WSP Global Inc.

Isabelle Adjahi - Vice President Investor Relations and Communications Alexandre L’Heureux - President and Chief Executive Officer Bruno Roy - Chief Financial Officer

Mona Nazir - Laurentian Bank Jacob Bout - CIBC Benoit Poirier - Desjardins Capital Markets Mark Neville - Scotiabank

Thank you, and good afternoon, everyone. I would like to thank you for taking the time to join the call, so that we can discuss our Q3 2017 performance.

We will follow the remarks by a Q&A session. Joining me today are Alexandre L’Heureux, President and CEO; and Bruno Roy, our CFO.

Please note that we will be recording the call, and we’ll post it on a website tomorrow. Before we start, I just want to mention that we may be making some forward-looking statements, and the material facts or assumptions that we use to develop these forward-looking statements are set forth in MD&A dated November 07, 2017.

Actual results could be materially different from those expressed or implied. And we do not undertake any obligation to update or revise any of these forward-looking statements.

I will now turn the call over to Alex. Alex?

Thank you, Isabelle, and good afternoon, everyone. Before Bruno gets into the financial details, there are few elements I would like to highlight, as we are very pleased with the performance of our firm in Q3.

First, we posted solid organic growth across all operating segments, both for the quarter and year-to-date. Second, we maintained our year-to-date adjusted EBITDA margin above 10.5% and optimally managed our balance sheet.

Third, we completed several acquisitions during the quarter in geographies where we believe will be drivers of future for our organizations. There are significant accomplishments which demonstrate our commitment to deliver on our 2015-2018 strategic plan.

As such, I would like to congratulate all of our employees from around the world. Before moving on with our Q3 performance I would also like to take a moment to announce one of our most recent project wins.

WSP does not typically press release project awards. However given the importance of this one, I would like to discuss it in more details.

We had been awarded the engineering, architectural and design management services contract for Parliament's Centre Block rehabilitation project in Ottawa. This is Canada’s largest and most multidisciplinary heritage rehabilitation project ever and globally represents WSP’s biggest property and buildings win in the history of our firm.

This successful bid is the result of our revenue synergy strategy. Led by Tom Smith, Global Director of Property and Building has combined intra-disciplinary effort and a collaborative approach that successfully leverage the strength of our buildings team in Canada, our global expertise in large heritage restoration projects and our acknowledged leadership and project management for complex infrastructure projects.

We have completed many iconic projects around the world but we are particularly proud of this one. The multi-year project is at scale that as the key will require over 300 resources on the team and is an excellent opportunity for us to enter into the long-term partnership with Government of Canada.

Congratulation to all involved within this project. Let me now turn to our operational performance for each region.

In Canada, organic growth and net revenues was particularly strong at 6.8%. This growth was mainly led by transportation infrastructure and property and buildings market segments.

In addition to Centre Block we won several significant projects with Ontario’s Ministry of Transportation. We also won a portion of the 4Transit joint venture Metrolinx contract for Regional Express Rail Program which helped propel our backlog to a record high $1 billion.

Organically backlog grew 6.3% year-over-year. Adjusted EBITDA margin before Global Corporate costs were strong at 13% due to the higher utilization rates achieved and improved project delivery.

Our Americas operating segment posted flat organic growth in net revenues and adjusted EBITDA margin before Global Corporate costs stood at 17.8% of net revenues, once again the highest amongst our reportable operating segments. Our U.S.

operation on a standalone basis delivered approximately 1% organic growth in net revenues for the quarter and 6.1% year-to-date. Backlog organic growth stood at 11.5% compared to prior quarter due to significant wins.

As an example, in Colorado, we were awarded the Central 70 project from the Colorado Department of Transportation, a project with capital value above $1 billion. We also secured grid program management of $54 million fee project.

Our EMEIA operating segment delivered organic growth in net revenues of 5.4%, and adjusted EBITDA margin of 11%, both in line with our expectations. The Nordics operation remains strong delivering organic growth in the low double-digits.

The UK operations posted moderate organic growth in net revenues of 1.6%, while the transportation & infrastructure sector is particularly robust, concerns pertaining to Brexit are expected to linger in short run negatively impacting the private commercial and retail markets. Our APAC operating segment posted 7.8% organic growth in net revenues for the quarter.

Our Australian operation continued on the strong performance we have seen since the beginning of the year posting significant organic growth in net revenues. Finally, our Asia operation continued to suffer from a significant slowdown in China’s property and buildings segment.

This being said there are some good news in Asia as our team in Hong Kong has won two large hospital contrasts including a mandate for the Prince of Wales Hospital in Hong Kong. Bruno will now review our Q3 2017 consolidated financial performance.

Bruno?

Thank you, Alex, and good afternoon everyone. For the quarter revenues and net revenues came in at $1.6 billion and $1.3 billion representing an increase of 5.4% and 8.1% respectively compared to Q3 ‘16.

We posted consolidated organic growth in net revenues of 4.4%, slightly ahead of our expectations for quarter. Consolidated acquisition growth stood at 6% for the quarter and 5.5% for the year, the bulk of it related to the Mouchel acquisition made in Q4 of ‘16.

The impact of foreign exchange was negative 2.2% on a consolidated basis. Adjusted EBITDA for the year stood at $160.4 million, up $13.2 million or 9% compared to Q3 ‘16.

Adjusted EBITDA margin reached 12.5%, up from 12.4% last year mainly due to the improved performance in our Canadian operations and the strong performance in our Austrian operations. I think this tax rate was 28% for the quarter in line with our expectations.

Adjusted net earnings stood at $79.5 million or $0.77 per share, up 18.8% and 16.7% respectively compared to Q3 ‘16. The increase was mainly due to grow the net revenues and higher adjusted EBITDA margins.

Our backlog stood at just under $6 billion comparable to Q2 ‘17 and representing approximately 10.2 months of revenues. It was up $592.7 million or 11%, 9% organically compared to the same period last year.

We ended the quarter with a DSO of 86 days comparable to Q3 ‘16 and in line with our seasonality cycle. For the third quarter of 2017, our free cash flow was positive at $19.9 million.

On a trailing 12 months basis free cash flow amounted $261.3 and represented 105% of net earnings. As I mentioned previously, we believe free cash flow should be reviewed in the trailing 12 months basis as opposed to quarter-over-quarter basis at the timing of investment and CapEx initiatives and the management of working capital can vary significantly in a quarterly basis.

Moving on to the balance sheet, our net debt to adjusted EBITDA ratio remains stable coming at 1.8 times. At the end of Q3 2017, we had access to over $860 million in cash and available credit facilities.

Subsequent to the quarter-end, we drew upon those facilities to finance the acquisition of ConCol, a 1000-employee firm base in Columbia. Alex will provide more color on activity later in the call.

We also declared a dividend of $0.375 per share to shareholders on record as of September 30, 2017, which was paid on October 16, 2017. With a 52.8% dividend investment bank participation, the net cash outflow was $18.2 million.

So on the whole we are pleased with the results for the quarter as well as for the first nine months of the year. Thus, we are reiterating our full year 2017 outlook with a bias towards the higher end of the ranges provided pertaining to net earnings so then growth in net earnings and to adjusted EBITDA.

This year firm outlook takes into account the billable days differential we've mentioned previous calls. As you might remember a differential in billable days between Q4 '17 and Q4 '16, will negatively impact some of the Q4 '17 performance metrics.

More specifically, organic growth in net earnings. Alex, over to you.

Thank you Bruno. Before we open the line for questions I would like to provide a brief update on our M&A activity.

Q3 has been a busy quarter for us, in addition to the acquisition of Poch in Chile we've also acquired LBG a 150 people employee ground water and environmental engineering services firm based in the United States. The addition of LBG will bolster WSP water and environment practice by increasing its ground water geology capabilities strengthening its environmental services expertise and extending its national footprint.

We also recently announced the acquisition of [indiscernible] a professional services firm headquartered in Colombia with approximately a 1000 employees in Colombia, Peru, Panama, Chile and Mexico. It is one of the largest firms in Colombia and enjoys a solid reputation in power, transport, oil and gas, environment as well as project management.

With now north of 5000 employees in Latin America this acquisition will be a catalyst to position WSP as a top tier player in this region. It will enable us to extend growth and the development of our people, client base, expertise and capabilities, Paul Dollin our COO will spend the next few months focusing on integrating all of our Latin American operation, so more to come on that front.

Finally although we have not yet closed this transaction we announced our intention to acquire a 100% of the share of Opus a 3000 person professional firm based in New Zealand with presence in the UK, Canada, and Australia. This company has best in class asset management expertise and is a leading brand in the New Zealand market.

As of today we have 90% of the shares either under lock up agreements or already tendered. Once we receive the content of the overseas investment office we will exercise our statutory right to compulsory acquire the remaining shares.

Consequently, we are very confident in our ability to close this transaction in Q4. Now I would like to open the line for questions.

Isabelle?

We can go ahead with the first question please. Operator?

So just firstly from me, in regard to the parliament center block heritage project that you referenced firstly congratulations, I'm just wondering if the work is to span the entire 10 years that the project's expected to take and also will the work begin in 2018 or has it already started.

No, the project has already started very recently. We were just not in a position to announce it publicly.

Only today we got the permission to announce it. So it’s a very, very -- we’re extremely proud and pleased by the win of this contract.

As I said before earlier on, I mean this is the largest project we won in property and building in WSP and you know that we worked on many fine and great projects in the past so but this one is the largest. So we are very pleased by it.

And then just turning to kind of more of a macro question, you have a business with a strong legacy. You’re a known pioneer in the engineering space considering the degraded companies that you have acquired, Parsons for example.

I am just wondering if you could give us a taste of any particular change factor or a potential disruptor that you are thinking about and proactively addressing when you think about WSP insight or even further out in order to remain competitive.

Wow! I mean that’s a great question.

Look obviously right now we’re very focused on executing on our strategic cycle, this strategic cycle which will come to an end by the end of next year. But I can tell you right away that already we are thinking extremely hard about what our next strategic cycle will be which end markets we would want to pursue or to enter frankly, what are the geographies we want to look at.

But I would tell you that there should be a big digital component or IT components to our next strategic cycle. We will take the next year, the next 12 months to really come together as a large ambition and I want to engage with a young professional or more matured professional then our leaders to really get a feel and really take the time to understand where the industry is going over the next decade.

I have good views. I have my views on this already.

But I would like to say that my answer if you can be patient for -- in 12 months when we roll out our next strategy. But all that to say that clearly the world is changing.

There are mega trend that are really impacting the world and impacting our industry. You heard me saying and talking a lot about the organization movement, the demographic change and shift, also the power and we well know that the power is moving is east in the world right now and for the last 100 years was out west.

So there are many, many large trends that are impacting the world. Right now what I am doing with the team is really to position the company to be actually uniquely positioned to take advantage of those trends.

So it’s just internal, we also need to look at the external factors. And I think we are well positioned if you ask me.

And just lastly from me and just to talk about kind of the opportunities that you are seeing in Latin America, now that you have a great presence post con call. If you could speak about the pipeline and then also on acquisition looking at what’s more attractive, what’s the revenue synergy potential and cost synergies?

Okay, let me start with the first subset, the first part of your question. I mean if you recall when we rolled out the 2015-2018 strategy we had said that Latin America would be a region that we would want to grow.

We would first explore and then grow. If we were determining that this would be possible and would be advantageous for the company, we conclude with that, but we want to be a reading firm in Latin America.

We don’t want to play in all of the countries in Latin America. So we picked countries that we believe will have tremendous growth over the next 20 to 25 years.

So again to give you a few examples, if you look at San Diego and Chile, this is a city that will reach, will be close to 9 million people of the population by 2030. And if my memory is not failing me both Peru – Lima in Peru and also Bogota in Colombia will be exceeding 10 million people.

So they will be essentially mega cities in the region. And I mentioned and talked about our strategy in the past in many different occasions, we want to be the go to trusted advisor to assess those megacities both on the property building point of view, but also in transportation and civil infrastructure but also in environment and energy.

So that's what I'm saying by positioning the firm where the growth will be in the years to come. So that's why Latin America is strategic to us.

And then the second part of your question, yes, I believe there're tremendous opportunities for revenue synergies. If you take ConCol as an example, this is a firm that has designed close to 30,000 kilometers of transmission lines in Latin America.

So this is an instance we're going to become our center of excellence when it comes to distribution and power. So I think I see a lot of opportunity for ConCol and also for WSP to work together around the world on this.

And also on cost synergies, we have 500 people at the beginning of this year in Latin America, but now with the combination of patch legacy WSP and also with ConCol, obviously, hopefully we will be able to generate some cost synergies.

I had a question on your growth rate in Canada, 6.8% in the quarter, very strong and much better than what we've seen in previous quarters and years I guess. Can you just talk a little bit about what you're seeing happening there, I think, it seems to be a consistent trend from what we're seeing from others in the industry as well?

Thanks, Jacob. As I had mentioned Canada, I mean, coming back from a long way away from Lake City a year ago.

So we’re going to team need to be commanding on the work has done internally and then the market is also doing well for us too, as you mentioned in the industry as a whole decision reasonably well. Central Block for us is a big deal.

And it will be a big deal for few years and that's in the help that organic growth rate. Again, keep in mind here that fourth quarter is going to be a bit lower because we’ll have one less week, so some of those numbers will slow down a little bit in the fourth quarter.

But all in, we're very happy with what we're seeing in Canada and again we’re very happy with the work the team has been doing.

And then the solid organic growth you saw in the Americas year-on-year. Is that one quarter of that because you noted also that your backlog seems to be there is some recent contract wins there?

Yes, I know it is timing, Jacob. As you mentioned we've done some large contracts in the U.S.

over the course of course large contracts in the U.S. over the course of the quarter again Greg Kerry and the team there needs to be commended for this quarter in terms of winning those contracts that are large essentially in transportation and that will pay off in terms of organic growth from fourth quarter onwards.

And last question here, just on the U.S. tax bill, the pass through rate cut exclusion seems to be you know some of the trade rights were talking a bit about this.

Obviously doesn’t impact you directly but does this create any M&A opportunities for you.

I think on the M&A front I don't know that this on its own will create or actually reduce the number of opportunities that we'll come across in the years to come frankly. I don’t know Bruno if you have anything else to add.

No, we were keeping obviously a very close eye on what's happening in the House in the US and again the headline news are interesting prima facie with likely reduction on the statutory rate but the devil's really going to be in the details so we'll see where the House ends up, I think it ends up passing anything then we'll react to that.

Good afternoon, thanks for taking my questions. Just on the -- you know if you close on your three acquisitions by the end of the year [indiscernible] by 1000 employees 12% growth from a headcount perspective.

When you think of 2018 do you dial that back a little bit on the acquisition front and focus on the margin improvement and integration of those acquisitions or the pipeline attractive enough where you'll continue to do both into 2018.

This is a good question and also it's allowing me to clarify something. Yes we've added 5000 people but the contribution of those five thousand people are not the same you know obviously and it's important that we take that into consideration, you know the revenue generated per employee in Latin America is probably half and in some occasion a bit higher on hire so for instance in Chile but lower in other parts of the world like Peru for instance, so you just I just wanted to clarify this that yes we've added 5000 people the contribution of each employee vary depending where when deploy the capital.

So that's the first part of your question, the second part you know we have a strategy and we execute on it and I think you all know that the target that we have provided you with in the last few, over the last few months and few years, so in order to achieve these I think M&A will still be part of our the thesis for 2018 but along the way I mean we're going to work extremely hard to reach our targets as well on EBITDA margin and organic growth. So I'd say that the menu is full for '18 and the goal is not to rest until we get to our targets.

Do you think, are you pretty comfortable with your 11% target and could you go beyond that in future years like is 11% the ceiling or there…

Again, just like I said to Mona I mean this is certainly something that I'd be more than happy to talk about when we get to disclose our next three year plan late next year, so more to come on that front. But I can tell you right away that obviously the ambition is always to improve as an organization, that’s what we want to do.

And we want to be more -- we’re -- we want to be viewed and seen as the -- as I said before the trusted advisor in our industry, the consultant of choice. And if you want to be the consultant of choice and you want to pride yourself in being the consultant of choice in our industry you need to be the best-in-class.

So that’s why we are going to work hard to continually improve our performance as a company in the years to come.

Have you seen any improvement in pricing power or the competitiveness in the bid activity as -- in particular in some of the areas where you’ve seen the higher organic growth rates or it is still pretty competitive?

It’s competitive, it’s a competitive world. We work and compete against very fine firms around the world.

So there are lots of good competitors in our industry. So it’s a competitive industry.

But it’s healthy, it’s healthy competition and I think it’s good. So that’s what I am saying, I mean if you want and our ambition is to become the best management consultants in our industry, I mean we need to continually improve and then challenge the status quo.

So that’s why we are going to work hard to improve the margin next year and hopefully continue to improve the margins in the years to come. That’s the goal.

Now that’s great color, Alex. And just one quickly for Bruno.

Do you hedge on FX and how should we think about FX in 2018 at this point?

So we do make use of financial instruments and the details in our financial statements, under note 12 you will get a summary of the impact. In terms of 2018 if you look at how variable being forecast for 2018, I’ve been with the banks over the last six weeks, it’s pretty impressive.

It’s moved quite a bit. So we are certainly keeping an eye on that and we will think about how we adapt the strategy accordingly.

Forecast has been very well over the last weeks.

We’re keeping an eye on it but really it’s something we don’t control. So all we can do is to deliver on our promises in the various regions and hope for the best.

And as Bruno said it’s such a volatile environment from an FX point of view. Right now that’s very difficult to make any prediction on what for instance the US dollar will be at by the end of next year.

Yes good afternoon gentlemen. If go on EMEIA and specifically to Swedish operation, you had to hire about 500 people in the first half which impacts utilization rate but when you -- looking at your margin this quarter we have seen a nice improvement and a rebound in your utilization rate.

So I was wondering if there is still further margin improvement you see in EMEIA or we have seen already a good chunk?

I think Benoit, I would -- I think our assumption would be that they will remain stable. We’re not excited to give you -- you know I mean that’s same thing and then the financial services recruiting individuals, that pays confidence, just they are not as performed -- they are not performing as optimally until they were brought up to speed so that's what took place in Sweden when you grow organically by clearly 10% on headcount, I mean, it takes time for those individuals to just pickup a scheme and speed.

And that's why we've seen a lower level of utilization in the year and a bit of pressure on the margins, but that's something that we were expecting. But at this point in time, I would not expect an increased level margin.

No.

And looking at APAC obviously organic growth has been very robust driven by Australia but there is still softness in property and building in China. So I was just wondering with respect if you could give more color about the markets specifically in Australia.

And what is kind of sustainable going through 2018?

Yes, you take it Bruno.

So just happy that I’m – we just backed from Sydney. So Australia is, again, seeing strong growth currently and we expect more over the same quarter the next year, risen essentially by the transportation sector, so we're doing a lot of work, and public transport, in particular, in Melbourne, around the Melbourne metro.

I think a guy in the team there done a great job. If you go back to few years, our Australian operation was in the best place.

And not only that we’ve expanded profitability there, but we’re going very nicely. So we expect more of the same over the months to come.

In terms of Asia Pacific, sorry, Asia itself, again, softness in property and buildings is a real issue in China this year. We don’t expect any short term improvements on that front.

So if you make the two out, you can expect more of the same between now and the end of the year and probably looking into 2018 as well.

And one additional point Benoit is what we’re trying and what we’re – not trying, but what we’re doing right now in Asia and more specifically in China is we are trying to orchestrate what we've done in the U.K. If you recall the U.K.

and I mentioned that before the U.K, if you go back to 2012 when we acquired WSP, I would say 90% of our revenue in the U.K. were private sector related and property and building related.

And over the years we were really diversified our U.K. platform.

And now in the U.K. 60% of our total revenue comes from the public sector, transportation sector.

And what our leaders are doing in China and Asia actually is exactly – but not exactly, to think because we're not doing it through acquisition but we're doing it organically. We have shifted our book of business from private sector NEP related in Asia to a more balanced portfolio where we're not at the end of this yet, but now I would say that few years ago we were like close to 100% private sector property and building.

And now we're down to probably 70-30. We're now 70-30 and we’ll continue in the years to come to diversify our portfolio.

So for instance, the win of the KL Singapore High Speed Rail was an amazing win for us because now we're dealing people. They see us in the public sector.

And I think that will develop future.

Yes. Same what the Alex mentioned is two wins in hospitals and Hong Kong which again public sector, social infrastructure and we’ll want to do more of that workforce.

Thank you, and looking at margin specifically in China, is there a big discrepancy between private and the public sector.

No not notably.

And last one from me, Bruno when we look at the free cash flow for the year obviously Q4 very seasonal in terms of free cash flow generation, so are you still comfortable with or any expectations for the full year in terms of converting net income into free cash flow.

Our guidance that we convert over 100% remains the same [indiscernible] so at 105 within 12 months and we expect more of the same [indiscernible].

Hi guys, the center block contract that you just announced, is that already in the backlog it’s in the Q3?

Yes, it's in the backlog in Q3. We just put it in this quarter.

What percentage of that contract is yours, I believe it’s a JV.

The JV contract we could provide you with the details but on the website of Government of Canada, [indiscernible] website buyandsell.gc.ca I think have most if not all the details that you're looking for.

Okay, I think investor day, Hugo I believe was talking about margins in Canada and he mentioned eventually getting back to the 14% at some point, I guess if it’s on I thought it was a few years away but I mean you've been at 13% for the last few quarters, so seasonality aside and I guess there'll be some weakness in maybe Q4 with the one less week but like the 13% you've been out the last two quarters is that a reasonable sort of range to think about for like '18 and as we go forward here.

On that we have to be mindful because there's real seasonality into this so look at the year to date we were around 11, we are around like 11.8% so that's a more realistic picture.

Thank you so much. Thanks everyone for attending this call, it was a real pleasure and we're looking forward to talking to you in further details at the end of Q4.

Thank you very much. Bye-bye.