WSP Global Inc T.WSP

TD

[retiredcf]

There's potential for them to increase their current $150 target. GLTA

WSP Global Inc.

(WSP-T) C$124.46

Q1/21 First Look Event

• WSP reported Q1/21 EBITDA that was above expectations and reaffirmed its full-year 2021 guidance.

• Conference call today at 8:00 a.m. ET (1-866-521-4907).

  Impact: SLIGHTLY POSITIVE

• Q1/21 adjusted EBITDA was $241.0mm – above consensus of $220.2mm and our estimate of $233.6mm. Note, WSP received $8.1mm of government subsidies in Q1/21; however, this amount was offset by additional discretionary employee compensation (resulting in no net impact to adj. EBITDA). Q1/21 adj. EPS (old definition) was $0.74 – above consensus/TD at $0.59/$0.66.

• Adjusted EBITDA margin was 14.4%, above consensus of 13.1% and our 13.8% estimate. Adj. EBITDA margin was +180bps y/y despite Q1/21 having two fewer billable days vs. the prior year period.

• Net revenue was $1.667bln (-4.0% y/y), below consensus of $1.680bln and TD at $1.698bln.
   Consistent with management's guidance, Q1/21 net revenue contracted

  organically (-4.5% y/y vs. our -3.5% y/y forecast). However, notably, approximately half of the quarter's y/y organic contraction was said to be accounted for by Q1/21's two fewer billable days. Adjusted for the number of billable days and considering acquisition growth, net revenues were essentially flat y/y.

 Geographically, all regions reported y/y organic net revenue declines.

• Backlog totaled $8.4bln, essentially flat q/q and y/y. Backlog organic growth was +1.7% q/q.

• Net debt to adj. EBITDA was 0.2x at Q1/21 (vs. 0.1x at Q4/20). Subsequent to quarter-end, leverage increased to ~1.2x following the closing of the Golder acquisition.

• Full-Year 2021 Financial Guidance Reaffirmed:
   2021 guidance ranges are as follows: net revenue of $7.5bln–$8.0bln

  (consensus at $7.8bln); adj. EBITDA of $1,220mm–$1,290mm (consensus at $1,256mm), and implied mid-point adj. EBITDA margin of 16.2% (consensus at 16.1%). Note that WSP's guidance assumes no new acquisitions, which is not directly comparable with consensus, as some analysts (including TD) forecast acquisitions.

 WSP continues to anticipate full-year 2021 organic growth in net revenues to be in the 2%–5% range (vs. TD at +3.5%) . Meanwhile, alongside the Q1/21 results release, WSP introduced guidance calling for Q2/21 organic net revenue growth to be in the low-single digits (below our current Q2/21 estimate of +5.5%, but implies that H2/21 organic growth may be stronger than we are currently forecasting)