Slide 1: Q1 2020 Earnings Presentation
Q1 2020 Q1 2020 Earnings Presentation May 7, 2020 Joint Venture with Snøhetta Temple University – Charles Library Philadelphia, Pennsylvania, USA Photo credit: Michael Grimm 1
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains non-IFRS measures and forward-looking statements, including a discussion of our business targets, expectations, and outlook. We caution readers not to place undue reliance on our forward-looking statements since a number of factors could cause Q1 2020
Slide 3: Agenda
Agenda Gord Johnston Opening Remarks Q1 Operational Performance Theresa Jang Q1 2020 Financial Performance Q1 2020 Gord Johnston COVID-19 Key Drivers Theresa Jang Guidance & Liquidity Discussion Gord Johnston Concluding Remarks 3
Slide 4: Values-Based Response to COVID-19
Values-Based Response to COVID-19 We put people first We are better together We do what is right We are driven to achieve Culture of safety Moved people home Responding to changing workloads Innovate and commercialize solutions Serving Q1 2020 our clients Pandemic response IT and business Adapting t
Slide 5: Net Revenue - Organic Growth Across All Geographies
Net Revenue - Organic Growth Across All Geographies 5.7% Net revenue growth driven by: 4.2% organic growth and Q1 2020 UNITED STATES CANAD A GLOBAL 1.4% acquisition growth 600 Q1 20 Q1 19 500 ($ millions) 400 300 3.7% 200 Increase in gross margin 100 0 Organic growth 5.7% 1.8% 4.0% Q1 net revenue $5
Slide 6: Net Revenue - Organic Growth Across All Businesses
Net Revenue - Organic Growth Across All Businesses Q1 2020 INFRASTRUCTURE BUILDINGS WATER ENVIRONM ENTAL ENERGY & 300 SERVICES RESOURCES Q1 20 Q1 19 200 ($ millions) 100 0 Organic growth 1.5% 1.0% 5.7% 6.3% 10.5% Q1 net revenue $261M $219M $194M $137M $145M 6
Slide 7: United States
United States 5.7% organic growth in Q1 • Driven by: • Water with the commencement of several large projects and continuation of existing programs • Buildings with robust activity from Industrial, Commercial, Retail, and Q1 2020 Civic sectors Martin County, Florida Substation • Mining as a major pro
Slide 8: Canada
Canada 1.8% organic growth in Q1 • Driven by: • Environmental Services and Oil & Gas due to Trans Mountain Expansion Pipeline ramp up • Transportation which benefitted from light-rail transit projects in Montreal, Q1 2020 Edmonton, and Ontario University of Manitoba Museum Phase II • Partially offse
Slide 9: Global
Global 4.0% organic growth in Q1 • Driven by: • Strong performance in the UK Infrastructure business from improved market conditions • Ramp up of water projects in the Middle East, Australia, and New Q1 2020 Zealand markets while remaining Center Parcs, University LongfordMuseum of Manitoba Forest P
Slide 10: Backlog at March 31, 2020
Backlog at March 31, 2020 11% Growth from Dec. 31, 2019 $4.7 B 5.9% Q1 2020 gross revenue Organic growth from Dec. 31, 2019 backlog 12 Months of work United States Canada Global 10
Slide 11: Q1 2020 Financial Performance
Q1 2020 Q1 2020 Financial Performance International Ave Pedestrian Realm Calgary, Alberta, Canada 11
Slide 12: Q1 2020 Results
Q1 2020 Results Net Revenue & Organic Growth ($ millions, %) 7.4% 5.3% 4.2% Q1 20 Q1 19 Change 2.5% 2.3% % Year- (In millions of Canadian dollars, % of Net % of Net over-year except per share amounts and percentages) $ Revenue $ Revenue change Net revenue $954 $953 $955 955.2 100.0 904.1 100.0 5.7 $
Slide 13: Balance Sheet Strength
Balance Sheet Strength Net Debt to Adjusted EBITDA(1) (TTM) Net debt to adjusted EBITDA(1) 2.5 2 1.5 1.3x at March 31, 2020 1 Target Range 0.5 1.0 - 2.0x Q1 2020 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Days Sales Outstanding 95 Days Sales Outstanding 90 85 86 days at March 31, 2020 80 Target 75 90 days 70 Q
Slide 14: Liquidity and Capital Allocation
Liquidity and Capital Allocation Free Cash Flow(1) ($ millions) (Comparisons to Q1 2019) • 38% improvement in free cash outflow (1) $115 $94 $204 • 59% decrease in capital expenditures ($85) ($138) • >$250 million in undrawn credit capacity Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 2020 Cash Flow from Contin
Slide 15: 2020 Outlook
Q1 2020 2020 Outlook Inova Mather Proton Therapy Center Fairfax, VA, USA 15
Slide 16: Key Drivers by Business Operating Unit
Key Drivers by Business Operating Unit % of Net COVID-19 Business Revenue Key Drivers Impact Operating Unit (Q1 2020) ▲ Multi-year frameworks for water utilities in UK and AUS; acceleration of UK AMP contract awards Less Water 20% ▲ Likely to benefit if governments implement stimulus programs Impact
Slide 17: Q2 2020 Net Revenue Outlook
Q2 2020 Net Revenue Outlook % of Net Geographic Revenue Key Drivers Region (Q1 2020) ▲ Net revenues expected to be consistent with Q1 20 53% ▲ Expect continuing benefit of US/Canadian exchange rate United States Q1 2020 ▼ Expect nominal net revenue retraction from Q1 20 29% ▲ Ramp-up of major transp
Slide 18: 2020 Outlook – Guidance Withdrawn
2020 Outlook – Guidance Withdrawn Net Revenue • Unable to reliably forecast net revenues for second half of 2020 Project Execution • Committed to continued strong project execution Q1 2020 • Monitoring quality of utilization • Less than 50% of contracts are fixed fee Cost Management • Voluntary comp
Slide 19: 2020 Outlook – Liquidity and Capital Allocation
2020 Outlook – Liquidity and Capital Allocation Leverage • Expect to remain within internal guideline of 1.0x to 2.0x net debt to adjusted EBITDA • No near-term debt maturities • More than 70% of debt is floating rate Liquidity Q1 2020 • >$250 million available liquidity on committed revolving credi
Slide 20: Concluding Remarks
Q1 2020 Concluding Remarks Fremont Water Pollution Control Center Expansion Fremont, OH, USA 20
Slide 21: In Conclusion
In Conclusion End Market Resiliency ▲ Design and engineering sector proved to be resilient in previous downturns ▲ Well positioned to withstand impacts of pandemic due to geographic and business diversification ▲ Strong mix of public and high-quality private sector clients Strong Financial Position
Slide 22: Q&A
Q1 2020 Q&A Lyu-Chuan - Shin Sei Green Waterway Taichung City, Taiwan 22