SNC-Lavalin Group Inc. SNC-T is changing its name to AtkinsRéalis as the Canadian engineering giant tries to forge a new corporate identity and move on from years of turmoil.
Executives and company directors concluded the time is right to rebrand in order to reflect a significant shift in strategy, operations and internal culture after a decade of crisis, said chief executive officer Ian Edwards.
The period was dominated by the fallout from a corruption scandal involving the company’s past business dealings in Libya that shook Canadians and engulfed officials at the highest levels of government. That’s been resolved, and the company now says it is a world leader in ethics and compliance programs.
Meanwhile, over four years as CEO, Mr. Edwards has reshaped the company by selling oil and gas assets and pivoting toward a simplified business model centred on engineering services and consulting work, while riskier fixed-price construction contracts that have historically sucked cash are wound down. It all amounts to a new purpose and a new approach to business, he says.
“We’re at this inflection point,” Mr. Edwards said in an interview Tuesday. “For me, we needed to be something different as a company before we got a new name.”
At the moment, SNC-Lavalin actually operates under three brands – Atkins, SNC-Lavalin and Faithful+Gould. That was never going to be sustainable and also provided the rationale for a change, even if it wasn’t hurting revenue, Mr. Edwards said.
“It’s a question of unifying everything under one brand – to energize our youth in the company, to energize our customers around what we do,” he said. “Honestly, I really do think that in Canada, the pride in the company is coming back for people that are close to us … and I really wish I could get the whole general public aligned to that as well.”
SNC-Lavalin investors have long been asking for a name change, said Maxim Sytchev, an analyst with National Bank of Canada. “It’s good to see. It just means that we’re turning the page” and showcasing the future of the company, he said in an interview.
But ultimately, while the change might be good for employee morale and optics, such marketing moves have little bearing on financial performance. And in that sense, AtkinsRéalis still has a way to go before it permanently shakes off what have often been volatile earnings in recent years.
A sustained turnaround for SNC-Lavalin hinges on closing the gap to its rivals in terms of profit margins and generating consistent, growing free cash flow, Mr. Sytchev said in a research note. The analyst estimates that free cash flow will still be negative for fiscal 2023, even if things are “definitely moving in the right direction.”
The new brand and visual identity will be used on all company communications materials as of Wednesday. The shares will also begin trading under a new ticker symbol (TSX: ATRL) as of Sept. 18. The corporation won’t change its legal name until it wins shareholder approval for the move, expected at its next annual meeting, in 2024.
SNC-Lavalin’s history stretches back to 1911, when Arthur Surveyer started an engineering firm after a career in the federal department of public works. That company, which became SNC, merged with Lavalin in 1991. In 2017, it took over U.K.-based WS Atkins, now a centrepiece of its strategy.
The name AtkinsRéalis combines Atkins with Réalis, which the company says is inspired by the city of Montreal and its French-Canadian roots. It says “Réalis” also resembles the verb “to realize” or “to make happen” in French, which emphasizes the company’s focus on outcomes and project delivery.
SNC-Lavalin and two of its affiliates were charged in 2015 with violating Canada’s Corruption of Foreign Public Officials Act and fraud related to its business dealings in Libya when Moammar Gadhafi was in power in the early 2000s. The company asked for a special settlement to the case, known as a deferred prosecution agreement, but was denied it because of what the director of federal prosecutions said was the “severity and breadth” of the offence.
The company struck an agreement with prosecutors in 2019, in which the SNC-Lavalin’s construction division pleaded guilty to a single charge of fraud while the corruption charge was dropped. The company agreed to pay a $280-million fine and received a three-year probation order.
Montreal-based boutique engineering firm Genivar made its own name change to WSP Global in 2013, in part to distance itself from a corruption scandal rocking the construction industry in Quebec at the time. Today, WSP has a market capitalization of $24-billion and about 66,000 employees.