Mr. Ian Edwards reports

SNC-LAVALIN REPORTS STRONG SECOND QUARTER 2023 RESULTS AND RAISES OUTLOOK FOR REVENUE GROWTH

SNC-Lavalin Group Inc. has released its financial results for the second quarter ended June 30, 2023.

SNC-Lavalin delivered another quarter of strong results, with a significant increase in organic revenue growth and segment adjusted EBIT (earnings before interest and taxes). Backlog continued to be strong with another record-high level achieved in the engineering services segment and a significant increase in the nuclear segment. Given the company's strong year-to-date performance, robust backlog and pipeline of prospects, management is raising its outlook for SNCL services organic revenue growth for full year 2023 versus 2022 to between 12 per cent and 15 per cent, from the previous range of between 5 per cent and 7 per cent.

Q2 2023 financial highlights and 2023 outlook (all results reflect comparisons with the prior-year period of Q2 2022, except where otherwise indicated):

• SNCL services revenue increased 21.8 per cent to $2.0-billion, or 17.7 per cent on an organic revenue growth basis, outperforming for another consecutive quarter the company's previous full-year outlook range:
  • Engineering services organic revenue growth of 25.1 per cent.
• SNCL services segment adjusted EBIT increased by 14.6 per cent to $167.1-million, representing an 8.5-per-cent margin, in line with the company's full-year outlook range:
  • Engineering services segment adjusted EBIT margin totalled 8.5 per cent.
  • Nuclear segment adjusted EBIT margin totalled 13.1 per cent.
• SNCL services backlog reached a record high and totalled $12.4-billion as at June 30, 2023, an increase of 9.3 per cent. Bookings in Q2 2023 totalled $2.2-billion, representing a 1.14 booking-to-revenue ratio:
  • Engineering services backlog reached a record high and totalled $5.1-billion as at June 30, 2023, an increase of 22.4 per cent, which includes another new record high for the United States. Bookings in Q2 2023 totalled $1.7-billion, representing a 1.17 booking-to-revenue ratio.
  • Nuclear backlog increased by 38.1 per cent to $1.1-billion as at June 30, 2023.
• LSTK projects segment adjusted EBIT of negative $12.6-million, in line with expectations. LSTK projects backlog reduced by $96.0-million sequentially from March 31, 2023, to $421.9-million as at June 30, 2023.
• Net income from continuing operations attributable to SNC-Lavalin shareholders totalled $63.8-million, or 36 cents per diluted share, compared with net income of $1.6-million, or one cent per diluted share, in Q2 2022.
• Adjusted net income attributable to SNC-Lavalin shareholders from PS&PM (professional services and project management) totalled $71.9-million, or 41 cents per diluted share, compared with $53.8-million, or 31 cents per diluted share in Q2 2022.
• Net cash used for operating activities of $155.9-million:
  • Net cash generated from operating activities in SNCL services of $69.5-million.
• Net-limited-recourse-and-recourse-debt-to-adjusted-EBITDA ratio of 3.1 as at June 30, 2023.
• SNCL services organic revenue growth outlook for full year 2023 versus 2022 raised to between 12 per cent and 15 per cent, from the previous range of between 5 per cent and 7 per cent, and reaffirming all other financial outlook metrics for full year 2023.

"Our second-quarter results were strong as we continue to see robust demand for our services, leading us to increase our revenue growth outlook for 2023," said Ian L. Edwards, president and chief executive officer of SNC-Lavalin Group. "Performance this past quarter highlights the continuing success of our 'pivoting to growth' strategy as we grow into a premier professional services and project management company. Subsequent to quarter close, we announced the sale of our Scandinavian engineering services business as part of our strategic review to further maximize long-term value creation for the company. Our core expertise in engineering services and nuclear is well regarded across the globe and positions SNC-Lavalin for long-term success in capturing new work as we transition to a more-sustainable future for our planet and its people."

Second-quarter financial results

The increase in net income from continuing operations attributable to SNC-Lavalin shareholders was mainly due to higher segment adjusted EBIT, partially offset by higher net financial expenses, while Q2 2022 included an expense related to a remediation agreement.

Quarterly dividend

The company has declared a cash dividend of two cents per share, unchanged from the previous quarter. The dividend is payable on Aug. 31, 2023, to shareholders of record on Aug. 17, 2023. This dividend is an eligible dividend for Canadian federal and provincial income tax purposes.

Second quarter 2023 conference call/webcast

SNC-Lavalin will hold a conference call and audio webcast today at 8:30 a.m. ET to discuss and present its second-quarter financial results. The live audio webcast of the conference call can be accessed through a link posted on the company's website. The call will also be accessible by telephone, for which an accompanying slide presentation can be accessed at the company's website.

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 0808-101-2791 in the United Kingdom. A recording and a transcript of the conference call will be available on the company's website within 24 hours following the call.

About SNC-Lavalin Group Inc.

Founded in 1911, SNC-Lavalin is a fully integrated professional service and project management company with offices around the world dedicated to engineering a better future for the planet and its people. SNC-Lavalin creates sustainable solutions that connect people, technology, and data to design, deliver and operate the most complex projects. The company deploys global capabilities locally to its clients and delivers unique end-to-end services across the whole life cycle of an asset, including: consulting, advisory and environmental services, intelligent networks and cybersecurity, design and engineering, procurement, project and construction management, decommissioning, operations and maintenance, and capital.

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