SNC-Lavalin named Federico Puebla, a former technology executive at major Canadian financial services cooperative Desjardins Group, as global lead of the Lava Labs. He had designed his prior company's first innovation lab.

An SNC-Lavalin video on the planned Montreal lab shows a casual and relatively open work space, equipped with the latest virtual reality and computer equipment and a movie-theater sized display screen. “These hubs will provide our people with the space and technology to think and work differently – collaborating with our clients and partners to co-create, develop and implement solutions,” said Ian L. Edwards, CEO of SNC-Lavalin.

In its second-quarter financial results released in late July, he told investors and analysts that the firm has been “looking at how we sell our digital capability,” and use it “to bring in new revenue.”

Edwards said SNC-Lavalin's 3,000-person India hub “is a very, very advanced technology center” that supports the firm's global work. He highlighted its digital modeling approach to reducing buildings' carbon footprint and work for key UK client Heathrow Airport in biometrics installation and digital tracing.

The digital hubs are “a good initiative that showcases that the company is investing for the future vs. battling execution issues or any other negative news flow,” says National Bank of Canada financial analyst Maxim Sytchev.

The technology showcase comes as the company moves away from managing large P3-style lump-sum turnkey transportation and other projects, where construction cost overruns and profit-eating risks have hurt the firm's bottom line.

SNC-Lavalin in 2017 acquired long-established U.K.-based consultant Atkins, which Sytchev calls “one of the strongest consulting platforms around,” focused on services in engineering, nuclear and infrastructure “vs. taking on execution risk in construction.” He says “this shifting dynamic is a much more important part of the company’s evolution.”

SNC-Lavalin is also looking to rebuild its image after damaging international bribery charges related to actions more than a decade ago by since departed or terminated executives.

The company pleaded guilty in December 2019 to fraud involving a bribery scandal in Libya, agreeing to pay $280 million over five years, with three years of probation, under the terms of a deferred prosecution agreement. But the firm's 10-year World Bank debarment ended in April, two years early, with compliance efforts cited.

SNC-Lavalin ranks at No. 8 on ENR's Top 150 Global Design Firms list, reporting about $4 billion in 2020 worldwide design revenue.

For its second quarter ending June 30, the firm reported profit of $29.1 million (C) and revenue up 8%, to $1.8 billion, from the previous quarter. The profit figure compares to a $25.3-million loss for its 2020 second quarter.

Edwards said wind down of SNC-Lavalin fixed-price projects continues “to progress well,” adding that discussions with clients on compensation for additional costs related to COVID-19 impacts have been “constructive.” He said about $200 million in fixed-price project backlog was cut during the quarter, and that the firm also announced “substantial close” of the sale of its oil and gas business to Kentech Corporate Holdings, with full completion expected in Q3.

According to Edwards, total firm backlog “remains robust” at $11.1 billion with a $1.5 billion in new bookings in the quarter, up 1.1% over the prior year. “Our first half 2021 performance shows that strategic initiatives to transform this company are generating results,” he said.

Design and PM services revenue of $935 million was “broadly flat” compared to the same quarter last year, but revenue was up 5.3%, driven by strength in the U.K., Middle East and U.S. Backlog grew 12% to just over $3 billion, a “record high” he said. Edwards noted “a major award” supporting the Sydney Metro project In Australia. "We see this as a key step to realizing our growth ambitions” there, he said.

“I think the laws of supply and demand are such that our customers are having to find new ways to develop and build their infrastructure,” Edwards told investors. “We're seeing a change in the way that procurement is being undertaken,” a trend allowing the firm more selectivity in its contract pursuits.

Edwards also noted more “organic growth” in the U.S., fueled by Atkins' previous moves there. He noted plans to build more capacity in the Northeast, Northwest and California, as well as outlook for “very, very strong growth” in the U.K., mostly from new business.