In the first few months after becoming chairman of the corporation in 2012, I was asked several times if I thought WSP would still have growth opportunities on the global stage, aside from smaller-scale regional acquisitions. My answer was always an emphatic “yes”, as I have been committed to consolidation in our industry for many years. It therefore gives me great pride and satisfaction to report that 2014 was once again a transformational year for WSP!
Parsons Brinckerhoff came together as one, creating a true global, professional design and management consultancy and clearly positioning the enlarged firm as the leader in our industry. With these ground-breaking transactions, we nearly doubled our global presence. We also strengthened our position in key established regions and sectors, as well as emerging growth markets such as South America and South-East Asia. These transactions also positioned us as one of the leading firms in the buildings and transportation sectors and underpinned us achieving our vision: “Always be the first choice for clients, partners and employees.”
As we pursue that vision, the board is committed to ensuring that WSP is managed and governed — and continues to strengthen — in an optimal way. Rest assured that we take our role as stewards of your investment very seriously; we work closely with the management team to meet our strategic and operational objectives. We also monitor the firm’s financial performance and risk management practices, in addition to setting the dividend policy, overseeing WSP’s reporting compliance and striving to implement the very highest standards of governance.
Here are a few highlights of our governance approach:
We continuously seek to develop and strengthen our governance practices to align with the regulatory environment in which we work. Accordingly in 2014 we added two new Directors, Josée Perreault, Oakley’s Senior Vice President of World Business, and George J. Pierson, former CEO of Parsons Brinckerhoff. I know that both Josée and George will bring a wealth of experience while adding to the board’s skill set. Indeed, we aim to develop our board so that it is aligned with and supports the firm’s global structure and multidisciplinary expertise, which are two of WSP’s defining characteristics.
I would also like, on behalf of the board, to thank Grant McCullagh, who has decided not to seek re-election as director of the Corporation at the next annual meeting of shareholders. His vision contributed to WSP’s success, as well as to the functioning of the Board and the Corporation’s strategic direction.
Helping to steer WSP along the path of future growth and integration of the newly enlarged firm are strategic objectives of the board and we continue to work tirelessly to accomplish these goals, in collaboration with the management team. As we grow, we will further diversify our technical and management expertise across all geographies, thus enhancing our offer to clients whilst boosting opportunities for employees and increasing long-term shareholder value. I believe we have the management and experience and are technically, commercially and financially well-positioned to build on our world-leading position, supported by our uniquely experienced workforce and iconic projects.
We have the appropriate financial and investment structure and support to underpin our growth opportunities. Accordingly I am optimistic about our firm’s future since massive public and private sector participation and investment will be required worldwide to maintain and build the core vertical and horizontal infrastructure that is so critical to elevating quality of life and economic prosperity. Our enlarged globally connected firm is a world leader with a sound strategy and experienced management to participate in these opportunities.
Our global management team is also highly motivated and aligned with shareholders’ interests. Management’s short-term incentive-based compensation is tied to financial performance metrics, which ensures that we deliver sustainable, profitable growth tied to appropriate capital expenditure and strong cash flow. Compensation under WSP’s long-term incentive plan is directly tied to the performance of our shares and the total return we deliver to shareholders, as these incentives promote responsible decision-making and maximize long-term value.
I am confident that our firm will deliver expected returns to shareholders over the coming years, supported by our strategy plan. Thanks to our strong balance sheet, we will continue to seek transactions with successful businesses with a view to complementing and enhancing our operations, future pipeline of work and growth to support our globally connected business model.
In closing, let me say how proud I am to be the Chairman of such a successful firm with a talented, dedicated team. In this regard, I must thank our management and employees at all levels of the organization for their dedication to the pursuit of excellence and our clients for continuously renewing their trust in us. I also extend my appreciation to our shareholders for their ongoing support and confidence in WSP and the board. Finally, I would like to thank my fellow directors for their diligence in guiding WSP through 2014.
2014 marked another milestone year with record revenues, solid operational performance and transformational acquisitions. I am pleased to report that we achieved or exceeded all of our financial objectives set out in our 2013-2015 Strategic plan, one full year ahead of schedule.
Our 2014 financial results are an accurate reflection of our geographical and end-market diversification, which was carefully expanded across our main regions and countries.
During the year, all of our regions increased their net revenues and EBITDA.
Our 2014 performance was also enhanced and strengthened by the acquisitions of Focus and Parsons Brinckerhoff, as eight months and two months respectively of these companies’ operations were included in our annual results.
Overall, we achieved revenues and net revenues of C$2.9 billion and C$2.3 billion respectively, a 44.0% and 40.1% increase over the previous year. Organic net revenues growth amounted to 10.4% (including 5.8% due to favourable foreign exchange impact), while growth from acquisitions was 29.7%.
We recorded EBITDA of C$253.5 million in fiscal 2014, up 40.4% from C$180.6 million in 2013. This translated into a 10.8%EBITDA margin (11.4% excluding Parsons Brinckerhoff), in line with our 2015 objective.
Net earnings attributable to shareholders, excluding non-underlying items and amortization of intangible assets related to acquisitions (net of income taxes) amounted to C$141.7 million, or C$2.21 per share up 50.1% and 21.4%, respectively.
As mentioned before, our solid financial performance was underpinned by our geographic and end-market diversification. Even more importantly, it was supported by the expertise and dedication of all our professionals worldwide.
Going into 2015, we expect our current momentum to continue. We also believe that our 2015 results are likely to be positively influenced by the transformational acquisitions we completed in 2014. Not only did we deliver sustainable growth over the past year, we also brought on board more than 16,000 new colleagues via our acquisitions. In March 2014, we acquired Focus for approximately C$366 million, thereby becoming one of the leading players in Canada. In October 2014, we accelerated our international expansion by acquiring Parsons Brinckerhoff, making us one of the largest pure-play consulting firms in our industry.
These acquisitions brought a roster of successful, profitable and growing companies into the ranks of a leading global professional services firm operating in 39 countries. Financially and operationally, our top priority is to ensure the successful integration of these acquisitions. In our view, real long-term opportunities will come not only from incremental revenue synergies and closer connections within our network of experts, but also by offering a wider range of high-end client services.
Our acquisitions were funded via public equity offerings and private placements with the Canada Pension Plan Investment Board and the Caisse de dépôt et placement du Québec, our two largest institutional shareholders. These financing arrangements totalled C$1.2 billion. Furthermore, we also obtained new credit facilities valued at US$1.2 billion.
Our year-end balance sheet position remained strong with a net debt to EBITDA ratio of 2.5x, slightly above our target of 1.5x-2.0x. However, if we incorporate full 12 month EBITDA for all acquisitions, this ratio decreases to 1.79x. Although it might have been tempting to capitalize on low interest rates by further leveraging our financial strength, we did not regard debt instruments as the primary means to support our organic growth initiatives and acquisition plans. Rather than relying exclusively on debt to support our growth initiatives, our management team focused on generating strong profitability, which generated improved cash flows in 2014. I am particularly proud of our days sales outstanding, which now ranks amongst the best for a global player in our industry. Based on this solid cash flow generation, we anticipate our debt ratio to return to its target range within the next 12 months.
Despite volatility in the world economy, our balance sheet is now supported by a diverse and more resistant business portfolio. I feel confident that the firm is well positioned as it enters 2015 and has the same commitment to long-term profitability growth as in the past.
Since our IPO in 2006, we have demonstrated our ability to create long-term value for our shareholders with a total shareholder return amounting to 24.1% with significant annualized excess returns over the main North American indexes for the same period.
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We, therefore, consider our dividend policy to be a good tool for rewarding shareholders -other than via stock price appreciation- and for maintaining a disciplined approach to our capital structure and allocation decisions. As such, the board does not plan to make any changes to WSP’s dividend policy in 2015. As we pursue our international growth, currency fluctuation will be increasingly important, since being a global firm obviously increases our exposure to variability in exchange rates.
I feel confident that we can reliably deliver the balanced and consistent growth to which we are committed. There are three underlying factors that account for my confidence:
Clearly, we now have the required depth and breadth to sustain and improve the consistency and reliability of our performance.
Combined with the strength of our culture and our people, these three underlying factors make our firm a good investment proposition for our existing and prospective investors.
Rest assured that, working as a team, we will continue to take decisive action to deliver the best possible return for our clients, employees and shareholders.
I look forward to working closely with all of you as we embark on a new phase in our growth.
2014 was a fantastic year for WSP on all fronts and I would like to extend my appreciation to our employees worldwide for their engagement and passion. There is no greater evidence of the achievements of our people than their stellar performance over the past few years and the numerous technical and leadership awards that were well deserved by several of them.
Our employees are the reason why our firm is where it is today. Our strategies provide clear direction and our systems and structures leverage our strength, but our people are the real guarantors of consistent and reliable growth. They are the ones who deliver the projects and work side-by-side with our clients. They are the ones whose individual efforts ultimately generate the returns we provide to you, our shareholders. In that regard, 2014 was no exception.
Whereas 2013 was marked by integration, consolidation and preparation for the next phase of our growth following the 2012 merger of GENIVAR and WSP, 2014 proved to be a transformational year: the firm doubled in size as a result of solid organic growth and the acquisition of 10 companies, which enhanced our expertise and geographic reach. These acquisitions were of different sizes but were all aligned with our strategic plan. They included Byggteknik Kurt Fransson, Comtest, ESC and Teknikfunktion in Sweden, ccrd in the United States, Dessau CEI in Colombia, Focus in Canada, TPS in France, WINWARD in Australia, and finally, our single most significant transaction ever, Parsons Brinckerhoff.
Thanks to the Parsons Brinckerhoff acquisition, we more than doubled our international scope while reinforcing our position in the United States, the United Kingdom and Australia, as well as in growth markets in Asia, Africa and the Middle East. We thus further achieved our strategic objective of expanding and diversifying our business to become a truly global firm. Today, approximately 80% of our pro forma revenues come from outside Canada, our home market. We now have a more diversified footprint with a strong global presence spanning 39 countries and an unswerving commitment to operational excellence that has made us the leading pure-play consultancy in our industry. We are truly positioned to deliver on our goal of achieving sustained growth in 2015 and beyond.
Leading such a group of talented people around the world requires a strong organizational structure of empowered regional and market leaders aligned around the firm’s corporate goals and objectives. They implement our strategies and take action to meet our targets. Over the past year, we strengthened the depth and breadth of our leadership at all levels of the organization. As shown in the following pages, this report provides an ideal opportunity to introduce some of these leaders who drive our global operations.
Drawing on a similar professional services consultancy model and complementary skills, WSP and Parsons Brinckerhoff are positioned to generate growth through revenue synergies, thus creating a level of shareholder value that would have been impossible for each to achieve on a stand-alone basis. Combined into one stronger firm, we will leverage our global reach, financial strength and complementary expertise to pursue growth opportunities and generate value and opportunities for our clients, employees and shareholders.
I am also pleased to report that we have achieved the objectives originally set in our 2013-2015 strategic plan. However, this is not the end game and there is much more to be done. As we move forward, I would like to reflect on how far we have come. Three years ago, we set out to build a unique international multidisciplinary consultancy advising local and global clients on their investment strategies in the infrastructure, industrial, property, resource and energy sectors. We now have a toptier position in several of the industrialized markets such as the United States, Canada, the United Kingdom, Sweden and Australia, as well as a strong presence in emerging markets, in China, the Middle East and Colombia. Over and above this larger and more diversified geographic reach, we have enhanced our capabilities in planning, environmental consulting, design and project management. This global knowhow positions us as a market leader and now, more than ever, our name is associated with emblematic projects around the world.
Our new strategy through 2018 will be a continuation of our 2013-2015 plan, building on the four pillars of this strategy: our people, our clients, our operational excellence and our expertise. We will continue to cement the organization around a set of common values that preserve our high performance culture and our desire to lead the future.
We will also continue to drive growth and expand our market share in all of our sectors, particularly transportation, buildings and environment, while leveraging our project management expertise worldwide. We will focus on leveraging our global knowledge and providing top-quality services to all our clients, whatever the size of their projects and wherever they operate In addition, we will take a disciplined and structured approach as we implement our acquisition strategy, while remaining alert and agile to react quickly to market opportunities. Our success will be measured in terms of client retention, organic growth, employee engagement, operational performance and return on investment for shareholders.
I have confidence in our ability to execute and deliver on this next phase of our development and I am honored to lead such a diversified international multidisciplinary family.
I thank our investors for continuing to place their trust in us. I look forward to working with our board, the senior management team and the rest of our staff to reach WSP’s ambitious growth and performance goals in the years to come.
WSP is a dynamic business, doubling in size in 2014. Our success in such a fast moving and exciting environment is as a direct result of our quality people who are empowered to deliver. Despite our size we have remained agile by placing emphasis on this already successful operational model and culture.
The dramatic rate that WSP has grown at over the last few years requires strong leadership and the ability to build strong teams and relationships, often across many time zones. Our regional leadership was significantly strengthened in 2014 with new appointments in Canada, United States and Latin America, EMEIA and APAC.
In 2014, we also made great progress in being global, which is more than having diversified end markets. It is about the attraction and retention of the best people, clients and projects. Again, through strong leadership that works across, but with the regional teams, we bring the best knowledge and capability to our clients and projects. In preparation for 2015, we have strengthened our global leadership with the addition of senior roles in the functions of Global Mobility, Global Infrastructure, Global Project Operations, Global Strategy and Major Pursuits.
In 2014, the headlines were on transformational acquisitions but great progress has also been made on underlying performance. A focus on maximising opportunities in the mature markets with economic recoveries, benchmarking and correction of any underperformance has driven our operational excellence. We now aspire to give our people information quickly and efficiently so that they can take effective decisions.
Health and safety also continues to be of paramount importance and drives our business decisions. We remain committed to continually investing in safety improvements, staff training and communications and reinforcement of safety as part of our culture, which ensures all safety issues are promptly reported, addressed and acted upon.
We strive to integrate sustainability into every part of our operations. This is being achieved through designing and advising on solutions that are future ready, less wasteful of resources and less harmful to the environment; taking measures to reduce our own carbon, water and waste footprints; continuously developing our staff; and engaging in activities that support local communities and charitable organisations.
Today we have many more choices as a result of our scale and diversity. Making the right choices will be a key theme in 2015 as we prioritise our efforts towards healthy organic growth, financial performance and creation of greater opportunity for our people.
New Year’s Honours 2015.
New Civil Engineer (NCE) Graduate of the Year 2011.
Best Development project of the year and Best Initiative 2010 - Awarded by the Government of Cameroon for projects completed by Cameroon Catalyst.
It’s important to think about what you enjoy and link that in with the skills you have. There are so many roles in engineering and rail that require different skill sets and I have definitely found the one that suits me. I really enjoy working at WSP and I’m really excited about the future of rail.
Public-Private Partnerships, Transportation
METRO Magazine’s Women in Transit for 2014.
Infrastructure Champion, Women Builders Council, 2015.
WTS International Woman of the Year in 2000.
How do we create synergies and put together teams to build on our capabilities in pursuing public-private partnerships (P3)? That’s what I’m interested in answering. I help motivate teams to break away from what they normally do to come up with innovative solutions. It’s a challenge but also one of the most exciting aspects of a P3 development.
2015 Sir John Holland Civil Engineer of the Year award from the IEAust Civil College.
Allen Neyland Tunnelling Lifetime Achievement Award from the Australasian Tunnelling Society.
I am extremely grateful that I have had such diverse and such challenging project opportunities afforded to me during my career. But there remains much to be done and to achieve. In Australia public acceptance of projects has become more problematical. Improving project transparency through better communication at concept development, project evaluation and ranking phases will do much to support this ongoing debate.
Our greatest asset is our people; therefore, we aim to be the preferred employer for existing and future staff, foster a performance-driven, passionate and customer-orientated culture that attracts, retains and empowers our people and stimulates collaboration and innovation. As a global multi-disciplinary business we are able to offer a wide variety of rewarding career opportunities from working in specialist areas to contributing to some of the world’s most iconic projects.
Egleston Medal for Distinguished Engineering, Columbia University, 2013.
OPAL (Outstanding Projects and Leaders) Award for lifetime achievement in design, American Society of Civil Engineers, 2012.
John A. Roebling Medal for lifetime achievement in bridge engineering; International Bridge Conference, 2011.
It doesn’t matter what the project is, it’s the process and challenge that make it exciting. It’s the process of understanding the challenge and then being able to work with others to apply engineering principles to solve problems... What you learn over and over again is that there’s always a solution. You learn how to solve the problems.
Order o' the Blue Ribbon, recognizing service on the Los Angeles Unified School District Bond Oversight Committee, 2009.
Bronze Award for Lifelong Volunteer Service from U.S. President George W. Bush, 2008.
City of Los Angeles Architect of the Year, 1994.United Way of Greater Los Angeles Leadership Award, 1992-1993.
As an architect, I feel best about projects that help people live a better life. I have worked on public transportation projects since 1975, and the point of all that is that mobility gives people access to the resources they need - work, school, health care, shopping, and other basics - and helps environmentally.
Big Project Awards Project Manager of the Year, 2014.
Construction Week Project Manager of the Year, 2014.
Runner up for Qatar Construction Week Award Project Manager of the Year, 2014.
I am very proud to have been part of WSP in the Middle East and our team of project managers for over three years. I have been lucky enough to be involved in a number of very highprofile and challenging projects in this organisation located across two continents. I have had great opportunities to learn and grow – professionally and personally as well.