MONTREAL, March 9, 2021 /CNW Telbec/ - SNC-Lavalin Group
Inc. (TSX: SNC), a fully integrated professional services and
project management company with offices around the world, today
announced its results for the fourth quarter and year ended
December 31, 2020.
Fourth Quarter Key Metrics from Continuing Operations and
Highlights
- Net loss from continuing operations attributable to
SNC-Lavalin shareholders of $322.9
million, or $(1.84) per
diluted share.
-
- Q4 2020 included, as announced on February 9, 2021, an aggregate amount of
$480 million (before taxes) in
charges, adjustments to provisions and claims receivable
reductions, as well as a cost reassessment of the remaining
Canadian LSTK Infrastructure projects in light of COVID-19.
- SNCL Engineering Services delivers solid Q4 results
-
- Q4 2020 revenues of $1.5
billion.
- Q4 2020 total Segment Adjusted EBIT(1) of
$153.1 million, representing a 10.1%
margin.
- Q4 2020 Segment Adjusted EBIT to revenue ratio(2) of
9.0%, 14.8% and 9.6% for EDPM, Nuclear and Infrastructure Services,
respectively.
- Q4 2020 net cash generated from operating activities of
$250 million.
- Q4 2020 bookings of $1.7 billion,
representing a 1.10 booking-to-revenue ratio(6). Backlog
at $10.9 billion as at December 31, 2020.
- Financial position remains strong
-
- As at December 31, 2020, the
Company had cash and cash equivalents of $932.9 million and a net recourse debt to EBITDA
ratio(7) of 2.1 (calculated in accordance with the
Company's Credit Agreement).
2021 Outlook provided for SNCL Engineering
Services
- SNCL Engineering Services revenue for 2021 forecast to grow
by a low single digit percentage, compared to 2020, and Segment
Adjusted EBIT to revenue ratio(2) expected to be between
8% and 10%.
IFRS Fourth Quarter and Year-End Financial
Highlights
|
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Fourth
Quarter
|
Year
Ended
December
31
|
2020
|
2019*
|
2020
|
2019*
|
Revenue
|
1,697,929
|
1,967,582
|
7,007,501
|
7,629,832
|
|
|
|
|
|
Attributable to
SNC-Lavalin Shareholders:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
from continuing operations
|
(322,906)
|
(180,169)
|
(356,103)
|
2,440,795
|
Diluted EPS from
continuing operations ($)
|
(1.84)
|
(1.03)
|
(2.03)
|
13.90
|
|
|
|
|
|
Net loss from
discontinued operations
|
(379,805)
|
(112,701)
|
(609,344)
|
(2,112,576)
|
Net income
(loss)
|
(702,711)
|
(292,870)
|
(965,447)
|
328,219
|
|
|
|
|
|
Net cash generated
from (used for) operating activities
|
104,606
|
312,248
|
121,485
|
(355,273)
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
932,902
|
1,188,636
|
|
|
|
|
|
Recourse debt and
limited recourse debt
|
|
|
1,570,965
|
1,572,663
|
|
|
|
|
|
Backlog from
continuing operations
|
|
|
13,187,800
|
14,137,700
|
Non-IFRS Fourth Quarter and Year-End Financial
Highlights
|
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Fourth
Quarter
|
Year
Ended
December
31
|
2020
|
2019*
|
2020
|
2019*
|
Attributable to
SNC-Lavalin Shareholders:
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(loss) from PS&PM(4)
|
(268,664)
|
109,590
|
(188,381)
|
150,248
|
Adjusted diluted EPS
from PS&PM(5) ($)
|
(1.53)
|
0.62
|
(1.07)
|
0.86
|
Adjusted EBITDA from
PS&PM(3)
|
(247,581)
|
205,293
|
111,390
|
485,654
|
|
*Comparative figures
have been re-presented as a result of an operation discontinued
during the current year
|
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, with strong performance in our three
segments, EDPM, Nuclear and Infrastructure Services. We have
significantly improved our operating cash flows in 2020, Segment
Adjusted EBIT margins remained strong, and the backlog for EDPM
business increased by 9% year-over-year, despite COVID-19. Since
the onset of the pandemic, we have prioritized the health, safety
and well-being of our employees and of all those we work with. We
are incredibly grateful for their dedication and perseverance and I
would like to thank everyone for their efforts through an
unprecedented and unique year."
"Following 18 months of focus and hard work executing on our
new strategic path, SNC-Lavalin is well positioned for the future
with a focus on growth, around which the team is energized to
deliver. The recent award of a major infrastructure project in the
UK, which will be delivered through a risk-capped alliance
agreement, underscores the global potential of our infrastructure
services offering and demonstrates the opportunity to apply our
major projects expertise through new and beneficial contracting
models."
Fourth Quarter Results
The Company reported a net loss from continuing operations
attributable to SNC-Lavalin shareholders of $322.9 million, or $(1.84) per diluted share in Q4 2020, compared to
$180.2 million, or ($1.03) per diluted share, for the corresponding
period in 2019. These net losses were comprised of a net loss from
continuing operations from PS&PM of $356.4 million, or $(2.03) per diluted share and a net income from
continuing operations from Capital of $33.5
million, or $0.19 per diluted
share in Q4 2020, compared to a net loss from continuing operations
from PS&PM of $197.7 million, or $(1.13) per diluted share and a net income from
continuing operations from Capital of $17.5
million, or $0.10 per diluted
share, for the corresponding period in 2019. Q4 2020 net loss was
primarily due to a negative Segment Adjusted EBIT(1)
from SNCL Projects. This Q4 negative Segment Adjusted
EBIT(1) was mainly attributable to the charges,
adjustments to provisions and commercial claims receivable
reductions, following an expanded review of legacy LSTK litigation
matters and other significant claims, as well as a cost
reassessment of the remaining Canadian LSTK Infrastructure projects
in light of COVID-19, announced by the Company on February 9, 2021. Q4 2019 included the Federal
charges settlement of $257.3
million.
Adjusted net loss from PS&PM(4) in Q4 2020
amounted to $268.7 million, or
$(1.53) per diluted share, compared
with an Adjusted net income from PS&PM(4) of
$109.6 million, or $0.62 per diluted share, for the corresponding
period in 2019. The variation was mainly due to a negative Segment
Adjusted EBIT(1) of $412.8
million in SNCL Projects in Q4 2020, compared to a positive
Segment Adjusted EBIT(1) of $17.4
million in Q4 2019, as well as higher Corporate selling,
general and administrative expenses in Q4 2020, which included
investments related to a new digital transformation initiative.
Lines of Business
SNCL Engineering Services
|
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Fourth
Quarter
|
Year
Ended
December
31
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
1,523,037
|
1,573,591
|
5,975,038
|
6,017,291
|
Segment Adjusted
EBIT(1)
|
153,118
|
158,998
|
539,532
|
558,878
|
Segment Adjusted EBIT
to revenue ratio(2) (%)
|
10.1%
|
10.1%
|
9.0%
|
9.3%
|
Backlog
|
|
|
10,853,500
|
11,121,000
|
The SNCL Engineering Services line of business (comprised of the
EDPM, Nuclear and Infrastructure Services segments) continued to
deliver solid results, benefitting from 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 $1,523.0 million in Q4 2020, a 3.2% decrease from
the corresponding period in 2019, while Segment Adjusted
EBIT(1) totaled $153.1
million in Q4 2020, compared to $159.0 million in Q4 2019, representing a margin
of 10.1% for both periods.
EDPM revenue amounted to $943.3
million in Q4 2020, compared to $984.0 million in Q4 2019. EDPM Segment
Adjusted EBIT(1) totaled $84.9
million, representing a margin of 9.0% in Q4 2020, compared
to $93.4 million in Q4 2019. The
variance reflected the impact of COVID-19 across some markets, such
as aviation and commercial property, and in the Middle East, which saw reduced investment
associated with the fall in the oil price, partially offset by the
strength of transportation and defence markets within the core
region of the UK & Europe.
Backlog was strong at December 31,
2020 at $2.9 billion, an
increase of 8.9% compared to December 31,
2019. Bookings in Q4 2020 totaled $1.0 billion, representing a 1.10
booking-to-revenue ratio(6).
Nuclear revenue amounted to $245.3
million in Q4 2020, compared to $250.8 million in Q4 2019. Nuclear Segment
Adjusted EBIT(1) totaled $36.2
million in Q4 2020, representing a margin of 14.8%, compared
to $45.4 million in Q4 2019. The
variance was mainly due to a decreased level of activity on certain
major Canadian projects resulting from major delivery milestones
being achieved, partially offset by higher contribution from the US
and Europe. Backlog decreased in
the quarter mainly due to progress on the Company's major long-term
contracts in Canada, yet remained
strong at $891 million as at
December 31, 2020. The segment
continued to be awarded extensions to ongoing contracts in
Canada and other long-term
contracts in the US and UK regions.
Infrastructure Services revenue amounted to $334.4 million in Q4 2020, compared to
$338.7 million in Q4 2019.
Infrastructure Services Segment Adjusted EBIT(1) totaled
$32.0 million in Q4 2020,
representing a margin of 9.6%, compared to $20.3 million in Q4 2019. The increase was mainly
due to a higher level of revenue from certain Operation &
Maintenance contracts in the operations phase and increased scope
of work on certain other contracts, from higher activities on
Program Management & Construction Management services, lower
overhead costs and a higher contribution from Linxon. Backlog
remains strong at $7.1 billion, which
includes long-term Operations & Maintenance contracts, which
can cover periods of up to 40 years.
SNCL Engineering Services total backlog amounted to $10.9 billion as at December 31, 2020, compared to $11.1 billion at the end of 2019. Total bookings
for 2020 amounted to $5.7 billion
despite the current COVID-19 environment.
SNCL Projects
|
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Fourth
Quarter
|
Year
Ended
December
31
|
2020
|
2019*
|
2020
|
2019*
|
Revenue
|
152,257
|
357,798
|
903,104
|
1,349,821
|
Segment Adjusted
EBIT(1)
|
(412,839)
|
17,446
|
(530,798)
|
(217,679)
|
Segment Adjusted EBIT
to revenue ratio(2) (%)
|
n/a
|
4.9%
|
(58.8%)
|
(16.1%)
|
Backlog
|
|
|
2,175,600
|
2,839,900
|
|
*Comparative figures
have been re-presented as a result of an operation discontinued
during the current year
|
As indicated in the Company's press release of February 9, 2021, the Oil & Gas business was
classified as an "Asset Held for Sale" and as "Discontinued
Operations" in Q4 2020, as the Company entered into a binding
agreement to sell this business. As a result, the Resources
segment, under the SNCL Projects business line, excludes the Oil
& Gas discontinued operations, and comparative figures have
been re-presented accordingly.
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 $152.3 million in Q4 2020, a decrease of 57.4%
compared to Q4 2019. This decrease is also in line with the
expected continuing backlog run-off of Canadian light rail transit
LSTK construction projects.
The Resources Segment, which is now largely related to the
Mining & Metallurgy ("M&M") business, generated revenues
and a negative Segment Adjusted EBIT(1) of $53.7 million and $93.4
million, respectively, in Q4 2020, compared to revenues and
a negative Segment Adjusted EBIT(1) of $64.0 million and $5.9
million, respectively, in Q4 2019. As announced on
February 9, 2021, the variance is
mainly due to charges related to a reassessment of historical
claims and litigation matters, as well as the reassessment of the
remaining Resources M&M LSTK project, which is forecast to be
completed in Q2 2021.
Infrastructure EPC Projects revenue amounted to $98.6 million in Q4 2020, compared to
$293.8 million in Q4 2019, while
Segment Adjusted EBIT(1) was negative $319.4 million in Q4 2020, compared to a positive
Segment Adjusted EBIT(1) of $23.4
million in Q4 2019. As announced on February 9, 2021, Q4 2020 included a total amount
of $326 million in adjustments to
provisions and commercial claims receivable reductions, for which
approximatively 65% is non-cash, following a review of legacy LSTK
litigation matters and commercial claims, as well as a reassessment
of the remaining Canadian LSTK Infrastructure projects in light of
COVID-19.
SNCL Projects backlog at the end of December 31, 2020 totaled $2.2 billion and included $1.8 billion of LSTK construction contracts and
$0.3 billion of reimbursable and
engineering services contracts. SNCL Projects backlog for LSTK
construction contracts of $1.8
billion represents a significant decrease compared to
$2.8 billion as at December 31, 2019, as the Company continued to
execute on its LSTK projects. The main projects remaining in this
backlog are three ongoing Canadian LSTK light rail transit
Infrastructure projects. The Oil & Gas projects backlog, for
which the Company entered into a binding agreement to sell, is no
longer included in the SNCL Projects backlog.
Capital
|
|
|
(in thousands of
dollars, unless otherwise indicated)
|
Fourth
Quarter
|
Year
Ended
December
31
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
22,635
|
36,193
|
129,359
|
262,720
|
Segment Adjusted
EBIT(1)
|
19,118
|
31,515
|
116,615
|
243,240
|
Backlog
|
|
|
158,700
|
176,900
|
Capital revenue and Segment Adjusted EBIT(1) totaled
$22.6 million and $19.1 million, respectively, in Q4 2020, compared
to $36.2 million and $31.5 million, respectively, in Q4 2019, due to
lower dividends received from Highway 407 ETR. Despite a reduction
in traffic volumes since mid-March
2020, mainly due to the impact of COVID-19, SNC-Lavalin's
management continues to 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 fourth quarter of 2020.
Cash Flow
The Company's net cash generated from operating activities was
$121.5 million in 2020, compared to a
net cash used for operating activities of $355.3 million in 2019. Q4 2020 net cash
generated from operating activities was $104.6 million, compared to $312.2 million in Q4 2019. This reduction in net
cash generated from operating activities was primarily driven by a
usage of cash in Q4 2020 from discontinued operations. The Company
expects net cash generated from operating activities in 2021 to be
broadly breakeven, as positive operating cash flow from SNCL
Engineering Services will be largely offset by an operating cash
flow usage in SNCL Projects.
Financial Position
As at December 31, 2020, the
Company had $932.9 million of cash
and cash equivalents. The Company also has an additional
$2.0 billion of available drawing
capacity under its revolving credit facility should it be required.
As at December 31, 2020, the Company
had $1.2 billion of recourse
debt and $0.4 billion of limited
recourse debt and its net recourse debt to EBITDA
ratio(7) calculated in accordance with the terms of the
Company's Credit Agreement was 2.1, 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 April 6, 2021 to shareholders of record on
March 23, 2021. This dividend is an
"eligible dividend" for Canadian federal and provincial income tax
purposes.
SNCL Engineering Services 2021 Outlook
The following statements are based on current
expectations. These statements are forward-looking and the
actual results could differ materially. The 2021 Outlook section
should be read in conjunction with the information on
forward-looking statements at the end of this release.
The Company expects SNCL Engineering Services revenue for full
year 2021 to increase by a low single digit percentage, compared to
2020, and for its Segment Adjusted EBIT to revenue
ratio(2) to be between 8% and 10% for the same
period.
As COVID-19 did not significantly impact SNCL Engineering
Services in Q1 2020, it is expected that its revenue for Q1 2021,
compared to Q1 2020, would decrease by a low single digit
percentage.
This outlook is based on the assumptions and methodology
described in the Company's Annual 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 2020 Annual Management's Discussion and Analysis.
Conference Call / Webcast
SNC-Lavalin will hold a conference call today at 8:30 a.m. EST to review results for its fourth
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 13 of SNC-Lavalin's 2020 Management's Discussion and
Analysis ("MD&A"), 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 of
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 13.3 of the 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, 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), impairment loss on remeasurement of
assets of disposal group classified as held for sale to fair value
less cost to sell, 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. Furthermore, impairment of goodwill and
impairment of intangible assets related to business combinations
were removed in 2020 from the list of adjustments disclosed in
prior periods as the impact of these elements for 2019 were related
to discontinued operations. See the reconciliation of total Segment
Adjusted EBIT to net income (loss) in the 2020 Annual 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
also presented in Note 4 to the Company's 2020 Annual Financial
Statements.
(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 is based on EBITDA from
continuing operations and 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 (as
described in the 2020 Annual MD&A, Section 14, and in Note 33
to the 2020 Annual Financial Statements), the Federal charges
settlement (PPSC) expense, the fair value revaluation of the
Highway 407 ETR contingent consideration receivable, the GMP
equalization expenses and the impairment loss on remeasurement of
assets of disposal group classified as held for sale to fair value
less cost to sell. 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, the adjustment to provision for the Pyrrhotite Case
litigation and the impairment loss on remeasurement of assets of
disposal group classified as held for sale to fair value less cost
to sell 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 were no significant
adjustments of this nature in the comparative periods being
presented. 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. The Company believes
that Adjusted EBITDA is useful for providing securities analysts,
investors and others 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 the 2020 Annual MD&A, Section 13.3 for a
reconciliation of Adjusted EBITDA to net income (loss) from
continuing operations 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 from continuing
operations, 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, 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, the adjustment to
provision for the Pyrrhotite Case litigation, impairment loss on
remeasurement of assets of disposal group classified as held for
sale to fair value less cost to sell and the GMP equalization
expense. 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, the
adjustment to provision for the Pyrrhotite Case litigation and
impairment loss on remeasurement of assets of disposal group
classified as held for sale to fair value less cost to sell 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 were no significant adjustments 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 impact of U.S. corporate tax
reform. Furthermore, impairment of goodwill and impairment of
intangible assets related to business combinations were removed in
2020 from the list of adjustments disclosed in prior periods as the
impact of these elements for 2019 were related to discontinued
operations. The Company believes that Adjusted net income (loss)
attributable to SNC-Lavalin shareholders is useful for providing
securities analysts, investors and others 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 the 2020 Annual MD&A, Section 13.3 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 from continuing
operations, 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 the Company to
present the adjusted net income (loss) attributable to SNC-Lavalin
shareholders on a diluted share basis. Refer to the 2020 Annual
MD&A, Section 13.3 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 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.
Reconciliation of IFRS net income (loss) from continuing
operations to Adjusted net income (loss)
|
|
|
|
Fourth
Quarter
2020
|
Year
ended
December 31,
2020
|
|
PS&PM
|
Capital
|
Total
|
PS&PM
|
Capital
|
Total
|
(in
M$)
|
|
|
|
|
|
|
Net income (loss)
from continuing
operations attributable to SNC-Lavalin
shareholders (IFRS)
|
(356.4)
|
33.5
|
(322.9)
|
(401.7)
|
45.6
|
(356.1)
|
Amortization of
intangible assets related
to business combination
|
18.9
|
-
|
18.9
|
103.5
|
-
|
103.5
|
Restructuring
costs
|
23.0
|
-
|
23.0
|
49.4
|
-
|
49.4
|
Fair value
revaluation of Highway 407
ETR contingent consideration receivable1
|
-
|
-
|
-
|
-
|
49.6
|
49.6
|
Adjustment to
provision for the Pyrrhotite
Case litigation2
|
36.6
|
-
|
36.6
|
43.6
|
-
|
43.6
|
Impairment loss on
remeasurement of
assets of disposal group classified as
held for sale to fair value less cost to sell
|
6.1
|
-
|
6.1
|
6.1
|
-
|
6.1
|
Guaranteed Minimum
Pension (GMP)
equalization2
|
3.2
|
-
|
3.2
|
3.2
|
-
|
3.2
|
Loss on disposals of
PS&PM business
|
-
|
-
|
-
|
7.5
|
-
|
7.5
|
Adjustment on gain
from disposal of a
Capital investment
|
-
|
(25.0)
|
(25.0)
|
-
|
(25.0)
|
(25.0)
|
|
|
|
|
|
|
|
Adjusted net income
(loss) attributable to
SNC-Lavalin shareholders (non-IFRS)
|
(268.7)
|
8.5
|
(260.2)
|
(188.4)
|
70.2
|
(118.2)
|
|
|
|
|
|
|
|
(in
$)
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
(IFRS)
|
(2.03)
|
0.19
|
(1.84)
|
(2.29)
|
0.26
|
(2.03)
|
Amortization of
intangible assets related
to business combination
|
0.11
|
-
|
0.11
|
0.59
|
-
|
0.59
|
Restructuring
costs
|
0.13
|
-
|
0.13
|
0.28
|
-
|
0.28
|
Fair value
revaluation of Highway 407
ETR contingent consideration receivable
|
-
|
-
|
-
|
-
|
0.28
|
0.28
|
Adjustment to
provision for the Pyrrhotite
Case litigation
|
0.21
|
-
|
0.21
|
0.25
|
-
|
0.25
|
Impairment loss on
remeasurement of
assets of disposal group classified as
held for sale to fair value less cost to sell
|
0.03
|
-
|
0.03
|
0.03
|
-
|
0.03
|
Guaranteed Minimum
Pension (GMP)
equalization
|
0.02
|
-
|
0.02
|
0.02
|
-
|
0.02
|
Loss on disposals of
PS&PM business
|
-
|
-
|
-
|
0.04
|
-
|
0.04
|
Adjustment on gain
from disposal of a
Capital investment
|
-
|
(0.14)
|
(0.14)
|
-
|
(0.14)
|
(0.14)
|
|
|
|
|
|
|
|
Adjusted Diluted EPS
(non-IFRS)
|
(1.53)
|
0.05
|
(1.48)
|
(1.07)
|
0.40
|
(0.67)
|
|
Note that certain
totals and subtotals may not reconcile due to
rounding
|
|
1 included in "Gain (loss) arising
on financial assets (liabilities) at fair value through profit or
loss"
|
2
included in "Corporate selling, general and administrative
expenses"
|
|
|
|
|
Fourth
Quarter
2019
|
Year
ended
December 31,
2019
|
|
PS&PM
|
Capital
|
Total
|
PS&PM
|
Capital
|
Total
|
(in
M$)
|
|
|
|
|
|
|
Net income (loss)
from continuing
operations attributable to SNC-Lavalin
shareholders (IFRS)
|
(197.7)
|
17.5
|
(180.2)
|
(332.0)
|
2,772.8
|
2,440.8
|
Amortization of
intangible assets related
to business combinations
|
32.4
|
-
|
32.4
|
131.6
|
-
|
131.6
|
Restructuring
costs
|
17.4
|
-
|
17.4
|
59.8
|
2.5
|
62.4
|
Financing costs
related to the agreement
to sell shares of Highway 407 ETR
|
-
|
-
|
-
|
27.4
|
-
|
27.4
|
Acquisition-related
costs and integration
costs
|
-
|
-
|
-
|
5.9
|
-
|
5.9
|
Federal charges
settlement (PPSC)
|
257.3
|
-
|
257.3
|
257.3
|
-
|
257.3
|
Loss from adjustment
on disposals of
PS&PM businesses
|
0.1
|
-
|
0.1
|
0.3
|
-
|
0.3
|
Gain or adjustment on
gain from disposal
of a Capital investment
|
-
|
1.8
|
1.8
|
-
|
(2,586.0)
|
(2,586.0)
|
|
|
|
|
|
|
|
Adjusted net income
(loss) attributable to
SNC-Lavalin shareholders (non-IFRS)
|
109.6
|
19.3
|
128.9
|
150.2
|
189.4
|
339.7
|
|
|
|
|
|
|
|
(in
$)
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
(IFRS)
|
(1.13)
|
0.10
|
(1.03)
|
(1.89)
|
15.79
|
13.90
|
Amortization of
intangible assets related
to business combinations
|
0.18
|
-
|
0.18
|
0.75
|
-
|
0.75
|
Restructuring
costs
|
0.10
|
-
|
0.10
|
0.34
|
0.01
|
0.36
|
Financing costs
related to the agreement
to sell shares of Highway 407 ETR
|
-
|
-
|
-
|
0.16
|
-
|
0.16
|
Acquisition-related
costs and integration
costs
|
-
|
-
|
-
|
0.03
|
-
|
0.03
|
Federal charges
settlement (PPSC)
|
1.47
|
-
|
1.47
|
1.47
|
-
|
1.47
|
Loss from adjustment
on disposals of
PS&PM businesses
|
0.00
|
-
|
0.00
|
0.00
|
-
|
0.00
|
Gain or adjustment on
gain from disposal
of a Capital investment
|
-
|
0.01
|
0.01
|
-
|
(14.73)
|
(14.73)
|
|
|
|
|
|
|
|
Adjusted Diluted EPS
(non-IFRS)
|
0.62
|
0.11
|
0.73
|
0.86
|
1.08
|
1.93
|
|
|
|
|
|
|
|
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", "outlooks", "estimates", "expects", "goal",
"intends", "may", "plans", "projects", "forecasts", "should",
"synergies", "target", "vision", "will", "likely", 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 additional impacts of the ongoing
COVID-19 pandemic on the business and its operating and reportable
segments as well as elements of uncertainty related thereto. 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 2020 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"). 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)
additional impacts of the COVID-19 pandemic; (b) execution of the
strategic direction announced in 2019; (c) fixed-price contracts or
the Company's failure to meet contractual schedule, performance
requirements or to execute projects efficiently; (d) remaining
performance obligations; (e) contract awards and timing; (f) being
a provider of services to government agencies; (g) international
operations; (h) Nuclear liability; (i) ownership interests in
investments; (j) dependence on third parties; (k) joint ventures
and partnerships; (l) information systems and data and compliance
with privacy legislation; (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) divestitures and the sale of significant assets;
(v) intellectual property; (w) liquidity and financial position; *
indebtedness; (y) impact of operating results and level of
indebtedness on financial situation; (z) security under the
CDPQ Loan Agreement; (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) the impact
on the Company of legal and regulatory proceedings, investigations
and litigation settlements; (hh) further regulatory developments as
well as employee, agent or partner misconduct or failure to comply
with anti-bribery and other government laws and regulations; (ii)
reputation of the Company; (jj) inherent limitations to the
Company's control framework; (kk) environmental laws and
regulations; (ll) Brexit; (mm) global economic conditions;
(nn) fluctuations in commodity prices; and (oo) income
taxes.
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 2020 Annual MD&A 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 audited consolidated financial statements for the
year ended December 31, 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