Desjardins 2017 Industrial Conference Neil Bruce, President and CEO March 27, 2017
Forward-looking statements Reference in this presentation, 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 arrangements, or SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint arrangements. Statements made in this presentation 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, cost savings, estimates, expects, goal, intends, may, plans, projects, should, synergies, will, or the negative thereof or other variations thereon. Forward-looking statements also include any other statements that do not refer to historical facts. Forward-looking statements also include statements relating to the following: (i) future capital expenditures, revenues, expenses, earnings, economic performance, indebtedness, financial condition, losses and future prospects; and (ii) business and management strategies and the expansion and growth of the Company s operations and potential synergies resulting from the Acquisition. 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. Forward-looking statements made in this presentation 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 2016 Management Discussion and Analysis (MD&A). The 2017 outlook also assumes that the federal charges laid against the Company and its indirect subsidiaries SNC-Lavalin International Inc. and SNC-Lavalin Construction Inc. on February 19, 2015, will not have a significant adverse impact on the Company s business in 2017. 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 risk factors are set out in the Company s 2016 MD&A. The 2017 outlook referred to in this presentation is forward-looking information and is based on the methodology described in the Company s 2016 MD&A 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 2017 outlook is to provide the reader with an indication of management s expectations, at the date of this presentation, regarding the Company s future financial performance and readers are cautioned that this information may not be appropriate for other purposes. 2
Building a global E&C Powerhouse Our teams provide engineering, procurement construction, completions and commissioning services with a range of sustaining capital services, as well as financing capabilities to clients in four industry sectors v v v v Oil & Gas Power Infrastructure Mining & Metallurgy v Capital ~ 35,000 Employees Founded in 1911 Listed on TSX ( SNC ) 3
A unique company well positioned to continue growing its bottom line through consistency, cost reduction and efficiency 1 Established track record of financial performance and strong balance sheet Why SNC-Lavalin? 2 4 3 Investment in the global infrastructure sector is expected to grow, with the North American market particularly attractive Optimally placed to capture market growth due to its diversified sector mix, extensive international presence and its competitive advantage from its presence across the value chain SNC-Lavalin provides high visibility of revenues driven by a diversified backlog and complemented by a portfolio of prime infrastructure concessions which provide stable cashflows 5 Experienced management who have developed SNC-Lavalin into a well respected global brand and fostered a culture of Ethics excellence 4
With a diversified and resilient business model Sectors We're focused on four key sectors: Infrastructure, Mining & Metallurgy, Oil & Gas and Power. Across these sectors, we're working to ensure that our people deliver as promised to clients, that our operations are efficient, and our company is ethical and profitable. Services We are one of very few firms with world-class expertise at scale in financing & asset management, engineering, procurement, construction, training, and operations & maintenance. This is a key differentiator in our industry, and a powerful vehicle for delivering outstanding value to our stakeholders. Consulting Environmental Services Sustaining Capital $8.5 BILLION IN REVENUES O&G Infrastructure Power M&M Capital 4% 3% North America Middle East & Africa Asia-Pacific Europe Latin America 5% 2% 19% 30% 60% Reimbursable 40% Fixed-price 44% 19% 22% CAN 41% USA 11% 52% Broadening our services and improving our risk profile 5
Operating in 5 regions across the world Europe 1,000 Americas 13,000 Middle- East & Africa 17,000 Asia- Pacific 4,000 Balancing our regional presence 6
Complemented by a portfolio of prime infrastructure concessions, providing stable cashflows Infrastructure Power Other Name Remaining life of concession Equity ownership Highway 407 82 17% InTransit BC 24 33% Okanagan Lake 19 100% TC Dôme 27 51% Chinook 27 50% 407 EDGGP 29 50% Highway Concessions One PL Indefinitely 10% Rideau 27 40% Eglinton Crosstown 35 25% SSL 33 50% SKH Indefinitely 26% Astoria II Indefinitely 6% InPower BC 17 100% MIHG 28 60% Rainbow 28 100% Myah Tipaza Indefinitely 26% Our assets add ~$4.5B 1 of strength to our Balance Sheet which provides additional stability to the E&C business as well as considerable firepower for future investments in the business 1 Average Fair Market Value as per analysts calculations, as at March 23, 2017. 7
A sustainable and diversified backlog (which does not reflect our increasing book & burn work) Strong Backlog Dec. 2016 $10.7B 15.00 (in B$) As at Dec. 31, 2016 10.00 Reimbursable 45% 5.00 10.9 10.7 Fixed-Price 55% 0.00 Dec. 31, 2015 Dec. 31, 2016 M&M Power O&G Infrastructure O&M FM + France Non-core Real Estate Facilities Management business in Canada (O&M FM) and local French operations (France) were sold in 2016, and therefore removed from the 2016 backlog 8
Delivering on our growth strategy Become a recognized Tier 1 diversified, global E&C player Strong, consistent financial performance World class, execution at top tier margins Short-term Medium-term Long-term Reduced cost base Reduced general and administrative expenses by 20.7% from $667.2 million to $529.3 million; Exited non-core businesses sold real estate facilities management and ongoing business in France and Malta airport; Signed an IT outsourcing agreement; Streamlined our operating structure and corporate centre to strengthen our business focus and accountability. Completed Operational Excellence Activities aimed at simplifying operating and governance structure; Organic growth as shown by being shortlisted on several major projects and by winning major contracts across all sectors in Canada, the Middle East, the United States, South America and Europe; Reached an agreement in principle for a new Joint Venture with China National Nuclear Corporation and Shanghai Electric Group Company Ltd. to develop, market and build the Advanced Fuel CANDU Reactor; Evaluation of potential growth through M&A with a focus on Infrastructure and Power; Initiatives to improve project delivery and financial performance with 12.7% increase in adjusted diluted EPS from E&C and 63.0% decrease in number of lost-time incidents in 2016, compared with 2015; Strengthen our One-Company approach through increased cross-selling and further implementation of our Key Account Management Program. Continuous Improvement & Increasing Agility Create a performance-driven culture; Focus on agility, continuous improvement and efficiency in operations to create a superior client experience; Implement systems improvements; Simplify financial models; Continued talent development, retention and engagement; Attract top-tier talent for a toptier firm. In progress Commenced 9
Delivering on our growth strategy requires a laser focus on cost leadership Reduced cost base Exiting non-core businesses and focusing on more profitable core businesses Drive cost base competitiveness SG&A Successfully completed the implementation of the Step Change program in December 2015 900 800 $132M or 15% Successfully implemented the Operational Excellence program in 2016 by reducing SG&A by $132M Target: decrease SG&A by a further $100M from 2016 to 2017 (in M$) 700 600 500 $100M or 14% 2013 2014 2015 2016 2017 target 10
Delivering on our growth strategy requires concrete actions Operational Excellence program A long-term, structured approach that focuses on improving every aspect of our business Objective: be the most efficient and sought-after engineering and construction company in the world Actions already taken: May 2016: IT outsourcing agreement average annual savings of 20% December 2016: Sale of noncore Real Estate Facilities Management Canadian business improving O&M EBIT margin December 2016: Sale of ongoing activities in France and Monaco improving I&C and O&M EBIT margin 11
A strong and experienced management Back row from left to right: Hartland J. A. Paterson EVP & GC Sandy Taylor President, Power Erik J. Ryan EVP, Strategy, Marketing and External Relations Neil Bruce President & CEO Martin Adler President, Oil & Gas José J. Suárez President, Mining & Metallurgy Christian Brown Corporate Development Officer ~1 year with SNC-Lavalin ~30 years in legal and ethics & compliance ~3 years with SNC-Lavalin ~30 years in industry ~3 years with SNC-Lavalin ~25 years in external relations and strategy ~4 years with SNC-Lavalin ~30 years in industry ~8 months with SNC-Lavalin ~25 years in industry ~5 years with SNC-Lavalin ~35 years in industry ~2 years with SNC-Lavalin ~20 years in industry Front row From left to right: Marie-Claude Dumas EVP, Human Resources Ian Edwards President, Infrastructure Sylvain Girard EVP & CFO Chantal Sorel Managing Director, Capital ~10 years with SNC-Lavalin ~20 years in industry ~2 years with SNC-Lavalin ~32 years in industry ~3 years with SNC-Lavalin ~25 years in finance and accounting ~9 years with SNC-Lavalin ~25 years in industry 12
2017 priorities and outlook 2017 Priorities 1 Continue our progress in Operational Excellence 2 Become an even more client-centric organization 3 Continue building a performance-driven culture 4 Growing our business 2017 Outlook 2017 Adjusted diluted EPS from E&C $1.70 $2.00 ($0.36 in 2014, $1.34 in 2015 & $1.51 in 2016) 13
Appendix
SNC-Lavalin s capital allocation priorities 1. ORGANIC INVESTMENTS To support our E&C core business, drive profitable organic growth/improve margins Capital investments portfolio which will act as catalyst for E&C revenues 2. DIVIDENDS Increased our yearly dividend paid per share for each of the past 16 years 3. EXTERNAL INVESTMENTS Allocated based on best risk-adjusted returns Share repurchases Acquisitions 15
A track record of increased dividends and strong balance sheet Annual dividends declared Cash and recourse debt 1.053 (in $ per share) 1.01 (in M$) 1,702 1,582 0.97 0.93 1,175 1,109 1,055 0.89 349 349 349 349 349 2012 2013 2014 2015 2016 Dividends were increased for each of the past 16 years 2012 2013 2014 2015 2016 Cash Recourse debt Strong cash and stable debt 16
On a path of growth and improved E&C earnings Focus on bottom line, not revenue Revenues from E&C 9,364 Adjusted net income from E&C (in M$) (in M$) 7,149 7,335 8,223 201.9 226.4 54.9 2013 2014 2015 2016 2013 2014 2015 2016-133.7 17
Solid financial position (in M$) December 31 2016 December 31 2015 Assets Cash and cash equivalent 1,055 1,582 Other current assets 3,135 3,616 Property and equipment 298 265 Capital investments accounted for by the equity or cost methods 448 468 Goodwill 3,268 3,387 Intangible assets related to Kentz acquisition 194 273 Other non-current assets and deferred income tax asset 900 912 9,298 10,503 Liabilities and Equity Current liabilities 3,962 5,090 Recourse long-term debt 349 349 Non-recourse long-term debt 473 526 Other non-current liabilities and deferred income tax liability 618 635 5,402 6,600 Equity attributable to SNC-Lavalin shareholders 3,873 3,868 Non-controlling interests 23 35 9,298 10,503 Recourse debt-to-capital ratio 9:91 9:91 18
Sectors of activity Providing complete end-to-end solutions that is a key differentiator in our industry, and a powerful vehicle for delivering outstanding value to our stakeholders. Oil & Gas Power Infrastructure Mining & Metallurgy Bitumen Hydroelectric Airports Aluminium Heavy Oil, Offshore Nuclear Facilities Gold LNG Thermal Highways Copper Unconventional O&G Upgrading and Refining Gas Processing Sustaining Capital Pipelines Carbon Capture and Utilization Transmission and Distribution Renewables Industrial Geotechnical Engineering and Materials Testing Ports & Harbours Roads & Bridges Social Infrastructure Urban Transit and Rail Systems Iron Ore Nickel Fertilizers Sulphur Products Water & Wastewater Capital Investments + Operations & Maintenance 19
407 ETR Consistent growth and low cost of financing Gross Vehicle Kilometres Travelled (in millions KM) 2,124 2,253 2,253 2,215 2,336 2,326 2,340 2,356 2,437 2,517 2,641 Dividends (in M$) 300 190 145 120 135 20 24 23 32 50 460 600 680 730 750 790 Total dividends paid by 407 ETR Dividends received by SNC-Lavalin 77 101 114 122 126 133 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bond Maturity Profile (in M$) 608.3 625 480 500 500 300 3.87% 300 4.99% 4.30% / 5.33% 250 3.35% 208.3 5.33% 350 2.43% 400 6.47% 208.3 5.33% 340 5.96% 5.75% 5.29% / 6.75% 165 7.13% 350 4.45% 400 4.19% 150 3.30% 3.83% 3.60% 400 3.98% 200 4.68% 2017 2020 2021 2024 2026 2027 2029 2031 2035 2036 2039 2040 2041 2042 2045 2046 2047 2052 2053 Senior Bonds ($5.8B) Subordinated Bonds ($0.8B) Junior Bonds ($0.2B) 20
407 ETR information Year ended December 31 (in M$) 2016 2015 Change Revenues 1,134.7 1,002.2 13.2% Operating expenses 149.7 162.2 (7.7)% EBITDA 985.0 840.0 17.3% EBITDA as a percentage of revenues 86.8% 83.8% 3.0% Net income 372.9 311.2 19.8% Total EBITDA/revenues (in M$) EBITDA Revenues 1002 1135 Toll revenues (in M$) 1,056 734 608 82.9% 801 665 83.0% 888 736 82.9% 840 83.8% 985 86.8% 670 727 809 916 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 21
SNC-Lavalin Denis Jasmin Vice-President, Investor Relations Tel.: 514-393-8000 Ext. 57553 E-mail: denis.jasmin@snclavalin.com www.snclavalin.com Firm Analyst Tel Market Details AltaCorp Capital Chris Murray 647-776-8246 BMO Capital Market Devin Dodge 416-359-6774 Canaccord Genuity Yuri Lynk 514-844-3708 CIBC World Markets Jacob Bout 416-956-6766 Desjardins Securities Benoit Poirier 514-281-8653 Morningstar Inc David Silver 312-244-7251 National Bank Financial Maxim Sytchev 416-869-6517 RBC Capital Markets Sara O Brien 514-878-7256 Raymond James Frederic Bastien 604-659-8232 Scotia Capital Anthony Zicha 514-350-7748 TD Newcrest Michael Tupholme 416-307-9389 Price as of March 23, 2017 $52.44 Shares outstanding Diluted 150.3M Market capitalization $7.9B 52 - week high / low $59.63 / $44.84 Dividend per share $0.273 / quarter Dividend yield ~ 2.0% 22