Canada-based SNC-Lavalin Group Inc. said Sept. 12 it has renamed the firm as AtkinsRéalis, to “bring its brands together” and “transform the company permanently,” President and CEO Ian Edwards told ENR.
The play on the name of its Atkins subsidiary, the UK-based engineer acquired in 2017, highlights the parent firm’s "transition to an engineering focus,” it said, but retains its Montreal headquarters and corporate roots in French-speaking Quebec that date to 1911.
Other units making up SNC-Lavalin include Faithful+Gould, DTS and Atkins Acuity.
Edwards, leading the firm since 2019, also sold an unprofitable oil and gas business in 2021 at a loss over its purchase price several years before. This fall, AtkinsRéalis will close the sale to France-based Systra Group of its Scandinavian transportation business.
The company has weathered more than a decade of legal battles, C-suite shifts and negative market impacts stemming from past contract bribe and fraud accusations in Canada, Libya, Bengladesh and elsewhere that involved since departed managers and executives.
It also is unwinding from losses related to fixed-price construction contracts mostly for large rail and other infrastructure projects.
Edwards told investors last month that the company segment managing those projects showed a loss of CAD$13-million before interest and taxes for the second quarter, down from CAD$37-million for the same quarter in 2022. The firm still recorded about CAD$422-million of the fixed-price projects in its backlog but that is down from CAD$828-million a year ago, as work completes.
"As we finalize the [lump-sum turnkey] projects, we continue to pursue recoveries that are owed to us,” he added.
Company backlog reached a record CAD$12.4-billion, fueled by engineering demand in the U.S., Edwards said, noting that engineering services for the quarter posted 25.1% organic growth year over year, to CAD$1.47-billion in revenue.
Last month, the company projected organic revenue growth of between 12% and 15% in 2023, more than double its previous prediction. The firm also plans new growth by acquisition starting next year, particularly in boosting its U.S. footprint, with purchases eyed in the northeast and northwest, Edwards told Bloomberg.
Edwards said 50% of total company revenue will be related to climate change work, particularly in the nuclear energy sector. AtkinsRéalis holds intellectual property rights to Canadian nuclear technology, which he says is a market draw for the firm, including contracts related to small modular plants to be built in Ontario, the U.S. and overseas. It also has won recent contracts to develop U.S. battery plants.
Nuclear revenue in the quarter rose 11% year to year, with that sector backlog up 38% "as sentiment toward the technology improves among governments and the public alike," says Toronto-based National Bank of Canada analyst Maxim Sytchev in an August research note, but he noted its earnings were flat.
“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,” Edwards said in sharing the firm's Q2 results.
About 80% of corporate revenue going forward will come from work in the U.S., Canada and the U.K., with 20% from the Middle East, he said.
According to Edwards, the firm's global employment is about 37,000, down from 52,000 in 2017 when it worked in more countries and on a broader array of projects. But he said about 6,000 staff have joined in the last 18 months.
"We lived with the SNC-Lavalin name, but now we're at an inflection point," the CEO said. "We're engineering for the planet and its people, and we've embedded that in the business."
Market reaction was optimistic but guarded. National Bank of Canada analyst Sytchev said SNC-Lavalin investors had long sought the name change, which now indicates it is "turning the page." But he said a sustained financial turnaround depended on consistent and growing free cash flow. "While margin expansion is certainly possible, it is by no means an easy task,” he said.
"Overall, SNC is progressing in the right direction, said Sytchev, with the firm's outperform rating unchanged.
The company said it will begin trading on the Toronto stock exchange under the new ticker symbol ATRL by Sept. 18 but will still use SNC-Lavalin Group Inc. as its legal name until after a shareholder vote next year.
Company shares are up 82% this year, with more promising results and new focus, according to Bloomberg. But they are still about 30% below a high point reached in 2011.