Mr. Ian Edwards reports
SNC-LAVALIN REPORTS FOURTH QUARTER 2020 RESULTS
SNC-Lavalin Group Inc. has provided its results for the fourth quarter and year ended Dec. 31, 2020.
Fourth quarter key metrics from continuing operations and highlights
Net loss from continuing operations attributable to SNC-Lavalin shareholders of $322.9-million, or $1.84 per diluted share.
Q4 2020 included, as announced on Feb. 9, 2021, an aggregate amount of $480-million (before taxes) in charges, adjustments to provisions and claims receivable reductions, as well as a cost reassessment of the remaining Canadian LSTK infrastructure projects in light of COVID-19.
SNCL Engineering Services delivers solid Q4 results
Q4 2020 revenues of $1.5-billion.
Q4 2020 total segment adjusted earnings before interest and taxes of $153.1-million, representing a 10.1-per-cent margin.
Q4 2020 segment adjusted EBIT to revenue ratio of 9.0 per cent, 14.8 per cent and 9.6 per cent for EDPM (engineering, design and product management), nuclear and infrastructure services, respectively.
Q4 2020 net cash generated from operating activities of $250-million.
Q4 2020 bookings of $1.7-billion, representing a 1.10 booking-to-revenue ratio. Backlog at $10.9-billion as at Dec. 31, 2020.
Financial position remains strong
As at Dec. 31, 2020, the company had cash and cash equivalents of $932.9-million and a net recourse debt to EBITDA ratio of 2.1 (calculated in accordance with the company's credit agreement).
2021 outlook provided for SNCL Engineering Services
SNCL Engineering Services revenue for 2021 forecast to grow by a low single-digit percentage, compared with 2020, and segment adjusted EBIT to revenue ratio expected to be between 8 per cent and 10 per cent.
IFRS FOURTH QUARTER AND YEAR-END FINANCIAL HIGHLIGHTS
(in thousands of dollars, unless otherwise indicated)
Fourth quarter Year ended
Dec. 31, Dec. 31,
2020 2019 2020 2019
Revenue $1,697,929 $1,967,582 $7,007,501 $7,629,832
Attributable to SNC-Lavalin shareholders
Net income (loss) from continuing operations (322,906) (180,169) (356,103) 2,440,795
Diluted EPS from continuing operations ($) (1.84) (1.03) (2.03) 13.90
Net (loss) from discontinued operations (379,805) (112,701) (609,344) (2,112,576)
Net income (loss) (702,711) (292,870) (965,447) 328,219
Net cash generated from (used for) operating activities 104,606 312,248 121,485 (355,273)
Cash and cash equivalents 932,902 1,188,636
Recourse debt and limited recourse debt 1,570,965 1,572,663
Backlog from continuing operations 13,187,800 14,137,700
Chief executive officer commentary
Ian L. Edwards, president and chief executive officer of SNC-Lavalin Group, made the following comments:
"Our engineering services business continued to deliver solid results in the quarter, with strong performance in our three segments, EDPM, nuclear and infrastructure services. We have significantly improved our operating cash flows in 2020, segment adjusted EBIT margins remained strong and the backlog for EDPM business increased by 9 per cent year over year, despite COVID-19. Since the onset of the pandemic, we have prioritized the health, safety and well-being of our employees and of all those we work with. We are incredibly grateful for their dedication and perseverance and I would like to thank everyone for their efforts through an unprecedented and unique year.
"Following 18 months of focus and hard work executing on our new strategic path, SNC-Lavalin is well positioned for the future with a focus on growth, around which the team is energized to deliver. The recent award of a major infrastructure project in the United Kingdom, which will be delivered through a risk-capped alliance agreement, underscores the global potential of our infrastructure services offering and demonstrates the opportunity to apply our major projects expertise through new and beneficial contracting models."
Fourth quarter results
The company reported a net loss from continuing operations attributable to SNC-Lavalin shareholders of $322.9-million, or $1.84 per diluted share in Q4 2020, compared with $180.2-million, or $1.03 per diluted share, for the corresponding period in 2019. These net losses comprise a net loss from continuing operations from PS&PM (professional services and project management) of $356.4-million, or $2.03 per diluted share, and a net income from continuing operations from capital of $33.5-million, or 19 cents per diluted share in Q4 2020, compared with a net loss from continuing operations from PS&PM of $197.7-million, or $1.13 per diluted share and a net income from continuing operations from capital of $17.5-million, or 10 cents per diluted share, for the corresponding period in 2019. Q4 2020 net loss was primarily due to a negative segment adjusted EBIT from SNCL Projects. This Q4 negative segment adjusted EBIT was mainly attributable to the charges, adjustments to provisions and commercial claims receivable reductions, following an expanded review of legacy LSTK litigation matters and other significant claims, as well as a cost reassessment of the remaining Canadian LSTK Infrastructure projects in light of COVID-19, announced by the company on Feb. 9, 2021. Q4 2019 included the federal charges settlement of $257.3-million.
Adjusted net loss from PS&PM in Q4 2020 amounted to $268.7-million, or $1.53 per diluted share, compared with an adjusted net income from PS&PM of $109.6-million, or 62 cents per diluted share, for the corresponding period in 2019. The variation was mainly due to a negative segment adjusted EBIT of $412.8-million in SNCL projects in Q4 2020, compared with a positive segment adjusted EBIT of $17.4-million in Q4 2019, as well as higher corporate selling, general and administrative expenses in Q4 2020, which included investments related to a new digital transformation initiative.
The board of directors today declared a cash dividend of two cents per share, unchanged from the previous quarter. The dividend is payable on April 6, 2021, to shareholders of record on March 23, 2021. This dividend is an eligible dividend for Canadian federal and provincial income tax purposes.
SNCL Engineering Services 2021 outlook
The company expects SNCL Engineering Services revenue for full-year 2021 to increase by a low single-digit percentage, compared with 2020, and for its segment adjusted EBIT to revenue ratio to be between 8 per cent and 10 per cent for the same period.
As COVID-19 did not significantly impact SNCL Engineering Services in Q1 2020, it is expected that its revenue for Q1 2021, compared with Q1 2020, would decrease by a low single-digit percentage.
SNC-Lavalin will hold a conference call today at 8:30 a.m. EST to review results for its fourth 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 life cycle. The company's expertise is wide-ranging -- consulting and advisory, intelligent networks and cybersecurity, design and engineering, procurement, project and construction management, operations and maintenance, decommissioning and sustaining capital -- and delivered to clients in four strategic sectors: EDPM (engineering, design and project management), infrastructure, nuclear and resources, supported by capital. People. Drive. Results.
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