Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — Q2 2020 Earnings Presentation
32 slides from Atkinsrealis's earnings presentation, Jul 31, 2020
Slide 1: Second Quarter 2020 Conference Call Presentation
› Second Quarter 2020 › Conference Call Presentation July 31, 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 a
Slide 3: Basis of Financial Outlook
Basis of Financial Outlook This presentation contains financial outlook both for the Company as a whole as well as its Resources Business and segment following the announced transformation plan for such business and segment. The financial outlook provided herein is based on the assumptions and metho
Slide 4: Ian L. Edwards, President and CEO
Ian L. Edwards President and CEO 4
Slide 5: Summary
Summary › Resources Business being transformed; simplified and refocused on profitable Services offering in primary regions, complementing Engineering Services capabilities › In line with our strategy to build a leading PS&PM* company › Believe that can generate profit margins over time in line with
Slide 6: Resources Services – Being Simplified and Refocused
Resources Services – Being Simplified and Refocused › Services business to be re-focused on a small Resources Services Strategy number of primary regions (Americas, Middle East) and key markets with durable competitive advantage › Establishing a targeted services foundation, Rapidly reducing Re-size
Slide 7: Resources Services – Profitability Expected in 2021
Resources Services – Profitability Expected in 20211 › Focus on targeted “Services” offering: Engineering, PMC’s and Consultancy Overhead cost reduction Illustrative cadence of Resources headcount evolution % decrease vs. 2019 overhead 16,000 › Leveraging existing relationship in primary 15,000 geog
Slide 8: Resources
Resources LSTK Backlog Phasing LSTK Resources Segment › Revenues of $279M in Q2 2020 Adjusted EBIT* 600 (M$) (M$) › Negative Segment Adjusted EBIT* of $122M, incl. $95M loss in LSTK 500 -120 › Q2 not representative of current -100 400 performance, as incl. $70M charge related to Incl. $70M client’s
Slide 9: Infrastructure EPC Projects
Infrastructure EPC Projects Backlog Phasing** Infrastructure EPC Projects › Revenues of $183M in Q2 2020 (M$) Segment Adjusted EBIT* 1,000 (M$) › Q2 2020 results includes forecast 30 adjustments to reflect lower productivity 750 25 caused by COVID-19 environment 20 15 › Backlog remains on track to b
Slide 10: Q2 Highlights: Solid Results from SNCL Engineering Services
Q2 Highlights: Solid Results from SNCL Engineering Services1 › SNCL Engineering Services › Revenue modestly down 2.0% vs. Q2 2019 › Segment Adjusted EBIT* up 7.4% vs. Q2 2019, margin at 9.0% › Strong backlog of $11.0B, in line with end of Q1 2020 1,500 10,935 10,983 1,470 Revenue (M$) Backlog (M$) Q
Slide 11: SNCL Engineering Services: EDPM Q2 Highlights
SNCL Engineering Services: EDPM Q2 Highlights Q2 performance › Core businesses in the UK, USA and Canada continue to perform well. › MEA performance continues to be impacted by COVID-19 and economic slowdown in activity. › Decisive management action in Q2 to reduce cost base with restructuring in ME
Slide 12: SNCL Engineering Services: Nuclear Q2 Highlights
SNCL Engineering Services: Nuclear Q2 Highlights Q2 performance › Project Management; Engineering and Field Services; and Technologies; proved resilient across multiple market sectors and target geographies through COVID-19 period. › Business has been strong for winning work for major Env. Mgt and N
Slide 13: SNCL Engineering Services: Infras. Services Q2 Highlights
SNCL Engineering Services: Infras. Services Q2 Highlights Q2 performance › All business lines performed well and proved resilient through the peak COVID-19 period. › O&M operations continued to operate generally at full service levels providing essential services. › Power, Grid and Industrial Soluti
Slide 14: Capital: Q2 Highlights
Capital: Q2 Highlights Highway 407 ETR › Modest but steady improvements in traffic volume, as Ontario continue to process with reopening businesses and easing restrictions across the GTA* › Average traffic volume reductions at end of June of ~55% vs end of June 2019 › Believe that bottom average tra
Slide 15: Positioning SNC-Lavalin for long-term Sustainable success
Positioning SNC-Lavalin for long-term Sustainable success 2019 Sustainability Report released on July 7th - Transforming Society for Future Generations Environmental Social Governance Strategic Direction Is Sustainable Value Embedded In Our Employees Structures In Place › Lowering the company’s risk
Slide 16: Conclusion
Conclusion The business has demonstrated resilience through COVID-19, as a result of our strategic direction and decisive actions taken Q2 Results SNC-Lavalin’s Strategic Direction › SNCL Engineering Services delivered strong › Continue to execute and progress on results due to its resilience strate
Slide 17: Jeff Bell, Chief Financial Officer
Jeff Bell Chief Financial Officer
Slide 18: Q2 Financial Highlights
Q2 Financial Highlights ($M, except EPS) ($M) Three months ended June 30 2020 2019 Δ Three months ended June 30 2020 2019 Δ Net loss attributable to Revenues SNC-Lavalin shareholders -112 -2,118 -95% SNCL Engineering Services 1,469 1,500 -2% Diluted EPS ($) -0.64 -12.07 -95% Adjusted net income* SNC
Slide 19: SNCL Engineering Services
Revenues SNCL Engineering Services (vs Q2 2019) $1,500M $1,470M › SNCL Engineering Services demonstrated resilience through COVID-19 Q2 2019 Q2 2020 › Revenue decreased modestly by 2.0% EDPM Nuclear Infras. Services › Segment Adjusted EBIT* increased by 7.4% to $133M Segment Adjusted EBIT* › EDPM: 4
Slide 20: SNCL Engineering Services Backlog
SNCL Engineering Services Backlog › Demonstrated resilience through unprecedent $11.1B COVID-19 situation $10.2B $11.0B $11.0B › End of June backlog in line with end of March 2020 › EDPM backlog at $2.7B, up 2.8% vs end of Q1 2020 (EDPM Q2 booking-to-revenue ratio* of 1.08) › Q2 total bookings of $1
Slide 21: SNCL Projects
Revenues $710M SNCL Projects (vs Q2 2019) $462M › Infrastructure EPC Projects: › Revenue at $182.6M, a 20.8% revenue decrease › LSTK projects winding down Q2 2019 Q2 2020 › Impact of COVID-19 Resources Infras. EPC Projects › No new LSTK bidding › Negative Segment Adj. EBIT* of $19.0M Segment Adjuste
Slide 22: Capital
Capital (vs Q2 2019) Decrease in Revenues and Segment Adjusted EBIT*, as no dividend received from H407 ETR Revenues Segment Adjusted EBIT* $75M $69M $22M $18M Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Capital *Non-IFRS financial measures. Refer to Section 9 of the Company’s Q2 2020 MD&A for N
Slide 23: Net Cash Generated From (Used For) Operating Activities
Net Cash Generated From (Used For) Operating Activities (in M$) Q1 Q2 Q3 Q4 Q2 cash generated from operating activities $312 of $129M › Improvement in working capital efficiency $130 $23 › Split by business line: › SNCL Engineering Services net cash generated ($51) from operating activities of $222M
Slide 24: 2020 Outlook Update
2020 Outlook Update1 › As the scale and economic impact on the business from COVID-19 becomes clearer, and the resiliency of the Company’s businesses are supplemented by management actions, it provides improved visibility on the forecasted financial outcome for the remainder of the year. › The Compa
Slide 25: Questions & Answers
Questions & Answers ») SNC +LAVALIN
Slide 26: Appendix
Appendix ») SNC+LAVALIN
Slide 27: PS&PM Segment Adj. EBIT – Q2 2020 vs Q2 2019
PS&PM Segment Adj. EBIT* – Q2 2020 vs Q2 2019 (in M$) SNCL EPC Projects SNCL Engineering Services Both periods included unfavorable reforecasts on LSTK projects. Q2 2020 loss due to a 82 79 Resources $70M charge related to client disputes on a +$60M Middle East project, lower productivity on (19) LS
Slide 28: SNCL Projects: LSTK Construction Contracts in Backlog
SNCL Projects: LSTK Construction Contracts in Backlog SNCL Projects Total Backlog Resources Reimbursable & (June 30, 2020) Engineering Service Contracts $0.8B Resources 29% Main Projects Resources Lump-sum turnkey 2 in North America construction contracts 2 in MENA $3.4B $0.2B Main Projects Infrastr
Slide 29: Main Lump-Sum Turnkey Construction Projects in SNCL Projects Backlog
Main Lump-Sum Turnkey Construction Projects in SNCL Projects Backlog Approximate Backlog as at Resources Expected substantial Country Completion % June 30, 2020 Client Project completion year (SNCL portion) ($M) Project #1 MENA 75 2021 <125 Confidential Project #2 North America 50 2021 <50 Confident
Slide 30: YTD Financial Highlights
YTD Financial Highlights ($M, except EPS) ($M) Six months ended June 30 2020 2019 Δ Six months ended June 30 2020 2019 Δ Net loss attributable to Revenues SNC-Lavalin shareholders -178 -2,135 -92% SNCL Engineering Services 3,004 2,942 2% Diluted EPS ($) -1.01 -12.17 -92% Adjusted net income* SNCL Pr
Slide 31: 407 ETR information
407 ETR information Q2 Q2 YTD YTD Change Change (in M$, unless otherwise indicated) 2020 2019 2020 2019 Revenues 129.6 390.5 (66.8%) 417.4 699.6 (40.3%) Operating expenses 36.2 43.1 (16.0%) 85.3 89.5 4.7% EBITDA* 93.4 347.4 (73.1%) 332.1 610.1 (45.6%) EBITDA as a percentage of revenues 72.1% 89.0% (
Slide 32: Net income reconciliation – 2020
Net income reconciliation – 2020 Net income (loss) Restructuring Amortization of Fair value Adjustment to Adjusted net attributable to costs intangible assets revaluation of the provision for the income (loss) SNC-Lavalin related to business Highway 407 ETR Pyrrhotite Case attributable to shareholde