Investor Presentation June 2019 Forward-looking statements - - PDF document

›Investor Presentation

›June 2019

Forward-looking statements

Reference in this presentation, 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 presentation 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”, “target”, “should”, “synergies”, “vision”, “will”, or the negative thereof or other variations thereon. Forward-looking statements also include any

• ther 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

• bjectives, 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 presentation 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 2018 Management Discussion and Analysis (MD&A) and as updated in the first quarter 2019. The 2019 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

• 2019. 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 risk factors are set out in the Company’s 2018 MD&A and as updated in the first quarter 2019. The 2019 outlook referred to in this presentation is forward-looking information and is based on the methodology described in the Company’s 2018 MD&A 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 2019 outlook is to provide the reader with an indication of management’s expectations, at the date of this presentation, regarding the Company’s future financial performance and readers are cautioned that this information may not be appropriate for other purposes.

Non-IFRS financial measures and additional IFRS measures

The Company reports its financial results in accordance with IFRS. However, the following non-IFRS measures and additional IFRS measures are used by the Company: Adjusted net income from E&C, Adjusted diluted EPS from E&C, Adjusted net income from Capital, Adjusted diluted EPS from Capital, Adjusted consolidated diluted EPS, EBITDA, Adjusted E&C EBITDA and Segment EBIT. Additional details for these non-IFRS measures can be found in SNC-Lavalin’s MD&A, which is available in the Investors section of the Company’s website at www.snclavalin.com. Non-IFRS financial measures do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with IFRS, these non-IFRS measures provide additional insight into the Company’s financial results and certain investors may use this information to evaluate the Company’s performance from period to period. However, these non-IFRS financial measures have limitations and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

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Why invest in SNC-Lavalin

› Continued growth for value-added global engineering services › The world will continue to evolve in ways that no one can foresee, but engineers will remain at the very heart of that change by designing and building projects to meet the great challenges of tomorrow, whether they be climatic, social, or resource-based › Leadership positions in highly attractive end markets, including Canadian PPP, Rail & Transit, Nuclear and O&G sustaining capital › Diversified business model with ability to provide comprehensive end-to-end project solutions – including consulting & advisory, intelligent networks & cybersecurity, design & engineering, procurement, project & construction management, operations & maintenance, sustaining capital and decommissioning as well as project financing and investment › Strong backlog with tier-1 clients › E&C business undervalued vs peers › Track record of dividend payments › High caliber international leadership supported by talented and dedicated team

Founded in

1911

Employees

~50,000

Revenue

~$10B

Listed on TSX

“SNC”

Since 1986 Investment Grade Credit Rating1

BBB- & BBB

A global fully integrated professional services & project management company leader

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1 Per S&P and DBRS.

SNC-Lavalin is a global fully integrated professional services and project management company, and a major player in the ownership of infrastructure From offices around the world, SNC-Lavalin’s employees think beyond engineering. Our teams provide comprehensive end-to-end project solutions to clients across four businesses

49% 24% 7% 20%

Operating in 4 regions across the world

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Breadth of geographic exposure

Americas

15,000

Europe

13,000

Asia Pacific

5,000

Middle East & Africa

17,000

2018 Revenues

$10.1B

Americas Middle East & Africa Asia Pacific Europe

Canada 29% USA 17% Latin America 3%

42% 21% 9% 25% 3% Nuclear1 36% 22% 9% 30% 3% Nuclear1

A diversified business model

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2018 Revenues

Resources Infrastructure EDPM Capital

$10.1B

1 ~35% of Nuclear revenues relate to decontamination, decommissioning and waste management projects.

75%

Reimbursable & Engineering Service Contracts

25%

EPC Fixed- price Contracts

Q1 2019 Revenues

Resources Infrastructure EDPM Capital

$2.4B

A strong backlog

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72%

Reimbursable & Engineering Service Contracts

28%

EPC Fixed- price Contracts

Backlog March 31, 2019

Backlog corresponds to the “Remaining performance obligations” (“RPO”), which is based on IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). *The Infrastructure backlog includes the full term of the Company’s O&M signed long-term contracts, which can cover a period up to 40 years. 17% 63% 8% 11% 1% Nuclear EDPM Infrastructure* Resources Capital

$15.8B

Redefining SNC-Lavalin’s Integrity and Moving Forward

Increased focus on Ethics & Compliance

New Management New Culture New Board New Business Mix

Administrative agreement signed with PWGSC Agreement with the Commissioner of Canada Elections and with the Ordre des ingénieurs du Quebec Fair and final settlement with Quebec’s Voluntary Reimbursement Program 2015 2016 2017 Agreement to settle class actions brought in 2012 2018 Resolution of Federal Charges Outstanding

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54.9 201.9 226.4 351.3 43.1

2014 2015 2016 2017 2018

2.1% 4.6% 4.5% 6.9% 3.9%

7,335 9,364 8,223 9,097 9,819

2014 2015 2016 2017 2018

(in M$)

E&C revenues and adjusted earnings

9 (in M$)

Revenues from E&C Adjusted E&C EBITDA margin and adjusted net income from E&C*

Adjusted net income from E&C Adjusted E&C EBITDA margin * Non-IFRS measures, additional details for these non-IFRS measures can be found in SNC-Lavalin’s MD&A

SNC-Lavalin: a discounted share price E&C EV/EBITDA multiples vs peers

SNC-Lavalin Peers Group Average1 Peers Group incl. Canadian peers Average2

Price # of shares

Market Cap3

$25.50 175.6M $4,478M

Less SNC-Lavalin’s Highway 407 stake of 6.76%4

($11.23) 175.6M ($1,972M)

Less Other concessions4

($2.62) 175.6M ($460M)

Add net recourse/limited recourse debt5

$381M

E&C EV $2,427M 2020 adjusted EBITDA from E&C consensus4 $926M E&C EV/EBITDA multiple 2.6 6.7 7.3

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1 Includes Aecom, Balfour Beatty, Fluor, Jacobs, McDermott, Wood and WorleyParsons 2 Incudes peers group + Stantec and WSP 3 As of market close June 12, 2019 4 Analysts consensus as at June 12, 2019 5 As at March 31, 2019 + assuming a proceeds on Highway 407 10.01% stake sale of $3B, less taxes

• n gain to be paid of $0.4B

SNC-Lavalin’s E&C EV/EBITDA multiple significantly lower than peers

Sector of Activity

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Comprehensive end-to-end service offering …

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Decommissioning

Decommissioning is one of the most challenging undertakings our clients are faced

• with. When their assets and facilities reach the

end of their productive lives they turn to us to carry out shutdowns that are both safe and environmentally-friendly. For more information, click here

Consulting & Advisory

Relationships are at the cornerstone of our consultancy and advisory services. They’re key to being able to fully understand our clients’ goals and aspirations, and to selecting the right mix of consultancy expertise to support them on that journey. For more information, click here

Intelligent networks & cybersecurity

By combining our expertise in digital, cyber, cybersecurity and engineering with the latest technology and innovative approaches to data, we’ve built a unique position in the market that enables us to quickly understand our clients’ priorities, and create solutions that overcome their challenges. For more information, click here

Design & Engineering

Whether we’re designing nuclear new-builds,

• ffshore wind farms, transport hubs or mixed-use

developments, we work with our customers to deliver projects from vision to reality. We provide innovative, data-driven solutions across a multitude of sectors – from concept and feasibility through to detailed design. For more information, click here

Procurement

Drawing on an international network of more than 1000 procurement professionals across 40 countries, our clients trust us with the management of over $7 billion worth of goods and services annually. We help them to thrive across multiple sectors - from infrastructure and nuclear to resources. For more information, click here

Project & Construction Management

From designing to delivering revolutionary transport infrastructure, our clients’ work spans some of the most complex projects in the world. We master that complexity by combining our creative thinking with the most innovative technologies, bringing our clients’ projects to life with maximum impact. For more information, click here

Operations & Maintenance

Entire communities are touched and defined by infrastructure, whether it’s moving commuters, housing businesses, generating economic growth

• r delivering essential services. It’s just one of

many reasons why we operate and maintain our client’s infrastructure like it’s our own, delivering exceptional, innovative solutions that maximize the value of assets and stand the test of time. For more information, click here

Sustaining Capital

As end-to-end solution providers and partners to

• ur clients, we know that the day a project is

completed is just the beginning. Our sustaining capital expertise helps our clients operate, maintain and create improvements throughout the entire lifespan of their facilities. For more information, click here

Decommissioning Consulting & Advisory Procurement Project & Construction Management Operations & Maintenance Design & Engineering Sustaining Capital Intelligent networks & cybersecurity

13 Note: % are for the first quarter 2019

…in four sectors of activity

Engineering, Design and Project Management (EDPM) incorporates all engineering, design and project management services around the world. It also harnesses our enhanced capabilities in intelligent mobility and digital asset

• management. Projects are mainly in

transportation, (including rail, mass transit and roads), infrastructure, aerospace, defence and security & technology. Some projects are largely funded by the public sector, be it federal Government, its agencies, including departments for transportation and utilities as well as, states and local authorities. The EDPM segment derives all its revenues from reimbursable and engineering service contracts. Infrastructure provides end-to-end services to a broad range of sectors, including mass transit, heavy rail, roads, bridges, airports, ports and harbours, facilities architecture and engineering (structural, mechanical, electrical), industrial (pharmaceutical, agrifood, life sciences, automation, industrial processes), geotechnical engineering, materials testing, and water infrastructure. In addition, Infrastructure includes O&M projects and the Technology Ventures business, which consolidates our expertise in how technology should shape the world around us, how it can bring efficiency to

• ur delivery, results for our clients, and

more sustainable solutions. Technology Ventures includes hydro, transmission and distribution, renewables, energy storage, and intelligent networks and cybersecurity, as well as the Linxon subsidiary. The Infrastructure segment derives its revenues from reimbursable and engineering service contracts (32%) and from EPC fixed-price contracts (68%). Nuclear supports clients across the entire Nuclear life cycle with the full spectrum of services from consultancy, EPCM services, field services, technology services, spare parts, reactor support & decommissioning and waste management. As stewards of the CANDU technology, it also provides new-build and full refurbishment services

• f CANDU reactors. The Nuclear segment

derives all its revenues from reimbursable and engineering service contracts. Resources combines the full lifecycle services in oil, gas and metals and mining. These areas remain regionally structured across the globe. This allows the Company to serve the cyclical markets while sharing our deep project execution expertise, which apply across all resource projects, and retaining our important

• specialisms. Resources includes projects

in the upstream, midstream, downstream and supporting infrastructure sectors for major oil and gas and resources companies, while the mining and metallurgy business is now focused on studies, EPCM scopes, and design and

• wner’s engineering. The Resources

segment derives its revenues from reimbursable and engineering service contracts (60%) and EPC fixed-price contracts (40%). Capital is the investment and asset management arm of SNC-Lavalin. Its main purpose is to invest equity or subordinated debt into projects to generate integrated, whole life-cycle revenues in engineering and construction, as well as operations and maintenance. All investments are structured with the intention to earn a return on capital adequate for the risk profile of each individual project. SNC- Lavalin makes capital investments in a variety of infrastructure assets such as bridges and highways, mass transit systems, power facilities, energy infrastructure and water treatment plants.

Supported by:

Name Description Held Since Concession Years Location Equity Participation

• 1. 407 EDGGP

32 km H407 East extension (Phase 1) 2012 33 Canada (Ontario) 50%

• 2. Carlyle Global Infras. Opportunity Fund LP

Holding investments in infrastructure projects 2018 n/a United States 8.1%

• 3. Eglinton Crosstown

19 km light rail line 2015 36 Canada (Ontario) 25%

• 4. Highway 407 (407 ETR)*

108 km electronic toll road 1999 99 Canada (Ontario) 16.77%

• 5. Highway Concessions One PL

Fund (Roads) 2012 n/a India 10%

• 6. InPower BC

John Hart 126 MW generating station 2014 19 Canada (B.C.) 100%

• 7. Myah Tipaza

Seawater desalination plant 2008 n/a Algeria 25.5%

• 8. Rideau

Light rail transit system 2013 30 Canada (Ontario) 40%

• 9. SKH

1,227 MW gas-fired power plant 2006 n/a Algeria 26%

• 10. SSL

New Champlain bridge corridor 2015 34 Canada (Quebec) 50%

• 11. TC Dôme

5.3 km electric cog railway 2008 35 France 51%

• 12. TransitNEXT

12 km light rail line 2019 30 Canada (Ontario) 100% Ownership through SNC-Lavalin Infrastructure Partnership LP

• 13. Chinook

25 km six-lane road 2010 33 Canada (Alberta) 10%

• 14. InTransit BC

Rapid transit line 2005 35 Canada (B.C.) 6.7%

• 15. MIHG

McGill University Health Centre 2010 34 Canada (Quebec) 10%

• 16. Okanagan Lake

Floating bridge 2005 30 Canada (B.C.) 20%

• 17. Rainbow

Restigouche Hospital Centre 2011 33 Canada (N.B.) 20%

Capital investments portfolio

NBV1 = $364M FMV2 ~$2.4B

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*On April 5, 2019, SNC-Lavalin reached an agreement to sell a portion (10.01%) of its stake for $3.25B (remaining stake after the sale will be 6.76%) 1 Net Book Value as at March 31, 2019 2 Average Fair Market Value as per analysts calculations, as at June 12, 2019 (after sale of a portion of H407 stake*)

2019 Guidance

Adjusted EBITDA from E&C1,2 $900M - $950M Adjusted diluted EPS from E&C1,2 $2.00 - $2.20 Adjusted consolidated diluted EPS 1,2 $3.00 - $3.20 Effective tax rate on adjusted E&C earnings ~20% Weighted average number of shares outstanding ~175.8M

1 Non-IFRS measure 2 Includes the impact of IFRS 16 - Leases

Outlook

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Given the challenges faced in Q1 2019, the Company expects a very modest recovery in its adjusted diluted EPS from E&C for Q2 2019 and a more significant ramp up in the second half of the year, as the Resources segment improves its performance and the Company starts to see the impact of its cost reduction program. The net effect of the disposal of 10.01% of the Company’s Highway 407 ETR interest has not yet been reflected in the 2019 guidance. The Company intends to adjust the guidance accordingly once a transaction is concluded.

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Appendix

2016 2015 1.053 1.01 0.97 2014 1.106 2018 2017 Payout ratio* 39% 35% 41% 42% 73%

(in $)

Dividends history

Declared dividend per share

* % of consolidated adjusted net income.

0.961

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$350M Debenture › Maturity: July 2019 › Interest rate: 6.19% $300M Series 1 Debenture › Maturity: November 2020 › Interest rate: 2.689% $175M Series 3 Debenture › Maturity: March 2021 › Interest rate: floating rate $200M Series 4 Debenture › Maturity: March 2023 › Interest rate: 3.235% $150M Series 5 Debenture › Maturity: June 2019 › Interest rate: floating rate Borrower › SNC-Lavalin Highway Holdings, non-recourse to SNC-Lavalin Group Amount › $1.0B Prepayment › Non-call period of 4 years on $400M* Revolving & Term Facility › $2,600M revolving Facility maturing May 2022 › $3,000M uncommitted bilateral facilities › $500M non-revolving 5-year term loan › Current maximum leverage ratio of 4.0

Credit facilities (recourse debt) Debentures (recourse debt) CDPQ loan (limited recourse debt)

Credit facilities and long-term debt

$2,614M as at March 31, 2019 $981M as at March 31, 2019

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* As per amendment signed on April 4th, 2019 As at March 31, 2019, the net recourse debt to EBITDA ratio in accordance with the terms of the Company’s Credit Agreement as amended, was 3.9x.

Long-term target

Gross recourse debt to adjusted EBITDA from E&C ratio in the range of 1.0x to 1.5x

407 ETR

Consistent growth and low cost of financing

608 250 208 350 400 300 208 250 340 625 350 400 500 150 500 500 500 500 400 200 300 480 165

2021 2022 2024 2026 2027 2029 2030 2031 2033 2035 2036 2039 2040 2041 2042 2044 2045 2046 2047 2048 2049 2052 2053

Bond Maturity Profile (in M$)

Senior Bonds ($5.8B) Subordinated Bonds ($0.8B) Junior Bonds ($0.2B)

3.60% 135 190 300 460 600 680 730 750 790 845 920 23 32 50 77 101 114 122 126 133 142 154

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dividends (in M$)

Total dividends paid by 407 ETR Dividends received by SNC-Lavalin

4.30% / 5.33% 3.35% 5.33% 6.47% 5.33% 5.96% 5.75%

7.13%

4.45% 4.19%

3.30%

3.83% 3.98%

4.68%

3.72% 5.29% / 6.75% 2.43% 2,253 2,215 2,336 2,326 2,340 2,356 2,437 2,517 2,641 2,709 2,748

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Gross Vehicle Kilometres Travelled (in millions – KM)

3.43% 2.47% 3.65% 3.14% 3.67% 19

407 ETR information

Year ended December 31 (in M$) 2018 2017 Change

Revenues 1,390.3 1,267.7 9.7% Operating expenses 179.7 163.9 9.6% EBITDA 1,210.6 1,103.8 9.7% EBITDA as a percentage of revenues 87.1% 87.1% Net income 539.0 470.1 14.7%

736 840 985 1,104 1,211 888 1,002 1,135 1,268 1,390 2014 2015 2016 2017 2018

Total EBITDA/revenues (in M$)

EBITDA Revenues

82.9% 83.8% 86.8% 87.1% 87.1%

809 916 1,056 1,178 1,295 2014 2015 2016 2017 2018

Toll revenues (in M$)

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Firm Analyst Rec. Tel

AltaCorp Capital Chris Murray Buy 647-776-8246 BMO Capital Markets Devin Dodge Hold 416-359-6774 Canaccord|Genuity Yuri Lynk Buy 514-844-3708 CIBC World Markets Jacob Bout restricted 416-956-6766 Desjardins Securities Benoit Poirier Hold 514-281-8653 Laurentian Bank Securities Mona Nazir Hold 647-252-5609 National Bank Financial Maxim Sytchev Buy 416-869-6517 Raymond James Frederic Bastien Hold 604-659-8232 RBC Capital Markets Derek Spronck Buy 416-842-7833 Scotia Capital Mark Neville Buy 514-350-7756 TD Newcrest Michael Tupholme Hold 416-307-9389 Price as of June 12, 2019 $25.50 Shares outstanding – Diluted 175.6M Market capitalization $4.5B 52 - week high / low $61.54 / $23.44 Dividend per share $0.10 / quarter Dividend yield ~ 1.6%

Tel.: 514-393-8000 Ext. 57553 E-mail: denis.jasmin@snclavalin.com www.snclavalin.com

SNC-Lavalin

Denis Jasmin Vice-President, Investor Relations

Market Details

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