WSP Global Inc.

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

Yuri Lynk - Canaccord Genuity Benoit Poirier - Desjardins Capital Markets Mona Nazir - Laurentian Bank Frederic Bastien - Raymond James Michael Tuzzo - TD Securities Jacob Bout - CIBC

Thank you, and good afternoon, everyone. Thanks for taking the time to join us today for this call during which we will be discussing our Q1 performance.

We will first make a few remarks and then we will follow these remarks by a Q&A session. Today with me are Alexandre L'Heureux, our President and CEO; and Bruno Roy, our CFO.

Please note that we will be recording the call, and we'll post it on our website tomorrow. Before we start the call, I wanted to mention that we will be making some forward-looking statements, and that actual results could be different from those expressed or implied.

And we undertake no obligation to update or revise any of these forward-looking statements. Now I will turn it over to over to Alex L'Heureux.

Alex?

Thank you Isabelle and good afternoon everyone. I'm very pleased with our Q1 performance, which we'll be discussing in detail in a few moments.

There are three elements I would particularly like to highlight today. First, we started 2018 on a solid note and as anticipated, posted organic growth in net revenues across all operating segments.

Second, our revenue synergy approach which is one of the key elements of our M&A strategy continues to translate into significant project wins. Finally, as we celebrate the first anniversary of our brand it is becoming clear that the WSP brand as had the anticipated desired impact.

This helps us differentiate ourselves from competition both from an employee and client perspective. Let me start with a few comments on our first quarter financial performance on which Bruno will further elaborate on later in the call.

For the first quarter net revenues were 1.5 billion up 15.2% year-over-year. On a constant currency basis organic growth in net revenues was strong at 4.6%.

Adjusted EBITDA was 133.5 million with adjusted EBITDA margin reaching 9.1%, slightly better when compared to the prior year. Finally, our backlog which stood at 6.7 billion at the end of the quarter representing approximately 10.5 months of revenues grew 5.4% organically compared to Q4 of '17.

Let now move to our regional operational performance. Organic growth of net revenues from our Canadian operation was positive for the quarter at 3.6%.

Adjusted EBITDA margin for global corporate cost was up 9.7%, an improvement compared to the same period in '17 and in line with our expectations. Our Americas operating segment posted robust organic growth in net revenue of 8.3% and adjusted EBITDA margin for global corporate costs which stood at 11.4% of net revenues, was the highest among our reportable prating segments.

Our US operation on a standalone basis delivered 9% organic growth in net revenue. Backlog remained solid particularly in the transportation infrastructure sector where we continue to see strong buildup.

Our EMEIA operating segment delivered organic growth in net revenue of 2.3% and adjusted EBITDA margin before global corporate cost of 10.4% of net revenues in line with our expectations. Our UK operations posted organic growth in net revenue of 1.8% despite lingering Brexit related uncertainties.

Our acquisition of Mouchel in late 2016 enabled us to minimize some of the Brexit related risk by shifting the UK's operating revenue mix from the private sector towards the public sector in which the government has been investing over the last 18months. The Mouchel acquisition also led to significant revenue synergies opportunity, which I will discuss in more detail shortly.

Our APAC operating segment posted organic growth in net revenue of 4.4% and adjusted EBITDA margin before global corporate cost of 9.4 % of net revenues. This performance was mainly driven by our Australian operation, which posted double digit organic growth.

The Australian transportation and infrastructure market segment continued to pave the way, delivering over half of the region's net revenue and posing a solid adjusted EBITDA margin. Integration of the Opus acquisition in New Zealand is progressing well.

Q1 acquisition growth in APAC amounted to 34.4%, all related to Opus. We are delighted with Opus operational performance to date and it is tracking in line with our original expectations.

Finally as expected, our region operation posted negative organic growth in net revenues. We are continuing our work to achieve a better balance between our core property and buildings business and our transportation and infrastructure business in line with our other reportable segments.

Now that we have discussed our regional performance, the second element I want to highlight is how the depth and the breadth of our expertise combined with our collaborative approach and translating into major project wins. A very good example of that is our win of the development of two of the four new stations part of the High Speed 2 Rail network in the UK at the beginning of the quarter.

Combining our rail expertise with Mouchel's public transportation and infrastructure and land referencing capabilities optimally position us to deliver these projects, which will cover the 85 kilometer western branch between Crewe and Manchester and 198 kilometer wastern branch between the West Midlands and Leeds. Lastly, I would like to discuss our brand.

It has now been a year since we repositioned our firm and their strong unified brand, constantly putting our employees and clients at the center of our ambition. The ambition is noble yet simple.

Make a long term difference in the life of our fellow citizens while positioning our expert strategic advisors to our clients. Given its core markets and your geographical footprint WSP is uniquely positioned to play a leading role in shaping the world the future and designing the cities of tomorrow.

Our work and more particularly our Future Ready program, which is now becoming an integral part of the way we do business, will impact our cities and communities for generations to come. This innovative program which originated in the UK and led by David Simons, UK Director of Sustainability is a world class initiative setting WSP apart and placing our business at the heart of creating a resilient future ready world.

At the core of this program our aim is to ensure that the projects we're working on today and which will be an integral part of our living environment for the next 50 to 100 years are designed and delivered using solutions that not only meets today's code and standard, the muscles will be ready for constantly evolving and the climate society's technology and resources changes. That's where our experts have a role to play by being future ready, advising our clients and integrating data that will impact their future in today's projects and we are convinced that we have what it takes to help our client design lasting solution for the development of better communities and optimal environments for the generations to come.

That's what our WSP brand is all about and I want to thank each of our employees for being proud ambassador of what we stand for. This will enable us to constantly raise the bar thus offering the best for our clients, employees and shareholders.

Bruno will now review our Q1 financial results in more details. Bruno?

Thanks Alex and good afternoon everyone. I'm pleased to share results for the first quarter of 2018.

Overall, we are pleased with our Q1 financial results. Organic growth in net revenues was 4.6%.

Adjusted EBITDA margin was where we expected it to be at 9.1%. DSOs remained stable at 78 days.

Free cash flow for the quarter was $35.4 million, quite strong for Q1 and stood at 326.9 million or 152% of net earnings on a trailing twelve month basis. Finally, our balance sheet has remained solid, with a net debt to adjusted EBITDA ratio of 1.8 times.

Now, let me dig into the details. For the first quarter revenues and net revenues were $1.9 billion and $1.5 billion respectively, an increase of 16.9% and 15.2% compared 2017.

Adjusted EBITDA for that period stood at 133.5 million, up 19 million or 16.6% compared to Q1 '17, also slightly ahead of our expectations. Adjusted EBITDA margin reached 9.1%, a slight improvement compared to last year.

Keeping in mind that we have seasonality and Q1 historically represents our lowest quarter in terms of adjusted EBITDA and adjusted EBITDA margin, we remain confident, we will attain our full year adjusted EBITDA margin target of 11%. Our effective tax rate was 24% in line with expectations.

This compares with 25.7% in Q1 2017, which is explained by the positive impact of the US tax reform effective January 1, 2018. Adjusted net earnings were $55.2 million or $0.53 per share, up 10.8% and 8.2% respectively compared to 2017.

This is mainly due to growth in net revenues and improvement in adjusted EBITDA margin. However, earnings were impacted by an increase in finance expenses compared to Q1 2017, due to a slightly higher debt level than we had last year and slightly higher borrowing cost.

Our backlog stood at $6.7 billion, representing approximately 10.5 months of revenue, up 357.2 million or 5.6% compared to the previous quarter. Organically our backlog grew at 5.4% when compared to both the prior quarter and Q1 2017.

Turning to our balance sheet, we ended the quarter with a DSO of 78 days, comparable to both the previous quarter and to Q1 2017. Incorporating a full 12 months adjusted EBITDA for all acquisitions, our net debt to EBITDA ratio came in at 1.8 times.

With access to almost $800 million in cash and available credit facilities, we have the flexibility to pursue our growth strategy and quickly act accordingly [ph] to these as they arise. We also declared a dividend of $0.375 per share to shareholders on record as of March 31, 2018, which was paid April 16, 2018.

With 47.6% dividend reinvestment plan participation, the net cash outflow was $19.5 million. Before turning it back to Alex, I wanted to highlight that the adoption of IFRS 9 and IFRS 15, effective January 1, 2018, did not impact our current results nor necessitated any significant restatement in our previous year's results.

The impact of adoption of IFRS 9 and 5 was mainly disclosure raised as indicated in note 2 of our Q1 interim consolidated financial statements. Alex, back to you.

Thank you, Bruno. With a solid balance sheet, favorable market positioning and a very strong brand, we remain well positioned to pursue our growth strategy.

Our Q1 results represent the solid start to the year and put us on the right path to pursue and achieve our objectives. As such we are reiterating our full year 2018 outlook.

Now, let's open the line for questions. Thank you.

Hey, good afternoon guys.

Hello.

Hi Yuri.

I didn't hear with regards to the outlook I think last quarter on the call you pointed to organic growth guidance of 1% to 4% for 2018. Is that still your expectation because you start out the year well above that and the Q2 comp is pretty easy as well, so just wondering if that organic outlook has changed at all.

Yuri, Bruno here. No, our outlook remains the same.

Do keep in mind that her fourth quarter comp will be significantly harder to reach due to the FEMA work that we had fourth quarter, so all in we do expect 1% to 4% organic growth for the year.

Okay, so it's on that - it's on the 6.3 that you did in 2017, not the not the 4.4 excluding the FEMA work.

The 1 to 4 includes the FEMA work.

Yeah, okay, got it and I just want to clarify on IFRS 15 because the backlog performed fairly well and some of your peers are getting a bit of a boost in backlog from the adoption of that measure, so no change in your backlog to do to IFRS 15?

No change.

Okay, so in that case the bookings were very strong, can you just talk about where that strength is in the outlook to be able to maintain a book to bill in excess of one throughout the year here.

Yeah, Yuri, the America - Americas I should say and Asia Pacific have been strong. The UK has been a good outcome and a good surprise for us in the first quarter of this year.

I mean, we were - we finished a year in '17 on a good note and we are entering '18 now on a solid note, but clearly the UK given the Brexit uncertainty we're not too sure, I mean it's difficult, we didn't have a crystal ball and I must say that in Q1 we did very well. So with the two major projects that were awarded and I talked about during my address, so let's say that those two major hubs or three major hubs I'm sorry did very well.

And the other countries also are working as planned and as expected.

I'll turn it over there. Thanks very much.

Thank you.

Yeah. Good afternoon, gentlemen.

If we look at your EBITDA margin year-over-year in Q1, you've been able to improve your margin by 10 bps, so I'm just wondering for the full year you're still maintaining 11% guidance, which would present almost 60 bps. So what makes you confident that the EBITDA improvement should accelerate as we go through the Q2 and the second half?

It's a good question, Benoit. Look, absolutely the first quarter historically has always been our weakest quarter of the year, so I mean, we still at this time still feel confident that we will be reaching our 11% target.

Okay, perfect and when we look at the stock price. Are there any change or should we expect you to be closer to the high end in terms of corporate cost because it tends to influence the corporate cost, so any color on that?

No, I mean we will be within the guidance we provided on that front.

Okay, perfect and when we look at the M&A pipeline you've announced an acquisition of ConCol on April 26. Just wondering what we - if you could talk about the pipeline right now and where do you see the greatest opportunities are around to globe?

Yeah, just a small - just small correction Benoit, we announced ConCol before Christmas, but the pipeline is good. Look, we - as we've said in the past, it's a people business and it's very - it's not impossible to time acquisitions.

I think what we're doing is having an active and more informal - active dialogue in some and informal dialogue with others with a view to develop a relationship with the firms that we believe would be complementary to our platform. I would tell you that that we do not believe our pipeline to be less or more active than what we've had in the past and we'll continue to work in the same fashion we've worked in that past in a very disciplined and focused way to achieve our goals.

Okay, very good and when we look at the APAC, last question, you reported a pretty robust organic growth of 4.4 % despite the fact that Asia turned negative, so any thoughts on what would be organic growth without Asia and if you see any opportunity to improve the operation on Asia?

Well, first let me take the opportunity to comment on the Opus acquisition. I mean New Zealand in the first quarter of this year - Opus generated very solid results.

We're very pleased and we are obviously doing our report just separately and obviously not part of the organic growth calculation, but I just wanted to take the opportunity to comment on the New Zealand market. That's a - it's a new market for us, but that the company has performed extremely well.

The integration is going extremely well, so we're pleased. As it relates to organic growth, I mean Australia has been a solid market for us over the last I would say six quarters and I will let Bruno comment in more granularity on the numbers.

Benoit in Australia we're over 10% for the quarter, which is again in continuity of the performance we had last year and New Zealand is about half of that. So both markets are posting their robust growth rates.

Okay and is it fair to say that those numbers are sustainable going through the remainder of the year Bruno?

Let's put it this way, right now those markets are performing at a very high level, very strong activity level, so can't comment for the future, but what we know today we're confident about '18, let's put it this way.

Thank you very much for the time.

Good afternoon and thank you for taking my questions.

Hello, Mona.

Hi, Mona.

Hi, so my first one just has to do with acquisitions and potential targets that you're looking at. And just given your scale and size, do you still have to call out and do you still have a group that actively seeking out targets or it's still safe to assume that a lot of your calls have been incoming or you're finding these acquisitions through connections and your network.

And I'm just wondering in a given year or quarter what is the percentage of targets that you look at that actually translate into a transaction. I'm just trying to get a sense of the market and if the M&A landscape has been shrinking through the years from your perspective.

Thank you.

Okay, look it's - I think the strength of good [indiscernible] is to tell you that all of the above assumptions are through - I mean we do get some inbound calls because WSP has a good name in the industry and I think that very humbly - by the way I'm just saying that I think we like to believe as a company that our best references are best acquisitions. And we believe we can be a good home and provide great career opportunities for engineers who wish to pursue and foster their career within our firm.

So we did get inbound calls in the past and I believe we'll continue to get some inbounds, but at the same time, I mean it is my job to develop ties with some of our peers in our industry around the world and a good portion of my time is dedicated to developing those relationships and as I said answering the question before yours Mona, I mean the pipeline hasn't unchanged, we continue to have discussion. In some markets it's more consolidated that it used to be, there's no doubt about that.

New Zealand for instance is a very mature market, Australia is more consolidated now than it was ten years ago so is the UK. Having said all that, I'm confident that there's a lot of opportunities out there for us to complement our platform with additional M&A activity, so that's how I feel about it.

And in relation to –we say, no more than we say yes, I mean that's the way I would answer it. I mean in order to consummate a transaction and to merge with another company often time we'll pass on many more opportunities before we decide to go ahead and pull the trigger, so yes.

Okay, that was very helpful. And then just secondly on someone's question about margin expansion and then a global corporate cost, just looking at the different segments, so Canada Americas, EMEIA, over 80% of the mix, I mean you had well over 30 basis point margin improvement.

So would it be safe to assume that global corporate cost should trend down with the quarters or either that - or that the other segment should see greater margin expansion.

Always cautious Mona, our investors and our analysts to sell any slice if you want a fixed cost or a variable cost or the trajectory of our business, I mean the life cycle of our projects are way beyond three months or six months or nine months in many cases for that matter, so I think the outlook that we provided I think is a fair assumption of what we believe we will be achieving for this year in '18.

Okay, think you.

I found a way to ask another question on M&A. And we'll see if we can add color there, but is your primary goal right now to fill in holes geographically or are you also looking at potentially adding or bolstering expertise in other areas or you do both if it makes sense strategically?

So Fred, I'll take another stab at answering that question differently. No, look again, all of the above, I mean we - I think in our case we still believe that a clearly unfinished business.

There are markets where we are still subscale and just to remind everyone on the call, I mean our strategy is quite clear, we've always said that we want to be a top tier player in every geography and verticals where we operate and that's not going to change and that's the case and that will be part of our next three years strategy. So if you look at our footprint both from a vertical point of view, but also from a graphic point of view, we are subscale in some parts of the world, we are subscale in a number of verticals.

So clearly in the years to come we will pursue our strategy to complement those verticals and geographies accordingly.

Okay, awesome. That is all I have, thank you.

Thank you, Fred.

Thank you. Good afternoon.

Hi, Michael.

Hi, Michael.

Alex, in the last year or so we've seen a very strong growth out of the Nordics region for WSP, can you talk a little bit about what you're seeing there now? Does that growth remain as healthy as it's been or are things leveling off at all or just what are you seeing in that region?

So good question, I mean I'm pleased to answer that. Over the years and for as long as WSP has been a player and the regions I would say since early 2000, I mean this operation should be commended for the hard work that it is put in because they've been doing an outstanding job and they've been generating growth over the years and it's been like that as I said before for the last 15 years even during that 2008 recession, so it's a business that has been very resilient and you know what they remind me a bit of Canada during the recession, but they have a very strong banking system, so the government has been wise and was wise to reinvest in the country and infrastructure.

And also you look at the economy, so you look at the trends, you look at the immigration trends that you're seeing in that part of the world and really this assures some growth in the region and thankfully we entered the market 15 years ago, so who we have a leadership position in Sweden, a good position I would say in Finland and we are growing our position in Norway very fast at this point in time, so it's been a good market for us last year the year before and for many years before that. Is it going to be a strong market like we have seen for as long as we remember, obviously I wouldn't be surprised if at some point in time in the years to come the private sector for instance may be cooling off a little bit, but this year we have a good start of the year and we're feeling confident that we'll meet our expectations in 2018 and we'll see in '19, '20, '21, but so far we're - we don't have any signs that lead us to believe that we should be concerned by that region.

Okay, perfect and I guess in the same vein or same region anyway, within your - you breakdown by regions, EMEIA, the UK, you mentioned you've continued to see some strength in the public sector that's helped to offset some of the private sector slowdown. Is there still a decent pipeline from your perspective of public sector work as you look out in the UK?

Yes, the answer is yes. I mean there's a lot of work going on right now in the rail sector and public sector more widely.

And we're fortunate to have developed since 2012 and I mentioned that in previous calls in the last few quarters that we were fortunate enough to really shift slowly, but surely our project mix away from a very private sector centric to a more balanced portfolio between the public and private sector and today I think we're bearing - I think we're benefiting from this shift that we orchestrated in the last few years.

Perfect, thank you and then just lastly, a lot of companies both in your sector, but even in other sectors have recently been talking about the improvements they've been seeing in the energy and resource markets more broadly. I know it's not a very significant part of your business, but you did do the Focus acquisition several years ago, just wondering if you are seeing some pickup in activity within your oil and gas and more broadly resource areas.

Again to just remind and reiterate our strategy around the resource sector and the energy sector, what we've always said is that in a resource based country and commodity based country, if you want to aspire to be a leading player it's - those markets are tough to ignore and that's why for instance in the mining sector we have a good presence in Australia and that's why in Canada, we strengthened our position in 2014 in the oil and gas sector, so certainly that - if the market is picking up, we will be benefitting from that and we are pleased about it.

Okay, have you started to see some pickup as well so far or is it early?

Yeah, I think its early days to jump and then celebrate. I think that clearly this week, given what's happening and when to place.

We've see the bump in the barrel and that's good news for some of our peers and for us essentially. But to now pretend that everything is rosy and we are out of the wood, I think its early days.

But I think do we feel slightly better now? The answer is yes, we are feeling better by what we are seeing.

And I think we see our teams typically on the ground being a bit more upbeat which is good news.

Okay, thank you.

Thank you.

Good afternoon. So I think last Analyst or Investor Day, you talked about doubling the size of the US presence.

Does the change in the US tax reform change that strategy at all?

No, it hasn't changed our strategy. I mean this comment was based on our industries, based on the fundamental of the country, based on how we believe we can win in the market place.

So this was - the comment was maybe respective of the changes and the tax reform or the changes that the government may effect in the tax system.

From an evaluation of some of these targets?

You mean that the - given there being less tax they're valued more?

Yes.

Well, that's obvious, I mean clearly - that all of a sudden - I mean given that there being less tax generated more cash flow that - there may be some excitement around the tax reform and frankly that's good news and we should all celebrate it. But it hasn't changed our mind on whatever or not we wish to grow our presence in the US.

We want to grow our presence in the US.

Thank you.

Thank you.

Thank you, Alex you want to conclude.

Thank you very much for attending the call and we look forward to updating you in our next call in August related to the release of our Q2 numbers. Thank you very much.

Have a good day.