AtkinsRéalis Group Inc.

Thank you for standing by. This is the conference operator. Good morning and welcome to SNC-Lavalin's second quarter 2021 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 0. I would now like to turn the conference over to Denis Jesmin, Vice President, Investor Relations. Please go ahead.

Thank you, Aria. Good morning, everyone, and we appreciate you joining the call. A Q2 earnings announcement was released this morning, and we have posted a corresponding slide presentation on the investor 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 may contain forward-looking information. This information, by its nature, is subject to risk 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 company's relevant filings 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 RMDNA, which can be found on CDAR and our website. Management believes that these non-RFRS 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?

Thank you, Denis, and good morning, everyone. Starting on slide four, we're pleased to have delivered a strong second quarter, and combined with the first quarter's performance, have reported solid results for the first half of 2021, and we remain on track to meet our 2021 outlook. SNCL Engineering Services delivered another robust performance with segment-adjusted EBIT growth and strong profitability across all three segments. Our LSTK projects continue to progress well, and discussions with our clients on compensation for the additional costs related to COVID-19 impacts have been constructive. Also, today, we've announced the substantial close of the sale of our oil and gas business. This represents an important strategic milestone for the company. Quarterly performance was driven primarily by engineering services, which generated revenues of $1.5 billion, an increase of 2.4% on Q2 last year. Excluding the impacts of foreign currency, we saw robust organic growth of 6.8%. Segment-adjusted EBIT increased 9.5 percent, resulting in an adjusted EBIT margin of 9.6 percent. Backlog also remains robust at $11.1 billion, with a $1.5 billion in new bookings in the quarter, up 1.1 percent over the prior year. In SNCL projects, the LSDK contracts backlog reduced by approximately $200 million bringing the remaining backlog down to $1.4 billion. In summary, having delivered a solid second quarter, our first half 21 performance shows that our strategic initiatives to transform this company are generating results. Now let me share with you the progress we've been making in each of our strategic initiatives, and I'm on slide five. First, As I mentioned before, we've achieved the substantial close of the oil and gas business, a significant step forward in our transformation. The transaction has received all regulatory approvals except for one jurisdiction, Saudi Arabia, which is expected towards the end of Q3. Secondly, we have been successfully running off the LFTK projects, where the backlog has fallen from $3.4 billion in June 2019 to just $1.4 billion in June 21, over 58% since we launched our transformation plan. Third is driving consistent financial performance within engineering services. In the first half of this year, revenue has grown year on year. EBIT margins are in the upper half of our target levels. Operating cash flow was $275 million and we see a robust pipeline that gives us confidence in the continued performance going forward. Fourth, we are focused on building a connected, collaborative organization. We see significant opportunity to leverage our capabilities and product offerings more broadly across our core markets. Our world-class global technology center in India and growing digital capabilities allow us to deliver for our customers across all time zones and geographies, while providing an attractive set of professional development opportunities to retain our employees and attract new talent. Finally, we continue to transform and align S&C Leveling with two fundamental growth trends, where we have clear capabilities and a compelling value proposition. One is climate change, and the other is digital transformation. On climate change, Governments around the world, including Canada, are increasingly enacting regulations around achieving net zero carbon. We are well positioned to be a leader in engineering a sustainable society with our engineering net zero initiative and providing clean and affordable solutions to our clients. As governments in our core geographies continue to prioritize infrastructure spending, we see significant opportunity for S&C Labeling in the months and years ahead. With respect to our digital transformation, we continue to leverage our digital expertise and invest in further fortifying our capabilities in this space. Digital is an enabler for all we do and a way to differentiate our core services. And it focuses on design transformation, program management, digital twinning, and provides the infrastructure and services required for a globally connected and data-driven engineering business. Turning to slide six and an update on our sustainability strategy, we have proactively positioned ourselves to be a leader in engineering a sustainable society, and we have been growing our portfolio work in this area. A great example of this is our recent award from the UK government where we will be ensuring that over four million square feet of public sector office space meets enhanced sustainability standards as part of a UK government investment to accelerate its net zero agenda. In May, we also communicated our goal of being net zero carbon by 2030. Next, I'd like to move on to our business lines, starting with slide seven and the results for EDPM. EDPM generated revenues of $935 million, broadly flat to the same quarter last year. However, excluding the impact of foreign exchange, revenue growth was up 5.3%, driven by strength in our UK, Middle East, and US businesses. Segment-adjusted EBIT of $85 million increased 8.5%, resulting in a 9.1% EBIT margin. Backlog grew 12% to just over $3 billion, a record high for EDPM, driven by major wins in the UK, Middle East, and Australia, where we recently logged a major award supporting the Sydney Metro project. We see this as a key step to realizing our growth ambitions in Australia. Additional awards included rail, road, transportation, and solar projects, and looking ahead, the pipeline remains strong at $27 billion. Turning to slide eight, nuclear segment increased 6.1% on a reported basis and 9.6% on a constant currency basis. Growth was driven by increased support of assets for North America and European clients. Canada showed particular strength as we saw increased demand for our engineering field services. Segment adjusted EBIT of $33 million increased 7.5% over the prior year, resulting in 14.2% margin. Profit improvement was driven primarily across the US, Canada, and Europe, partially offset by a reduction in Asia Pacific. We continue to see several significant opportunities and growth catalysts on the horizon. These include continued demand for reactor support, can-do refurbishments and decommissioning, intensified tendering by the US Department of Energy for environmental management work, as well as continued momentum in the UK. We also see opportunities for new bill work and decommissioning activities within Canada, the US, and the UK. A key component to our continued success is our nuclear products and technology, which is a portfolio of physical software and licensing rights for the nuclear reactor designs and operational support licenses, as well as waste management reduction and process technologies. Our capabilities are differentiated, and in many cases, unique, enabling us to secure contracts like the expansion for medical isotope extraction at our overage facility. Moving to slide nine, an infrastructure services, the segment had a solid quarter with revenues of $334 million. representing growth of 6.3% compared to Q2 2020. On a constant currency basis, revenue increased by 9.2%, driven by increased levels of activity in links on because of significant new orders in the U.S. and the EMEA region. Segment-adjusted EBIT of $26 million increased 15.8% and resulted in an EBIT margin of 7.9%. We remain very optimistic about the numerous opportunities ahead, including growth in renewables such as wind, solar, and hydro, as well as data centers, rail and transit, and social infrastructures in the Americas and Europe. Turning to slide 10 and capital, the segment continued to be impacted by COVID restrictions in Ontario, which has resulted in reduced traffic volume on Highway 407 ETR, As a result, there was no dividend payment in the quarter. However, we do see increased volumes as a result of easing restrictions that really started in earnest at the end of June, and we remain optimistic for increasing traffic volumes over the short to medium term as more people return to offices. Our other concessions continue to perform well, And looking ahead, we are building a pipeline of new public-private partnership opportunities where we can leverage our engineering and O&M capabilities. These include several PPPs in Canada and the UK in the sewage water treatment and hospital space. Moving to slide 11 and the infrastructure EPC projects, we continue to make good progress reducing the LSTK construction backlog. Comprising three Canadian LRT projects, this portfolio's backlog is down 45% versus a year ago and down 13% since the end of Q1. The segment recorded an adjusted segment EBIT loss for the quarter of $22 million compared to a loss of $19 million a year ago. We are also proactively monitoring potential macroeconomic challenges including potential inflationary pressures on labor and materials, supply chain issues, and labor constraints. While we have not seen any material impact on our LSTK project so far, we are tracking these very closely. Turning to slide 12 in the resources segment, we continue to target full completion of the sale of our oil and gas business by the end of Q3. Our mining and metal services business is performing well. we are seeing growth in revenue and profitability driven primarily by increased demand for the materials used in clean energy storage, including electric vehicles. With that, I'll now turn the call over to Jeff.