SNC-Lavalin: An Overview › Investor Presentation › May 2020
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”, “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 and future prospects; (ii) business and management strategies and the expansion and growth of the Company’s operations; and (iii) the expected impacts of the COVID-19 pandemic on the business and its operating and reportable segments. 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 SNCL Projects 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- Operating Cash Adjusted Net Cash Balance looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of the Company’s current objectives, strategic Flows Income from E&C Increased 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 $336 million, $78.9 million , 87% year-over-year, net SNCL Projects assumptions are set out throughout the Company’s annual 2019 Management Discussion and Analysis (MD&A) and as updated in the first quarter 2020 MD&A. 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 Segment EBIT of highest quarterly up from a loss of $284.1 recourse debt to EBITDA 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 -$28M, performance year-over- year operating cash flow since ratio now 2.1x these forward-looking statements. These risk factors are set out in the Company’s 2019 annual MD&A and as updated in the first quarter 2020 MD&A. better than the past Q4 2017 four quarters 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 ~47,000 around the world. SNC-Lavalin connects people, technology and Revenue data to help shape and deliver world-leading ~$9.5B 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 Europe ~13,000 Americas ~15,000 Middle Asia East Pacific & Africa ~5,000 ~14,000 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
With a breath of geographic and industry exposure Geographic areas Industry segments Industry segments Infrastructure EPC Infrastructure EPC EDPM Projects Projects Americas Middle East & 11% Canada 30% Africa 17% 17% 22% USA 19% Latin America 2% Resources 41% 2019 Nuclear 2019 8% 9% Dec. 31, 2019 EDPM Resources 23% Asia Pacific 5% Revenue Revenue Backlog 51% 1% Capital $9.5B $9.5B $15.3B 3% Europe 22% Capital 12% 10% 48% Infrastructure Nuclear 1 Infrastructure Services Services 2 1 36% of Nuclear revenues are from final decommissioning, waste management and environmental clean-up 2 The Infrastructure Services backlog includes the full term of the Company’s O&M signed long -term contracts, which can cover a period up to 40 years. 7
Strategy 8
New strategic direction Positioning SNC-Lavalin for long-term sustainable success (1) Exit LSTK construction work Goals of New Strategic Direction: Grow › Simplified business Reorganize › Engineering Reduced risk › the Company Services Focus on strengths › Generate consistent earnings and cash flow Restructure Resources segment (1) LSTK: Lump-sum turnkey 9
Why exit the LSTK model? › The current LSTK contracting model within the industry is broken as it places undue risk on the company › Many of SNC- Lavalin’s industry peers have also exited “The volatility and unreasonable risk LSTK associated with lump-sum, turnkey › By exiting this contracting model and running off the LSTK projects have been the root cause of the project backlog as efficiently as possible, SNC-Lavalin will Company’s past performance issues.” be able to significantly reduce risk while optimizing free cash flow generation from the higher performance parts of the business - Ian L. Edwards › The world is moving to a digitized, technology environment. Given our innovative solutions, SNC-Lavalin is well positioned to capture the benefits of this change. 10
Expected phase out of the main Lump-Sum Turnkey Construction projects in SNCL Projects backlog LSTK Backlog Phasing* 1,200 LSTK Backlog (in $ millions) Infrastructure EPC Projects 1,000 800 Resources 600 400 200 0 2020 2021 2022 2023 2024 (last 9 months) Expected Annual Conversion to Revenue * The Husky White Rose project is not included in the graph as the project completion was suspended by the client in March 2020 11
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) 12
Restructuring Resources segment › De-risking and Optimizing the Business 1. Running off existing Resources LSTK backlog 2. Exploring all options for Resources, particularly Oil & Gas 3. Right-sizing and assessing a transition to services 13
SNCL Engineering Services: Future growth opportunities 14
SNC-Lavalin Engineering Services growth opportunities: EDPM › Working on transformational projects shaping the future EDPM Growth Strategy 1 Grow our Core Growth in core regions Maximize position on Transformational projects 2 New Growth Areas Including N.East and N.West US Lead the transformation of the infrastructure sector by harnessing data and technology across our services 3 Harnessing Data and Technology Design Transformation Digital Asset Management Intelligent Mobility 15
SNCL Engineering Services growth opportunities: Nuclear Building on our industry-leading position in CANDU-related services and products 1 2 3 4 Global nuclear leader Offering services Technology as a Stable business with with ever stronger extending across the full differentiator by leveraging a strong margins and cash brands life-cycle of a nuclear asset, substantial portfolio of over 200 flow supported by long-term patents to develop new value- positioned to capitalize on from design and delivery through contracts with large utilities and added solutions for our customers significant investments its operating life, and final government entities unfolding over the next decommissioning decades 16
SNCL Engineering Services growth opportunities: Infrastructure Services SNC-Lavalin has a strong track record of managing complex projects and a global market-leading position in rail and transit Growth opportunities in Canada and U.S. include: Lower-risk Project Operations and Integrator on and Construction Maintenance service major projects Management mandates 17
Managing & pricing risk 18
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