MONTREAL, March 27, 2020 /CNW Telbec/ - SNC-Lavalin Group Inc. (TSX: SNC) today announced actions taken in response to the COVID-19 economic disruptions. Given the consequences of the unprecedented and rapidly changing nature of the COVID-19 situation, and the impact on the Company's worldwide operations, the 2020 financial outlook that was provided by the Company on February 28, 2020 is no longer valid in these circumstances.
The Company has and will continue to take all appropriate actions to protect its staff, to maintain business operations for customers where allowable and possible, and to preserve liquidity. In doing this, we are following the latest health and safety measures and guidelines issued by the World Health Organization (WHO) and home country governments.
"As a global organization we are doing our utmost to protect the health and safety of our workforce and have enacted robust business continuity plans for our customers,'' said Ian L. Edwards, President and Chief Executive Officer, SNC-Lavalin. "I can't thank our employees enough for everything they are doing for the Company and its customers. We are actively managing the emerging impact on our business to minimize disruptions to our service delivery where possible, while taking actions on costs and cashflow with immediate effect to maximize their impact in the second quarter – and will stand ready to take further action if the situation demands."
Most of our SNCL Engineering Services personnel have been able to continue servicing clients from non-office-based locations, and to transition work among different jurisdictions as required. The Company continues to actively offer its services and capabilities to customers and governments in the regions it operates. It is also closely monitoring the situation with regard to LSTK infrastructure projects and will implement government and client instructions around ability to work as required. The Company continues to closely monitor and adjust its plans for its different business segments and customers in response to the evolving situation.
In response to the rapidly emerging economic disruptions and impacts from COVID-19, management is undertaking actions and measures to align the cost base of the Company to deliver cost savings as we start the second quarter. These measures are focused on reducing costs and managing cash flow across the Company to provide flexibility in addressing varying levels of revenue and customer business. Discretionary expenditure not required to directly support client delivery is being significantly reduced, and capital expenditure frozen. Where it is not possible for employees to carry on productive client work, either due to temporary shutdowns or the nature of the client service, remedial actions are being taken, including reduced hours and employee furloughs. All SNC-Lavalin's executive leadership will be taking a 20% reduction in salary and Board members will take a 20% reduction in cash compensation for the second quarter. The Company stands ready to take additional cost action through the second quarter and beyond should the situation demand, while looking to preserve its world class capability to be ready and available to deliver for its customers when the economic recovery begins.
The Company continues to focus on ensuring that it maximizes all available options in building financial flexibility for the second quarter and beyond. At the end of the fourth quarter of 2019 SNC-Lavalin had cash available of $1.2 billion and a $2.6 billion revolving credit facility. The net recourse debt to EBITDA ratio required in the credit facility covenant, calculated in accordance with the terms of the Company's Credit Agreement, was 2.1x.
The Company issued its full year 2020 financial outlook on February 28, 2020, prior to the global impact of COVID-19 disruptions. The Company expects to provide a further update on the situation when it releases its first quarter 2020 earnings results.
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
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", "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; 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.
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