AtkinsRéalis Group Inc.

Thank you for standing by. This is the conference operator. Good morning and welcome to SNC-Lavalin's fourth quarter 2020 earnings conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, You may signal an operator by pressing star and zero. I would now like to turn the conference over to Denis Jasmine, Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining the call. Our Q4 earnings announcement was released this morning, and we have posted a corresponding slide presentation on the Investors section of our website. The recording of today's call and its transcript will also be available on our website within 24 hours. With me today are Ian Edwards, President and Chief Executive Officer, and Jeff Bell, Executive Vice President and Chief Financial Officer. Before we begin, I would like to ask everyone to limit themselves to one or two questions to ensure that all analysts have an opportunity to participate. You are welcome to return to the queue for any follow-up questions. I would like to draw your attention to slide two. Comments made on today's call contain forward-looking information. This information, by its nature, is subject to risks and uncertainties and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the campaign's relevant filing on CDAR. These documents are also available on our website. Also during the call, we may refer to certain non-IFRS measures. These measures are defined and reconciled with comparable IFRS measures in our MD&A, which can be found on CDAR on our website. Management believes that these non-IFRS measures provide additional insight into the company's financial results, and certain investors may use this information to evaluate the company's performance from period to period. And now I'll pass the call over to Ian Edwards. Ian?

Thanks, Denis, and good morning, everyone. So turning to slide four, 2020 really has been a transformative year for S&C Lavalin on many fronts. We took a series of actions focused really on two objectives. One, reducing the company's risk profile as it relates to our legacy LSTK business. And two, accelerating S&C Lavalin's transition to a leading professional services and project management company. The actions we took included the closure, sale, and strategic divestment of a vast majority of the resources business, including a binding agreement to sell the oil and gas business announced on February the 9th. a review of all significant litigation matters and claims receivable in order to provide the most fulsome assessment of outstanding risk and the continued wind down of the LSTK projects backlog by approximately a billion dollars. We also demonstrated through COVID-19 pandemic both our agility in responding to unprecedented global events and the resilience of our engineering services business. We quickly pivoted to respond to the challenging environment triggered by the pandemic, moving to remote working, reducing costs, and enhancing our digital transformation. We have also collaborated with our clients to develop new risk-capped contracting models. And we have leveraged our public sector expertise and diverse service offering in our core markets to win new, and in many cases, groundbreaking work that reflects our ability to to meet the changing needs of a post-COVID world. These include some major nuclear transport infrastructure and social housing projects. And as we move to 2021, Engineering Services is strongly positioned to meet the needs of our clients for renewed infrastructure investment and the development of low-carbon assets. Turning to slide five, I'll now walk you through the Q4 highlights and the 2021 outlook for each of the engineering services segments, starting with EDPM. EDPM finished the year strongly across all regions, underpinned by robust performance in our roads, railway and defence service offering. Overall, EDPM generated strong cash flow and backlog grew by 8.9% in 2020, fuelled by road and rail winds in the UK, rapid transit in the US and new water and O&M projects in Asia-Pacific, amongst others. With a robust pipeline of $27 billion ahead to 2021, combined with government's commitments to infrastructure spending, we are really optimistic about the return to growth in our core geographies, particularly in the second half of the year. We have an ambitious growth plan focused on areas where we anticipate increased investment and where we have deep expertise. Specifically in transportation infrastructure, water, environment and defense. In terms of geographies, the US is a central focus. We see significant potential to deepen our penetration into the US market, and we believe there could be much larger infrastructure spending bill passed under the new Biden administration. Turn into slide six and highlights of the recent EDPM project wins. In February, S&C Loveland and its partners won a $1.3 billion contract to design and build Phase 2 of the East-West Rail Project, one of the largest rail projects in the UK. This project features a new alliance contracting model in which all partners work as an integrated team and the risks are shared and capped amongst them. It signals a new collaborative way of working with partners and clients. and it's the model that we hope to replicate for other projects in other countries. Moving to slide seven and highlights from our nuclear segment, nuclear continued to perform well through Q4. A number of multi-year project extensions were awarded on contracts in the US and Canada during the quarter, and as we head into 2021, the pipeline is strong. We see significant opportunity for nuclear going forward, fueled by market demand and our own market-leading position. These opportunities include nuclear new build and reactors at all, a number of projects coming up for tender by the U.S. Department of Energy, where urgency leveling already has a strong track record of wins, and nuclear decommissioning and environmental opportunities. Turning to slide 8, you can see some of the recent wins and industry awards, which include contracts in Canada and the U.S., as well as service support for the Can-Do fleet in Canada and internationally. Moving to slide 9, and infrastructure services, the segment had a strong quarter reflecting the essential nature of infrastructure services in supporting critical infrastructure through the pandemic. Operations and maintenance continue to operate at full service levels, with strong activity in power, grid, and industrial solutions. Linsong was also a strong contributor to the quarter and saw a healthy intake of orders. As we move to 21, we see a strong pipeline of opportunity for Linsong, particularly in the transportation and transmission sectors. We are also focusing our business development in O&M in the US, the UK, and Canadian transportation sectors as governments continue to invest in new infrastructure. Turning to slide 10, you can see the breadth of work in the infrastructure services backlog ranging from design, building, and refurbishment of hydro plants to defense work and COVID-19 related contracts, including a medical supply contract and the delivery of mobile health units. Turning to slide 11 and the capital segment, with traffic volumes down by 44% on the 407 in Q4 due to return to lockdown, there were no dividend payments in the quarter. As the province comes out of lockdown, we anticipate an increase in traffic levels and continue to believe in the long-term fundamentals of the highway in the country's largest city and economic hub. Our remaining concessions continue to perform well and have not been significantly impacted by the pandemic. Moving to slide 12, on infrastructure EPC projects, As discussed during our February 9th update, the three remaining Canadian light rail projects continue to progress well. We expect to continue to reduce the backlog by approximately $1 billion by the end of 21. Two of the projects are expected to be complete by the end of 22, with the last remaining one, the REM, to be delivered in 24. While these LSTK projects wind down, we do see light rail as a significant growth opportunity as governments invest in low-carbon rapid transit. S&C Lavelling will continue to leverage its expertise in the light rail space, but with a focus on collaborative and risk-capped project management and construction management services. Turning to slide 13 on the resources segment, With the agreement to sell the oil and gas business, our remaining resources business is focused on services in the mining and metallurgy sector. We have a long history in M&M, which generates revenues of $163 million in 2020, and will be part of the ongoing engineering services offering. Moving to slide 14, I'd like to conclude my presentation by focusing on S&C Lavelland's strategic priorities for 2021. As I mentioned at the beginning of this call, we are focused on de-risking the business and generating consistent earnings in cash flow. This remains our focus, and we have five key priorities. Closing the oil and gas sale, successfully running off the LSDK projects, continuing to drive consistent performance in engineering services, building a connected, collaborative organization that can work and support clients remotely from anywhere in the world, and most importantly, driving growth and sustainable outcomes for our clients across the company. Turning to slide 15, we are focused on a number of growth drivers. The first is centered on our core markets, the US, the UK, and Canada, where we can leverage our expertise in nuclear and transportation infrastructure, amongst other areas. to expand our market penetration across our full service offering. The second, as I mentioned earlier, is to expand our major projects business in Canada, US and UK through risk-capped opportunities. We're also focused on expanding our operations and maintenance business, our water, environment and defence in core geographies where we see opportunity to build our footprint. These efforts are underpinned by enhanced digital capabilities which improve productivity and delivery. and lower the carbon footprint for our clients. The focus on digital transformation is closely connected to another key growth driver and the priority of the company, which is sustainability. As engineers who design, build, and service the built environment, we have an integral role in enabling countries and companies to meet their carbon reduction targets. As part of that effort, we have a comprehensive range of services around helping our clients in engineering net zero. Additionally, we are further developing our own ESG strategies, and we will be sharing our targets with you in Q2. In the second half of the year, we'll also be ready to share the specifics around an overall growth strategy for the business as we head into 22, and we really look forward to sharing that with you. With that, I'll now pass the call to Jeff.