SNC-Lavalin Q2 Results Miss Estimates, But Backs 2014 Outlook

(RTTNews) - Canadian engineering and construction company SNC-Lavalin Group, Inc. (SNCAF, SNC.TO) reported Friday a profit for the second quarter compared to a loss last year, despite a revenue decline, reflecting significantly lower direct costs as well as improved results from the two operating segments.

However, both earnings per share and quarterly revenues missed analysts' expectations. The company also maintained earnings guidance for the full-year 2014, and announced a quarterly cash dividend for the second quarter.

"2014 is a year of rebuilding and we are continuing to make progress in that regard. During the second quarter, we continued to execute our previously announced growth strategy. The agreement to sell AltaLink and the proposed acquisition of Kentz are key milestones in SNC-Lavalin's strategic plan to transform into a Tier-1 global E&C company," President and CEO Robert Card said in a statement.

The Montreal, Canada-based company reported net income of C$32.07 million or C$0.21 per share for the second quarter, compared to a net loss of C$37.68 million or C$0.25 per share in the prior-year quarter.

On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.

Net income from Infrastructure Concession Investments (ICI) increased to C$78.93 million from C$67.0 million last year. Net loss from Engineering & Construction and Operations & Maintenance (E&C) narrowed to $46.86 million from $104.68 million a year ago.

Total revenues for the quarter decreased 13 percent to C$1.70 billion from C$1.94 billion in the same quarter last year, and missed four Wall Street analysts' consensus estimate of C$1.80 billion.

At the end of the second quarter, revenue backlog stood at $8.21 billion, compared to $8.29 billion at the end of fiscal 2013.

Services revenues declined to C$559 million from C$723 million, and packages revenues decreased to C$625 million from C$737 million in the prior-year quarter.

Revenues for operations and maintenance totaled C$284 million, lower than 298 million in the same quarter a year ago. ICI revenues improved to C$229 million from C$185 million in the comparable quarter last year.

Gross margin for the quarter improved 870 basis points to 20.6 percent from last year as direct cost of activities decreased to C$1.35 billion from C$1.71 billion a year ago. Selling, general and administrative expenses also decreased 8.9 percent to $208.3 million from last year's $228.7 million.

Further, SNC-Lavalin declared a quarterly cash dividend to C$0.24 per share for the second quarter of fiscal 2014, payable on September 5, to shareholders of record on August 22, 2014.

Looking ahead to fiscal 2014, the company continued to expect earnings in a range of C$2.80 to C$3.05 per share. Street is currently looking for full-year 2014 earnings of $2.90 per share.

In Friday's regular trading session, SNC.TO is currently trading on the Toronto Stock Exchange at C$56.85, down C$1.77 or 3.02 percent on a volume of 0.10 million shares.