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Urbanization, immigration and climate change are reshaping the world, and WSP is well poised to build on it, according to CEO and President Alexandre L’Heureux.
In a third-quarter earnings call on Nov. 7, he said the company’s four main markets: transportation and infrastructure; properties and buildings; land and environment; and energy, resources and industry – all are healthy and continue to reflect and respond to macro trends “such as decarbonisation, energy transition, aging infrastructure and urbanization to name a few”.
Leaders of the Montreal-based megacontractor seemed optimistic about the results of the US presidential election.
“We’ve done well with both administrations and we don’t expect things to be any different this time,” WSP CFO Alain Michaud said on the call.
Unlike other companiesHeureux said WSP didn’t see any slowdown in American work before the election, and feels “comfortable that we’re going to maneuver very well” with the federal Infrastructure Investment and Jobs Act, the Reduction of Inflation and CHIPS. and the Science Act under Trump.
“I doubt it very much [the IRA] will be dismantled. There’s going to be reallocation and the IRA can be reshaped, so we don’t know how deep the scalpel is going to be, and we don’t really even know how that’s going to happen,” L’Heureux said. “If you ask me where do I see a change, it’s closer [United States Agency for International Development] work I really think this could have an impact.”
Numbers Q3
WSP reported earnings of CA$3.98 billion (US$2.87 billion) in the third quarter, up 10.7% from CA$3.6 billion in the third quarter of 2023. Its profits grew to CA$203.6 million in the third quarter of 2024, a jump of 30.3% over the same period last year.
L’Heureux attributes the results to an increase in net income and organic growth, particularly in the Americas and Canada; efficiency of WSP’s new ERP platform; and greater free cash flow.
Backlog stood at CA$14.8 billion, up 3.9% from Q3 2023. WSP’s board of directors also declared a dividend of $0.375 per share, payable in January of 2025 to registered shareholders.
This report closes WSP’s three-year strategic cycle, in which it made 15 acquisitions and added about 20,000 people to its workforce. Most recently, the company purchased Hailey, Power Engineers based in Idaho in August for 1.78 billion dollars.
More acquisitions on the horizon
Heureux indicated that the company intends to continue its purchases, saying he is “very confident” that WSP will find more acquisitions in the next three years.
Clients want multidisciplinary services, especially on large projects, L’Heureux said, and with the support of its ERP platform, WSP’s workforce can be remobilized to jobs and markets around the world. He sees more opportunities to consolidate the construction space, especially in the US and Europe.
“The heart and blood of a company is organic growth, and I always see M&A as icing on the cake. But you know, the underlying recipe for your cake has to be good,” L’Heureux said. “WSP’s growth hasn’t been on steroids, obviously. I think the demand for our services has grown because the trends fueling our industries are real.”
The company also announced an upcoming C-suite move: Mark Naysmith, current president and CEO of Europe, Middle East, India and Africa, has been named global COO, effective January 2025.
Environment, data centers, supply chain still hot
Water is still experiencing increased investment globally, according to L’Heureux, and demand for services to drive the green transition is strong in all regions.
“These services include, but are not limited to, environmental baseline studies, permitting, site selection, corridor optimization, and geotechnical and biodiversity activities, all of which are highly strategic to any project,” L’Heureux said.
Transportation and infrastructure remains the company’s largest end market, according to L’Heureux, and the aviation and maritime sectors remain resilient as countries around the world invest in improving global logistics Manufacturing is also booming as corporations and countries focus on cushioning their supply chains.
“This investment cycle is expected to continue as the global supply chain readjusts to the new post-pandemic reality,” L’Heureux said.
Finally, data center work continues to boom.
“Hyperscalers are spending $18 billion to $19 billion a quarter growing the data center market. They’re opening a data center every two days,” L’Heureux said. Thanks to the purchase of Power Engineers, he said, WSP will now be able to connect these data centers to the grid.
