TORONTO, May 7, 2014 /CNW/ - Aecon Group Inc. (TSX: ARE)
today reported results for the first quarter 2014 including higher
Adjusted EBITDA of $3.1 million as
compared to an Adjusted EBITDA loss of $11.3
million in the first quarter of 2013, and backlog of
$2.2 billion at March 31, 2014, as compared to $1.8 billion at December
31, 2013.
"Our focus on execution is yielding results and Aecon's first
quarter represents a solid start to the year. We anticipate that
revenue and therefore profits will be even more weighted to the
second half of 2014 than is usually the case due to the ramp up of
significant new projects currently underway," said John M. Beck, Chairman and Chief Executive
Officer, Aecon Group Inc. "With Aecon's balanced and diversified
portfolio of work in three core market sectors of infrastructure,
energy and mining, and our strong backlog of higher margin work, we
maintain a positive outlook and anticipate making continued
progress through 2014 to our Adjusted EBITDA margin target of 9 per
cent in 2015."
HIGHLIGHTS
- Adjusted EBITDA for the first quarter of 2014 increased to
$3.1 million (margin of 0.7 per cent)
on revenue of $462 million as
compared to an Adjusted EBITDA loss of $11.3
million (margin loss of 2.0 per cent) on revenue of
$567 million for the first quarter of
2013.
- Backlog of $2.2 billion at
March 31, 2014 was approximately
$400 million higher than at year end
2013.
- New contracts in the first quarter of 2014 totaled $867 million compared to $212 million in the first quarter of 2013.
- Subsequent to quarter end, Aecon and its joint venture partner
announced that they were selected for the York Viva Bus Rapid
Transit project in Ontario, with
an expected $130 million in revenue
to Aecon's account. Aecon was also awarded a $94 million contract for the reconstruction and
widening of Second Concession Road for York Region.
- Increased annual dividend took effect with the first quarterly
payment of $0.09 per share (increased
from $0.08 per share) paid on
April 1, 2014 to shareholders of
record on March 21, 2014.
|
CONSOLIDATED FINANCIAL
HIGHLIGHTS(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
|
$ millions (except per share
amounts) |
|
|
March 31 |
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
461.9 |
|
$ |
567.4 |
|
|
Gross profit |
|
|
29.4 |
|
|
22.5 |
|
|
Marketing, general and administrative
expenses |
|
|
(41.0) |
|
|
(44.8) |
|
|
Income from projects accounted for
using the equity method |
|
|
7.3 |
|
|
8.4 |
|
|
Foreign exchange gains |
|
|
0.4 |
|
|
0.1 |
|
|
Gain on sale of assets |
|
|
- |
|
|
0.2 |
|
|
Loss on disposal of a subsidiary |
|
|
(2.6) |
|
|
- |
|
|
Depreciation and amortization |
|
|
(16.8) |
|
|
(17.5) |
|
|
Operating
loss(2) |
|
|
(23.2) |
|
|
(31.1) |
|
|
Financing costs, net |
|
|
(11.1) |
|
|
(8.7) |
|
|
Fair value
loss on convertible debentures |
|
|
(1.7) |
|
|
(2.2) |
|
|
Loss before income taxes |
|
|
(36.0) |
|
|
(42.0) |
|
|
Income tax
recovery |
|
|
10.1 |
|
|
12.1 |
|
|
Loss |
|
$ |
(25.9) |
|
$ |
(29.9) |
|
|
|
|
|
|
|
|
|
|
|
Loss |
|
$ |
(25.9) |
|
$ |
(29.9) |
|
|
Exclude: |
|
|
|
|
|
|
|
|
Fair value loss on convertible
debentures |
|
|
1.7 |
|
|
2.2 |
|
|
Income tax
on fair value loss |
|
|
(0.5) |
|
|
(0.6) |
|
|
Adjusted loss(3) |
|
$ |
(24.7) |
|
$ |
(28.3) |
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin |
|
|
6.4% |
|
|
4.0% |
|
|
MG&A as a percent of
revenue |
|
|
8.9% |
|
|
7.9% |
|
|
Adjusted
EBITDA(4) |
|
|
3.1 |
|
|
(11.3) |
|
|
Adjusted EBITDA Margin |
|
|
0.7% |
|
|
(2.0)% |
|
|
Operating margin |
|
|
(5.0)% |
|
|
(5.5)% |
|
|
Loss per share - basic |
|
$ |
(0.49) |
|
$ |
(0.56) |
|
|
Loss per share - diluted |
|
$ |
(0.49) |
|
$ |
(0.56) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted loss per share -
basic(5) |
|
$ |
(0.47) |
|
$ |
(0.53) |
|
|
Adjusted loss per share -
diluted(5) |
|
$ |
(0.47) |
|
$ |
(0.53) |
|
|
|
|
|
|
|
|
|
|
|
Backlog |
|
$ |
2,178 |
|
$ |
2,073 |
|
|
|
|
|
|
|
|
|
|
(1) |
This press release presents certain non-GAAP and additional
GAAP (GAAP refers to
Canadian Generally Accepted Accounting Principles) financial
measures to assist
readers in understanding the Company's performance. Non-GAAP
financial measures
are measures that either exclude or include amounts that are not
excluded or included
in the most directly comparable measures calculated and presented
in accordance with
GAAP in the consolidated financial statements. Further details on
non-GAAP and
additional GAAP measures are included in the Company's Management's
Discussion
and Analysis and available through the System for Electronic
Document Analysis and
Retrieval at www.sedar.com. |
(2) |
"Operating profit (loss)" represents the profit (loss) from
operations, before net financing
expense, income taxes and non-controlling interests. |
(3) |
"Adjusted profit (loss)" represents the profit (loss) adjusted
to exclude the after-tax fair
value gain (loss) on the embedded derivative portion of convertible
debentures. |
(4) |
"Adjusted EBITDA" represents operating profit (loss) adjusted
to exclude depreciation
and amortization, the gain (loss) on sales of assets and
investments, and net income
(loss) from projects accounted for using the equity method, but
including "JV EBITDA"
from projects accounted for using the equity method. |
(5) |
"Adjusted earnings (loss) per share" represents earnings (loss)
per share calculated
using adjusted profit (loss). |
OPERATING AND FINANCIAL RESULTS
"With an improved mix of work in our Infrastructure segment, a
strong market environment for our Energy segment, and targeted
opportunities in Mining, we move forward in 2014 with a focused,
disciplined approach to a robust pipeline of opportunities," said
Teri McKibbon, Aecon's President and
Chief Operating Officer. "The scope of opportunities suited
to Aecon's capabilities covers the breadth of Canada."
Revenue of $462 million in the
first quarter of 2014 compared to revenue of $567 million in the same period of 2013. Lower
revenue resulted primarily from decreases in the Mining segment,
primarily from site installation work, and in the Infrastructure
segment mostly in buildings operations.
Adjusted EBITDA for the first quarter of 2014 increased to
$3.1 million (margin of 0.7 per cent)
compared to an Adjusted EBITDA loss of $11.3
million (margin loss of 2.0 per cent) for the first quarter
of 2013.
Operating loss for the period of $23.2
million improved by $7.9
million compared to the same period in 2013. Included in the
quarter-over-quarter improvement is the impact of a $19 million provision on a specific project
reported in the first quarter of 2013, offset to some extent by the
impact of lower volume in the Mining segment in the first quarter
of 2014.
Backlog was $2,178 million at
March 31, 2014, compared to
$2,073 million at March 31, 2013. New contract awards of
$867 million were booked in the first
quarter of 2014 compared to $212
million in the first quarter of 2013. Among other contracts,
the following major projects were booked in the first quarter:
- John Hart Generating Station in British Columbia: a joint venture of Aecon
(60%) and SNC-Lavalin Constructors Pacific Inc. (40%) for the civil
construction scope, with Aecon's portion of the contract
representing $225 million; and
- Waterloo Region Light Rapid Transit: a joint venture
partnership of Aecon (51%) and Kiewit (49%), with a backlog value
to Aecon's account of approximately $250
million.
Subsequent to quarter end, Aecon and its joint venture partner
(Dufferin Construction) announced that they were selected for the
York Viva Bus Rapid Transit project in Ontario, with an expected $130 million in revenue to Aecon's account.
Aecon was also awarded a $94 million
contract for the reconstruction and widening of Second Concession
Road for York Region. Work on this project will commence in the
second quarter and is expected to be complete in the third quarter
of 2016.
Not included in backlog, but important to Aecon's prospects due
to the increasingly significant volume involved, is the expected
recurring revenue from Aecon's growing alliances and
supplier-of-choice arrangements where the amount and/or value of
work to be carried out is not specified. This recurring
revenue currently represents approximately 25 per cent of annual
revenue.
REPORTING SEGMENTS
Aecon reports its financial performance on the basis of four
segments: Infrastructure, Energy, Mining, and Concessions.
INFRASTRUCTURE SEGMENT
The Infrastructure segment includes all aspects of the
construction of both public and private infrastructure, primarily
in Canada, and on a selected
basis, internationally. The Infrastructure segment focuses
primarily on the transportation, heavy civil and social
infrastructure markets.
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
$ millions |
|
March
31 |
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
106.5 |
|
$ |
149.7 |
|
|
Gross profit |
$ |
(6.3) |
|
$ |
(15.1) |
|
|
Adjusted EBITDA |
$ |
(16.7) |
|
$ |
(29.7) |
|
|
Operating loss |
$ |
(23.3) |
|
$ |
(33.6) |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
(15.7)% |
|
|
(19.8)% |
|
|
Operating margin |
|
(21.8)% |
|
|
(22.5)% |
|
|
Backlog |
$ |
1,277 |
|
$ |
1,021 |
|
|
|
|
|
|
|
|
|
In the first quarter of 2014, revenue in the Infrastructure
segment of $107 million was
$42 million lower, or 29 per cent,
over the same period last year. Approximately half of the
decrease in revenue occurred in social infrastructure operations,
primarily from less ongoing work in buildings operations in
Ontario compared to the prior year
and from the closure of the Seattle operations during the first quarter of
2014. In addition, heavy civil and transportation operations
also experienced a decrease in revenue during the first quarter of
2014 as many large heavy civil projects were nearing completion,
and a severe winter in Ontario and
other timing issues affected road building work.
Operating loss in the Infrastructure segment of $23.3 million improved by $10.3 million over the same period in the prior
year. The largest improvement occurred in transportation
operations primarily from the impact in the first quarter of 2013
of the segment's $9.7 million share
of a specific project provision.
Infrastructure backlog at March 31,
2014 was $1,277 million,
$256 million higher than the same
time last year with most of the increase occurring in heavy civil
operations. New contract awards totaled $563 million in the first quarter of 2014
compared to $49 million in the same
period in the prior year, with significant project awards received
in 2014 for the John Hart Generating Station and Waterloo Region
Light Rail Transit Project.
ENERGY SEGMENT
The Energy segment encompasses a full suite of service offerings
to the energy market including industrial construction and
manufacturing activities such as in-plant construction, site
construction and module assembly. The Energy segment focuses
primarily on the following sectors: oil and gas, power generation,
pipelines, utilities, and energy support services.
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
Three months
ended |
|
|
$ millions |
|
March
31 |
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
248.2 |
|
$ |
248.0 |
|
|
Gross profit |
$ |
18.6 |
|
$ |
6.3 |
|
|
Adjusted EBITDA |
$ |
3.9 |
|
$ |
(10.1) |
|
|
Operating profit (loss) |
$ |
0.2 |
|
$ |
(13.4) |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
1.6% |
|
|
(4.1)% |
|
|
Operating margin |
|
0.1% |
|
|
(5.4)% |
|
|
Backlog |
$ |
821 |
|
$ |
801 |
|
|
|
|
|
|
|
|
|
Revenue in the first quarter of 2014 of $248 million in the Energy segment was in line
with the same period of 2013, as increases from utilities
operations were offset by lower revenue from industrial
operations.
Operating profit in the Energy segment of $0.2 million was $13.6
million higher than the same period last year. The
quarter-over-quarter improvement is partially due to the Energy
segment's $9.7 million share of a
specific project provision in the first quarter of 2013. The
remaining increase is mainly due to increased volume and margin
from power generation projects in Central
Canada and from higher volume in Atlantic Canada.
Backlog at March 31, 2014 of
$821 million for the segment was
$20 million higher than the same time
last year with most of the increase occurring in industrial
operations in Western Canada,
primarily as a result of project awards for site construction
projects in the oil sands during the past year, offset by lower
backlog in utilities operations due to the work-off of pipeline
projects. New contract awards of $193
million in the first quarter of 2014 were $142 million higher than in the same period in
2013.
MINING SEGMENT
The Mining segment offers turn-key services consolidating
Aecon's mining capabilities and services across Canada, including both mine site installations
and contract mining. This segment offers construction
services that span the scope of a project's life cycle: from
overburden removal and resource extraction, to processing and
environmental reclamation.
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
Three months
ended |
|
|
$ millions |
|
March
31 |
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
107.5 |
|
$ |
171.5 |
|
|
Gross profit |
$ |
17.4 |
|
$ |
31.4 |
|
|
Adjusted EBITDA |
$ |
11.9 |
|
$ |
27.0 |
|
|
Operating profit |
$ |
4.3 |
|
$ |
18.7 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
11.1% |
|
|
15.7% |
|
|
Operating margin |
|
4.0% |
|
|
10.9% |
|
|
Backlog |
$ |
80 |
|
$ |
251 |
|
|
|
|
|
|
|
|
|
Revenue in the first quarter of 2014 of $108 million in the Mining segment was
$64 million lower than in the same
period of 2013. Substantially all of the revenue decrease was
from a lower volume of site installation work in the commodity
mining sector following the completion of a substantial project
during 2013.
For the three months ended March 31,
2014, operating profit of $4.3
million was $14.4 million
lower than the same period last year. The majority of the
period-over-period decrease in operating profit resulted from the
above noted lower volume of site installation work in the commodity
mining sector.
Backlog at March 31, 2014 of
$80 million was $171 million lower than the same time last
year. New contract awards of $111
million in the first quarter of 2014 were $1 million lower than in the same period in
2013.
CONCESSIONS SEGMENT
The Concessions segment includes the development, financing,
construction and operation of infrastructure projects by way of
build-operate-transfer, build-own-operate-transfer and other
public-private partnership contract structures.
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
$ millions |
|
March 31 |
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
0.6 |
|
$ |
0.6 |
|
|
Gross profit |
$ |
(0.2) |
|
$ |
(0.1) |
|
|
Income from projects accounted for
using the equity
method |
$ |
5.5 |
|
$ |
7.0 |
|
|
Adjusted EBITDA |
$ |
11.7 |
|
$ |
8.7 |
|
|
Operating profit |
$ |
4.5 |
|
$ |
6.2 |
|
|
|
|
|
|
|
|
|
Revenue reported in the Concessions segment for the three months
ended March 31, 2014 and 2013, was
$0.6 million.
For the three months ended March 31,
2014, operating profit of $4.5
million was $1.7 million lower
than the same period last year as increases in revenue and Adjusted
EBITDA from the new Quito airport
concessionaire were offset by higher interest and amortization
charges related to Quito
operations. With the opening of the new Quito airport on February 20, 2013, the project commenced
expensing interest (whereas prior to the opening of the new
airport, interest was being capitalized) and began amortizing
airport assets that were put into service. From an operating
profit perspective, the first quarter of 2013 included
approximately one month of interest and amortization expense
related to the new airport, whereas the first quarter of 2014
includes a full three months of interest and amortization
charges.
DIVIDEND
As previously announced, the annual dividend to be paid to all
shareholders of Aecon Common shares is $0.36 per share (up from $0.32 per share) to be paid in four quarterly
payments of $0.09 per share (up from
$0.08 per share). The first
increased quarterly payment was paid on April 1, 2014 to shareholders of record on
March 21, 2014.
CONSOLIDATED RESULTS
The consolidated results for the three months ended March 31, 2014 and 2013 are available at the end
of this news release.
Balance Sheet
Highlights |
|
|
|
|
|
|
March 31 |
|
Dec. 31 |
|
$ thousands (unaudited) |
|
2014 |
|
2013 |
|
|
|
|
|
Cash and cash equivalents
and restricted cash |
$ |
150,585 |
$ |
244,536 |
Other current assets |
|
836,334 |
|
885,052 |
Property, plant and
equipment |
|
501,809 |
|
512,257 |
Other long-term
assets |
|
380,705 |
|
351,741 |
Total Assets |
$ |
1,869,433 |
$ |
1,993,586 |
|
|
|
|
|
Current liabilities |
$ |
840,935 |
$ |
940,356 |
Long-term debt |
|
114,970 |
|
123,128 |
Convertible debentures
(long term portion) |
|
250,855 |
|
248,817 |
Other long-term
liabilities |
|
94,629 |
|
94,677 |
|
|
|
|
|
Equity |
|
568,044 |
|
586,608 |
Total Liabilities and
Equity |
$ |
1,869,433 |
$ |
1,993,586 |
CONFERENCE CALL
A conference call has been scheduled for Thursday, May 8, 2014 at 9:30 a.m. (ET) to discuss Aecon's 2014 first
quarter financial results. Participants should dial 416-981-9011 or
1-800-734-8507 at least 10 minutes prior to the conference
time. A replay will be available after 11:30 a.m. at 1-800-558-5253 or 416-626-4100
until midnight on May 15, 2014. The
reservation number is 21713584.
ABOUT AECON
Aecon Group Inc. is a Canadian leader in construction and
infrastructure development providing integrated turnkey services to
private and public sector clients. Aecon is pleased to be
consistently recognized as one of the Best Employers in
Canada.
STATEMENT ON FORWARD-LOOKING INFORMATION
The information in this press release includes certain
forward-looking statements. These forward-looking statements are
based on currently available competitive, financial and economic
data and operating plans but are subject to risks and
uncertainties. In addition to events beyond Aecon's control,
there are factors which could cause actual or future results,
performance or achievements to differ materially from those
expressed or inferred herein including, but not limited to:
interest and foreign exchange rates, global equity and capital
markets, business competition and operational and reputational
risks, including Large Project Risk and Contractual Factors.
Readers are referred to the specific risk factors relating to and
affecting Aecon's business and operations as filed by Aecon
pursuant to applicable securities laws. Forward-looking
statements may include, without limitation, statements regarding
the operations, business, financial condition, expected financial
results, performance, prospects, ongoing objectives, strategies and
outlook for Aecon. Forward-looking statements, may in some
cases be identified by words such as "will," "plans," "believes,"
"expects," "anticipates," "estimates," "projects," "intends,"
"should" or the negative of these terms, or similar
expressions. Except as required by applicable securities
laws, forward-looking statements speak only as of the date on which
they are made and Aecon undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
CONSOLIDATED STATEMENTS OF
INCOME |
|
(in thousands of Canadian dollars,
except per share amounts) (unaudited) |
|
|
|
|
For the
three months ended |
|
|
March 31 |
|
March 31 |
|
|
|
2014 |
|
2013 |
|
Revenue |
$ |
461,873 |
$ |
567,439 |
Direct costs
and expenses |
|
(432,424) |
|
(544,934) |
Gross profit |
|
29,449 |
|
22,505 |
|
|
|
|
|
|
Marketing, general and administrative
expenses |
|
(40,996) |
|
(44,814) |
Depreciation and amortization |
|
(16,828) |
|
(17,511) |
Income from projects accounted for
using the
equity method |
|
7,321 |
|
8,422 |
Other income (loss) |
|
(2,139) |
|
297 |
Operating loss |
|
(23,193) |
|
(31,101) |
|
|
|
|
|
|
Finance income |
|
604 |
|
532 |
Finance costs |
|
(11,747) |
|
(9,277) |
Fair value gain on convertible
debentures |
|
(1,705) |
|
(2,156) |
Loss before income taxes |
|
(36,041) |
|
(42,002) |
Income tax recovery |
|
10,140 |
|
12,090 |
Loss for the period |
$ |
(25,901) |
$ |
(29,912) |
|
|
|
|
|
|
Basic loss per share |
$ |
(0.49) |
$ |
(0.56) |
Diluted loss per share |
$ |
(0.49) |
$ |
(0.56) |
SOURCE Aecon Group Inc.