found in section 8, "Financial Review" of the management's discussion and analysis for the year ended December 31, 2019.



CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (AUDITED)

References to notes refer to notes in the financial statements

As at December 3120192018
 $$
Assets  
Current assets  
Cash255.6254.7
Trade receivables and other receivables (note 14)1,767.81,758.6
Cost and anticipated profits in excess of billings  (note 15)995.71,116.1
Other financial assets (note 16)114.5100.6
Prepaid expenses104.299.0
Income taxes receivable18.813.6
 3,256.63,342.6
Non-current assets  
Right-of-use assets (note 17)913.4
Property and equipment (note 18)347.7350.6
Intangible assets (note 19)355.4367.7
Goodwill (note 20)3,568.83,493.2
Deferred income tax assets (note 12)145.8116.1
Other assets (note 21)88.496.4
 5,419.54,424.0
Total assets8,676.17,766.6
   
Liabilities  
Current liabilities  
Accounts payable and accrued liabilities (note 22)1,650.71,693.7
Billings in excess of costs and anticipated profits (note 15)629.0678.3
Income taxes payable125.352.1
Provisions (note 23)71.893.8
Dividends payable to shareholders (notes 12 and 27)39.739.2
Current portion of lease liabilities (note 17)211.7
Current portion of long-term debt (note 24)307.856.8
 3,036.02,613.9
Non-current liabilities  
Long-term debt (note 24)1,091.91,467.9
Lease liabilities (note 17)838.9
Provisions (note 23)72.8153.1
Retirement benefit obligations (note 9)213.4197.7
Deferred income tax liabilities (note 12)91.274.3
 2,308.21,893.0
Total liabilities5,344.24,506.9
   
Equity  
Equity attributable to shareholders of WSP Global Inc.3,330.83,259.0
Non-controlling interests1.10.7
Total equity3,331.93,259.7
Total liabilities and equity8,676.17,766.6


CONSOLIDATED STATEMENTS OF CASH FLOWS (AUDITED)

References to notes refer to notes in the financial statements

For the years ended December 312019 2018 
 $ $ 
Operating activities  
Net earnings285.7 248.8 
Adjustments  (note 28)435.4 171.1 
Net financing expense (note 11)102.0 68.8 
Income tax expense (note 12)100.1 80.5 
Income taxes paid(79.8)(73.9)
Change in non-cash working capital items (note 28)(29.1)174.4 
Cash inflows from operating activities814.3 669.7 
Financing activities  
Dividends paid to shareholders of WSP Global Inc.(77.6)(78.1)
Net (repayment) proceeds of long-term debt(96.6)213.5 
Net financing expenses paid(69.0)(59.1)
Lease payments (note 17)(260.7) 
Issuance of common shares, net of issuance costs13.3 1.4 
Dividends paid to a non-controlling interest(6.2) 
Cash (outflows) inflows from financing activities(496.8)77.7 
Investing activities  
Net disbursements related to business acquisitions(220.9)(556.7)
Lease incentives received25.3  
Additions to property and equipment, excluding business acquisitions(122.4)(98.1)
Additions to identifiable intangible assets, excluding business acquisitions(26.6)(28.7)
Proceeds from disposal of property and equipment11.7 4.5 
Dividends received from associates10.8  
Other 0.9 
Cash outflows from investing activities(322.1)(678.1)
Effect of exchange rate change on cash(12.0)6.0 
Change in net cash(16.6)75.3 
Cash, net of bank overdraft – beginning of the year253.9 178.6 
Cash, net of bank overdraft - end of the year (note 28)237.3 253.9 


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; EBITDA; 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.  Additional details for these non-IFRS measures can be found in WSP’s MD&A for the year ended December 31, 2019, which is posted on WSP’s website at www.wsp.com, and filed with 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 similarly named 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 experts include engineers, advisors, technicians, scientists, architects, planners, environmental specialists and surveyors, in addition to other design, program and construction management professionals. With approximately 50,000 talented
people globally, WSP is uniquely 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, 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’s Discussion and Analysis for the year ended December 31, 2019, which is 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:

Isabelle Adjahi
Senior Vice President, Investor Relations and Communications
WSP Global Inc.
Tel: (438) 843-7548
isabelle.adjahi@wsp.com