AtkinsRéalis Group Inc.

Thank you for standing by. This is the conference operator. Good morning and welcome to SNC-Lavalin's second quarter 2022 results 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, then zero. I would now like to turn the conference over to Denis Jesmin, Vice President, Investor Relations. Please go ahead.

Thank you, Ariel. Good morning, everyone, and thank you for joining us all. Our Q2 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 Jess 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 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 company's relevant findings on CDAR. These documents are also available on our website. Also during the call, we may refer to certain non-ISRS measures and ratios. These measures and ratios are defined, calculated, and reconciled with comparable RFRS measures in RMDNA, which can be found on CEDAR and on our website. Management believes that these 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, Ginny, and good morning, everyone, and thank you for joining us today. I want to start, as I do every quarter, to take a minute to recognize the tireless efforts of our 32,000 employees worldwide, from those who have been with us for their entire career to the employees who have joined us since the beginning of this year. They continue to take pride in being part of the S&C Loveland community, and we're appreciative of their dedication to our growth and purpose to engineer a better future for our planet and its people. With that, let's start on slide four. During the second quarter, we saw a continued uptick in top-line performance as total revenues increased 4.1% year-over-year to $1.9 billion, driven by continued acceleration of our engineering services business. During the second quarter, our LSDK projects backlogged decreased by $128 million from the first quarter to $828 million. I'll speak further to this a little bit later, but our visibility remains clear on path to closing out these projects over the next several quarters, and we remain confident in our initial assessment of their financial impact from now until completion. SNCL services revenues were up 4.2% over Q2 last year to $1.6 billion. Excluding the impacts of foreign currency, we achieved a robust organic growth of 6%. Segment-adjusted EBIT was $146 million and represented a 9.1% margin. In our engineering services business, we achieved a record-high U.S. backlog during the second quarter, and a total backlog rose to $4.2 billion which represented an 11% increase year over year. And we have the talent to deliver this backlog as our net headcount increased and we continue to make strategic hires in areas that support our pivoting to growth strategy. That purpose-driven strategy has influenced our deliberate approach to long-term value creation with a focus on expansion in strong and growing markets, mainly Canada, the U.S., and the U.K., driven by our long-standing customer relationships and a focus on public sector entities. While the macroeconomic environment is challenging and is projected to be for the foreseeable future, our business model and our approach remains resilient, underpinned by multi-year investment trends by our customers and our operational focus on what we can control. Turning to slide five, our engineering services business capitalized on the momentum from the last few quarters, delivering strong results during the quarter. Business remained robust in our core geographies, leading to 8% year-over-year organic revenue growth to $1.1 billion. Segment-adjusted EBIT margin and segment-adjusted EBITDA over net revenue margin were 8.5% and 15% respectively in our target ranges. We witnessed key wins in the quarter across Europe, Canada, and the US, including in Denmark, where we recently won a contract to design a new high-speed rail line, while at home in Canada, we captured a key win for a multidisciplinary design work on the Shikutami Hospital. We continue to generate wins in the US, as highlighted by a recently awarded three-year contract to provide program management and design criteria professional services at Florida's Pensacola International Airport, which follows the recent contract extension we were awarded for our work on the expansion of Southwest Florida's International Fort Myers. These two projects demonstrate the general reemergence of projects in the aviation sector and the commitment from the U.S. government to spend on infrastructure development as outlined in the $1 trillion infrastructure bill. These wins and others elevated our backlog to $4.2 billion, another record level and 11% higher as of June 30, 2021, which gives us confidence that it's hitting our revenue target for the full year. I'd like to move to slide six and the results for our nuclear business. During the second quarter, nuclear revenues and segment-adjusted EBIT were similar to the prior year. with slightly lower revenue being offset by slightly higher segment-adjusted EBIT margins. We continue to make progress across the Canadian refurbishment project at Darlington and Bruce Power. In addition, the life extension opportunities on the global Can-Do reactor fleet remains robust, and we recently announced a $64 million contract for the engineering and early procurement services for retubing work for the Sonoba Unit 1 reactor in Romania. We see this type of work as a key driver for long-term value creation in the nuclear segment over the coming years. We're also well positioned to capitalize on major upcoming new build projects and small modular reactors, where we're beginning to dedicate a greater number of highly skilled engineers to fillable projects, as we position our new build business to growth. The market conditions for new nuclear are looking more and more positive, driven by government commitment on climate change and an increasing desire, particularly in Europe, to improve energy autonomy and security of supply. The opportunity to participate in new nuclear projects is robust, including Hinkley Point and Sizewell Sea in the UK, and the potential for Cernavoda Units 3 and 4 in Romania. Moving to slide 7 in our O&M segment, which generated $105 million in revenue during the second quarter, in line with second quarter 2021. This sector continues to deliver strong segment-adjusted EBIT, with $11 million representing an 11% EBIT margin above the long-term target of 5% to 7%. Year-to-date, we continue to see sustained financial performance with strong operational metrics across the O&M portfolio. with a healthy pipeline of project opportunities, including roadway transit and healthcare work. Our teams have also been mobilizing the startup on Eglinton, Trillium, and the REN project. We also see opportunity for growth in our strategic partnership with key industrial players by leveraging our capital group to maximize bidding opportunities for future growth in our core markets. On slide eight, our LinkedIn business generated robust year-over-year top line growth for a second consecutive quarter, increasing revenues to $154 million, representing an organic revenue growth of 13.7% compared to the second quarter of 2021. Year-over-year growth was aided by increased level of activity in the U.S. and the Middle East. As expected, the business returns profitability in the quarter with segment adjusted EBIT totaling $7 million and operating margins in line with our target. This quarter, we are also disclosing segment adjusted EBITDA of net revenue for the first time, which we believe is a better reflection of the project management and execution profitability of this business. Our backlog ended the second quarter at $823 million below our second quarter 2022 backlog as we saw delay in awards. We continue to see significant opportunity ahead as demand for links on services in growing and enhancing electricity transmission and distribution networks remain high. Turning to slide nine and capital, second quarter revenues declined to $14 million and segment adjusted EBIT was $11 million, mainly due to the disposal of our investment in Empower DC during the first quarter of 2022. Amidst the easing of COVID-19 restrictions by the province of Ontario, traffic pattern trends on the Highway 407 grew by 56% versus the second quarter of 2021. We did not receive a dividend from Highway 407 ETR during the second quarter But subsequent to the quarter, we received $14 million in July, which will be recognized in the third quarter. So moving to slide 10 and the update on LSDK projects, second quarter revenue grew $15 million or 6% year over year to $249 million due largely to better than expected progress on our REM project. Our backlog continues to decrease at a robust pace with year-over-year decline from $1.4 billion to $828 million, representing a 41% decrease. Sequentially, the backlog saw a 13% reduction from Q1 as we continued to make steady progress on each of our projects. Segment-adjusted EBIT continues to be impacted by the unprecedented factors that we've been managing as we work to complete these projects. including elevated inflation in building and construction indices, supply chain disruptions, and absenteeism due to labor strikes in Ontario. As you can see on slide 11, we provided more detailed update on the wind down of the LSDK project. Overall, we saw a 29% decline in backlog during the first half, while recognizing close to $465 million in revenue over the same period. Two of the three largest Canadian projects, Eglinton and Trillium, remain on track to be largely complete by the end of 2022. As mentioned earlier, REM continues to progress well and is over 65% complete at the end of the second quarter. We have recognized $67 million in EBIT losses during the first half of the year. With $46 million of these losses, relating to the $300 million of total potential financial risk scenario to complete the LSDK project. This is represented in the chart on the right-hand side of the slide. With each passing quarter, we gain increased visibility into the completion cost and the timeline of these projects, and we remain confident that any further additional financial risk should be contained within the $300 million envelope. Before passing it over to Jeff, just to discuss the financial highlights of the second quarter, I want to take a moment to discuss our sustainability efforts. We will be releasing our annual sustainability report towards the end of September, which will provide a deep analysis on our progress across ES and G, as highlighted on the slide. A few points to point out. 50% of our global revenues were assessed as sustainable revenues, which contribute to a sustainable future in a carbon-free economy. A major milestone in evolving our ESG story was the launch of decarbonomics this year. This is a data-driven solution for builders and real estate owners and operators that can help decarbonize the built environment. We've increased our target as it pertains to female representation. And we continue to make inroads in building mutually beneficial relationships with Aboriginal and First Nation people. I'm delighted to share with you also that as per the most recent results of our third-party employee engagement survey, our people told us how proud they are to work for S&C Loveland and how enthusiastic they are about the purpose-driven strategy to deliver a more sustainable future, scoring higher than last year and the industry benchmarks. On the governance side, we are receiving positive recognition by third-party rating agencies for our achievements. We've also strengthened our ESG commitments by adding new oversight responsibilities for the board. And later this year, we have plans to tell you more about how we're effectively managing material ESG risk and seizing significant opportunities to provide sustainable solutions to our customers. So with that, I'll now turn over to Jeff to discuss the financial highlights.