Paul Dollin Chief Operating Officer ENHANCING OPERATIONAL EXCELLENCE, EXTENDING COMPETITIVE ADVANTAGE

Transcription

1 Paul Dollin Chief Operating Officer ENHANCING OPERATIONAL EXCELLENCE, EXTENDING COMPETITIVE ADVANTAGE

2 140 DISCUSSION

3 Alexandre L Heureux Chief Financial Officer FINANCIAL OUTLOOK

4 AGENDA Historical Financial Performance Fundamental Trends by Country Pathway to Continued Value Creation Capital Structure and Dividend Policy Key Takeaways Discussion 142

5 143 HISTORICAL FINANCIAL PERFORMANCE

6 SOLID TRACK RECORD SINCE IPO Strong Revenue Growth Steady Profitability Focus on Growth CAGR 44% 1,677 CAGR 32% CAGR +13% Net Revenues EBITDA EPS Continued commitment to Long Term Profitable Growth 144 In CAD $ million

7 STRONG PROFITABILITY DRIVING STEADY CASH GENERATION Positive Free Cash Flow Focus on Working Capital Balance Sheet Strength CAGR 16% 1.76 Decrease of 24 days x 0.6x FCF / Share DSO Net Debt / EBITDA Prudent capital structure despite high dividend payout & acquisitions 145 In CAD $ million

8 DEMONSTRATED ABILITY TO CREATE LONG-TERM VALUE FOR SHAREHOLDERS Average: 5.5% Index Annualized Return WSP s Excess return TSX Index 5.7% 18.5% S&P 7.3% 16.9% DJIA 7.7% 16.5% WSP Cineplex FutureMED.... Fibrek YellowMedia 146

9 TODAY S BUSINESS PORTFOLIO IS MORE RESILIENT & DIVERSE Geography Geography Geography Ontario 23% Internation al 3% Atlantic 1% Internationa l 3% ROW 14% Canada 31% Infrastructure 43% Quebec 74% Market Segments Industrial & Energy 20% Environment 9% Building 28% Western Canada 18% Infrastructure 48% Ontario 29% Market Segments Quebec 49% Environment 9% Industrial & Energy 18% Building 25% Europe 28% UK 17% Market Segments Infrastructure 33% Industrial & Energy 16% US 10% Environment 12% Building 39% REGIONAL Net Revenues $128.8M EBITDA $26.0M Employees 1,800 NATIONAL Net Revenues $469.5M EBITDA $83.5M Employees 4,500 GLOBAL Net Revenues $1,677.2M EBITDA $180.6M Employees 15, In CAD $ million

10 148 FUNDAMENTAL TRENDS BY COUNTRY

11 OUTLOOK AMERICAS PROFITABLE GROWTH Net Revenues EBITDA EBITDA Margin DSO Hard Backlog Flat to slightly negative organic growth Increased margin profile due to Focus and cost containment Eastern Canada remains challenging in 2014 Double digit organic growth Strong outlook and backlog in Buildings and Transportation Working Capital initiatives Stable margin profile Double digit organic growth Positive outlook on public spending Investments to support future growth in operations Stable margins 149

12 OUTLOOK EMEA STRONG FUNDAMENTALS Net Revenues EBITDA EBITDA Margin DSO Hard Backlog 150 Double digit organic growth Bullish outlook in Property & Infrastructure Selective bidding and increase in workforce Margin programs improvement around the country High single digit organic growth Positive market outlook, albeit slower growth than 2013 Focus on utilisation rates and costs Flat organic growth Uncertain market outlook offset by market share gains Target to get working capital lower N/A N/A High single digit organic growth Positive economic outlook in Norway Multiconsult and Link investments performing ahead of expectations

13 OUTLOOK EMEA STRONG FUNDAMENTALS (cont d) Net Revenues EBITDA EBITDA Margin DSO Hard Backlog Slightly negative organic growth Major projects being completed Increased margin profile post 2013 restructuring Will remain challenging in 2014 Single digit organic growth TPS acquisition adds to Building and Industrials expertise Business combination with current operations will drive margins Double digit organic growth Selective proposals in booming markets 30% headcount growth Uplift in margins expected from major projects Slightly negative organic growth Timing of public spending projects Major wins in Industrials segment Impressive backlog growth Focus on stable margins 151

14 OUTLOOK ASIA PACIFIC SIGNIFICANT GROWTH OPPORTUNITIES Net Revenues EBITDA EBITDA Margin DSO Hard Backlog Double digit organic growth High growth in China's Property segment Stable margins due to inflationary pressure and hires Double digit organic growth Significant improvement in margins Winward bulks up Building segment 152

15 153 PATHWAY TO CONTINUED VALUE CREATION

16 ONE OF CORPORATE GROUP s MOST IMPORTANT RESPONSIBILITIES CAPITAL ALLOCATION ROIC NOPAT Invested Capital Capital Allocation 1. Investing in existing operations 2. Acquisitions 3. Paying down Debt 4. Dividends 5. Repurchasing Stock Financing Capital Allocation 1. Internal Cash Flows 2. Increasing Debt 3. Raising Equity Companies with identical results, but different capital allocation approaches will derive very different outcomes for shareholders 154

17 LINK STRATEGIC PRIORITIES TO CASH FLOW AND INVESTED CAPITAL Improve Cash Flow Generate steady and quality growth Target high ROIC regions Effective cost management, such as real estate Continue to attract rainmakers Reduce Invested Capital Trim down working capital in each region Review financial leverage M&A focused on ROIC WSP COMPETES WITH THE OUTSIDE WORLD, OUR REGIONS COMPETE WITH EACH OTHER 155

18 156 CAPITAL STRUCTURE & DIVIDEND POLICY

19 OPTIMIZE OUR CAPITAL STRUCTURE Maintain Dry Powder for Future Acquisitions Before Focus (Q1 2014): Net Debt / EBITDA of 0.8x Focus acquisition: Net Debt / EBITDA of 1.1x Aim to optimize our capital structure and increase debt between 1.5 to 2.0x EBITDA Evaluate financing alternatives to diversify sources of debt and maturities 157

20 A GROWTH PROFILE SUPPORTED BY A VALUE ORIENTED STORY Since IPO in 2006, WSP (GENIVAR) has declared $392.5 million in dividends to its shareholders Management prefers to reward Investors with means other than share price appreciation Payment of dividends has never been an impairment to growth plans Keeps operations and management disciplined and focus on cash conversion MAINTAINING DIVIDEND POLICY HAS NOT INCREASED WSP S CREDIT RISK 158

21 CONTINUED COMMITMENTS TO DIVIDENDS Management Commitment to sustained Dividend policy 70 Continued Shareholders Commitment through DRIP Q Q Cash Payout Ratio % DRIP Participation Strong Board support to existing Dividend policy No plan to increase dividend until 50% payout of EPS, given actual payout level and future acquisition plans 159

22 160 KEY TAKEAWAYS

23 CLEAR 2014 FINANCIAL PRIORITIES Focus on growth Mid-single digit organic growth Invest in what we know and understand Focus on cost control and additional operation efficiencies Optimize capital structure and increase debt level between 1.5 to 2.0x EBITDA Strong and consistent free cash flow generation Increase our Return on Invested Capital

24 162 DISCUSSION