Dive Brief:

• WSP’s earnings, revenue and backlog all soared in the second quarter of 2023, according to its earnings report released Tuesday. The firm’s growth occurred across all key regions and segments, said CEO Alexandre L'Heureux on a Wednesday earnings call, and the firm raised its earnings forecast for the year.
• The Montreal-based engineering and design giant reported revenues of $3.63 billion Canadian dollars ($2.71 billion), up 31.2% from the same period last year. Its profits stood at CA$150.7 million, a 68.8% increase year over year, while backlog stood at a record high level of CA$14.3 billion, a 25% increase from the year-ago period. 
• L'Heureux said that federal infrastructure funding continues to be a boon in the U.S. and the outlook for that sector is strong globally. Although inflation is persisting, he believes the firm has managed it well.

Dive Insight:

In light of what the company called higher-than-expected organic growth and record-high order intake for a quarter, WSP adjusted its outlook for the rest of 2023 adjusted EBITDA of $1.90 billion to $1.93 billion, up from a range of $1.76 billion to $1.84 billion. 

L’Heureux said finding enough workers is “a constant challenge” but its turnover is down significantly in past months and it has seen an increase in acceptance rates. Nonetheless, the company and industry overall have yet to return to pre-pandemic levels of retention, he said.

WSP has bought 11 businesses since 2022, but this quarter it also offloaded one. The firm announced on Aug. 7 that it sold Louis Berger Services, a global engineering, environmental and security services company. L’Heureux said WSP had planned to divest it but wanted to increase profitability first.

The company highlighted three wins for its engineering services from the past quarter:

• The $4.2 billion Sunrise Wind Farm in New York, 30 miles off the coast of Montauk Point State Park on Long Island.
• The $1.36  billion Heidelberg Materials North America Carbon Capture, Utilization and Storage facility at its cement plant in Edmonton, Canada.
• The $1 billion Waratah Super Battery, located in Australia’s Hunter - Central Coast renewable energy zone.

Infrastructure a continued strength

The firm is getting a boost from the Infrastructure Investment and Jobs Act in the U.S., according to WSP CFO Alain Michaud.

“[The IIJA] certainly has brought positive tailwinds to our business, the flow of funds is continuing to progress. When will it peak — that’s a big question, but it tends to be more towards 2024, 2025,” Michaud said. “Clearly [it’s had a] direct impact on our growth, and also a direct impact on our growth in that it provides confidence for our public sector clients to fund more projects.” 

Like AECOM, the firm is seeing strong demand for infrastructure around the world, with China an outlier at the moment.

"[There’s] a rising need for improved infrastructure and for our expertise, which is a similar trend we see globally," L'Heureux said. "We are seeing better performance than what we were anticipating at the beginning of this year essentially everywhere — with the exception of mainland China, where I think it's widely recognized that the prolonged [COVID-19] lockdown had its effect and impact on the business." 

The firm remains focused on clean energy and resilience projects, and is also seeing strong growth in healthcare, mission critical and data center projects, according to L’Heureux.