A Deep Dive Into EDPM › December 2019
Forward-looking statements Reference in this presentation, 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 presentation 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”, “target”, “should”, “synergies”, “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. Forward-looking statements made in this presentation 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 2018 Management Discussion and Analysis (MD&A) and as updated in the first, second and third quarters of 2019. 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 risk factors are set out in the Company’s 2018 MD&A and as updated in the first, second and third quarters of 2019. 2
EDPM leadership The driving force behind a successful business Philip Hoare Chris Birdsong President EDPM Appointed in March 2019 CEO Asia Pacific Appointed in 2010 › 22 years with Atkins / EDPM. Joined Atkins in 1997 and has held several › Joined Atkins / EDPM in 2007 and appointed managing director of the UK Management senior positions including leading the transportation division and operations Consultants across Europe and CEO UK & Europe from 2017 to 2019 › Previously worked for Bechtel for over 30 years in project development and delivery › Member of Institution of Civil Engineers › Fellow of the Institute of Business Consulting (IBC) and is on the IBC Council Simon Cole George Nash Senior Vice President Finance Appointed in October 2017 President & CEO North America Appointed in 2016 › 33 years with Atkins / EDPM › Joined Atkins / EDPM in 2016 from AECOM, where he most recently served › Previously Atkins Group Financial Controller and divisional as Group President of Energy, Infrastructure and Industrial Construction Finance Director › More than 30 years of experience providing a wide range of consulting, engineering, design, › Group including the UK and Far East, Major project P3 / PPP experience as construction and commissioning services to markets worldwide Controller and Finance Director › Bachelor’s degree in Mechanical Engineering from Brown University and registered › Fellow of the Chartered institute of Certified Accountants professional engineer Richard Robinson Cris Dedigama CEO UK&E Appointed in November 2019 CEO MEA Appointed in November 2019 › Previously the Chief Operating Officer at HS2 and has held senior › Appointed in November 2019 leadership roles at AECOM, BAA Heathrow, and Anglo American › Spent 30 years leading projects and managing operations in the engineering and following his early career at ICI construction sector › Chartered Chemical Engineer › Developed SNC- Lavalin’s Infrastructure sector in the Middle East region. 3
EDPM Global consultancy business World-Class global consultancy business with highly respected Atkins and F&G brands with 80+ years of design and engineering history Robust growth prospects driven by core UK and European markets and significant opportunities in underpenetrated North American and APACmarkets Leadership in digital innovation to enhance customer delivery and expand service offerings Multidisciplinary team of ~21,000 professionals that delivers comprehensive end-to-end project solutions across design, engineering and project management consultancies 4
World-class services provider To infrastructure and transportation sectors Delivering End-to-End With Global Delivery Capabilities and Service Offering ~ 21,000 people across four regions Atkins, Member of the SNC-Lavalin Group, is one the world’s most respected design, engineering and project management consultancies Core business is helping clients plan, design and enable major capital Global Design Middle East Asia Pacific North America UK & Europe programs Centre (India) & Africa ~ 1,800 employees ~ 2,150 employees ~ 1,250 employees ~ 6,500 employees ~ 9,300 employees 5
Professional services Oriented business model Business Highlights › Services oriented business with inherently low financial risk / asset light model leading to consistent and predictable marginprofile › Negligible/ limited exposure to construction risk Attractive and › Lower project investment costs and lower third party project costs diversified “Book and burn” business model – short / medium term contracts,framework › and master service agreements with robust replenishmentrates consultancy model ‘Seller doer’ model › › Blue chip public and private sector client base with recurring businessand with over 20,000 contracts globally › 90% of revenues sourced from government procurement agencies and 10% from private sector 6
Attractive and Professional services diversified consultancy model Oriented business model Revenue Segmentation 6% 6% 4% 25% 9% 32% 38% 38% Consultancy Rail Defence 21% Consultancy Design Roads Airports 24% Project & Program Large Programmes E&W Industrial/ Other 22% Management Frameworks Other 35% 30% Buildings 10% Sector Exposure FY18 Contract Type FY18 Offering Mix Approx. even revenue contribution across Largely services oriented business with a › Revenue base diversified across sectors service offerings with ~1/3 of revenue focus on design, consultancy and project › Increased resilience against sector generated from long-dated recurring & program management cyclicality framework agreements 7
Delivering Robust revenue growth and industry-leading profitability 1 Resilient and Growing Revenue Base Consistent growth driven by robust 9.3% 9.6% markets in key geographies Resilient Business Contracts diversification and broad geographic mix of longstanding clients in Model with our portfolio mitigates risk and volatility Industry Leading 2 Industry Leading Profitability Profitability Strategic focus on profitability by focusing on higher margin work $3,896M 2018 margin improvement explained by $3,676M acquisition synergies, improved efficiency, productivity from operating model, FY 2018 LTM Q3 2019 efficiencies of scale and use of the Global Design Centre Revenues Segment EBIT* Margin Note: Segment EBIT* margin % calculated on a gross revenue basis * Non-IFRS measure, additional details can be found in SNC- Lavalin’s MD&A 8
Why we win SNC- Lavalin’s EDPM division is a world leading global consultancy business Highly respected and well-known Full spectrum, end to end Atkins and F&G brands engineering consultancy services across a broad range of markets Ability to attract and retain the world’s Strong global footprint across North New digital capabilities transforming America, UK & Europe, Middle East best engineering talent design and creating new digital and APAC services and platforms 9
Market capabilities Global Strength and Depth in Rail and Transit Crossrail, London, UK 10
Market capabilities Technical Excellence in Roads and Bridges Project Neon, Nevada, USA 11
Market capabilities World-class Reputation in Masterplanning Asia Aerospace City,Malaysia 12
Market capabilities Growing Defence and Cyber Security Expertise Horizon Energy Security Standards Review 13
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