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U.S. infrastructure bill means more cash and contracts for WSP Global, CEO says

MONTREAL — The US$1-trillion infrastructure package passed by Congress on Friday marks a boon for WSP Global Inc., says the CEO of the Montreal-based engineering firm.

MONTREAL — The US$1-trillion infrastructure package passed by Congress on Friday marks a boon for WSP Global Inc., says the CEO of the Montreal-based engineering firm.

Alexandre L’Heureux said Wednesday the fast-growing company, whose design and management services overlay directly onto the types of projects backed by President Joe Biden's bill, is poised to boost its backlog over the next year and beyond as a result.

"Clearly our clients at the moment are excited. There's obviously also a nervousness about the ability to deliver, which I haven't seen in a very long time. So I think this is clearly a positive outcome as it relates to organic growth," L'Heureux told investors on a conference call.

While Biden predicted last week Americans would begin to feel the impact of the infrastructure bill within two to three months, L'Heureux says federal funds won't start "entering the pipeline" for up to six months.

The funding flood should drive more projects for WSP by late next year or 2023, the CEO said.

The bill holds the promise of rebuilding aging roads, highways and bridges across the United States as well as improving broadband, ports, water supplies and other public works.

Renewed commitments to emissions reduction and a greener globe across levels of government as well as international forums like the ongoing United Nations climate change conference in Scotland feed into WSP's focus on environmental services.

"This is by far our fastest growing sector at the moment," he said, citing green infrastructure plan in Canada, Australia, the U.S. and Scandinavia.

"And the work that we do in environment is often times in preparation for more work in the transportation, infrastructure and building sectors."

Ramped-up spending on infrastructure and green efforts in other countries has started to pay off.

Last quarter WSP secured a deal to undertake environmental investigations into land and marine habitats at the world's first "energy island," which Denmark pledged in February to undertake as a wind-power project in the North Sea.

Fresh off its $1.5-billion acquisition of environmental sciences firm Golder Associates in April, WSP also agreed to oversee investigation, design and construction of road safety projects in corridors across New Zealand.

In September, a joint venture involving WSP won a US$500-million contract to improve the dry docks at two U.S. navy shipyards, including the 113-year-old facility at Pearl Harbor.

Wages remain a possible pressure point for WSP as the company eyes the potential cost of inflation.

"Wages and inflation are something we're very much focused on at the moment. We are cautiously optimistic," L'Heureux said. "But this is obviously something that we are monitoring right now very, very carefully."

In a note to investors, analyst Frederic Bastien of Raymond James said he sees "massive opportunities related to sustainability and the net-zero transition," and to massive public infrastructure spending and "revenue synergies" from the Golder purchase.

RBC Dominion Securities analyst Sabahat Khan said WSP continues to grow its presence in Canada, where the federal budget from April allots $26 billion over six years to public transit, infrastructure in Indigenous communities and affordable housing.

WSP beat expectations Tuesday as its net profit increased 33 per cent in its latest quarter, with acquisitions helping to boost revenues.

Its backlog stood at $10 billion, representing nearly 12 months of revenues. And its workforce grew more than 17 per cent year over year to 55,300 employees in the third quarter from 47,100 a year earlier.

WSP's share price rose 3.55 per cent Wednesday, closing up $6.12 at $178.65 after hitting a record high in earlier trading on the Toronto Stock Exchange.

Net income attributable to shareholders was $139 million or $1.18 per diluted share in the third quarter, up from $104.3 million or 92 cents per share a year earlier.

Net revenues were $2.03 billion, up from $1.69 billion, driven by 20.1 per cent growth in revenues from acquisitions and a 4.3 per cent increase in organic growth.

This report by The Canadian Press was first published Nov. 10, 2021.

Companies in this story: (TSX:WSP)

Christopher Reynolds, The Canadian Press

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