2014

SNC-Lavalin announces its results for the second quarter and six-month period ended June 30, 2013

Highlights

  • Revenues for the second quarter of 2013 were in line with the second quarter of 2012.
  • Net loss attributable to SNC-Lavalin shareholders for the second quarter of 2013 of $37.7 million (-$0.25 per share on a diluted basis), compared to a net income of $31.7 million ($0.21 per share on a diluted basis) for the second quarter of 2012.
  • Revenues for the six-month period ended June 30, 2013, increased by 4.0% to $3.8 billion, compared to $3.7 billion for the same period in 2012.
  • Net income attributable to SNC-Lavalin shareholders for the six-month period ended June 30, 2013 of $15.9 million ($0.11 per share on a diluted basis), compared to $98.0 million ($0.65 per share on a diluted basis) for the same period of 2012.
  • Net loss excluding Infrastructure Concession Investments of $86.1 million for the six-month period ended June 30, 2013, compared to a net income of $42.4 million for the corresponding period in 2012. SNC-Lavalin's net income from Infrastructure Concession Investments was $102.0 million for the six-month period ended June 30, 2013, compared to $55.6 million for the same period of 2012.
  • Revenue backlog totalled $9.7 billion at the end of June 2013, compared to $10.1 billion at the end of December 2012.
  • The Board of Directors declared a cash dividend of $0.23 per share for the second quarter of 2013.

N.B.: All amounts indicated are in Canadian dollars.

MONTREAL, Aug. 2, 2013 /CNW Telbec/ -

SNC-Lavalin Group Inc.
Financial Highlights (unaudited)

  Second Quarter   Six months ended June 30
(in thousands of Canadian dollars, unless otherwise indicated) 2013   2012   2013   2012
                       
Revenues by activity                      
  Services $ 723,090   $ 787,011   $ 1,373,761   $ 1,456,065
  Packages   736,935     701,158     1,460,357     1,320,108
  Operations and Maintenance   298,361     293,229     681,236     676,590
  Infrastructure Concession Investments (ICI)   184,980     124,887     328,268     241,405
  $ 1,943,366   $ 1,906,285   $ 3,843,622   $ 3,694,168
                       
                       
Net income (loss) excluding ICI (1) $ (104,679)   $ 1,186   $ (86,094)   $ 42,401
SNC-Lavalin's net income from ICI   67,004     30,511     102,042     55,628
Net income (loss) attributable to SNC-Lavalin shareholders (1)   (37,675)     31,697     15,948     98,029
Net income attributable to non-controlling interests   193     200     270     417
Net income (loss) (1) $ (37,482)   $ 31,897   $ 16,218   $ 98,446
                       
                       
Diluted earnings (loss) per share ($) (1) $ (0.25)   $ 0.21   $ 0.11   $ 0.65
                       
                       
Shares outstanding (in thousands)                      
  Weighted average number of outstanding shares - Basic   151,446     151,039     151,339     151,075
  Weighted average number of outstanding shares - Diluted   151,446     151,198     151,657     151,414
                       
                       
              As at   As at
              June 30   December 31
Revenue backlog by activity             2013   2012
  Services             $ 1,848,600   $ 2,151,300
  Packages               5,553,400     5,747,700
  Operations and Maintenance               2,250,400     2,234,400
              $ 9,652,400   $ 10,133,400
                         
(1) Effective January 1, 2013, the Company has adopted the IAS 19 amendments with respect to employee benefits. 
Accordingly, comparative figures were adjusted to conform to these amendments. See Note 2B to the Company's unaudited
interim condensed consolidated financial statements for more details.

SNC-Lavalin Group Inc. (TSX: SNC) announces its results today for the second quarter and six-month period ended June 30, 2013.

Second Quarter Results
For the second quarter of 2013, SNC-Lavalin reported a net loss attributable to SNC-Lavalin shareholders of $37.7 million (-$0.25 per share on a diluted basis), compared to a net income of $31.7 million ($0.21 per share on a diluted basis) for the comparable quarter of 2012.

The Company reported a net loss excluding Infrastructure Concession Investments ("ICI") of $104.7 million, compared to a net income of $1.2 million for the second quarter of 2012, mainly reflecting operating losses in the Oil & Gas and Infrastructure & Environment segments, due to unforeseeable and evolving political contexts, partially offset by higher contributions from the Power segment. The operating loss in Oil & Gas results mainly from SNC-Lavalin recognizing a loss of $70.1 million relating to a recent confirmation of a claim received alleging late penalties under a fixed-price project in Algeria. To date the Company continues its discussions with the client and it intends to deploy all necessary actions to resolve these penalties, including taking further actions to recover the additional costs incurred by the Company. The operating loss in Infrastructure & Environment is due to SNC-Lavalin having recorded in the quarter a risk provision of $47.0 million, following a recent unexpected attempt to draw this amount under letters of credit, covering advance payment and performance, previously issued in favour of a client on a Libyan project. The Company is not currently aware of any claim relating to the advance payment or performance. The project has been halted since the civil unrest began in Libya. The Company is seeking to clarify the situation surrounding this attempt to draw on the letters of credit and will use all legal and other means available to prevent any draws.

Net income from ICI increased to $67.0 million, compared to $30.5 million for the quarter ended June 30, 2012, due to a higher net income from AltaLink and a higher dividend received from Highway 407, as well as a higher net income from Shariket Kahraba Hadjret En Nouss S.p.A. ("SKH"), as uncertainties on dividend collection were resolved.

Revenues for the second quarter of 2013 were substantially unchanged from revenues in the second quarter of 2012.

Year-to-Date Results
For the six-month period ended June 30, 2013, net income attributable to SNC-Lavalin shareholders was $15.9 million ($0.11 per share on a diluted basis), compared to $98.0 million ($0.65 per share on a diluted basis) for the same period of 2012.

The Company reported a net loss excluding ICI of $86.1 million, compared to a net income of $42.4 million for the first six months of 2012, mainly reflecting operating losses in the Infrastructure & Environment and Oil & Gas segments, as well as a lower contribution from the Mining & Metallurgy segment, partially offset by a higher contribution from the Power segment. The reason of the operating loss in Oil & Gas segment for the six months period ended June 30, 2013 was explained above. The reason of the operating loss in the Infrastructure & Environment segment for the first six months of 2013 was also mainly explained above, but also included the additional costs on a major infrastructure project recognized in the first quarter of 2013.

For the same reasons given above for the second quarter, net income from ICI increased to $102.0 million, compared to $55.6 million for the six-month period ended June 30, 2012.

Revenues for the six-month period ended June 30, 2013, increased by 4.0% to $3.8 billion, compared to $3.7 billion for the same period in 2012.

Cash and cash equivalents totalled $0.8 billion as at June 30, 2013, compared to $1.2 billion as at December 31, 2012. The decrease is mainly due to the timing of working capital requirements to complete some Canadian projects. Management remains focused on maintaining appropriate cash balances and continues to reinforce its liquidity for the Company's business and operations as they evolve. The Company expects that a number of current projects will continue to temporarily require significant working capital and that additional liquidity may be required to support the implementation of its strategic plan. Consequently, the Company is considering various possibilities to access additional sources of liquidity and intends to manage its working capital more efficiently.

Revenue backlog totalled $9.7 billion at the end of June 2013, compared to $10.1 billion at the end of December 2012.

"ICI's performance in the quarter was very good and the segment continues to be a catalyst for generating E&C and O&M project work and a stable source of cash flow. Unfortunately we have had to record some unanticipated and unusual provisions on two E&C North African projects in the quarter. Although we are on track in terms of operational execution throughout the Company, this unforeseen situation, related to an evolving political context, is obliging us to reduce our 2013 outlook," said Robert G. Card, President and Chief Executive Officer, SNC-Lavalin Group Inc. "In addition, as we said in May, we will continue to be much more disciplined in how we manage assets within our ICI portfolio to create value. As a first step, we are in active discussions around potential transactions with respect to certain assets and, while there's no guarantee that a transaction will occur, we are pleased with our progress thus far."

2013 Outlook Update
The Company is revising its previously announced 2013 outlook for which it expected an annual growth in net income of between 10% and 15% in 2013 as compared to 2012. As a result of losses on two fixed-price projects in North Africa recorded in the second quarter of 2013, one in the Oil & Gas segment and one in the Infrastructure & Environment segment, the Company's 2013 net income is currently expected to now be in the range of $220 million to $235 million. This outlook continues to be principally based on (i) the expectations that the Power segment, mainly based on its current backlog, and the ICI segment will be the main contributors to net income, while the Oil & Gas and Infrastructure & Environment segments will continue to be challenging throughout 2013, and the Mining & Metallurgy segment will continue to be affected by the softening of the commodity markets, (ii) the costs expectations relating to the Company's ongoing commitment to compliance matters and the improvement and strengthening of its processes across the organization and (iii) the assumptions and methodology described in the Company's 2012 Management's Discussion and Analysis under the heading "How We Budget and Forecast Our Results." This 2013 Outlook 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.

"Due to a variety of unexpected factors, such as the ones with have experienced in the second quarter in North Africa, 2013 is proving to be a very challenging year for the Company, but also a year of important transition and improvements which we believe will be beneficial for 2014 and thereafter," added Mr. Card.

Quarterly Dividends
The Board of Directors today declared a cash dividend of $0.23 per share, payable on August 30, 2013 to shareholders of record on August 16, 2013. 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 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 ventures, or SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint ventures.

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 2013 outlook referred to in this press release is forward-looking information and is based on the methodology described in the Company's 2012 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 2013 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 2012 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 2012 Management's Discussion and Analysis), as updated in the Company's Second Quarter 2013 Management's Discussion and Analysis. 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) if the Company is not able to successfully execute on its new strategic plan, its business and results of operations would be adversely affected; (b) 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; (c) the Company is subject to ongoing investigations which could adversely affect its business, results of operations or reputation and which could subject it to sanctions, fines or monetary penalties, some of which may be significant; (d) 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 civil enforcement actions; (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 net cash position, 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 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 2012 Management's Discussion and Analysis, as updated in the Company's Second Quarter 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



More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.