Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WSP Global Inc (WSPOF, Financial) reported a significant 23% increase in net revenues for Q4 and a 12% increase for the full year compared to 2023.
- The company achieved a 40-basis-point increase in EBITDA margin in Q4, despite restructuring activities in Asia.
- Free cash flow more than doubled compared to the previous year, reaching $885 million.
- The integration of POWER Engineers, acquired in October 2024, is progressing well, with the entity posting 16% organic growth in Q4.
- WSP Global Inc (WSPOF) ended the year with a robust backlog of $15.6 billion, representing 10.9 months of revenues, indicating sustainable demand for services.
Negative Points
- Adjusted EBITDA margins slightly decreased to 18.7% in Q4 from 19% in the same quarter of 2023, due to restructuring activities in Asia and a higher mix of lower-margin emergency response services in the US.
- The APAC region experienced margin pressures, with the company taking steps to optimize operations for future success.
- The company's net debt position stands at 1.8 times, which, while within management's target range, reflects higher interest on long-term debt.
- The backlog duration was shorter this quarter, which could indicate potential challenges in maintaining long-term project pipelines.
- The M&A landscape is expected to be quieter in the first half of 2025 due to policy fluidity and market instability, potentially impacting growth through acquisitions.
Q & A Highlights
Q: Within the mid- to high-single-digit organic growth expectations for Canada and the Americas in 2025, how do you expect growth rates to differ between transportation, environment, property, and power sectors?
A: Alain Michaud, CFO: Generally, growth should be strong across all sectors with no significant variances between them.
Q: What impact are Trump's policies having on your infrastructure markets?
A: Alexandre L'Heureux, CEO: Despite the dynamic political environment, there is bipartisan support for infrastructure, which should continue to be strong in 2025.
Q: Can you confirm the 16% revenue growth for POWER Engineers and explain if this is year-on-year on net revenues?
A: Alain Michaud, CFO: Yes, the 16% growth is for Q4 2024 compared to Q4 2023, and it reflects organic growth for POWER Engineers.
Q: How do you view the sustainability of POWER Engineers' growth?
A: Alexandre L'Heureux, CEO: POWER Engineers has a history of double-digit CAGR growth over the last 10 years, and we are pleased with their strong start since joining WSP.
Q: What steps are being taken to improve margins in the APAC region?
A: Alexandre L'Heureux, CEO: We are optimizing our business in Asia and have expanded leadership roles to set up for future success. We remain committed to Australia and New Zealand despite recent market cooling.
Q: Can you explain the shorter duration of backlog this quarter and its implications?
A: Alexandre L'Heureux, CEO: The shorter backlog is typical for our earth and environment practice, and we expect to rebuild it starting in spring. We feel confident about our guidance and market position.
Q: Does the increase in advisory work affect the book and burn dynamic?
A: Alexandre L'Heureux, CEO: Advisory work tends to have a shorter backlog duration, but it does not significantly impact our long-term business outlook.
Q: How is the current M&A landscape affected by policy changes?
A: Alexandre L'Heureux, CEO: The M&A environment is currently quiet due to policy fluidity, but we expect activity to resume with more market stability, and WSP plans to actively participate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
