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Atkinsrealis Group Inc T.ATRL

Alternate Symbol(s):  SNCAF

Atkinsrealis Group Inc., formerly SNC-Lavalin Group Inc., is a professional services, and project management company. It delivers end-to-end services across the whole life cycle of an asset including consulting, and advisory and environmental services. Its segments include Engineering Services; Nuclear; O&M; Linxon; LSTK Projects, and Capital. The Engineering Services segment includes consultancy, engineering, design and project management services. The Nuclear segment supports clients across the entire nuclear lifecycle with the full spectrum of services from consultancy, EPCM services, field services, technology services, spare parts, reactor support and decommissioning and waste management. The O&M segment consists of providing operations, maintenance, and asset management solutions. The Linxon segment offers engineering, procurement, management, and construction services. The LSTK Projects is comprised of the remaining LSTK construction contracts of the Company.


TSX:ATRL - Post by User

Comment by FutureRealtyon May 06, 2021 8:55am
103 Views
Post# 33139325

RE:Résultats

RE:Résultats

Pour votre information:
Stantec Inc.

Benoit Poirier, CFA • (514) 281-8653 • benoit.poirier@desjardins.com
Jean-Francois Lavoie, CFA, Associate • (514) 985-3498 • jean-francois.b.lavoie@desjardins.com

Rating: Buy, Risk: Average, Target: C$57.00

STN C$57.44, TSX/STN US$46.84, NYSE

Soft 1Q21 results but 2021 guidance reiterated, pointing to a strong recovery in the rest of the year

The Desjardins Takeaway: Slightly negative

STN reported soft 1Q21 results, mainly driven by weaker-than-expected organic growth. Net revenue of C$879m was below consensus of C$932m (we expected C$913m). Adjusted EBITDA (investors’ main focus) of C$129m (including impact of IFRS 16) missed our forecast of C$133m and consensus of C $137m. Finally, adjusted EPS of C$0.50 was slightly below consensus of C$0.51 and our forecast of C$0.52. No government subsidy was recorded in 1Q. Encouragingly, the contract backlog increased sequentially to C$4.6b in 1Q (vs C$4.4b in 4Q; +5.8% organic), representing ~12 months of work.

Organic growth contracted 7.4% in 1Q, mainly due to the pandemic; this was below our forecast of -1.1%. The decline was primarily driven by Energy & Resources (-18.4%, mainly due to reduced scope on a large midstream project), Buildings (-13.6%), Environmental Services (-6.6%) and Infrastructure (-4.7%). Water remained strong in 1Q at +3.7%.

Net debt to adjusted EBITDA of 0.8x was better than our forecast of 0.9x and still below management’s target range of 1.0–2.0x (including IFRS 16 impact). This was driven mainly by stronger-than-expected FCF of C$15m (we expected -C$113m vs consensus of -C$27m). DSO remained stable sequentially at 75 days, again beating the company’s target of 90 days.

More importantly, management reiterated its outlook for 2021 despite the softer start to the year, highlighting that organic growth would recover through the remainder of 2021. Accordingly, STN reiterated its 2021 organic growth guidance of low- to mid-single digits (we expected +2.6%). Management expects adjusted EPS to increase by low- to mid-single digits compared with the C$2.22 reported in 2020 (consensus was at +4.5% vs our forecast of +2.3%).

Overall, while we are somewhat surprised by the soft organic growth posted in 1Q, we are encouraged by the healthy organic growth in the backlog in the period, which should help management to achieve its 2021 guidance. Recall that STN’s guidance does not contemplate any infrastructure stimulus spending in the US (management previously acknowledged that programs would likely be deployed starting in late 2H21).

A conference call is scheduled for tomorrow at 9am EDT (dial-in 800-367-2403). We will be focusing on (1) the organic growth outlook for the remainder of 2021, (2) management’s M&A strategy (five tuck-in acquisitions announced since October 2020) to achieve the 2021–23 net revenue growth CAGR target of >10%, as well as (3) the growth prospects associated with President Biden’s proposed infrastructure stimulus package.

This report was prepared by an analyst(s) employed by Desjardins Capital Markets and who is (are) not registered as a research analyst(s) under FINRA rules. Please see disclosure section on pages 2–4 for company-specific disclosures, analyst certification and legal disclaimers.

MAY 5, 2021 1

Express Pulse

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