- Q1 2022 revenue of $1.9 billion, a 3.8% increase compared to Q1 2021
- Net income from continuing operations attributable to SNC-Lavalin shareholders of $24.8 million, or $0.14 per diluted share, compared to a net income of $67.7 million, or $0.39 per diluted share in Q1 2021
- SNCL Services revenue of $1.7 billion, an increase of 6.8%, or 8.4% based on organic revenue growth(1)(6), compared to Q1 2021, representing a higher growth rate than the Company’s full year outlook
- SNCL Services Segment Adjusted EBIT of $126.7 million, representing a 7.6% margin
- Increased market opportunities through our Pivoting to Growth Strategy led to elevated bidding and business development expenses, impacting margins
- LSTK Projects Segment Adjusted EBIT of negative $30.5 million
- SNCL Services backlog continued to be strong at $11.2 billion as at March 31, 2022; LSTK Projects backlog reduced by $210.3 million from the prior quarter
- Net cash used for operating activities of $134.0 million
- Reaffirming the Company’s full year 2022 outlook, announced on March 3, 2022
SNC-Lavalin Group Inc., a fully integrated professional services and project management company with offices around the world, today announced its results for the first quarter ended March 31, 2022 and reaffirmed its full year 2022 outlook.
“Our SNCL Services business continued its momentum from prior quarters and reported another period of revenue growth. We also progressed on the winding down of our last LSTK projects, decreasing the LSTK Projects backlog by 18% in the first three months of the year,” said Ian L. Edwards, President and CEO of SNC-Lavalin Group Inc. “Results during the first quarter highlight the continued execution of our Pivoting to Growth Strategy, our path for long-term value creation. Robust growth from our Engineering Services segment, strong performance of our Nuclear and O&M segments and the sustained strong bidding activities further underpins our confidence in delivering on our full-year 2022 outlook.”
“Our net zero carbon focus and dedication to develop clean energy and infrastructure decarbonization solutions for our customers and our planet will continue to drive growth. We recently committed to the Science Based Targets Initiative, outlining our own path to Net Zero. We are excited about the vast potential of our best-in-class services portfolio and the opportunity to leverage our end-to-end services expertise to lead in solving the challenges driven by a world that is heavily reinvesting for sustainability, resilience, and impact in the built environment,” added Mr. Edwards.
First Quarter Results
Professional Services & Project Management are collectively referred to as “PS&PM” to distinguish them from “Capital” activities. PS&PM groups together five of the Company’s segments, namely Engineering Services, Nuclear, Linxon, Operation & Maintenance (“O&M"), and Lum-Sum Turnkey (“LSTK”) Projects, while Capital is its own reportable segment and separate from PS&PM.
Lines of Business Performance
The SNCL Services line of business (comprised of the Engineering Services, Nuclear, O&M and Linxon segments) delivered strong organic revenue growth this quarter, benefitting from its global capabilities, unique end-to-end services, decarbonization and sustainable solutions, long-term client relationships and a strong public sector focus.
- Q1 2022 revenue of $1,657.3 million, was up 6.8% compared to Q1 2021. SNCL Services had an organic revenue growth(1)(6) of 8.4% in Q1 2022 compared to Q1 2021, a higher growth rate than the Company’s full year outlook range.
- Primarily driven by an organic revenue growth(1)(6) of 10.0% in Engineering Services and 21.3% in Linxon.
- Q1 2022 Segment Adjusted EBIT was $126.7 million, representing a margin of 7.6%, slightly lower than the Company’s full year outlook range. Increased market opportunities through our Pivoting to Growth Strategy led to elevated bidding and business development expenses, impacting margins in Q1 2022.
- Engineering Services Segment Adjusted EBIT of $85.2 million represents a margin of 7.5%.
- Engineering Services segment adjusted EBITDA to segment net revenue ratio(1)(7) of 13.0%.
- Nuclear Segment Adjusted EBIT of $34.3 million represents a margin of 14.8%.
- O&M Segment Adjusted EBIT of $11.7 million represents a margin of 8.6%.
- Linxon Segment Adjusted EBIT of $(4.5) million represents a margin of (3.0)%.
- Total SNCL Services backlog amounted to $11.2 billion as at March 31, 2022, which included $1.5 billion of bookings in Q1 2022, representing a 0.94 booking-to-revenue ratio(1)(4).
- Engineering Services backlog increased 6.7%, compared to March 31, 2021, totaling $3.9 billion as at March 31, 2022. Bookings in Q1 2022 totaled $1.2 billion, representing a 1.08 booking-to-revenue ratio(1)(4).
- The Company continues to execute its LSTK projects exit strategy.
- The LSTK Projects segment backlog decreased by 18.0% during the quarter, as the Company continued to execute and progress on its last remaining LSTK projects. Backlog totaled $956.6 million as at March 31, 2022, compared to $1.2 billion as at December 31, 2021 and to $1.6 billion as at March 31, 2021.
- Q1 2022 Segment Adjusted EBIT was negative $30.5 million.
- Recognized $20.0 million in the quarter of previously disclosed $300 million* potential future additional financial risks to complete the projects.
- Balance of negative Segment Adjusted EBIT mainly includes segment overhead costs needed to support the projects.
The Q1 2022 Capital Segment Adjusted EBIT decrease was mainly due to the disposal of InPower BC G.P. in February 2022 and a lower contribution from certain other Capital investments. No dividend was received from Highway 407 ETR in Q1 2022 and Q1 2021.
Operating Cash Flow and Financial Position
- Net cash used for operating activities amounted to $134.0 million in Q1 2022, compared to a net cash generated from operating activities of $5.6 million in Q1 2021. The negative operating cash flows in Q1 2022 were mainly due to operating cash outflows related to the LSTK projects, partially offset by operating cash inflows from SNCL Services.
- Net cash generated from operating activities in SNCL Services of $58.7 million in Q1 2022.
- Cash and cash equivalents of $506.0 million as at March 31, 2022.
- Recourse debt of $1.2 billion and limited recourse debt of $0.4 billion as at March 31, 2022.
- Net limited recourse and recourse debt to Adjusted EBITDA ratio(1)(5) of 2.3.
The Board of Directors today declared a cash dividend of $0.02 per share, unchanged from the previous quarter. The dividend is payable on June 2, 2022, to shareholders of record on May 19, 2022. This dividend is an “eligible dividend” for Canadian federal and provincial income tax purposes.