- Reported Q4 2015 IFRS net income of $49.2 million, or $0.33 per diluted share.
- "STEP Change" program successfully completed and should reduce
expenses by twice the cost of implementation.
- Q4 2015 Adjusted net income from E&C(1) of
$66.1 million, or $0.44 per diluted share. $1.34 per diluted share for the full year,
slightly ahead of expectations.
- Q4 2015 bookings of $1.9 billion,
stable and increasingly diversified revenue backlog of $12.0 billion at December
31, 2015, which excludes two contracts signed in 2016 worth
over $2 billion.
- Strong cash balances of $1.6
billion at December 31, 2015,
up 9% compared to September 30,
2015.
- Quarterly dividend increased by 4% to $0.26 per share.
- Outlook 2016: Adjusted diluted EPS from E&C(2)
for 2016 in the range of $1.50 to
$1.70.
MONTREAL, March 3, 2016 /CNW Telbec/ - SNC-Lavalin
Group Inc. (TSX: SNC) announces its results today for the fourth
quarter and year ended December 31,
2015.
"We are pleased with our fourth quarter performance. We
delivered on our commitments and met our 2015 guidance," said
Neil Bruce, President and Chief
Executive Officer, SNC-Lavalin Group Inc. "Despite the turbulent
markets and persisting softer economic environment, we are entering
2016 with a strong balance sheet, a stable and diversified backlog
and a continued focus on improving performance that has yielded
cost reductions from our "STEP Change" program. I am particularly
encouraged by the tremendous efforts from everyone at SNC-Lavalin
to identify and implement initiatives, which should reduce expenses
for 2016 by twice as much as the cost of restructuring. Our focus
will now turn to improving operational excellence in order to
sustain a culture of efficiency and execution, and ensure that we
deliver on our target of an annualized adjusted E&C EBITDA
margin of 7% in 2017. This remains our key priority in
2016."
To watch Neil Bruce comment on
SNC-Lavalin's fourth quarter 2015 financial results and the outlook
for 2016, click here.
- For Q4 2015, reported IFRS net income was $49.2 million, or $0.33 per diluted share, compared with a net
income of $1,146.6 million, or
$7.51 per diluted share, for the
corresponding period in 2014. The Q4 2014 included a net gain of
$1,320.7 million, or $8.65 per diluted share, on the disposal of our
interest in AltaLink.
- Adjusted net income from E&C(1) for Q4 2015
increased to $66.1 million, or
$0.44 per diluted share, compared
with $22.7 million, or $0.15 per diluted share, for the corresponding
period in 2014. The increase was mainly due to improved Segment
EBIT(3) from all segments, compared to Q4 2014.
- Total E&C revenues for the year ended December 31, 2015 increased by 28% to
$9.4 billion, as a result of
increases in the Oil & Gas segment with incremental revenue
generated by Kentz, and in the Power segment, partially offset by a
decrease in the Infrastructure & Construction and the
Operations & Maintenance sub-segments, as well as a decrease in
Mining & Metallurgy.
- The Company maintained a stable and increasingly diversified
revenue backlog at the end of December
2015 totalling $12.0 billion, which is representative of
our broad offering and the diversified nature of our company and
market segments. New awards for the quarter were $1.9 billion, including $0.9 billion in Oil & Gas and $0.4 billion in Infrastructure. Note that the
December 2015 backlog excludes
SNC-Lavalin's share of the recently awarded $2.75 billion contract for the execution phase of
a nuclear refurbishment project in Canada. It also excludes the recently awarded
contract for developing the infrastructure and processing
facilities for a gas field in the Middle
East with an approximate value of $800 million. These two contracts will be added
to the Power and the Oil & Gas segment backlogs, respectively,
in the first quarter of 2016.
- SNC-Lavalin's cash and cash equivalents at the end of the year
was $1.6 billion, and this balance
sheet resilience remains an important differentiator with our key
clients. During the year, the Company repurchased approximately 2.8
million of its common shares for $121.8
million under its Normal Course Issuer Bid ("NCIB"), and
paid $150.9 million in dividends to
its shareholders.
- In 2015, the Company successfully completed its previously
announced "STEP Change" program. This program has delivered
increased competitiveness and agility, as well as identifying a
significant number of cost reduction initiatives. It has also
aligned our organization with market conditions. For the year ended
December 31, 2015, the Company
recorded a total of $87.7 million
after taxes ($116.4 million before
taxes) of charges relating to its restructuring and right-sizing
plan, including the "STEP Change" program, which is $7 million after taxes less than previously
announced. We will continue to take additional measures throughout
the year, if required, to ensure we achieve our target of
delivering an annualised adjusted E&C EBITDA(4)
margin of 7% in 2017.
Outlook
We anticipate our performance in 2016 overall to benefit from
our diversified E&C strategy, our cost reductions, driven by
our 2015 restructuring and right-sizing initiatives, and our
continued focus on improving project delivery performance. We
expect that the Oil & Gas and Power segments will be the main
contributors to net income, while Mining & Metallurgy should be
the smaller contributor to net income. We also expect that the
Infrastructure segment will return to profitability in 2016.
The Company is targeting an adjusted diluted EPS from
E&C(2) for 2016 of $1.50 to
$1.70. The Company is also targeting to deliver an
annualized adjusted E&C EBITDA(4) margin of 7% in
2017.
The adjusted diluted EPS from E&C(2) guidance
excludes charges related to the restructuring and right-sizing plan
and amortization of intangible assets related to the Kentz
acquisition.
The above outlook is based on the assumptions and methodology
described in the Company's 2015 Management's Discussion and
Analysis under the heading, "How We Budget and Forecast Our
Results", which should be read in conjunction with the "Forward
Looking Statements" section below and is subject to the risks and
uncertainties summarized therein, which are more fully described in
the Company's public disclosure documents.
Quarterly Dividend
Given the Company's long-term outlook, cash position and
diversified backlog, the Board of Directors has increased the
quarterly cash dividend by 4% to $0.26 per share, payable on March 31, 2016, to shareholders of record on
March 17, 2016. This dividend is an
"eligible dividend" for income tax purposes.
Conference Call / Webcast
SNC-Lavalin will hold a conference call today at 3:00 p.m. EST to discuss the fourth quarter
results. The telephone numbers to access the conference call are 1
866 530 1553 in North America: 416
847 6330 in Toronto: 514 223 0613
in Montreal: 080 0279 0444 in the
United Kingdom: and 180 099 2284
in Ireland. A live audio webcast
of the conference call and an accompanying slide presentation will
be available at investors.snclavalin.com. A recording of the
conference call will be available on our website within 24 hours
following the call.
About SNC-Lavalin
Founded in 1911, SNC-Lavalin is one of the leading
engineering and construction groups in the world and a major player
in the ownership of infrastructure. From offices in over 50
countries, SNC-Lavalin's employees are proud to build what matters.
Our teams provide EPC and EPCM services to clients in a variety of
industry sectors, including oil and gas, mining and metallurgy,
infrastructure and power. SNC-Lavalin can also combine these
services with its financing and operations and maintenance
capabilities to provide complete end-to-end project solutions.
www.snclavalin.com
(1) Adjusted net income from E&C is defined as
net income attributable to SNC-Lavalin shareholders from E&C,
excluding one-time net foreign exchange gains, charges related to
restructuring and right-sizing, as well as amortization of
intangible assets, and the financing, acquisition-related costs and
integration costs incurred in connection with the acquisition of
Kentz in 2014. E&C is defined in the Company's 2015 financial
statements and Management's Discussion and Analysis. The term
"Adjusted net income from E&C" does not have any standardized
meaning under IFRS. Therefore, it may not be comparable to similar
measures presented by other issuers. Management uses this measure
as a more meaningful way to compare the Company's financial
performance from period to period. Management believes that, in
addition to conventional measures prepared in accordance with IFRS,
certain investors use this information to evaluate the Company's
performance. See reconciliation below.
(2) Adjusted diluted EPS from E&C is defined
as the adjusted net income from E&C, divided by the weighted
average outstanding number of shares for the period.
(3) Segment EBIT is defined herein as gross margin
less i) directly related selling, general and administrative
expenses; ii) corporate selling, general and administrative
expenses that are directly related to projects or segments; and
iii) non-controlling interests before taxes. Corporate selling,
general and administrative expenses that are not directly related
to projects or segments, restructuring costs, goodwill impairment,
acquisition-related costs and integration costs and amortization of
intangible assets are not allocated to the Company's segments. The
term segment EBIT does not have any standardized meaning under
IFRS. Therefore, it may not be comparable to similar measures
presented by other issuers. Management uses this measure as a more
meaningful way to compare the Company's financial performance from
period to period. Management believes that, in addition to
conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company's
performance.
(4) Adjusted E&C EBITDA is defined herein as
earnings from E&C before net financial expenses, income taxes,
depreciation and amortization, and excludes one-time net foreign
exchange gains, charges related to restructuring and right-sizing,
as well as the acquisition-related costs and integration costs
incurred in connection with the acquisition of Kentz in 2014. The
term adjusted E&C EBITDA does not have any standardized meaning
under IFRS. Therefore, it may not be comparable to similar measures
presented by other issuers. Management uses this measure as a more
meaningful way to compare the Company's financial performance from
period to period. Management believes that, in addition to
conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company's
performance.
SNC-Lavalin
Financial Summary
|
|
(in thousands of
Canadian dollars, unless otherwise indicated)
|
Fourth
Quarter
|
Year ended
December 31
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Revenues
|
|
|
|
|
From
E&C
|
2,590,297
|
2,617,318
|
9,363,508
|
7,334,676
|
From
Capital
|
55,990
|
200,701
|
223,446
|
904,086
|
|
2,646,287
|
2,818,019
|
9,586,954
|
8,238,762
|
|
|
|
|
|
Net income
attributable to SNC-Lavalin's shareholders
|
|
|
|
|
From
E&C
|
13,987
|
(255,569)
|
95,834
|
(300,515)
|
From
Capital
|
35,257
|
1,402,214
|
308,502
|
1,633,859
|
|
49,244
|
1,146,645
|
404,336
|
1,333,344
|
|
|
|
|
|
Diluted EPS
($)
|
|
|
|
|
From
E&C
|
0.09
|
(1.67)
|
0.64
|
(1.97)
|
From
Capital
|
0.24
|
9.18
|
2.04
|
10.71
|
|
0.33
|
7.51
|
2.68
|
8.74
|
|
|
|
|
|
Adjusted net
income attributable to SNC-Lavalin's shareholders
|
|
|
|
|
From
E&C
|
66,186
|
22,681
|
201,856
|
54,895
|
From
Capital
|
35,276
|
83,992
|
162,802
|
318,763
|
|
101,462
|
106,673
|
364,658
|
373,658
|
|
|
|
|
|
Adjusted diluted
EPS ($)
From
E&C
|
0.44
|
0.15
|
1.34
|
0.36
|
From
Capital
|
0.23
|
0.55
|
1.08
|
2.10
|
|
0.67
|
0.70
|
2.42
|
2.46
|
|
|
|
|
|
Adjusted E&C
EBITDA
|
144,831
|
8,094
|
433,377
|
152,821
|
Adjusted E&C
EBITDA margin
|
5.6%
|
0.3%
|
4.6%
|
2.1%
|
|
|
|
|
|
|
|
|
|
|
Revenue
backlog
|
|
|
11,991,900
|
12,325,500
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
1,581,834
|
1,702,205
|
Reconciliation
of IFRS Net Income as Reported to Adjusted Net
Income
|
|
|
|
|
|
|
|
|
Net income, as
reported
|
Net charges related
to the restructuring and right-sizing plan
|
Acquisition of
Kentz
|
Net gain on
investment disposals
|
One-time net foreign
exchange gain
|
Net income,
adjusted
|
|
|
|
Acquisition-related
costs and integration costs
|
Amortization of
intangible assets
|
|
|
|
|
Fourth Quarter
2015
|
In
M$
|
E&C
|
13.9
|
34.8*
|
0.1
|
17.3
|
-
|
-
|
66.1
|
Capital
|
35.3
|
-
|
-
|
-
|
-
|
-
|
35.3
|
|
49.2
|
34.8
|
0.1
|
17.3
|
-
|
-
|
101.4
|
Per diluted share
($)
|
E&C
|
0.09
|
0.23
|
0.00
|
0.12
|
-
|
-
|
0.44
|
Capital
|
0.24
|
-
|
-
|
-
|
-
|
-
|
0.24
|
|
0.33
|
0.23
|
0.00
|
0.12
|
-
|
-
|
0.68
|
|
Year Ended
December 31, 2015
|
In
M$
|
E&C
|
95.8
|
51.4*
|
15.2
|
72.0
|
-
|
(32.6)
|
201.8
|
Capital
|
308.5
|
-
|
-
|
-
|
(145.7)
|
-
|
162.8
|
|
404.3
|
51.4
|
15.2
|
72.0
|
(145.7)
|
(32.6)
|
364.6
|
Per diluted share
($)
|
E&C
|
0.64
|
0.33
|
0.10
|
0.48
|
-
|
(0.21)
|
1.34
|
Capital
|
2.04
|
-
|
-
|
-
|
(0.96)
|
-
|
1.08
|
|
2.68
|
0.33
|
0.10
|
0.48
|
(0.96)
|
(0.21)
|
2.42
|
*An amount related
to the restructuring and right sizing plan of $36.3 million ($36.3
million after taxes) originally included in the 2014 gross margin,
in accordance with IFRS, was reversed in the fourth quarter of 2015
due to a favorable outcome.
|
|
|
|
|
|
|
|
|
|
|
Acquisition of
Kentz
|
|
|
Net income, as
reported
|
Net gain on
investment disposals
|
Charges related to
the restructuring and right-sizing plan announcement of November 6,
2014
|
Acquisition-related
costs and integration costs
|
Financial
expenses
|
Amortization of
intangible assets
|
Other restructuring
costs
(recorded before
November 6, 2014)
|
Net income,
adjusted
|
|
Fourth Quarter
2014
|
In
M$
|
E&C
|
(255.6)
|
-
|
236.5
|
6.0
|
18.2
|
17.6
|
-
|
22.7
|
Capital
|
1,402.2
|
(1,337.3)
|
19.1
|
-
|
-
|
-
|
-
|
84.0
|
|
1,146.6
|
(1,337.3)
|
255.6
|
6.0
|
18.2
|
17.6
|
-
|
106.7
|
|
Per diluted share
($)
|
E&C
|
(1.67)
|
-
|
1.55
|
0.04
|
0.12
|
0.11
|
-
|
0.15
|
Capital
|
9.18
|
(8.76)
|
0.13
|
-
|
-
|
-
|
-
|
0.55
|
|
7.51
|
(8.76)
|
1.68
|
0.04
|
0.12
|
0.11
|
-
|
0.70
|
|
Year Ended
December 31, 2014
|
In
M$
|
E&C
|
(300.5)
|
-
|
236.5
|
53.1
|
27.3
|
26.5
|
12.0
|
54.9
|
Capital
|
1,633.8
|
(1,334.2)
|
19.1
|
-
|
-
|
-
|
-
|
318.7
|
|
1,333.3
|
(1,334.2)
|
255.6
|
53.1
|
27.3
|
26.5
|
12.0
|
373.6
|
|
Per diluted share
($)
|
E&C
|
(1.97)
|
-
|
1.55
|
0.35
|
0.18
|
0.17
|
0.08
|
0.36
|
Capital
|
10.71
|
(8.74)
|
0.13
|
-
|
-
|
-
|
-
|
2.10
|
|
8.74
|
(8.74)
|
1.68
|
0.35
|
0.18
|
0.17
|
0.08
|
2.46
|
Forward-looking Statements:
Reference in this press release, 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 arrangements.
Statements made in this press release that describe the
Company's or management's budgets, estimates, expectations,
forecasts, objectives, predictions, projections of the future or
strategies may be "forward-looking statements", which can be
identified by the use of the conditional or forward-looking
terminology such as "aims", "anticipates", "assumes", "believes",
"cost savings", "estimates", "expects", "goal", "intends", "may",
"plans", "projects", "should", "synergies", "will", or the negative
thereof or other variations thereon. Forward-looking statements
also include any other statements that do not refer to historical
facts. Forward-looking statements also include statements relating
to the following: i) future capital expenditures, revenues,
expenses, earnings, economic performance, indebtedness, financial
condition, losses and future prospects; and ii) business and
management strategies and the expansion and growth of the Company's
operations and potential synergies resulting from the Acquisition.
All such forward-looking statements are made pursuant to the
"safe-harbour" provisions of applicable Canadian securities laws.
The Company cautions that, by their nature, forward-looking
statements involve risks and uncertainties, and that its actual
actions and/or results could differ materially from those expressed
or implied in such forward-looking statements, or could affect the
extent to which a particular projection materializes.
Forward-looking statements are presented for the purpose of
assisting investors and others in understanding certain key
elements of the Company's current objectives, strategic priorities,
expectations and plans, and in obtaining a better understanding of
the Company's business and anticipated operating environment.
Readers are cautioned that such information may not be appropriate
for other purposes.
The 2016 outlook referred to in this press release is
forward-looking information and is based on the methodology
described in the Company's 2015 Management's Discussion and
Analysis under the heading "How We Budget and Forecast Our Results"
and is subject to the risks and uncertainties described in the
Company's public disclosure documents. The purpose of the 2016
outlook is to provide the reader with an indication of management's
expectations, at the date of this press release, regarding the
Company's future financial performance and readers are cautioned
that this information may not be appropriate for other
purposes.
Forward-looking statements made in this press release are
based on a number of assumptions believed by the Company to be
reasonable as at the date hereof. The assumptions are set out
throughout the Company's 2015 Management's Discussion and Analysis
(particularly in the sections entitled "Critical Accounting
Judgments and Key Sources of Estimation Uncertainty" and "How We
Analyze and Report our Results" in the Company's 2015 Management's
Discussion and Analysis). The 2016 outlook also assumes that the
federal charges laid against the Company and its indirect
subsidiaries SNC-Lavalin International Inc. and SNC-Lavalin
Construction Inc. on February 19,
2015, will not have a significant adverse impact on the
Company's business in 2016. If these assumptions are inaccurate,
the Company's actual results could differ materially from those
expressed or implied in such forward-looking statements. In
addition, important risk factors could cause the Company's
assumptions and estimates to be inaccurate and actual results or
events to differ materially from those expressed in or implied by
these forward-looking statements. These risks include, but are not
limited to: (a) the outcome of pending and future claims and
litigation could have a material adverse impact on the Company's
business, financial condition and results of operation; (b) on
February 19, 2015, the Company was
charged with one count of corruption under the CFPOA and one count
of fraud under the Criminal Code (Canada), and is also subject to other ongoing
investigations which could subject the Company to criminal and
administrative enforcement actions, civil actions and sanctions,
fines and other penalties, some of which may be significant. These
charges and investigations, and potential results thereof, could
harm the Company's reputation, result in suspension, prohibition or
debarment of the Company from participating in certain projects,
reduce its revenues and net income and adversely affect its
business; (c) further regulatory developments could have a
significant adverse impact on the Company's results, and employee,
agent or partner misconduct or failure to comply with anti-bribery
and other government laws and regulations could harm the Company's
reputation, reduce its revenues and net income, and subject the
Company to criminal and administrative enforcement actions and
civil actions; (d) if the Company is not able to successfully
execute on its new strategic plan, its business and results of
operations would be adversely affected; (e) a negative impact on
the Company's public image could influence its ability to obtain
future projects; (f) fixed-price contracts or the Company's failure
to meet contractual schedule or performance requirements may
increase the volatility and unpredictability of its revenue and
profitability; (g) the Company's revenue and profitability are
largely dependent on the awarding of new contracts, which it does
not directly control, and the uncertainty of contract award timing
could have an adverse effect on the Company's ability to match its
workforce size with its contract needs; (h) the Company's backlog
is subject to unexpected adjustments and cancellations, including
under "termination for convenience" provisions, and does not
represent a guarantee of the Company's future revenues or
profitability; (i) SNC-Lavalin is a provider of services to
government agencies and is exposed to risks associated with
government contracting; (j) the Company's international operations
are exposed to various risks and uncertainties, including
unfavourable political environments, weak foreign economies and the
exposure to foreign currency risk; (k) there are risks associated
with the Company's ownership interests in Capital that could
adversely affect it; (l) the Company is dependent on third parties
to complete many of its contracts; (m) the Company's use of joint
ventures and partnerships exposes it to risks and uncertainties,
many of which are outside of the Company's control; (n) the
competitive nature of the markets in which the Company does
business could adversely affect it; (o) the Company's project
execution activities may result in professional liability or
liability for faulty services; (p) the Company could be subject to
monetary damages and penalties in connection with professional and
engineering reports and opinions that it provides; (q) the Company
may not have in place sufficient insurance coverage to satisfy its
needs; (r) the Company's employees work on projects that are
inherently dangerous and a failure to maintain a safe work site
could result in significant losses and/or an inability to obtain
future projects; (s) the Company's failure to attract and retain
qualified personnel could have an adverse effect on its activities;
(t) work stoppages, union negotiations and other labour matters
could adversely affect the Company; (u) the Company relies on
information systems and data in its operations. Failure in the
availability or security of the Company's information systems or in
data security could adversely affect its business and results of
operations; (v) any acquisition or other investment may present
risks or uncertainties; (w) the Company may be unable to
successfully integrate the businesses of SNC-Lavalin and Kentz and
realize the anticipated benefits of the Acquisition; * a
deterioration or weakening of the Company's financial position,
including its cash net of recourse debt, would have a material
adverse effect on its business and results of operations; (y) the
Company may have significant working capital requirements, which if
unfunded could negatively impact its business, financial condition
and cash flows; (z) an inability of SNC-Lavalin's clients to
fulfill their obligations on a timely basis could adversely affect
the Company; (aa) the Company may be required to impair certain of
its goodwill, and it may also be required to write down or write
off the value of certain of its assets and investments, either of
which could have a material adverse impact on the Company's results
of operations and financial condition; (bb) global economic
conditions could affect the Company's client base, partners,
subcontractors and suppliers and could materially affect its
backlog, revenues, net income and ability to secure and maintain
financing; (cc) fluctuations in commodity prices may affect
clients' investment decisions and therefore subject the Company to
risks of cancellation, delays in existing work, or changes in the
timing and funding of new awards, and may affect the costs of the
Company's projects; (dd) inherent limitations to the Company's
control framework could result in a material misstatement of
financial information, and; (ee) environmental laws and regulations
expose the Company to certain risks, could increase costs and
liabilities and impact demand for the Company's services. The
Company cautions that the foregoing list of factors is not
exhaustive. For more information on risks and uncertainties, and
assumptions that would cause the Company's actual results to differ
from current expectations, please refer to the sections "Risks and
Uncertainties", "How We Analyze and Report Our Results" and
"Critical Accounting Judgments and Key Sources of Estimation
Uncertainty" in the Company's 2015 Management's Discussion and
Analysis.
The forward-looking statements herein reflect the Company's
expectations as at the date of this press release and are subject
to change after this date. The Company does not undertake any
obligation to update publicly or to revise any such forward-looking
statements, whether as a result of new information, future events
or otherwise, unless required by applicable legislation or
regulation.
SNC-Lavalin's Consolidated Financial Statements and
Management's Discussion and Analysis and other relevant financial
materials are available in the Investors section of the Company's
website at www.snclavalin.com. These and other Company reports are
also available on the website maintained by the Canadian Securities
regulators at www.sedar.com.
SOURCE SNC-Lavalin