The SNCL Services line of business continued to deliver on its "Pivoting to Growth" strategy with another quarter of strong revenue growth, particularly in the Engineering Services segment, and a significant increase in Segment Adjusted EBIT. SNCL Services achieved record high backlog, with another record high level in the Engineering Services segment and a strong increase in the Nuclear segment. The LSTK projects exit strategy continues to progress well.
Q1 2023 Financial Highlights
(All results reflect comparisons to prior-year period of Q1 2022, except otherwise indicated)
- SNCL Services revenue increased 10.8% to
$1.8 billion , or 10.1% on an organic revenue growth(1)(2) basis, outperforming the Company's 5% to 7% full year outlook range - Engineering Services organic revenue growth(1)(2) of 17.5%
- SNCL Services Segment Adjusted EBIT increased by 23.4% to
$156.3 million , representing an 8.5% margin, in line with Company's full year outlook range - Engineering Services Segment Adjusted EBIT margin and Engineering Services Segment Adjusted EBITDA to segment net revenue ratio(1)(3) of 8.4% and 14.0%, respectively
- Nuclear Segment Adjusted EBIT margin of 13.4%
- SNCL Services backlog reached a record-high and totaled
$12.1 billion as atMarch 31, 2023 , an increase of 8.0%. Bookings in Q1 2023 totaled $2.1 billion, representing a 1.13 booking-to-revenue ratio(1)(4) - Engineering Services backlog reached a record-high and totaled
$4.8 billion as atMarch 31, 2023 , an increase of 25.3%, which includes another new record-high forthe United States . Bookings in Q1 2023 totaled$1.5 billion , representing a 1.13 booking-to-revenue ratio(1)(4) - Nuclear backlog increased by 22.9% to
$985.8 million as atMarch 31, 2023 - LSTK Projects Segment Adjusted EBIT of negative $9.2 million, in line with expectations. LSTK Projects backlog reduced by
$167.6 million sequentially fromDecember 31, 2022 to$517.9 million as atMarch 31, 2023 - Adjusted net income attributable to
SNC-Lavalin shareholders from PS&PM(1) totaled$55.4 million , or$0.32 per diluted share, compared to$39.4 million , or$0.22 per diluted share in Q1 2022 - Net income from continuing operations attributable to
SNC-Lavalin shareholders totaled$28.4 million , or$0.16 per diluted share, compared to$24.8 million , or$0.14 per diluted share in Q1 2022 - Net cash used for operating activities of
$57.3 million - Net cash generated from operating activities in SNCL Services(1)(5) of
$94.1 million - Net limited recourse and recourse debt to Adjusted EBITDA ratio(1)(6) of 2.9 as at
March 31, 2023
"With our strong first quarter results, we believe that we are well on track to deliver the Company's 2023 outlook," said
First Quarter Financial Results
Professional Services & Project Management are collectively referred to as "PS&PM" to distinguish them from "Capital" activities. PS&PM groups together five of the Company's segments, namely Engineering Services, Nuclear,
- The increase in net income from continuing operations attributable to
SNC-Lavalin shareholders was mainly due to higher Segment Adjusted EBIT, partially offset by higher net financial expenses.
IFRS Financial Highlights
Q1 2023A | Q1 2022A | |||
Revenues | ||||
From PS&PM | 2,006.7 | 1,871.7 | ||
From Capital | 16.3 | 16.4 | ||
2,023.1 | 1,888.1 | |||
Attributable to | ||||
Net income from continuing operations: | ||||
From PS&PM | 26.0 | 16.6 | ||
From Capital | 2.4 | 8.2 | ||
28.4 | 24.8 | |||
Diluted EPS from continuing operations: | ||||
From PS&PM ($) | 0.15 | 0.09 | ||
From Capital ($) | 0.01 | 0.05 | ||
0.16 | 0.14 |
Non-IFRS Financial Highlights
Q1 2023A | Q1 2022A | |||
Attributable to | ||||
Adjusted net income from PS&PM(1) | 55.4 | 39.4 | ||
Adjusted diluted EPS from PS&PM(1)(7) ($) | 0.32 | 0.22 | ||
Adjusted EBITDA from PS&PM(1) | 155.9 | 112.6 |
Segment Performance
Q1 2023A | Q1 2022A | |||
Segment revenues | ||||
Engineering Services | 1,344.2 | 1,138.2 | ||
Nuclear | 244.3 | 232.1 | ||
O&M | 125.9 | 136.5 | ||
| 121.5 | 150.5 | ||
SNCL Services | 1,835.9 | 1,657.3 | ||
LSTK Projects | 170.8 | 214.4 | ||
Capital | 16.3 | 16.4 | ||
2,023.1 | 1,888.1 | |||
Segment Adjusted EBIT | ||||
Engineering Services | 113.5 | 85.2 | ||
Nuclear | 32.7 | 34.3 | ||
O&M | 9.4 | 11.7 | ||
| 0.8 | (4.5) | ||
SNCL Services | 156.3 | 126.7 | ||
LSTK Projects | (9.2) | (30.5) | ||
Capital | 11.6 | 12.4 | ||
158.8 | 108.6 | |||
Backlog as at | ||||
Engineering Services | 4,837.0 | 3,861.1 | ||
Nuclear | 985.8 | 802.2 | ||
O&M | 5,262.2 | 5,598.4 | ||
| 994.4 | 920.4 | ||
SNCL Services | 12,079.3 | 11,182.1 | ||
LSTK Projects | 517.9 | 956.6 | ||
Capital | 29.3 | 35.0 | ||
12,626.5 | 12,173.7 |
All figures in millions of dollars, except otherwise indicated |
Certain totals and subtotals may not reconcile due to rounding |
A For the three-month period ended |
Quarterly Dividend
The Board of Directors today declared a cash dividend of
First Quarter 2023 Conference Call / Webcast
Annual Meeting of Shareholders
Additional information related to the Meeting can also be found in
About
Founded in 1911,
Non-IFRS Financial Measures and Ratios, Supplementary Financial Measures and Non-Financial Information
The Company reports its financial results in accordance with IFRS. However, the following non–IFRS financial measures and ratios, supplementary financial measures and non-financial information are used by the Company in this press release: Organic revenue growth (contraction), EBITDA, Adjusted EBITDA, Adjusted net income (loss) attributable to
Non-IFRS financial measures and ratios, supplementary financial measures and non-financial information do not have any standardized meaning under IFRS and other issuers may define these measures differently and, accordingly, they may not be comparable to similar measures prepared by other issuers. Such non-IFRS financial measures and ratios, supplementary financial measures and non-financial information have limitations and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
However, management believes that, in addition to conventional measures prepared in accordance with IFRS, these non-IFRS financial measures and ratios and supplementary financial measures and non-financial information provide additional insight into the Company's operating performance and financial position and certain investors may use this information to evaluate the Company's performance from period to period. Furthermore, certain non-IFRS financial measures and ratios, certain additional IFRS measures and ratios, certain supplementary financial measures and other non-financial information are presented separately for PS&PM, by excluding components related to Capital, as the Company believes that such measures are useful as these PS&PM activities are usually analyzed separately by the Company. Reconciliations and calculations of non-IFRS measures and ratios to the most comparable IFRS measures and ratios are set forth below in the section "Reconciliations and Calculations" of this press release.
(1) Non-IFRS financial measure or ratio or supplementary financial measure. |
(2) Organic revenue growth (contraction) is a non-IFRS ratio comparing organic revenue (which excludes foreign exchange and acquisition and disposal impacts), itself a non-IFRS financial measure, between two periods. |
(3) Segment Adjusted EBITDA to segment net revenue for the Engineering Services segment is a non-IFRS ratio based on Segment Adjusted EBITDA and segment net revenue, both of which are non-IFRS financial measures. |
(4) Booking-to-revenue ratio is a non-IFRS ratio based on contract bookings. |
(5) Net cash generated from (used for) operating activities on a line of business/segment basis is a supplementary financial measure and is identical in composition to net cash generated from (used for) operating activities as reported in the financial statements, except that it is provided on a line of business/segment basis as opposed to on a consolidated basis. |
(6) Net limited recourse and recourse debt to Adjusted EBITDA ratio is a non-IFRS ratio based on net limited recourse and recourse debt at the end of a given period and Adjusted EBITDA of the corresponding trailing twelve-month period, both of which are non-IFRS financial measures. |
(7) Adjusted diluted EPS is a non-IFRS ratio based on adjusted net income (loss) attributable to |
Reconciliations and Calculations
Reconciliation of Adjusted net income attributable to
Q1 2023 | Q1 2022 | |||||||
Before Taxes | Taxes | After Taxes | Diluted EPS (In $) | Before Taxes | Taxes | After Taxes | Diluted EPS (In $) | |
Net income attributable to (IFRS) | 28.4 | 0.16 | 24.8 | 0.14 | ||||
Restructuring and transformation costs | 14.5 | (1.7) | 12.8 | 6.7 | (1.6) | 5.1 | ||
Amortization of intangible assets related to business combinations | 20.6 | (4.0) | 16.5 | 22.3 | (4.7) | 17.7 | ||
Gain on disposal of a Capital investment | - | - | - | (4.3) | (0.1) | (4.4) | ||
Total adjustments | 35.1 | (5.7) | 29.4 | 0.17 | 24.7 | (6.4) | 18.4 | 0.10 |
Adjusted net income attributable to (non-IFRS) | 57.8 | 0.33 | 43.1 | 0.25 | ||||
Net income attributable to | 2.4 | 0.01 | 8.2 | 0.05 | ||||
Gain on disposal of a Capital investment | - | - | - | (4.3) | (0.1) | (4.4) | ||
Total adjustments | - | - | - | - | (4.3) | (0.1) | (4.4) | (0.03) |
Adjusted net income attributable to (non-IFRS) | 2.4 | 0.01 | 3.8 | 0.02 | ||||
Adjusted net income attributable to (non-IFRS) | 55.4 | 0.32 | 39.4 | 0.22 |
Note that certain totals and subtotals may not reconcile due to rounding |
All figures in millions of dollars, except otherwise indicated |
Reconciliation of EBITDA and Adjusted EBITDA to IFRS net income from continuing operations
Q1 2023 | Q1 2022 | |||||
From PS&PM | From Capital | Total | From PS&PM | From Capital | Total | |
Net income from continuing operations | 26.1 | 2.4 | 28.5 | 13.7 | 8.2 | 21.9 |
Net financial expenses | 45.7 | 1.7 | 47.4 | 24.6 | 1.0 | 25.6 |
Income tax expense | 11.1 | 0.5 | 11.6 | 3.5 | 0.5 | 4.0 |
EBIT | 82.9 | 4.6 | 87.5 | 41.8 | 9.7 | 51.5 |
Depreciation and amortization | 58.6 | - | 58.6 | 64.0 | - | 64.0 |
EBITDA | 141.4 | 4.6 | 146.0 | 105.8 | 9.7 | 115.5 |
Restructuring and transformation costs | 14.5 | - | 14.5 | 6.7 | - | 6.7 |
Gain on disposal of a Capital investment | - | - | - | - | (4.3) | (4.3) |
Adjusted EBITDA | 155.9 | 4.6 | 160.5 | 112.6 | 5.3 | 117.9 |
Note that certain totals and subtotals may not reconcile due to rounding |
All figures in millions of dollars |
Calculation of segment net revenue and Segment Adjusted EBITDA to segment net revenue ratio for the Engineering Services segment
Q1 2023 | |
Revenue – Engineering Services | 1,344.2 |
Less: Direct costs for sub-contractors and other direct expenses that are recoverable directly from clients – Engineering Services | 331.3 |
Segment net revenue – Engineering Services | 1,012.9 |
Segment Adjusted EBITDA – Engineering Services | 141.7 |
Segment Adjusted EBITDA to segment net revenue ratio – Engineering Services | 14.0 % |
All figures in millions of dollars, except otherwise indicated |
Calculation of organic revenue growth (contraction)
Q1 2023 | Q1 2022 | Variance | Foreign | Acquisition / | Organic | |
Engineering Services | 1,344.2 | 1,138.2 | 206.0 | 5.9 | - | 200.0 |
Nuclear | 244.3 | 232.1 | 12.2 | 0.8 | 0.7 | 10.8 |
O&M | 125.9 | 136.5 | (10.6) | 2.3 | - | (12.9) |
121.5 | 150.5 | (29.0) | 0.7 | - | (29.7) | |
Total – SNCL Services | 1,835.9 | 1,657.3 | 178.6 | 9.7 | 0.7 | 168.2 |
Q1 2023 | Q1 2022 | Variance | Foreign | Acquisition / | Organic | |
Engineering Services | 1,344.2 | 1,138.2 | 18.1 % | 0.6 % | - | 17.5 % |
Nuclear | 244.3 | 232.1 | 5.3 % | 0.4 % | 0.3 % | 4.6 % |
O&M | 125.9 | 136.5 | (7.8) % | 1.5 % | - | (9.3) % |
121.5 | 150.5 | (19.2) % | 0.4 % | - | (19.6) % | |
Total – SNCL Services | 1,835.9 | 1,657.3 | 10.8 % | 0.6 % | - | 10.1 % |
Note that certain totals and subtotals may not reconcile due to rounding |
All figures in millions of dollars, except otherwise indicated |
Calculation of booking-to-revenue ratio
Q1 2023 | |||||
Engineering Services | Nuclear | O&M | Total SNCL Services | ||
Opening backlog | 4,662.1 | 936.6 | 5,353.9 | 881.8 | 11,834.4 |
Plus: Contract bookings during the period | 1,517.8 | 287.7 | 34.1 | 234.1 | 2,073.8 |
Less: Revenues from contracts with customers recognized during the period | 1,342.9 | 238.5 | 125.9 | 121.5 | 1,828.9 |
Ending backlog | 4,837.0 | 985.8 | 5,262.2 | 994.4 | 12,079.3 |
Booking-to-revenue ratio | 1.13 | 1.21 | 0.27 | 1.93 | 1.13 |
Note that certain totals and subtotals may not reconcile due to rounding |
All figures in millions of dollars, except otherwise indicated |
Calculation of net limited recourse and recourse debt to Adjusted EBITDA ratio
Limited recourse debt | 400.0 | |||
Recourse debt | 1,609.6 | |||
Less: Cash and cash equivalents | 561.3 | |||
Net limited recourse and recourse debt | 1,448.3 | |||
Adjusted EBITDA (trailing 12 months) | 495.7 | |||
Net limited recourse and recourse debt to Adjusted EBITDA ratio | 2.9 |
All figures in millions of dollars, except otherwise indicated |
Forward-Looking Statements
Reference in this press release, and hereafter, to the "Company" or to "SNC-Lavalin" means, as the context may require,
Statements made in this press release 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", "forecasts", "goal", "intends", "likely", "may", "objective", "outlook", "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, project- or contract-specific cost reforecasts and claims provisions, and future prospects; ii) business and management strategies and the expansion and growth of the Company's operations; and iii) the expected additional impacts of the ongoing COVID-19 pandemic on the business and its operating and reportable segments as well as elements of uncertainty related thereto. 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 press release 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 2022 Annual MD&A (particularly in the sections entitled "Critical Accounting Judgements and Key Sources of Estimation Uncertainty" and "How We Analyze and Report Our Results"). 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 risks include, but are not limited to, matters relating to: (a) epidemics, pandemics, including COVID-19, and other global health crises; (b) execution of the Company's "Pivoting to Growth Strategy" unveiled in
The Company cautions that the foregoing list of factors is not exhaustive. For more information on risks and uncertainties, and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the sections "Risks and Uncertainties", "How We Analyze and Report Our Results" and "Critical Accounting Judgements and Key Sources of Estimation Uncertainty" in the Company's 2022 Annual MD&A and as updated in the first quarter 2023 MD&A filed with the securities regulatory authorities in
The forward-looking statements herein reflect the Company's expectations as at the date of this press release and are subject to change after this date. The Company does not undertake to update publicly or to revise any written or oral forward-looking information or statements whether as a result of new information, future events or otherwise, unless required by applicable legislation or regulation. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.
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The Company's unaudited interim condensed consolidated financial statements for the three-month periods ended
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