Global Visionary of the Year: Alexandre L’Heureux is more of an accountant than an engineer, but he’s turned WSP Global into a powerhouse

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Alexander Lisakowski / The Globe and Mail

When Alexandre L’Heureux became CEO of WSP Global Inc. in 2016, he had a minor concern at the back of his mind. Although he had been with the engineering consulting firm for about six years at that point, he was worried that the employees would not accept him as the company’s leader. L’Heureux was the chief financial officer, a numbers man—not an engineer by training.

As it happens, he once tried to become an engineer. Growing up on Montreal’s South Shore, L’Heureux, now 50, harbored dreams of working for the National Aeronautics and Space Administration, otherwise known as NASA. The dream didn’t last long. “I discovered early on that I found engineering very boring,” he recalls. “I said, ‘There’s no way I’m doing this.’” L’Heureux instead pursued accounting, embarking on a career that took him to Deloitte, a hedge fund in Bermuda, a private equity firm and eventually, ironically, WSP’s C -Suit, leading a company of engineers.

But L’Heureux’s mix of skills was exactly what WSP needed at the time. “When you start getting to the scale we’re at now, the qualities you want in your leader aren’t really engineering,” said Christopher Cole, WSP’s board chairman. “They’re strategic skills, they’re financial, they’re risk analysis. I am an engineer, so I say something reluctantly.”

It turns out that employees don’t mind L’Heureux’s lack of formal training. On the day of his campaign, however, the market was not so crowded. “Our stock price, if I’m not mistaken, lost 2% or 3%,” the CEO said.

Since then, the market at L’Heureux has turned around. and fast. Shares in WSP have risen more than 340% since his appointment, the number of employees has doubled to 66,350, and the company has overtaken rival SNC-Lavalin Group in terms of market capitalization. (WSP is valued at $20 billion on the TSX, compared with just $4 billion for SNC.) Much of the growth is due to L’Heureux’s approach to acquisitions, with nearly 80 deals since joining as CFO in 2010 — carefully considered and Value conscious—something no engineering school teaches.

Perhaps most notably, WSP expanded its international footprint. Just 17% of WSP’s revenue is derived from Canada, according to the company’s 2021 annual report, with the largest share coming from the United States and Latin America, followed by Europe, Africa, India and the Middle East. WSP’s catalog of work is as deep as it is eclectic: project management of the refurbishment of the Center Block on Parliament Hill; Flood Control Plan for a River Basin in China; A net-zero strategy for a UK hospital; Assessment of bat habitats in Ontario and Quebec; Congestion Pricing and Evaluation for the Swedish Transport Administration; And figuring out how to reduce vortex shedding — when wind causes a building to vibrate — in one of the world’s tallest residential condos in Manhattan.

The reputation WSP enjoys among both analysts and investors nonetheless creates high expectations, putting pressure on L’Heureux to deliver consistent growth, expand margins and not derail the integration of its largest purchase — the $2.3-billion purchase of the Environment and Infrastructure division. British company John Wood Group earlier this year.

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WSP grew out of a boutique engineering and construction firm in Quebec called Geneva, which was initially formed through the merger of two local companies founded in the late 1950s. Geneva remains mostly confined to her home country, working on projects such as the renovation of BC Place in Vancouver, which was completed in 2011. The following year, the company bought WSP Global, then a British professional services firm, to help build the global stage. Expansion of the past decade. (Jennifer changed its name to WSP in 2014.)

Over the years, the company has moved into consulting services and away from fixed-price construction projects, which are prone to delays, cost overruns and losses. “They were basically too smart to get out [construction] business,” said Dmitry Khmelnitsky, an analyst at Veritas Investment Research. Meanwhile, SNC-Lavalin reports a huge loss every few years, he noted.

WSP is also benefiting from a few big trends. Governments in Canada, the US, the UK and Australia plan to invest billions of dollars in infrastructure over the next few years, while countries around the world are trying to decarbonise their economies – retrofitting buildings, developing renewable energy projects, etc. That requires the kind of environmental consulting expertise that WSP provides.

But trends alone are not enough to boost WSP’s fortunes. Everything still comes down to execution, which is where L’Heureux comes in. His time as an accountant at Deloitte in the 1990s was more influential than one might expect. The accounting and consulting world is largely dominated by four major firms, and the engineering and professional services space appears to be moving in the same direction. It is highly fragmented, with numerous boutique and medium-sized firms poised for consolidation. “It’s not by accident that I spend a lot of time looking at what I believe are the most successful professional services firms in the world,” says L’Heureux. “How are they doing globally? How can we replicate something?”

Global growth inevitably means acquisitions, and L’Heureux has a simple framework for buying a company. To begin with, there must be a good reason for the deal, and a potential purchase must fit within its three-year strategic plan for the firm. Price is crucial—WSP has a track record of being disciplined, analysts say—as is culture fit. In fact, in some cases, L’Heureux spent years talking to executives at other firms to understand their values ​​and motivations. Engineering is a profession, he points out, unlike medicine or science. “If I don’t find that sense of vocational mentality,” he says, “and they’re there for money or for reasons other than building a better tomorrow, we’re not going to do the deal.”

Finally, L’Heureux needed to be sure he could sell the deal. “I have to look at myself in the mirror, and I imagine myself on stage in front of all our employees,” he says. He asks himself if he can explain the merits of the transaction. Sometimes he can’t. “Many times, I’ve passed on fantastic deals on paper,” L’Heureux says, describing the exercise as a last “sanity check.”

This past August, when WSP announced a deal to buy a British firm called RPS Group, the sale seemed to check all the boxes. RPS handles a lot of work in the environmental sector—an area where L’Heureux wants to grow according to its latest strategic plan—especially in water and wastewater management, where WSP is not represented. Its offer valued the company at just under $1 billion — not an unreasonable price, even if some analysts noted it was on the high side.

But then another bidder emerged. US rival Tetra Tech Inc has struck a deal with richer valuations attached to it. L’Heureux was not surprised that another bidder was waiting in the wings and his next move was obvious. The RPS was fully valued, in his view, and there was no good reason to overpay. “You have to stay true to your DNA, be disciplined,” L’Heureux says.

Just because the decision was obvious doesn’t mean it was easy. L’Heureux had already spent time convincing the board it was a good deal. Now he had to explain why the company would go away. Cole said L’Heureux’s decision-making process on deals is typical of his as CEO. His gut instinct wasn’t to get into a bidding war, Cole recalls, but L’Heureux then spent time testing and proving his intuition. “He came back to the board with a very reasoned response to why intuition was now validated in his mind,” Cole said.

“It’s not by accident that I spend a lot of time looking at what I believe are the most successful professional services firms in the world. How are they doing globally? How can we replicate something?”

Alexandre L’Heureux

While L’Heureux thought the purchase would expand WSP’s power in a few areas, it was not critical. Other opportunities will arise, and the company has already integrated about 6,000 employees from John Wood’s environmental division, a deal that closed in September.

The ability to absorb a company into a larger entity is one of the things L’Heureux maps out beforehand. This is partly why he is so concerned about culture, but the structure of the organization is equally important. WSP is organized by geography, not by business line. There is a CEO for Asia, for example, but no CEO for transport infrastructure. Acquiring a differently structured company would require a massive reorganization of people and resources, so L’Heureux looked for firms that could be absorbed with minimal fuss. He describes himself as “hands-on” as a CEO, and the company doesn’t have a chief operating officer so he can relate directly to the executives running each division.

L’Heureux will need to stay in touch with those leaders in the coming months. While macroeconomic factors have worked in WSP’s favor in recent years, the risk of recession is rising, and inflation is driving up project construction costs. About half of WSP’s work is for the public sector, which is better insulated in a recession, according to Khmelnytskyi. But private-sector clients are more likely to postpone projects, which can be problematic for WSP because its work can be short-term and therefore requires a constant flow of new orders.

For his part, L’Heuruex said WSP is lean, especially after spending about $100 million in cost cuts in the first months of the pandemic, and has little in the way of fixed costs today. Also, the company’s order backlog is still growing. As of the second quarter of 2022, it stood at a record $11.4 billion, a 19% jump from the same period last year. RBC analyst Sabahat Khan said, given WSP’s strong balance sheet, the economic uncertainty could present an opportunity for the firm to do more deals. “Note that WSP has not been shy about making significant acquisitions during periods of past uncertainty,” Khan wrote in a recent note. During the depth of the pandemic in December 2020, for example, WSP announced a deal to buy environmental consulting firm Golder Associates.

A potential recession and inflation aren’t even at the top of L’Heureux’s list of concerns. He is more concerned about preserving the culture at WSP. Not surprisingly, he draws an example from the accounting world: Arthur Andersen, which collapsed in scandal two decades ago. “They became restless, they became complacent, and they thought they were better than others,” she says. “We have to make sure we stay humble. The day you think you’re too big to fail, trouble strikes.

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Global Visionary of the Year: Alexandre L’Heureux is more of an accountant than an engineer, but he’s turned WSP Global into a powerhouse

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