Fourth Quarter & Year-End 2019 › Conference Call Presentation › February 28, 2020
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”, “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. 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 SNCL Projects throughout the Company’s 2019 Management Discussion and Analysis (MD&A). If these assumptions are inaccurate, the Company’s actual results could differ materially from those expressed or Operating Cash Adjusted Net Cash Balance 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 2019 MD&A. Flows Income from E&C Increased Non-IFRS Financial Measures and Additional IFRS Measures $336 million, $78.9 million , 87% year-over-year, net SNCL Projects 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: Adjusted net income from Segment EBIT of highest quarterly up from a loss of $284.1 recourse debt to EBITDA E&C, Adjusted diluted EPS from E&C, Adjusted net income from Capital, Adjusted diluted EPS from Capital, Adjusted consolidated diluted EPS, EBITDA, Adjusted EBITDA from E&C, Segment -$28M, performance EBIT and Segment EBITDA. Additional details for these non-IFRS measures and additional IFRS measures, as well as where the reconciliation to the most comparable measure calculated in year-over- year operating cash flow since ratio now 2.1x better than the past accordance with IFRS are, can be found in Section 14 of the 2019 SNC- Lavalin’s MD&A, which is available in the Investors section of the Company’s website at www.snclavalin.com. Non-IFRS Q4 2017 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 four quarters to conventional measures prepared in accordance with IFRS, these non-IFRS measures provide additional insight into the Company’s financial results 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. 2
Ian L. Edwards President and CEO 3
Q4 Highlights: Solid Q4 Results a Step in the Right Direction Q4 results show considerable improvement over previous quarters SNCL Projects Operating Cash Adjusted Net Cash Balance Consistent Growth in Flows Income from E&C Increased to $1.2B SNCL Engineering Services $312.2M $79.1M 87% Year-over-year SNCL Projects improvements in backlog Segment EBIT of highest quarterly up from a loss of $284.1M in increase year-over-year and revenue, and strong -$27.8M, performance operating cash flow since Q4 2018 Net recourse debt to Segment EBIT and better than the past EBITDA ratio 1 now 2.1x Q4 2017 Segment EBIT Ratios four quarters This presentation contains Non-IFRS financial measures. Non-IFRS financial measures are defined at slide 2 and are reconciled in Section 14 of the Company’s 2019 MD&A. See caution regarding Non -IFRS financial measures at slide 2. 1 In accordance with the terms of the Company’s Credit Agreement 4
SNCL Engineering Services: Strong Performance in Q4 › Increase in revenue year-over-year › EDPM: Increased revenue and 9.5% EBIT margins › Nuclear: Revenue in line with Q4 2018 and 18.1% EBIT margin › Infrastructure Services: 20.8% revenue increase compared to Q4 2018 › Backlog increased by $921 million year-over-year; 1.2 book-to-bill ratio for the last 12 months Revenue Segment EBIT Ratio Segment EBIT 252.9 1,610 16.0% 1,580 1,582 219.1 13.9% 190.5 11.8% SNCL Engineering Services ($M) SNCL Engineering Services ($M) SNCL Engineering Services ($M) Q4 2018 Q3 2019 Q4 2019 Q4 2018 Q3 2019 Q4 2019 Q4 2018 Q3 2019 Q4 2019 This presentation contains Non-IFRS financial measures. Non-IFRS financial measures are defined at slide 2 and are reconciled in Section 14 of the Company’s 2019 MD&A. See caution regarding Non -IFRS financial measures at slide 2. 5
SNC-Lavalin Engineering Services Growth Opportunities: EDPM › Working on transformational projects shaping the future EDPM Growth Strategy 1 Grow our Core Growth in core regions Maximize position on Transformational projects 2 New Growth Areas Including N.East and N.West US Lead the transformation of the infrastructure sector by harnessing data and technology across our services 3 Harnessing Data and Technology Design Transformation Digital Asset Management Intelligent Mobility 6
SNCL Engineering Services Growth Opportunities: Nuclear Building on our industry-leading position in CANDU-related services and products 1 2 3 4 Global nuclear leader Offering services Technology as a Stable business with with ever stronger extending across the full differentiator by leveraging a strong margins and cash brands life-cycle of a nuclear asset, substantial portfolio of over 200 flow supported by long-term patents to develop new value- positioned to capitalize on from design and delivery through contracts with large utilities and added solutions for our customers significant investments its operating life, and final government entities unfolding over the next decommissioning decades 7
SNCL Engineering Services Growth Opportunities: Infrastructure Services SNC-Lavalin has a strong track record of managing complex projects and a global market-leading position in rail and transit Growth opportunities in Canada and U.S. include: Lower-risk Project Operations and Integrator on and Construction Maintenance service major projects Management mandates 8
SNCL Projects: Executing LSTK Run-off Improved performance; on track to complete 80% of LSTK Projects by 2021 › Infrastructure EPC Projects profitable in Q4 Factors leading to SNCL Projects Loss in Q4 2019: › Resources LSTK backlog reduced by 20% › Reforecasts on certain Resources LSTK construction (vs Q3) projects Majority of LSTK Project Backlog in › Underperformance of midstream oil & gas fabrication Light-Rail Transit Systems facility › Overhead costs that are in the process of being right- 14% sized to align with lower level of activity in Resources business Resources LSTK $3.0B Infrastructure LSTK Company addressing these factors as part of the restructuring of the Resources segment and LSTK backlog runoff 86% Backlog corresponds to the “Remaining performance obligations” (“RPO”), which is based on IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). 9
Conclusion Company set up for future success and well-positioned for a transformational 2020 SNC- Lavalin’s Actions taken to significantly de-risk the business: Transformation: › Settled Federal charges › Becoming a leading provider of professional engineering services › Significantly reduced leverage ratio and project management solutions › Exited bidding on LSTK construction business 10
Nigel W.M. White Executive Vice-President, Project Oversight
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