Mr. Ian Edwards reports

ATKINSREALIS REPORTS STRONG SECOND QUARTER RESULTS

Atkinsrealis Group Inc. has released its financial results for the second quarter (Q2) ended June 30, 2024.

Atkinsrealis delivered strong Q2 results, with significant year-over-year increases in revenue, segment adjusted EBIT (earnings before income and taxes), net income and EPS (earnings per share). The company's segment adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to segment net revenue ratio for engineering services regions improved year over year, mainly driven by the company's initiatives presented at the investor day on June 13, 2024. Note that the net income and EPS were impacted in the quarter by a strong share price appreciation, increasing the company's compensation costs. The company's backlog continued to achieve record highs with strong year-over-year increases in engineering services regions and nuclear.

"We concluded the first half of the year with another strong quarter, delivering significant year-over-year revenue growth and margin expansion. We continue to see robust demand for our engineering services business and the market remains strong, as witnessed by our record backlog," said Ian L. Edwards, president and chief executive officer of Atkinsrealis. "In addition, we are encouraged by the exceptional opportunities we are seeing across our nuclear portfolio, particularly in Candu refurbishment. With the powerful organic growth engine we have constructed, we remain confident in our ability to drive long-term shareholder value.

"In June, we held our investor day, where we introduced our new 'delivering excellence, driving growth' strategy underpinned by three pillars. In alignment with these pillars, we highlighted the ways in which we will optimize the business, accelerate value creation and explore untapped potential. We also unveiled our long-term financial targets, emphasizing our confidence in driving growth, improving margins and delivering excellence for our customers. I want to thank the exceptional leadership team of Atkinsrealis for setting the tone in differentiating the company, as well as our 38,500 employees for their passion and dedication in helping to engineer a better future for our planet and its people."

Q2 2024 financial highlights

(All results reflect comparisons with the prior-year period of Q2 2023, except as otherwise indicated) (Engineering services regions comprise the following reportable segments: Canada, the United Kingdom and Ireland (UKI), the United States and Latin America (USLA), and Asia, the Middle East and Australia (AMEA)):

• Atkinsrealis services revenue totalled $2.3-billion, an increase of 17.0 per cent, or 17.0 per cent on an organic revenue growth basis:
  • Engineering services regions revenue totalled $1.7-billion, an increase of 11.6 per cent, or 12.0 per cent on an organic revenue growth basis, above the company's full-year outlook range, with organic revenue growth in all regions.
  • Nuclear revenue totalled $357.6-million, an increase of 42.4 per cent, or 40.9 per cent on an organic revenue growth basis, well above the company's full-year outlook range.
• Atkinsrealis services segment adjusted EBIT increased by 21.9 per cent to $203.8-million:
  • Segment adjusted EBIT for engineering services regions increased by 19.0 per cent to $157.4-million, representing a segment adjusted EBIT to segment revenue ratio of 9.0 per cent, while the segment adjusted EBITDA to segment net revenue ratio was 15.2 per cent, an increase of 110 basis points and in line with the company's full-year outlook range.
  • Segment adjusted EBIT for nuclear increased by 31.8 per cent to $43.4-million, representing a segment adjusted EBIT to segment revenue ratio of 12.1 per cent.
• Segment adjusted EBIT for LSTK (lump-sum turnkey) projects was negative $18.4-million.
• Adjusted EBITDA from PS&PM (professional services and project management) increased by 12.2 per cent to $187.6-million.
• Atkinsrealis services backlog reached a new record-high and totalled $15.6-billion as at June 30, 2024, an increase of 26.4 per cent from June 30, 2023.
• Net income attributable to Atkinsrealis shareholders totalled $82.2-million, or 47 cents per diluted share, compared with $63.8-million, or 36 cents per diluted share.
• Adjusted net income attributable to Atkinsrealis shareholders from PS&PM totalled $85.3-million, or 49 cents per diluted share. Results this quarter were impacted by a strong share price appreciation, which increased the company's expenses related to the Atkinsrealis's long-term incentive plans (LTIPs).
• Net cash used for operating activities of $88.7-million.
• The company returned $16.1-million to shareholders through share repurchases and dividends ($22.6-million year to date).
• Net limited recourse and recourse debt to adjusted EBITDA ratio was 1.9 as at June 30, 2024, compared with 3.1 as at June 30, 2023.

2024 outlook

The company is raising its nuclear organic revenue growth outlook for full year 2024, compared with 2023, to between 30 per cent and 35 per cent, from the previous range of between 15 per cent and 20 per cent, reflecting strong growth to date and confidence in continued demand, supported by a strong backlog.

The company is adjusting its nuclear segment adjusted EBIT to segment revenue ratio outlook for full year 2024 to between 12 per cent and 14 per cent, from the previous range of between 13 per cent and 15 per cent, reflective of the 2024 business mix and in line with the company's long-term target introduced at the investor day on June 13, 2024.

All other financial outlook metrics for full year 2024, issued on March 1, 2024, in the Q4 (fourth quarter) 2023 news release, and as updated on May 15, 2024, in the Q1 (first quarter) 2024 news release, are maintained.

Second quarter financial results

Professional services and project management are collectively referred to as PS&PM to distinguish them from capital activities. PS&PM groups together the company's segments, namely engineering services regions (Canada, UKI, USLA and AMEA), nuclear, Linxon and LSTK projects, while capital is its own reportable segment and separate from PS&PM.

The increase in net income attributable to Atkinsrealis shareholders was mainly due to higher segment adjusted EBIT, partially offset by higher corporate selling, general and administrative expenses, primarily driven by higher LTIP compensation costs.

Quarterly dividend

The board of directors today declared a cash dividend of two cents per share, unchanged from the previous quarter. The dividend is payable on Sept. 6, 2024, to shareholders of record on Aug. 23, 2024. This dividend is an eligible dividend for Canadian federal and provincial income tax purposes.

Second quarter 2024 conference call/webcast

Atkinsrealis will hold a conference call and audio webcast today at 8 a.m. Eastern Time, to discuss and present its second quarter financial results. The live audio webcast of the conference call can be accessed through a link posted on the company's website. The call will also be accessible by telephone, for which an accompanying slide presentation can be accessed on the company's website.

Please dial toll-free 1-844-763-8274 in North America, dial 1-647-484-8814 outside North America or dial 44-20-3795-9972 in the U.K. A recording and a transcript of the conference call will be available on the company's website within 24 hours following the call.

About Atkinsrealis Group Inc.

Created by the integration of long-standing organizations dating back to 1911, Atkinsrealis is a world-leading engineering services and nuclear company dedicated to engineering a better future for the planet and its people. The company creates sustainable solutions that connect people, data and technology to transform the world's infrastructure and energy systems. It deploys global capabilities locally to its clients and delivers unique end-to-end services across the whole life cycle of an asset, including consulting, advisory and environmental services, intelligent networks and cybersecurity, design and engineering, procurement, project and construction management, operations and maintenance, decommissioning, and capital. The breadth and depth of the company's capabilities are delivered to clients in strategic sectors, such as engineering services, nuclear and capital.

Non-IFRS (international financial reporting standards) financial measures and ratios, supplementary financial measures, total of segments measures and non-financial information

The company reports its financial results in accordance with IFRS. However, the following non-IFRS financial measures and ratios, supplementary financial measures, total of segments measures, and non-financial information are used by the company in this news release: organic revenue growth (contraction), EBITDA, adjusted EBITDA, adjusted net income (loss) attributable to Atkinsrealis shareholders, adjusted diluted EPS, segment adjusted EBITDA to segment net revenue ratio, segment net revenue, net limited recourse and recourse debt to adjusted EBITDA ratio, and net limited recourse and recourse debt, as well as certain measures for various reportable segments that are grouped together, such as revenue for the various engineering services regions segments and the various segments that comprise the Atkinsrealis services line of business. Additional details for these non-IFRS financial measures and ratios, supplementary financial measures, total of segments measures, and non-financial information can be found in the company's management's discussion and analysis (MD&A) for the second quarter of 2024, filed with the securities regulatory authorities in Canada, and available on SEDAR+ and on the company's website under the investors section.

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