First half earnings in line with guidance, reflecting improving momentum in Q2. Strong margin improvement as delivery of efficiencies and improved project execution more than offset lower activity.
Good growth in order book, up c18% year-to-date, underpinning confidence of a return to growth and the delivery of a stronger H2.
Wood, the global consulting and engineering company, announces its results for the six months ended 30 June 2021:
Six months ended 30 June
Adjusted EBITDA Margin
Operating profit before exceptional items
Loss for the period
Adjusted diluted EPS2
Net debt excluding leases 3
“The first half of 2021 reflects improving momentum in activity in Q2 and a strong margin improvement, with increased margins in all business units and a greater weighting of high margin Consulting activity. Trading momentum and good growth in our order book, which is up c18% year-to-date, underpin our confidence in delivering a stronger second half which will reflect a return to growth compared to both H1 2021 and H2 2020, and further growth in our full year adjusted EBITDA margin.”
- Robin Watson, Chief Executive
First half highlights
Revenue reflects improving momentum in activity in Q2 & benefit of broad end market exposure
- Good activity levels in built environment, relatively robust renewables activity and improving demand in conventional energy markets, partly offsetting lower activity in process & chemicals, as larger projects reached completion
- Revenue of $3.2bn down 22.9%; primarily reflecting the impact of Covid-19 and including a $74m reduction in revenue from disposed businesses
- Improving momentum in activity in Q2; growth in Consulting and Operations compared to Q2 2020
- Order book at June of $7.7bn, up c18% compared to December 2020:
- Strong order intake in H1 with orders of $3.2bn
- Continued momentum in Consulting across built environment and energy
- Excellent growth in Operations, including recent awards of multi-year contract renewals
- Encouraging signs of markets recovering in Projects, c12% order book growth month on month in June
Strong margin improvement: increased margins in all business units and positive evolution of business mix
- Adjusted EBITDA margin up 80 bps on H1 2020; driven by increased margins in all Business Units including significantly improved margins in Projects, up 220 bps
- Maintenance of high utilisation levels, successful delivery of efficiencies including Future Fit, improving project execution and greater weighting of high margin Consultancy revenue more than offsetting lower activity
- Adjusted EBITDA of $262m and operating profit before exceptionals of $86m in line with guidance
Net debt increase reflects timing of working capital movements
- Net debt excluding leases of $1.28bn at 30 June 2021 (30 June 2020: $1.22bn and 31 December 2020: $1.01bn). Increase driven by a working capital outflow of $237m including unwind of advance payments as major projects completed
- c$100m higher than anticipated due to increased net working capital outflows largely related to timing of receipts expected in H1 but actually received in H2
- Net debt excluding leases : adjusted EBITDA (excluding IFRS 16) 2.9x3 (30 June 2020: 2.0x and 31 December 2020: 2.1x).
FY 2021 outlook: Improving activity levels and strong order book growth underpin our confidence in growth in H2 2021
- Full year revenue in the range of $6.6bn to $6.8bn underpinned by trading momentum and strong order book growth, with $3.0bn for delivery in H2 2021
- Further improvement in full year EBITDA margin to 8.7% to 8.9%, reflecting progress towards our medium-term target of 9.6%
- Confidence in a stronger H2, returning to growth relative to both H1 2021 and H2 2020, whilst also laying strong foundations for 2022
- Full year outlook unchanged. Increased activity in Consulting and growth in Operations expected to partly offset lower activity in Projects
- Expect net debt reduction in H2 from increased profitability and working capital inflows. Net debt : EBITDA ratio will also reduce from increased profitability in H2
Future Fit: Strong early progress accelerating our strategy at pace
- Future Fit programme being delivered at pace: c$20m efficiencies delivered in H1, further c$20m expected in H2
- Optimised organisational design complete
- Operational Excellence programmes launched to deliver exceptional and consistent execution and drive efficiencies in the way we work
- Investing in digital capabilities and solutions
- Strategic growth plans in place in all business units, with a focus on building on our strong positions in energy transition and decarbonisation
Sustainability leadership through strategic action
- Strategy aligned with the delivery of engineering solutions for a net-zero future and enabling sustainable and resilient living, harnessing our significant technical expertise and breadth of capabilities to develop a global approach to energy transition & decarbonisation
- Demonstrating our commitment to the delivery of affordable and clean energy:
- steering member of the Hydrogen Council
- supporting the delivery of UN Sustainable Development Goal 7, utilising our resources and engaging with stakeholders to deliver the goal of affordable and clean energy
- Forming strategic partnerships to develop solutions to accelerate energy transition
- partnering with Honeywell to develop renewable diesel and sustainable aviation fuel
- A reconciliation of adjusted EBITDA to operating profit (pre-exceptional items) is shown in note 2 to the interim financial statements.
- A reconciliation of adjusted diluted earnings per share to basic earnings per share is shown in note 7 to the financial statements.
- Net debt excluding leases is total group borrowings, offset by cash and cash equivalents. Borrowings comprise loans drawn on the Group’s revolving credit facility, term loans, overdrafts and unsecured senior loan notes issued in the US private placement market. Borrowings do not include obligations relating to leases. Cash and cash equivalents include cash at bank and in hand and short term bank deposits. Borrowings, cash and cash equivalents contained within assets classified as held for sale are also included in net debt. The net debt: adjusted EBITDA ratio is calculated on the existing basis prior to the adoption of IFRS 16 in 2019 and is based on net debt excluding leases. These measures are presented as they closely aligned to the measure used in our financing covenants. A reconciliation of net debt excluding leases to net debt including leases is show in note 15 to the financial statements.
- 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. Order book as at 31 December 2020 recalculated for the new operating model is shown below for illustration purposes:
Order book ($m)
- Revenue on a like for like basis is calculated as revenue less revenue from disposals executed in the first half of 2021 and adjusted EBITDA on a like for like basis is calculated as adjusted EBITDA less the adjusted EBITDA from those disposals. These amounts are presented as a measure of underlying business performance excluding businesses disposed. In H1 2021 executed disposals consisted of our joint venture interest in Sulzer Wood. Comparative figures also exclude revenue and adjusted EBITDA from the disposals of our nuclear and industrial services businesses, YKK and our joint venture interest in TransCanada Turbines completed in 2020. These disposals accounted for $nil revenue in H1 2021 (H1 2020: $74m) and adjusted EBITDA of $nil (H1 2020: $9m).
- Company compiled, publicly available consensus comprises 11 analysts who have published estimates since our Full Year Results for the year ended 31 December 2020 issued on 16 March 2021. Consensus includes: JP Morgan Cazenove, Barclays, RBC, Bank of America Merrill Lynch, Morgan Stanley, Berenberg, UBS, Citigroup, HSBC, Kepler Cheuvreux and Jefferies.
Consensus 2021 revenue is $6.9bn (range: $6.7bn to $7.2bn), consensus adjusted EBITDA is $599m (range: $576m-$615m), consensus operating profit (pre-exceptional items) is $229m (Range: $187m-$267m) and consensus AEPS is 24.1c (Range: 16.8c-30.5c).
Wood is a global leader in consulting and engineering across energy and the built environment, helping to unlock solutions to some of the world’s most critical challenges. We provide consulting, projects and operations solutions in more than 60 countries, employing around 40,000 people.
Ellie Dixon – Acting President Investor Relations 01224 851 369
Citigate Dewe Rogerson
Kevin Smith 020 7638 9571
There will be an analyst and investor presentation webcast today at 9:00am, immediately followed by a live Q&A conference call. Replay facilities will be available later in the day. The webcast can be accessed using the following link: https://edge.media-server.com/mmc/p/rrkbr864
If you wish to ask a question during the Q&A session, or are unable to listen to the presentation via the webcast, please dial in to the audio conference call using the details below. Please note that questions may be submitted via the conference call only and it is recommended that you dial in at the start of the webcast.
UK / international: +44 2071 928 338
US: +1 646 741 3167
Conference passcode: 8466697
Notification authorised by:
Martin J McIntyre
Group General Counsel and Company Secretary
Download in full: Half Year Report 2021 (PDF, 507Kb)