Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin Group — Q2 2022 Earnings Presentation
26 slides from Atkinsrealis's earnings presentation, Aug 4, 2022
Slide 1: Q2 Conference Call Presentation
Q 2 CO NFERENC E CALL PRESENTAT I O N AUGUST 4, 2022 Sydney Harbour Sydney, Australia
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
BUSINESS PERFO RM ANC E IAN EDWARDS, PRESIDENT & CEO
Slide 4: Q2 Financial Highlights
4 Q2 Financial Highlights (All results reflect comparisons to prior-year period of Q2 2021, except otherwise indicated) Consolidated SNCL Services LSTK Projects › Revenues of $1.9B, up 4.1% › Revenue of $1.6B was up by 4.2%, › Segment Adjusted EBIT was negative or 6.0% based on organic revenue $37M
Slide 5: Engineering Services
5 Engineering Services REVENUES ($M) PROFITABILITY ($M) BACKLOG ($M) SEGMENT ADJ. EBIT SEGMENT ADJ. EBITDA** +11% (% of gross revenues) (% of segment net 8.3% revenues)* 15.8% 15.0% 9.0% 8.5% 3,746 3,861 4,158 1,061 1,129 126 126 95 95 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 June 30’21 Mar.
Slide 6: Nuclear
6 Nuclear REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) (5.3)% 14.2% 14.7% 235 221 33 33 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Organic revenue contraction* Q2 KEY HIGHLIGHTS › Sustained revenues and profitability › Continued progress on Darlington and Bruce Power refurbishment projects; signed two new early-st
Slide 7: O&M
7 O&M REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) (0.8)% 12.8% 10.9% 104 105 13 11 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Organic revenue contraction* Q2 KEY HIGHLIGHTS › Strong financial performance with solid operational metrics across the portfolio › Mobilizing for the O&M start-up on REM, Eglinton and Tri
Slide 8: Linxon
8 Linxon REVENUES ($M) PROFITABILITY ($M) BACKLOG ($M) SEGMENT ADJ. EBIT SEGMENT ADJ. EBITDA** (% of gross revenues) (% of segment net 13.7% revenues)* 6.8% 5.1% 5.9% 4.2% 1,043 143 154 8 823 7 7 7 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 June 30’21 June 30’22 Organic revenue growth* Q2 KEY H
Slide 9: Capital
9 Capital REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) 20 16 14 11 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 KEY HIGHLIGHTS › Segment Adjusted EBIT decrease mainly due to the disposal of InPower BC (John Hart Generating Station) to SNCL Infrastructure Partners LP in February 2022 and a lower contribution from
Slide 10: LSTK Projects
10 LSTK Projects REVENUES ($M) SEGMENT ADJUSTED EBIT ($M) BACKLOG ($M) -41% -13% 1,394 234 249 -25 957 828 -37 Q2 2021 Q2 2022 Q2 2021 Q2 2022 June 30’21 Mar. 31’21 June 30’22 Q2 KEY HIGHLIGHTS › Segment Adjusted EBIT impacted by continued challenges from supply chain and inflation, as well as recen
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 in H1 2022 REM Ontario Projects Other projects expected to › $464M revenue recognized since Q4 2021 400 complete over 2023 with › $339M or 29% decrease in backlog since December
Slide 12: 2021 Sustainability Report Preview – Engineering a Better Future
12 2021 Sustainability Report Preview – Engineering a Better Future SU ST AI N A B L E ~50% of SNC-Lavalin’s 2021 total revenues assessed as sustainable revenues, which represent revenues PROJECT derived from projects contributing to a sustainable future and carbon-free economy1 PORTFOLIO ENVIRONMEN
Slide 13: Financial Performance
13 FINAN CI AL PERFORM ANC E JEFF BELL, CHIEF FINANCIAL OFFICER
Slide 14: Q2 Selected Financial Metrics
14 Q2 Selected Financial Metrics SNCL Services Engineering Services O&M (in M$, except otherwise indicated) Q2 2022 Q2 2021 Change Nuclear Linxon Revenues REVENUES REVENUES ($M) ($M) PS&PM 1,858 1,778 4% Capital 14 20 (30%) 1,544 1,608 Total Revenues 1,872 1,798 4% Segment Adjusted EBIT – Total 120
Slide 15: Leverage and DSO
15 Leverage and DSO* Credit Facilities: introduction of a sustainability-linked framework, further strengthening ESG NET LIMITED RECOURSE & RECOURSE DEBT TO DAYS SALES OUTSTANDING (DSO)* FROM ADJUSTED EBITDA RATIO*** RECONCILIATION THE ENGINEERING SERVICES SEGMENT 1 commitments › In May, Company ext
Slide 16: Free Cash Flow
16 Free Cash Flow* Six months ended (in M$) Q2 2022 June 30, 2022 Segment Adjusted EBITDA* from SNCL Services 183 345 1 Change in working capital and other items from SNCL Services (89) (192) Net cash generated from operating activities - SNCL Services 94 153 Income taxes paid (49) (63) Interest pai
Slide 17: 2022 Outlook
17 2022 Outlook 2022 Target 2021 Actual SNCL Services organic revenue growth* Between 4% and 6% n/a1 SNCL Services segment Adjusted EBIT to segment revenue ratio Between 8% and 10% 10.6% Segment Adjusted EBITDA to segment net revenue ratio* - Engineering Services Between 14% and 16% 17.0% Corporate
Slide 18: Conclusion
18 CO NCLUSIO N IAN EDWARDS, PRESIDENT & CEO
Slide 19: Conclusion
19 Conclusion › Remaining focused on executing our “Pivoting to Growth Strategy” and optimizing our delivery of sustained revenue and free cash flow growth › Company’s core business is executing well and delivering strong financial performance, with notable engineering services backlog expansion in
Slide 20: Questions & Answers
20 Q UEST IO NS & ANSW ER S
Slide 21: Appendix
APP EN DI X
Slide 22: Financial Targets (2022-2024)
22 Financial Targets (2022-2024) 2022-2024 Target 2021 Actual SNCL Services organic revenue growth* (annually) Between 4% and 6% n/a1 SNCL Services segment Adjusted EBIT to segment revenue ratio (annually) Between 8% and 10% 10.6% Engineering Services Between 8% and 10% 10.6% Nuclear Between 13% and
Slide 23: LSTK Projects Update
23 LSTK Projects Update Eglinton Trillium Réseau Express Métropolitain (REM) As at June 30, 2022 Client Infrastructure Ontario City of Ottawa CDPQ Backlog ($M) ~70 ~160 ~520 Approximate Completion ~95% ~85% >65% Expected Substantial 2022 2023 2024 Completion Year • Engineering & design completed at
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