WSP CEO and President Alexandre L’Heureux sees growing and diversifying opportunities ahead in environmental work. That’s why the Montreal-based engineering and design giant is investing heavily in clean energy talent.
“We said that we wanted to become the leading firm in the green transition, so we built our pillar around earth and environment. And now I feel that we are ready to make a big push in the energy transition,” L’Heureux said in a Thursday earnings call.
To that end, WSP was tapped as a design and consenting service partner for the U.K. National Grid’s Great Grid Upgrade, a clean energy initiative in England and Wales that marks its biggest overhaul in generations.
First quarter numbers, acquisitions
WSP reported revenues of CA$3.59 billion ($2.63 billion USD) in the first quarter, up 2.7% from CA$3.49 billion in Q1 2023. Its profits grew to CA$126.8 million in Q1 2024, a 12.7% jump from the same period last year.
Backlog stood at CA$14.2 billion, a 2.9% increase from Q1 2023.
Some of the company’s growth was due to its acquisitions as well as productivity improvements, according to L’Heureux, and he said WSP has all the ingredients in place to continue to expand. Last year, the firm went on a shopping spree, buying four companies.
“We view 2023 as a year of consolidation. Last year alone, we grew our top line by over 20%. Yes, not all of this was organic growth, there was a lot of acquisition growth, but we grew our top line by one-fifth in one year,” L’Heureux said. “So I consider that to be very meaningful, and very transformative.”
The firm started 2024 where it left off in 2023, with four acquisitions announced or completed in the first quarter:
- New York City-based AKF, a mechanical, electrical and plumbing firm that designs complex healthcare, science and technology and mission-critical facilities.
- Finnish rail consultancies Proxion Pro and Proxion Plan.
- Communica Public Affairs, one of Canada’s leading Indigenous and stakeholder engagement and information management consulting firms.
- It also agreed to buy 1A Ingenieros, a Spanish consulting firm operating mainly in the power and energy sector.
Though WSP is planning to continue its M&A streak, L’Heureux said oftentimes, it takes many years to convince a firm to sell.
“We continue to have formal and informal discussions with smaller size, medium size and larger size acquisitions,” L’Heureux said. “I cannot guarantee when we are going to complete these. But what I can tell you is that I'm encouraged by the discussion that I'm having right now.”
Despite high interest rates, “for the right acquisition, I am not going to shy away,” he said.
Roadwork ahead
Still, WSP isn’t pulling away from its infrastructure and transportation expertise — it recently won a $100 million project management contract to help Los Angeles County Metro build a 15-mile light rail line to connect southeast L.A. County to downtown Los Angeles, L’Heureux said on the call. The firm also sees openings to enlarge its presence in the water and in advanced manufacturing sectors.
“That also is a real opportunity for us to grow and to develop,” L’Heureux said.
While some construction companies, such as California-based Granite Construction, are shifting focus to smaller and less risky projects, WSP is continuing to pursue megaproject work.
“We excel in complex projects, that's where we feel we can do better,” said L’Heureux. “By selecting projects where we believe we can really raise the bar, provide a better service or differentiated service, [that] will allow us to increase our margin profiles.”
Bullish on PFAS
In April the EPA designated two types of PFAS as hazardous substances: perfluorooctanoic acid and perfluorooctanesulfonic acid. Per-and polyfluoroalkyl substances, or PFAS, are a group of widely used chemicals — known as “forever chemicals” — that can pose serious human health and environmental risks.
Similar to competitor AECOM, L’Heureux said he sees “tremendous opportunities” in the PFAS cleanup sector.
“The rules and regulations are strict, and the requirements will increase demands for our services,” said L’Heureux. “So I feel that over the coming years, we'll have our share, we’ll be winning our share of work in that space.”
