Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — Q1 2020 Earnings Presentation
33 slides from Atkinsrealis's earnings presentation, May 7, 2020
Slide 1: First Quarter 2020
FIRST QUARTER 2020
Slide 2: Forward-Looking Statements
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 3: Ian L. Edwards, President and CEO
Ian L. Edwards President and CEO 3
Slide 4: Summary
Summary › Further progress on new strategic direction › Business has been resilient in current environment › Early actions to align cost base and manage liquidity proving effective › Investments in IT/Digital allowing us to deliver for our customers › Solid results in Q1 against challenging back dro
Slide 5: COVID-19: Update
COVID-19: Update › First priority remains to protect the health and well-being of the employees › Maintaining business operations for customers where allowable and possible › Most Engineering Services personnel are working effectively from remote locations › Engineering Services is well diversified,
Slide 6: Q1 Highlights: Solid Results from SNCL Engineering Services
Q1 Highlights: Solid Results from SNCL Engineering Services SNCL Eng. Services, excl. Capital › SNCL Engineering Services, excl. Capital 1,535 › Revenue up 6.4% vs. Q1 2019 › Backlog at $11.0B 1,442 › Segment EBIT up 10.7% vs. Q1 2019 Q1 2019 Q1 2020 › SNCL Projects › Revenue down 23.6% and backlog
Slide 7: SNC-Lavalin Engineering Services: EDPM Q1 Highlights
SNC-Lavalin Engineering Services: EDPM Q1 Highlights › Q1 performance › Core businesses in the UK, USA and Canada continue to perform well › AsiaPAC and MEA performance impacted by COVID-19 and economic slowdown in activity › Successful mobilization of all staff to work from home during March EDPM l
Slide 8: SNC-Lavalin Engineering Services: EDPM Q2
SNC-Lavalin Engineering Services: EDPM Q2 › Open for business despite impact of COVID-19 › 97% of employees working remotely – productivity stable › Significant efforts to support COVID-19 relief effort working closely with governments in the UK, US and Canada › New business continuing to be won in
Slide 9: SNC-Lavalin Engineering Services: Nuclear Q1 Highlights
SNC-Lavalin Engineering Services: Nuclear Q1 Highlights › Delivering Growth Nuclear Long-term Growth Strategy › Continued growth in core markets of Canada, UK and US › Added backlog in CDI through the closing of Oyster Creek and Pilgrim and start of early work on Indian Point 1 Grow from geographic
Slide 10: SNC-Lavalin Engineering Services: Nuclear Q2
SNC-Lavalin Engineering Services: Nuclear Q2 › Impact of COVID-19 › General slowdown but Nuclear remains an essential service in key geographies, maintaining demand and support for nuclear workforce › OPG Darlington Unit 3 refurbishment delayed 4-6 months › Successful delivery of Darlington Unit 2 r
Slide 11: SNC-Lavalin Engineering Services: Infras. Services Q1 Highlights
SNC-Lavalin Engineering Services: Infras. Services Q1 Highlights › Delivering Growth Infrastructure Services Long- › Expanded Linxon geographic activity term Growth Strategy › Growth in O&M in Canada, USA and MENA 1 Grow our core and expand Grow O&M services in North America › Notable Wins in Q1 mar
Slide 12: SNC-Lavalin Engineering Services: Infras. Services Q2
SNC-Lavalin Engineering Services: Infras. Services Q2 › Impact of COVID-19 › Minimum business impact in O&M, as providing essential services to hospitals, courthouses, transit, power plants, Canadian Navy and Canada Post › Linxon growth delayed, most contracts awards are currently on hold by clients
Slide 13: SNC-Lavalin Engineering Services: Capital
SNC-Lavalin Engineering Services: Capital › Q1 Highlights › Lower dividends received from Highway 407 ETR, from reduced Company’s interest Capital Long-term Growth Strategy › Champlain Bridge: Cash equity injected in Q1 (dividend payments will start in Q2) 1 Grow from strengths Continued pursuit and
Slide 14: SNCL Projects: Infrastructure Projects
SNCL Projects: Infrastructure Projects › LSTK Run-off › Good progress on all projects in Q1 › REM suspended – remobilization 11th May 2020 › Husky construction activities suspended, offsite fabrication continues › Worked with clients to demobilize safely with minimal cost › Backlog of $2.6B in Q1, i
Slide 15: SNCL Projects: Resources
SNCL Projects: Resources › LSTK Run-off › Backlog reduced 19% to $0.3B in Q1; all sites remained operational › Limitations on site access and mobility restrictions of personnel impacting productivity › Projects will be largely complete by end of 2020; risk that some may slip to first half 2021 › Val
Slide 16: SNCL Projects: Lump-Sum Turnkey Construction Contracts in Backlog
SNCL Projects: Lump-Sum Turnkey Construction Contracts in Backlog SNCL Projects Total Backlog Resources Reimbursable & (March 31, 2020) Engineering Service Contracts $1.0B Resources 34% Main Projects Resources Lump-sum turnkey 2 in North America construction contracts 3 in MENA $3.9B $0.3B Main Proj
Slide 17: SNCL Projects: Phase out of Main LSTK Projects
SNCL Projects: Phase out of Main LSTK Projects LSTK Backlog net decrease of $0.5B since end of Q2 2019 Projects forecast to be largely completed by end of 2021 LSTK Backlog LSTK Backlog Phasing* 4 1,200 Infrastructure 1,000 EPC Projects (in M$) 800 Resources In B$ 3 600 400 200 2 0 Q2 2019 Q3 2019 Q
Slide 18: Conclusion
Conclusion The Company has and will continue to take all appropriate actions to protect its staff, to maintain business operations for customers where allowable and possible, and to preserve liquidity. COVID-19 SNC-Lavalin’s New Strategic Direction › Taking actions and appropriate measures Our goal
Slide 19: Jeff Bell, Chief Financial Officer
Jeff Bell Chief Financial Officer
Slide 20: Q1 Financial Highlights
Q1 Financial Highlights ($M, except EPS) ($M) Three months ended March 31 2020 2019 Δ Three months ended March 31 2020 2019 Δ Net loss attributable to Revenues SNC-Lavalin shareholders -66.0 -17.3 282% SNCL Engineering Services 1,535 1,442 6% Diluted EPS ($) -0.38 -0.10 280% Capital 46 72 -36% Adjus
Slide 21: SNCL Engineering Services
Revenues $1,535M SNCL Engineering Services (vs Q1 2019) $1,442M › Continued growth in SNCL Engineering Services, excluding Capital, Segment EBITDA: $143M vs $133M Q1 2019 Q1 2020 EDPM Nuclear Infras. Services › EDPM: 3.9% revenue decrease; 6.1% EBIT margin Segment EBIT › Nuclear: 5.9% revenue increa
Slide 22: SNCL Projects
Revenues $849M SNCL Projects (vs Q1 2019) $648M › Infrastructure EPC Projects: › 15.7% revenue decrease as LSTK projects complete Q1 2019 Q1 2020 › Segment EBIT of $3.8M Resources Infras. EPC Projects Segment EBIT › Resources: $(67M) $(54M) › 27.2% revenue decrease as LSTK projects wind down and low
Slide 23: Operating Cash Flow
Operating Cash Flow (in M$) › Q1 Operating Cash Flow of $23M Q1 Q2 Q3 Q4 $312 › Improvement in working capital efficiency › SNCL Engineering Services OCF of $23 $142M vs SNCL Projects of $(152M) ($51) › Capital/Corporate OCF of $33M › Lower dividends from H407 ($249) ETR versus Q1 2019 ($367) 2019 2
Slide 24: Balance sheet as at March 31, 2020
Balance sheet as at March 31, 2020 Credit facilities Debt Breakdown Q1 2020 Revolving Facility Recourse Liquidity › $1,352M undrawn under the $300M Series 1 Debenture › Cash balance of $2.1B $2,600M revolving Facility maturing › Maturity: November 2020 › Undrawn credit facility May 2022. › Interest
Slide 25: 2020 Outlook
2020 Outlook › The Company issued its full year 2020 financial outlook on February 28, 2020, prior to the global impact of COVID-19 disruptions. › Given the consequences of the unprecedented and rapidly changing nature of the COVID- 19 situation, and the impact on the Company’s worldwide operations,
Slide 26: Questions & Answers
Questions & Answers ») SNC +LAVALIN
Slide 27: Appendix
Appendix ») SNC+LAVALIN
Slide 28: Main Lump-Sum Turnkey Construction Projects in SNCL Projects Backlog
Main Lump-Sum Turnkey Construction Projects in SNCL Projects Backlog Resources Country Approximate Expected Backlog as at Client Project Completion % substantial March 31, 2020 (SNC-Lavalin completion year ($M) portion) Project #1 MENA 70 2021 <150 Confidential Project #2 North America 50 2021 <60 C
Slide 29: PS&PM Segment EBIT – Q1 2020 vs Q1 2019
PS&PM Segment EBIT – Q1 2020 vs Q1 2019 Loss due to unfavorable reforecasts on certain major LSTK construction Resources contracts (as in Q1 2019) and an (in M$) +$3M uncompetitive cost base and slower than anticipated awards for the SNCL EPC Projects SNCL Engineering Services services portfolio. 4
Slide 30: 2019 Segment EBITDA: SNCL Engineering Services
2019 Segment EBITDA1 SNCL Engineering Services Segment Q1 2019 Q2 2019 Q3 2019 Q4 2019 YTD 2019 EBITDA % (in thousands of $) EDPM (Engineering, Design and Project Management) Revenues 982,955 972,092 969,844 984,009 3,908,900 Segment EBITDA 108,256 108,697 131,578 121,721 470,252 12.0% Nuclear Reven
Slide 31: 2019 Segment EBITDA: SNCL Projects
2019 Segment EBITDA1 SNCL Projects Segment Q1 2019 Q2 2019 Q3 2019 Q4 2019 YTD 2019 EBITDA % (in thousands of $) Resources Revenues 585,232 479,154 561,971 532,498 2,158,855 Segment EBITDA (49,027) (170,002) (37,960) (50,238) (307,227) (14.2%) Infrastructure EPC Projects Revenues 263,773 230,525 288
Slide 32: 407 ETR information – Q1
407 ETR information – Q1 (in M$, unless otherwise indicated) Q1 2020 Q1 2019 Change Revenues 287.8 309.1 (6.9%) Operating expenses 49.1 46.4 5.8% EBITDA 238.7 262.7 (9.1%) EBITDA as a percentage of revenues 82.9% 85.0% (2.1%) Net income 114.5 95.4 20.0% Traffic / Trips (in millions) 23.5 27.3 (13.9%
Slide 33: Net income reconciliation – Q1
Net income reconciliation – Q1 Net income (loss) Restructuring Acquisition- Amortization of Fair value Loss from Adjustment to Adjusted net attributable to costs related costs intangible assets revaluation of the adjustment on provision for income (loss) SNC-Lavalin and integration related to busine