The Board of Salini Impregilo has approved: acquisition of Lane Industries INC..

Milan, November 12, 2015

THE BOARD OF SALINI IMPREGILO HAS APPPROVED:

 

  1. THE ACQUISITION OF LANE INDUSTRIES INC. A LEADING US CONSTRUCTION COMPANY
  • Creation of a larger and stronger Group with 2015 pro-forma sales of more than €6 billion
  • With Lane, the large and attractive US construction market will be a key region for the Group, representing approx. 21% of pro-forma revenues
  • Significant commercial synergies expected thanks to Lane’s strong local platform combined with Salini Impregilo’s technical capabilities and greater financial resources
  • Transaction value equal to approx. $406 million net of adjustments that will be defined at closing
  • The transaction has been approved also by the Board of Directors of Lane and is subject to the approval of Lane shareholders and other customary closing conditions including antitrust. Closing is expected in January 2016.
  1. THE FIRST 9 MONTHS 2015 CONSOLIDATED FINANCIAL RESULTS
  • Revenues: €3.4 billion (vs. €3.1 billion; +8.4%)[1]
  • EBITDA: €340.4 million (vs. €306.3 million; +11.1%); EBITDA margin 10.1% (vs. 9.9%)
  • EBIT: €185.2 million (vs. €180.4 million; +2.6 %); EBIT margin 5.5% (vs. 5.8%)
  • No recurring cost €7.5 million: adjusted EBITDA margin 10.3%, adjusted EBIT margin 5,7%
  • Net financing costs and equity investments €59.7 million (€109.9 million) improving by 45.2%
  • Net profit from continuing operations: €87.8 million (vs. €45.3 million); +94.0%
  • Business plan total revenues coverage by backlog increased to 94%

The Board of Directors of Salini Impregilo (MTA: SAL) approved yesterday an agreement under which Salini Impregilo will acquire 100% of the share capital of Lane Industries Inc. The Board also approved the first nine months Interim Financial Report as at September 30, 2015.

  1. AGREEMENT TO ACQUIRE 100% OF LANE INDUSTRIES INC.

Lane is the top highway contractor and top private asphalt producer in the US. It is a family-owned business with more than 100 years of history specialized in heavy civil construction and in the transportation infrastructure sector with approx. $1.5 billion turnover.

The company has three divisions: asphalt production, road projects and other infrastructure projects, in both domestic and international markets. Lane is the largest US private producer of asphalt, as well as the top highway contractor in the US. Thanks to its strong track record, technical experience and the strategic location of its materials plants, Lane is participating in some of the largest and most complex projects in the US, such as the highway construction in Florida, the I-4 Ultimate, a $2.3 billion contract, in which Lane has a 30% stake.

The acquisition of Lane represents a further step by Salini Impregilo to expand in the large and attractive US infrastructure market. It will enable the Group to create a powerful platform to seize opportunities in a market where having a local presence and a local team of managers it is must to succeed.

With Lane, Salini Impregilo will be able to access a much larger pool of projects. The US transportation infrastructure market - $130 billion in 2014 - is expected to grow above GDP on the back of a recovering economy, a positive demographic trend and the pent-up demand for significant upgrades and expansions of existing infrastructure after years of underinvestment. The presence of Lane into the Group will bring significant growth opportunities, while increasing the diversification of the portfolio by improving the balance of its exposure between developed and developing markets.

TRANSACTION DETAILS & CLOSING

The value of the transaction is equal to approx. $406 million net of adjustments that will be defined at closing and takes into account the value of Lane’s stakes in JVs. Salini Impregilo will finance this transaction with available cash, existing credit lines and new financing available at closing. The acquisition is expected to close in January 2016, subject to the approval of Lane's shareholders and the satisfaction of other customary conditions, including compliance with US antitrust requirements.

Pietro Salini, Salini Impregilo CEO, commented: “The Lane acquisition will be a key milestone in the development of our company. After the completion of the merger between Salini and Impregilo in January 2014, we demonstrated our ability to integrate businesses, to create value for our shareholders and to achieve our business plan target, profit and enhancement of human resources. Our Group already operates in the US with its subsidiary Healy, and has already developed projects such as the Metro in San Francisco, and Lake Mead in Nevada. With Lane, we bring our group to a new, more ambitious level as we reach a truly global scale while preserving a sound financial structure. We will be at home in more than 50 countries with a workforce of more than 35,000 employees. We will have a leadership position in the US, in Europe as well as in high-growth regions. We will be able to compete globally and seize the best opportunities on a risk-adjusted basis. We will achieve all of this thanks to the acquisition of a great US company that shares many things in common with Salini Impregilo. I look forward to welcoming into our group the talented Lane management team and its employees so we can build together a solid and profitable future”.

B) FIRST 9 MONTHS 2015 CONSOLIDATED FINANCIAL RESULTS

€/million 9M 2015 9M 2014 (*) change
REVENUES 3,367.5 3,106.6 8.4%
EBITDA 340.4 306.3 11.1%
EBITDA margin 10.1% 9.9%  
EBIT 185.2 180.4 2.6%
EBIT margin 5.5% 5.8%  
NET PROFIT from continuing operations 87.8 45.3 94.0%
NET PROFIT 80.2 110.5 (27. 5%)

INCOME STATEMENT

Consolidated revenues for the first nine months of 2015 totaled €3,367.5 million, a 8.4% increase from the €3,106.6 million reported for the same period the prior year, due to the progress of some large-scale projects among which: the Red Line North project in Qatar, Line 3 of the Riyadh Metro in Saudi Arabia, the Skytrain project in Australia, and the High Speed/High Capacity Milan - Genoa railway in Italy.

Total operating costs in the first nine months of 2015 were €3,027.1 million compared with €2,800.3 million a year earlier. The ratio of operating expenses to total revenues is in line with September 2014. Non-recurring costs of approximately €7.5 million were recorded in the first nine months of 2015. They relate to strategic projects aimed at improving the Group’s efficiency and achieving the business plan’s objectives.

In the first nine months of 2015, EBITDA was €340.4 million, 11.1% higher than the figure reported in the same period the prior year. EBIT in the first nine months of 2015 totaled €185.2 million, versus €180.4 million in the same period of the previous year.

In the first nine months 2015, EBITDA margin was 10.1% and EBIT margin was 5.5%, in line with our year-end targets. Including no recurring costs adjusted EBITDA margin 10.3%, and adjusted EBIT margin 5.7%.

The combined result of net financing costs and equity investments in the first nine months of 2015 negative for €59.7 million, showing a noticeable improvement of €49.3 million, compared with the first nine months of 2014, which reported a net expense of €109.0 million. The improvement is largely attributable to the reduction in financial expenses, decreasing from €103.1 million to €73.5 million. This is thanks to the renegotiation of a substantial portion of the medium-long bank debt, which substantially reduced the average cost of debt. Net foreign exchange recorded a loss of €12.1 million compared with a loss of €41.3 million in the same period last year.

In the first nine months of 2015, net profit from continuing operations came to €87.8 million, showing a remarkable increase versus €45.3 million realized in the first nine months of 2014. Net profit, before minorities, amounted to €80.2 million, including a loss from discontinued operations of €7.7 million, that compared with €110.5 million for the first nine months of 2014, which included €65.3 million mainly deriving from the Fisia Babcock sale.

BALANCE SHEET

At September 30, 2015, net debt was €357.3 million, showing an improvement versus the net debt of June 2015 equal to €378.6 million, and an increase of €268.1 million versus the net debt at the end of December 2014. The average M/L bank debt maturity has been successfully extended from 2016 to 2019, and the average cost of M/L bank debt substantially reduced versus the prior year. For the first nine months of 2015, the net debt-to-equity ratio was equal to 0.29.

The bond issued by Impregilo International Infrastructures NV for an amount of €150 million will mature on November 26, 2015, and it will be replaced by a bank loan, already committed, for a period of five years with more favorable conditions.

NEW ORDERS AND BACKLOG

The total backlog as at September 30, 2015 is €33.7 billion, €26.5 billion of which related to construction and €7.2 billion to concessions.

New orders, comprising variation orders and share increases, totaled €4.5 billion. The total amount includes new orders of €1.9 billion, variation orders for €1.3 billion and share increases for €1.3 billion.

****

SIGNIFICANT EVENTS AND OPERATIONS THAT OCCURRED IN THE FIRST NINE MONTH OF 2015

April 27, 2015 - PAPUA NEW GUINEA - The Government of Papua New Guinea and Salini Impregilo signs an exclusive agreement to develop jointly a hydroelectric project of 1800 MW. The agreement with the second largest nation in Oceania after Australia concerns the development of infrastructure whose planned investment exceeds $2 billion.

May 23, 2015 - ITALY - The Como bypass of the Pedemontana Lombarda was inaugurated. Salini Impregilo leads the Pedelombarda Consortium. The work of the entire project carried out by the Pedelombarda Consortium is split into three macro-sections totaling about 24 km. In addition to the Como bypass, these included the A8-A9 motorway link called Section 8, covering 14.585 km, and the first section of the Varese bypass covering 4.9 km, both already inaugurated in January.

May 28 2015 - USA - Salini Impregilo successfully completed - on time and on budget - the tunnel for Central Subway, a major project to extend a subway line across the heart of San Francisco.

July 1, 2015 - COLOMBIA - Successfully completed the "El Quimbo" hydroelectric complex reservoir works in the Colombian region of Huila, 250 km south-west of the capital of the South American country. The structure includes a main dam, a secondary dam and a 400 MW power station. The contract value was €450 million.

July 8, 2015 - QATAR - Signed a contract of €770 million for the construction of the Al Bayt stadium in Al Khor, a city about 50 km north of the capital, Doha.

July 9, 2015 - QATAR - Won a contract for the construction of primary urban infrastructures in Shamal, a residential area with great expansion possibilities that is situated at approximately 100 km from the capital, Doha, in the extreme northern area of Qatar. The project is worth €300 million. It is part of the Framework Contract for Local Roads and Drainage Programme (LR&DP).

July 14, 2015 - The Board of Directors of Salini Impregilo S.p.A. appointed Alberto Giovannini as Chairman of the Company's Board of Directors. Giovannini replaces Claudio Costamagna, who was recently appointed Chairman of the Board of Directors of Cassa Depositi e Prestiti S.p.A.

July 22, 2015 – POLAND - Won a contract worth €170 million for the design and construction of a 20.27 km section of the A1 Motorway, south of Warsaw, near the City of Katowice. The project is partly funded by the European Union and the Polish state.

August 31, 2015 – GEORGIA - Contract worth $575 million for the construction of a new hydropower project in Georgia.

****

OUTLOOK 2015

Guidance for the year-end reconfirmed.

****

Massimo Ferrari, in his capacity as Director in charge of the preparation of the company’s accounting documents, declares, pursuant to Section 2 of Article 154 bis of the Italian Uniform Financial Code, that the information contained in this press release corresponds to the accounting documents, books and entries.

****

On November 12, 2015, at 9:30 CET, Salini Impregilo will hold a conference call for the financial community to comment on the financial results of the first nine months of 2015 and the company’s strategic evolution. A presentation will be available on the Group's website at the following link http://www.salini-impregilo.com/en/investor-relations/. A replay of the conference call will be available at the same link, one hour after the close of the call.

 

[1] First nine-month 2014 figures in brackets

[2] First nine months 2014 restated in accordance to IFRS 5. In addition, 2014 figures have been prepared in accordance to the new accounting principles IFRS 10-11 as adopted for FY 2014.

 

Attached are the reclassified consolidated income statement, balance sheet and Net Financial Position of Salini Impregilo as at 30 September 2015

 

 

9 Months 2015 Financial Results & Strategy Evolution

IN THE PRESS

#related:5335#

 

DOWNLOAD

Publishing date: