John Wood Group (WG) H1 2024 earnings summary

Executive summary

• Adjusted EBITDA rose 8.5% year-over-year to $219 million, with margin expanding to 7.7% due to improved business mix and pricing, despite a 5% revenue decline to $2.8 billion as the business shifted to higher quality, higher margin work.

• Order book increased 3.6% to $6.2 billion, reflecting strong bookings, a focus on high-margin work, and contract wins in sustainable solutions and energy transition projects.

• Significant progress on transformation strategy, including exit from LSTK/EPC, simplification program, and non-core asset disposals, with $60 million annualized cost savings targeted from 2025.

• Statutory results impacted by $966 million in exceptional items, including an $815 million goodwill impairment and $140 million in charges from exiting EPC/LSTK work.

• Net debt (excluding leases) rose to $876 million, reflecting working capital seasonality and exceptional cash outflows.

Financial highlights

• Adjusted EBIT increased 14.2% to $102 million; adjusted diluted EPS up 127% to 2.5c, driven by EBIT growth and lower tax charge.

• Operating cash flow of $51 million in H1, with adjusted operating cash flow up 29% year-over-year.

• Free cash outflow improved to $(168) million, with net debt/EBITDA at 2.5x.

• Order book up 3.6% year-over-year to $6.2 billion; operations order book up 6%, projects down 2%, consulting down 8%.

• Operating loss of $899 million and loss for the period of $983 million, mainly due to exceptional items.

Outlook and guidance

• High single-digit adjusted EBITDA growth expected in 2024, with performance weighted to H2 due to seasonality and simplification program benefits.

• 2025 outlook reconfirmed: adjusted EBITDA growth above medium-term targets, $60 million annualized simplification benefits, and significant free cash flow expected.

• Net debt at year-end 2024 expected to be similar to 2023 after planned disposals.

• Exceptional cash outflows in 2024 to be ~$125 million, reducing to $30 million per year from 2026.