- Reported Q1 2017 IFRS net income attributable to SNC-Lavalin
shareholders of $89.7 million, or
$0.60 per diluted share.
- Q1 2017 G&A expenses of $107.8
million, 12.1% lower versus Q1 2016.
- Q1 2017 adjusted net income from E&C(1) of
$60.7 million, or $0.40 per diluted share.
- 2017 Outlook maintained: adjusted diluted EPS from
E&C(2) in the range of $1.70
to $2.00.
MONTREAL, May 4, 2017 /CNW Telbec/ - SNC-Lavalin Group
Inc. (TSX: SNC) announces its results today for the first quarter
ended March 31, 2017.
"We are pleased with our first quarter performance, all four
segments and the Capital group performing slightly ahead of our
expectations, and we are on track to meet our 2017 outlook," said
Neil Bruce, President and Chief
Executive Officer, SNC-Lavalin Group Inc. "We are also very pleased
with the recently announced proposed acquisition of WS Atkins, as
we continue to execute on our growth strategy. This announcement
reflects our progress towards our goal to position SNC-Lavalin to
benefit from the expected future growth that is ahead, particularly
in Infrastructure and Nuclear sectors."
- Q1 2017 reported IFRS net income attributable to SNC-Lavalin
shareholders was $89.7 million, or
$0.60 per diluted share, compared
with $122.1 million, or $0.81 per diluted share, for the corresponding
period in 2016. Q1 2016 Reported IFRS net income attributable to
SNC-Lavalin shareholders included a net gain after taxes of
$51.1 million, or $0.34 per diluted share, on Capital investments
disposals.
- Selling, general and administrative (SG&A) expenses in Q1
2017 were $157.1 million compared
with $168.1 million, in Q1 2016.
General and administrative (G&A) expenses decreased by 12.1% to
$107.8 million, while selling
expenses increased to $49.3 million
compared to $45.4 million in Q1 2016.
This increase was mainly due to higher business development
activities than in Q1 2016, particularly in the Infrastructure
sector.
- Adjusted net income from E&C(1) for Q1 2017
increased to $60.7 million, or
$0.40 per diluted share, compared to
$57.2 million, or $0.38 per diluted share for Q1 2016, mainly due
to higher gross margin-to-revenue ratio and lower G&A,
partially offset by higher financial expenses and income taxes. On
a segmented basis, the higher segment EBIT(5) in Q1
2017, compared to Q1 2016, was mainly due to Oil & Gas and
Power.
- Adjusted net income from Capital(3) for Q1 2017 was
$44.4 million, or $0.30 per diluted share, compared with
$39.9 million, or $0.26 per diluted share for the corresponding
period in 2016, mainly due to a higher level of activity of Capital
investments and an increase in dividends from Highway 407 ETR.
- Total E&C revenue for the first quarter ended March 31, 2017 was $1.8
billion, compared with $1.9
billion in the first quarter of 2016. The variation was due
to a decrease in the Infrastructure segment, principally
attributable to the disposal, in December
2016, of SNC-Lavalin's non-core E&C business in
France and Real Estate Facilities
Management business in Canada.
- The revenue backlog(7) totaled $10.1 billion at the end of March 2017, with the Mining & Metallurgy
segment increasing by more than 50% since December 31, 2016. Total new contract awards for
the first quarter amounted to $1.2
billion.
- The balance sheet remained strong at the end of March 2017 with cash and cash equivalents of
$0.8 billion.
Outlook
The Company is maintaining its previously announced 2017 outlook
for the adjusted diluted EPS from E&C(2), which is
expected to be in the range of $1.70 to
$2.00, without taking into account the recently proposed
acquisition of WS Atkins or related financing.
While we anticipate continuing market challenges in 2017 in
certain of the Company's sectors, we expect to benefit from our
recent restructuring savings and "Operational Excellence" program.
As such, we expect increased Segment EBIT(5) margins for
all segments in 2017, compared to 2016, except for Mining &
Metallurgy.
This outlook is based on the assumptions and methodology
described in the Company's 2016 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
The Board of Directors today declared a cash dividend of
$0.273 per share, payable on
June 1, 2017, to shareholders of
record on May 18, 2017. This dividend
is an "eligible dividend" for income tax purposes.
Q1 2017 Results Conference Call / Webcast
SNC-Lavalin will hold a conference call today at 1:30 p.m. EDT (Eastern Daylight Time) to review
results for its first quarter. To join the conference call, please
dial toll free at 1 800 263 0877 in North
America, 647 794 1827 in Toronto, 438 968 3557 in Montreal, 080 0279 7204 in the United Kingdom, or 180 093 6686 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.
Annual Shareholders' Meeting / Webcast
SNC-Lavalin will also hold its Annual Shareholders' Meeting
today at 11:00 a.m. EDT at the Palais
des congrès, 1001 Place Jean-Paul-Riopelle, Montreal, Quebec. The event will be webcast
live, and will be available at
http://www.icastpro.ca/esnc170504.
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 engineering, procurement, construction, completions and
commissioning services together with a range of sustaining capital
services to clients in four industry sectors: 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 charges related to restructuring, right-sizing
and other, acquisition-related costs and integration costs, as well
as amortization of intangible assets incurred in connection with
the acquisition of Kentz in 2014 and the gain (loss) on disposals
of E&C businesses. E&C is defined in the Company's 2016
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
diluted weighted average number of outstanding shares for the
period.
(3) Adjusted net income from Capital is
defined as net income attributable to SNC-Lavalin shareholders from
Capital, excluding the gain on disposals of Capital
Investments.
(4) Adjusted diluted EPS from Capital is
defined as the adjusted net income from Capital divided by the
diluted weighted average number of outstanding shares for the
period.
(5) 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 related to the Kentz acquisition, as well as
gains (losses) on disposals of E&C businesses and Capital
investments 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.
(6) Adjusted E&C EBITDA is defined
herein as earnings from E&C before net financial expenses
(income), income taxes, depreciation and amortization, and excludes
charges related to restructuring, right-sizing and other,
acquisition-related costs and integration costs, as well as the
gains (losses) on disposals of E&C businesses and Capital
investments. 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.
(7) Revenue Backlog is defined herein as a
forward-looking indicator of anticipated revenues to be recognized
by the Company, determined based on contract awards that are
considered firm. Management could be required to make estimates
regarding the revenue to be generated for long-term firm
reimbursable contracts. In order to provide information that is
comparable to the revenue backlog of other categories of activity,
the Company limits the O&M activities revenue backlog, which
can cover a period of up to 40 years, to the earlier of: i) the
contract term awarded; and ii) the next five years. The term
"Revenue backlog" does not have any standardized meaning under
IFRS. Therefore, it may not be comparable to similar measures
presented by other issuers. Management believes that, in addition
to conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company's future
performance.
SNC-Lavalin Financial Summary
|
|
(in thousands of
Canadian dollars, unless otherwise
indicated)
|
First
Quarter
|
|
2017
|
2016
|
|
|
|
Revenues
|
|
|
From
E&C
|
1,788,324
|
1,930,773
|
From
Capital
|
60,946
|
57,397
|
|
1,849,270
|
1,988,170
|
|
|
|
Net income
attributable to SNC-Lavalin's shareholders
|
|
|
From
E&C
|
45,338
|
31,199
|
From
Capital
|
44,376
|
90,908
|
|
89,714
|
122,107
|
|
|
|
Diluted EPS
($)
|
|
|
From
E&C
|
0.30
|
0.21
|
From
Capital
|
0.30
|
0.60
|
|
0.60
|
0.81
|
|
|
|
|
|
|
Adjusted net income
attributable to
SNC-Lavalin's shareholders
|
|
|
From
E&C(1)
|
60,724
|
57,180
|
From
Capital(3)
|
44,376
|
39,860
|
|
105,100
|
97,040
|
|
|
|
Adjusted diluted
EPS ($)
|
|
|
From
E&C(2)
|
0.40
|
0.38
|
From
Capital(4)
|
0.30
|
0.26
|
|
0.70
|
0.64
|
|
|
|
Adjusted E&C
EBITDA(6)
|
99,991
|
99,850
|
Adjusted E&C
EBITDA margin
|
5.6%
|
5.2%
|
|
|
|
|
|
|
Revenue
backlog(7)
|
10,078,700
|
13,417,300
|
|
|
|
Cash and cash
equivalents
|
810,533
|
1,388,390
|
Reconciliation of IFRS Net Income as
Reported to Adjusted Net Income
|
|
|
|
|
|
|
Net income,
as reported
|
Net charges related
to
the restructuring &
right-sizing plan and
other
|
Acquisition
|
Net gain on
capital
investment and
E&C business
disposals
|
Net income,
adjusted
|
|
|
|
Acquisition-related
costs and
integration costs
|
Amortization of
intangible assets
related to Kentz
|
|
|
|
First Quarter
2017
|
In
M$
|
E&C
|
45.3
|
2.6
|
1.1
|
12.3
|
(0.6)
|
60.7
|
Capital
|
44.4
|
-
|
-
|
-
|
-
|
44.4
|
|
89.7
|
2.6
|
1.1
|
12.3
|
(0.6)
|
105.1
|
Per Diluted share
($)
|
E&C
|
0.30
|
0.02
|
0.01
|
0.08
|
(0.0)
|
0.40
|
Capital
|
0.30
|
-
|
-
|
-
|
-
|
0.30
|
|
0.60
|
0.02
|
0.01
|
0.08
|
(0.0)
|
0.70
|
|
First Quarter
2016
|
In
M$
|
E&C
|
31.2
|
9.2
|
1.0
|
15.8
|
-
|
57.2
|
Capital
|
90.9
|
-
|
-
|
-
|
(51.1)
|
39.8
|
|
122.1
|
9.2
|
1.0
|
15.8
|
(51.1)
|
97.0
|
Per diluted share
($)
|
E&C
|
0.21
|
0.06
|
0.01
|
0.10
|
-
|
0.38
|
Capital
|
0.60
|
-
|
-
|
-
|
(0.34)
|
0.26
|
|
0.81
|
0.06
|
0.01
|
0.10
|
(0.34)
|
0.64
|
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. 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 2017 outlook referred to in this press release is
forward-looking information and is based on the methodology
described in the Company's 2016 Management's Discussion and
Analysis ("MD&A") 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 2017 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 2016 MD&A, 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 2016 MD&A, and as updated in the first quarter
2017 MD&A. The 2017 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 2017. 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 Corruption of Foreign Public Officials Act (Canada)(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 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 or to execute projects efficiently 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 investments 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) divestitures and the sale of
significant assets may present risks or uncertainties; * 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; as
well as the risks identified in respect of the Company's agreement
with WS Atkins plc ("Atkins") on the terms of an acquisition by the
Company of Atkins in section 11 of the Company's first quarter 2017
MD&A (entitled "Risks and Uncertainties"). The Company cautions
that the foregoing list of factors is not exhaustive. For more
information on risks and uncertainties, and assumptions that could
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 2016 MD&A and as updated in the
first quarter 2017 MD&A.
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