Atkinsrealis Group Inc T.ATRL

Alternate Symbol(s): SNCAF

Industrials Engineering & Construction

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.

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Post by retiredcfon Jun 13, 2024 9:04am

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Post# 36086697

TD

Have a $68.00 target. GLTA

ATRL UNVEILS THREE-YEAR STRATEGIC PLAN AHEAD OF INVESTOR DAY

THE TD COWEN INSIGHT

ATRL unveiled details of its 2025–2027 strategic plan, including various financial targets. Overall, we believe investors will be encouraged by ATRL's next three-year targets. That said, we do not expect ATRL's targets to come as a complete surprise to investors (growth and margin improvement was expected), and as such, we have characterized the release as SLIGHTLY POSITIVE.

Event

ATRL is hosting an Investor Day today starting at 8:30 a.m. ET (webcast registration link).
Ahead of today's presentations, ATRL unveiled its three-year strategic plan. Called "Delivering Excellence, Driving Growth", the plan outlines how and where ATRL intends to drive profitable growth through 2027.

Impact: SLIGHTLY POSITIVE

At a high level, ATRL's 2025–2027 strategic plan represents a continuation and natural evolution of the company's previously communicated strategy. As expected, the strategy is focused on margin expansion and continuing to realize strong growth.
ATRL unveiled several targets pertaining to the 2025–2027 period.
- ATRL targets achieving an Engineering Services Regions segment organic revenue
  
  CAGR of >8%. Meanwhile, the company targets an Engineering Services adjusted EBITDA to segment net revenue ratio of 17% to 18% by 2027. The midpoint of margin guidance range implies approximately 250bps and 150 bps margin expansion vs. 2023's level and vs. the midpoint of 2024's guidance range, respectively. We see these as healthy target ranges for both organic growth and adjusted EBITDA margin, and believe that the market will be encouraged.
- For the Nuclear segment, ATRL targets achieving revenue of $1.8bln–$2.0bln by 2027 (vs. TD's forecast of $1.2bln in 2024). This implies a three-year revenue CAGR of 14% to 17%, which we believe is impressive. Meanwhile, the company targets a Nuclear segment adjusted EBIT to revenue ratio of 12% to 14% (vs. the 13% to 15% range the company has historically targeted). This expected moderation in Nuclear's margin will likely be seen as the one area of softness in ATRL's new three-year targets (we will be looking for more detail on why margins are expected to moderate).
- Regarding cash flow, ATRL indicated that it targets achieving a FCF to adjusted net income ratio of 80%–90%. Although we view this as a healthy/respectable cash conversion ratio, it is in line with prior guidance.
- Further, ATRL noted that it intends to sell its 6.76% equity stake in Highway 407 by the end of 2027 (carried at a net value of $1.5bln in our ATRL target valuation).