Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin Group — Investor Day (October 2021)
115 slides from Atkinsrealis's investor day presentation, Oct 29, 2021
Slide 1: SNC-Lavalin Investor Day
SNC-LAVALIN — Investor }D =: Dae
Slide 2: Agenda
2 Agenda 8:30 am Welcome and Opening Remarks 10:35 am Break Denis Jasmin VP, Investor Relations 10:40 am Driving Profitable Growth in O&M and Capital Stéphanie Vaillancourt President, Capital & O&M 8:35 am Pivoting to Growth and Creating Value Ian Edwards President & Chief Executive Officer 11:00 am
Slide 3: Forward-Looking Statements and Non-IFRS Financial Measures
3 Forward-Looking Statements, Forward-Looking Financial Information and Outlook 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 associates, or SN
Slide 4: Pivoting to Growth and Creating Value
Pivoting to Growth and Creating Value IAN EDWARDS PRESIDENT & CHIEF EXECUTIVE OFFICER Investor >) =
Slide 5: The Company of Choice to Meet the Demands of the Future
5 The Company of Choice to Meet the Demands of the Future Leading Expert and Premier Professional Integrated Partner Thought-Leader in Services and Project Delivering Innovative Sustainability and Management Digital Solutions to Engineering Net Zero Company Transform Industry Hinkley Point C CDOT Tr
Slide 6: Pivoting to Growth
6 Pivoting to Growth FIX STRENGTHEN GROW 2019 2020 2021 2022 2023 2024+ Derisked the business Focusing on core Leveraging industry and divested non-core assets SNC-Lavalin leading capabilities businesses and and reputation to drive Built and expanded returning to investment growth in core markets a
Slide 7: Experienced Leadership Team Focused on Execution
7 Experienced Leadership Team Focused on Execution Ian Edwards Jeff Bell Philip Hoare Steve Morriss Bob Alger Stéphanie Vaillancourt Sandy Taylor President and Executive Vice-President President, Eng. Services President, Eng. Services President, President, President, Chief Executive Officer and Chie
Slide 8: Experienced Board of Directors
8 Experienced Board of Directors B O A R D S K I L L S M AT R I X Corporate Experience 100% Strategic Planning 90% Industry Experience 80% Ian Edwards William (Bill) Young Gary Baughman Mary-Ann Bell Christie Clark M&A 80% President and Co-founder, Chairman and CEO, SVP, Bell Aliant Regional CEO and
Slide 9: Our Values
9 Our Values Our values are the essence of our company’s identity. They represent how we act, speak and behave together, and how we engage with our clients and stakeholders We put safety at the heart of everything we do, to safeguard people, assets and the environment We do the right thing, no matte
Slide 10: Attracting the Best Talent in the Industry
10 Attracting the Best Talent in the Industry SNC-LAVALIN ATTRACTS THE BEST EQUALITY, DIVERSITY & INCLUSION DEVELOPMENT TALENT IN THE INDUSTRY Programmes, milestones/accomplishments Delivering world-class professional, › Track record, brand and organizational › Our employees speak ~70 languages mana
Slide 11: Risk Oversight / Management
11 Risk Oversight / Management BENEFITS/OUTCOMES Strengthened Strengthened Risk Appetite > Improved predictability Enterprise Risk Commercial and Legal Statement established Management oversight / support > Consistent performance > Improved profitability and cashflows Oversight Function > Improved t
Slide 12: Our Transformation Journey
12 Our Transformation Journey Ceased bidding on LSTK BACKLOG REDUCED FROM June 2021 EDPM backlog new LSTK work $3.4B to $1.4B achieves record FROM JULY 2019 UNTIL JUNE 2021 high July 2020 August 2021 HEAVY LIFTING TO FIX AND STRENGHTEN Announced Closing of Resources Business Resources O&G Divesting
Slide 13: Strategically Engineering Our Future
13 Strategically Engineering Our Future WHERE WE PLAY Strongly positioned with a leading presence across Canada, the U.S. and the UK, as well as targeted operations in Europe, the Middle HOW WE WIN East, Asia-Pacific and Latin America; Deploying global capabilities locally primary focus on built and
Slide 14: Serving Diversified End Markets with Focused Capabilities
14 Serving Diversified End Markets with Focused Capabilities MARKET LEADER ~75% › UK Water Infrastructure 2020 Revenue LEADING › UK Transport Infrastructure PRESENCE › Canada Transport Infrastructure (CANADA, U.S., UK) › Canada Power and Renewables › Canada Nuclear Technology ~25% (CANDU) 2020 Reven
Slide 15: Fully Integrated Professional Services and Project Management Company
15 Fully Integrated Professional Services and Project Management Company C O M PA N Y A N D F I N A N C I A L S TAT S 2020 2020 M ARKET COUNT RIES TOTAL HEADQUART ERS FOUNDED TOTAL REVENUE BACKLOG CAP1 SERVED EM PLOY EES2 Montreal, Canada 1911 $7.0B $13.2B $6.1B 50 ~31,000 REVENUE (H1 2021) B A C K
Slide 16: Socially and Environmentally Responsible
16 › Socially and Environmentally Responsible NET ZERO CARBON 2030 CORPORATE SOCIAL RESPONSIBILITY UN GLOBAL COMPACT Set annual targets, externally verified, with › Progressive Aboriginal Relations (PAR) Programme 12 Key ESG targets and annual updates published via the Carbon › Local Resources Devel
Slide 17: Our ESG Journey
17 Our ESG Journey ACCOMPLISHMENTS OBJECTIVES Published 33% Engineering Net of women across 30% Zero reports for the organization CA & UK by 2025 of WOMEN across the organization 25% of WOMEN among Created our senior leadership team Designated 2030 Net Zero Signed UN Target routemap Increase use of
Slide 18: How We Win
18 How We Win E N D - T O - E N D S E R V I C E S C A PA B I L I T I E S Consulting, Intelligent Design & Procurement Project & Operations & Capital Decommissioning Advisory & Networks & Engineering Construction Maintenance Environmental Cybersecurity Management (O&M) SEGMENTS1 Services Engineering
Slide 19: Leveraging Our Capabilities Across Attractive Markets and Geographies
19 Leveraging Our Capabilities Across Attractive Markets and Geographies GLOBAL MEGA TRENDS OUR UNIQUE CAPABILITIES GROWTH › Government commitment to › Delivering end-to-end services › Well-positioned to capitalize address aging infrastructure across all life cycle of an asset on infrastructure spen
Slide 20: How We Grow to Create Long-Term Value
20 How We Grow to Create Long-Term Value Greater FCF* to Well-positioned Great set of deploy toward for organic growth capabilities to strategic bolt-on in strong markets drive growth acquisitions *Non-IFRS financial measures. See the cautionary statement regarding Non-IFRS financial measures at sli
Slide 21: Growing and Creating Value by Investing in Organic Growth
21 Growing and Creating Value by Investing in Organic Growth KEY GROW TH AREAS Engineering Services Nuclear Decommissioning Major Programmes Digital Transformation U.S. Expansion and Waste Management › Opportunity to leverage our › Pioneering new data driven › Increased infrastructure › Strong deman
Slide 22: Strategic Bolt-on Acquisitions to Fuel Inorganic Growth
22 Strategic Bolt-on Acquisitions to Fuel Inorganic Growth S T R AT E G I C F I LT E RS Aligned Primarily core Bolt-on / Expands with overall regions1 and white space capabilities growth strategy end markets2 opportunities Accelerate our strategy through bolt-on acquisitions in highly attractive and
Slide 23: Financial Targets and Capital Allocation Priorities (2022-2024)
23 Financial Targets and Capital Allocation Priorities (2022-2024)1 SNCL SERVICES C O N S O L I D AT E D Capital Allocation Priorities ( A N N U A L LY ) (BY END OF 2024) › Improve debt leverage to achieve investment grade › Prioritize positive FCF** to accelerate the strategy through organic and OR
Slide 24: Key Takeaways
24 Key Takeaways 1 2 3 Strongly positioned with a Deploying global capabilities locally Creating value through the leading presence across to our clients and delivering unique breadth and depth of our Canada, the U.S. and the UK, as end-to-end services across the capabilities, consistently deliverin
Slide 25: Engineering the Future
Engineering the Future PHILIP HOARE PRESIDENT, ENGINEERING SERVICES (CA, UK&E, ME) Investor >) =
Slide 26: Key Messages | Engineering Services
26 Key Messages | Engineering Services Substantial depth and breadth of services in Engineering & Design, Projects & 1 Programme Management and Consultancy & Advisory Services 2 Strong global reputation provides a foundation for growth Global Market Networks and Global Practices align and optimize o
Slide 27: Engineering Services | Delivering Local Services on a Global Scale
27 Engineering Services | Delivering Local Services on a Global Scale REVENUE AND EM PLOYEES BY REGION R E V E N U E S E G M E N TAT I O N 2 CLIENT T Y PE SERVICE LINE M ARKET C AN AD A UK & EUROPE 4 . 0 K e m p lo ye e s 9 . 4 K e m p lo ye e s $0.6B $1.8B 3% 10% 9% 29% 20% 38% 10% 45% 10% AS IA P
Slide 28: Delivering world class projects across key end markets
28 Delivering world class projects across 6 key end markets Transportation Defence Defence Industrial & Transportation Defence Mining Project NEON Urban Freeway Improvements Confidential Client Cyber Risk Assessment Medicago Production Facility Nevada, USA Confidential Location Quebec City, Canada B
Slide 29: A Solid Pipeline to Underpin Future Engineering Services Performance
29 UK & E U R O P E $660M A Solid Pipeline to Underpin Future Engineering Services Performance PROSPECT PIPELINE* ( $B) 5.7 5.6 0.3 0.3 0.2 Canada: 5.0 0.4 0.3 Greater Toronto Area 0.9 0.6 0.4 UK: major projects 0.8 including HS2, East 1.4 West Rail and Lower 1.6 USA: Thames Crossing 1.2 Biden Infra
Slide 30: Sustainable Competitive Advantages that Drive Growth
30 Sustainable Competitive Advantages that Drive Growth 1 2 3 4 Comprehensive end-to- Reputation for high-quality Leadership driven by a Market-leading Global end capabilities span all engineering services collaborative culture with Technology Centre in aspects of project lifecycle and and deep, lon
Slide 31: Strategically Engineering Our Future
31 Strategically Engineering Our Future WHERE WE PLAY Strongly positioned with a leading presence across Canada, the U.S. and the UK, as well as targeted HOW WE WIN operations in Europe, the Middle Deploying global capabilities locally East, Asia-Pacific and Latin America; to our clients and deliver
Slide 32: Engineering Services Snapshot (CA, UK&E, ME)
32 Engineering Services Snapshot (CA, UK&E, ME) KEY PROJECTS East West Rail (UK) Project Management, Design Delivery, Consents and Planning Permissions, Risk Management, Project Controls, Signalling Construction, System Assurance and Environment & Ecology Darwen Wastewater Treatment Works Canada Lin
Slide 33: UK Client Partnership Focus Drives Value
33 UK Client Partnership Focus Drives Value Customer Name Type of Engagement Start of Engagement Network Rail Rail engineering consultancy/design and signaling design & installation 1995 MoD (including AWE, Project management, engineering consultancy/design and business change related 1990 Babcock,
Slide 34: Canada Client Focus Drives Value
34 Canada Client Focus Drives Value Customer Name Type of Engagement Start of Engagement Ministère des Transports du Québec 1960 Société de Transport de Montréal 1991 Various services including Consulting, Environment and Metrolinx Geotechnical services, Design, Engineering, Project 1991 Management
Slide 35: Collaborative Contracting Case Study: High Speed 2 (HS2) Project
35 Collaborative Contracting Case Study: High Speed 2 (HS2) Project PROJECT DESCRIPTION SNC-LAVALIN SOLUTION › ~$150B project delivers the first › Developed and grew relationship with client since high speed railway in the UK, 2001 to a $60M+ revenue in 2020 linking up London, the Midlands, › Develo
Slide 36: Track Record of Successful Bolt-on Acquisitions
36 Track Record of Successful Bolt-on Acquisitions Confluence Project Management Pte. Ltd. ACQUISITION CLOSE October 2010 October 2013 November 2014 November 2017 # OF EMPLOYEES 3,500 200 62 70 HQ LOCATION Tampa, FL Singapore Oslo Orlando, FL ACQUISITION Transformational U.S. Bolt-on acquisition in
Slide 37: A Culture of Continuous Improvement and Collaboration
37 A Culture of Continuous Improvement and Collaboration Established reputation and culture of SNC-Lavalin attracts top talent › 88% of staff are proud to work for SNC-Lavalin and 85% would recommend as an employer1 We value and recognize technical excellence › Over 23,000 qualified staff delivering
Slide 38: Engineering Net Zero is at the Heart of Our Business
38 Engineering Net Zero is at the Heart of Our Business As a leader in the design and delivery of the built environment, SNC-Lavalin has › OUR CREDENTIALS a unique role to play in influencing what gets built, and how new technologies and Buildings & Cities Energy methods can be used to create and op
Slide 39: Leading Industry Transformation by Combining People, Technology and Data
39 Leading Industry Transformation by Combining People, Technology and Data As a leader in the design and delivery of the built environment, SNC-Lavalin has a unique role › OUR CREDENTIALS to play in influencing what gets built, and how new technologies and methods can be used to Design Transformati
Slide 40: Addressing Market Needs with Focused Solutions
40 Addressing Market Needs with Focused Solutions M ARKET DYNAM IC S N C - L AVA L I N A D VA N TA G E › Public and private UK infrastructure investment › Established relationship with key government forecast to be nearly £650B to 20301 and Canada clients positions SNC-Lavalin to drive infrastructur
Slide 41: Leveraging Our Capabilities to Drive Growth
Leveraging Our Capabilities to Drive Growth STEVE MORRISS PRESIDENT, ENGINEERING SERVICES (U.S., APAC, M&M) CHAIR, LINXON
Slide 42: Engineering Services Snapshot (U.S., Asia, Australia, M&M)
42 Engineering Services Snapshot (U.S., Asia, Australia, M&M) K E Y P R O J E C TS AN D C U S TO M E R S US Army Corp of Engineers (USACE) Delivering for USACE at home and abroad Tung Chung Line (MTR Colorado Department of Federal Emergency Management Corporation) Transportation (CDOT) Agency (FEMA)
Slide 43: Leading Expertise in Substation Engineering
43 Leading Expertise in Substation Engineering MARKETS AND DRIVERS • Linxon is a company built on 100 years of technology expertise, and 60 years of • Organic growth >30% over last 2 years substation experience worldwide • Backlog of $800M USD • We combine Hitachi ABB Power Grids' deep technological
Slide 44: Why the U.S.? The Market
44 Why the U.S.? The Market SIZE World’s largest INFRA Market › $5T USD infrastructure gap1 › $1T USD additional infrastructure package GROW TH Covid recovery stimulus voted at Senate2 › Additional $550B USD in infrastructure spending3 › State and local clients developing long-term, CLIENTS Value de
Slide 45: Why the U.S.? We Have Proven We Can Grow in the U.S.
45 Why the U.S.? We Have Proven We Can Grow in the U.S. › ENR ranking 17 POSITION Strong reputation, critical mass › 3,100 employees1 with revenues2 of $1.0B › >6,000 ongoing projects from >900 clients › Market subject to the same macro trends MEGA TRENDS Digital, decarbonization, partnering that we
Slide 46: How Do We Win? Organic Growth Playbook
46 How Do We Win? Organic Growth Playbook DEVELOP STRATEGICALLY TARGETED INVEST RELATIONSHIPS WIN BUSINESS LEVERAGE OUR 1 2 3 CAPABILITIES TO DELIVER ESTABLISH DRIVE FURTHER SUCCESSFULLY TRACK RECORD EXPANSION 4 5 6 Leveraging success in developing and expanding relationships to drive further growth
Slide 47: Organic Growth through Land and Expand Strategy
47 Organic Growth through “Land and Expand” Strategy Start of 5-Year Revenue Customer Name Type of Engagement Engagement growth1 Florida Department of Transportation 1960 53% Various services including General Engineering Texas Department of Transportation Consulting, Planning, Environmental, Right
Slide 48: Case Study: Helping FEMA Advance Nationwide Disaster Resiliency
48 CASE STUDY: Helping FEMA Advance Nationwide Disaster Resiliency INDUSTRY NEED SNC-LAVALIN SOLUTION › Help communities prepare for, › Innovation with cutting-edge solutions to respond to and recover from “old” problem sets natural and manmade disasters › “FEMA First” strategy to further solidify ›
Slide 49: FEMA Case Study: How Did We Win?
49 FEMA CASE STUDY: How Did We Win? WINNING CAPABILITIES CLIENT FOCUSED PROPOSITION • Water Resources River and Coastal Engineering • Digital transformation proposal • Geographical Information Systems (GIS) • Flexible approach • Environmental Scientists • Reduced administration required by client •
Slide 50: Track Record of Successful Organic Growth
50 Track Record of Successful Organic Growth REVENUE SEGMENT ADJ. EBIT TO IN THE U.S. ($B CAD) S E G M E N T R E V E N U E R AT I O * IN THE U.S. (%) 2017 2020 2017 2020 *Non-IFRS financial measures. Refer to Section 9 of the Company’s Q2 2021 MD&A for Non-IFRS financial measures definition and reco
Slide 51: U.S. Market Growth through White Space Opportunities
51 U.S. Market Growth through White Space Opportunities EXPANDING SPACE Seattle New York City Los Angeles FUTURE EXISTING EXPANSION HUBS Chicago (Midwest) Mid Atlantic
Slide 52: Opportunity to Accelerate Growth – Adding Value Through Acquisition
52 Opportunity to Accelerate Growth – Adding Value Through Acquisition › Fragmented U.S. market ripe for disruption › Robust pipeline of attractive bolt-on acquisition candidates in key white space areas › Targets in the market typically have attractive financial profiles with strong margins and gro
Slide 53: Engineering Services Conclusion
Engineering Services Conclusion Investor >) =
Slide 54: Engineering Services | Measuring Success through Clear KPIs
54 Engineering Services | Measuring Success through Clear KPIs $4.2B $3.6B 11.0% 2020 REVENUE BACKLOG BACKLOG GROWTH (As of June 30, 2021) (OVER PAST 2 YRS.)1 TAR G E T S 2 0 2 2 - 2 0 2 4 ( AN N U AL LY ) 4-6% 8-10% 14-16% ORGANIC SEGMENT ADJ. EBIT SEGMENT ADJ. EBITDA REVENUE GROWTH TO SEGMENT TO S
Slide 55: Key Takeaways | Engineering Services
55 Key Takeaways | Engineering Services 1 2 3 4 5 Substantial depth Strong global Global market Targeted Well-positioned and breadth of services reputation provides networks and investments in to accelerate in Consultancy & Advisory a foundation for global practices digital technology Engineering Se
Slide 56: Q&A Session
Q&EA Session Investor >) =
Slide 57: Break
Break Investor >) =
Slide 58: Driving Profitable Growth in O&M and Capital
Driving Profitable Growth in O&M and Capital STEPHANIE VAILLANCOURT PRESIDENT, O&M AND CAPITAL Investor >) =
Slide 59: Key Messages | O&M
59 Key Messages | O&M Integrated One SNC-Lavalin Strategy, leveraging Engineering Services and Capital, 1 provides pathways to target revenue growth opportunities Opportunity to participate in outsourced O&M market and further penetrate the in-house 2 market through integrated asset and data managem
Slide 60: O&M Snapshot
60 O&M Snapshot Operating Segments 2020 REVENUE BACKLOG Transportation (A s at J une 30 t h, 2021) › Highways and bridges › Light rail transit systems 22% 15% 37% Facilities & Defence $464M 22% $5.8B › Full service of private and public social infrastructure and commercial property 63% 41% › Integra
Slide 61: Leveraging Decades of Expertise with New Strategic Direction for Profitable Growth
61 Leveraging Decades of Expertise with New Strategic Direction for Profitable Growth 2017 Acquisition 1996, Atkins 1998 SNC-Lavalin ProFac of Atkins brings O&M strategy aligned wins its first rebrands to SNC-Lavalin 2013 Atkins sells asset management with new SNC-Lavalin FUT URE FOCUS highways O&M
Slide 62: Well-Positioned to Capitalize on O&M Market Trends
62 Well-Positioned to Capitalize on O&M Market Trends • • • • Decarbonization Access to SNC-Lavalin’s Digital Asset Premier asset and Net Zero broad capabilities and Management management advisory expertise in carbon reduction capabilities, data strategies positions O&M as analytics, asset data an i
Slide 63: Forward Thinking Solutions to Accelerate Growth
63 Forward Thinking Solutions to Accelerate Growth WHERE WE PLAY Strongly positioned with a leading presence across Canada and targeted operations in the US, UK and Middle-East, primarily focused HOW WE WIN on the built and natural environment Deploying global capabilities locally across clearly def
Slide 64: 1. Optimizing and Leveraging Our Existing Contracts
64 1. Optimizing and Leveraging Our Existing Contracts Our O&M contract experience informs and reinforces our consulting Expand key public sector client relationships by identifying practice and vice versa opportunities to build upon existing contracts through value enhancing propositions and contra
Slide 65: 2. Pursuing New P3 Opportunities
65 2. Pursuing New P3 Opportunities › SNC-Lavalin’s P3 O&M/FM1 contracts have yielded higher-than-industry margins than on non-P3 O&M/FM contracts › Robust pipeline of projects in Canada, U.S. and UK › Investing equity alongside O&M enhances the overall return to SNC-Lavalin and provides better cert
Slide 66: 3. Intelligent O&M Contracts
66 3. Intelligent O&M Contracts O&M/FM1 Asset › Intelligent O&M is being able to provide smart infrastructure Delivery Integrate Management management solutions Experience Advisory › It’s about increasing the sophistication of O&M activities, such as introducing drones and augmented reality to help
Slide 67: 3. Extending Beyond Consultancy into Intelligent O&M
67 3. Extending Beyond Consultancy into Intelligent O&M Becoming an integrated and embedded partner in the management of our client’s assets and data Differentiated offering of multi- Uniquely positioned as a trusted partner year integrated asset and data to ensure target outcomes are met Developmen
Slide 68: Case Study: Canada Line Rapid Transit System
68 CASE STUDY: Canada Line Rapid Transit System CLIENT NEED SNC-LAVALIN COMPREHENSIVE SOLUTION › A 19.5 km fully-automated and driverless transit system connecting downtown › Led the financing, design, delivery and the Vancouver to Richmond and Vancouver operations and maintenance of the entire Airp
Slide 69: Growing and Creating Value through O&M Opportunities
69 Growing and Creating Value through O&M Opportunities Multi-year contracts Significant backlog of O&M relationships O&M and Engineering The performance provide low-risk $5.8B1 of long-term create cross-selling Services are track record of O&M’s cashflows and are contracts, providing opportunities
Slide 70: Key Messages | Capital
70 Key Messages | Capital Asset and investment management expertise with a track record of increasing and 1 optimizing investment value across a range of asset types History of successful delivery and asset management of P3 projects across a broad 2 range of asset classes uniquely positions us to de
Slide 71: Capital Snapshot
71 Capital Snapshot A N A LY S T C O N S E N S U S F A I R M A R K E T Capital has been an important strategic contributor to VA L U E V S . N E T B O O K VA L U E ( $ M ) SNC-Lavalin’s results, providing cash flow and profitability 1,800 Managing a portfolio of 17 assets and currently pursuing mult
Slide 72: Diversified Capital Investments Portfolio
72 Diversified Capital Investments Portfolio Held Concession Equity Name Description Location Since Years Participation 1. 407 EDGGP 32 km H407 East extension (Phase 1) 2012 33 Canada (Ontario) 50% 2. Carlyle Global Infras. Opportunity Holding investments in infrastructure projects 2018 n/a United S
Slide 73: Highway 407 ETR is a World-Class P3 Concession
73 Highway 407 ETR is a World-Class P3 Concession › Unique asset with › Provides long-term attractive terms shareholder value › Significant flexibility on toll rates › 77 years remaining in the concession
Slide 74: Positive Momentum for Highway 407 ETR as COVID-19 Restrictions Lift
74 Positive Momentum for Highway 407 ETR as COVID-19 Restrictions Lift H407 ETR GROSS VEHICLE KILOMETERS TRAVELED 2 Kilometers (M) 300 › Rapid traffic recovery has occurred in major global cities where COVID-19 250 restrictions have been lifted 1 200 › In some cases, congestion is worse than pre-pan
Slide 75: Capital + O&M Joint-Market Approach
75 › Capital + O&M Joint-Market Approach Highlights ✓ ✓ Capital is a key differentiator and Return horizon and partnership mindset enables us to access and bundle › Consistent contributor of EBIT of Capital and O&M are strategically investment, O&M services and aligned engineering services roles in
Slide 76: Key Takeaways | O&M and Capital
76 Key Takeaways | O&M and Capital 1 2 3 4 Long-term, focused Opportunities for further Well-positioned to become Capital is a key alignment of equity value optimization and an embedded, integrated differentiator within our investment and O&M demonstration of advanced delivery partner through end-to
Slide 77: Capitalizing on Our Leading Nuclear Expertise
Capitalizing on Our Leading Nuclear Expertise SANDY TAYLOR PRESIDENT, NUCLEAR Investor >) =
Slide 78: Key Messages | Nuclear
78 Key Messages | Nuclear Well-positioned for growth with a stable base of long-term, low-risk and profitable contracts 1 with key, high-quality clients Differentiated business enabled by proprietary technology, intellectual property and customized 2 product solutions, including advances in robotics
Slide 79: Nuclear is Well-Positioned to Capitalize on Energy Market Trends
79 Nuclear is Well-Positioned to Capitalize on Energy Market Trends Life Waste Prompt Increased Available Electrical Integrated Extensions Management Decommissioning Importance Globally Supply Must Increase Energy Solutions Decades of expertise and Decarbonization will proprietary require government
Slide 80: Nuclear Snapshot
80 Nuclear Snapshot 2020 REVENUE GLOBAL BACKLOG BY BACKLOG BY LENGTH EM PLOYEE BASE SERVICES ($ M ) OF CONTRACT ($ M ) $929M 5,982 5,982 46% Canada 25% UK, EUR, ME ~2,800 ~8,000 1,309 28% U.S. 1% Other Direct Employed Includes 40% Derived from Decommissioning Management through JVs share of 4,673 &
Slide 81: Recognized High Quality Nuclear Brand with Broad Capabilities
81 Recognized High Quality Nuclear Brand with Broad Capabilities C O M B I N E D C A PA B I L I T I E S 2004 2011 2017 2018 2019 Today Stewards of CANDU® technology for over 60 years SNC-Lavalin Unique expertise for new builds Nuclear Extensive technology portfolio of 200+ active & pending patents t
Slide 82: Sustainable Competitive Advantages
82 Sustainable Competitive Advantages 1 2 3 4 Reputation as a Strong base of highly Owners and Broad technical global leader talented engineers, developers capabilities and global in nuclear technologies scientists and of proprietary footprint enabled by including CANDU OEM1 technical staff nuclear
Slide 83: Culture of Excellence
83 Culture of Excellence SNC-Lavalin is a highly trusted name in Nuclear › Continuous training on Culture of Excellence (e.g., communication, affirmative responses) › Commitment to the highest technical standards and operational excellence helps us attract and retain the best nuclear engineers, scie
Slide 84: Generating Growth in Nuclear
84 Generating Growth in Nuclear WHERE WE PLAY Strongly positioned with a leading presence in Canada and the UK across the nuclear value chain, and HOW WE WIN a strong presence in the U.S., with Deploying global capabilities locally a primary focus on Nuclear Waste to our clients and delivering uniqu
Slide 85: Focused Geographic Positioning and Technology Export
85 Focused Geographic Positioning and Technology Export Sellafield Whiteshell Lingen Darlington Hinkley Point C Hanford and Bruce CNL Plateau Sizewell C Cernavoda ITER Wolseong Oak Ridge IPEC 1, 2, 3 Savannah River Qinshan ~1,200 Isotek Employees in Canada ~500 Employees in the U.S. Darlington (Onta
Slide 86: Aging Reactor Fleet Creates Opportunities
86 Aging Reactor Fleet Creates Opportunities 3 WAYS FORWARD FOR OWNERS: 1 Seek life extensions Number of reactors and years of operation1 Enter “safe-store” 2 (deferred Decommissioning) Construction boom 40 of the ‘70/80s 3 Accelerate Decommissioning 201 reactors between 30 and 40 years old 35 30 AL
Slide 87: Subsector Focused Approach to Nuclear
87 Subsector Focused Approach to Nuclear NEW BUILDS REACTOR SUPPORT (RS) & DECOMMISSIONING AND LIFE EXTENSIONS (LE) WASTE MANAGEMENT (DWM) › Steward of CANDU nuclear technology › Leading depth and breadth in the industry › Field services, remediation, nuclear fuel › Decades of major EPCM1 experience
Slide 88: Decommissioning and Waste Management Subsector
88 Decommissioning and Waste Management Subsector Commercial and Government Nuclear Sites U.S. - Commercial U.S. - Department Nuclear Sites of Energy & US Army Corps of Engineers Nuclear Cleanup Sites Canadian UK Nuclear Sites Government Sites Sources: Retrieved from the US N.R.C., US Department of
Slide 89: Decommissioning and Waste Management Subsector: Products and Technology
89 Decommissioning and Waste Management Subsector Our Technologies Create Long-Term Relationships and Growth Opportunities P&T for Decommissioning P&T for Waste Management Digital Twins for optimized D&D2 Solid radwaste treatment and processing Robotics for radioactive material handling P&T1 Liquid
Slide 90: Decommissioning and Waste Management: Main Project Pipeline
90 Decommissioning and Waste Management Subsector Main Project Pipeline Provides Long-Term Visibility Isotek –-TerraPower Partnership (1) Federal Government Contract - CNEA / CNL M&O (2) Sellafield Decommissioning Delivery Partnership (DDP) D&D Oyster Creek (CDI) D&D Pilgrim (CDI) D&D Lingen DoE - H
Slide 91: Case Study: Canadian Nuclear Laboratories (CNL)
91 Decommissioning and Waste Management Subsector Case Study | Canadian Nuclear Laboratories (CNL) CLIENT NEED SNC-LAVALIN COMPREHENSIVE › Lab modernization, environmental restoration SOLUTION & waste management › Collaboration & Leadership: Deployed › Growth of CNL Science & Technology Mission SNCL
Slide 92: Reactor Support and Life Extensions
92 Reactor Support and Life Extensions Our Technologies Create Long-Term Relationships and Growth Opportunities Retube Tooling Systems Nuclear Steam Plant Components P&T1 Field Services Products for Reactor Support & Operations & Maintenance Software Life Extensions 1. Products and Technology
Slide 93: Reactor Support and Life Extensions: Main Project Pipeline
93 Reactor Support (RS) and Life Extensions (LE) Main Project Pipeline Provides Long-Term Visibility Isotek –-TerraPower Partnership (1) Federal Government Contract - CNEA / CNL M&O (2) Sellafield Decommissioning Delivery Partnership (DDP) D&D Oyster Creek (CDI) D&D Pilgrim (CDI) D&D Lingen DoE – Ha
Slide 94: New Builds Subsector
94 New Builds Subsector Exclusive licensee of CANDU® nuclear technology Decades of major EPCM1 experience, delivering end-to-end solutions from Canada and the UK Collaborating with Small Modular and Advanced Reactor vendors to develop new reactor technologies Involved in the development of revolutio
Slide 95: New Builds Subsector: Main Project Pipeline
95 New Builds Subsector Main Project Pipeline Provides Long-Term Visibility Isotek –-TerraPower Partnership (1) Federal Government Contract - CNEA / CNL M&O (2) Sellafield Decommissioning Delivery Partnership (DDP) D&D Oyster Creek (CDI) D&D Pilgrim (CDI) D&D Lingen DoE – Hanford Central Plateau D&D
Slide 96: Nuclear | Key Drivers and Targets
96 Nuclear | Key Drivers and Targets KEY DRIVERS ANNUAL TARGETS (2022-2024) 4-6% › Expected growth in overall sector supported by long-term contracts ANNUAL ORGANIC and continued market penetration in our targeted geographies REVENUE GROWTH › Decommissioning & Waste Management (DWM) and new TARGET t
Slide 97: Key Takeaways | Nuclear
97 Key Takeaways | Nuclear 1 2 3 4 Well-positioned for Differentiated business Highly responsible, Global initiatives growth with a stable enabled by proprietary innovative partner with for a carbon net base of long-term, technology, intellectual technical expertise and zero future create low-risk a
Slide 98: Delivering Results and Investing in the Future
Delivering Results and Investing in the Future JEFF BELL EXECUTIVE VICE-PRESIDENT AND CFO Investor >) =
Slide 99: Key Messages | Finance
99 Key Messages 1 Substantial progress in strengthening the balance sheet and de-risking the business 2 SNCL Services positioned to deliver mid-single digit organic revenue growth year-over- year with continued margin strength Targeting positive free cash flow* in the medium term (2022-2024), with a
Slide 100: Historical Financial Performance
100 Historical Financial Performance C O N S O L I D AT E D R E V E N U E ( $ M ) Highlights SNCL Services Capital SNCL Projects 7,573 7,630 7,008 › Core SNCL Services 24% 18% 13% is a strong and growing 3,618 proportion of the Company, 15% 73% 79% 85% as LSTK projects wind down 83% 2018 2019 2020 H
Slide 101: Improving Free Cash Flow Performance
101 Improving Free Cash Flow* Performance Highlights C O N S O L I D AT E D F C F * ( $ M ) › Highlights Opportunity to deploy FCF in Net cash generated from (used for) operating activities Acquisition of property and equipment Payment of lease liabilities additional returns to › shareholders Focuse
Slide 102: LSTK Project Backlog Materially Reduced Over Last 2 Years
102 LSTK Project Backlog Materially Reduced Over Last 2 Years LSTK BACKLOG ($ B) Highlights ~3.4 › LSTK Project backlog reduced by ~60% over last two years ~2.6 › Oil &Gas business sale in 2021 accelerated LSTK backlog reduction ~1.4 › Three remaining Infrastructure light rail LSTK Projects in Canad
Slide 103: Focusing on Successful Execution of Remaining LSTK Projects
103 Focusing on Successful Execution of Remaining LSTK Projects Eglinton Trillium Réseau Express Métropolitain (REM) As of June 30, 2021 Backlog ($M) <175 <400 <700 Approximate ~90% ~55% ~55% Completion Expected Substantial 2022 2022 2024 Completion Year Significant progress achieved post Q2 2019 an
Slide 104: Strategic Realignment Enables Focused Execution
104 Strategic Realignment Enables Focused Execution 2020 Revenues SNCL Services 2022 LSTK2 Engineering Services O&M3 Linxon Nuclear Capital Engineering Services projects Reportable ~$4.2B ~$0.5B ~$0.5B ~$0.9B ~$0.1B ~$0.7B Segment Resources Infrastructure Services Current Resources Resources Power &
Slide 105: Setting the Stage for Future Growth
105 Setting the Stage for Future Growth FREE CASH FLOW * REVENUE GROW TH EBIT MARGINS CONVERSION Drive revenue growth in SNCL Focus on maintaining profitable Deliver positive FCF* as LSTK Services while running off growth, with continued projects run off allowing highly LSTK backlog optimization of
Slide 106: Revenue Growth Over Next Three Years to Be Driven by SNCL Services
106 Revenue Growth Over Next Three Years to Be Driven by SNCL Services $B ›SNCL SERVICES ›LSTK PROJECTS C A P I TA L › 4-6% CAGR Low-single ~7.0-7.6 digits % growth Growth will be 6.1 mainly driven by Highway 407 ETR dividend 0.7 0.1 ~0 2020 2021E 2024E 2020 2024E 2020 Eng. Services Nuclear O&M Linx
Slide 107: Margins Expected to Remain in Current Target Ranges
107 Margins Expected to Remain in Current Target Ranges Historical Segment Adj. EBIT to Segment Revenue Ratio* › EDPM Target 9.0% 9.0% 8.6% 9.1% 10% Highlights 8.4% 6.1% 8% › SNCL Services targeting operating margin ranges Q1 ’20 Q2 ’20 Q3 ’20 Q4 ’20 Q1 ’21 Q2 ’21 similar to recent history › NUCLEAR
Slide 108: Targeting Strong Free Cash Flow Generation
108 Targeting Strong Free Cash Flow* Generation FCF* IMPROVEMENT DRIVERS BY 2024 KEY DRIVER COMMENTS 80-90%1 › LSTK projects cash consumption winding Conversion down as backlog reduces › SNCL Services working capital improves as COVID-19 payment term impacts unwind › Expected EBITDA growth in SNCL S
Slide 109: Capital Allocation Priorities in Support of Our Strategy
109 Capital Allocation Priorities in Support of Our Strategy STRENGTHEN GROW AND CREATE VALUE Strengthening the Investing in Returning capital balance sheet the business to shareholders Improve debt leverage ratios Accelerate strategy through Opportunistically return to achieve investment grade orga
Slide 110: Strengthening a Flexible Balance Sheet
110 Strengthening a Flexible Balance Sheet N E T L I M ITE D R E C O U R S E & R E C O U R S E D E B T TO PRIORITIES C O N S O L I D AT E D A D J U S T E D E B I T D A * 3.2x Target › Long-term leverage ratio target range of 2.7x 2.0x 1.5x-2.0x › Return to investment grade rating 1.5x important for
Slide 111: Strategic Bolt-On Acquisitions | Accelerator of Future Growth in Key Markets
111 Strategic Bolt-On Acquisitions | Accelerator of Future Growth in Key Markets Strategic Filters Aligned Primarily core Bolt-on / with overall regions1 and Expands white space growth strategy end markets2 capabilities opportunities Qualitative Criteria Financial Criteria ✓ Complementary activities
Slide 112: Financial Targets (2022-2024)
112 Financial Targets (2022-2024)1 SNCL SERVICES C O N S O L I D AT E D ( A N N U A L LY ) (BY END OF 2024) ORGANIC SEGM ENT ADJ . FCF** OVER NET LIMITED RECOURSE REVENUE E B I T TO S E G M E N T C O N S O L I D AT E D A D J . & R E C O U R S E D E B T TO G R O WTH R E V E N U E R AT I O * NET INCOM
Slide 113: Key Takeaways
113 Key Takeaways 1 2 3 Substantial progress over the SNCL Services positioned to Targeting positive free cash flow* last two years strengthening deliver mid-single digit organic in the medium term (2022-2024), the balance sheet, and de- revenue growth year-over-year with associated capital allocati
Slide 114: Closing Remarks
Closing Remarks IAN EDWARDS PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 115: Q&A Session
Q&EA Session Investor >) =