The shareholders of the engineering consulting firm SNC-Lavalin enjoyed one of its best days on the stock market in just over a year on Thursday after the publication of quarterly results and growth prospects enhanced beyond the expectations of analysts and investors.
Propelled up 10%, SNC-Lavalin’s market value closed at $41.70 per share, or $7.3 billion in total.
This share value is a new high since January 2019, when SNC-Lavalin began a long and costly episode of commercial and legal turmoil.
In its second-quarter results released Thursday morning, SNC-Lavalin reported net income of $63.8 million, up considerably from the $1.6 million reported in the corresponding quarter last year.
As a result, SNC-Lavalin’s revenue for the first half of its 2023 fiscal year is $4.15 billion, up 10% year-on-year.
Cumulative net profit for the first six months of 2023 was 92.2 million, also up sharply from 26.3 million in the comparable period last year.
As for the state of the order book for the main activities in consulting engineering, which is an important indicator of the medium-term business outlook, SNC-Lavalin recorded it at 12.36 billion as of June 30.
This is a record amount, according to the company’s management, up 9% year on year.
In fact, motivated by an observation of “strong demand for our services” according to Ian L. Edwards, President and CEO of SNC-Lavalin, the company’s senior management has doubled its objective of revenue growth for its main activities in consulting engineering and project management.
It now anticipates this growth to be around 12% to 15% on an annualized basis, whereas its previous objective was in the range of 5% to 7%.
“In the United States, where business opportunities are abundant, we are reaping the rewards of our increased market presence and the government’s commitment to infrastructure spending,” Mr. Edwards said during the analyst conference call.
The SNC-Lavalin CEO also reported “key wins this quarter” in the market for industrial projects related to the manufacture of electric vehicle batteries.
Moreover, to support this renewed growth, SNC-Lavalin intends to maintain its hiring rate at a high level.
It expects to end fiscal 2023 with 4,000 more employees, bringing its total workforce to around 37,000 employees.
Analyst Maxim Sytchev at National Bank Financial in Toronto said, “While these hires will put pressure on profit margins in the near term, I am encouraged by the implication that the outlook for revenue growth continues. to be strong, despite the turmoil in the markets due to an uncertain macroeconomic environment”.
“Overall, SNC is moving in the right direction,” the analyst said in a note to investors.
“With his higher financial projections, I reiterate my ‘outperform’ rating and raise my target stock price from $39 to $46. »
Activities: consulting engineering services and project management, maintenance and renovation in nuclear energy
Headquarters: Montreal
Workforce: approximately 36,000 employees
Revenue (annualized as of June 30): CAN 7.94 billion
Net income (annualized as of June 30): CAN 75.6 million
Market value (as of August 3): C$7.32 billion
Main shareholders: Caisse de depot et placement du Quebec (CDPQ, 19.9%), Jarislowsky Fraser (Montreal, subsidiary of Scotiabank, 10.7%), RBC Global Asset Management (Toronto, 8.9%), Fidelity Investments Canada (Toronto, 6.9%), etc.
