M&A activity cools amid instability: WSP

Amid uncertainty stemming from President Donald Trump’s tariffs and elections world wide, WSP CEO Alexandre L’Heureux stated in a Thursday earnings name that the agency has skilled “a really attention-grabbing begin of 2025 and a really fluid setting.” 

Nonetheless, L’Heureux expressed confidence within the Montreal-based agency’s means to reply to international megatrends resembling decarbonization, electrification, urbanization and provide chain resilience.

Throughout WSP’s earlier three-year strategic cycle, it made 15 acquisitions and added about 20,000 people to its headcount. Nonetheless, the worst factor that may occur for mergers and acquisitions is instability and a scarcity of visibility into the longer term, L’Heureux stated. He characterised the setting as “very unstable” in the mean time.

“I believe quite a lot of gamers are on the sideline and are ready for good situations to return again to take a look at taking actions. No one needs to promote at a reduction,” L’Heureux stated. “No one needs to get an asset on the market in an setting the place the setting isn’t prospering.”

L’Heureux stated the mixing of Energy Engineers, the Hailey, Idaho-based engineering and environmental consulting agency that it bought in August 2024 for $1.78 billion, was progressing as deliberate.

Relating to Trump’s tariffs, L’Heureux stated he was “not overly involved now” as a result of the corporate is concentrated on offering companies, and native groups in its respective nations sometimes ship work. He additionally famous that proposal exercise within the U.S. continues to be stable.

“The fantastic thing about our mannequin is that the work that’s performed within the U.S. is performed by U.S. residents and paying taxes within the U.S. and offering income to the U.S. authorities,” L’Heureux stated. Nonetheless, “purchasers clearly are questioning, like all of us, the place it will lead us.”

Sector watch

The Trump administration has made Infrastructure Funding and Jobs Act funding much less sure, stated L’Heureux, however broadly, he’s “extremely assured” that the U.S. will proceed to spend money on the sector.

“I’m conscious that various Republican congressmen wish to amend [the IIJA]. Long term, I don’t know what the form of the funding will appear to be,” L’Heureux stated. “The one factor I do know is that each the Republican Celebration and the Democratic Celebration are each dedicated to infrastructure spending.”

WSP’s vital infrastructure finish markets — together with industrial, superior manufacturing, information facilities and healthcare — proceed to point out power, L’Heureux stated, and “notably, information heart demand has been a gradual contributor.”

Funding in water infrastructure is trending positively throughout most of WSP’s geographies, L’Heureux stated. As well as, the agency is seeing excessive demand for protection — a sector Dallas-based AECOM also shouted out in its recent earnings name.

“Protection particularly, by way of our lengthy standing relationship with entities such because the U.S. Navy, Air Pressure and Military Corps of Engineers and plenty of different entities globally, stay robust,” L’Heureux stated. “Notably, we had been not too long ago appointed to a $1.5 billion, 10-year program with the U. S. Air Force to help web site remediation and environmental consulting throughout its international belongings.”

By the numbers

WSP reported revenues of 4.39 billion Canadian {dollars} ($3.15 billion) within the first quarter, up 22.4% from CA$3.59 billion in Q1 2024. The agency’s earnings grew to CA$144.1 in Q1 2025, up 13.6% from the identical interval final 12 months. 

Backlog stood at CA$16.6 billion, a 16.6% enhance from Q1 2024. 

L’Heureux attributed the outcomes to the agency’s deal with working capital administration, a diversified platform and optimization underneath its new ERP platform.

WSP did see subpar efficiency within the Asia-Pacific area, however L’Heureux stated the outlook for Australia and New Zealand remained constructive within the medium and long run. The agency additionally wracked up restructuring costs in its Europe, Center East, India and Africa section.

“We absorbed the prices, as I stated, course-corrected and arrange the enterprise for future success. So this quarter there was quite a lot of that in [the Asia-Pacific] area,” L’Heureux stated. “Do I count on there could also be some extra? Yeah, in all probability … however on the similar time, we’re seeing the backlog rising in these areas.”

The agency reaffirmed its monetary steering and stated it expects North America to proceed to guide its development in 2025.