MONTREAL, Oct. 30, 2020 /CNW Telbec/ - SNC-Lavalin
Group Inc. (TSX: SNC) today announced its results for the third
quarter ended September 30, 2020.
2020 Third Quarter Highlights
- Net loss attributable to SNC-Lavalin shareholders of
$85.1 million, or $(0.48) per diluted share, compared with net
income of $2,756.7 million, or
$15.70 per diluted share for Q3
2019
-
- Q3 2019 included a net gain on the disposal of a 10.01% stake
of Highway 407 ETR of $2,587.8
million, or $14.74 per diluted
share.
- Q3 2020 had an income tax expense of $45.1 million, which included a reduction of
deferred income tax assets, while Q3 2019 included $82.7 million income tax recoveries on capital
losses, following the capital gain on disposal of a 10.01% stake in
Highway 407 ETR.
- SNCL Engineering Services delivered solid results; outlook
tightened
-
- Total Segment Adjusted EBIT(1) of $142.4 million, representing a 9.8% margin.
- Segment Adjusted EBIT(1) margin of 9.0%, 16.1% and
7.8% for EDPM, Nuclear and Infrastructure Services,
respectively.
- Backlog remains strong at $10.7
billion as at September 30,
2020 with Q3 2020 bookings of $1.2
billion.
- Outlook for Q4 2020 Segment Adjusted EBIT(1) margin
tightened to between 8.5% and 9.5%.
- Resources Services transformation progressing well
-
- Q3 2020 Resources Services revenues of $267.1 million and Segment Adjusted
EBIT(1) of negative $14
million, slightly better than management's previously
communicated expectation of between negative $15 million to $25
million.
- Progress on overhead reduction and country exits remains on
track.
- SNCL Projects results affected by arbitration ruling,
COVID-19
-
- Total negative Segment Adjusted EBIT(1) of
$100.1 million included a
$57.9 million unfavorable arbitration
ruling on a LSTK legacy project and lower productivity caused by
COVID-19 impacts.
- LSTK projects backlog reduced by $0.6
billion in the quarter to $2.1
billion, with $1.9 billion of
Infrastructure EPC Projects backlog.
- Financial position remains strong
-
- As at September 30, 2020, cash
and cash equivalents at $1.1 billion
and net recourse debt to EBITDA ratio(7) at 1.7
(calculated in accordance with Credit Agreement).
CEO Commentary
Ian L. Edwards, President and
CEO of SNC-Lavalin Group Inc., made the following comments:
"Our Engineering Services business continued to deliver solid
results in the quarter, supported by strong performance in the
transportation, defence and nuclear markets in our core regions.
The transformation of our Resources Services business is on track
as we move quickly to restructure and reduce overhead costs, and we
look forward to additional positive EBIT from this business in
2021."
"As expected, LSTK project productivity continued to be
impacted by COVID-19, with Infrastructure EPC Projects reporting a
loss in the quarter. We also had in the quarter an unfavorable
arbitration ruling on a completed LSTK Resources legacy project,
for which the ruling was outside our internal and external experts'
assessments. While we believe our current litigation risk
assessment processes are appropriate, we are undertaking a further
review of the remaining LSTK legacy litigation matters to provide
additional assurance. Despite the productivity challenges related
to COVID-19, the LSTK backlog continued to reduce and we expect to
largely complete the Resources LSTK projects by the end of the
year."
Third Quarter
Financial Highlights
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Third
Quarter
|
2020
|
2019
|
Total
revenue
|
2,005,732
|
2,432,163
|
Net income (loss)
attributable to SNC-Lavalin shareholders
|
(85,125)
|
2,756,714
|
Diluted EPS
($)
|
(0.48)
|
15.70
|
SNCL Engineering
Services
|
|
|
Revenue
|
1,447,727
|
1,501,937
|
Segment Adjusted
EBIT(1)
|
142,356
|
175,742
|
Segment Adjusted EBIT
to revenue ratio(2) (%)
|
9.8%
|
11.7%
|
Backlog
|
10,699,700
|
11,233,300
|
SNCL
Projects
|
|
|
Revenue
|
519,111
|
850,622
|
Segment Adjusted
EBIT(1)
|
(100,122)
|
(44,971)
|
Segment Adjusted EBIT
to revenue ratio(2) (%)
|
(19.3%)
|
(5.3%)
|
Backlog
|
3,091,900
|
4,216,700
|
Capital
|
|
|
Revenue
|
38,894
|
79,604
|
Segment Adjusted
EBIT(1)
|
37,094
|
77,137
|
Backlog
|
162,000
|
182,800
|
Net cash used for
operating activities
|
(136,293)
|
(51,063)
|
Adjusted EBITDA from
PS&PM(3)
|
72,763
|
184,892
|
Adjusted diluted
EPS(5) from PS&PM ($)
|
(0.33)
|
0.94
|
Third Quarter Results
The Company reported a net loss attributable to SNC-Lavalin
shareholders of $85.1 million,
or $(0.48) per diluted share in Q3
2020, compared with a net income of $2,756.7 million, or $15.70 per diluted share, for the corresponding
period in 2019, which included a net gain on the disposal of a
10.01% stake of Highway 407 ETR of $2,587.8
million, or $14.74 per diluted
share. Q3 2020 net loss included restructuring costs of
$25.8 million (after taxes), mainly
related to the Resources Services transformation announced on
July 31, 2020.
Adjusted net loss(4) from PS&PM in Q3 2020
amounted to $58.4 million, or
$(0.33) per diluted share, compared
with Adjusted net income(4) from PS&PM of
$165.3 million, or $0.94 per diluted share, for the corresponding
period in 2019. The variation was mainly due to a negative
variation in income taxes, lower total Segment Adjusted
EBIT(1) from PS&PM, partially offset by lower net
financial expenses. The Q3 2020 income tax expense included a
$53.3 million reduction of deferred
income tax assets resulting from a re-assessment of the future
recoverability of loss carryforwards in the United States, while Q3 2019 included
$82.7 million income tax recoveries
on capital losses, following the capital gain on disposal of a
10.01% stake in Highway 407 ETR.
Lines of Business
SNCL Engineering Services
The SNCL Engineering Services line of business (comprised of the
EDPM, Nuclear and Infrastructure Services segments) delivered solid
results, underpinned by a diversified business model, long-term
client relationships and a strong public sector focus. Many
services provided by SNCL Engineering Services are deemed essential
and are characterized by long-term contracts, particularly in the
Nuclear and Infrastructure Services segments. Revenue from SNCL
Engineering Services totaled $1,447.7
million in Q3 2020, a 3.6% decrease from the corresponding
period in 2019, while Segment Adjusted EBIT(1) totaled
$142.4 million, compared to
$175.7 million in Q3 2019.
EDPM Segment Adjusted EBIT(1) totaled $81.1 million, representing a margin of 9.0%, in
Q3 2020, compared to $102.6 million,
representing a margin of 10.6%, in Q3 2019, which included some
positive project settlements. The strength in a number of sectors,
including transportation and defence within the core region of the
UK & Europe region, partially
offset the adverse impact of COVID-19 in some markets (aviation and
commercial property) and in the Middle
East, that has also suffered from reduced investment
associated with the fall in the oil price. Backlog continues to be
strong at $2.8 billion, with
$943 million of bookings in the
quarter, representing a 1.05 booking-to-revenue ratio(6)
for Q3 2020.
Nuclear Segment Adjusted EBIT(1) totaled $36.2 million in Q3 2020, compared to
$39.5 million in Q3 2019. While Q3
2020 revenues were 5.5% higher than Q3 2019, restricted work site
access in the US due to COVID-19 reduced performance milestone
bonuses, impacting profitability. The segment continues to be
awarded significant long-term contracts, such as a US federal
nuclear assets remediation and decommissioning project in the
USA, and backlog continues to be
strong at $1.0 billion.
Infrastructure Services Segments Adjusted EBIT(1)
totaled $25.1 million in Q3 2020,
compared to $33.6 million in Q3 2019,
which included favorable reforecasts on certain long-term
contracts. Revenues were 1.6% higher than Q3 2019, mainly due to an
increase in Linxon's revenue in the UK & Europe region. Backlog remains strong at
$7.0 billion, which includes
long-term Operations & Maintenance contracts, which can cover a
period up to 40 years.
SNCL Engineering Services total backlog amounted to $10.7 billion as at September 30, 2020, compared to $11.1 billion at the end of 2019. Total bookings
for Q3 2020 amounted to $1.2 billion
despite the current COVID-19 environment.
SNCL Projects
In line with the Company's previous decision to exit LSTK
projects, revenue from the SNCL Projects line of business
(comprised of the Resources and Infrastructure EPC Projects
segments), continued to decrease and totaled $519.1 million in Q3 2020, a decrease of 39.0%
compared to Q3 2019. This was mainly due to the continuing backlog
run-off of Resources and Canadian light rail transit LSTK
construction projects, as well as the divestment or closure of
certain Resources businesses, including Valerus in Q1 2020.
Resources Segment Adjusted EBIT(1) was negative
$75.0 million in Q3 2020, compared to
a Segment Adjusted EBIT(1) of negative $47.3 million in Q3 2019. The Resources LSTK
business recorded a loss of $61
million, mainly due to a $57.9
million provision, following an unfavorable arbitration
ruling on a completed LSTK legacy project, for which the ruling was
outside the Company's internal and external experts' assessments.
While the Company is currently reviewing the ruling, management has
provisioned the entire amount of the decision in the quarter and
will undertake a further review of the remaining LSTK legacy
litigation matters. The Resources Services business, which is
currently being transformed to complement Engineering Services,
recorded a loss of $14 million,
slightly better than management's expectations, as non-primary
operations wound down.
Infrastructure EPC Projects Segment Adjusted EBIT(1)
was negative $25.1 million in Q3
2020, compared to Segment Adjusted EBIT(1) of
$2.3 million in Q3 2019, mainly due
to lower productivity due to revised working conditions caused by
COVID-19 and cost reforecasts.
SNCL Projects backlog continues to decrease and totaled
$3.1 billion as at September 30, 2020, compared to $3.4 billion as at June
30, 2020 and $4.0 billion as
at December 31, 2019. SNCL Projects
backlog at the end of September 30,
2020 included $2.1 billion of
LSTK construction contracts, split between Infrastructure EPC
Projects with $1.9 billion and
Resources with $0.2 billion, and
$1.0 billion of reimbursable &
engineering services contracts. The reimbursable & engineering
services contracts backlog balance as at September 30, 2020 includes the reclassification
of an Infrastructure LSTK project which has been de-risked during
the quarter, following changes in the contract profile. The
Resources LSTK construction contracts backlog remains on track to
be largely completed by the end of 2020.
Capital
Capital Segment Adjusted EBIT(1) totaled $37.1 million in Q3 2020, compared to
$77.1 million in Q3 2019, due to
lower dividends received from a reduced stake in Highway 407 ETR.
SNC-Lavalin received a dividend of $16.9
million from Highway 407 ETR on September 3, 2020. Despite a reduction in traffic
volumes since mid-March, mainly due to the impact of COVID-19,
SNC-Lavalin's management continues to strongly believe in the
long-term value of the Highway 407 ETR concession. Excluding
Highway 407 ETR, the other concessions, which are primarily
availability-based contracts, continued to perform well during the
third quarter of 2020 and were not significantly impacted by the
COVID-19 pandemic.
Resources Services Transformation Update
SNC-Lavalin continues to progress its previously announced
Resources Services business transformation that will complement the
Company's broader engineering services capabilities. As previously
announced, the Resources Services business is expected to be
profitable for full year 2021 (assuming and giving effect to the
transformation plan for the Resources Services business announced
on July 31, 2020), reaching break
even on a Segmented Adjusted EBIT(1) basis in first half
of 2021.
Overhead cost reduced by 40%, in the first nine months of 2020
compared to the first nine months of 2019, progressing on its
target of a 75% reduction by end of 2021. Headcount was reduced to
10,100 employees at the end of Q3 2020, compared to 15,000
employees at the end of 2019, mainly reflecting the orderly
business transformation and the divestment of the European
Fertilizer business, as well as a decrease in labor employees
related to completed projects. The previously announced disposal of
the South African Resources business remains on track to be
completed in Q4 2020.
As a result, the Company has recorded $58.1 million of restructuring costs in the first
nine months of 2020, in line with management's expectations of
between $50 million and $60 million in 2020.
Cash Flow
The Company's net cash used for operating activities was
$136.3 million in Q3 2020, compared
to $51.1 million in Q3 2019. The
variance was mainly due to a timing difference between the
$200 million payment for the
Pyrrhotite Case, following a Quebec Superior Court ruling, and the
expected future receipt of insurance coverage proceeds in Q4 2020,
which cover a substantial portion of the award and are in line with
existing financial provisions. This was partially offset by another
strong quarter from SNCL Engineering Services, which generated
$186 million of cash from operating
activities, and by cash received under certain governments COVID-19
support programs.
Financial Position
As at September 30, 2020, the
Company had $1.1 billion of cash and
cash equivalents. The Company also has an additional $2.0 billion available under its revolving credit
facility should it be required. The Company has $1.4 billion of recourse debt and
$0.4 billion of limited recourse
debt. As at September 30, 2020, the
net recourse debt to EBITDA ratio(7) calculated in
accordance with the terms of the Company's Credit Agreement was
1.7, well below the required covenant level of 3.75.
Quarterly Dividend
The Board of Directors today declared a cash dividend of
$0.02 per share, unchanged from the
previous quarter. The dividend is payable on November 27, 2020 to shareholders of record on
November 13, 2020. This dividend is
an "eligible dividend" for Canadian federal and provincial income
tax purposes.
2020 Outlook
The Company expects, assuming no significant deviation from the
current COVID-19 worldwide situation, that SNCL Engineering
Services revenue for Q4 2020 should decrease by a low to mid single
digit percentage, compared to Q4 2019, and has tightened the
outlook for its Segment Adjusted EBIT(1) as a percentage
of revenue to between 8.5% and 9.5% for the same period.
This outlook is based on the assumptions and methodology
described in the Company's third quarter 2020 Management's
Discussion and Analysis under the heading, "How We Budget and
Forecast Our Results" and the "Forward-Looking Statements" section
below and is subject to the risks and uncertainties summarized
therein and in the Company's 2019 Annual Management's Discussion
and Analysis, which are more fully described in the Company's
public disclosure documents.
Conference Call / Webcast
SNC-Lavalin will hold a conference call today at 8:30 a.m. EDT to review results for its third
quarter of 2020. A live audio webcast of the conference call and an
accompanying slide presentation will be available at
www.investors.snclavalin.com. The call will also be
accessible by telephone, please dial toll free at 1 800 319
4610 in North America or dial
1 604 638 5340 outside North
America. You can also use the following numbers: 416 915
3239 in Toronto, 514 375
0364 in Montreal, or 080 8101
2791 in the United Kingdom. A
recording of the conference call and its transcript will be
available on the Company's website within 24 hours following the
call.
About SNC-Lavalin
Founded in 1911, SNC-Lavalin is a fully integrated professional
services and project management company with offices around the
world. SNC-Lavalin connects people, technology and data to help
shape and deliver world-leading concepts and projects, while
offering comprehensive innovative solutions across the asset
lifecycle. Our expertise is wide-ranging — consulting &
advisory, intelligent networks & cybersecurity, design &
engineering, procurement, project & construction management,
operations & maintenance, decommissioning and sustaining
capital – and delivered to clients in four strategic sectors: EDPM
(engineering, design and project management), Infrastructure,
Nuclear and Resources, supported by Capital. People. Drive.
Results. www.snclavalin.com
Non-IFRS Financial Measures and Additional IFRS
Measures
The Company reports its financial results in accordance with
IFRS. However, the following non–IFRS measures and additional IFRS
measures are used by the Company in this press release: Segment
Adjusted EBIT, Segment Adjusted EBIT to revenue ratio, Adjusted
EBITDA, Adjusted net income (loss) attributable to SNC-Lavalin
shareholders, Adjusted diluted EPS, and Booking-to-revenue ratio.
Additional details for these non-IFRS measures can be found below
and in section 9 of SNC-Lavalin's Management's Discussion and
Analysis ("MD&A") for the third quarter of 2020, filed with the
securities regulatory authorities in Canada, available on SEDAR at
www.sedar.com and on the Company's website at
www.snclavalin.com under the "Investors" section. Non-IFRS
financial measures do not have any standardized meaning under IFRS
and therefore may not be comparable to similar measures presented
by other issuers. Management believes that, in addition to
conventional measures prepared in accordance with IFRS, these
non-IFRS measures provide additional insight into the Company's
operating performance and financial position and certain investors
may use this information to evaluate the Company's performance from
period to period. However, these non-IFRS financial measures have
limitations and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Furthermore, certain non-IFRS financial measures and
additional IFRS measures are presented separately for each
PS&PM and Capital, as the Company believes that such measures
are useful as these activities are usually analyzed separately by
the Company. Reconciliations of non-IFRS measures to the most
comparable IFRS measures are set forth in Section 9.3 of the third
quarter 2020 MD&A and certain of those reconciliations are set
out at the end of this press release.
(1) Segment Adjusted EBIT consists of
revenues allocated to the applicable segment less i) direct costs
of activities, ii) directly related selling, general and
administrative expenses, and iii) corporate selling, general and
administrative expenses that are allocated to segments. Segment
Adjusted EBIT is the measure used by management to evaluate the
performance of the Company's segments, and gives investors an
indication of the profitability of each segment, as it excludes
certain items that the Company believes are not reflective of the
segment's underlying operations. Such financial measure also
facilitates period-to-period comparisons of the underlying
segment's performance. Expenses that are not allocated to the
Company's segments are: certain corporate selling, general and
administrative expenses that are not directly related to projects
or segments, impairment loss arising from expected credit losses,
gain (loss) arising on financial assets (liabilities) at fair value
through profit or loss, restructuring costs, impairment of
goodwill, impairment of intangible assets related to business
combinations, acquisition-related costs and integration costs,
amortization of intangible assets related to business combinations,
the federal charges settlement (PPSC) expense and gains (losses) on
disposals of PS&PM businesses and Capital investments (or
adjustments to gains or losses on such disposals), net financial
expenses and income taxes. Also, it should be noted that the
following adjustment was removed from the list of adjustments
disclosed in prior periods as there was no adjustment of this
nature in the current periods and the previous year: the net
expense for the 2012 class action lawsuit settlement and related
legal costs. See reconciliation of Segment Adjusted EBIT to net
income (loss) in Q3, 2020 MD&A, Section 4. A reconciliation of
Segment Adjusted EBIT from PS&PM and from Capital to net income
(loss) as determined under IFRS is presented in Note 3 to the
Company's unaudited interim condensed consolidated financial
statements for the three-month and nine-month periods ended
September 30, 2020.
(2) Segment Adjusted EBIT to revenue
ratio is a measure used to analyze the profitability of the
Company's segments and facilitate period-to-period comparisons, as
well as comparison with peers. This financial measure is calculated
by dividing the amount of Segment Adjusted EBIT of a given period
to the amount of revenue for the same period.
(3) Adjusted EBITDA is a non-IFRS
financial measure used by management to facilitate operating
performance comparison from period to period and to prepare annual
operating budgets and forecasts. Adjusted EBITDA excludes charges
related to restructuring costs, acquisition-related costs and
integration costs, gains (losses) on disposals of PS&PM
businesses and Capital investments (or adjustments to gains or
losses on such disposals), the adjustment to provision for the
Pyrrhotite Case litigation (described in the 2019 Annual MD&A,
as updated in Note 12 to the Company's unaudited interim condensed
consolidated financial statements for the three-month and
nine-month periods ended September 30, 2020), the Federal
charges settlement (PPSC) expense and the fair value revaluation of
the Highway 407 ETR contingent consideration receivable. It should
be noted that, in 2020, management has added as components to
Adjusted EBITDA the amounts of the fair value revaluation of the
Highway 407 ETR contingent consideration receivable and the
adjustment to provision for the Pyrrhotite Case litigation as it
believes that such items are not reflective of the Company's
underlying operations. Such additions did not result in any change
to comparative figures as there was no adjustment of this nature in
the comparative periods being presented. Also, it should be noted
that the following adjustments were removed from the list of
adjustments disclosed in prior periods as there was no adjustment
of this nature in the current periods and the previous year: the
net expense for the 2012 class action lawsuit settlement and
related legal costs and the GMP equalization expense. The Company
believes that Adjusted EBITDA is useful for providing securities
analysts, investors and other parties with additional information
to assist them in understanding components of its financial
results, including a more complete understanding of factors and
trends affecting the Company's operating performance. Adjusted
EBITDA is believed to supplement information provided, as it
highlights trends that may not otherwise be apparent when relying
solely on IFRS financial measures. Refer to Q3 MD&A, Section
9.3 for a reconciliation of Adjusted EBITDA to net income (loss) as
determined under IFRS. Such reconciliation is provided on a
consolidated basis and also separately for each of PS&PM and
Capital, as the Company believes that such measures are useful
since these activities are analyzed separately by the
Company.
(4) Adjusted net income (loss)
attributable to SNC-Lavalin shareholders is defined as net income
(loss) attributable to SNC-Lavalin shareholders, adjusted for
certain specific items that are significant but are not, based on
management's judgement, reflective of the Company's underlying
operations. These adjustments are restructuring costs,
acquisition-related costs and integration costs, amortization of
intangible assets related to business combinations, impairment of
intangible assets related to business combinations and impairment
of goodwill, gains (losses) on disposals of PS&PM businesses
and Capital investments (or adjustments to gains or losses on such
disposals), financing costs related to the agreement to sell shares
of Highway 407 ETR, the fair value revaluation of the Highway 407
ETR contingent consideration receivable, the federal charges
settlement (PPSC) expense and the adjustment to provision for the
Pyrrhotite Case litigation. It should be noted that, in 2020,
management has added as components of Adjusted net income (loss)
attributable to SNC-Lavalin shareholders the amounts of the fair
value revaluation of Highway 407 ETR contingent consideration
receivable and the adjustment to provision for the Pyrrhotite Case
litigation as it believes that such items are not reflective of the
Company's underlying operations. Such additions did not result in
any change to comparative figures as there was no adjustment of
this nature in the comparative periods being presented. Also, it
should be noted that the following adjustments were removed from
the list of adjustments disclosed in prior periods as there was no
adjustment of this nature in the current periods and the previous
year: the net expense for the 2012 class action lawsuit settlement
and related legal costs, the GMP equalization expense and the
impact of U.S. corporate tax reform. The Company believes that
Adjusted net income (loss) attributable to SNC-Lavalin shareholders
is useful for providing securities analysts, investors and other
parties with additional information to assist them in understanding
components of its financial results, including a more complete
understanding of factors and trends affecting the Company's
operating performance. Adjusted net income (loss) attributable to
SNC-Lavalin shareholders is believed to supplement information
provided, as it highlights trends that may not otherwise be
apparent when relying solely on IFRS financial measures. It is also
used by management to evaluate the performance of the activities of
the Company from period to period. Refer to Q3 MD&A, Section
9.3 for a reconciliation of Adjusted net income (loss) attributable
to SNC-Lavalin shareholders to net income (loss) as determined
under IFRS. Such reconciliation is provided on a consolidated basis
and also separately for each of PS&PM and Capital, as the
Company believes that such measures are useful since these
activities are analyzed separately by the Company.
(5) Adjusted diluted earnings
per share ("Adjusted diluted EPS") is defined as adjusted net
income (loss) attributable to SNC-Lavalin shareholders, divided by
the diluted weighted average number of outstanding shares for the
period. Adjusted diluted EPS is a non-IFRS financial measure that
is an indicator of the financial performance of the Company's
activities and allows to present the adjusted net income (loss)
attributable to SNC-Lavalin shareholders on a diluted share basis.
Refer to Q3, 2020 MD&A, Section 9.3 for the reconciliation of
Adjusted diluted EPS to diluted EPS (namely, net income (loss) per
diluted share) as determined under IFRS. Such reconciliation is
provided on a consolidated basis and also separately for each of
PS&PM and Capital, as the Company believes that such measures
are useful since these activities are also analyzed separately by
the Company.
(6) Booking-to-revenue ratio
corresponds to contract bookings divided by the revenues, for a
given period. This measure provides a useful basis for assessing
the renewal of business, as it compares the value of performance
obligations added in a given period to the amount of revenue
recognized upon satisfying performance obligations in the same
given period.
(7) While net recourse debt and
EBITDA are non-IFRS measures, the reference to the ratio of "net
recourse debt to EBITDA" is a defined term under and calculated in
accordance with the Company's Credit Agreement and is not a
specific reference to the actual non-IFRS measures in
question.
SNC-Lavalin
Financial Summary
|
|
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Third
Quarter
|
Nine months
ended
September 30
|
2020
|
2019
|
2020
|
2019
|
Revenues
|
|
|
|
|
SNCL Engineering
Services
|
1,447,727
|
1,501,937
|
4,452,001
|
4,443,700
|
SNCL
Projects
|
519,111
|
850,622
|
1,629,230
|
2,409,306
|
Capital
|
38,894
|
79,604
|
106,724
|
226,527
|
|
2,005,732
|
2,432,163
|
6,187,955
|
7,079,533
|
|
|
|
|
|
Net income (loss)
attributable to SNC-Lavalin
shareholders
|
|
|
|
|
From
PS&PM
|
(110,631)
|
116,910
|
(274,798)
|
(2,134,217)
|
From
Capital
|
25,506
|
2,639,804
|
12,062
|
2,755,306
|
|
(85,125)
|
2,756,714
|
(262,736)
|
621,089
|
|
|
|
|
|
Diluted EPS
($)
|
|
|
|
|
From
PS&PM
|
(0.63)
|
0.67
|
(1.57)
|
(12.16)
|
From
Capital
|
0.15
|
15.04
|
0.07
|
15.69
|
|
(0.48)
|
15.70
|
(1.50)
|
3.54
|
Adjusted net
income (loss) attributable to
SNC-Lavalin shareholders(4)
|
|
|
|
|
From
PS&PM
|
(58,362)
|
165,322
|
(100,474)
|
(149,392)
|
From
Capital
|
25,507
|
52,723
|
61,689
|
170,113
|
|
(32,855)
|
218,045
|
(38,785)
|
20,721
|
Adjusted diluted
EPS(5) ($)
|
|
|
|
|
From
PS&PM
|
(0.33)
|
0.94
|
(0.57)
|
(0.85)
|
From
Capital
|
0.15
|
0.30
|
0.35
|
0.97
|
|
(0.19)
|
1.24
|
(0.22)
|
0.12
|
Adjusted EBITDA
from PS&PM(3)
|
72,763
|
184,892
|
197,335
|
112,315
|
|
|
|
|
|
Backlog
|
|
|
|
|
SNCL Engineering
Services
|
|
|
10,699,700
|
11,233,300
|
SNCL
Projects
|
|
|
3,091,900
|
4,216,700
|
Capital
|
|
|
162,000
|
182,800
|
|
|
|
13,953,500
|
15,632,700
|
Cash and cash
equivalents
|
|
|
1,127,137
|
938,911
|
Recourse and
limited recourse debt
|
|
|
1,830,553
|
1,572,352
|
|
|
|
|
|
Note that certain
totals and subtotals may not reconcile due to
rounding
|
Reconciliation
of IFRS Net Income (loss) as Reported to Adjusted Net Income
(loss)
|
|
|
|
|
Third
Quarter
2020
|
Nine months
ended
September 30,
2020
|
|
PS&PM
|
Capital
|
Total
|
PS&PM
|
Capital
|
Total
|
(in
M$)
|
|
|
|
|
|
|
Net income (loss)
attributable to SNC-
Lavalin shareholders (IFRS)
|
(110.6)
|
25.5
|
(85.1)
|
(274.8)
|
12.1
|
(262.7)
|
Amortization of
intangible assets related
to business combinations
|
18.9
|
-
|
18.9
|
84.6
|
-
|
84.6
|
Restructuring
costs
|
25.8
|
-
|
25.8
|
75.2
|
-
|
75.2
|
Fair value
revaluation of Highway 407
ETR contingent consideration receivable1
|
-
|
-
|
-
|
-
|
49.6
|
49.6
|
Adjustment to
provision for the Pyrrhotite
Case litigation2
|
-
|
-
|
-
|
7.0
|
-
|
7.0
|
Loss from disposals
of PS&PM businesses
|
7.5
|
-
|
7.5
|
7.5
|
-
|
7.5
|
|
|
|
|
|
|
|
Adjusted net income
(loss) attributable to
SNC-Lavalin shareholders (non-IFRS)
|
(58.4)
|
25.5
|
(32.9)
|
(100.5)
|
61.7
|
(38.8)
|
|
|
|
|
|
|
|
(in
$)
|
|
|
|
|
|
|
Diluted EPS
(IFRS)
|
(0.63)
|
0.15
|
(0.48)
|
(1.57)
|
0.07
|
(1.50)
|
Amortization of
intangible assets related
to business combinations
|
0.11
|
-
|
0.11
|
0.48
|
-
|
0.48
|
Restructuring
costs
|
0.15
|
-
|
0.15
|
0.43
|
-
|
0.43
|
Fair value
revaluation of Highway 407
ETR contingent consideration receivable
|
-
|
-
|
-
|
-
|
0.28
|
0.28
|
Adjustment to
provision for the Pyrrhotite
Case litigation
|
-
|
-
|
-
|
0.04
|
-
|
0.04
|
Loss from disposals
of PS&PM
businesses
|
0.04
|
-
|
0.04
|
0.04
|
-
|
0.04
|
|
|
|
|
|
|
|
Adjusted Diluted EPS
(non-IFRS)
|
(0.33)
|
0.15
|
(0.19)
|
(0.57)
|
0.35
|
(0.22)
|
|
Note that certain
totals and subtotals may not reconcile due to
rounding
|
|
1 included
in "Gain (loss) arising on financial assets (liabilities) at fair
value through profit or loss"
|
2included in "Corporate selling,
general and administrative expenses"
|
|
|
Third
Quarter
2019
|
Nine months
ended
September 30,
2019
|
|
PS&PM
|
Capital
|
Total
|
PS&PM
|
Capital
|
Total
|
(in
M$)
|
|
|
|
|
|
|
Net income (loss)
attributable to SNC-
Lavalin shareholders (IFRS)
|
116.9
|
2,639.8
|
2,756.7
|
(2,134.2)
|
2,755.3
|
621.1
|
Impairment of
goodwill
|
-
|
-
|
-
|
1,720.9
|
-
|
1,720.9
|
Impairment of
intangible assets related to
business combinations
|
-
|
-
|
-
|
60.1
|
-
|
60.1
|
Amortization of
intangible assets related
to business combinations
|
32.8
|
-
|
32.8
|
116.0
|
-
|
116.0
|
Restructuring
costs
|
15.2
|
0.7
|
15.9
|
54.4
|
2.5
|
56.9
|
Financing costs
related to the agreement
to sell shares of Highway 407 ETR
|
-
|
-
|
-
|
27.4
|
-
|
27.4
|
Acquisition-related
costs and integration
costs
|
0.4
|
-
|
0.4
|
5.9
|
-
|
5.9
|
Loss from adjustment
on disposals of
PS&PM businesses
|
-
|
-
|
-
|
0.2
|
-
|
0.2
|
Gain on disposal of a
Capital investment
|
-
|
(2,587.8)
|
(2,587.8)
|
-
|
(2,587.8)
|
(2,587.8)
|
|
|
|
|
|
|
|
Adjusted net income
(loss) attributable to
SNC-Lavalin shareholders (non-IFRS)
|
165.3
|
52.7
|
218.0
|
(149.4)
|
170.1
|
20.7
|
|
|
|
|
|
|
|
(in
$)
|
|
|
|
|
|
|
Diluted EPS
(IFRS)
|
0.67
|
15.04
|
15.70
|
(12.16)
|
15.69
|
3.54
|
Impairment of
goodwill
|
-
|
-
|
-
|
9.80
|
-
|
9.80
|
Impairment of
intangible assets related to
business combinations
|
-
|
-
|
-
|
0.34
|
-
|
0.34
|
Amortization of
intangible assets related
to business combinations
|
0.19
|
-
|
0.19
|
0.66
|
-
|
0.66
|
Restructuring
costs
|
0.09
|
0.00
|
0.09
|
0.31
|
0.01
|
0.32
|
Financing costs
related to the agreement
to sell shares of Highway 407 ETR
|
-
|
-
|
-
|
0.16
|
-
|
0.16
|
Acquisition-related
costs and integration
costs
|
0.00
|
-
|
0.00
|
0.03
|
-
|
0.03
|
Loss from adjustment
on disposals of
PS&PM businesses
|
-
|
-
|
-
|
0.00
|
-
|
0.00
|
Gain on disposal of a
Capital investment
|
-
|
(14.74)
|
(14.74)
|
-
|
(14.74)
|
(14.74)
|
|
|
|
|
|
|
|
Adjusted Diluted EPS
(non-IFRS)
|
0.94
|
0.30
|
1.24
|
(0.85)
|
0.97
|
0.12
|
|
Note that certain
totals and subtotals may not reconcile due to
rounding
|
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 associates, or SNC-Lavalin Group Inc. or one or
more of its subsidiaries or joint arrangements or
associates.
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", "target", "vision",
"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; ii)
business and management strategies and the expansion and growth of
the Company's operations; and iii) the expected impacts of the
ongoing COVID-19 pandemic on the business and its operating and
reportable segments as well as elements of uncertainty related
thereto and other near-term risks and uncertainties. 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.
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 2019 annual MD&A (particularly in the
sections entitled "Critical Accounting Judgments and Key Sources of
Estimation Uncertainty" and "How We Analyze and Report our
Results") and as updated in the first, second and third quarter
2020 MD&A. 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)
impacts of the COVID-19 pandemic and other near-term risks and
uncertainties; (b) results of the new 2019 strategic direction
coupled with a corporate reorganization; (c) fixed-price contracts
or the Company's failure to meet contractual schedule, performance
requirements or to execute projects efficiently; (d) contract
awards and timing; (e) remaining performance obligations; (f) being
a provider of services to government agencies; (g) international
operations; (h) Nuclear liability; (i) ownership interests in
Capital investments; (j) dependence on third parties; (k) joint
ventures and partnerships; (l) information systems and data; (m)
competition; (n) professional liability or liability for faulty
services; (o) monetary damages and penalties in connection
with professional and engineering reports and opinions; (p)
insurance coverage; (q) health and safety; (r) qualified personnel;
(s) work stoppages, union negotiations and other labour matters;
(t) extreme weather conditions and the impact of natural or other
disasters and global health crises; (u) intellectual property;
(v) divestitures and the sale of significant assets; (w)
impact of operating results and level of indebtedness on financial
situation; * liquidity and financial position; (y) indebtedness;
(z) security under the SNC–Lavalin Highway Holdings Loan; (aa)
dependence on subsidiaries to help repay indebtedness; (bb)
dividends; (cc) post-employment benefit obligations, including
pension-related obligations; (dd) working capital requirements;
(ee) collection from customers; (ff) impairment of goodwill
and other assets; (gg) outcome of pending and future claims and
litigations; (hh) ongoing and potential investigations; (ii)
settlements; (jj) further regulatory developments as well as
employee, agent or partner misconduct or failure to comply with
anti-bribery and other government laws and regulations; (kk)
reputation of the Company; (ll) inherent limitations to the
Company's control framework; (mm) environmental laws and
regulations; (nn) Brexit; (oo) global economic conditions; and
(pp) fluctuations and volatility in commodity prices.
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 2019 annual MD&A and as updated
in the first, second and third quarter 2020 MD&A, each filed
with the securities regulatory authorities in Canada, available on SEDAR at
www.sedar.com and on the Company's website
at www.snclavalin.com under the "Investors"
section.
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 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.
The Company's unaudited condensed consolidated interim financial
statements for the three-month and nine-month periods ended
September 30, 2020, together with its
MD&A for the corresponding period, can be accessed on the
Company's website at www.snclavalin.com and on
www.sedar.com.
SOURCE SNC-Lavalin