SNC-Lavalin Reports Revenue Increase of 46% in the Third
Quarter
MONTREAL, QUEBEC--NOVEMBER 3, 2000 - 12:10 EST
/T/
Third quarter report
and press release
September 30, 2000
Third Quarter Highlights
* Revenues in the third quarter were $462 million, an increase of 46
percent over the same period last year. Revenues for the nine months
of $1.23 billion were almost at the same level as for the entire 1999
fiscal year.
* Net income in the third quarter, excluding Highway 407, rose by 5
percent over the corresponding period last year to $13.6 million, or
$0.30 per share, while net income for the nine months increased by 7
percent to $40.7 million, or $0.88 per share.
* Backlog at the end of the third quarter was $3.8 billion, up from
$3.7 billion at the end of the second quarter of this year, and
compared with $2.8 billion one year ago.
* The company completed its first public debt issue of
$105 million in unsecured debentures, strengthening its financial
position.
* Revenues from Highway 407 exceeded expectations in the third quarter
increasing 20 percent over the corresponding quarter of 1999 and
resulting in a lower than expected accounting loss of $0.10 per
share. Including the impact of Highway 407, consolidated earnings
per share were $0.20 in the third quarter.
/T/
SNC-LAVALIN REPORTS REVENUE INCREASE OF 46 %
IN THE THIRD QUARTER
SNC-Lavalin Group reported revenues of $462 million in the third
quarter of 2000, an increase of 46 percent over the corresponding
period in 1999. Revenues in the first nine months of 2000,
totaling $1.23 billion, were almost at the same level as that
reported for the entire 1999 fiscal year, reflecting increased
activity in almost all operating segments of the Company.
Net income in the third quarter, excluding Highway 407, rose by 5
percent over the corresponding period last year to $13.6 million,
or $0.30 per share, representing the 27th consecutive quarterly
increase year over year. Net income for the nine months,
excluding Highway 407, increased by 7 percent to $40.7 million, or
$0.88 per share compared with $0.82 per share last year.
Including the impact of Highway 407, consolidated earnings per
share were $0.20 for the third quarter, and $0.42 for the nine
months ended September 30, 2000.
Backlog at the end of the third quarter of 2000 was $3.8 billion,
up from $3.7 billion at the end of the second quarter of this year
and $2.8 billion one year ago. Major new awards announced during
the quarter include, among others, the repowering of the Queen
Elizabeth Station for SaskPower in Saskatoon; the electrical
distribution management system for the Provincial Electricity
Authority in Thailand; and the construction of district cooling
plants at Zayed Military City in Abu Dhabi.
"Revenues from Highway 407 rose by 20 percent over the
corresponding quarter last year. Highway 407 is on track and its
performance substantiates the company's long-term strategic plan
of more growth through investments in infrastructure," said
Jacques Lamarre, President and CEO of SNC-Lavalin. Highway 407's
total number of trips in the third quarter exceeded expectations
and surpassed the previous quarter, resulting for SNC-Lavalin in
an accounting loss of $0.10 per share, lower than the $0.20 and
$0.16 per share recorded in the first and second quarters of this
year. Excluding the non-recurring gain in 1999 related to the
termination of interest rate hedging instruments, the loss per
share from Highway 407 in the third quarter of 2000 was also 23
percent lower than in the corresponding quarter in 1999.
In September, the company completed its first public debt issue of
$105 million in unsecured debentures due 2010 with a coupon of
7.70 percent. The issue received "investment grade" rating from
Canadian Bond Rating Services Inc. (CBRS) and Dominion Bond Rating
Service Limited (DBRS). This new source of funds further
strengthens the company's financial position which, at the end of
the third quarter, comprised cash and short-term investments of
$235 million.
"With a solid backlog, a strong Canadian economy, increased cash
flow for the oil and gas industry and the strengthening of the
Asian economy, we remain confident about our continued strong
performance," said Jacques Lamarre.
The Board of Directors today declared a dividend of $0.06 per
share on the outstanding common shares payable on December 1st,
2000, to shareholders of record on November 17, 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
Third Quarter Nine months ended
September 30
-----------------------------------------------------------------------
(in thousands, except
per-share amounts) 2000 1999 2000 1999
-----------------------------------------------------------------------
Summary of results
Revenues
Services $128,261 $127,528 $415,173 $394,381
Packages 142,191 111,254 366,945 321,581
Diversified 191,516 76,927 447,900 215,354
-----------------------------------------------------------------------
$461,968 $315,709 $1,230,018 $931,316
-----------------------------------------------------------------------
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Earnings before interest,
taxes, depreciation
and amortization (EBITDA)
Excluding Highway 407 $30,434 $29,273 $87,877 $83,863
From Highway 407 10,729 8,194 24,099 12,214
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$41,163 $37,467 $111,976 $96,077
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Net income (loss)
Excluding Highway 407 $13,630 $13,013 $40,657 $38,076
From Highway 407 (4,462) 637 (21,257) (4,145)
-----------------------------------------------------------------------
$9,168 $13,650 $19,400 $33,931
-----------------------------------------------------------------------
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Basic earnings per share
Excluding Highway 407 $0.30 $0.27 $0.88 $0.82
From Highway 407 (0.10) 0.01 (0.46) (0.09)
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$0.20 $0.28 $0.42 $0.73
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-----------------------------------------------------------------------
Basic cash flow per share
Excluding Highway 407 $0.52 $0.69 $1.44 $1.61
From Highway 407 0.07 0.12 (0.03) 0.04
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$0.59 $0.81 $1.41 $1.65
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Return on weighted average
shareholders' equity
Excluding Highway 407 14.5% 14.5%
From Highway 407 (8.4)% (1.2)%
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6.1% 13.3%
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Weighted average number of outstanding shares 46,463 46,354
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-----------------------------------------------------------------------
Actual number of outstanding shares
at end of period 46,090 47,841
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Backlog at September 30
Canada * Services $196,900 $141,700
* Packages 237,800 191,800
* Diversified 2 260,100 1,311,600
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2,694,800 1,645,100
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Outside Canada * Services 140,500 181,700
* Packages 690,100 729,400
* Diversified 233,000 205,300
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1,063,600 1,116,400
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$3,758,400 $2,761,500
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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
Third Quarter Nine months ended
September 30
-----------------------------------------------------------------------
(in thousands, except
per-share amounts) 2000 1999 2000 1999
-----------------------------------------------------------------------
Revenues $461,968 $315,709 $1,230,018 $931,316
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Gross margin $76,214 $73,912 $229,018 $224,771
Administrative, marketing
and other expenses 48,710 47,607 154,498 157,512
-----------------------------------------------------------------------
Income before interest
and taxes 27,504 26,305 74,520 67,259
Interest and capital taxes 11,513 5,205 34,382 12,176
-----------------------------------------------------------------------
Income before income taxes 15,991 21,100 40,138 55,083
Income taxes 6,823 7,450 20,738 21,152
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Net income $9,168 $13,650 $19,400 $33,931
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Basic earnings per share $0.20 $0.28 $0.42 $0.73
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Note - Additional information
Net income (loss)
Excluding Highway 407 $13,630 $13,013 $40,657 $38,076
From Highway 407 (4,462) 637 (21,257) (4,145)
-----------------------------------------------------------------------
$9,168 $13,650 $19,400 $33,931
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Basic earnings per share
Excluding Highway 407 $0.30 $0.27 $0.88 $0.82
From Highway 407 (0.10) 0.01 (0.46) (0.09)
-----------------------------------------------------------------------
$0.20 $0.28 $0.42 $0.73
-----------------------------------------------------------------------
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Consolidated balance sheets
September 30
Unaudited
(in thousands of dollars) 2000 1999
---------------------------------------------------------------------
Assets
Current
Cash and cash equivalents $239,947 $138,438
Short-term investments 10,092 8,627
Accounts receivable 370,227 312,575
Contracts in progress and inventories 186,389 202,555
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806,655 662,195
Capital assets 1,084,603 1 012,007
Other assets 249,982 181,468
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$2,141,240 $1,855,670
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-----------------------------------------------------------------------
Liabilities and shareholders' equity
Current
Accounts payable and accrued charges $450,136 $367,164
Downpayments on contracts 146,283 76,227
Deferred revenues 91,854 165,820
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688,273 609,211
Long-term debt 1,052,572 839,949
Other liabilities 41,387 31,762
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1,782,232 1,480,922
Shareholders' equity 359,008 374,748
-----------------------------------------------------------------------
$2,141,240 $1,855,670
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Note
Certain 1999 figures have been reclassified to be comparable to the
2000 presentation.
Consolidated statements of cash flows
Nine months ended September 30
Unaudited
(in thousands of dollars,
except per-share amounts) 2000 1999
----------------------------------------------------------------------
Operating activities
Net Income $19,400 $33,931
Items not involving a movement in cash
Depreciation and amortization 37,456 28,818
Future income taxes (6,928) 12,259
Other 13,296 1,332
Deferred gains on interest rate hedging 2,295 -
----------------------------------------------------------------------
65,519 76,340
Net change in non-cash working capital items 20,157 30,513
----------------------------------------------------------------------
85,676 106,853
----------------------------------------------------------------------
Investing activities
Acquisition of capital assets (92,090) (27,095)
Acquisition of Highway 407 - (859,155)
Acquisition of businesses (38,826) -
Acquisition of investment - (25,060)
Subordinated loan - Highway 407 25,790 (20,546)
Other 7,090 6,559
----------------------------------------------------------------------
(98,036) (925,297)
----------------------------------------------------------------------
Financing activities
Repayment of long-term debt (259,543) (414,696)
Increase in long-term debt 445,750 1,155,147
Net proceeds from issuance of shares 1,935 51,785
Redemption of shares (11,882) (20,373)
Dividends (8,358) (8,418)
Other (13,271) (5,310)
----------------------------------------------------------------------
154,631 758,135
----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents during the period 142,271 (60,309)
Cash and cash equivalents at beginning of period 97,676 198,747
----------------------------------------------------------------------
Cash and cash equivalents at end of period $239,947 $138,438
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash flow per share (1) $1.41 $1.65
----------------------------------------------------------------------
----------------------------------------------------------------------
Note - Additional information
Basic cash flow per share
Excluding Highway 407 $1.44 $1.61
From Highway 407 (0.03) 0.04
----------------------------------------------------------------------
$1.41 $1.65
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash paid for interest $33,949 $19,511
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash paid for income taxes $26,539 $11,873
----------------------------------------------------------------------
----------------------------------------------------------------------
(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
Third quarter (note)
----------------------------------------------------------------------
(in thousands of dollars) 2000 1999
----------------------------------------------------------------------
Operating Operating
Revenues Income Revenues Income
(loss) (loss)
----------------------------------------------------------------------
Excluding Highway 407
Chemicals and petroleum $36,736 $1,743 $53,903 $4,009
Infrastructure 120,451 10,226 69,390 7,454
Mining and metallurgy 54,802 5,918 63,557 4,440
Power 44,573 826 33,089 1,263
Facilities management 112,450 2,968 15,498 287
Defence 48,425 2,024 41,153 3,241
All Other 38,313 (1,069) 27,329 1,003
----------------------------------------------------------------------
$455,750 22,636 $303,919 21,697
-------- --------
-------- --------
Reversal of total imputed
interest cost (revenue)
included in segment
operating income (167) 1,052
Goodwill amortization (3,161) (2,206)
Interest revenue (expense)
and capital taxes 1,344 (524)
----------------------------------------------------------------------
Income before income taxes 20,652 20,019
Income taxes (7,022) (7,006)
----------------------------------------------------------------------
Net income excluding Highway 407 13,630 13,013
Highway 407, net income (loss) (4,462) 637
----------------------------------------------------------------------
Net income $9,168 $13,650
----------------------------------------------------------------------
----------------------------------------------------------------------
Details of the Company's proportionate share of Highway 407 results for
the third quarter and the nine-month periods ended September 30, are as
follows:
Revenues (diversified), before
consolidation elimination $15,085 $12,525
----------------------------------------------------------------------
----------------------------------------------------------------------
Gross margin $12,270 $8,675
Depreciation and amortization (2,533) (2,080)
Administrative, marketing and
other expenses (1,459) (781)
Interest expense and capital tax (10,669) (4,560)
----------------------------------------------------------------------
Income (loss) before income taxes (2,391) 1,254
Income taxes (573) (504)
----------------------------------------------------------------------
Net income (loss), before
consolidation eliminations (2,964) 750
Consolidation eliminations (1,498) (113)
----------------------------------------------------------------------
Net income (loss), net of
consolidation eliminations $(4,462) $637
----------------------------------------------------------------------
----------------------------------------------------------------------
Nine months ended September 30 (note)
----------------------------------------------------------------------
(in thousands of dollars) 2000 1999
----------------------------------------------------------------------
Operating Operating
Revenues Income Revenues Income
(loss) (loss)
----------------------------------------------------------------------
Excluding Highway 407
Chemicals and petroleum $149,688 $9,395 $194,340 $19,220
Infrastructure 287,461 25,447 205,601 26,279
Mining and metallurgy 190,115 20,301 161,465 1,143
Power 121,496 3,369 100,804 3,646
Facilities management 220,657 3,143 49,074 1,759
Defence 149,848 8,324 123,168 8,877
All Other 92,775 (4,102) 79,147 363
----------------------------------------------------------------------
$1,212,040 65,877 $913,599 61,287
---------- --------
---------- --------
Reversal of total imputed
interest cost (revenue)
included in segment
operating income (426) 3,745
Goodwill amortization (8,154) (6,338)
Interest revenue (expense)
and capital taxes 4,305 (116)
----------------------------------------------------------------------
Income before income taxes 61,602 58,578
Income taxes (20,945) (20,502)
----------------------------------------------------------------------
Net income excluding Highway 407 40,657 38,076
Highway 407, net income (loss) (21,257) (4,145)
----------------------------------------------------------------------
Net income $19,400 $33,931
----------------------------------------------------------------------
----------------------------------------------------------------------
Details of the Company's proportionate share of Highway 407 results for
the third quarter and the nine-month periods ended September 30, are as
follows:
Revenues (diversified), before
consolidation elimination $37,577 $18,878
----------------------------------------------------------------------
----------------------------------------------------------------------
Gross margin $28,699 $13,128
Depreciation and amortization (6,876) (3,297)
Administrative, marketing and
other expenses (2,999) (1,046)
Interest expense and capital tax (34,631) (11,734)
----------------------------------------------------------------------
Income (loss) before income taxes (15,807) (2,949)
Income taxes (1,717) (841)
----------------------------------------------------------------------
Net income (loss), before
consolidation eliminations (17,524) (3,790)
Consolidation eliminations (3,733) (355)
----------------------------------------------------------------------
Net income (loss), net of
consolidation eliminations $(21,257) $(4,145)
----------------------------------------------------------------------
----------------------------------------------------------------------
Note
The 1999 results include five months of Highway 407 results, as it was
acquired on May 5, 1999.
Note to Financial Statements
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 table presents the Company's financial position had its
investment in Highway 407 been 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 September 30
---------------------------------------------------------------------
Highway 407 investment
accounted for using
equity method
(in thousands of dollars) 2000 1999
----------------------------------------------------------------------
Assets
Cash, cash equivalents and short-term
investments $234,765 $122,709
Other current assets 518,361 506,784
Capital assets 144,777 133,935
Equity investment in 407 International Inc.
(note) 146,758 171,210
Other long-term assets 144,227 142,916
----------------------------------------------------------------------
$1,188,888 $1,077,554
----------------------------------------------------------------------
----------------------------------------------------------------------
Liabilities and shareholders' equity
Current Liabilities $655,578 $601,159
Long-term debt 140,881 68,627
Other long-term liabilities 33,421 33,020
----------------------------------------------------------------------
829,880 702,806
Shareholders' equity 359,008 374,748
----------------------------------------------------------------------
$1,188,888 $1,077,554
----------------------------------------------------------------------
----------------------------------------------------------------------
Note : "Equity investment in 407 International Inc." represents the
original equity investment of $175 million less cumulative net losses,
excluding consolidation eliminations.
/T/ |
