M&A activity cools amid instability: WSP

Amid uncertainty stemming from President Donald Trump’s tariffs and elections all over the world, 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 atmosphere.” 

Nonetheless, L’Heureux expressed confidence within the Montreal-based agency’s capability to reply to international megatrends reminiscent of 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. Nevertheless, 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 atmosphere as “very unstable” in the mean time.

“I feel a variety of gamers are on the sideline and are ready for good situations to come back again to have a look at taking actions. No one desires to promote at a reduction,” L’Heureux stated. “No one desires to get an asset on the market in an atmosphere the place the atmosphere will not be 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 providers, and native groups in its respective international locations usually ship work. He additionally famous that proposal exercise within the U.S. continues to be strong.

“The great thing about our mannequin is that the work that’s carried out within the U.S. is carried out by U.S. residents and paying taxes within the U.S. and offering income to the U.S. authorities,” L’Heureux stated. Nevertheless, “purchasers clearly are questioning, like all of us, the place this may 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 numerous Republican congressmen want to amend [the IIJA]. Long term, I don’t know what the form of the funding will seem like,” L’Heureux stated. “The one factor I do know is that each the Republican Occasion and the Democratic Occasion are each dedicated to infrastructure spending.”

WSP’s crucial infrastructure finish markets — together with industrial, superior manufacturing, information facilities and healthcare — proceed to indicate energy, L’Heureux stated, and “notably, information middle demand has been a gentle 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 specifically, by way of our lengthy standing relationship with entities such because the U.S. Navy, Air Drive and Military Corps of Engineers and lots of different entities globally, stay robust,” L’Heureux stated. “Notably, we have been just lately 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 income grew to CA$144.1 in Q1 2025, up 13.6% from the identical interval final yr. 

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

L’Heureux attributed the outcomes to the agency’s concentrate on working capital administration, a diversified platform and optimization beneath 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 optimistic within the medium and long term. The agency additionally wracked up restructuring expenses 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 a variety 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.