MONTREAL — The head of WSP Global Inc. says its spate of acquisitions — four so far this year, plus its biggest ever last fall — is no barrier to future deals by the engineering company, even as interest rates remain high.
“Is that a roadblock to future acquisitions? The answer is absolutely not," CEO Alexandre L'Heureux told analysts on a conference call Thursday, referring to the US$1.81-billion acquisition of U.K.-based John Wood Group’s environment and infrastructure business in September 2022.
Since then, the former boutique firm known as Genivar has snapped up four more engineering outfits based on three continents with about 1,100 employees, bringing WSP's head count to 67,000.
On Thursday, WSP reported its profit and revenue in its latest quarter rose by nearly a quarter compared with a year ago, buoyed by organic growth as well as the acquisitions.
L’Heureux said growth in the company's backlog to $14.3 billion at the end of its third quarter, spoke to continued demand for the engineering company’s services.
Organic revenue growth in North America notched below other areas, but L'Heureux said WSP continues to seize on the spending unleashed by the U.S. government's US$1-trillion infrastructure bill passed in November 2021.
"We're essentially winning more than our share," he said, stating the "win rate" is up from a year or two ago, leading to market share gains. The company's soft backlog — revenue from both confirmed contracts and those expected to materialize — grew by 50 per cent year over year in the U.S., L'Heureux said.
Sabahat Khan, an analyst at RBC Capital Research, pointed to the ballooning backlog as one sign that demand remains sturdy.
However, he cited "the uncertain macro backdrop" and "the financial health of major 'public' clients — a.k.a., the U.S., U.K. (and) Canadian federal governments" — as points of possible concern. Slightly more than half of WSP's revenue stems from public contracts, according to analysts.
On Thursday, the Montreal-based company said net earnings attributable to shareholders grew 23 per cent to $156.2 million or $1.25 per share for the three months ended Sept. 30 compared with $127.5 million or $1.05 per share in the same period a year earlier.
Revenue rose 24 per cent to $3.6 billion in its third quarter from $2.9 billion the year before.
On an adjusted basis, WSP's profit climbed to $1.98 per share last quarter compared with $1.59 per share a year earlier. The result beat analyst expectations for $1.90 per share, according to financial markets data firm Refinitiv.
This report by The Canadian Press was first published Nov. 9, 2023.
Companies in this story: (TSX:WSP)
Christopher Reynolds, The Canadian Press
