Full year results for year ending 31 December 2023

Strong growth in first year of new strategy; upgrading outlook

*FY22 results have been re-presented to include Built Environment Saudi Arabia. Built Environment Consulting (sold in 2022) is treated as a discontinued operation and its results are included within the “Total group” measures. Continuing results exclude its results. See notes on page 4.

Ken Gilmartin, CEO, said:

“We made significant progress in this first year of our three-year growth strategy. We delivered strong revenue and adjusted EBITDA growth, and we significantly improved operating cash flow.

“We continue to see clear business momentum, with a higher order book, double-digit growth in our pipeline and positive pricing trends in both pipeline and order book. It is encouraging that the fastest growing parts of Wood are the higher-margin Consulting business, and our sustainable solutions across all areas.

“To build on this early success and further enhance our strategic delivery, we have launched a simplification programme to drive efficiency and support further margin expansion. We are therefore upgrading our outlook, with 2024 guidance now towards the top end of our medium-term targets and 2025 expected to exceed those targets. Ultimately, our priority remains sustainable cash generation and we expect to deliver significant free cash flow from 2025.”

Strategic progress and strong growth in the first year of our strategy

• Delivered results in line with expectations
  • Revenue growth across all business units
  • Strong adjusted EBITDA growth, in line with guidance
• Continued momentum
  • Fastest growth in Consulting and across sustainable solutions
  • Order book up 4% to $6.3 billion, up 7% like-for-like¹⁴
  • Double-digit growth in our factored sales pipeline
  • Improving pricing trends across pipeline, order book and in margin performance in 2023
  • Adjusted operating cash flow improved to $194 million, up $260 million on last year
• Growing our sustainable solutions business to $1.3 billion¹⁵
  • Sustainable solutions revenue up 15% and represented 22% of Group revenue
  • 43% of factored sales pipeline now in sustainable solutions

Simplification to enhance strategic delivery

• Focus on driving higher margins through continued growth, evolving our business mix with faster growth in Consulting, improved pricing and taking action on cost
• Simplification programme to drive efficiency
  • Targeting annualised savings of around $60 million from 2025
  • Initial focus on central costs, with benefit within FY24 expected to be around $10 million
  • Will improve both EBITDA and EBIT margins, and future cash generation
  • Cash costs to complete of c.$70 million over next 12 months, exceptional P&L charge in FY24
• Aligning our portfolio with our strategy
  • Sale process for EthosEnergy progressing well, smaller disposals expected to follow

Upgraded 2024 outlook

• Adjusted EBITDA growth towards the top end of mid to high single digit target (before disposals)
  • Margin expansion driven by topline growth, evolving business mix and improved pricing, plus the c.$10 million in-year benefits of our simplification programme
  • Performance will be weighted to the second half, reflecting the typical seasonality of our business and the phasing of the in-year benefit of the simplification programme
• Cash performance to continue to improve
  • Operating cash growing at a faster rate than adjusted EBITDA will help deliver positive free cash flow before exceptional cash flows
  • Exceptional cash flows are expected to be around $120 million and will be weighted to the first half. They now include c.$50 million related to the delivery of the simplification programme
  • Net debt at December 2024 expected to be lower than December 2023 after the expected proceeds from planned disposals

Upgraded medium-term outlook

• The simplification programme is expected to add to our growth potential, leading to EBITDA growth in 2025 above our medium-term target
• We will continue to expand our EBITDA margin and that benefit will translate into our EBIT margins and support a significant increase in our earnings per share over the medium term
• We are on-track to deliver significant free cash flow in 2025, as previously guided
• From 2025, our sustainable free cash flow generation, combined with proceeds from disposals, will provide increased flexibility in our capital allocation policy

FY23 financial highlights

• Revenue of $5.9 billion was up 8% (+9% at constant currency) with growth in all business units, including a c.$200 million increase in pass-through revenue
• Adjusted EBITDA of $423 million was up 9% on last year (+11% at constant currency) with good growth across all business units
• Adjusted EBITDA margin of 7.2%, up 0.1ppts on last year, reflecting business mix and improved pricing partly offset by the increased pass-through revenue and opex investments
• Adjusted EBIT up 4% to $185 million with EBITDA growth partly offset by higher lease depreciation and software amortisation
• Adjusted diluted EPS of 2.3c was an improvement on last year’s (3.1)c, reflecting the higher adjusted EBIT and lower finance costs
• Adjusted operating cash flow of $194 million was significantly improved on last year, up $260 million
• Free cash flow of $(265) million reflects the improved operating cash flow offset by capex, interest and tax paid, plus cash exceptionals broadly in line with our guidance at $145 million
• Net debt (excluding leases) at 31 December 2023 was $694 million, higher than at 31 December 2022 ($393 million) given the free cash outflow and the payment of $65 million of tax on the sale of Built Environment Consulting

FY23 statutory results

• Operating profit of $38 million compares to an operating loss in the prior year
• Exceptional items of $77 million include a $45 million charge relating to a receivables write-down and an arbitration claim in the now closed Power and Industrials EPC business. Also includes $29 million of charges related to our asbestos liability. Full details on pages 16-17
• Loss for the period of $105 million reflects operating profit more than offset by finance costs and tax
• Basic EPS of (16.1)c reflects the loss for the period
• Cash flow from operating activities of $48 million, a significant improvement on the outflow in 2022

Presentation

Arvind Balan will join Wood as Chief Financial Officer (CFO) on 15 April 2024, replacing David Kemp who will retire from the Board on 14 April 2024. David will remain with Wood for a period of time to ensure a smooth transition.

Presentation

A presentation with Ken Gilmartin (CEO) and David Kemp (CFO) will be held at 9:00am today in London, UK. This event will also be webcast at https://edge.media-server.com/mmc/p/ngex5be8.

The webcast and transcript will be available after the event 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 / FTI_Wood@FTIconsulting.com

The person responsible for arranging the release of this announcement on behalf of Wood is Martin McIntyre, Company Secretary.

Future events

• 9 May 2024 – Q1 trading update and Annual General Meeting
• 11 July 2024 – HY24 trading update
• 20 August 2024 – HY24 results
• 7 November 2024 – Q3 trading update

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: FY22 results are re-presented to include the results of Built Environment Consulting Saudi Arabia, which was previously classified as held for sale. 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 unaudited FY23 to FY22 restated at FY23 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: A reconciliation of adjusted EBITDA to operating profit is shown in note 1 to the financial statements.

Note 5: 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 6: 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 13.

Note 7: 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 8: A reconciliation of adjusted diluted EPS to basic EPS is shown in note 9 of the financial statements.

Note 9: Adjusted operating cash flow refers to adjusted cash generated from operations excluding leases, as shown on page 20 of the Financial Review. This is a metric used by management to monitor business performance throughout the year.

Note 10: 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 26. Free cash flow is a key measure of delivering value to our shareholders.

Note 11: 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 24. This measure is a key metric used in our debt covenants.

Note 12: 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. Multi-year agreements are recognised 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 13: Headcount is a measure of total employees working for Wood, including Wood employees and contractors. This measure excludes employees in our joint ventures.

Note 14: Excluding the Gulf of Mexico labour operations business sold in March 2023. Order book at constant currency.

Note 15: 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 that include a decarbonisation element, for our pipeline disclosure we include the proportion of the opportunity that is related to those decarbonisation elements. For our revenue disclosure, we only include revenue if directly within sustainable solutions, with mixed scopes only included if 75% or more of the scope relates to decarbonisation.