Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin Group — Q3 2016 Earnings Presentation
24 slides from Atkinsrealis's earnings presentation, Nov 3, 2016
Slide 1: Third Quarter 2016 Conference Call Presentation
› Third Quarter 2016 › Conference Call Presentation › November 3rd, 2016
Slide 2: Agenda
Agenda Forward-looking statements › Denis Jasmin, Vice-President, Investor Relations CEO remarks › Neil Bruce, President and Chief Executive Officer Financial overview › Sylvain Girard, Executive Vice-President and Chief Financial Officer Q&A
Slide 3: 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 4: Q3 2016 results
Q3 2016 results › Q3 2016 IFRS net income attributable to SNC-Lavalin shareholders of $43.3M, or $0.29 per diluted › Q3 2016 adjusted net income from E&C of $24.4M, or $0.16 per diluted share › Negative Segment EBIT from Oil & Gas of $28.1M, which included $117M adverse impact on two projects › SG&A
Slide 5: Oil & Gas
~$4B revenue business with ~20,500 Oil & Gas employees Revenues of $1.0B in Q3, highest quarter of 2016 Backlog remains strong at $3.6B Contract award in Q3 for construction services in Mozambique Contract award in Q3 for engineering consultancy and support services in Qatar Gorgon project in Austra
Slide 6: Mining & Metallurgy
~$500M revenue business with ~2,000 Mining & Metallurgy employees Challenging sector affected by lower commodity prices, impacting capital investments Sustainable EBIT % SG&A being adjusted to new reality Contract awards in Q3 for two potash projects in Quebec and Utah Solid prospects in front of us
Slide 7: Power
~$2B revenue business with ~3,500 Power employees Sustainable backlog Agreement signed in Q3 for a new JV with China National Nuclear Corporation & Shanghai Electric Group Company, to develop, market and build the AFCRTM Framework agreement of up to $400M signed with Bruce Power, for engineering and
Slide 8: Infrastructure (I&C + O&M)
~$3B revenue business with ~10,000 Infrastructure (I&C + O&M) employees EBIT margin continues to improve 6.6% Q3 I&C EBIT, highest quarter of 2016 8.5% Q3 O&M EBIT, highest quarter of 2016 New awards in Q3 2016 of ~$600M Two-year $180M contract extension recently awarded by the Government of Canada,
Slide 9: Capital
Portfolio of value creating assets Capital New structure for our North American concession investments (excl. H407): Strong interest from investors, but completion longer than expected Focused on maximizing value rather than speed of completion Working towards the right structure to maximize value W
Slide 10: Q3 Financial performance summary
Q3 Financial performance summary E&C Capital Total Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Revenues 2,101 2,376 68 57 2,169 2,433 SG&A 129 202 12 6 141 208 EBITDA, adjusted 46 138 47 47 93 185 EBITDA margin 2.2% 5.8% n/a n/a 4.3% 7.6% Net income, as reported 0 33 43 191 43 224 Net income, ad
Slide 11: Q3 2016 reconciliation
Q3 2016 reconciliation (in M$) › If we exclude: Unfavorable cost and revenue › O&G unfavorable cost and revenue reforecasts on 2 O&G projects in (117) reforecasts on two projects in Middle East Middle East › Favorable impact from revised estimates in O&G EBIT, excluding above 81 Corporate SG&A › Q3
Slide 12: E&C segment EBIT – Q3 2016 vs Q3 2015
E&C segment EBIT – Q3 2016 vs Q3 2015 M&M (in M$) Mainly due to lower volume of activity, -90 partially offset by increased GM% 70 (close out process on certain major int’l 62 +7 projects). 60 -12 O&G 50 Unfavorable cost and revenue 41 reforecasts on 2 projects in Middle East 40 -8 operating under t
Slide 13: A sustainable and diversified backlog
Strong Backlog Sept. 2016 $11.8B A sustainable and diversified backlog (in B$) As at Sept. 30, 2016 15 13.4 12.5 12.0 11.8 M&M 2% 10 Power 22% 5 O&G 31% 0 Infrastructure 45% Dec. 15 March 16 June 16 Sept. 16 Fixed-Price Reimbursable 13
Slide 14: Operating Cash Flow YTD (9 months)
Operating Cash Flow YTD (9 months) Improved cash flow from operations 2016 2015 Q1 Q2 Q3 YTD (9 mths) (3 mths) (3 mths) (3 mths) (9 mths) Cash Balance as December 31, 2015 1,582 187 Cash flow from operations (134) (82) Inflow on disposals of Capital investments 102 (134) (239) Capital expenditures (
Slide 15: Solid financial position
Solid financial position (in M$) September 30, 2016 December 31, 2015 Assets Cash and cash equivalent 896 1,582 Other current assets 3,350 3,616 Property and equipment 276 265 Capital investments accounted for by the equity or cost methods 431 468 Goodwill 3,142 3,387 Intangible assets related to Ke
Slide 16: Outlook
Outlook › We expect that the Oil & Gas and Infrastructure segments will be the main contributors to net income, while Mining & Metallurgy will likely be the smallest contributor to net income. Outlook 2016 Adjusted diluted Target EPS from E&C 7% $1.30 $1.60 adjusted E&C EBITDA margin in 2017 ($0.36
Slide 17: Questions & Answers
Questions & Answers
Slide 18: Appendix
Appendix
Slide 19: Capital investments portfolio
Capital investments portfolio Name Description Held Concession Location Equity Since Years Participation Highways, Bridges & Rail 1. Highway 407 (407 ETR) 108 km electronic toll road 1999 99 Canada (Ontario) 16.8% 2. InTransit BC Rapid transit line 2005 35 Canada (B.C.) 33.3% 3. Okanagan Lake Floati
Slide 20: 407 ETR information – Q3
407 ETR information – Q3 (in M$, unless otherwise indicated) Q3 2016 Q3 2015 Change Revenues 321.3 277.6 15.7% Operating expenses 36.4 40.8 (10.8)% EBITDA 284.9 236.8 20.3% EBITDA as a percentage of revenues 88.7% 85.3% 3.4% Net Income 115.9 97.9 18.4% Traffic / Trips (in millions) 33.5 32.3 3.7% Av
Slide 21: 407 ETR
407 ETR Consistent growth and low cost of financing 730 750 680 Gross Vehicle Kilometres Travelled Dividends 600 (in millions - km) (in M$) 460 Total dividends paid 2,517 by 407 ETR 2,437 300 Dividends received 2,336 2,326 2,340 2,356 by SNC-Lavalin 2,253 2,253 190 2,215 145 135 120 114 122 126 2,12
Slide 22: Diversity of revenue base – by segment
Diversity of revenue base – by segment (in B$) YTD 2016 2015 (9 Months) (12 Months) 3% 2% $0.2 $0.2 5% $0.8 $0.3 $0.2 8% $0.8 19% $1.2 19% $1.2 43% 41% $1.8 $2.7 $3.9 $3.9 30% $1.9 30% $1.8 $2.9 O&G O&G Infrastructure (I&C + O&M) Infrastructure (I&C + O&M) Power Power M&M M&M Capital Capital YTD 201
Slide 23: Net income reconciliation – Q3
Net income reconciliation – Q3 (in M$, except per share amount) Net Income, Net charges Acquisition of Kentz One-time net Net gain on Net income, as reported related to the foreign Capital adjusted restructuring exchange gain Investment and right-sizing Acquisition- Amortization of disposals plan an
Slide 24: Net income reconciliation – YTD 2016
Net income reconciliation – YTD 2016 (in M$, except per share amount) Net Income, Net charges Acquisition of Kentz One-time net Net gain on Net income, as reported related to the foreign Capital adjusted restructuring exchange gain Investment and right-sizing Acquisition- Amortization of disposals p