SNC-Lavalin Group Inc T.ATRL

Question to Ron

[Gabriel]

When the backlog of a contractor is above the roof, what happens with the profit margins and contingencies for the next job he bids on?

[Gabriel]

You know they built the 407 (as Armbro) and the trans Israel highway (I was with John Beck founder of Aecon and minister Art Eggleton (Toronto representative) on a trade mission to Israel then). The CN tower...

[Ronbromleygross]

You bid as high as you can afford to go just to see if the fish bite.  If they bite it's gravy to your bottom line even if you have to hire additional staff to keep up with the volumes.  If you lose the bid then you don't care anyways.  You still have the backlog to keep your staff working for a few years.  If the developers really want you as the contractor of choice

[Gabriel]

So let me know when you move in and I will double my position.

[Ronbromleygross]

OMG Gabriel You got me excited here.- No one ever doubled down on their investment when I initiated a position on anything- lets see.  lololo Boy oh boy I wish I had your good financial fortune.     Ron 

[Alexcanada]

I'll initiate a position at 10.50 (1/4 x 10000K shares)

[Alexcanada]

Gab What is your opinion on the safety of the dividend ? I can see a great opportunity to buy if they decide to reduce it ? (Why was this not done up to now ?) Thanks 

[Gabriel]

It is a momentary set back. They would have had an EBITDA 375m in the last twelve months with an EBITDA margin of 9.6% (higher than SNC...) had it not been for the 4 LSTKs, two of which with SNC and for which they also have claims.  With such a strong backlog, I am expecting EBITDA margins to climb above 10% (I advise and provide technical support to comparable companies in claims and

[Alexcanada]

Thanks for your input. Just read as well the last report on ARE from NBCFM Research dated July 27th (Sytchev). Interesting. It is definitively on my radar.

[Gabriel]

The 81m projected loss that was booked in Q2 is the most likely enveloppe that the company expects to incur to close the 4 LSTK projects at zero profit. All other things being equal that would be it.