Desjardins - translated https://www.baytoday.ca/business/snc-lavalin-stock-soars-as-it-looks-to-us-for-growth-and-mas-eventually-6972413
https://www.lesaffaires.com/bourse/nouvelles-economiques/snc-lavalin-hausse-du-profit-et-des-revenus-au-1er-trimestre-de-l-exercice-2023/640916
SNC-Lavalin avoids new nasty surprises with turnkey contracts
The Canadian Press
SNC-Lavalin's shares jumped more than 10% as the engineering firm avoided more bad surprises in its turnkey contracts.
The Montreal-based company surprised investors with a $150 million loss in the turnkey segment in the previous fourth quarter of 2022.
In March, management had assured investors that the significant losses in this division were "largely behind us".
The operating loss in this segment was limited to $9.2M in the first quarter.
Prior to the release of the results, analysts were expecting an average loss of $16 million, according to RBC Capital Markets.
SNC-Lavalin has not been bidding on turnkey contracts since 2019, as these projects often experience cost overruns. It still needs to complete three before the division's operations are complete, including the Rseau express mtropolitain (REM) in the greater Montreal area, the Trillium light rail line in Ottawa and the Eglinton line in Toronto.
President and CEO Ian Edwards reiterated that the two Ontario projects were nearing completion while the REM was progressing "very well" in a conference call with analysts on Tuesday. "REM was 75% complete at the end of March.
Our quarterly losses are in line with our expectations." Management reiterated that it believes it will be able to recover "a significant portion" of the additional costs associated with the project due to supply chain disruptions, the pandemic and inflation. Negotiations are going well, but Edwards didn't rule out legal recourse if the parties can't reach agreement. "We are optimistic that we will find a win-win solution and negotiation is the best way to get there."
SNC-Lavalin's top boss gave no new information about the strategic review process, announced last March, which is proceeding. Linxon, in which SNC-Lavalin has a majority stake, is included in the strategic review.
A turning point Analyst Benoit Poirier of Desjardins Capital Markets believes the first quarter results could mark a "turning point" for the company. "Overall, we view these results favorably, due to better-than-expected results in all segments, maintained annual forecasts and lower-than-expected losses in turnkey contracts. This could represent a turning point that would indicate that much of the risk is now behind SNC." In the first quarter, the company reported that its net income attributable to shareholders totaled $28.4 million, compared to $24.8 million in the same period last year.
Adjusted diluted earnings per share were 32 cents. During the same period, revenues increased by $1.89 billion to $2.02 billion. For the SNCL Services division, revenues rose 10.8% to $1.8 billion. This represents organic growth of 10.1%, beating the company's guidance range of 5% to 7%.
Prior to the release of the results, analysts were expecting earnings per share of 30 cents, according to financial data firm Refinitiv.
SNC-Lavalin shares were up $3.88, or 12.13%, at $35.86 on the Toronto Stock Exchange in afternoon trading.
https://www.bnnbloomberg.ca/snc-lavalin-s-services-in-high-demand-amid-clean-energy-transition-ceo-1.1917849