SNC-Lavalin Group (TSE: SNC) reduced its losses in the fourth quarter of 2021, but it failed to beat expectations.
The company has been hit by the COVID-19 pandemic, inflation, and supply chain disruptions. Shares plunged nearly 10% following the release.
Revenue & Earnings
Revenue came in at C$1.88 billion in Q4 2021, an increase of 14.5% from C$1.68 billion in Q4 2020.
Net loss was C$15.3 million (C$0.09 per diluted share), compared to a net loss of C$322.9 million, or (C$1.84 per diluted share) in the prior-year quarter.
On an adjusted basis, SNC’s net loss from professional services and project management, which represent the vast majority of SNC-Lavalin’s business, was C$0.15 per diluted share, compared to a loss of C$1.53 per diluted share in Q4 2020.
SNCL Engineering Services revenue amounted to C$1.7 billion in the quarter. This represents an increase of 9.7%, or 11.9% based on organic revenue growth, compared to Q4 2020.
CEO Commentary
SNC-Lavalin president and CEO Ian L. Edwards said, “We finished 2021 with a solid performance in our Engineering Services business, which reported strong revenue growth and margin performance in line with our expectations, and exceeded our outlook for broadly break-even cash flow. The business continues to perform at a high level as we leverage our global capabilities, unique end-to-end services, and decarbonization solutions. We are executing on the Pivoting to Growth Strategy we outlined during our investor day and strongly believe that we have a best-in-class SNCL Services business, which should continue to deliver revenue growth and positive cash flows in line with our 2022-2024 financial targets.”
Wall Street’s Take
On March 1, TD Securities analyst Michael Tupholme kept a Buy rating on SNC and C$42 price target. This implies 59.8% upside potential.
The rest of the Street is bullish on SNC with a Strong Buy consensus rating based on four Buys. The average SNC-Lavalin price target of C$42.50 implies 61.7% upside potential to current levels.
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