Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin Group — Q4 2019 Earnings Presentation
30 slides from Atkinsrealis's earnings presentation, Feb 28, 2020
Slide 1: Fourth Quarter & Year-End 2019 Conference Call Presentation
Fourth Quarter & Year-End 2019 Conference Call Presentation › February 28, 2020 ›
Slide 2: Forward-Looking Statements
Forward-Looking Statements Reference in this presentation, and hereafter, to the “Company” or to “SNC-Lavalin” means, as the context may require, SNC-Lavalin Group Inc. and all or some of its subsidiaries or joint arrangements, or SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint ar
Slide 3: Ian L. Edwards, President and CEO
Ian L. Edwards President and CEO 3
Slide 4: Q4 Highlights: Solid Q4 Results a Step in the Right Direction
Q4 Highlights: Solid Q4 Results a Step in the Right Direction Q4 results show considerable improvement over previous quarters Operating Cash Adjusted Net Cash Balance Consistent Growth in SNCL Projects Flows Income from E&C Increased to $1.2B SNCL Engineering Services $312.2M $79.1M 87% Year-over-
Slide 5: SNCL Engineering Services: Strong Performance in Q4
SNCL Engineering Services: Strong Performance in Q4 › Increase in revenue year-over-year › EDPM: Increased revenue and 9.5% EBIT margins › Nuclear: Revenue in line with Q4 2018 and 18.1% EBIT margin › Infrastructure Services: 20.8% revenue increase compared to Q4 2018 › Backlog increased by $921 mil
Slide 6: Engineering Services Growth Opportunities: EDPM
SNC-Lavalin Engineering Services Growth Opportunities: EDPM Working on transformational projects shaping the future › EDPM Growth Strategy Grow our Core 1 Growth in core regions Maximize position on Transformational projects Lead the transformation of the infrastructure sector by harnessing data and
Slide 7: Engineering Services Growth Opportunities: Nuclear
SNCL Engineering Services Growth Opportunities: Nuclear Building on our industry-leading position in CANDU-related services and products 1 2 3 4 Global nuclear leader Offering services Technology as a Stable business with with ever stronger extending across the full differentiator by leveraging a st
Slide 8: Engineering Services Growth Opportunities: Infrastructure Services
SNCL Engineering Services Growth Opportunities: Infrastructure Services SNC-Lavalin has a strong track record of managing complex projects and a global market-leading position in rail and transit Growth opportunities in Canada and U.S. include: Lower-risk Project Operations and Integrator on and Con
Slide 9: SNCL Projects: Executing LSTK Run-off
SNCL Projects: Executing LSTK Run-off Improved performance; on track to complete 80% of LSTK Projects by 2021 › Infrastructure EPC Projects profitable in Q4 Factors leading to SNCL Projects Loss in Q4 2019: › Resources LSTK backlog reduced by 20% (vs Q3) › Reforecasts on certain Resources LSTK const
Slide 10: Conclusion
Conclusion Company set up for future success and well-positioned for a transformational 2020 Actions taken to significantly SNC-Lavalin’s de-risk the business: Transformation: › Settled Federal charges › Becoming a leading provider of › Significantly reduced leverage ratio professional engineering s
Slide 11: Nigel W.M. White, Executive Vice-President, Project Oversight
Nigel W.M. White Executive Vice-President, Project Oversight
Slide 12: Project Oversight: Implementing Enhanced Controls
Project Oversight: Implementing Enhanced Controls Effectively managing risk › Evidence-based understanding of LSTK backlog through sensitivity in running off the LSTK analyses for each project construction project › Close collaboration with Sector Presidents and project teams to backlog through: pro
Slide 13: Lump-Sum Turnkey Construction Contracts in SNCL Projects Backlog
Lump-Sum Turnkey Construction Contracts in SNCL Projects Backlog SNCL Projects Total Backlog Resources (December 31, 2019) Reimbursable & Engineering Service Contracts $1.0B Resources 35% Main Projects Resources Lump-sum turnkey 2 in North America construction contracts 3 in MENA $4.0B $0.4B Main Pr
Slide 14: Main Lump-Sum Turnkey Construction Projects in Backlog
Main Lump-Sum Turnkey Construction Projects in SNCL Projects Backlog Resources Country Approximate Expected Backlog as at Client Project Completion % substantial Dec. 31, 2019 (SNC-Lavalin completion year ($M) portion) Project #1 MENA 60 2021 <175 Confidential Project #2 North America 50 2021 <75 Co
Slide 15: Expected Phase Out of Main LSTK Projects in Backlog
Expected Phase Out of the Main Lump-Sum Turnkey Construction Projects in SNCL Projects Backlog Backlog Phasing 1,600 Backlog (in C$ millions) 1,400 Infrastructure EPC Projects 1,200 1,000 Resources 800 600 400 200 0 2020 2021 2022 2023 2024 Expected Annual Conversion to Revenue 15
Slide 16: Sylvain Girard, Chief Financial Officer
Sylvain Girard Chief Financial Officer
Slide 17: Q4 2019 Financial Performance (vs Q4 2018)
Q4 2019 Financial Performance (vs Q4 2018) Net loss attributable to SNC-Lavalin Shareholders of $293M Total Segment EBIT1 of $163M › Positive Segment EBIT in SNCL Engineering Services of $191M › Federal charges settlement (PPSC) of $257M (NPV of $280M) › SNCL Engineering Services Segment EBIT (excl.
Slide 18: 2019 Operating Cash Flows
2019 Operating Cash Flows (in M$) Q1 2019 Q2 2019 Q3 2019 Q4 2019 › Full-year 2019 operating cash flow was negative $312 $355M with Q4 positive $312M › Operating cash flow generation from SNCL Engineering Services (excl. Capital) of $732.6M › SNCL Engineering Services Segment EBIT (excl. Capital) co
Slide 19: Strong balance sheet as at December 31, 2019
Strong balance sheet as at December 31, 2019 Credit facilities Debt Revolving Facility Recourse › $2,411M undrawn under the $2,600M $300M Series 1 Debenture Cash revolving Facility maturing May 2022 › Maturity: November 2020 › Interest rate: 2.689% $1,189M › $3,000M uncommitted bilateral facilities
Slide 20: E&C Segment EBIT – Q4 2019 vs Q4 2018
E&C Segment EBIT – Q4 2019 vs Q4 2018 (in M$) SNCL EPC Projects SNCL Engineering Services Q4 2018 included a substantial 23 Resources negative cost reforecast on a major 10 +$323M Mining LSTK project in Chile. 99 93 Infrastructure Higher profitability %, mainly due to (51) EPC Projects improved exec
Slide 21: 2020 Outlook
2020 Outlook Gross revenue from SNCL Engineering Services (excl. Capital) growth Low single digit percentage Segment EBITDA from SNCL Engineering Services (excl. Capital) as % of gross Between 10% and 12% revenue Segment EBIT1 margin (as a % of gross revenue) target: • EDPM 8% to 10% • Nuclear 13% t
Slide 22: Questions & Answers
Questions & Answers ») SNC +LAVALIN
Slide 23: Appendix
Appendix ») SNC+LAVALIN
Slide 24: Project Performance %
LSTK – 2014 to 2019 Project Revenues & Gross Margin % by Activity 20 15 Clean Power 10 Others LRT Project Performance % 5 0 M&M O&G -5 Hospital Roads and Bridges -10 -15 Thermal Power -20 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Project Revenues, in $B M&M: Mining Metallurgy O&G: Oil & Gas Note: incl
Slide 25: 2019 Segment EBITDA: Engineering Services
2019 Segment EBITDA1 SNCL Engineering Services Segment Q1 2019 Q2 2019 Q3 2019 Q4 2019 YTD 2019 EBITDA % (in thousands of $) EDPM (Engineering, Design and Project Management) Revenues 982,955 972,092 969,844 984,009 3,908,900 Segment EBITDA 108,256 108,697 131,578 121,721 470,252 12.0% Nuclear Reven
Slide 26: 2019 Segment EBITDA: SNCL Projects
2019 Segment EBITDA1 SNCL Projects Segment Q1 2019 Q2 2019 Q3 2019 Q4 2019 YTD 2019 EBITDA % (in thousands of $) Resources Revenues 585,232 479,154 561,971 532,498 2,158,855 Segment EBITDA (49,027) (170,002) (37,960) (50,238) (307,227) (14.2%) Infrastructure EPC Projects Revenues 263,773 230,525 288
Slide 27: Capital investments portfolio
Capital investments portfolio Name Description Held Concession Location Equity Since Years Participation 1. 407 EDGGP 32 km H407 East extension (Phase 1) 2012 33 Canada (Ontario) 50% 2. Carlyle Global Infras. Opportunity Fund LP Holding investments in infrastructure projects 2018 n/a United States 4
Slide 28: 407 ETR information – full year
407 ETR information – full year (in M$, unless otherwise indicated) 2019 2018 Change Revenues 1,505.3 1,390.3 8.3% Operating expenses 196.2 179.7 9.2% EBITDA 1,309.1 1,210.6 8.1% EBITDA as a percentage of revenues 87.0% 87.1% (0.1%) Net income 575.7 539.0 6.8% Traffic / Trips (in millions) 125.1 126
Slide 29: 2018 preliminary revised figures: Engineering Services
2018 preliminary revised figures1 On a comparable basis with our new 2019 reorganized structure2 SNCL Engineering Services Segment Q1 2018 Q2 2018 Q3 2018 Q4 2018 Total EBIT % Q1 2019 (in thousands of $) EDPM (Engineering, Design and Project Management) Revenues 879,010 913,604 912,998 970,785 3,676
Slide 30: 2018 preliminary revised figures: SNCL Projects
2018 preliminary revised figures1 On a comparable basis with our new 2019 reorganized structure2 SNCL Projects Segment Q1 2018 Q2 2018 Q3 2018 Q4 2018 Total EBIT % Q1 2019 (in thousands of $) Resources Revenues 757,099 794,648 844,141 605,476 3,001,364 585,232 Segment EBIT 52,348 15,797 49,564 (374,