SNC-Lavalin announces fourth quarter and year-end results for 2012

 N.B.: All amounts indicated are in Canadian dollars.

MONTREAL, March 8, 2013 /CNW Telbec/ -

SNC-Lavalin Group Inc. (TSX: SNC) announced its results today for the fourth quarter and the year ended December 31, 2012.

Fourth Quarter Results
For the fourth quarter of 2012, net income attributable to SNC-Lavalin shareholders was $94.6 million ($0.63 per share on a diluted basis), compared to $76.0 million ($0.50 per share on a diluted basis) for the comparable quarter of 2011.

Net income excluding Infrastructure Concession Investments ("ICI") for the fourth quarter of 2012 was $24.2 million, compared to $36.5 million for the same period last year, mainly reflecting a higher level of selling, general and administrative expenses, partially offset by a higher gross margin amount due to a higher level of activity.  The 2012 fourth quarter gross margin included unfavourable cost reforecasts on two major Packages projects outside Canada, one in the Power segment and one in the Hydrocarbons & Chemicals segment. The 2011 gross margin included unfavourable cost reforecasts on certain projects in the Infrastructure & Environment and the Hydrocarbons & Chemicals segments, a $22.4 million loss from a revised position of the Company's net financial position related to its Libyan infrastructure projects, and period expenses of $35 million in Hydrocarbons & Chemicals.

Net income from ICI increased to $70.4 million, compared to $39.5 million for the fourth quarter of 2011, mainly due to higher dividends received from Highway 407.

For the fourth quarter of 2012, revenues increased by 14.3% to $2.4 billion, mainly due to increases of 15.8% and 21.7% in the Services and Packages categories, respectively.

Year-End Results
For the year ended December 31, 2012, net income attributable to SNC-Lavalin shareholders was $309.1 million ($2.04 per share on a diluted basis), compared to $378.8 million ($2.49 per share on a diluted basis) for the comparable period of 2011.

The net income excluding ICI was $152.2 million, compared to $247.6 million for the year ended December 31, 2011, mainly reflecting higher selling, general and administrative expenses partially offset by a higher gross margin amount. The increase in gross margin reflected a higher level of activity, partially offset by lower gross margin to revenue ratio, notably in the Packages category which was impacted particularly by unfavourable cost reforecasts on a major Power project. On an industry segment basis, with the exception of the Mining & Metallurgy segment, all other segments had lower operating income in 2012 compared to 2011, and the Hydrocarbons & Chemicals segment had an operating loss in 2012.

The net income from ICI increased to $156.9 million, compared to $131.2 million for the year ended December 31, 2011, mainly due to higher dividends received from Highway 407 and higher net income from AltaLink, partially offset by lower net income from Shariket Kahraba Hadjret En Nouss S.p.A.

Cash and cash equivalents totalled $1.2 billion as at December 31, 2012.

Revenues for the year ended December 31, 2012, increased by 12.2% to $8.1 billion, compared to $7.2 billion for the same period of 2011, mainly due to an increase in revenues of 30.2% in the Services category.

Revenue backlog remained strong at $10.1 billion at the end of December 2012, which is the same level as at the end of December 2011.

"While 2012 was a challenging year for SNC-Lavalin and its employees, our revenue increased and our backlog remained solid. The last months have been dedicated to putting the house in order and reinforcing our commitment to excellence, quality, safety and ethics," said Robert G. Card, President and Chief Executive Officer, SNC-Lavalin Group Inc. "As previously announced, we continue to actively review and develop the strategic business plan of the Company, and we expect to announce the main elements of the plan at the time of our first quarter financial results and Annual General Meeting. We are committed to focusing on project delivery, core competencies and organizational improvements in order to enhance our performance and to establish a basis for growth and success in the future. Our desire is to create long term value for our shareholders."

Controls and Procedures
An evaluation of the Company's internal control over financial reporting has been carried out as at December 31, 2012. Based on this evaluation, including an assessment of the remedial measures that have been implemented by the Company during 2012, the Chief Executive Officer and the Chief Financial Officer have concluded that the previously identified material weaknesses relating to the design and operating effectiveness of the Company's internal control over financial reporting no longer existed as at December 31, 2012.

2013 Outlook
The Company currently expects an annual growth in net income between 10% and 15% in 2013 compared to 2012. This outlook is principally based on (i) the expectations that the Power segment, mainly based on its current backlog, and the ICI segment will be the main contributors to net income, while the Hydrocarbons & Chemicals segment will continue to be challenging throughout 2013, and Mining & Metallurgy could be affected by the softening of the commodity markets, ii) the costs expectations relating to the Company's ongoing commitment to compliance matters and the improvement and strengthening of its processes across the organization and (iii) the assumptions and methodology described in the Company's 2012 Management's Discussion and Analysis under the heading "How We Budget and Forecast Our Results". These are also subject to the risks and uncertainties described in the Company's public disclosure documents.

Quarterly Dividends
The Board of Directors has increased the quarterly cash dividend by 4.5% to $0.23 per share, payable on April 5, 2013, to shareholders of record on March 22, 2013. This dividend is an "eligible dividend" for income tax purposes.

Adoption of Advance Notice Bylaw
The Company also announces that its Board of Directors has approved an amendment to its by-laws to add an advance notice requirement (the "By-Law Amendment"), which requires advance notice to be given to the Company in circumstances where nominations of persons for election as a director of the Company are made by shareholders other than pursuant to: (i) a requisition of a meeting made pursuant to the provisions of the Canada Business Corporations Act (the "CBCA"); or (ii) a shareholder proposal made pursuant to the provisions of the CBCA. Among other things, the By-law Amendment fixes a deadline by which shareholders must submit a notice of director nominations to the Company prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that a shareholder must include in the notice for it to be valid.

In the case of an annual meeting of shareholders, notice to the Company must be given not less than 30 nor more than 65 days prior to the date of the annual meeting, however, in the event the meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement.

The By-Law Amendment is effective immediately and will be submitted to shareholders for confirmation and ratification at the Company's upcoming annual meeting of shareholders to be held in early May 2013.

Update on Board Renewal Process
As announced in December 2012, the Company remains actively engaged in a continuous board renewal process and expects to make certain announcements with respect to this process at the time of filing of the Annual Management Proxy Circular in late March.

About SNC-Lavalin
SNC-Lavalin is one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure, and in the provision of operations and maintenance services. Founded in 1911, SNC-Lavalin has offices across Canada and in over 40 other countries around the world, and is currently working in some 100 countries. www.snclavalin.com

Forward-looking Statements:

Reference in this press release, and hereafter, to the "Company" or to "SNC-Lavalin" means, as the context may require, SNC-Lavalin Group Inc. and all or some of its subsidiaries or joint ventures, or SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint ventures.

Statements made in this press release that describe the Company's or management's budgets, estimates, expectations, forecasts, objectives, predictions, projections of the future or strategies may be "forward-looking statements", which can be identified by the use of the conditional or forward-looking terminology such as "aim", "anticipates", "assumes", "believes", "estimates", "expects", "goal", "intend", "may", "plans", "projects", "should", "will", or the negative thereof or other variations thereon. Forward-looking statements also include any other statements that do not refer to historical facts. All such forward-looking statements are made pursuant to the "safe-harbour" provisions of applicable Canadian securities laws. The Company cautions that, by their nature, forward-looking statements involve risks and uncertainties, and that its actual actions and/or results could differ materially from those expressed or implied in such forward-looking statements, or could affect the extent to which a particular projection materializes. Forward-looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of the Company's current objectives, strategic priorities, expectations and plans, and in obtaining a better understanding of the Company's business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

The 2013 outlook referred to in this press release is forward-looking information and is based on the methodology described in the Company's 2012 Management's Discussion and Analysis under the heading "How We Budget and Forecast Our Results" and is subject to the risks and uncertainties described in the Company's public disclosure documents. The purpose of the 2013 outlook is to provide the reader with an indication of management's expectations, at the date of this press release, regarding the Company's future financial performance and readers are cautioned that this information may not be appropriate for other purposes.

Forward-looking statements made in this press release are based on a number of assumptions believed by the Company to be reasonable as at the date hereof. The assumptions are set out throughout the Company's 2012 Management's Discussion and Analysis (particularly, in the sections entitled "Critical Accounting Judgments and Key Sources of Estimation Uncertainty" and "How We Analyze and Report our Results" in the Company's 2012 Management's Discussion and Analysis).  If these assumptions are inaccurate, the Company's actual results could differ materially from those expressed or implied in such forward-looking statements.  In addition, important risk factors could cause the Company's assumptions and estimates to be inaccurate and actual results or events to differ materially from those expressed in or implied by these forward-looking statements.  These risks include, but are not limited to: (a) the outcome of pending and future claims and litigation could have a material adverse impact on the Company's business, financial condition and results of operation; (b) the Company is subject to ongoing investigations which could adversely affect its business, results of operations or reputation and which could subject it to sanctions, fines or monetary penalties, some of which may be significant; (c) further regulatory developments could have a significant adverse impact on the Company's results, and employee, agent or partner misconduct or failure to comply with anti-bribery and other government laws and regulations could harm the Company's reputation, reduce its revenues and net income, and subject the Company to criminal and civil enforcement actions; (d) a negative impact on the Company's public image could influence its ability to obtain future projects; (e) fixed-price contracts or the Company's failure to meet contractual schedule or performance requirements may increase the volatility and unpredictability of its revenue and profitability; (f) the Company's revenue and profitability are largely dependent on the awarding of new contracts, which it does not directly control, and the uncertainty of contract award timing could have an adverse effect on the Company's ability to match its workforce size with its contract needs; (g) the Company's backlog is subject to unexpected adjustments and cancellations, including under "termination for convenience" provisions, and does not represent a guarantee of the Company's future revenues or profitability; (h) SNC-Lavalin is a provider of services to government agencies and is exposed to risks associated with government contracting; (i) the Company's international operations are exposed to various risks and uncertainties, including unfavourable political environments, weak foreign economies and the exposure to foreign currency risk; (j) there are risks associated with the Company's ownership interests in ICI that could adversely affect it; (k) the Company is dependent on third parties to complete many of its contracts; (l) the Company's use of joint ventures and partnerships exposes it to risks and uncertainties, many of which are outside of the Company's control; (m) the competitive nature of the markets in which the Company does business could adversely affect it; (n) the Company's project execution activities may result in professional liability or liability for faulty services; (o) the Company could be subject to monetary damages and penalties in connection with professional and engineering reports and opinions that it provides; (p) the Company may not have in place sufficient insurance coverage to satisfy its needs; (q) the Company's employees work on projects that are inherently dangerous and a failure to maintain a safe work site could result in significant losses and/or an inability to obtain future projects; (r) the Company's failure to attract and retain qualified personnel could have an adverse effect on its activities; (s) Work stoppages, union negotiations and other labour matters could adversely affect the Company; (t) the Company relies on information systems and data in its operations. Failure in the availability or security of the Company's information systems or in data security could adversely affect its business and results of operations; (u) any acquisition or other investment may present risks or uncertainties; (v) a deterioration or weakening of the Company's financial position, including its net cash position, would have a material adverse effect on its business and results of operations; (w) the Company may have significant working capital requirements, which if unfunded could negatively impact its business, financial condition and cash flows; * an inability of SNC-Lavalin's clients to fulfill their obligations on a timely basis could adversely affect the Company; (y) the Company may be required to impair certain of its goodwill, and it may also be required to write down or write off the value of certain of its assets and investments, either of which could have a material adverse impact on the Company's results of operations and financial condition; (z) global economic conditions could affect the Company's client base, partners, subcontractors and suppliers and could materially affect its backlog, revenues, net income and ability to secure and maintain financing; (aa) fluctuations in commodity prices may affect clients' investment decisions and therefore subject the Company to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards, and may affect the costs of the Company's projects; (bb) inherent limitations to the Company's control framework could result in a material misstatement of financial information, and; (cc) environmental laws and regulations expose the Company to certain risks, could increase costs and liabilities and impact demand for the Company's services. The Company cautions that the foregoing list of factors is not exhaustive. For more information on risks and uncertainties, and assumptions that would cause the Company's actual results to differ from current expectations, please refer to the sections "Risks and Uncertainties", "How We Analyze and Report Our Results" and "Critical Accounting Judgments and Key Sources of Estimation Uncertainty" in the Company's 2012 Management's Discussion and Analysis.

The forward-looking statements herein reflect the Company's expectations as at the date of this press release and are subject to change after this date. The Company does not undertake any obligation to update publicly or to revise any such forward-looking statements whether as a result of new information, future events or otherwise, unless required by applicable legislation or regulation.

SNC-Lavalin's Consolidated Financial Statements and Management's Discussion and Analysis and other relevant financial materials are available in the Investor Relations section of the Company's website at www.snclavalin.com. These and other Company reports are also available on the website maintained by the Canadian Securities regulators at www.sedar.com.

SOURCE: SNC-LAVALIN