Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — Q3 2022 Earnings Presentation
26 slides from Atkinsrealis's earnings presentation, Nov 4, 2022
Slide 1: Q3 Conference Call Presentation
Q 3 CO NFERENC E CALL PRESENTAT I O N NOVEMBER 4, 2022 Musée des beaux-arts du Québec - Espace Riopelle Québec, Canada
Slide 2: Forward-Looking Statements, Forward-Looking Financial Information and Outlook
2 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: Business Performance
3 BUSINESS PERFO RM ANC E IAN EDWARDS, PRESIDENT & CEO
Slide 4: Q3 Financial Highlights
4 Q3 Financial Highlights (All results reflect comparisons to prior-year period of Q3 2021, except otherwise indicated) Consolidated SNCL Services LSTK Projects › Revenues of $1.9B, up 4.5% › Revenue increased 8.2% to $1.6B, or › Segment Adjusted EBIT was negative 12.6% on an organic revenue growth*
Slide 5: Engineering Services
5 Engineering Services REVENUES ($M) PROFITABILITY ($M) BACKLOG ($M) SEGMENT ADJ. EBIT SEGMENT ADJ. EBITDA** +20% (% of gross revenues) (% of segment net 18.3% revenues)* 16.1% 14.5% 8.9% 8.3% 4,158 4,623 3,843 1,039 1,176 123 128 93 98 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Sept. 30’21June
Slide 6: Nuclear
6 Nuclear REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) 1.5% 16.3% 16.7% 220 219 36 37 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Organic revenue growth* Q3 KEY HIGHLIGHTS › Sustained year-over-year financial performance › Continued progress on Darlington and Bruce Power refurbishment projects and growing demand fo
Slide 7: O&M
7 O&M REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) 12.2% 15.8% 12.7% 110 124 17 16 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Organic revenue growth* Q3 KEY HIGHLIGHTS › Strong Revenue growth and Segment Adjusted EBIT margins › Mobilizing for the O&M start-up on REM, Eglinton and Trillium › Increased bidding activ
Slide 8: Linxon
8 Linxon REVENUES ($M) PROFITABILITY ($M) BACKLOG ($M) SEGMENT ADJ. EBIT SEGMENT ADJ. EBITDA** (% of gross revenues) (% of segment net (11.1) % revenues)* 3.2% 1.9% 1.9% 1.1% 1,018 149 123 3 764 2 2 2 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Sept. 30’21 Sept. 30’22 Organic revenue contraction
Slide 9: Capital
9 Capital REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) 27 29 24 25 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 KEY HIGHLIGHTS › Segment Adjusted EBIT increase mainly due to dividend received from Highway 407 ETR, partially offset by the decreased contribution from InPower BC G.P. (John Hart Generating Station),
Slide 10: LSTK Projects
10 LSTK Projects REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) BACKLOG ($M) -43% -20% 1,158 263 217 -32 828 -44 664 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Sept. 30’21June 30’22 Sept. 30’22 Q3 KEY HIGHLIGHTS › Backlog decreased by 20% vs June 30, 2022 and by 43% vs September 30, 2021 › Segment Adjusted EBIT impa
Slide 11: LSTK Projects Update
11 LSTK Projects Update What we said Where we stand Backlog phasing ($M) › 2 of 3 Canadian LRT › Strong project execution year-to-date REM Ontario Projects Other projects expected to › $681M revenue recognized 400 complete over 2023 with › $503M decrease in backlog since December 31, 2021 physical w
Slide 12: Our Vision for Engineering a Sustainable Society
12 Our Vision for Engineering a Sustainable Society 2021 Sustainability Report issued on September 26, 2022 SUST AINABLE ~52% of SNC-Lavalin’s 2021 total revenues assessed as sustainable revenues, which represent revenues derived PROJECT from projects contributing to a sustainable future and carbon-
Slide 13: Financial Performance
13 FINAN CI AL PERFORM ANC E JEFF BELL, CHIEF FINANCIAL OFFICER
Slide 14: Q3 Selected Financial Metrics
14 Q3 Selected Financial Metrics SNCL Services Engineering Services O&M (in M$, except otherwise indicated) Q3 2022 Q3 2021 Change Nuclear Linxon Revenues REVENUES REVENUES ($M) ($M) PS&PM 1,860 1,781 4% Capital 29 27 7% 1,519 1,643 Total Revenues 1,889 1,809 4% Segment Adjusted EBIT – Total 134 139
Slide 15: Leverage and DSO
15 Leverage and DSO* NET LIMITED RECOURSE & RECOURSE DEBT TO ADJUSTED DAYS SALES OUTSTANDING (DSO)* FROM THE ENGINEERING EBITDA RATIO*** RECONCILIATION SERVICES SEGMENT1 › In May, Company extended its $2.5B primary corporate credit facilities to 2025 (in M$, except otherwise indicated) Sept. 30 2022
Slide 16: Free Cash Flow
16 Free Cash Flow* Nine months ended (in M$) Q3 2022 Sept 30, 2022 Segment Adjusted EBITDA* from SNCL Services 185 530 1 Change in working capital and other items from SNCL Services (125) (317) Net cash generated from operating activities - SNCL Services** 60 213 Income taxes paid (2) (65) Interest
Slide 17: 2022 Outlook
17 2022 Outlook 2022 Target 2021 Actual Between 5% and 7% SNCL Services organic revenue growth* (Previously: Between 4% and 6%) n/a1 Between 8.5% and 9.0% SNCL Services segment Adjusted EBIT to segment revenue ratio (Previously: Between 8% and 10%) 10.6% Segment Adjusted EBITDA to segment net revenu
Slide 18: Conclusion
18 CO NCLUSIO N IAN EDWARDS, PRESIDENT & CEO
Slide 19: Conclusion
19 Conclusion › SNCL Services business is executing well, and we continue to do what we said we would do › Continuing to exit our LSTK business and discussing with our customers to recoup the cash owed for the work we have completed › Recent results further demonstrate the resiliency of SNC-Lavalin’
Slide 20: Questions & Answers
20 Q UEST IO NS & ANSW ER S
Slide 21: Appendix
21 APP EN DI X
Slide 22: Financial Targets (2022-2024)
22 Financial Targets (2022-2024) 2022-2024 Target 2021 Actual SNCL Services organic revenue growth* (annually) Between 4% and 6% n/a1 SNCL Services segment Adjusted EBIT to segment revenue ratio (annually) Between 8% and 10% 10.6% Engineering Services Between 8% and 10% 10.6% Nuclear Between 13% and
Slide 23: LSTK Projects Update
23 LSTK Projects Update Eglinton Trillium Réseau Express Métropolitain (REM) As at September 30, 2022 Client Infrastructure Ontario City of Ottawa CDPQ Backlog ($M) ~50 ~130 ~425 Approximate Completion >95% >85% >70% Expected Substantial 2023 2023 2024 Completion Year • Engineering & design complete
Slide 24: 2021 Quarterly Comparative Restated Segmented Figures
24 2021 Quarterly Comparative Restated Segmented Figures (in millions of $) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Margin % Engineering Services Revenues 1,049.6 1,061.2 1,039.3 1,216.3 4,366.4 Segment Adjusted EBIT 86.2 95.2 93.0 189.5 464.0 10.6% Segment Adjusted EBITDA* - restated 118.5 126.1 12
Slide 25: 2021 Quarterly Comparative Restated Segmented Figures
25 2021 Quarterly Comparative Restated Segmented Figures (in millions of $) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Margin % LSTK Projects Revenues 245.8 234.4 263.0 164.1 907.2 Segment Adjusted EBIT (11.9) (25.3) (32.4) (233.0) (302.6) n.a. Segment Adjusted EBITDA* - restated (6.0) (20.2) (25.0) (2
Slide 26: Endnotes
26 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. Adjusted diluted EPS is a non-IFRS ratio based on adjusted net income (loss) attributable to SNC-Lavali