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SNC-Lavalin announces fourth quarter and year-end results for 2012

March 8, 2013

    Highlights

        --  For the fourth quarter of 2012, net income attributable to
            SNC-Lavalin shareholders was $94.6 million ($0.63 per share on
            a diluted basis), compared to $76.0 million ($0.50 per share on
            a diluted basis) for the comparable quarter of 2011.
        --  For the year ended December 31, 2012, net income attributable
            to SNC-Lavalin shareholders was $309.1 million ($2.04 per share
            on a diluted basis), compared to $378.8 million ($2.49 per
            share on a diluted basis) for the same period of 2011.
        --  Net income excluding Infrastructure Concession Investments was
            $152.2 million for the year ended December 31, 2012, compared
            to $247.6 million for the corresponding period of 2011.
            SNC-Lavalin's net income from Infrastructure Concession
            Investments was $156.9 million for the year ended December 31,
            2012, compared to $131.2 million for the same period of 2011.
        --  Revenues for the year ended December 31, 2012, increased by
            12.2% to $8.1 billion, compared to $7.2 billion for the year
            ended December 31, 2011.
        --  Revenue backlog remained strong at $10.1 billion at the end of
            December 2012, which is the same level as at the end of
            December 2011.
        --  Cash and cash equivalents totalled $1.2 billion as at December
            31, 2012.
        --  The Board of Directors increased the cash dividend by 4.5% to
            $0.23 per share for the fourth quarter of 2012.
        --  The Board of Directors adopted an advance notice by-law.

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

MONTREAL, March 8, 2013 /CNW Telbec/ -


    SNC-Lavalin
    Group Inc.                                                              

    Financial
    Highlights
    (unaudited)                                                             

                             Fourth Quarter         Year ended December 31

    (in thousands of
    Canadian
    dollars, unless
    otherwise
    indicated)            2012          2011           2012           2011

    Revenues by
    activity                                                                

      Services       $   921,174   $   795,245   $  3,174,934   $  2,437,778

      Packages           954,743       784,544      3,020,400      2,871,530

      Operations and
      Maintenance        349,423       382,458      1,330,501      1,399,197

      Infrastructure
      Concession
      Investments
      (ICI)              196,203       155,851        565,125        501,366

                                                                $
                     $ 2,421,543   $ 2,118,098   $  8,090,960      7,209,871

    Net income                                   $              $
    excluding ICI    $    24,252   $    36,495        152,192        247,585

    SNC-Lavalin's
    net income from
    ICI                   70,387        39,494        156,923        131,215

    Net income
    attributable to
    SNC-Lavalin
    shareholders          94,639        75,989        309,115        378,800

    Net income
    attributable to
    non-controlling
    interests                128           137            415          8,542

    Net income       $    94,767   $    76,126   $    309,530   $    387,342

    Diluted earnings                             $              $
    per share ($)    $      0.63   $      0.50           2.04           2.49

    Shares
    outstanding (in
    thousands)                                                              

      Weighted
      average number
      of outstanding
      shares - Basic     151,048       150,924        151,058        150,897

      Weighted
      average number
      of outstanding
      shares -
      Diluted            151,238       151,645        151,304        151,940

                                                      As at         As at 

                                                 December 31    December 31 

    Revenue backlog                                    2012
    by activity                                                       2011

      Services                                   $  2,151,300   $  2,226,100

      Packages                                      5,747,700      5,482,800

      Operations and
      Maintenance                                   2,234,400      2,379,100

                                                 $ 10,133,400   $ 10,088,000

 

SNC-Lavalin Group Inc. (TSX: SNC) announced its results today for the
fourth quarter and the year ended December 31, 2012.

Fourth Quarter Results
For the fourth quarter of 2012, net income attributable to SNC-Lavalin
shareholders was $94.6 million ($0.63 per share on a diluted basis),
compared to $76.0 million ($0.50 per share on a diluted basis) for the
comparable quarter of 2011.

Net income excluding Infrastructure Concession Investments (“ICI”) for
the fourth quarter of 2012 was $24.2 million, compared to $36.5 million
for the same period last year, mainly reflecting a higher level of
selling, general and administrative expenses, partially offset by a
higher gross margin amount due to a higher level of activity.  The 2012
fourth quarter gross margin included unfavourable cost reforecasts on
two major Packages projects outside Canada, one in the Power segment
and one in the Hydrocarbons & Chemicals segment. The 2011 gross margin
included unfavourable cost reforecasts on certain projects in the
Infrastructure & Environment and the Hydrocarbons & Chemicals segments,
a $22.4 million loss from a revised position of the Company’s net
financial position related to its Libyan infrastructure projects, and
period expenses of $35 million in Hydrocarbons & Chemicals.

Net income from ICI increased to $70.4 million, compared to
$39.5 million for the fourth quarter of 2011, mainly due to higher
dividends received from Highway 407.

For the fourth quarter of 2012, revenues increased by 14.3% to $2.4
billion, mainly due to increases of 15.8% and 21.7% in the Services and
Packages categories, respectively.

Year-End Results
For the year ended December 31, 2012, net income attributable to
SNC-Lavalin shareholders was $309.1 million ($2.04 per share on a
diluted basis), compared to $378.8 million ($2.49 per share on a
diluted basis) for the comparable period of 2011.

The net income excluding ICI was $152.2 million, compared to $247.6
million for the year ended December 31, 2011, mainly reflecting higher
selling, general and administrative expenses partially offset by a
higher gross margin amount. The increase in gross margin reflected a
higher level of activity, partially offset by lower gross margin to
revenue ratio, notably in the Packages category which was impacted
particularly by unfavourable cost reforecasts on a major Power project.
On an industry segment basis, with the exception of the Mining &
Metallurgy segment, all other segments had lower operating income in
2012 compared to 2011, and the Hydrocarbons & Chemicals segment had an
operating loss in 2012.

The net income from ICI increased to $156.9 million, compared to
$131.2 million for the year ended December 31, 2011, mainly due to
higher dividends received from Highway 407 and higher net income from
AltaLink, partially offset by lower net income from Shariket Kahraba
Hadjret En Nouss S.p.A.

Cash and cash equivalents totalled $1.2 billion as at December 31, 2012.

Revenues for the year ended December 31, 2012, increased by 12.2% to
$8.1 billion, compared to $7.2 billion for the same period of 2011,
mainly due to an increase in revenues of 30.2% in the Services
category.

Revenue backlog remained strong at $10.1 billion at the end of December
2012, which is the same level as at the end of December 2011.

“While 2012 was a challenging year for SNC-Lavalin and its employees,
our revenue increased and our backlog remained solid. The last months
have been dedicated to putting the house in order and reinforcing our
commitment to excellence, quality, safety and ethics,” said Robert G.
Card, President and Chief Executive Officer, SNC-Lavalin Group Inc. “As
previously announced, we continue to actively review and develop the
strategic business plan of the Company, and we expect to announce the
main elements of the plan at the time of our first quarter financial
results and Annual General Meeting. We are committed to focusing on
project delivery, core competencies and organizational improvements in
order to enhance our performance and to establish a basis for growth
and success in the future. Our desire is to create long term value for
our shareholders.”

Controls and Procedures
An evaluation of the Company’s internal control over financial reporting
has been carried out as at December 31, 2012. Based on this evaluation,
including an assessment of the remedial measures that have been
implemented by the Company during 2012, the Chief Executive Officer and
the Chief Financial Officer have concluded that the previously
identified material weaknesses relating to the design and operating
effectiveness of the Company’s internal control over financial
reporting no longer existed as at December 31, 2012.

2013 Outlook
The Company currently expects an annual growth in net income between 10%
and 15% in 2013 compared to 2012. This outlook is 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 Hydrocarbons & Chemicals segment will continue to
be challenging throughout 2013, and Mining & Metallurgy could 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”. These are also
subject to the risks and uncertainties described in the Company’s
public disclosure documents.

Quarterly Dividends
The Board of Directors has increased the quarterly cash dividend by 4.5%
to $0.23 per share, payable on April 5, 2013, to shareholders of record
on March 22, 2013. This dividend is an “eligible dividend” for income
tax purposes.

Adoption of Advance Notice Bylaw
The Company also announces that its Board of Directors has approved an
amendment to its by-laws to add an advance notice requirement (the
“By-Law Amendment”), which requires advance notice to be given to the
Company in circumstances where nominations of persons for election as a
director of the Company are made by shareholders other than pursuant
to: (i) a requisition of a meeting made pursuant to the provisions of
the Canada Business Corporations Act (the “CBCA”); or (ii) a
shareholder proposal made pursuant to the provisions of the CBCA. Among
other things, the By-law Amendment fixes a deadline by which
shareholders must submit a notice of director nominations to the
Company prior to any annual or special meeting of shareholders where
directors are to be elected and sets forth the information that a
shareholder must include in the notice for it to be valid.

In the case of an annual meeting of shareholders, notice to the Company
must be given not less than 30 nor more than 65 days prior to the date
of the annual meeting, however, in the event the meeting is to be held
on a date that is less than 50 days after the date on which the first
public announcement of the date of the annual meeting was made, notice
may be made not later than the close of business on the 10th day
following such public announcement.

The By-Law Amendment is effective immediately and will be submitted to
shareholders for confirmation and ratification at the Company’s
upcoming annual meeting of shareholders to be held in early May 2013.

Update on Board Renewal Process
As announced in December 2012, the Company remains actively engaged in a
continuous board renewal process and expects to make certain
announcements with respect to this process at the time of filing of the
Annual Management Proxy Circular in late March.

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 working 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 “aim”,
“anticipates”, “assumes”, “believes”, “estimates”, “expects”, “goal”,
“intend”, “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).  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) 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; (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 civil enforcement actions; (d) a negative impact on the
Company’s public image could influence its ability to obtain future
projects; (e) 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; (f)
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; (g) 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; (h) SNC-Lavalin is a provider of services to
government agencies and is exposed to risks associated with government
contracting; (i) 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; (j) there are risks associated with the Company’s
ownership interests in ICI that could adversely affect it; (k) the
Company is dependent on third parties to complete many of its
contracts; (l) 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; (m) the competitive nature of the markets in which
the Company does business could adversely affect it; (n) the Company’s
project execution activities may result in professional liability or
liability for faulty services; (o) the Company could be subject to
monetary damages and penalties in connection with professional and
engineering reports and opinions that it provides; (p) the Company may
not have in place sufficient insurance coverage to satisfy its needs;
(q) 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; (r)
the Company’s failure to attract and retain qualified personnel could
have an adverse effect on its activities; (s) Work stoppages, union
negotiations and other labour matters could adversely affect the
Company; (t) 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; (u) any acquisition or other
investment may present risks or uncertainties; (v) 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; (w) the Company may have significant working
capital requirements, which if unfunded could negatively impact its
business, financial condition and cash flows; * an inability of
SNC-Lavalin’s clients to fulfill their obligations on a timely basis
could adversely affect the Company; (y) 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; (z) 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; (aa)
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; (bb)
inherent limitations to the Company’s control framework could result in
a material misstatement of financial information, and; (cc)
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.

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


Source: PR Newswire