Mr. Ian Edwards reports
SNC-LAVALIN REPORTS SECOND QUARTER 2020 RESULTS
SNC-Lavalin Group Inc. has released its results for the second quarter ended June 30, 2020.
2020 second quarter highlights
Net loss attributable to SNC-Lavalin shareholders of $111.6-million, or 64cents per diluted share, compared with a net loss of $2,118.3-million, or $12.07 per diluted share for Q2 2019
- Q2 2020 net loss includes $47.3-million of restructuring costs mainly related to the resources services transformation (see press release issued earlier today) and EDPM.
- SNCL engineering services; resilient through COVID-19, outlook provided
- Total segment adjusted EBIT of $132.5-million, representing a 9 per cent margin. EDPM segment adjusted EBIT of $78.8-million, representing an 8.4 per cent margin.
- SNCL engineering services revenue for the second half of 2020 forecast to decrease by a low to mid single digit percentage, compared to the second half of 2019, and segment adjusted EBIT as a percentage of revenue expected to be between 8 per cent and 10 per cent.
- SNCL projects; backlog continued to reduce, results impacted by COVID-19
- LSTK projects backlog reduced by $0.2-billion in the quarter to $2.7-billion, with $2.4-billion being infrastructure EPC projects.
- Resources LSTK backlog reduced to $0.2-billion and remains on track to be largely completed by end of 2020, considerably improving management's visibility on completion risks.
Total negative segment adjusted EBIt of $141.3-million, which included a loss of $122.3-million in resources and a loss of $19-million in infrastructure EPC projects.
Lower productivity from COVID-19 impacted LSTK projects in both resources and infrastructure EPC projects resulting in project reforecasts, with resources taking a $70-million charge related to client disputes on a project.
- Strong financial position and operating cash flows
- Cash and cash equivalents at $1.6-billion and net recourse debt to EBITDA ratio at 1.0x (calculated in accordance with credit agreement).
$129.8-million of net cash generated from operating activities during Q2, with SNCL engineering services generating $222-million.
Chief executive officer commentary
Ian L. Edwards, president and CEO of SNC-Lavalin Group Inc., made the following comments:
"During the last quarter, our business has demonstrated resilience through the challenges posed by COVID-19. This would not have been possible without the commitment and efforts of our employees, to whom I offer my thanks and appreciation. The unprecedented economic situation precipitated by COVID-19 and the downturn in oil prices has demonstrated that we made the right decision in changing our business model and exiting LSTK contracting to focus on our core engineering services strengths. Our engineering services business in Q2 delivered solid financial results."
"COVID-19 did have an impact on our LSTK projects productivity, contributing to project reforecasts; however, we do not consider these losses to be representative of future quarterly performance. The LSTK backlog continued to reduce and we are now in the final phases of closing out the resources LSTK projects, improving management's visibility on completion risks. We are confident about transforming and resizing our resources services business, and its potential to add real value to our professional services and project management capabilities and to complement our existing engineering services focused strategy."
SECOND QUARTER FINANCIAL HIGHLIGHTS
Note that effective from the second quarter of 2020, the company presents
financial results of Capital outside of SNCL engineering services.
(in thousands of dollars, unless otherwise indicated) Second quarter
Total revenue 1,952,739 2,284,177
Net loss attributable to SNC-Lavalin shareholders (111,647)(2,118,320)
Diluted EPS ($) (0.64) (12.07)
SNCL engineering services
Revenue 1,469,505 1,499,752
Segment adjusted EBIT 132,526 123,358
Segment adjusted EBIT to revenue ratio (per cent) 9.0 8.2
Backlog 10,982,500 10,934,900
Revenue 461,646 709,679
Segment adjusted EBIT (141,307) (307,704)
Segment adjusted EBIT to revenue ratio (per cent) (30.6) (43.4)
Backlog 3,442,800 4,562,100
Revenue 21,588 74,746
Segment adjusted EBIT 18,375 69,189
Backlog 166,900 187,200
Net cash generated from (used for) operating activities 129,818 (367,603)
Adjusted EBITDA from PS&PM 39,578 (151,783)
Adjusted diluted EPS from PS&PM ($) (0.22) (1.71)
As the scale and economic impact on the business from COVID-19 becomes clearer, and the resiliency of the company's businesses are supplemented by management actions, it provides improved visibility on the forecasted financial outcome for the remainder of the year. The company now expects, assuming no significant deviation from the current COVID-19 worldwide situation, that SNCL engineering services revenue for the second half of 2020 should decrease by a low to mid single digit percentage, compared to the second half of 2019, and that its segment adjusted EBIT as a percentage of revenue should be between 8 per cent and 10 per cent for the same period.
This outlook is based on the assumptions and methodology described in the company's second quarter 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 2019 annual management's discussion and analysis, which are more fully described in the company's public disclosure documents.
Second quarter 2020 earnings conference call/webcast
SNC-Lavalin will hold a conference call today at 8:30 a.m. EDT to review results for its second quarter of 2020. A live audio webcast of the conference call and an accompanying slide presentation will be available at the company's website. The call will also be accessible by telephone, 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 080-8101-2791 in the United Kingdom. A recording of the conference call and its transcript 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 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.
SNC-LAVALIN FINANCIAL SUMMARY
(in thousands of dollars, unless otherwise indicated) Second quarter Six months
ended June 30
2020 2019 2020 2019
SNCL engineering services 1,469,505 1,499,752 3,004,274 2,941,763
SNCL projects 461,646 709,679 1,110,119 1,558,684
Capital 21,588 74,746 67,830 146,923
1,952,739 2,284,177 4,182,223 4,647,370
Net income (loss) attributable to SNC-Lavalin shareholders
From PS&PM (118,242)(2,183,772) (164,167) (2,251,127)
From capital 6,595 65,452 (13,444) 115,502
(111,647)(2,118,320) (177,611) (2,135,625)
Diluted EPS ($)
From PS&PM (0.67) (12.44) (0.94) (12.82)
From capital 0.04 0.37 (0.08) 0.65
(0.64) (12.07) (1.01) (12.17)
Adjusted net income (loss) attributable to SNC-Lavalin shareholders
From PS&PM (38,194) (299,822) (42,112) (314,735)
From Capital 6,593 65,608 36,182 117,390
(31,601) (234,214) (5,930) (197,345)
Adjusted diluted EPS ($)
From PS&PM (0.22) (1.71) (0.24) (1.79)
From capital 0.04 0.37 0.21 0.67
(0.18) (1.34) (0.03) (1.12)
Adjusted EBITDA from PS&PM 39,578 (151,783) 124,571 (72,577)
SNCL engineering services 10,982,500 10,934,900
SNCL projects 3,442,800 4,562,100
Capital 166,900 187,200
Cash and cash equivalents 1,591,221 580,625
Recourse and limited recourse debt 2,069,034 3,991,428
**Note that certain totals and subtotals may not reconcile due to rounding.
We seek Safe Harbor.
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