- Executed significant steps to progress transformation into
Top-Tier global E&C firm;
-
- Developed world-class ethics and compliance framework,
punctuated by receipt of approval to contract with public
authorities in Quebec;
- Performed an extensive evaluation and analysis of our ongoing
projects and associated risks, notably in the second and third
quarter of 2013, and initiated a reorganization of our European
operations, totalling a net negative amount of $435 million;
- Continued strategic rebalancing of the ICI portfolio to develop
both new business and shareholder value;
- Decreased SG&A expenses and launched a profit improvement
initiative ("Value Up") program to enhance efficiency and
effectiveness and improve competiveness;
- Continued execution of Strategic Plan to focus on key markets
and optimize geographic and services mix to enhance overall margin
profile;
- Announces dividend of $0.24
per share, up 4% compared to current quarterly dividend, showing
confidence in the Company's long-term outlook, cash position,
backlog, opportunities and expected E&C and O&M
recovery;
- Although challenging legacy projects continue to negatively
impact 2014, EPS guidance for 2014 set at $2.25 to $2.50; and
- Company driving to achieve improved consolidated EBIT margin
on revenues and further improve earnings in 2015.
MONTREAL, March 6, 2014 /CNW Telbec/ - SNC-Lavalin Group
Inc. (TSX: SNC) announces its results today for the fourth quarter
and the year ended December 31,
2013.
"This last year was a true testament to the
character and determination of SNC-Lavalin's employees.
Thanks to them, we have made significant progress on the strategic
plan we outlined in May 2013," said
Robert G. Card, President and Chief
Executive Officer, SNC-Lavalin Group Inc. "We also developed a
strong ethics and compliance framework, announced key executive
appointments, allocated more than $300
million mainly to cover project risks, $123 million mainly to reorganize our European
operations, and reduced our SG&A expenses after years of
increases. The strong contribution, mainly from our Power and ICI
segments, allowed us to offset this financial effort and to deliver
$186 million of operating income.
Simultaneously, we are strategically rebalancing our ICI portfolio
and will continue to evaluate how best to manage our assets to
position the Company to win business and deliver growth."
"Our recent receipt of authorization by the
Autorité des Marchés Financiers (AMF) to contract with public
authorities in the Province of Quebec is a key milestone in our objective to
become a standard of excellence in ethics and compliance in the
industry," added Mr. Card. "With a strong cash position; a
solid backlog, following recent awards; and a volume of additional
bid opportunities, we are well-positioned to improve performance
and continue building our platform for future growth and value
creation."
|
|
|
(in thousands of
Canadian dollars, unless
otherwise indicated) |
Fourth
Quarter |
Year
Ended December 31 |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Revenues by activity |
|
|
|
|
|
Services |
697,056 |
921,174 |
2,697,611 |
3,174,934 |
|
Packages |
833,187 |
954,743 |
3,113,381 |
3,020,400 |
|
O&M |
338,244 |
349,423 |
1,338,318 |
1,330,501 |
|
ICI |
255,854 |
196,203 |
763,848 |
565,125 |
|
2,124,341 |
2,421,543 |
7,913,158 |
8,090,960 |
|
|
|
|
|
Net income (loss)
from E&C and O&M (1) |
(31,297) |
23,455 |
(245,783) |
149,004 |
SNC-Lavalin's net income
from ICI (2) |
123,834 |
70,387 |
281,551 |
156,923 |
Net income attributable to
SNC-Lavalin's shareholders (1) |
92,537 |
93,842 |
35,768 |
305,927 |
|
|
|
|
|
Net income attributable to
non-controlling interests |
93 |
128 |
616 |
415 |
Net income (1) |
92,630 |
93,970 |
36,384 |
306,342 |
|
|
|
|
|
Diluted earnings
per share ($) (1) |
0.61 |
0.62 |
0.24 |
2.02 |
|
|
|
|
|
|
|
|
As at
December 31,
2013 |
As at
December 31,
2012 |
Revenue backlog by
activity |
|
|
|
|
|
Services |
|
|
1,629,600 |
2,151,300 |
|
Packages |
|
|
4,429,700 |
5,747,700 |
|
O&M |
|
|
2,228,500 |
2,234,400 |
|
|
|
8,287,800 |
10,133,400 |
|
|
|
|
|
Cash and cash equivalents |
|
|
1,108,694 |
1,174,900 |
(1)Effective January 1, 2013, the Company adopted the
amendments to IAS 19 with respect to employee benefits.
Accordingly, comparative figures were adjusted to conform to these
amendments. See Note 2C to the Company's 2013 audited annual
consolidated financial statements for more details.
(2) Including a net gain of $36.2
million on the partial disposal of Astoria II in the fourth
quarter of 2013.
Fourth Quarter Results
For the fourth quarter of 2013, SNC-Lavalin reported a net income
attributable to SNC-Lavalin shareholders of $92.5 million ($0.61 per share on a diluted basis), compared to
a net income of $93.8 million
($0.62 per share on a diluted basis)
for the comparable quarter of 2012. Net income from Infrastructure
Concession Investments ("ICI") increased in the fourth quarter of
2013, compared to the corresponding quarter of 2012, while net
income from Engineering & Construction and Operations &
Maintenance ("E&C and O&M") continued to be
challenging.
Net income from ICI increased to $123.8 million for the fourth quarter of 2013,
compared to $70.4 million for
the corresponding quarter of 2012, mainly due to a net gain of
$36.2 million on the partial
disposal of Astoria II and a higher net income from AltaLink,
partially offset by a lower dividend received from Highway 407.
The Company reported a net loss from E&C and
O&M of $31.3 million,
compared to a net income of $23.5 million for the fourth quarter of
2012, mainly reflecting an operating loss in the Infrastructure
& Environment segment and a lower contribution from the Mining
& Metallurgy segment, partially offset by a higher contribution
from the Oil & Gas segment. The operating loss in the
Infrastructure & Environment segment was mainly due to
unfavourable cost reforecasts on certain unprofitable legacy
fixed-price contracts in the road sector. The Power segment
contribution in the fourth quarter of 2013 was slightly better than
the same quarter of 2012, as an unfavourable cost reforecast on a
major Packages project in Tunisia
recorded in the fourth quarter of 2013 was lower than the cost
reforecast recorded in the fourth quarter of 2012. In addition, as
previously indicated, the Company recorded an additional charge for
restructuring costs and goodwill impairment in the fourth quarter
of 2013. This charge totalled $55.2
million ($49.7 million after
taxes) in the quarter and relates mainly to the Company's European
reorganization. The reorganization is designed to increase
efficiency and competitiveness for that region and related service
offerings by sector of activity.
Revenues for the fourth quarter of 2013 totalled
$2.1 billion, compared to
$2.4 billion in the fourth quarter of
2012.
Year-End Results
For the year ended December 31, 2013,
SNC-Lavalin reported a net income attributable to SNC-Lavalin
shareholders of $35.8 million
($0.24 per share on a diluted basis),
compared to a net income of $305.9 million ($2.02 per share on a diluted basis) for the same
period of 2012. Net income from ICI increased in 2013 compared to
2012, while the net income from E&C and O&M, as expected,
concluded 2013 in a loss position.
Net income from ICI increased to $281.6 million, compared to $156.9 million for the year ended
December 31, 2012, mainly due to
higher net income from AltaLink and Shariket Kahraba Hadjret En
Nouss S.p.A., a net gain of $36.2 million on the partial disposal of
Astoria II, and higher dividends received from Highway 407.
The Company reported a net loss from E&C and
O&M of $245.8 million, compared
to a net income of $149.0 million for
the year ended December 31, 2012,
mainly reflecting operating losses in the Infrastructure &
Environment and Oil & Gas segments, a $123.5 million ($112.1
million after taxes) charge for restructuring costs and
goodwill impairment relating mainly to Europe, as well as a lower contribution from
the Mining & Metallurgy segment, partially offset by a higher
contribution from the Power segment. The operating loss in the
Infrastructure & Environment segment for the year ended
December 31, 2013, was mainly due to
unfavourable cost reforecasts and additional costs on certain
unprofitable legacy fixed-price contracts, particularly in the
hospital and road sectors, as well as a risk provision recorded on
a Libyan project. The operating loss in the Oil & Gas segment
for the year ended December 31, 2013
was mainly due to a loss and an unfavourable cost reforecast
related to a fixed-price project in Algeria.
Revenues for the year ended December 31, 2013, were $7.9 billion, in line with revenues for the same
period in 2012.
Selling, general and administrative ("SG&A")
expenses for the year ended December 31,
2013, decreased to $836.6
million, compared to $855.5
million for the corresponding period of 2012, thus attaining
the Company's objective of not exceeding its 2012 SG&A level.
The decrease mainly reflected new initiatives and programs that the
Company is currently implementing.
Cash and cash equivalents as at December 31, 2013, increased to $1.1 billion, compared to $0.8 billion at the end of September 30, 2013, and remained in line with
December 31, 2012.
Revenue backlog totalled $8.3 billion at the end of December 2013, compared to $10.1 billion at the end of December 2012, mainly reflecting a decrease in
the Power, Mining & Metallurgy and Infrastructure &
Environment segments. The challenging legacy projects in the
Company's backlog, the large majority of which are in the hospitals
sector, totalled $902.6 million, a
decrease of $158.5 million since
September 30, 2013.
Outlook
For 2014, the Company is establishing its Earnings Per Share
("EPS") guidance in the range of $2.25 and $2.50 per
share, reflecting continued challenges in the Infrastructure &
Environment and Oil & Gas segments, mainly due to certain
challenging legacy projects, and in the Mining & Metallurgy
segment, which continues to be affected by the softening of the
commodity markets, as well as the expectation that the Power,
O&M and ICI segments should increase their contributions. This
outlook assumes that SG&A expenses will continue to decrease
mainly as a result of new initiatives and ongoing activities
associated with SNC-Lavalin's new company-wide profit improvement
program.
This above outlook is based on the assumptions
and methodology described in the Company's 2013 Management's
Discussion and Analysis under the heading "How We Budget and
Forecast Our Results", which should be read in conjunction with the
"Forward Looking Statements" section below and is subject to the
risks and uncertainties summarized therein, which are more fully
described in the Company's public disclosure documents.
"While challenging legacy projects continue to
negatively impact the Company's earnings in 2014, we continue to
drive toward returning gross margin to revenue ratios to the stated
goals set forth in our 2013 Management's Discussion and Analysis,
through increasing operational efficiencies and the completion of
unprofitable legacy fixed price contracts," said Robert G. Card. "Based on our progress in 2013,
which I am confident will continue with momentum in 2014, I believe
we are well positioned to improve our consolidated EBIT margin on
revenues and further improve earnings in 2015."
Quarterly Dividend
Given the Company's long-term outlook, cash position, backlog,
opportunities and expected E&C and O&M recovery, the Board
of Directors has increased the quarterly cash dividend to
$0.24 per share, payable on
April 3, 2014, to shareholders
of record on March 20, 2014. This
dividend is an "eligible dividend" for income tax purposes.
About SNC-Lavalin
SNC-Lavalin is one of the leading engineering and construction
groups in the world, and is a major player in the ownership of
infrastructure and in the provision of operations and maintenance
services. Founded in 1911, SNC-Lavalin has offices across
Canada and in over 40 other
countries around the world, and is currently active in some 100
countries. www.snclavalin.com
Forward-looking Statements:
Reference in this press release, 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 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",
"estimates", "expects", "goal", "intends", "may", "plans",
"projects", "should", "will", or the negative thereof or other
variations thereon. Forward-looking statements also include any
other statements that do not refer to historical facts. 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.
The 2014 outlook referred to in this press
release is forward-looking information and is based on the
methodology described in the Company's 2013 Management's Discussion
and Analysis under the heading "How We Budget and Forecast Our
Results" and is subject to the risks and uncertainties described in
the Company's public disclosure documents. The purpose of the 2014
outlook is to provide the reader with an indication of management's
expectations, at the date of this press release, regarding the
Company's future financial performance and readers are cautioned
that this 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 2013 Management's Discussion and
Analysis (particularly, in the sections entitled "Critical
Accounting Judgments and Key Sources of Estimation Uncertainty" and
"How We Analyze and Report our Results" in the Company's 2013
Management's Discussion and Analysis). The 2014 outlook also
assumes that previously disclosed amounts relating to a claim in
Algeria and the attempted draw on
a letter of credit in Libya will
not be reversed and does not take into account any sale or partial
sale of the Company's interest in AltaLink. 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: (a) the outcome of pending and future
claims and litigation could have a material adverse impact on the
Company's business, financial condition and results of operation;
(b) the Company is subject to ongoing investigations which could
subject the Company to criminal and administrative enforcement
actions, civil actions and sanctions, fines and other penalties,
some of which may be significant, which, in turn, could harm the
Company's reputation, result in suspension, prohibition or
debarment of the Company from participating in certain projects,
reduce its revenues and net income and adversely affect its
business; (c) further regulatory developments could have a
significant adverse impact on the Company's results, and employee,
agent or partner misconduct or failure to comply with anti-bribery
and other government laws and regulations could harm the Company's
reputation, reduce its revenues and net income, and subject the
Company to criminal and administrative enforcement actions and
civil actions;(d) if the Company is not able to successfully
execute on its new strategic plan, its business and results of
operations would be adversely affected; (e) a negative impact on
the Company's public image could influence its ability to obtain
future projects; (f) fixed-price contracts or the Company's failure
to meet contractual schedule or performance requirements may
increase the volatility and unpredictability of its revenue and
profitability; (g) the Company's revenue and profitability are
largely dependent on the awarding of new contracts, which it does
not directly control, and the uncertainty of contract award timing
could have an adverse effect on the Company's ability to match its
workforce size with its contract needs; (h) the Company's backlog
is subject to unexpected adjustments and cancellations, including
under "termination for convenience" provisions, and does not
represent a guarantee of the Company's future revenues or
profitability; (i) SNC-Lavalin is a provider of services to
government agencies and is exposed to risks associated with
government contracting; (j) the Company's international operations
are exposed to various risks and uncertainties, including
unfavourable political environments, weak foreign economies and the
exposure to foreign currency risk; (k) there are risks associated
with the Company's ownership interests in ICI that could adversely
affect it; (l) the Company is dependent on third parties to
complete many of its contracts; (m) the Company's use of joint
ventures and partnerships exposes it to risks and uncertainties,
many of which are outside of the Company's control; (n) the
competitive nature of the markets in which the Company does
business could adversely affect it; (o) the Company's project
execution activities may result in professional liability or
liability for faulty services; (p) the Company could be subject to
monetary damages and penalties in connection with professional and
engineering reports and opinions that it provides; (q) the Company
may not have in place sufficient insurance coverage to satisfy its
needs; (r) the Company's employees work on projects that are
inherently dangerous and a failure to maintain a safe work site
could result in significant losses and/or an inability to obtain
future projects; (s) the Company's failure to attract and retain
qualified personnel could have an adverse effect on its activities;
(t) work stoppages, union negotiations and other labour matters
could adversely affect the Company; (u) the Company relies on
information systems and data in its operations. Failure in the
availability or security of the Company's information systems or in
data security could adversely affect its business and results of
operations; (v) any acquisition or other investment may present
risks or uncertainties; (w) a deterioration or weakening of the
Company's financial position, including its cash net of recourse
debt, would have a material adverse effect on its business and
results of operations; ( x ) the Company may have significant
working capital requirements, which if unfunded could negatively
impact its business, financial condition and cash flows; (y) an
inability of SNC-Lavalin's clients to fulfill their obligations on
a timely basis could adversely affect the Company; (z) the Company
may be required to impair certain of its goodwill, and it may also
be required to write down or write off the value of certain of its
assets and investments, either of which could have a material
adverse impact on the Company's results of operations and financial
condition; (aa) global economic conditions could affect the
Company's client base, partners, subcontractors and suppliers and
could materially affect its backlog, revenues, net income and
ability to secure and maintain financing; (bb) fluctuations in
commodity prices may affect clients' investment decisions and
therefore subject the Company to risks of cancellation, delays in
existing work, or changes in the timing and funding of new awards,
and may affect the costs of the Company's projects; (cc) inherent
limitations to the Company's control framework could result in a
material misstatement of financial information, and; (dd)
environmental laws and regulations expose the Company to certain
risks, could increase costs and liabilities and impact demand for
the Company's services. The Company cautions that the foregoing
list of factors is not exhaustive. For more information on risks
and uncertainties, and assumptions that would 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 Judgments and Key Sources of
Estimation Uncertainty" in the Company's 2013 Management's
Discussion and Analysis.
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 any obligation to update publicly or to revise any such
forward-looking statements whether as a result of new information,
future events or otherwise, unless required by applicable
legislation or regulation.
SNC-Lavalin's Consolidated Financial Statements
and Management's Discussion and Analysis and other relevant
financial materials are available in the Investor Relations section
of the Company's website at www.snclavalin.com. These and other
Company reports are also available on the website maintained by the
Canadian Securities regulators at www.sedar.com.
SOURCE SNC-Lavalin