MONTREAL, Sept. 29, 2016 /CNW Telbec/ - SNC-Lavalin Group
Inc. (TSX:SNC) announces that it is updating its outlook for Fiscal
2016. Following its most recent evaluation and analysis of its
projects portfolio, the Company had just established, and expects
to be recording in the third quarter, unfavorable cost and revenue
reforecasts on two Oil & Gas projects in the Middle East. The fourth quarter is expected to
return to a more normal run rate, and discussions are ongoing to
attempt to resolve the commercial issues in these contracts.
The outlook for the other segments remains largely unchanged
with the Infrastructure segment trending to be slightly better than
expected.
Due to these unfavorable cost and revenue reforecasts, the
Company is updating its previously announced 2016 outlook from an
adjusted diluted EPS from E&C(1) in the range of
$1.50 to $1.70 to an adjusted diluted
EPS from E&C(1) in the range of $1.30 to $1.60.
SNC-Lavalin remains confident in its diversified business model
and continues to target an annualized adjusted E&C
EBITDA(2) margin of 7% in 2017, mainly due to actions
taken in the last 12 months through its "Step Change" and
"Operational Excellence" programs.
The Company will provide further details in its upcoming third
quarter earnings release as well as during its regularly scheduled
earnings conference call and webcast following the earnings
release.
The above updated outlook is based on the assumptions and
methodology described in the Company's 2015 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.
About SNC-Lavalin
Founded in 1911, SNC-Lavalin is one of the leading engineering and
construction groups in the world and a major player in the
ownership of infrastructure. From offices in over 50 countries,
SNC-Lavalin's employees are proud to build what matters. Our teams
provide engineering, procurement, construction, completions and
commissioning services together with a range of sustaining capital
services to clients in four industry sectors, oil and gas, mining
and metallurgy, infrastructure and power. SNC-Lavalin can also
combine these services with its financing and operations and
maintenance capabilities to provide complete end-to-end project
solutions. www.snclavalin.com
(1) Adjusted diluted EPS from E&C is defined
as the adjusted net income from E&C(3) divided by
the weighted average outstanding number of shares for the
period.
(2) Adjusted E&C EBITDA is defined herein as
earnings from E&C before net financial expenses, income taxes,
depreciation and amortization, and excludes one-time net foreign
exchange gains, charges related to restructuring and right-sizing
and other, as well as the acquisition-related costs and integration
costs incurred in connection with the acquisition of Kentz in 2014.
The term "Adjusted E&C EBITDA" does not have any standardized
meaning under IFRS. Therefore, it may not be comparable to similar
measures presented by other issuers. Management uses this measure
as a more meaningful way to compare the Company's financial
performance from period to period. Management believes that, in
addition to conventional measures prepared in accordance with IFRS,
certain investors use this information to evaluate the Company's
performance.
(3) Adjusted net income from E&C is defined as
net income attributable to SNC-Lavalin shareholders from E&C,
excluding one-time net foreign exchange gains, charges related to
restructuring and right-sizing and other, as well as amortization
of intangible assets, and the financing, acquisition-related costs
and integration costs incurred in connection with the acquisition
of Kentz in 2014. E&C is defined in the Company's 2015
financial statements and Management's Discussion and Analysis. The
term "Adjusted net income from E&C" does not have any
standardized meaning under IFRS. Therefore, it may not be
comparable to similar measures presented by other issuers.
Management uses this measure as a more meaningful way to compare
the Company's financial performance from period to period.
Management believes that, in addition to conventional measures
prepared in accordance with IFRS, certain investors use this
information to evaluate the Company's performance.
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",
"cost savings", "estimates", "expects", "goal", "intends", "may",
"plans", "projects", "should", "synergies", "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 and future prospects; and ii) business and
management strategies and the expansion and growth of the Company's
operations. 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 2016-2017 outlook referred to in this press release is
forward-looking information and is based on the methodology
described in the Company's 2015 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 2016-2017
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 2015 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 2015 Management's
Discussion and Analysis). The 2016-2017 outlook also assumes that
the federal charges laid against the Company and its indirect
subsidiaries SNC-Lavalin International Inc. and SNC-Lavalin
Construction Inc. on February 19,
2015, will not have a significant adverse impact on the
Company's business in 2016-2017. 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) on
February 19, 2015, the Company was
charged with one count of corruption under the Corruption of
Foreign Public Officials Act (Canada)(the "CFPOA") and one count of fraud
under the Criminal Code (Canada),
and is also subject to other 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. These charges and investigations,
and potential results thereof, 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 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 Capital investments 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; * 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 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 Judgments and Key Sources of
Estimation Uncertainty" in the Company's 2015 and as updated in the
second quarter 2016 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.
SOURCE SNC-Lavalin