SNC-Lavalin President and CEO Neil Bruce on Thursday praised the early benefits of his company’s acquisition of British engineering rival Atkins, which he called “the largest and most transformative in our history.”
The Montreal-based infrastructure and engineering company in July 2017 completed its $3.6 billion (CAN) deal for Atkins, a significant player in cleanup of the U.S. Cold War nuclear complex. During a quarterly earnings call with financial analysts, Bruce said the Atkins integration remains on track to produce $120 million in cost synergies by the end of 2018. The company reaped $40 million in cost synergies in 2017, he added.
The SNC chief said the remaining aspects of the Atkins integration should be finished this year.
“By bringing Atkins into the fold, we’ve created a compelling life of asset service with deep technological expertise that’s geared for greater project and technical complexity across higher-margin businesses,” Bruce said. “We are now one of the world’s few professional services and project management companies able to take on large, multibillion-dollar projects from concept to reality.”
During the call, Bruce said the nuclear businesses of both Atkins and SNC-Lavalin will be combined into a single segment under SNC’s global nuclear sector president, Sandy Taylor. The business segment provides decommissioning and other nuclear life-cycle work, including services for Canada’s CANDU reactors.
As he has in prior calls, Bruce said SNC-Lavalin considers the decommissioning of nuclear power plants a potential growth business. “We are looking at a number of decommissioning opportunities throughout the world” in coming years, the CEO said, without elaborating.
Engineering and construction revenue for the quarter ended Dec. 31 increased to $2.9 billion (CAN) from $2.1 billion in the fourth quarter of 2016. The uptick was partly due to $1 billion in incremental revenue from the Atkins deal, which was partially offset by declining numbers in oil and gas.
During 2017, SNC-Lavalin delivered $382 million (CAN) in net income, or $2.34 per diluted share, compared to $255.5 million, or $1.70 per diluted share, in 2016. For the fourth quarter of 2017, net income landed at $52.4 million, or $0.30 per diluted share, compared with $1.6 million, or $0.01 per diluted share, during the same period in 2016.
The company said its 2018 outlook for consolidated earnings per share is $3.60 to $3.85.
The Atkins merger gives SNC-Lavalin a big chunk of the Department of Energy cleanup business, including as a partner with AECOM in tank waste contractor Washington River Protection Solutions at the Hanford Site in Washington state and as a key subcontractor for liquid waste management at the Savannah River Site in South Carolina.
Atkins, with partners Westinghouse and Fluor, was selected by DOE in 2016 to manage depleted uranium hexafluoride (DUF6) conversion facilities in Kentucky and Ohio. The DUF6 deal represents a five-year, $318 million value for the joint venture.
