SNC-Lavalin: An Overview › Investor Presentation › November 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 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. 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, second and third quarters of 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, second and third quarters of 2019. 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 . 2
SNC-Lavalin: shaping & delivering world-leading concepts & projects 3
A global leader in professional services & project management Founded in 1911 SNC- Lavalin is… A fully integrated professional services and Employees project management company with offices ~50,000 around the world. SNC-Lavalin connects people, technology and Revenue data to help shape and deliver world-leading ~$10B concepts and projects, while offering comprehensive innovative solutions across the asset lifecycle in four strategic sectors. Listed on TSX “SNC” Since 1986 Investment Grade Credit Rating 1 BBB- & BB+ 1 Per DBRS and S&P. 4
Operating in 4 regions across the world Breadth of geographic exposure Europe Americas ~13,000 Middle East & Africa Asia Pacific Europe Americas ~15,000 Middle Asia 2018 Revenues East Pacific & Africa ~5,000 ~15,000 20% $10.1B 7% 49% Canada 29% USA 17% 24% Latin America 3% 5
Providing a comprehensive end-to- end service offering … Procurement Decommissioning Consulting Intelligent networks Design Project & Construction Operations Sustaining Capital & Advisory & cybersecurity & Engineering Management & Maintenance …in four sectors of activity Supported by: Engineering, Design and Infrastructure Nuclear Resources Capital Project Management (EDPM) 6
Strategy 7
New strategic direction Positioning SNC-Lavalin for long-term sustainable success Exit LSTK* construction work Goals of New Strategic Direction: Grow › Simplified business Reorganize Engineering › Reduced risk › Services the Company Focus on strengths › Generate consistent earnings and cash flow Restructure Resources segment *LSTK: Lump-sum turnkey 8
Why exit the LSTK model? “The volatility and › The current LSTK contracting model within the industry is broken as it places undue risk on the company unreasonable risk › Many of SNC- Lavalin’s industry peers have also exited associated with lump-sum, LSTK › By exiting this contracting model and running off the LSTK turnkey projects have been project backlog as efficiently as possible, SNC-Lavalin will the root cause of the be able to significantly reduce risk while optimizing free cash flow generation from the higher performance parts of Company’s performance the business issues.” › The world is moving to a digitized, technology environment. Given our innovative solutions, SNC-Lavalin - Ian L. Edwards is well positioned to capture the benefits of this change. 9
Expected phase out of the main LSTK construction projects in SNCL Projects backlog Backlog Phasing 1,400 Backlog (in C$ millions) Infrastructure EPC 1,200 Projects 1,000 Resources 800 600 400 200 0 2019 2020 2021 2022 2023 2024 (last 3 months) Expected Annual Conversion to Revenue 10
Reorganized the Company into two clear businesses 2 SNCL Engineering Services SNCL Projects (growth & future) (controlled exit) › Infrastructure LSTK projects run off › Resources LSTK projects run off Business › Resources Engineering Services (exploring a EDPM Nuclear Infrastructure Capital combination of closures and divestitures and lines Services potential transition to services-based business) 11
Restructuring Resources segment › De-risking and Optimizing the Business 1. Running off existing Resources LSTK backlog 2. Exploring all options for Oil & Gas production and processing fabrication facilities 3. Right-sizing and assessing a transition to services 12
New strategy demonstrating results: SNCL Engineering Services Dynamic, high-performing business delivering strong margins Revenue Segment EBIT Segment EBIT Ratio 252.9 16.0% 1,574 1,582 1,419 13.0% 192.5 184.8 12.2% SNCL Engineering Services ($M) SNCL Engineering Services ($M) SNCL Engineering Services Q3 2018 Q2 2019 Q3 2019 Q3 2018 Q2 2019 Q3 2019 Q3 2018 Q2 2019 Q3 2019 13
SNCL Engineering Services: Future growth opportunities 14
EDPM growth opportunities › Transformational projects shaping the future › Hinkley Point C › Multi-Use Corridors Initiative › Freight Rail Infrastructure Project › Quebec City Tramway & Montreal Port Terminal Hinkley Point C Freight Rail Infrastructure Project Quebec City Tramway Canada United Kingdom Australia 15
Nuclear growth opportunities Building on our industry-leading position in CANDU- related services and products › CANDU › Non-CANDU › Decommissioning Darlington Oyster Creek Hunterston B 16
Infrastructure Services growth opportunities SNC-Lavalin has a global market-leading position in rail and transit › Ottawa LRT › Montreal Airport Montreal Airport Confederation Line 17
Valuation 18
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