AtkinsRéalis Group Inc.

Thank you for standing by. This is the conference operator. Good morning and welcome to SNC-Lavalin's second quarter 2023 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 0. I would now like to turn the conference over to Denis Jasmin, Vice President, Investor Relations. Please go ahead.

Merci, Ariel. Bonjour tout le monde. Good morning, everyone, and thank you for joining us today. For those dialing in, we invite you to view the slide presentation that we have posted in the Investors section of our website, which we will refer to during this call. Today's call is also webcast. 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 assumptions, risks, and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these assumptions, 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-RFRS financial measures. Reconciliation of these amounts to corresponding RFRS financial measures are reflected in our earnings release and MD&A, which can be found on CDAR+, and our website. And now I'll pass the call over to Ian Edwards. Ian?

Thank you, Denis. Good morning, everyone, and thanks for joining us today. We are very pleased with our performance during the first half of the year, as results were strong across all our businesses. Our pivoting to growth strategy, which has been our guide as we grow into a premier professional services and project management company, is really taking shape. Performance this past quarter reinforces the benefits of this strategy, and positions as well for long-term value creation. SNCL services continued to grow, expanding revenue by 22% year-on-year, significantly outperforming our four-year outlook range of 5% to 7%. Segment-adjusted EBIT grew 15%, or $21 million, as we continue to manage our costs to deliver our targeted margin percentage. We achieved another record backlog this quarter, totaling $12.4 billion as at June 30, as demand for our services remains very strong in our core and end markets and geographies. Given our strong year-to-date performance, robust backlog, and the pipeline of prospects, we are raising our SNCL services organic revenue growth outlook for the full year to between 12% and 15%. We also continue to successfully add high-quality talent in the quarter, increasing our headcount by approximately 2,400 employees since the beginning of the year. Subsequent to quarter close, we made progress against our strategic review through the sale of the Scandinavian Engineering Services business to Systra Group, a France-based engineering and consulting group specialized in public transport and mobility solutions. We expect the transaction to close before the end of the year. Our success this past quarter and the opportunities we see ahead further emphasize the strength and resilience of our business and is driven by the global focus on sustainable infrastructure, energy sources for the built environment. We continue to have great confidence in our forward-looking trajectory and we are well on track to achieve our newly elevated outlook. for 23. On slide four, we highlight our backlog growth across SNCL services. Our 9% growth in the second quarter of 2023 versus the second quarter of last year was mainly driven by wins across our engineering services and nuclear businesses. We are seeing key wins across many of the markets in which we operate, including transportation work in the US, building infrastructure development in Saudi Arabia, and asset management and nuclear life extension work at home here in Canada. The wins highlighted on this slide demonstrate our ability to deliver growth now and in the future. Turning to slide five, our engineering services business continues to drive robust organic growth for SNCL and saw significant year-over-year revenue growth of 25% during the second quarter. Our record revenue generation for this quarter was driven by continued growth in the US, one of the pillars of our pivoting to growth strategy, along with strong performance in the UK, Canada and the Middle East. We also saw sustained performance in Australia and Asia, further demonstrating the resilience of our business in the region. Increased volume and productivity across the UK and Europe contributed to the profitability improvement in the quarter. Segment adjusted EBIT margin and segment adjusted EBITDA over net revenue margin were 8.5% and approximately 14% respectively during the quarter. We continue to achieve record backlog results, which now stands at approximately $5.1 billion, representing 22% growth versus our backlog as at June 30, 2022. On slide six, we provide further insight into each of our core geographies of the UK, the US, and Canada. In addition to organic revenue growth, we also earn several key wins across these markets that touch all of the engineering services that S&C Laughlin provides. In the UK and Europe, we saw continued revenue growth, which speaks to our position as strategic partners to governments as they focus on transportation, defense, and water. Performance this quarter in these markets was driven by increased volume, productivity and profitability. In the U.S., we continue to reap the benefits of our increased foothold in the market and the government's commitment to infrastructure spending. This past quarter, we secured key wins in transportation, building and places and defense. And looking out, these opportunities in the U.S. are plentiful. backed by the US commitment to spend more than $100 billion over the next five years. We have strong confidence for near-term and long-term opportunities in Canada, as the government plans to spend close to $15 billion until 2029 in reliable, fast, affordable, and clean public transport. We are also at the forefront of supporting projects related to the development of EV batteries as proven by a key win this quarter. Long-term, there is a focus on reducing GHG emissions by 90% by 2050, which will lead to further contract opportunities for S&C Lavalin. Global demand for our end-to-end services remain robust, driven by generational investments in infrastructure and climate resiliency and reshoring of manufacturing and the energy transition. We are successfully attracting and retaining top talent to support our growth pipeline. Future opportunities and our focus on operational excellence sets us up for top line and bottom line growth in our engineering services business across each of our geographies. I'd like to now move to slide seven and the results of our nuclear business. We demonstrated strong growth in the quarter. with an organic revenue increase of 11% compared to the second quarter of 2022. Our nuclear backlog has also grown to $1.1 billion, which represents a 38% growth versus our backlog at that June 30, 2022. Operating margins fell to 13% due to changes in the business mix of nuclear segment this quarter. Nuclear represents a significant opportunity for S&C Loveland and our position in the marketplace. Our robust revenue and backlog growth further confirms that we are well positioned to capture long-term benefits as leaders in this thriving nuclear energy space. On slide eight, we highlight achievements in each of the nuclear services that we provide. Nuclear new build represents a near-term and long-term revenue-generating opportunity for S&C Loveland. The recent announcements by the Ontario government in which they plan to build three small modular reactors at the OPG Darlington site and their proposal to expand the Bruce Power Nuclear Station are just two examples of how governments are acting on their commitments to net zero. We remain active in reactor support and life extension projects, as indicated by our work across many of the core geographies. In Ontario, we continue to be actively supporting can-do life extension work at the Bruce Power Site, where we recently signed a 10-year commitment to life extend the remainder of the reactors. Our can-do technology and proven success in life extension allow us to capture new opportunities such as the recent announcement by Ontario provincial government approving the extension of Pickering Nuclear for a further two years. On waste management and decommissioning, we're seeing continued progress on our projects in the UK and in the UAE and have a strong pipeline of prospects in the US. We are increasingly excited about the long-term growth potential of our nuclear business, given our expertise, and our recognition as a trusted engineering and delivery partner. We are consistently harnessing our capabilities across the globe to continue to set SSE leveling up for further nuclear contract wins. Now moving to slide nine and our O&M and links on businesses. Our O&M segment generated $99 million in revenue during the second quarter, a 7% organic revenue decrease mainly due to the completion of a large contract that offset revenue generated from new projects. Segment adjusted EBIT margin was 8%, above our long-term target of 5% to 7%. We continue to see opportunities for growth and expansion in Canada and the UK through wastewater facilities and building and road infrastructure improvements. We're also utilizing our strategic partnerships with key industry players and leverage in our capital group to maximize bidding opportunities for future growth in core markets. Our strategic review regarding LinksOn remains ongoing, and we will provide an update when applicable. Backlog increased by 16% to approximately $1 billion at the end of the quarter, and the quality of the backlog should lead to an increase in revenue over the back half of the year and a segment-adjusted EBIT margin percentage closer to the low end of our outlook range in Q4. This market actually remains very strong with good opportunities, particularly in the Middle East and the U.S. Moving to slide 10 and our LSTK projects and capital business, we recognize $13 million in losses in the quarter in line with our expectations. As we finalize the LSTK projects for our clients, we continue to pursue recoveries that are owed to us. A significant portion of additional costs related to the pandemic, supply chain disruption, inflation, labour strike action should be recoverable under the contracts we have with our customers and discussions remain ongoing as we vigorously pursue recovery of these losses. Testing and commissioning on our two Ontario projects is proceeding as scheduled. Our last project, REM, continues to progress well with the South Shore portion having successfully opened on July 31. Turning to our capital business, second quarter revenues and segment-adjusted EBIT both grew significantly versus the second quarter of 2022 as we received $10 million in dividends from our holding interest in the Highway 407 compared to no payment received this quarter of last year. In July, we received another $10 million in dividends. Traffic volumes continued to accelerate as more workers returned to the office. Volume grew by 18% compared to the second quarter of 2022. So with that, I'll now turn over to Jeff to discuss the financial highlights.