SNC-Lavalin Posts Strong Second Quarter Results
MONTREAL, QUEBEC-- AUGUST 4, 2000 - 11:29 EDT
/T/
Second quarter report
and press release
June 2000
Second Quarter Highlights
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* Revenues were $434.6 million, up 44 per cent over last year.
Excluding revenues from the Highway 407 concession and the impact
of acquiring the balance of ProFac Facilities Management Services
Inc., revenues rose by 40 per cent.
* Net income, excluding Highway 407, increased 7 per cent to $15.5
million or $0.33 per share.
* Backlog stood at $3.7 billion, up from $3.1 billion at the end of
the first quarter.
* In addition to the acquisition of ProFac Facilities Management
Services Inc., SNC-Lavalin acquired the energy control systems
division of CAE Inc.
* The refinancing program for the original debt of the Highway 407
was successfully completed.
* Highway 407 attracted 38 million trips in the first six months of
2000, approximately 5 per cent more than the original base case
scenario, and 15 per cent higher than the same period last year.
* As expected, the Highway 407 accounting loss per share of $0.16 was
lower than the $0.20 reported in the first quarter. Including the
impact of Highway 407, earnings per share were $0.17 in the second
quarter.
/T/
SNC-LAVALIN POSTS STRONG SECOND QUARTER RESULTS
SNC-Lavalin Group today reported revenues of $434.6 million in the
second quarter ended June 30, 2000, an increase of 44 per cent
over the corresponding period in 1999. Excluding revenues from
the Highway 407 concession and the impact of acquiring the balance
of ProFac Facilities Management Services Inc., revenues rose by 40
per cent. Net income, excluding the company's participation in
the Highway 407 concession, increased 7 per cent to $15.5 million
or $0.33 per share, from $14.6 million or $0.31 per share in the
second quarter of last year. Earnings per share, including the
impact of the Highway 407 concession, were $0.17 for the second
quarter.
Backlog rose to $3.7 billion, compared with $3.1 billion reported
at the end of the first quarter 2000. This represents an increase
of 19 per cent, which is largely attributable to the acquisition
of the remaining 50 per cent of ProFac Facilities Management
Services Inc. This acquisition is in line with the company's
strategy to better position itself to capture a significant share
of this growing business sector. Also during the quarter, the
company acquired the energy control systems division of CAE Inc.
to complement SNC-Lavalin's expertise in the power industry.
At the end of the second quarter, the company's cash position and
short-term investments exceeded $100 million, with no long-term
recourse debt. "Our solid financial position provides us with the
capacity to fund future growth strategies," said Jacques Lamarre,
SNC-Lavalin President and Chief Executive Officer. "Also, we are
pursuing a number of exciting project opportunities in and outside
Canada, and we continue to look positively to our future
performance."
Revenues from Highway 407 for the quarter before consolidation
eliminations were $12.5 million. The company's proportionate
share of Highway 407 accounting losses was $7.8 million, or $0.16
per share, for the second quarter of 2000. In line with
expectations, the Highway 407 accounting loss per share was lower
than the $0.20 reported in the first quarter. In the first six
months of 2000, Highway 407 attracted 38 million trips, which was
approximately 5 per cent higher than the original base case
scenario, and represented an increase of 15 per cent over the same
period last year.
The successful refinancing of the Highway 407 original debt of
more than $3 billion was achieved within one year of the first
bond issuance, well ahead of the originally anticipated schedule.
Within the refinancing program of the Highway 407 was the
refinancing of the sponsors' subordinated debt, which replaced
SNC-Lavalin's $175 million commitment in subordinated loans,
leaving the company's $175 million in equity investment in the
Highway 407 concession. "The successful completion of the
refinancing of Highway 407 was a critical milestone in our
participation and a clear vote of confidence from the debt capital
markets," Mr. Lamarre said.
The Board of Directors declared today at its meeting a dividend of
$0.06 per share on the outstanding common shares payable on
September 1, 2000 to shareholders of record on August 18, 2000.
SNC-Lavalin Group is one of the leading engineering and
construction firms in the world, and a key player in the ownership
and management of infrastructure. The group and its companies
have offices across Canada and in 30 other countries, and are
currently working in some 100 countries. The company is listed on
the Toronto Stock Exchange (symbol: SNC).
/T/
Highlights
Unaudited
Second Quarter Six months ended
June 30
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(in thousands, except
per-share amounts) 2000 1999 2000 1999
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Summary of results
Revenues
Services $152,640 $133,296 $286,912 $266,853
Packages 130,542 95,096 224,754 210,327
Diversified 151,372 72,597 256,384 138,427
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$434,554 $300,989 $768,050 $615,607
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Earnings before interest,
taxes, depreciation
and amortization
(EBITDA)
Excluding Highway 407 $32,467 $30,537 $57,443 $54,590
From Highway 407 7,589 4,020 13,370 4,020
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$40,056 $34,557 $70,813 $58,610
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Net income (loss)
Excluding Highway 407 $15,530 $14,555 $27,027 $25,063
From Highway 407 (7,787) (4,782) (16,795) (4,782)
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$7,743 $9,773 $10,232 $20,281
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Basic earnings per share
Excluding Highway 407 $0.33 $0.31 $0.58 $0.55
From Highway 407 (0.16) (0.10) (0.36) (0.10)
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$0.17 $0.21 $0.22 $0.45
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Basic cash flow per share
Excluding Highway 407 $0.54 $0.50 $0.92 $0.92
From Highway 407 (0.10) (0.08) (0.10) (0.08)
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$0.44 $0.42 $0.82 $0.84
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Return on weighted average shareholders' equity
Excluding Highway 407 14.2 % 14.6 %
From Highway 407 (7.0)% (1.5)%
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7.2 % 13.1 %
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Weighted average number of outstanding shares 46,577 45,502
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Actual number of outstanding shares at end
of period 46,438 48,190
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Backlog at June 30
Canada *Services $151,500 $161,200
*Packages 200,400 160,200
*Diversified 2,358,600 1,267,800
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2,710,500 1,589,200
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Outside Canada *Services 181,700 184,700
*Packages 569,700 721,000
*Diversified 230,800 203,700
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982,200 1,109,400
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$3,692,700 $2,698,600
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Note
The Company's 26.92 % proportionate share of 407 International Inc.
results, after consolidation eliminations, is referred to as "Highway
407".
Consolidated statements of income
Unaudited
Second quarter Six months ended
June 30
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(in thousands of dollars,
except per-share
amounts) 2000 1999 2000 1999
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Revenues $434,554 $300,989 $768,050 $615,607
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Gross margin $82,146 $74,771 $152,804 $150,859
Administrative,
marketing and other
expenses 55,101 49,657 105,788 109,905
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Income before interest
and taxes 27,045 25,114 47,016 40,954
Interest and
capital tax 11,581 7,297 22,869 6,971
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Income before
income taxes 15,464 17,817 24,147 33,983
Income taxes 7,721 8,044 13,915 13,702
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Net income $7,743 $9,773 $10,232 $20,281
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Basic earnings per
share $0.17 $0.21 $0.22 $0.45
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Note - Additional information
Net income (loss)
Excluding Highway 407 $15,530 $14,555 $27,027 $25,063
From Highway 407 (7,787) (4,782) (16,795) (4,782)
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$7,743 $9,773 $10,232 $20,281
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Basic earnings per share
Excluding Highway 407 $0.33 $0.31 $0.58 $0.55
From Highway 407 (0.16) (0.10) (0.36) (0.10)
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$0.17 $0.21 $0.22 $0.45
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Consolidated balance sheets
June 30
Unaudited
(in thousands of dollars) 2000 1999
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Assets
Current
Cash and cash equivalents $125,151 $125,936
Short-term investments 20,368 11,509
Accounts receivable 400,969 338,733
Contracts in progress and inventories 150,896 197,957
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697,384 674,135
Capital assets (note) 1,053,538 995,786
Other assets 250,343 109,293
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$2,001,265 $1,779,214
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Liabilities and shareholders' equity
Current
Accounts payable and accrued charges $448,497 $355,554
Downpayments on contracts 125,654 94,939
Deferred revenues 103,396 131,917
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677,547 582,410
Long-term debt (note) 921,253 810,694
Other liabilities 45,570 17,936
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1,644,370 1,411,040
Shareholders' equity 356,895 368,174
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$2,001,265 $1,779,214
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Notes
1. The Company's consolidated balance sheet as at June 30, 2000,
includes the Company's proportionate share of Highway 407's capital
assets and long-term debt (non-recourse to the general credit of the
Company) of $907.9 million (1999: $860.5 million) and $884.2 million
(1999: $696.8 million), respectively.
2. Certain 1999 figures have been reclassified to be comparable to the
2000 presentation.
Consolidated statements of cash flows
Six months ended June 30
Unaudited
(in thousands of dollars, except per-share amounts)
2000 1999
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Operating activities
Net Income $10,232 $20,281
Items not involving a movement in cash
Depreciation and amortization 23,797 17,656
Future income taxes (5,828) (97)
Other 7,856 245
Deferred gains on interest rate hedging 2,294 -
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38,351 38,085
Net change in non-cash working
capital items 16,300 (11,793)
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54,651 26,292
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Investing activities
Acquisition of capital assets (56,006) (32,432)
Acquisition of Highway 407 - (838,340)
Acquisition of businesses (38,458) -
Acquisition of investment - (25,060)
Subordinated loan - Highway 407 25,790 (7,925)
Other (3,294) 7,904
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(71,968) (895,853)
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Financing activities
Repayment of long-term debt (218,633) -
Increase in long-term debt 302,787 772,615
Reserve funds (20,179) -
Net proceeds from issuance of shares 1,675 51,412
Redemption of shares (7,339) (15,805)
Dividends (5,586) (5,537)
Other (7,933) (5,935)
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44,792 796,750
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Net increase (decrease) in cash and cash
equivalents during the period 27,475 (72,811)
Cash and cash equivalents at
beginning of period 97,676 198,747
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Cash and cash equivalents at end of period $125,151 $125,936
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Cash flow per share(1) $0.82 $0.84
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Note - Additional information
Basic cash flow per share
Excluding Highway 407 $0.92 $0.92
From Highway 407 (0.10) (0.08)
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$0.82 $0.84
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Cash paid for interest $23,378 $11,434
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Cash paid for income taxes $20,075 $10,557
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(1) Basic cash flow per share has been determined by dividing the cash
provided from operating activities before net change in non-cash
working capital items by the weighted daily average number of
outstanding shares.
Segment disclosures
Unaudited
Second quarter (note)
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(in thousands of dollars) 2000 1999
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Operating Operating
Revenues Income (loss) Revenues Income (loss)
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Excluding Highway 407
Chemicals and
petroleum $60,033 $3,907 $66,949 $8,778
Infrastructure 96,712 8,545 66,176 6,667
Mining and metallurgy 78,443 9,868 43,166 2,814
Power 44,640 1,618 33,344 1,529
Facilities management 65,280 96 14,821 353
Defence 57,971 2,849 43,588 2,513
All Other 26,923 (2,312) 27,018 400
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$430,002 24,571 $295,062 23,054
Reversal of total imputed
interest cost (revenue)
included in segment
operating income (54) 1,439
Goodwill amortization (2,736) (2,182)
Interest revenue and capital taxes 1,749 82
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Income before income taxes 23,530 22,393
Income taxes (8,000) (7,838)
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Net income excluding Highway 407 15,530 14,555
Highway 407, net loss (7,787) (4,782)
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Net income $7,743 $9,773
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Details of the Company's proportionate share of Highway 407 results for
the second quarter and the six-month periods ended June 30, are as
follows:
Revenues (diversified),
before consolidation
elimination $12,525 $6,353
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Gross margin $9,716 $4,453
Depreciation and amortization (2,325) (1,217)
Administrative, marketing
and other expenses (757) (265)
Interest expense and capital tax (12,198) (7,174)
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Loss before income taxes (5,564) (4,203)
Income taxes (572) (337)
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Net loss, before consolidation
eliminations (6,136) (4,540)
Consolidation eliminations (1,651) (242)
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Net loss, net of consolidation
eliminations $(7,787) $(4,782)
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Note
The 1999 results include two months of Highway 407 results, as it was
acquired on May 5, 1999.
Six months ended June 30 (note)
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(in thousands of dollars) 2000 1999
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Operating Operating
Revenues Income (loss) Revenues Income (loss)
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Excluding Highway 407
Chemicals and
petroleum $112,952 $7,652 $140,437 $15,211
Infrastructure 167,010 15,221 136,211 18,825
Mining and metallurgy 135,313 14,383 97,908 (3,297)
Power 76,923 2,543 67,715 2,383
Facilities management 108,207 175 33,576 1,472
Defence 101,423 6,300 82,015 5,636
All Other 54,462 (3,033) 51,818 (640)
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$756,290 43,241 $609,680 39,590
Reversal of total
imputed interest
cost (revenue)
included in segment
operating income (259) 2,693
Goodwill amortization (4,993) (4,132)
Interest revenue and capital taxes 2,961 408
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Income before income taxes 40,950 38,559
Income taxes (13,923) (13,496)
Net income excluding Highway 407 27,027 25,063
Highway 407, net loss (16,795) (4,782)
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Net income $10,232 $20,281
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Details of the Company's proportionate share of Highway 407 results for
the second quarter and the six-month periods ended June 30, are as
follows:
Revenues (diversified), before
consolidation elimination $22,492 $6,353
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Gross margin $16,429 $4,453
Depreciation and amortization (4,343) (1,217)
Administrative, marketing
and other expenses (1,540) (265)
Interest expense and capital tax (23,962) (7,174)
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Loss before income taxes (13,416) (4,203)
Income taxes (1,144) (337)
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Net loss, before consolidation
eliminations (14,560) (4,540)
Consolidation eliminations (2,235) (242)
Net loss, net of consolidation
eliminations $(16,795) $(4,782)
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Additional Information
Unaudited
In accordance with the recommendations of the Canadian Institute of
Chartered Accountants, the Company's investment in Highway 407 is
currently accounted for using the proportionate consolidation method,
whereby the consolidated financial statements reflect, line by line,
the pro-rata share of each of the assets, liabilities, revenues and
expenses of Highway 407. The impact of Highway 407 on the consolidated
statements of income is shown separately in the segment disclosures
section of the attached interim financial statements.
The following information includes balance sheets that reflect the
Company's investment in Highway 407 accounted for using the equity
method, which isolates the Company's equity investment in Highway 407
as a single line item on the balance sheet, as opposed to the
proportionate consolidation presentation as reported in the attached
interim consolidated financial statements.
As at June 30
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Highway 407 investment
accounted for using
equity method
(in thousands of dollars) 2000 1999
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Balance Sheets
Assets
Cash and cash equivalents $108,223 $114,882
Other current assets 530,251 532,551
Capital assets 145,589 135,291
Equity investment in 407
International Inc. (note) 149,722 170,460
Other long-term assets 151,248 122,529
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$1,085,033 $1,075,713
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Liabilities and shareholders' equity
Current Liabilities $654,341 $573,963
Long-term debt 37,057 113,924
Other long-term liabilities 36,740 19,652
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728,138 707,539
Shareholders' equity 356,895 368,174
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$1,085,033 $1,075,713
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Note : "Equity investment in 407 International Inc." represents the
original equity investment of $175 million less cumulative net
losses, excluding consolidation eliminations.
/T/ |
