(Montreal) WSP Global saw its profits and revenues grow in its most recent quarter, and exceeded expectations by winning contracts for new projects on three continents.
Updated yesterday at 5:29 p.m.
The Montreal engineering firm has won contracts related to GO Transit’s expansion plans in Ontario, an energy center in the Adriatic Sea and a hospital development in Melbourne, Australia.
These new projects boosted the value of WSP’s backlog to $11 billion, with organic growth of almost 16% in the most recent quarter compared to a year ago. Net profit climbed 8% and revenue jumped 29%, the company said Thursday.
The rail contract, announced last month, will see WSP take over design and engineering services in a partnership of half a dozen companies working on “one of the largest transportation projects regional pool in Canadian history,” said WSP CEO Alexandre L’Heureux during a conference call with analysts.
The agreement between the six partners and regional transit agency Metrolinx and Infrastructure Ontario marks the first phase of a multi-billion dollar plan to transform the GO rail network from a peak commuter service into a full-day service “with subway-like frequency” for the Greater Toronto and Hamilton Area, he said. The project also provides for the acquisition of a fleet of electric trains, the electrification of 600 kilometers of tracks and the construction of 200 kilometers of new tracks.
Despite the strong quarter, WSP shares are down 25% year-to-date.
“We don’t pay too much attention to what’s going on in the stock market right now,” L’Heureux said.
“We’re getting a lot of great work from both the public and private sectors,” he added, saying US President Joe Biden’s $1 trillion infrastructure plan held promise for government-funded projects. the government from next year.
“Ups and downs, of course. But I have to say […] if it’s not the strongest, it’s definitely a very good time for the company. »
One of the “best performances” in its sector
Analysts were mostly in agreement, with some noting confusion over the stock’s continued decline — WSP’s share price returned $1.19, or about 1%, on Thursday to close at $134.27.
“We are puzzled by the reaction to one of the best performances of any public engineering company released this quarter. […] WSP remains one of the only companies in its industry with the balance sheet and shareholder support to undertake a large but accretive acquisition in the near term,” said analyst Troy Sun of Laurentian Bank Securities. in a note to investors.
Analyst Sabahat Khan of RBC Dominion Securities attributed the stock decline to “broader concerns” that could hurt engineering and construction companies in a recession, in addition to a ” general correction in the market. He pointed out that WSP continues to “perform well,” driving higher profit margins even as inflation and labor shortages drive up costs.
Once a smaller company going by the Genivar name, the 63-year-old company grew from 31,700 to 56,000 employees at the end of 2014. WSP’s market value stood at $15.8 billion as of Thursday afternoon.
The company posted net income attributable to shareholders of 95 million, or 81 cents per share, for the quarter ended April 2, which compared to a profit of 87.9 million, or 77 cents per share, for the same period last year.
Revenue jumped to $2.71 billion from $2.10 billion in the same period last year, beating analysts’ forecast by a third, according to financial data firm Refinitiv.
Adjusted net income climbed to 136.4 million, or $1.16 per share, in the most recent quarter, from 94.2 million, or 83 cents per share, in the same period a year earlier. early. Analysts had expected a profit of $1.10 per share, according to Refinitiv.