Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin Group — Q4 2017 Earnings Presentation
29 slides from Atkinsrealis's earnings presentation, Feb 22, 2018
Slide 1: Fourth Quarter 2017 Conference Call Presentation
› Fourth Quarter 2017 › Conference Call Presentation › February 22nd, 2018
Slide 2: Agenda
Agenda Forward-looking statements › Denis Jasmin, Vice-President, Investor Relations CEO remarks › Neil Bruce, President and Chief Executive Officer Financial overview › Sylvain Girard, Executive Vice-President and Chief Financial Officer Q&A
Slide 3: Forward-looking statements; 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 SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint ar
Slide 4: Q4 2017 results
Q4 2017 results › Q4 2017 IFRS net income attributable to SNC-Lavalin shareholders of $52.4M, or $0.30 EPS › Includes a non-cash charge of $42.5 million for the estimated net impact of the Company’s U.S. deferred tax assets and liabilities as a result of the U.S. corporate tax reform › Includes acqu
Slide 5: Oil & Gas
~$3.4B revenue business with ~20,000 Oil & Gas employees Improved EBIT % - Q4 2017 EBIT of 11.2% (2017 EBIT of 7.2% vs 2016 EBIT of 5.0%) Revenues of $884M in Q4 YTD 2017 awards of ~ $1.7B. Recently awarded: - Fabrication and supply of a modular gas processing equipment in the Delaware Basin of the
Slide 6: Mining & Metallurgy
~$500M revenue business with ~1,000 Mining & Metallurgy employees Backlog at $0.6B, compared to $0.3B at the end of 2016 and 2015 Recently awarded: - Selected as an Alliance Partner on the Clean TeQ Sunrise project in Australia - This project will be delivered by our O&G and M&M teams together, demo
Slide 7: Power
~$1.3B revenue business with ~3,000 Power employees Management decided to exit the fixed-price EPC thermal power business - One project remains to be completed (expected completion mid-year 2018) - 2017 EBIT was negatively impacted by losses from thermal operations, mainly driven by $93.4M loss on t
Slide 8: Infrastructure
~$2.1B revenue business with ~6,000 Infrastructure employees Improved EBIT margin Sustainable revenue backlog - YTD 2017 awards of ~$2.0B, but excludes the recently REM project award Recently awarded: - NouvLR, a consortium including SNC-Lavalin, selected as preferred consortium for the Infrastructu
Slide 9: Atkins Services
~$3.6B revenue business with ~20,000 (acquired July 3, 2017) employees Strong revenues and EBIT margin Stable revenue backlog of $2.1B - Awards of $1.7B since acquisition Integration / synergies - On track to deliver $120M run-rate cost synergies by end of 2018 - Delivered cost synergies of $40M in
Slide 10: Capital
Portfolio of value creating assets Capital SNC-Lavalin Infrastructure Partners LP vehicle - One more asset (MIHG) should be transferred into the vehicle by mid-year 407 ETR continues to deliver very good results (see appendix) - Year-over-year variance: 12% increase in revenues 3% increase in VKT 26
Slide 11: Q4 Financial performance summary
Q4 Financial performance summary E&C Capital Total Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Revenues 2,868 2,146 50 65 2,918 2,211 SG&A 407 201 10 13 417 214 EBITDA, adjusted 246 108 37 47 283 155 Adjusted EBITDA margin 8.6% 5.0% n/a n/a 9.7% 7.0% Net income, as reported 14 (38) 38 40 52 2 Ne
Slide 12: E&C segment EBIT – Q4 2017 vs Q4 2016
E&C segment EBIT – Q4 2017 vs Q4 2016 New, M&M +$2M acquired (in M$) July 3, 17 Higher level of activities resulting from recent contract awards and lower 140 -2 132 SG&A, partially offset by lower GM%. O&G -$2M 120 Lower level of activities mainly due to 101 completion or near completion of LNG 100
Slide 13: A sustainable and diversified backlog
Backlog December 2017 $10.4B A sustainable and diversified backlog Backlog expected to (in B$) be >$15B in 2018 Recently named 10.7 10.4 preferred proponent on several major projects: •REM in Montreal •Stockyard Hill Wind Farm in Australia (they are expected to be booked into backlog in Q118 and/o
Slide 14: 2017 Operating Cash Flow
2017 Operating Cash Flow (in M$) Cash Balance as December 31, 2016 1,055 Q1 Q2 Q3 Q4 376 Cash flow from operations (236) 240 Business acquisitions (3,177) 187 Increase in limited recourse debt 1,500 Proceeds from share issuance 1,221 Increase in recourse debt, net of repayment 492 (82) (82) (187) Ca
Slide 15: Capital structure and debt ratios
Capital structure and debt ratios (in M$, unless otherwise indicated) Q4 2017 Limited recourse debt $1.47B Net recourse debt 641 TTM adjusted EBITDA 816 Unused capacity under the $2.75B committed revolving credit facility $2.35B Less: TTM interest on limited recourse debt* (49) TTM adjusted EBITDA,
Slide 16: 2018 growth outlook
2018 growth outlook › We anticipate increased Segment EBIT for the M&M and Power segments, while O&G and Infrastructure are expected to be mainly in line with 2017. Atkins will include 12 months of operations and related financing vs 6 months in 2017. › Q1 to be the lowest quarter of 2018, gradual i
Slide 17: Questions & Answers
Questions & Answers
Slide 18: Appendix
Appendix
Slide 19: Capital investments portfolio
Capital investments portfolio Name Description Held Concession Location Equity Since Years Participation Highways, Bridges & Rail 1. Highway 407 (407 ETR) 108 km electronic toll road 1999 99 Canada (Ontario) 16.8% 2. InTransit BC* Rapid transit line 2005 35 Canada (B.C.) 6.7% 3. Okanagan Lake* Float
Slide 20: 407 ETR information – Q4
407 ETR information – Q4 (in M$, unless otherwise indicated) Q4 2017 Q4 2016 Change Revenues 327.3 297.3 10.1% Operating expenses 43.0 42.2 1.9% EBITDA 284.3 255.1 11.5% EBITDA as a percentage of revenues 86.9% 85.8% 1.1% Net Income 114.9 98.0 17.2% Traffic / Trips (in millions) 32.1 31.7 1.3% Avera
Slide 21: 407 ETR information – Full year
407 ETR information – Full year (in M$, unless otherwise indicated) 2017 2016 Change Revenues 1,267.7 1,134.7 11.7% Operating expenses 163.9 149.7 9.5% EBITDA 1,103.8 985.0 12.1% EBITDA as a percentage of revenues 87.1% 86.8% 0.3% Net Income 470.1 372.9 26.1% Traffic / Trips (in millions) 125.7 124.
Slide 22: 407 ETR: Consistent growth and low cost of financing
407 ETR Consistent growth and low cost of financing 845 790 Gross Vehicle Kilometres Travelled Dividends 730 750 680 (in millions – KM) 2,709 (in M$) 600 2,641 Total dividends paid 460 by 407 ETR 2,517 2,437 Dividends received 300 by SNC-Lavalin 2,336 2,326 2,340 2,356 2,253 2,253 190 2,215 142 135
Slide 23: Full year financial performance summary
Full year financial performance summary E&C Capital Total 2017 2016 2017 2016 2017 2016 Revenues 9,097 8,223 238 248 9,335 8,471 SG&A 1,118 679 41 45 1,159 724 EBITDA, adjusted 629 372 188 180 817 552 Adjusted EBITDA margin 6.9% 4.5% n/a n/a 8.7% 6.5% Net income, as reported 176 46 206 209 382 256 N
Slide 24: Diversity of revenue base – by segment
Diversity of revenue base – by segment 2016 2017 As per 2018 new structure 4% 3% 18% O&G 19% Infrastructure 3% 37% Nuclear Power 44% Clean Power 5% Thermal Power 3% M&M 5% Capital 30% EDPM 8% 21% 2016 Revenues 2017 Revenues* $8.5 billion $9.3 billion *Only includes 6 months of Atkins revenues, as it
Slide 25: Diversity of revenue base – by geography
Diversity of revenue base – by geography 2016 2017 5% 12% 20% $0.8 14% Americas Middle East & Africa 52% 53% Asia Pacific CAN 31% CAN 41% $3.9 USA 11% Europe USA 17% Latam 4% Latam 1% 22% 22% $1.8 2016 Revenues 2017 Revenues* $8.5 billion $9.3 billion *Only includes 6 months of Atkins revenues, as i
Slide 26: Solid financial position
Solid financial position December 31 December 31 (in M$) 2017 2016 Assets Cash and cash equivalents 707 1,055 Other current assets 3,908 3,135 Property and equipment 414 298 Capital investments accounted for by the equity or cost methods 352 448 Goodwill 6,323 3,268 Intangible assets related to busi
Slide 27: A track record of increased dividends
A track record of increased dividends Declared dividend per share Dividends were 1.106 increased for each of 1.053 the past 17 1.01 years 0.97 0.93 2013 2014 2015 2016 2017 Payout ratio* 125% 39% 41% 40% 34% (in $) Key Goals: › Maintain dividend growth trajectory › Stabilize dividend payout at aroun
Slide 28: Net income reconciliation – Q4
Net income reconciliation – Q4 (in M$, except per share amount) Net Income Net charges Acquisition Net gain on Impact of U.S. Net income, (loss), related to the disposals of corporate tax adjusted as reported restructuring & E&C business, reform (Non-IFRS) right-sizing plan Acquisition- Amortization
Slide 29: Net income reconciliation – YTD
Net income reconciliation – YTD (in M$, except per share amount) Net Income, Net charges Acquisition Net loss (gain) Impact of U.S. Net income, as reported related to the on disposals of corporate tax adjusted restructuring & E&C business, reform (Non-IFRS) right-sizing plan Acquisition- Amortizatio