Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — Investor Presentation (October 2023)
38 slides from Atkinsrealis's investor presentation, October 2023
Slide 1: Fully Integrated Professional Services and Project Management Company
Fully Integrated Professional Services and Project Management Company Investors Presentation October 2023
Slide 2: Forward-Looking Statements, Forward-Looking Financial Information and Outlook
Forward-Looking Statements, Forward-Looking Financial Information and Outlook Reference in this presentation, and hereafter, to the “Company”, “AtkinsRéalis”, “SNC-Lavalin”, “we”, “us” and “our” mean, as the context may require, SNC-Lavalin Group Inc. and all or some of its subsidiaries or joint arr
Slide 3: Serving Diversified End Markets with Focused Capabilities
Serving Diversified End Markets with Focused Capabilities Revenue Headquarters: Countries Top 225 International (for the twelve-month period ended June 30, 2023) Montreal, Canada Served Design Firms4: By Region By Segment Total Employees1: Market Cap2 Overall #6 O&M Capital 2% Linxon 6% Other 7% ~36
Slide 4: Fully Integrated Professional Services and Project Management Company
Fully Integrated Professional Services and Project Management Company Four segments providing Services: comprehensive end-to-end Consulting, advisory and Operations and services in seven clearly environmental services maintenance Capital defined end markets: Intelligent networks Project delivery Dec
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 AtkinsRéalis Core Geographies AtkinsRéalis Other Europe Targeted Geographies ~14,000 Asia AtkinsRéalis Pacific
Slide 6: Transforming for Future Growth
Transforming for Future Growth September 2021 March 2023 Announced Pivoting to Growth Reported strong SNCL June-October 2019 Strategy focused on growing the Services results and completed February 2020 August 2021 September 2023 SNCL Services business: major milestone on LSTK Ian Edwards Jeff Bell a
Slide 7: Leadership Team
Leadership Team Highly knowledgeable executive team with deep industry experience Ian Edwards 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 Chie
Slide 8: Financial Targets and Capital Allocation Priorities (2022-2024)
Financial Targets and Capital Allocation Capital Allocation Priorities (2022-2024)1 Priorities ▪ Improve debt leverage to achieve investment grade SNCL Services Consolidated (annually) (by end of 2024) ▪ Prioritize positive FCF** to accelerate the strategy through organic and inorganic investment 4-
Slide 9: Key Messages
Key Messages Pivoting into High-Growth Markets Capitalizing on the Investment Boom into 1 Intentional focus in Canada, U.S. and U.K. provides diverse 4 Climate Change Adaption and Mitigation revenue stream to perform well in volatile macroeconomic With ~50% of 2022 total revenues derived from enviro
Slide 10: Strategic Framework for Accelerating Growth
Strategic Framework for Accelerating Growth 10
Slide 11: Strategically Engineering our Future by Pivoting to Growth and Creating Value
Strategically Engineering our Future by Pivoting to Growth and Creating Value One AtkinsRéalis Strategy › Executing against our strategy ▪ Record-high backlog in Engineering Services at Where we play How we win $5.1B1 with a strong increase in the U.S. Strongly positioned with a Deploying global lea
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 Harnessing our Global Scale To meet the global demands for a low-carbon future by To maintain a relentless focus on consistency, efficiency connecting people, data and technology and utilizing our and o
Slide 13: Opportunities Across our Business Expertise Drive Long-Term Value Proposition
Opportunities Across our Business Expertise Drive Long-Term Value Proposition Unique end to end services over the › whole lifecycle of an asset In addition to driving growth in our core markets and Consulting, advisory and services, four key growth areas identified environmental services Leveraging
Slide 14: Engineering a Better Future for our Planet and its People
Engineering a Better Future for our Planet and its People 14
Slide 15: Focused Approach to Engineering Sustainable Solutions
Focused Approach to Engineering Sustainable Solutions to Help Customers Achieve Their Long-Term Goals Global Challenges AtkinsRéalis’ Advantage Delivering in Our End Markets 1 Meeting the global demand for clean energy Expertise in nuclear new build and life extensions, hydroelectric power, electric
Slide 16: Leading ESG and Integrity Programs
Leading ESG and Integrity Programs Our Advantages Embedding Integrity Strengthened ESG commitments › Recognitions into Operations through balance sheet action Prestigious Compliance ▪ World-class integrity ▪ Mandatory annual Training In May 2022, AtkinsRéalis extended its $2.5B Leader Verification f
Slide 17: Using our Foundation to Generate Long-term Profitability
Using our Foundation to Generate Long-term Profitability 17
Slide 18: Engineering Services: Diversified, Growing and Resilient Business
Addressable Market1: $~270B Engineering Services: Employees: ~28,000 TTM Revenue2: $5,230M Diversified, Growing and TTM Segment Adj. EBIT Margin2: 8.7% Resilient Business Backlog3: $5,092M Incorporates consultancy, engineering, design and project management services around the world, primarily for t
Slide 19: Engineering Services: Long-Term Client Relationships
Engineering Services: Long-Term Client Relationships Highlighted Clients TTM Revenue1 Segmentation Canada U.K. U.S. Public Engineering & Private Design Project & Program Management Consulting, Strategy & Advisory Other Diverse, stable revenue streams and growing client portfolio leads to resiliency
Slide 20: Nuclear: Unique Global Services Capabilities
Addressable Market1: $~11B Nuclear: Unique Global Employees: ~3,200 TTM Revenue2: $938M Services Capabilities TTM Segment Adj. EBIT Margin2: 15.2% Backlog3: $1,117M Supports clients across the entire nuclear lifecycle with the full spectrum of services from consultancy, EPCM services, field services
Slide 21: O&M: Long-Term Contracts to Deliver Stable Earnings
Addressable Market1: $~45B O&M: Long-Term Contracts Employees: ~800 TTM Revenue2: $481M to Deliver Stable Earnings TTM Segment Adj. EBIT Margin2: 9.0% Backlog3: $5,192M Consists of providing operations, maintenance and asset management solutions for highways and bridges, transit systems, buildings a
Slide 22: Linxon: Hitachi JV Focused on Electrification Opportunities
Addressable Market1: $~14B Linxon: Hitachi JV Focused on Employees: ~600 TTM Revenue2: $521M Electrification Opportunities TTM Segment Adj. EBIT Margin2: (1.8)% Backlog3: $958M Offers, through our 51% / 49% AtkinsRéalis / Hitachi JV, engineering, procurement, management and construction services for
Slide 23: Capital: Strategic Contributor of Cash Flow and Profitability
Capital: Strategic Contributor of Cash Flow and Profitability Highway 407 Key Data2 Total vehicle kilometres3: 2,213M Capital is a key differentiator and enables us to access and bundle Average workday number of trips3: 309,944 investment, O&M services and engineering services roles in Major project
Slide 24: Diversified Capital Investments Portfolio
Diversified Capital Investments Portfolio Equity Name Description Held Since Concession Years Location Participation 1. Highway 407 ETR 108 km electronic toll road 1999 99 Canada (Ontario) 6.76% 2. 407 EDGGP 32 km H407 East extension (Phase 1) 2012 33 Canada (Ontario) 50% 3. Eglinton Crosstown 19 km
Slide 25: LSTK Projects: Delivering on exit strategy
LSTK Projects: Delivering on exit strategy Ontario LSTK projects largely physically complete - to be handed over to clients in 2023 Eglinton Approximate Completion: ~95% Trillium Approximate Completion: ~95% Infrastructure Ontario Expected Completion Date: H2 2023 City of Ottawa Expected Completion
Slide 26: Delivering on Value-Creation Opportunities
Delivering on Value-Creation Opportunities 26
Slide 27: Historical Financial Overview
Historical Financial Overview Consolidated Revenue ($M) Segment Adj. EBIT ($M) SNCL Services Capital LSTK Projects SNCL Services Capital LSTK Projects Q4 2021 included positive impact of a $93M favorable 7,371 7,549 arbitration outcome in the 7,008 Engineering Services SNCL Projects segment SNCL Eng
Slide 28: Free Cash Flow Growth Trajectory
Net cash generated (used from) operating activities: Free Cash Flow Growth Trajectory SNCL Services and Capital Net cash generated (used from) operating activities: LSTK Projects and Discontinued Operations Consolidated FCF* ($M) 166 Acquisition of property and equipment, payment of lease liabilitie
Slide 29: Strong Balance Sheet
Strong Balance Sheet ▪ Long-term net limited recourse and recourse debt to ▪ Strong access to liquidity Adjusted EBITDA ratio* target range of 1.5x-2.0x ▪ $941M remains unused under the Company’s $1.8B ▪ Return to investment grade rating important for: Revolving Credit Facility as at June 30, 2023 ▪
Slide 30: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation Strenghten Grow and Create Value Strengthening the balance sheet Investing in the business Returning capital to shareholders Improve debt leverage ratios to achieve Accelerate strategy through Opportunistically return capital to investment grade organic and
Slide 31: Financial Targets (2022-2024)
Financial Targets (2022-2024)1 SNCL Services Consolidated (annually) (by end of 2024) 4-6% 8-10% 80-90%2 1.5-2.0x Organic revenue Segment Adjusted Free cash flow to Adjusted net Net limited recourse growth* EBIT to segment income (loss) attributable to SNC- and recourse debt revenue ratio Lavalin sh
Slide 32: 2023 Outlook
2023 Outlook 2023 Target 2022 Actual SNCL Services organic revenue growth* Between 12% and 15% 6.8% (raised on Aug. 3, 2023) SNCL Services segment Adjusted EBIT to segment revenue ratio Between 8% and 10% 8.7% Segment Adjusted EBITDA to segment net revenue ratio* - Engineering Services Between 14% a
Slide 33: Key Takeaways
Key Takeaways 33
Slide 34: Key Takeaways
Key Takeaways Advancing our Deploying Resolute focus Focused investment Steadfast approach footprint capabilities on growing pipeline in providing to investing in into markets that offer locally and globally to of new business leading sustainable organic and inorganic high growth potential our clien
Slide 35: Appendix
Appendix 35
Slide 36: Q2 2023 Quarterly Recap
Q2 2023 Quarterly Recap (All results reflect comparisons to prior-year period of Q2 2022, except otherwise indicated) Revenue ($M) Segment Adjusted EBIT Adjusted Diluted EPS Net Cash Used From ($M) From PS&PM*($) Operations ($M) 2,132 1,872 178 0.41 120 0.31 1,959 167 1,608 146 -129 -156 Q2 2022 Q2
Slide 37: Capital Market Profile and Analysts' Coverage
Capital Market Profile and Analysts’ Coverage Denis Jasmin Tel.: 514-393-8000 Ext. 57553 Vice-President, E-mail: denis.jasmin@atkinsrealis.com Investor Relations www.atkinsrealis.com Firm Analyst Rec. Tel. Market Details ATB Capital Markets Chris Murray Buy 647-776-8246 BMO Capital Markets Devin Dod
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 fina