Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin Group — Investor Day (September 2017)
141 slides from Atkinsrealis's investor day presentation, September 2017
Slide 1: Investor Day September 2017
Slide 2: Forward-looking statements
Forward-looking statements Reference in these presentations, 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
Slide 3: Opening Remarks: Vision 2020
OPENING REMARKS Vision 2020
Slide 4: Redefining SNC-Lavalin
Redefining SNC-Lavalin 2020 - Vision › Reposition SNC-Lavalin on a path 2015 - Step Change and of strong profitable growth › Balance portfolio across sectors operational excellence geography risk profile › Adjust cost structure to the 2013 - New Beginning resources market slowdown › Target $200M in
Slide 5: Redefining SNC-Lavalin – What we've done
Redefining SNC-Lavalin – What we’ve done NEW 100 % COMPANY 100 % New Management New Board › Culture since 2012 › Business Mix As of December 2017 › Repositioned the company and delivered on our bad contracts › Balanced sector portfolio › Created a Global organization › Derisked the business model ›
Slide 6: New management team
New management team Average tenure of 3 years 6
Slide 7: New Board of directors
New Board of directors Average tenure of 21/2 years Lawrence N. Stevenson Kevin G. Lynch Jacques Bougie Neil Bruce Isabelle Courville Catherine J. Hughes Chairman of the Board. Vice-Chairman of the Chair of the Governance President & Chief Member of the Member of the Human Joined Board in 1999 Board
Slide 8: Redefining SNC-Lavalin – What we've found
Redefining SNC-Lavalin – What we’ve found Working through issues of the past in an open & transparent way Our key stakeholders believe this is limited and “fixable”: We have their trust and respect that we’re on the right track › We have been able to retain & build financial strength despite these i
Slide 9: Where Are We
WHERE ARE WE
Slide 10: Our safety record is World Class & continues to improve
Our safety record is World Class & continues to improve Total Recordable Incidents and Frequency (TRIF) 0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 2012 2013 2014 2015 2016 2017 Target Peers SNC-Lavalin * Figures from SNC-Lavalin HSSE 10
Slide 11: Income Dashboard
> INCOME DASHBOARD paity WEEKLY PERFORMANCE
Slide 12: On a path of improved E&C earnings and consolidated EPS
On a path of improved E&C earnings and consolidated EPS Adjusted EPS from E&C Adjusted consolidated EPS 3.30 3.10 2.58 2.46 2.42 2.20 2.00 1.51 1.34 0.74 0.36 2013 2014 2015 2016 2017 * 2013 2014 2015 2016 2017 Outlook Outlook (0.88) (in $) * Current guidance as updated in Q2. 12
Slide 13: Our dividends have grown significantly
Our dividends have grown significantly Dividends continue to rise as earnings improve Annual dividends declared 1.09 * 1.05 1.01 0.97 0.93 0.89 2012 2013 2014 2015 2016 2017 Dividends were increased for each of the past 16 years (in $) * Including forecasted dividends 13
Slide 14: Market Outlook
MAR © OG KET OUT LOOK
Slide 15: Competing in a $2.9 trillion global market impacted by macro trends
Macro econo Today, SNC-Lavalin competes in a $2.9 trillion mic Enviro global market impacted by diverse macro trends nment 15
Slide 16: These trends create a wealth of opportunities across all of our markets
These trends create a wealth of opportunities across all of our markets 16
Slide 17: Within project management, engineering & design
Within project management, engineering & design Major trends we see affecting customer needs in the future: Rapid consolidation Growth on Digital & Artificial Direct & Indirect & globalization three axes Intelligence cost efficiency Rapidly Geographies enhancing Services engineering Markets analysis
Slide 18: Our market has seen significant consolidation and change
Our market has seen significant consolidation and change Market Cap. 12,000 10,000 8,000 $ M CAD 6,000 4,000 2,000 0 * * WSP SNC-Lavalin Wood Group Fluor Aecom Stantec CH2M WorleyParsons AmecFW Balfour Beatty CB&I Atkins Jacobs SNC-Lavalin’s market Cap. was $6.1B at the end of 2012 * Estimated As at
Slide 19: Each of our markets offers numerous opportunities
Each of our markets offers numerous opportunities Global Market 2017-21 Infrastructure Growing strong position in Rail & Transit with a focus on Canada and the U.S., expanding and P3 opportunities to leverage Capital; growing O&M and US$ 1.9 T leveraging Atkins presence Oil & Gas Greater regional fo
Slide 20: Our Strategy
Slide 21: Our strategy is built upon 4 guiding principles
Our strategy is built upon 4 guiding principles 1 Continuing our progress in operational excellence 2 Delivering as a client-centric organization 3 Delivering a performance-driven culture 4 Growing our business & delivering superior shareholder returns 21
Slide 22: We now operate from a truly global platform
We now operate from a truly global platform Our workforce UK & Europe North America ~11,000 employees ~15,000 employees Asia Pacific Middle-East & Africa ~6,000 employees Latin America ~18,000 employees ~1,000 employees 22
Slide 23: Our service mix improves our resilience & profitability
Our service mix improves our resilience & profitability across sectors, geographics & customer base Services Projects › Projects focus remains key element of business › Area of core historical strength for the firm in all sectors to access key sectors of focus, e.g. › Key to our growth trajectory in
Slide 24: Our broader service mix provides competitive differentiators
Our broader service mix provides a range of competitive differentiators & efficiency improvements Project Lifecycle Capital Consulting & Design & Procurement Construction O&M and Advisory Engineering Management Sustaining Capital Digital Enhanced by Atkins capabilities Artificial Intelligence 24
Slide 25: Plan to deliver adjusted consolidated EPS of $5 by 2020
Plan to deliver adjusted consolidated EPS of $5 by 2020 VISION 2020 HOW? $5.00 1.4% › G&A efficiency & operational R: 3 CAG excellence continuous improvement $3.30 › Improved project execution › Drive organic growth $3.10 - Increase share in nuclear through $2.58 expanded offering $2.46 $2.42 - Capi
Slide 26: Vision 2020 – Redefining SNC-Lavalin
Vision 2020 – Redefining SNC-Lavalin Plan to deliver 2020 adjusted 2020 Objectives consolidated EPS › One of Top EPCM Firms in Profitability and Profit Growth › Top Tier Margins Firm (7% EBITDA is Still › our Internal Hurdle) Recognized as a Client-Centric Delivery Focused Organization $5.00 › Stron
Slide 27: Capital Allocation Priorities
Capital Allocation Priorities September 12, 2017
Slide 28: Our Capital Allocation Framework
Our Capital Allocation Framework Sources of Funds Uses of Funds › Operating cash flows from E&C projects › Working Capital & Capex needs on new projects › Operating cash flows from existing concessions and Capital Investments › Equity investments driving E&C revenues › Divestiture of matured Capital
Slide 29: Drive E&C Growth
1 Drive E&C Growth Operating Cash Flow From E&C Projects Service Model $100M Mandate over 13 months Characteristics › Billing cycle ≈ 30 days › Payments terms ≈ 45 days › Cash outflows are mostly salaries Months › Steady and predictable 70% of our Revenues, incl. Atkins (vs. 60%) End-to-End Model $5
Slide 30: Drive E&C Growth – Capital Investment Life Cycle
1 Drive E&C Growth Capital Investment Life Cycle Invest in Hold Assets Sell Capital Until Mature Project Maturity Assets E.g.: › Ottawa LRT › 407 ETR › MUHC › Champlain Bridge › 407 EDG › Canada Line › Eglinton LRT › Astoria › Restigouche › John Hart Facility › Hadjret En Nouss › Stoney Trail New in
Slide 31: Optimizing Our Balance Sheet
2 Optimizing Our Balance Sheet Safe but less Efficient Improved Efficiency Actual Fcst $M Ratio 2,000 3.00x 2.50x 2.25x 3.0x 0.2x 0.9x 1.5x 0.1x 0.5x 0.3x 0.0x 1,000 -1.5x -0.8x -0.6x -3.0x -3.5x 0 -1,000 2013 2014 2015 2016 2017 Q2 2017 2018 2019+ Leverage Ratio Credit Agreement Leverage Ratio S&P
Slide 32: Optimizing Our Balance Sheet
2 Optimizing Our Balance Sheet Credit Facilities Other Long-term Recourse Debt CDPQ Limited Recourse Debt Borrower Revolving Credit Facility & Term Loan $350M Indenture › SNC-Lavalin Highway Holding, › $2,750M Revolving Credit Facility › Maturity: July 2019 non-recourse to SNC-Lavalin Group maturing
Slide 33: Return Capital to Shareholders
3 Return Capital to Shareholders DividendYield Dividend per share 2.46% 2.19% 2.03% 1.95% 1.82% 1.09* 1.05 1.01 0.97 0.93 2013 2014 2015 2016 2017 Dividend Payout % 125% 39% 41% 40% 30-35% (in $) Key Goals: › Maintain dividend growth trajectory › Stabilize dividend payout at around 30% of consolidat
Slide 34: Summary
Summary Achieved Delivering › Invest in E&C Growth Drive Organic and Inorganic 1 - Atkins acquisition E&C Growth - WC Investment › Optimization of balance sheet 2 Optimize our Balance Sheet while › Continue to invest shareholders returns safeguarding our Investment Grade › Divested non-core assets -
Slide 35: Capital
CAPITAL > Creating E&C opportunities through investments
Slide 36: Capital's Purpose
Capital’s Purpose SNC-Lavalin Capital is the investment and asset management arm of SNC-Lavalin Its main purpose is to invest equity or subordinated debt into projects to generate engineering, construction, operations and maintenance revenues that may otherwise not be attainable for SNC-Lavalin’s Se
Slide 37: Capital's end-to-end Solution
Capital’s end-to-end Solution Investment Investment Asset Development Management Management › Early identification of › Structure equity & partnerships and › Monitor the performance and prospects related investment vehicles success of our investments › Lead consortium partnering › General Partner ca
Slide 38: Capital Overall Market Outlook
Capital Overall Market Outlook Market Size (Overall and by region/Focus area) Key Market Direction 2016-17 Canada P3 – Infra › Infrastructure and P3 spend expected to remain robust. Political support to increase investment in Infrastructure. › Nevertheless, pipeline still resides with traditional pu
Slide 39: Main Focus Areas 2017 — 2020
39 Strategic Conclusions Main Focus Areas 2017 — 2020 Opportunity Strategic Focus Leader in Canada for large, complex P3 Continued and growing pipeline of large and infrastructure projects. complex LRT and bridges in Canada. Canadian P3 experience provides entry point into US market, Expand Infrastr
Slide 40: SNC-Lavalin Infrastructure Partners LP
SNC-Lavalin Infrastructure Partners LP June 29, 2017 September 30th, 2017 By end of Q4 2017 2020+ Initial closing Second step closing* Agreements signed Transfer of the 4 initial 5th seed asset transfer: Vend-in mechanism (ROFO) seed assets: › MUHC Glen site regarding SNC-Lavalin › William R. Bennet
Slide 41: Carlyle Global Infrastructure Fund (CGI)
Carlyle Global Infrastructure Fund (“CGI”) › Partnering with CGI in a dedicated fund that will seek to invest globally in infrastructure assets/business that require development capital & project delivery capabilities › SNC-Lavalin Capital will invest US$100M as a Limited Partner. SNC-Lavalin sector
Slide 42: Highway 407 ETR
Highway 407 ETR Geoffrey Liang CFO, 407 Interna<onal inc.
Slide 43: The Next Ten Years
THE NEXT TEN YEARS |, YORK; +0.7% HAMILTON: +1.2% TORONTO: cy a “ DURHAM: +2.2% ONTARIO GDP: +2.0% Population < 50,000 50,000 to 75,000 75,000 to 100,000 100,000 to 250,000 250,000 to 550,000 550,000 to 1 million >1 million
Slide 44: Area urbanized between 2006 and 2016
Area urbanized between 2006 and 2016 407: FAST. SAFE. RELIABLE.
Slide 45: Employment megazones
Employment megazones Milton 407 EIR FAST. SAFE. RELIABLE.
Slide 46: The Next Ten Years
THE NEXT TEN YEARS Brin rain HAMILTON: +1.2% TORONTO: +0.7% 4 S Majon “DURHAM: ONTARIO GDP: +2.0% Legend Population Area urbanized | between 2006 and 2016 Employment megazones Population s < 50,000 50,000 to 75,000 75,000 to 100,000 100,000 to 250,000 250,000 to 550,000 550,000 to 1 million >1 milli
Slide 47: Outlook and Considerations
Outlook and Considera0ons GTA Popula0on +1.0 million people by 2026 Opera0onal Advantages Highway 407 East extension Speed advantage: 4x 20% more lane capacity Lease Considera0ons Flexibility to set tolls 81 years remaining 47
Slide 48: Traffic Performance
Traffic Performance Million CAGR 1.1% KM CAGR 0.7% 130 Total Trips Average Trip Length 22.00 125 21.50 120 21.00 20.50 115 20.00 110 19.50 105 19.00 100 18.50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Million CAGR 1.8% $ CAGR 7.7% 2,700 Total V
Slide 49: Financial Performance
Financial Performance ($Millions) CAGR 9.1% ($Millions) CAGR 3.3% 1200 Revenues 1200 Opera0ng Expenses 1100 1100 1000 1000 900 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (
Slide 50: Dividend Payments and EPS Contribution
Dividend Payments and EPS Contribu0on CAGR 7.1% ($Millions) EPS= 1,000 EPS= $0.94 EPS= EPS= $0.88 900 EPS= $0.81 $0.84 EPS= $0.76 845 * 800 $0.67 790 730 750 700 680 600 600 500 400 300 200 100 0 2012 2013 2014 2015 2016 2017 Cash from Opera0ons Addi0onal Leverage and Others * Assumes October 2017 d
Slide 51: Capital Structure Plan
Capital Structure Plan ($Millions) 700 Addi0onal Leverage § Con0nue to increase the leverage of 600 the highway asset 500 400 § Reward shareholders and slow down 300 deleveraging (due to increasing 200 EBITDA) 100 § Gradual addi0onal leverage 0 § Performance based 2012 2013 2014 2015 2016 2017 2.60
Slide 52: Bond Maturity Profile
Bond Maturity Profile No more than 20% total debt maturing during any 24-month period 900,000,000 800,000,000 700,000,000 600,000,000 500,000,000 400,000,000 300,000,000 200,000,000 100,000,000 - 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 Senior Bon
Slide 53: The Asset Continues to Grow
The Asset Con0nues to Grow GTA Popula0on Revenues increase (popula0on and toll rate increase > CPI) Stable opera0ng costs Currently underleveraged Low interest rate Increasing dividends to shareholders 53
Slide 54: Highway
HIGHWAY 407 > Successful asset with potential value creation
Slide 55: Highway 407 ETR: An Exceptional Investment
Highway 407 ETR: An Exceptional Investment SNC-Lavalin’s investment in Highway 407 ETR has had an outstanding performance during its first 16 years … › SNC-Lavalin bought 175M shares in Now owns 130M shares, or 1999 for $175M 16.77%, worth at least › Sold 45M shares in 2002 for $178M 4X $4.3B Value
Slide 56: Market valuation
Market valuation SNC-Lavalin’s investment in Highway 407 ETR – a solid growing platform Potential value creation ~50X 160 8.0 140 7.0 120 6.0 100 5.0 $M $B 80 4.0 60 3.0 C AGR % 40 14.1 2.0 20 1.0 0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2026 SNC-Lavalin analysts' average co
Slide 57: Mining & Metallurgy
Eleonore Goldcorp MINING & METALLURGY >» Winning new businesses in a rallying market
Slide 58: Background
Background Historically (2012 to 2014), the M&M sector: › Was seriously impacted by the mining sector downturn, contributing to large decreases of revenues across the industry; › Like other Tier 1 E&C companies continued to focus on large expansionary projects with limited pursuits of sustaining cap
Slide 59: Market Opportunities – Mining & Metallurgy
Market Opportunities – Mining & Metallurgy Mining & Metallurgy Market Outlook Analytical Context*: Prices for copper hit their highest level in nearly three years. Zinc sits at its highest price in a decade. Aluminum climbed to three-year peaks last week. Iron ore has rallied 35% since the end of Ma
Slide 60: Main Focus Areas 2017-2018
60 Strategic Conclusions Main Focus Areas 2017-2018 Opportunity Strategic Focus Servicing the full spectrum of commodities with an adaptive focus on key commodities: copper, sulphur management, gold, fertilizers, clean energy Adapting to commodities and metals (lithium, cobalt, nickel). regional dem
Slide 61: M&M Major Pursuits
M&M Major Pursuits Focus on Tier 1 and Tier 2 Clients covering every area of services: 61
Slide 62: M&M Sector: Major Projects Won
M&M Sector: Major Projects Won Client Commodity Country Project Nickel/Sulphur Russia Norilsk - Sulphur emissions reduction - (FEED ahead of EPC) Chuquicamata – Effluent treatment plant (EPC) + Sulphuric acid plant Copper Chile (EPC) Fertilizers Oman Salalah - Ammonia plant (EPC) Fertilizers Russia
Slide 63: M&M Sector: Major Prospects (2017-2018)
M&M Sector: Major Prospects (2017-2018) Client Commodity Country Prospect Nickel Russia Norilsk Phase 2 – Sulphur emissions reduction (EPC) Gold Saudi Arabia Ma’aden - Gold (EPC) Copper Indonesia Amman - Greenfield copper smelter (FEED) Fertilizers Jordan Manaseer – Integrated fertilizer complex (EP
Slide 64: Summary
Summary › The M&M sector is a full-service, lean organization that incorporates innovation, value added services, flexibility and agility to meet commodity cycles, regional market conditions, and client investment priorities. › Healthy base in high GMAF value-added services such as studies and susta
Slide 65: Clean Power
CLEAN POWER » Growth opportunities in Global Nuclear and Renewables markets
Slide 66: Power Basics
Power Basics › Who › Tier-1 provider of full life-cycle solutions for broad range of Power generation, transmission and distribution. What › Feasibility studies and design › EPCM › Asset Life Extension › O&M Services › Critical Infrastructure Protection › Decommissioning Where › Predominantly North
Slide 67: Power Market Dynamics
Power Market Dynamics › Power Market Outlook Overall Power Sector › Aging infrastructure in the U.S. and Canada, › Renewables is gaining market position plus demand for low-carbon power will drive › Synergies between renewables and energy storage further investment › Demand for critical infrastructu
Slide 68: Grow profitable global Nuclear OEM + Services business
Grow profitable global Nuclear OEM + Services business ›Technology-driven business CANDU Fleet › Reactor core + balance of plant engineering › Field Services › Manufactured parts & products 30 ACTIVE UNITS › Tooling & robotics › New build › Life extension 20,932 MWe INSTALLED CAPACITY › Decommission
Slide 69: Become recognized as EPCM supplier for Complex Renewable offerings
Become recognized as EPCM supplier for Complex Renewable offerings › Engineering Services, EPCM and PROVEN GLOBAL EXPERTISE, LOCAL DELIVERY Developer with SNC-Lavalin Capital EXPERIENCE in over 50 countries IN COMPLEX around the world TURNKEY PROJECTS › Key Partnerships with OEM’s and Interest in RE
Slide 70: Power Major Pursuits
Power Major Pursuits ›Nuclear › Argentina: NASA Atuchu 3 CANDU new build › › China: CNNC Advanced Fuel CANDU Reactor™ new build › Canada: Darlington Execution and Bruce Power life extension projects › Global: Ongoing support to existing CANDU fleet ›Renewables › Australia: Solar & wind EPC projects
Slide 71: Synergies with Atkins
Synergies with Atkins ›Nuclear › Significantly enhanced US presence, with significant DWM opportunities › Enhanced UK/European presence, with New Build and DWM opportunities › Broaden new build service capabilities Renewables › Increased offshore wind capabilities in growing markets in North America
Slide 72: Nuclear, Complex renewables and Hydro
Nuclear, Complex renewables and Hydro › Grow profitable Nuclear services business through Atkins acquisition; ongoing CANDU life extensions; new build Candu opportunities in China and Argentina; development of SMR solutions › Focus on expanding Renewables through technology and construction partners
Slide 73: Break
BREAK
Slide 74: Oil & Gas
OIL & GAS » Managing revenues and margins in challenging times
Slide 75: Market Outlook – Oil & Gas
Market Outlook – Oil & Gas ($USM) Oil price expected to remain low through 2020. Gradual increases in investments expected. Potential for more midstream gas processing projects to be awarded that are not currently built in pipeline. O&G Sector Capex Forecasts (for SNC-Lavalin addressable market) $12
Slide 76: Capabilities
Capabilities We have capabilities across all phases of the project life-cycle: Concept, Engineering Procurement Modular Construction Completions O&M Asset Feasibility, FEED Fabrication & Commissions Enhancement Project Management Consultancy and Asset Financing/Concession Investments We provide solu
Slide 77: Strategic Growth 2017-20
77 Strategic Conclusions Strategic Growth 2017-20 Expanding our addressable market, and applying our lifecycle EPC and O&M capabilities to meet market demands, will allow us to maintain and grow revenue and margin Market/ Customer Opportunity Our Strategic Focus Deliver more efficient technical and
Slide 78: Oil & Gas Strategic Pillars – How We Will Grow
Oil & Gas Strategic Pillars – How We Will Grow Vision: To fundamentally transform our scale by 2020 Project Development Gas Downstream Field Services Objective Creative project Grow upstream/ Enter downstream Create a global, development options midstream position EPC space in differentiated to win
Slide 79: Maintaining Revenues & Margins
Maintaining Revenues & Margins › In a tightened market, we have seen the continued delivery of revenues and margins due to our project performance › We expect revenues to maintain and then increase as the market returns and we grow these strong customer relationships further Helps win Underpins busi
Slide 80: Large Potential of Global Opportunities
Large Potential of Global Opportunities $18B 25.7% › Our prospect pipeline consisting of ~$70B of Upstream projects, includes over Midstream 80 projects of >$200M $34B 48.6% $6B 8.6% Downstream › $10.1B of proposals awaiting decision; under bid or Cross-sector $12B negotiating 17.1% › These are some
Slide 81: Summary
Summary Our model and ability to provide services at all stages of a project’s life cycle has largely protected us from the more serious declines some of our peers have faced We expect revenues to maintain, before increasing as the industry moves forward again, and the value to our clients in our se
Slide 82: Sector Snapshot
Sector Snapshot O&G a global business; active presence in 27 countries › Over 100 years of experience in Oil & Gas › Completed 700+ projects over the past 50 years › 73 million person-hours worked in 2016 with a TRIF of 0.11 › Worked 5 of Australia’s 7 LNG projects Countries we › Operating in Baytow
Slide 83: Infrastructure
INFRASTRUCTURE >» Repositioned and well positioned to win new work
Slide 84: Infrastructure
Infrastructure Long history and Strong track Sustainable Leader in record of profit delivery Canadian PPP completing complex since 2015 projects projects globally Ability to address Focused strategy; Won 10 of full infrastructure geographically Canada’s 13 life cycle from and in business recent majo
Slide 85: Infrastructure - Expertise for the full life-cycle
Infrastructure - Expertise for the full life-cycle › Key differentiator: ability to address full infrastructure life cycle and deliver: End-to-End Solutions P3 Expertise Small and Large Scale Projects › Top-tier specialized services offered separately or grouped together › Wide-ranging service portf
Slide 86: Repositioned for Growth
Repositioned for Growth › Divested low margin businesses › Exited competitive commodity business lines (commercial building, roadworks, small construction projects) › Built our capability for large full lifecycle projects eg. P3 complex projects › Completed legacy projects › Strengthened our winning
Slide 87: Infrastructure Overview
Infrastructure Overview 6,600 dedicated staff, excluding Atkins. › Over 6,600 dedicated professionals working Engineering Construction O&M MENA in 15 countries 64% 4,300 employees 8% 20% 8% 500 employees 1,300 employees 500 employees › Nearly 66% of our business is based in Canada Geographic Presenc
Slide 88: The North American and MENA opportunity
The North American and MENA opportunity; great potential in the markets where SNC-Lavalin is present Middle-East North Africa Canada United States (MENA) Federal and Provincial United States needs to spend Over US$800B in projects currently spending budget: ~0.7% of GDP (about US$125B) being planned
Slide 89: Over $50B in potential Infrastructure Major Pursuits Across Canada
Over $50B in potential Infrastructure Major Pursuits Across Canada PROJECTS ($7.0B) • Pattullo Bridge (2019) • Surrey LRT (2019) • Broadway Extension LRT (2019) PROJECTS ($25.2B) • George Massey Bridge * • Finch West LRT (2017) • Gordie Howe Bridge (2018) • Scarborough Subway Extension (2018) PROJEC
Slide 90: Opportunities for SNC-Lavalin
Opportunities for SNC-Lavalin Recent Wins › Ottawa LRT phase 2 › White Rose Extension (Husky), NF › $335 million of Engineering mandates won in 2017 to date. Current Major Pursuits › Light Rail projects: › REM, CDPQ Infra, QC › Finch West LRT, ON › Trillium Line Extension, ON › Complex infrastructur
Slide 91: Opportunities with Atkins
Opportunities with Atkins Capitalize on the infrastructure market opportunities in the US and in the Middle East › Rail & Transit › Roads & Bridges › Social Infrastructure › Industrial › Defense and Logistics Create a sizable footprint in the US for the Infrastructure sector › Atkins presence brings
Slide 92: Summary
Summary The Infrastructure Sector: › has Delivered Consistent Results › has Repositioned its Business Mix › is Well-positioned to Win New Business in this Strong Market 92
Slide 93: Atkins – Strategy and capabilities
ATKINS Member of the SNC-Lavalin Group > Strategy and capabilities
Slide 94: Atkins business
Revenue Operating margin Atkins business $3.6B 8.2% Atkins is one of the world’s We operate in a significant › most respected design, part of the value chain – engineering and project providing solutions for the management consultancies complete journey of capital programmes Our core business is hel
Slide 95: Atkins business
Atkins business › Nuclear › Highways and intelligent transport systems › Oil and gas › Rail and urban transport › Conventional power › Aviation › Renewables › Ports and coastal › Urban development › Property Seamless, end-to-end › Security advisory services for › Water and environment developing mar
Slide 96: Segmentation
Segmentation Revenue by market % Key clients 7% › Network Rail 8% 21% › Highways England › Heathrow Airport Limited › High Speed 2 › Transport for London › Florida Department of Transportation 21% › Texas Department of Transportation › Colorado Department of Transportation › Mass Transit Rail Corpor
Slide 97: Financial performance – focus on margin growth
Financial performance – focus on margin growth Revenue Underlying operating ($B) profit margin (%) 3.6 3.6 8.2 8.0 3.2 7.6 2.8 2.4 6.7 6.4 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Revenue is approximate derived from sterling amount disclosed in results for Atkins Group for years ended March
Slide 98: Atkins people
Atkins people U.K. 8,800 Europe 800 North America 3,600 Middle East and Asia Pacific Africa 1,200 2,400 India 1,500 Atkins total 18,300 98
Slide 99: UK and Europe
Revenue Operating margin UK and Europe $1.6B 9.9% Market Focus › Strong demand for infrastructure › Well-funded transport and infrastructure through the UK National Infrastructure markets Plan – our large project pipeline › Major projects in roads and rail includes High Speed 2, Crossrail 2, Thames
Slide 100: North America
Revenue Operating margin North America $800M 7.0% Market Focus › Government and private investment in › Core market-leading business in infrastructure expected to increase transportation › Ageing legacy infrastructure in › Develop Federal offering and target transportation, water and ports large inf
Slide 101: Middle East and Africa
Revenue Operating margin Middle East and Africa $400M 9.4% Market Focus › Economic diversity, population growth › Multidisciplinary integrated services with and urbanisation are drivers of longer- emphasis on major projects and term requirements programmes › Short term growth impacted by low oil › T
Slide 102: Asia Pacific
Revenue Operating margin Asia Pacific $200M 7.9% Market Focus › The Hong Kong market for major › Continued diversification from public infrastructure developments and infrastructure in Hong Kong general market conditions in mainland › Consolidate property activity in urban China remain challenging p
Slide 103: Energy
Revenue Operating margin Energy $600M 9.3% Market Focus › Energy demand is forecast to › Operate across the energy sector increase over the long term with an emphasis on nuclear › In developed nations, significantly › Core business in supporting existing increased levels of investment are energy ass
Slide 104: Global design centre
Global design centre Proposition › A world-class design and engineering delivery model › Global resource pool providing single and multi-disciplinary resources › Technical and cost competitive advantage › A centre of digital engineering excellence and a catalyst for organisational learning › ~1,500
Slide 105: A selection of Atkins capabilities
A selection of Atkins capabilities
Slide 106: Strength in depth in rail and transit
Strength in depth in rail and transit Clockwise from top left: Riyadh Metro – Kingdom of Saudi Arabia, Crossrail – United Kingdom, High Speed 2 – United Kingdom 106
Slide 107: Technical excellence in roads and bridges
Technical excellence in roads and bridges Clockwise from top left: Florida Turnpike Toll System – United States, Project NEON – United States, Smart motorways – United Kingdom 107
Slide 108: Capability in masterplanning and building design
Capability in masterplanning and building design Ruai land use plan – Kenya (left), Changsha Convention and Exhibition Centre – China (right) 108
Slide 109: Complex safety critical engineering skills
Complex safety critical engineering skills Clockwise from top left: Deepwater flowlines – Gulf of Mexico, ITER – France, Barakah nuclear new build – UAE 109
Slide 110: Project and programme management expertise
Project and programme management expertise › A world leading integrated project and programme management consultancy › Providing advice on some of the world’s most exciting construction related projects – from giant petrochemical plants to the world’s tallest hotel, and from London’s Heathrow Airpor
Slide 111: Growth drivers
Growth drivers 1 2 3 Core market growth Market share growth New growth initiatives Driving growth from our Taking advantage of Development of new existing core presence in opportunities in business and service lines home markets › North America › Atkins Acuity › UK and Europe › Digital › Middle East
Slide 112: New growth initiatives – Acuity
New growth initiatives – Acuity › Unique combination of engineering, infrastructure and technical expertise with consultancy around strategy, structuring and financing › New strategic alliances and partnerships with a focus on emerging markets › Supports strategic asset management, intelligent mobil
Slide 113: New growth initiatives – Digital
New growth initiatives – Digital › Applying new technologies to engineering services to deliver better Digital outcomes for customers Engineering › Both a defensive play to protect existing revenue and enhance margin as well as an offensive play to capture revenue from new offerings › Building on ou
Slide 114: Digital positioning and collaborating for success
Digital positioning and collaborating for success 19 April 2017 9 August 2017 10 August 2017 Reducing the cost of offshore Atkins and EAMS Group to Atkins signs global partnership wind with new approach to design collaborate on the digital with INRIX to drive data insight and development transformat
Slide 115: Digital project successes
Digital project successes Connected and Autonomous Vehicles (left), Dynamic Insight application (right) 115
Slide 116: Digital journey
Digital journey › Focus on three key areas for digital › Our key differentiator – data PLUS engineering insight › Platform and partner based approach › Focus on hiring different commercial talent › Lean start up methodology in how we work Our challenge is now repeatability, scale and pace 116
Slide 117: Summary
Summary › Strategic focus on key markets in energy, transportation and infrastructure › Differentiated offering for complex projects and programmes › Evolution to top line growth through › Existing presence in core markets › Building market share › New growth initiatives 117
Slide 118: WS Atkins acquisition
› WS Atkins acquisition › An update on integration and synergies
Slide 119: Executive summary
Executive summary › Successful Day 1 with seamless business continuity Progress › Joint integration teams appointed for 12 workstreams to date › Integration plans and Day 100 priorities identified › Remain on track to complete the Day 100 integration by 11 October Today › Ten regional/sector worksho
Slide 120: Key decisions following the acquisition for a robust integration
We took a number of key decisions following the acquisition, to ensure a robust integration › We made a number of strategic senior appointments › A cross organisational Integration Management Office (supported by advisors as appropriate) was established to oversee and drive the integration › We appo
Slide 121: The IMO is driving key integration and synergy priorities
The IMO is driving the delivery of key integration and synergy priorities 100 Days BAU July August September October › Successful Day 1 with › Regional / sector › Finalise operational › Complete Day 100 seamless business workshops to focus on and business integration continuity business development
Slide 122: Detailed integration and synergy execution plan by workstream
A detailed integration and synergy execution plan is developed by each functional workstream… Examples of: Examples of: Quick wins implemented Day 100 integration plan items Group Finance › Debt structure review › Financial consolidation and reporting (Revolver repayment) › FX process alignment › In
Slide 123: Ten regional/sector workshops to capture commercial opportunities
…and ten regional/sector workshops are taking place to capture commercial opportunities Focus of Regional and Sector workshops Business Development Integration Strategy › Identify key opportunities and › Assess regional and sector › Knowledge share on strategy joint bid strategies capabilities and s
Slide 124: The potential of the combined organisation
The potential of the combined organisation › SNC-Lavalin is a global Tier 1 integrated E&C firm, that is seen as a consolidator in the industry › Significant opportunity of Revenue synergies (above and beyond the $120M cost synergies) › End to end service capabilities across the project lifecycle Re
Slide 125: Looking ahead our emphasis in three main areas
Looking ahead our emphasis in three main areas will be… › Functional Integration: › Complete the priority Day 100 integration activities › Return focus to “Business As Usual” activities › Monitor the delivery of long-term integration initiatives e.g. IT › Synergies: › Deliver $30M benefits by year e
Slide 126: Q&A Period
Q&A PERIOD
Slide 127: Appendix
APPENDIX
Slide 128: Appendix: Capital
Appendix Capital 128
Slide 129: Capital investments portfolio
Capital investments portfolio Name Description Held Since Concession Years Location Equity 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* Floa
Slide 130: Appendix: Mining & Metallurgy
Appendix Mining & Metallurgy 130
Slide 131: Sector Snapshot
Sector Snapshot Over 1,000 dedicated staff working in 10 countries › Over 1,000 dedicated professionals working in over 10 countries M&M Engineering M&M Construction 73% 27% › In 2017, we were awarded EPC 800+ employees 300+ employees Salalah Methanol Company ammonia plant construction, and awarded
Slide 132: Capabilities
Capabilities Services Other related industries › Sustaining capital & Consulting › Fertilizers Local support throughout › Studies › Sulphuric acid › Major projects the mining life cycle › Pit-to-port life-cycle services Mining and Metallurgy Markets Pit-to-port solutions for mines and processing pla
Slide 133: Core differentiators
Core differentiators We have the global-calibre expertise and local capabilities to deliver tailored solutions for projects of any size, scope or complexity, taking into consideration the clients’ unique needs › › Flexible Safety Client End-to-end Local and leadership focus services execution dynami
Slide 134: Mining & Metallurgy presence
Mining & Metallurgy presence › 1,000 + employees worldwide 500+ 140+ 120+ 60+ 50+ 200+ Engineering Project Controls Project Management Mine Environment Safety Others & Quality & Construction Canada Belgium 500+ 65+ Resources in our high value center in India 600+ UAE 65+ Peru, Brazil, Chile Australi
Slide 135: Appendix: Power
Appendix Power 135
Slide 136: Sector Snapshot
Sector Snapshot ~3,000 dedicated staff working in 20 countries › Power is ~19% of SNC-Lavalin’s business; nearly 61 % of that is based in Canada › In 2016 Darlington Retube Nuclear Hydro & Thermal Power Delivery & Refurbishment + Bruce (Inc. Renewables) Major Components Replacement made up 49% of Nu
Slide 137: Capabilities
Capabilities Globally, the world is facing common energy challenges. Demand for more › low-carbon power, produced economically and safely has never been higher. SNC-Lavalin is well-positioned, to satisfy this demand, especially with Hydro, › Nuclear and Renewables from technology development through
Slide 138: Who We Work For
Internal Business Environment Who We Work For Top 10 Clients Comments Ontario Power Generation E / EPC / O&M Bruce Power E / EPC / O&M BC Hydro E / EPC / PPP Nalcor E / P / CS NA-SA E / EPC ARES EPC CPV EPC Toronto Hydro E / CS Avangrid OE / CS Hydro One E 138
Slide 139: Appendix: Oil & Gas
Appendix Oil & Gas 139
Slide 140: Who We Work For
Internal Business Environment Who We Work For 10 Key Clients Comments (based on 2017 $ / bidding) Saudi Aramco EPCC, Engineering, Construction & Commissioning ExxonMobil EPCC, Engineering, Construction, Commissioning and O&M Chevron EPCC, Engineering, Construction, Commissioning and O&M Shell EPCC,
Slide 141: O&G – Geographic Focus
O&G – Geographic Focus Global player with strong position in Canada and Middle East; expanding in Asia Europe/CIS Canada • Opportunistic • Sustaining capital opportunities Canada • CCS/ sustainability • Sustaining capital/ construction • LNG positioning • Selective downstream • Telecoms • CCS/ susta