(Montreal) WSP Global Group plans to continue its acquisition spree this year after purchasing several other companies during the first part of the year.
Since mid-March, the engineering company has acquired four consulting services firms in four countries – Canada, Finland, Spain and the United States – adding more than 800 employees to its workforce.
These purchases follow five other acquisitions since September 2022, when WSP absorbed the environment and infrastructure activities of the British John Wood Group for US1.81 billion.
The Montreal company’s workforce stood at 67,200 as of March 31, down 100 from a year earlier, despite the buying frenzy as WSP tries to “deliver more with less,” it said. President and CEO, Alexandre L’Heureux.
The decline reflects the sale of 1,400-person engineering and design firm Louis Berger in August, but that number has since exceeded 2023 levels, according to WSP.
After a year of “consolidation”, the elements are in place for the company to continue to grow through its existing activities as well as those to be acquired, indicated Mr. L’Heureux.
“All the ingredients are now in place for us to continue to grow inorganically and organically,” he said during a conference call with analysts on Thursday.
“With mergers and acquisitions, we have a very good start,” he added, expressing confidence that the rest of the year will bear fruit.
Since 2012, the Montreal company, then known as Genivar, has grown from a firm with 15,000 workers to an engineering giant present in approximately 60 countries.
The company says healthy organic revenue growth contributed to a 13% rise in net profit to 126.8 million in the first quarter. Its order book increased by 3% to 14.23 billion.
“WSP continued its tradition of strong execution […] with solid growth in all regions,” National Bank analyst Maxim Sytchev wrote in a note to investors.
“While some might point to a stagnant order book in Canada and a decline in the Asia-Pacific region, we remind investors that the infrastructure environment in Canada remains strong,” he added.
The United States, a driver of activity
In the United States – WSP’s largest segment with net revenues exceeding $1 billion last quarter – the company recently signed a US$100 million program management contract for a 24-kilometer light rail extension on rail in the Los Angeles area, mentioned Mr. L’Heureux.
He said he was seeing growth in the transport, real estate and environment sectors, among others.
The company has previously highlighted the spending wave triggered by the US government’s US$1 trillion infrastructure bill passed in November 2021 as a driver of activity.
One of the few dark spots on WSP’s earnings statement is China, where a declining real estate market continues to weigh on the economy. Organic growth in its Asia-Pacific segment was effectively flat year-over-year in the first quarter.
“Asia is a challenge, there is no doubt about it,” acknowledged Mr. L’Heureux. This has been a challenge and I think it will continue to be a challenge for some time. That said, mainland China for us is 300 people out of 67,000.”
Revenue for the quarter ended March 31 rose 3% to $3.58 billion, beating analysts’ expectations by 30%, according to LSEG Data & Analytics.
On an adjusted basis, net income increased to $1.55 per share from $1.37 per share a year earlier.
