Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — Investor Presentation (August 2023)
38 slides from Atkinsrealis's investor presentation, August 2023
Slide 1: Fully Integrated Professional Services and Project Management Company
Fully Integrated Professional Services and Project Management Company AtkinsRéalis Investor Presentation (formely SNC-Lavalin) August 2023 1 2023 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements and Non-IFRS Financial Measures
› 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 3: Serving Diversified End Markets with Focused Capabilities
› Serving Diversified End Markets with Focused Capabilities REVENUE HEADQUARTERS TOTAL EMPLOYEES1 (For the twelve -m onth period ended June 30, 2023) Montreal, ~36,000 Other By Region By Segment O&M Capital Canada Europe 17% Linxon 7% 6% 2% 30% Canada LSTK 4% Projects 8% FOUNDED COUNTRIES SERVED MAR
Slide 4: Fully Integrated Professional Services and Project Management Company
Fully Integrated Professional Services and › Project Management Company Four segments providing comprehensive end -to-end services in seven clearly defined end markets Engineering Nuclear O&M Linxon Services SERVICES Consulting, Intelligent networks Design and Procurement Project delivery Operations
Slide 5: Operating in Four Regions Across the World
› Operating in Four Regions Across the World We create sustainable solutions that connect people, data and technology to design, deliver and operate the most complex projects around the world SNC-Lavalin Europe Core Geographies ~14,000 SNC-Lavalin Other Asia Targeted Geographies Pacific ~5,000 SNC-L
Slide 6: Transforming for Future Growth
› Transforming for Future Growth June/October 2019 February 2020 August 2021 March 2022 July 2023 ORGANIZATION REFOCUSED ON: Ian Edwards Jeff Bell Exited Oil & Gas Announced cumulative Announced the sale of Integrating capability in SNCL Services appointed appointed CFO business potential financial
Slide 7: Leadership Team
› Leadership Team Ian Edw ards Jeff Bell Philip Hoare Steve Moriss Joe St. Julian Stéphanie President and Executive Vice-President President, Eng. Services President, Eng. Services President, Vaillancourt Chief Executive Officer and Chief Financial Officer U.K., Europe, MEA and Canada U.S., APAC and
Slide 8: Financial Targets and Capital Allocation Priorities (2022-2024)
› Financial Targets and Capital Allocation Priorities (2022-2024)1 CAPITAL › SNCL SERVICES C O N S O L I D AT E D ALLOCATION ( A N N U A L LY ) (BY END OF 2024) PRIORITIES • Improve debt leverage to achieve investment grade • Prioritize positive FCF** to accelerate the strategy through organic and i
Slide 9: Key Messages
› Key Messages Pivoting into High-Growth Markets 1 Intentional focus in Canada, U.S. and U.K. provides diverse revenue stream to perform well in volatile macroeconomic environments and yields identifiable tailwinds for growth through government investment in new infrastructure programs Utilizing Uni
Slide 10: Strategic Framework for Accelerating Growth
Strategic Framework for Accelerating Growth 10 2023 INVESTOR PRESENTATION
Slide 11: Strategically Engineering our Future by Pivoting to Growth and Creating Value
› Strategically Engineering our Future by Pivoting to Growth and Creating Value › EXECUTING AGAINST OUR STRATEGY W H E R E W E P L AY HOW WE WIN Strongly positioned with a • Record-high backlog in Engineering Services at Deploying global leading presence across $5.1B1 with a strong increase in the U
Slide 12: Ability to Grow and Create Long-Term Value Begins with Core Strengths
› Ability to Grow and Create Long-Term Value Begins with Core Strengths Leveraging our Capabilities To meet the global demands for a low-carbon future by connecting people, data and technology and utilizing our unique end-to-end services capabilities to help our clients achieve their sustainability
Slide 13: Opportunities Across our Business Expertise Drive Long-Term Value Proposition
› Opportunities Across our Business Expertise Drive Long-Term Value Proposition IN ADDITION TO DRIVING GROWTH IN OUR › UNIQUE END TO END SERVICES CORE MARKETS AND SERVICES, FOUR KEY OVER THE WHOLE LIFECYCLE GROWTH AREAS IDENTIFIED OF AN ASSET ✓ Leveraging our market leading UK Engineering Services c
Slide 14: Engineering a Better Future for our Planet and its People
Engineering a Better Future for our Planet and its People 14 2023 INVESTOR PRESENTATION
Slide 15: Focused Approach to Engineering Sustainable Solutions
› Focused Approach to Engineering Sustainable Solutions to Help Customers Achieve Their Long-Term Goals GLOBAL CHALLENGES S N C - L AV A L I N ’ S A D V A N T A G E Meeting the global Expertise in nuclear new build and life extensions, hydroelectric power, 01 demand for clean energy electrical AC su
Slide 16: Leading ESG and Integrity Programs
› Leading ESG and Integrity Programs Our Advantages Embedding Integrity Strengthened ESG commitments into Operations through balance sheet action › RECOGNITIONS • World-class integrity program • Mandatory annual Training In May 2022, SNC-Lavalin extended its 01 and Code of Conduct $2.5B primary corp
Slide 17: Using our Foundation to Generate Long-Term Profitability
Using our Foundation to Generate Long-Term Profitability 17 2023 INVESTOR PRESENTATION
Slide 18: Engineering Services: Diversified, Growing and Resilient Business
› Engineering Services: Diversified, Growing and Resilient Business $~ 270B ~28,000 $ 5,230M 8.7% $ 5,092M ADDRESSABLE EMPLOYEES TTM REVENUE2 TTM SEGMENT ADJ. BACKLOG3 MARKET1 EBIT MARGIN2 › Incorporates consultancy, engineering, design and project TTM REVENUE2 TTM REVENUE2 management services aroun
Slide 19: Engineering Services: Long-Term Client Relationships
› Engineering Services: Long-Term Client Relationships HIGHLIGHTED CLIENTS TTM REVENUE2 S E G M E N TAT I O N Canada U.K. U.S. Public Engineering & Design Private Project & Program Management Consulting, Strategy & Advisory Other Diverse, stable revenue streams and growing client portfolio leads to
Slide 20: Nuclear: Unique Global Services Capabilities
› Nuclear: Unique Global Services Capabilities $~ 11B ~ 3,200 $ 938M 15.2% $ 1,117M ADDRESSABLE EMPLOYEES TTM REVENUE2 TTM SEGMENT ADJ. BACKLOG3 MARKET1 EBIT MARGIN2 › Supports clients across the entire nuclear lifecycle with the full spectrum TTM REVENUE2 TTM REVENUE2 of services from consultancy,
Slide 21: O&M: Long-Term Contracts to Deliver Stable Earnings
› O&M: Long-Term Contracts to Deliver Stable Earnings $~ 45B ~ 800 $ 481M 9.0% $ 5,192M ADDRESSABLE EMPLOYEES TTM REVENUE2 TTM SEGMENT ADJ. BACKLOG3 MARKET1 EBIT MARGIN2 Consists of providing operations, maintenance and asset management TTM REVENUE2 solutions for highways and bridges, transit system
Slide 22: Linxon: Hitachi JV Focused on Electrification Opportunities
› Linxon: Hitachi JV Focused on Electrification Opportunities $~ 14B ~ 600 $ 521M (1.8)% $ 958M ADDRESSABLE EMPLOYEES TTM REVENUE2 TTM SEGMENT ADJ. BACKLOG3 MARKET1 EBIT MARGIN2 › Offers, through our 51% / 49% SNC-Lavalin / Hitachi JV, engineering, procurement, management and construction services f
Slide 23: Capital: Strategic Contributor of Cash Flow and Profitability
› Capital: Strategic Contributor of Cash Flow and Profitability Key • Capital is a key differentiator and enables us to • Most of Capital’s investments have delivered access and bundle investment, O&M services higher than bid target equity returns – Attributes and engineering services roles in Major
Slide 24: Diversified Capital Investments Portfolio
› Diversified Capital Investments Portfolio Held Concession Equity Name Description Location Since Years Participation 1. Highway 407 ETR 108 km electronic toll road 1999 99 Canada (Ontario) 6.76% 2. 407 EDGGP 32 km H407 East extension (Phase 1) 2012 33 Canada (Ontario) 50% 3. Eglinton Crosstown 19
Slide 25: LSTK Projects: Delivering on exit strategy
› LSTK Projects: Delivering on exit strategy Ontario LSTK projects largely physically complete - to be handed over to clients in 2023 › 14/15 stations have achieved › Train signal installation is activities ongoing - safety, Approximate pre-revenue service occupancy complete security, electrical and
Slide 26: Delivering on Value-Creation Opportunities
Delivering on Value-Creation Opportunities 26 2023 INVESTOR PRESENTATION
Slide 27: Historical Financial Overview
› Historical Financial Overview C O N S O L I D AT E D R E V E N U E ( $ M ) SEGMENT ADJ. EBIT ($M) SNCL Services Capital LSTK Projects SNCL Services Capital LSTK Projects Q4 2021 included positive impact of a $93M favorable arbitration outcome in the SNCL Projects 7,371 7,549 Engineering Services 7
Slide 28: Free Cash Flow Growth Trajectory
› Free Cash Flow Growth Trajectory C O N S O L I D AT E D F C F * ( $ M ) Net cash generated (used from) operating activities – SNCL Services and Capital Net cash generated (used from) operating activities – LSTK Projects and Discontinued Operations › KEY DRIVERS Acquisition of property and equipmen
Slide 29: Strong Balance Sheet
› Strong Balance Sheet • Long-term net limited recourse and recourse debt to Adjusted EBITDA ratio* target range of 1.5x-2.0x • Return to investment grade rating important for o Winning long duration O&M contracts and other types of work o Lower cost of debt • Strong access to liquidity • $941M rema
Slide 30: Disciplined Approach to Capital Allocation
› Disciplined Approach to Capital Allocation STRENGTHEN G R O W A N D C R E AT E V A L U E Strengthening the Investing in Returning capital balance sheet the business to shareholders Improve debt leverage ratios Accelerate strategy through Opportunistically return to achieve investment grade organic
Slide 31: Financial Targets (2022-2024)
› Financial Targets (2022-2024)1 SNCL SERVICES C O N S O L I D AT E D ( A N N U A L LY ) (BY END OF 2024) 4-6% 8-10% 80-90%2 1.5-2.0x Organic Segment Adjusted Free cash flow to Net limited recourse revenue EBIT to segment Adjusted net income and recourse debt growth* revenue ratio (loss) attributabl
Slide 32: 2023 Outlook
› 2023 Outlook 2023 Target 2022 Actual Between 12% and 15% SNCL Services organic revenue growth* 6.8% (raised on Aug. 3, 2023) SNCL Services segment Adjusted EBIT to segment revenue ratio Between 8% and 10% 8.7% Segment Adjusted EBITDA to segment net revenue ratio* - Engineering Services Between 14%
Slide 33: Key Takeaways
KEY TAKEAWAYS 33 2023 INVESTOR PRESENTATION
Slide 34: Key Takeaways
› Key Takeaways Advancing our Deploying Resolute focus Focused Steadfast footprint capabilities on growing pipeline investment approach into markets that locally and globally of new business in providing to investing in offer high growth to our clients opportunities in leading sustainable organic an
Slide 35: Appendix
APPENDIX 35 2023 INVESTOR PRESENTATION
Slide 36: Q2 2023 Quarterly Recap
› Q2 2023 Quarterly Recap (All results reflect comparisons to prior-year period of Q2 2022, except otherwise indicated) REVENUE ($M) SEGMENT ADJUSTED ADJUSTED NET CASH USED FROM EBIT ($M) DILUTED EPS O P E R AT I O N S ( $ M ) FROM PS&PM*($) SNCL Services Capital LSTK Projects 178 2,132 1,872 120 0.
Slide 37: Capital Market Profile and Analysts' Coverage
› Capital Market Profile and Analysts’ Coverage DENIS JASMIN Tel.: 514-393-8000 Ext. 57553 Market Details E-mail: denis.jasmin@snclavalin.com Vice-President, www.atkinsrealis.com Investor Relations Price as of $41.70 August 3, 2023 Firm Analyst Rec. Tel. Shares outstanding 175.6M – Diluted ATB Capit
Slide 38: Endnotes
› Endnotes (See also the cautionary statement regarding non-IFRS financial measures and ratios, supplementary financial measures and non-financial information at slide 2 of this presentation.) 1. Organic revenue growth (contraction) is a non-IFRS ratio comparing organic revenue, itself a non-IFRS fi
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