Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — Q3 2020 Earnings Presentation
29 slides from Atkinsrealis's earnings presentation, Oct 30, 2020
Slide 1: Third Quarter 2020 Conference Call Presentation
› Third Quarter 2020 › Conference Call Presentation › October 30, 2020
Slide 2: Forward-Looking Statements and Non-IFRS Financial Measures
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 associates, or SNC-Lavalin Group Inc. or one or more of its subsidiari
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 › SNCL Engineering Services delivered solid results › Underpinned by: › Business diversity › Long-term client relationships › Strong public sector focus; some services being considered essential › Long-term contract, particularly in Nuclear and Infrastructure Services (O&M1) › Strong backlog
Slide 6: Q3 Highlights: Solid Results from SNCL Engineering Services
Q3 Highlights: Solid Results from SNCL Engineering Services1 › SNCL Engineering Services › Performance consistent with Q2 2020 › Revenue of $1.45B modestly down vs. Q3 2019 › Segment Adjusted EBIT* of $142M, margin at 9.8% › Net cash generated from operating activities of $186M › Strong backlog of $
Slide 7: SNCL Engineering Services: EDPM Q3 Highlights
SNCL Engineering Services: EDPM Q3 Highlights Q3 performance › Core businesses in the UK, USA and Canada continued to deliver solid results through the quarter. › Revenues from the UK&E transportation and defence markets particularly strong offset by ongoing challenges in the aviation and commercial
Slide 8: SNCL Engineering Services: Nuclear Q3 Highlights
SNCL Engineering Services: Nuclear Q3 Highlights Q3 performance › Major Nuclear Operations in UK, Canada and US have performed well throughout the quarter. › Long term and field services contracts and ongoing engineering continued to fuel a strong quarter performance. › Favorable mix combined with f
Slide 9: SNCL Engineering Services: Infras. Services Q3 Highlights
SNCL Engineering Services: Infras. Services Q3 Highlights Q3 performance › All business lines performed well with revenues and margins on target. › O&M operations continued to operate at full service levels. › Power, Grid and Industrial Solutions continued to see robust activity in healthcare relate
Slide 10: Capital: Q3 Highlights
Capital: Q3 Highlights Highway 407 ETR › Dividend of $16.9M received in Q3 2020. › Credit rating maintained. › Steady improvements in traffic volumes compared to the earlier periods of the pandemic. › Q3 2020 traffic volume lower by ~42% vs Q3 2019. › Maintaining sufficient liquidity to satisfy its
Slide 11: SNCL Projects: Infrastructure EPC Projects
SNCL Projects: Infrastructure EPC Projects › Revenues of $237M in Q3 2020 Backlog Phasing** Segment › Q3 2020 results includes forecast (M$) Adjusted EBIT* (M$) adjustments to reflect lower productivity 1,000 30 due to revised working conditions caused by COVID-19 and other cost 750 20 reforecasts I
Slide 12: SNCL Projects: Resources
SNCL Projects: Resources › Revenues of $282M in Q3 2020 LSTK Backlog Phasing Negative Segment › Negative Segment Adjusted EBIT* of $75M Incl. (M$) Adjusted EBIT* 600 (M$) unfavorable $58M › $61M loss in LSTK projects arbitration 500 ruling on a › $14M loss in Services -140 LSTK legacy -120 project ›
Slide 13: SNCL Projects Backlog
SNCL Projects Backlog SNCL Projects Backlog June 30, 2019 September 30, 2020 (LSTK exit initiated) September 30, 2020 Stable Reimbursable & Engineering Services contracts Resources 29% $1.1B $1.0B Decrease in LSTK construction contracts $3.1B Resources $0.6B $0.2B Infrastructure EPC Projects 71% Inf
Slide 14: Resources Services Transformation Update
Resources Services Transformation Update1 › Transformation is progressing well, right-sizing the business to the new Target / Service structure Expectation › Divestment of European Fertilizer business in Q3 › Disposal2 of South African Resources business remains on track to be completed in Q4 2020 ›
Slide 15: Conclusion
Conclusion SNCL Engineering Services delivering solid results – business diversity, long-term contracts & client relationships – and Resources Services transformation progressing well Q3 Results SNC-Lavalin’s Strategic Priorities › SNCL Engineering Services delivered solid results › Running off LSTK
Slide 16: Jeff Bell, Chief Financial Officer
Jeff Bell Chief Financial Officer
Slide 17: Q3 Financial Highlights
Q3 Financial Highlights Q3 2019 includes: • Net gain on the disposal of Three months ended September 30 2020 2019 Change ($M, except EPS) a 10.01% stake of Highway 407 ETR of $2,588M Revenue 2,006 2,432 -18% • $82.7M income tax Net income (loss) attributable to SNC-Lavalin shareholders (85) 2,757 -1
Slide 18: SNCL Engineering Services
Revenues SNCL Engineering Services (vs Q3 2019) $1,502M $1,448M › SNCL Engineering Services continues to deliver solid results Q3 2019 Q3 2020 › Revenue at $1.4B, slightly lower than Q3 2019 EDPM Nuclear Infras. Services › Segment Adjusted EBIT* at $142M, adj. EBIT margin* Segment Adjusted EBIT* at
Slide 19: SNCL Engineering Services Backlog
SNCL Engineering Services Backlog $11.1B $11.0B $11.0B $10.7B › Strong backlog – demonstrating resilience through $10.2B unprecedented COVID-19 situation Resilient through › Q3 total backlog of $10.7B; with bookings of $1.2B COVID-19 › EDPM backlog at $2.8B, up 1.6% vs end of Q2 2020 › Q3 booking-to
Slide 20: SNCL Projects
Revenues SNCL Projects (vs Q3 2019) $851M $519M › Infrastructure EPC Projects: › Revenue at $236.8M, a 18.0% decrease › LSTK projects winding down › Negative Segment Adj. EBIT* of $25.1M Q3 2019 Q3 2020 › Impact of COVID-19 and cost reforecasts Resources Infras. EPC Projects › Resources: Segment Adj
Slide 21: Capital
Capital (vs Q3 2019) Decrease in Revenues and Segment Adjusted EBIT*, due to lower dividends received from a reduced stake1 in H407 ETR Revenues Segment Adjusted EBIT* $80M $77M $39M $37M Q3 2019 Q3 2020 Q3 2019 Q3 2020 *Non-IFRS financial measures. Refer to Section 9 of the Company’s Q3 2020 MD&A f
Slide 22: Net Cash Generated From (Used For) Operating Activities
Net Cash Generated From (Used For) Operating Activities Q3 cash used from operating activities of $136M (in M$) Q1 Q2 Q3 $130 › Incl. ($200M) payment for the Pyrrhotite case, of which a substantial portion is expected to be reimbursed $23 by the company’s external insurer › SNCL Engineering Services
Slide 23: 2020 Outlook
2020 Outlook1 › SNCL Engineering Services : › Q4 2020 revenues expected to decrease by a low to mid single digit percentage, compared to Q4 2019 › Q4 2020 Segment Adjusted EBIT* margin expected between 8.5% and 9.5% › Assuming no significant deviation from the current COVID-19 worldwide situation. *
Slide 24: Questions & Answers
Questions & Answers » SNC->LAVALIN
Slide 25: Appendix
Appendix » SNC*LAVALIN
Slide 26: Main LSTK Construction Projects in SNCL Projects Backlog
Main LSTK Construction Projects in SNCL Projects Backlog Approximate Backlog as at Resources Expected substantial Country Completion % Sept. 30, 2020 Client Project completion year (SNCL portion) ($M) Project #1 MENA 75 2021 85 Confidential Project #2 North America 50 2021 <50 Confidential Project #
Slide 27: YTD Financial Highlights
YTD Financial Highlights ($M, except EPS) ($M) Nine months ended September 30 2020 2019 Δ Nine months ended September 30 2020 2019 Δ Net income (loss) attributable to Revenues SNC-Lavalin shareholders (263) 621 -142% SNCL Engineering Services 4,452 4,444 0% Diluted EPS ($) (1.50) 3.54 -142% Adjusted
Slide 28: 407 ETR Information
407 ETR Information Q3 Q3 YTD YTD Change Change (in M$, unless otherwise indicated) 2020 2019 2020 2019 Revenues 265.7 426.4 -37.7% 683.1 1,126.0 -39.3% Operating expenses 39.1 52.6 -25.6% 124.4 142.1 -12.5% EBITDA* 226.6 373.8 -39.4% 558.7 983.9 -43.2% EBITDA as a percentage of revenues 85.3% 87.7%
Slide 29: Reconciliation of Adjusted Net Income to Net Income
Reconciliation of Adjusted Net Income* to Net Income Net income Restructuring Amortization of Fair value Adjustment to Loss from Adjusted net (loss) costs intangible assets revaluation of the provision for the disposals of income (loss) attributable to related to business Highway 407 ETR Pyrrhotite