Clear strategic progress, strong growth and increasing full year guidance
HEADLINE RESULTS | Notes | HY23 | HY22 | Movement | At constant currency | |
|---|---|---|---|---|---|---|
Revenue (pre-exceptional) | Continuing | 4 | 2,986 | 2,571 | 16.2% | 19.7% |
Adjusted EBITDA | Continuing | 5 | 202 | 186 | 8.5% | 12.3% |
Adjusted EBITDA margin | Continuing | 6 | 6.8% | 7.2% | (0.4)ppts | (0.4)ppts |
Adjusted EBIT | Continuing | 7 | 89 | 82 | 9.2% | |
Adjusted EBIT margin | Continuing | 8 | 3.0% | 3.2% | (0.2)ppts | |
Adjusted diluted EPS | Total group | 9 | 1.1c | 5.7c | (80.7)% | |
Adjusted operating cash flow | Total group | 10 | 39 | (82) | n/a | |
Free cash flow | Total group | 11 | (219) | (352) | (37.8)% | |
Net debt including leases | Total group | 980 | 2,156 | 54.5% | ||
Net debt excluding leases | Total group | 654 | 1,756 | 62.8% | ||
Net debt / adjusted EBITDA | Continuing | 12 | 2.0x | 4.0x | n/a | |
Order book | Continuing | 13 | 5,991 | 6,424 | (6.7)% | (4.3)% |
Headcount | Continuing | 14 | 35,636 | 34,079 | 4.7% | |
STATUTORYRESULTS | ||||||
Revenue | Continuing | 4 | 2,986 | 2,563 | 16.5% | |
Operating profit | Continuing | 23 | 31 | (25.7)% | ||
(Loss) / profit for the period | Total group | (27) | 89 | n/a | ||
Basic EPS | Total group | (4.3)c | 13.0c | n/a | ||
Cash flow from operating activities | Total group | (7) | (117) | 93.9% | ||
Built Environment Consulting (sold in September 2022) is treated as a discontinued operation and its results are included within the “Total group” measures. Continuing results exclude its results. HY22 results have been restated to include Built Environment Saudi Arabia. See notes.
Ken Gilmartin,CEO,said:
“When we announced our growth strategy in November last year, we set out a plan for Wood to deliver on its significant potential, and I am delighted that our results show the clear progress we are making. We have made a good start to the year, delivering growth in revenue, EBITDA, headcount and our pipeline, all while furthering our inspiring culture, as evidenced by our highest-ever employee net promoter score.
“As we look ahead, we are confident that our actions, the business model we have implemented and the market growth opportunities to which we have aligned, support the momentum we are building in our business. As such, we are increasing our full year guidance for the year for revenue and EBITDA.”
Delivering on our profitable growth strategy
- Well-positioned for growth across energy and materials
- Market growth opportunity of c.5% CAGR with addressable market of c.$235bn in 2025
- Double-digit revenue and pipeline growth in HY23 across majority of our key markets
- Excellent growth across Carbon Capture and Hydrogen
- Order book of $6 billion, up 5% compared to December 2022 (at constant currency and excluding the divested Gulf of Mexico labour operations business)
- Significant contract wins across energy and materials
- Growing and improving our pipeline
- Right business model in place, predominantly services-based cost reimbursable business
- Double-digit growth in the 24-month factored pipeline versus December 2022, following strategic clean up last year that removed lump sum turnkey (LSTK) and largescale lump sum EPC work
- This pipeline growth reflects the strength of our markets and our client offering
- Positive trends in pipeline gross margin reflecting selectivity of our bidding, and market conditions
- Engaged and energised people
- Headcount up 5% to around 36,000 people
- Highest recorded employee net promoter score scores to date
- Growing our sustainable business (see note 15)
- Over $600 million of sustainable solutions revenue in HY23, up 20% on last year
- Represented 20% of Group revenue
- 33% of sales pipeline from sustainable solutions, up from 31% at year end
Headline financial highlights
- Revenue and adjusted EBITDA ahead of expectations set out in HY23 trading update on 13 July
- Revenueof$3.0billionwas up 16% (+20% at constant currency) with growth in all business units
- c.$160 million increase in pass-through revenue, which generates only a small or nil margin
- This increase in pass-through revenue represented around a third of the revenue growth
- Adjusted EBITDA of $202 million was up 9% on last year (+12% at constant currency)
- Adjusted EBITDA margin of 6.8%, down 0.4ppts on last year, reflecting increased low margin pass- through revenue and our previously guided opex investments across the Group to deliver future growth
- AdjustedEBITup 9% to $89 million following the EBITDA growth
- Adjusted diluted EPS of 1.1c was down 81% on last year, mainly reflecting the absence of Built Environment Consulting (sold in 2022) which contributed $57 million of adjusted profit after tax in HY22
- Adjusted operating cash flow of $39 million was significantly improved on last year, with improved working capital and lower utilisation of provisions more than offsetting the sale of Built Environment Consulting
- Free cash flow of $(219) million reflects phasing of exceptional cash outflows ($99 million vs. c.$140 million expected for FY23) as well as the typical working capital seasonality of our business
- Net debt (excl. leases) at 30 June 2023 was $654 million, significantly down on last year following the reset of our business, but higher than December 2022 ($393 million) given the free cash outflow and the payment of $62 million of tax on the sale of Built Environment Consulting
Statutory results
- Operating profit of $23 million was down 26%, mainly reflecting exceptional items of $31 million which include around $5 million of Apollo-related costs and a $20 million receivables write-down in the Power and Industrial EPC business which was closed in 2022
- Loss for the period of $27 million reflects the lower level of profit from discontinued operations (Built Environment Consulting), the exceptional items and the tax charge in the period
- BasicEPSof (4.3)c reflects the loss in the period
- Revenueis expected to continue to grow in the second half, albeit at a lower rate than the first half, which included the benefits of higher pass-through activity and a weak 2022 comparator. Overall, revenue for FY23 is now expected to be around $6 billion
- Our adjusted EBITDA margin is expected to be flat in the nearer term at around 7%, partly reflecting investments being made in the business and the level of low margin pass-through revenue activity
- As such, adjusted EBITDA for FY23 is expected to be ahead of our previous expectations and within our medium-term target of mid to high single digit growth
- Free cash flow is expected to be positive in the second half, with no change to our expectations for net debt at the end of the year and no change to legacy liability cash outflows, which mostly end in 2024
CFO succession
We announced today that David Kemp, Chief Financial Officer (CFO), has advised the Board of his intention to retire as CFO. The process to appoint his successor is now underway and David will remain in his role until a successful candidate is in place.
Presentation
A virtual meeting for investors and analysts will be held today at 8:00am (UK time) with Ken Gilmartin (CEO) and David Kemp (CFO).
Watch live webcast here
To join the conference call, and ask any questions, please register here:
The webcast and transcript will be available after the event at www.woodplc.com/investors.
For further information: | |
Simon McGough, President, Investor Relations | +44 (0)7850 978 741 |
Vikas Gujadhur, Senior Manager, Investor Relations | +44 (0)7855 987 399 |
Alex Le May, Ariadna Peretz, FTI Consulting | +44 (0)20 3727 1340 |
The person responsible for arranging the release of this announcement on behalf of Wood is Martin McIntyre, Group General Counsel and Company Secretary.
Notes
Adjustments between statutory and underlying information
The Group uses various alternative performance measures (APMs) to enable users to better understand the performance of the Group. The Directors believe the APMs provide a consistent measure of business performance year-to-year and they are used by management to measure operating performance and for forecasting and decision-making. The Group believes they are used by investors in analysing business performance. These APMs are not defined by IFRS and there is a level of judgement involved in identifying the adjustments required to calculate them. As the APMs used are not defined under IFRS, they may not be comparable to similar measures used by other companies. They are not a substitute for measures defined under IFRS.
Note 1: HY22 results are restated to include the results of Built Environment Consulting Saudi Arabia, which was previously classified as held for sale. For HY22, this business contributed $10 million of revenue and $1 million of adjusted EBITDA. For FY22, this business contributed $27 million of revenue and $3 million of adjusted EBITDA.
Note 2: Percentage growth rates are calculated on actuals and not the rounded figures shown throughout this statement. Growth rates shown at constant currency are calculated by comparing HY23 to HY22 restated at HY23 currency rates.
Note 3: Built Environment Consulting (sold in September 2022) is treated as a discontinued operation and its results are
included within the “Total group” measures. Continuing results exclude its results.
Note 4: Revenue includes an exceptional item in HY22 of $(8.0) million related to contract losses in respect of the closure of the Power and Industrials EPC business. Revenue (pre-exceptional items) is an APM that is used throughout this Report as the Group believes it provides a more useful measure of performance.
Note 5: A reconciliation of adjusted EBITDA to operating profit is shown in note 2 to the financial statements.
Note 6: Adjusted EBITDA margin is adjusted EBITDA shown as a percentage of revenue. This measure is used by management to measure the performance of business, and is one of our medium term targets.
Note 7: Adjusted EBIT shows the Group’s adjusted EBITDA after depreciation and amortisation. This measure excludes amortisation of acquired intangibles and is therefore aligned with our measure of adjusted EPS. A reconciliation of adjusted EBIT to operating profit/loss is shown in the Financial Review on page 12.
Note 8: Adjusted EBIT margin is adjusted EBIT shown as a percentage of revenue. This measure is used by management to measure the performance of business.
Note 9: A reconciliation of adjusted diluted EPS to basic EPS is shown in note 7 of the financial statements.
Note 10: Adjusted operating cash flow refers to adjusted cash generated from operations excluding leases, as shown on page 19 of the Financial Review.
Note 11: Free cash flow is defined as all cash flows before acquisitions, disposals and dividends. It includes all mandatory payments the Group makes such as interest and tax, and all exceptional cash flows. It excludes the impacts of IFRS 16 (Leases) accounting and FX. A reconciliation of free cash flow to our statutory cash flow statement is shown on page 19.
Note 12: Net debt / adjusted EBITDA ratio (covenant basis) is calculated on the existing basis prior to the adoption of IFRS 16 in 2019 and is based on net debt excluding leases. It includes a series of covenant adjustments to both net debt and EBITDA. The calculation is shown in the Financial Review on page 23.
Note 13: Order book comprises revenue that is supported by a signed contract or written purchase order for work secured under a single contract award or frame agreements. Work under multi-year agreements is recognised in order book according to anticipated activity supported by purchase orders, customer plans or management estimates. Where contracts have optional extension periods, only the confirmed term is included. Order book disclosure is aligned with the IFRS definition of revenue and does not include Wood’s proportional share of joint venture order book. Order book is presented as an indicator of the visibility of future revenue.
Note 14: Headcount is a measure of total employees working for Wood, including Wood employees and contractors. This measure excludes employees in our joint ventures.
Note 15: Estimated share of revenue as defined by Wood. This figure is referred to across this document. Sustainable solutions consist of activities related to: renewable energy, hydrogen, carbon capture & storage, electrification and electricity transmission & distribution, LNG, waste to energy, sustainable fuels & feedstocks and recycling, processing of energy transition minerals, life sciences, and decarbonisation in oil & gas, refining & chemicals, minerals processing and other industrial processes. In the case of mixed scopes including a decarbonisation element, these are only included in decarbonisation if 75% or more of the scope relates to that element, in which case the total revenue is recorded in decarbonisation.