First Quarter Highlights and Key Metrics from Continuing Operations
- Net income from continuing operations attributable to
SNC-Lavalin shareholders of$67.7 million , or$0.39 per diluted share. - SNCL Engineering Services delivers solid Q1 results
- Revenues of
$1.5 billion . - Segment Adjusted EBIT(1) of
$132.8 million , representing a 8.8% margin. - Segment Adjusted EBIT to revenue ratio(2) of 8.6%, 13.9% and 5.8% for EDPM, Nuclear and Infrastructure Services, respectively, in line with Company's targets.
- Net cash generated from operating activities of
$118 million . - Bookings of
$1.7 billion , representing a 1.15 booking-to-revenue ratio(6). Backlog at$11.1 billion as atMarch 31, 2021 . - SNCL Projects backlog continues to decrease
- LSTK construction contracts backlog reduced by
$241.5 million in the quarter to$1.6 billion as atMarch 31, 2021 . - Financial position remains strong
- As at
March 31, 2021 , the Company had cash and cash equivalents of$702.7 million and a net recourse debt to EBITDA ratio(7) of 1.8 (calculated in accordance with the Company's Credit Agreement).
2021 Outlook for SNCL Engineering Services maintained
- SNCL Engineering Services revenue for 2021 forecast to grow by a low single digit percentage, compared to 2020, and Segment Adjusted EBIT to revenue ratio(2) expected to be between 8% and 10%.
Investor day to be held on
SNC-Lavalin's management will provide an update on the Company's strategy and outlook, including growth opportunities in EDPM, Nuclear and Infrastructure Services.
IFRS First Quarter Financial Highlights
(in thousands of dollars, unless otherwise indicated) | First Quarter | |
2021 | 2020* | |
Revenue | 1,819,739 | 1,868,519 |
Attributable to SNC-Lavalin Shareholders: | ||
Net income from continuing operations | 67,743 | 950 |
Diluted EPS from continuing operations ($) | 0.39 | 0.01 |
Net income (loss) from discontinued operations | 5,302 | (66,914) |
Net income (loss) | 73,045 | (65,964) |
Net cash generated from operating activities | 5,612 | 23,354 |
Cash and cash equivalents as at | 702,685 | 2,102,324 |
Recourse debt and limited recourse debt as at | 1,396,306 | 2,568,159 |
Backlog from continuing operations as at | 13,214,000 | 13,938,200 |
Non-IFRS First Quarter Financial Highlights
(in thousands of dollars, unless otherwise indicated) | First Quarter | |
2021 | 2020* | |
Attributable to SNC-Lavalin Shareholders: | ||
Adjusted net income from PS&PM(4) | 83,424 | 61,075 |
Adjusted diluted EPS from PS&PM(5) ($) | 0.48 | 0.35 |
Adjusted EBITDA from PS&PM(3) | 164,122 | 136,515 |
Adjusted EBITDA from PS&PM to revenue from PS&PM ratio(8) | 9.1% | 7.5% |
*Comparative figures have been re-presented as a result of an operation discontinued in 2020 |
CEO Commentary
"We had a strong start to the year with a first quarter in line with our expectations, as our Engineering Services business, which includes the EDPM, Nuclear and Infrastructure Services segments, delivered another solid quarterly performance. We are seeing a strong pipeline of new work across all of our core geographies, as governments continue investing in new projects," said
First Quarter Results
The Company's net income from continuing operations attributable to
Adjusted net income from PS&PM(4) in Q1 2021 increased by 36.6% and totaled
Lines of Business
SNCL Engineering Services
(in thousands of dollars, unless otherwise indicated) | First Quarter | |
2021 | 2020 | |
Revenue | 1,515,125 | 1,534,769 |
Segment Adjusted EBIT(1) | 132,790 | 111,532 |
Segment Adjusted EBIT to revenue ratio(2) | 8.8% | 7.3% |
Backlog as at | 11,083,900 | 10,965,400 |
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.
As expected, since COVID-19 did not significantly impact SNCL Engineering Services in Q1 2020, revenue for Q1 2021, compared to Q1 2020, decreased by a low single digit percentage. Revenue from SNCL Engineering Services totaled
EDPM revenue amounted to
Nuclear revenue amounted to
Infrastructure Services revenue amounted to
SNCL Projects
(in thousands of dollars) | First Quarter | |
2021 | 2020* | |
Revenue | 282,881 | 287,508 |
Segment Adjusted EBIT(1) | (8,193) | 1,847 |
LSTK construction contracts backlog decrease LSTK construction contracts backlog as at | 241,500 1,596,600 | 32,100 2,725,100 |
*Comparative figures have been re-presented as a result of an operation discontinued in 2020 |
Backlog for the SNCL Projects line of business (comprised of the Resources and Infrastructure EPC Projects segments) at the end of
SNCL Projects revenues amounted to
The Company continues to target Q2 2021 for the closing of the binding agreement to sell the Oil & Gas business to
Capital
(in thousands of dollars) | First Quarter | |
2021 | 2020 | |
Revenue | 21,733 | 46,242 |
Segment Adjusted EBIT(1) | 18,722 | 42,028 |
Backlog as at | 153,400 | 171,900 |
Capital revenue and Segment Adjusted EBIT(1) totaled
Operating Cash Flow
The Company's net cash generated from operating activities was
Financial Position
As at
Investor Day
SNCL Engineering Services 2021 Outlook maintained
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 continues to expect that 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.
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.
Quarterly Dividend
The Board of Directors today declared a cash dividend of
First Quarter 2021 Conference Call / Webcast
Annual Meeting of Shareholders / Webcast
About
Founded in 1911,
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
(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 and transformation 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), gain 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. 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: acquisition-related costs and integration costs and the federal charges settlement (PPSC) expense. See the reconciliation of total Segment Adjusted EBIT to net income (loss) in the Q1 2021 MD&A, Section 4.
(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 and transformation 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 2020 Annual MD&A, as updated in Note 12 to the Company's unaudited interim condensed consolidated financial statements for the first quarter ended
(4) Adjusted net income (loss) attributable to
(5) Adjusted diluted earnings per share ("Adjusted diluted EPS") is defined as adjusted net income (loss) attributable to
(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.
(8) Adjusted EBITDA from PS&PM to revenue from PS&PM ratio is a measure used to analyze the profitability of the Company's PS&PM line of business and facilitate period-to-period comparisons, as well as comparison with peers. This financial measure is calculated by dividing the amount of Segment Adjusted EBITDA from PS&PM of a given period to the amount of revenue from PS&PM for the same period.
Reconciliation of IFRS net income from continuing operations to Adjusted net income from PS&PM
First Quarter 2021 | First Quarter 20201 | |||
In M$ | Diluted EPS In $ | In M$ | Diluted EPS In $ | |
Net income from continuing operations attributable to | 67.7 | 0.39 | 0.9 | 0.01 |
Restructuring and transformation costs | 4.9 | 0.5 | ||
Amortization of intangible assets related to business combination | 23.3 | 40.5 | ||
Fair value revaluation of Highway 407 ETR contingent consideration receivable2 | - | 57.2 | ||
Adjustment to provision for the Pyrrhotite Case litigation3 | - | 10.0 | ||
Gain on remeasurement of assets of disposal group classified as held for sale to fair value less cost to sell | (0.5) | - | ||
Income taxes and non-controlling interest on adjustments above | (5.4) | (18.4) | ||
Total adjustments | 22.4 | 0.13 | 89.7 | 0.51 |
Adjusted net income attributable to (non-IFRS) | 90.1 | 0.51 | 90.7 | 0.52 |
Segment adjusted EBIT from Capital | (18.7) | (42.0) | ||
Corporate selling, general and administrative expenses from Capital | 7.0 | 7.0 | ||
Net financial expenses from Capital | 4.2 | 4.3 | ||
Income taxes from Capital | 0.8 | 1.1 | ||
Total adjustments to exclude Capital | (6.7) | (0.04) | (29.6) | (0.17) |
Adjusted net income from PS&PM (non-IFRS) | 83.4 | 0.48 | 61.1 | 0.35 |
Note that certain totals and subtotals may not reconcile due to rounding |
1 Comparative figures have been re-presented as a result of an operation discontinued in 2020 |
2 included in "Gain (loss) arising on financial assets (liabilities) at fair value through profit or loss" |
3 included in "Corporate selling, general and administrative expenses" |
Forward-Looking Statements
Reference in this press release, and hereafter, to the "Company" or to "SNC-Lavalin" means, as the context may require,
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") and as updated in the first quarter 2021 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) 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 and as updated in the first quarter 2021 MD&A, each filed with the securities regulatory authorities in
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 period ended
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