TORONTO, April 25, 2019 /CNW/ - Aecon Group Inc. (TSX:
ARE) today reported strong results for the first quarter of 2019
with year-over-year increases in revenue and Adjusted EBITDA, and
quarter end backlog of $6.7
billion.
"Aecon's first quarter results represent continued positive
momentum including increased revenue, improved Adjusted EBITDA
margin, and strong backlog," said Jean-Louis Servranckx, President and Chief
Executive Officer, Aecon Group Inc. "We continue to see significant
ongoing demand in both the private and public sectors, with a mix
of opportunities that Aecon is ideally suited to pursue, while
remaining highly focused on strong execution of our backlog and
operational excellence."
HIGHLIGHTS
- Revenue for the three months ended March
31, 2019 of $650 million was
$107 million, or 20 per cent, higher
compared to the same period in 2018; revenue was 35 per cent higher
on a like-for-like basis, excluding Aecon's contract mining
business sold in November, 2018.
- Adjusted EBITDA for the first quarter of 2019 of $11.9 million (margin of 1.8 per cent) compared
to Adjusted EBITDA of $3.7 million
(margin of 0.7 per cent) for the first quarter of 2018, and
compared to Adjusted EBITDA of negative $9.2
million (negative margin of 1.9 per cent) on a like-for-like
basis in the prior year.
- Operating loss of $10.8 million
for the three months ended March 31,
2019 improved by $11.4 million
compared to an operating loss of $22.2
million in the same period in 2018, and compared to an
operating loss of $26.3 million on a
like-for-like basis in the prior year.
- Reported backlog as at March 31,
2019 of $6,749 million
compares to backlog of $4,614 million
a year earlier, representing a 46 per cent increase.
- Commencing in 2019, Aecon's Infrastructure and Industrial
segments were combined into a Construction segment to align with
Aecon's new operating management structure. This was driven
primarily by the progress Aecon has made in recent years with
respect to the "One Aecon" strategy, which has increasingly allowed
for integrated project management and systems, allowing Aecon to
capitalize on those markets providing the greatest opportunity at
any point in time.
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
$ millions (except
per share amounts)
|
|
|
March
31
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
650.3
|
|
$
|
543.3
|
|
|
Gross
profit
|
|
|
46.8
|
|
|
47.0
|
|
|
Marketing, general
and administrative expenses
|
|
|
(43.3)
|
|
|
(47.2)
|
|
|
Income from projects
accounted for using the equity method
|
|
|
2.5
|
|
|
0.8
|
|
|
Other
income
|
|
|
1.8
|
|
|
0.9
|
|
|
Depreciation and
amortization
|
|
|
(18.5)
|
|
|
(23.7)
|
|
|
Operating
loss(2)
|
|
|
(10.8)
|
|
|
(22.2)
|
|
|
Financing expense,
net
|
|
|
(4.1)
|
|
|
(4.9)
|
|
|
Loss before income
taxes
|
|
|
(14.9)
|
|
|
(27.1)
|
|
|
Income tax
recovery
|
|
|
5.1
|
|
|
7.9
|
|
|
Loss
|
|
$
|
(9.8)
|
|
$
|
(19.2)
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
margin
|
|
|
7.2%
|
|
|
8.6%
|
|
|
MG&A as a
percent of revenue
|
|
|
6.7%
|
|
|
8.7%
|
|
|
Adjusted
EBITDA(3)
|
|
|
11.9
|
|
|
3.7
|
|
|
Adjusted EBITDA
Margin
|
|
|
1.8%
|
|
|
0.7%
|
|
|
Operating
margin
|
|
|
(1.7)%
|
|
|
(4.1)%
|
|
|
Loss per share
− basic
|
|
$
|
(0.16)
|
|
$
|
(0.32)
|
|
|
Loss per
share − diluted
|
|
$
|
(0.16)
|
|
$
|
(0.32)
|
|
|
|
|
|
|
|
|
|
|
|
Backlog
|
|
$
|
6,749
|
|
$
|
4,614
|
|
|
|
|
|
|
|
|
|
|
(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
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 "Equity Project EBITDA" from
projects accounted for using the equity method.
|
OPERATING AND FINANCIAL RESULTS
Revenue for the three months ended March
31, 2019 of $650 million was
$107 million, or 20%, higher compared
to the same period in 2018. Revenue was higher in the
Construction segment ($108 million),
driven by higher revenue in civil operations and urban
transportation systems ($124 million)
and nuclear operations ($47 million)
which offset lower revenue in utility ($10
million) and conventional industrial operations
($53 million) primarily caused by the
sale of Aecon's contract mining business in November 2018.
Revenue was also higher in the Concessions segment ($27 million), which was offset by inter-segment
revenue eliminations that increased by $28
million, primarily due to revenue between the Concessions
and Construction segments related to the Bermuda International Airport Redevelopment
Project.
Operating loss of $10.8 million
for the three months ended March 31,
2019 improved by $11.4 million
compared to an operating loss of $22.2
million in the same period in 2018. Contributing to
the operating loss in the first quarter of 2019 was a decrease in
gross profit of $0.2 million compared
to the same period in 2018. In the Construction segment,
gross profit decreased by $0.5
million, as the sale of the contract mining business in
November 2018 resulted in a
$14.3 million decrease in gross
profit in the current quarter compared to the same period in
2018. This more than offset an increase in gross profit from
the balance of the Construction segment of $13.8 million from increased volume and higher
gross margin. In the Concessions segment, gross profit
increased by $1.0 million, primarily
due to operations related to the Bermuda International Airport Redevelopment
Project.
Reported backlog as at March 31,
2019 of $6,749 million
compares to backlog of $4,614 million
a year earlier. New contract awards of $578 million were
booked in the first quarter of 2019 compared to $910 million in the same period of 2018.
The sale of Aecon's contract mining business in November 2018 impacted Aecon's operating results
for the three months ended March 31,
2019 when compared to the same period in 2018. A
summary of these impacts is included below:
|
|
|
|
|
|
$
millions
|
|
Three months
ended
March 31
|
|
|
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Revenue as
reported
|
$
|
650.3
|
543.3
|
107.0
|
|
Exclude: Contract Mining Revenue
|
|
-
|
59.9
|
(59.9)
|
|
Revenue excluding
Contract Mining
|
$
|
650.3
|
483.4
|
166.9
|
|
|
|
|
|
|
|
Adjusted EBITDA as
reported
|
$
|
11.9
|
3.7
|
8.2
|
|
Exclude: Contract Mining
Adjusted EBITDA
|
|
-
|
12.9
|
(12.9)
|
|
Adjusted EBITDA
excluding Contract Mining
|
$
|
11.9
|
(9.2)
|
21.1
|
|
|
|
|
|
|
|
Operating Profit as
reported
|
$
|
(10.8)
|
(22.2)
|
11.4
|
|
Exclude: Contract Mining
Operating Profit
|
|
-
|
4.1
|
(4.1)
|
|
Operating Profit
excluding Contract Mining
|
$
|
(10.8)
|
(26.3)
|
15.5
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin as reported
|
|
1.8%
|
0.7%
|
1.1%
|
|
Adjusted EBITDA
margin excluding Contract Mining
|
|
1.8%
|
(1.9)%
|
3.7%
|
|
|
|
|
|
|
|
Operating Profit
margin as reported
|
|
(1.7)%
|
(4.1)%
|
2.4%
|
|
Operating Profit
margin excluding Contract Mining
|
|
(1.7)%
|
(5.4)%
|
3.7%
|
|
|
|
|
|
|
|
REPORTING SEGMENTS
Commencing in 2019, Aecon's Infrastructure and Industrial
segments were combined into a Construction segment to align with
Aecon's new operating management structure. The progress
Aecon has made in recent years with respect to the "One Aecon"
strategy has increasingly allowed for integrated project management
and systems, allowing Aecon to capitalize on those markets
providing the greatest opportunity at any point in time. This
trend is expected to continue going forward, seeing Aecon's
services and resources becoming increasingly mobile between end
markets. Aecon has migrated its overall management and
operating structure to reflect this increasingly flexible
model. Prior year comparative figures have been restated to
conform to the presentation adopted in the current year.
CONSTRUCTION SEGMENT
The Construction segment includes all aspects of the
construction of both public and private infrastructure, primarily
in Canada, and on a selected
basis, internationally and focuses primarily on the following
market sectors:
Financial Highlights
- Civil Infrastructure;
- Urban Transportation Systems;
- Nuclear Power Infrastructure;
- Utility Infrastructure; and
- Conventional Industrial Infrastructure.
|
|
|
Three Months
Ended
|
|
|
$
millions
|
|
March
31
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
637.9
|
|
$
|
530.3
|
|
|
Gross
profit
|
$
|
39.6
|
|
$
|
40.1
|
|
|
Adjusted
EBITDA
|
$
|
7.3
|
|
$
|
5.8
|
|
|
Operating
loss
|
$
|
(5.4)
|
|
$
|
(13.1)
|
|
|
|
|
|
|
|
|
|
|
Gross profit
margin
|
|
6.2%
|
|
|
7.6%
|
|
|
Adjusted EBITDA
margin
|
|
1.1%
|
|
|
1.1%
|
|
|
Operating
margin
|
|
(0.9)%
|
|
|
(2.5)%
|
|
|
Backlog
|
$
|
6,708
|
|
$
|
4,594
|
|
|
|
|
|
|
|
|
|
Revenue in the Construction segment for the three months ended
March 31, 2019 of $638 million was $108
million, or 20%, higher compared to the same period in
2018. Construction segment revenue was higher in civil
operations and urban transportation systems by $124 million driven by increases in both eastern
and western Canada. Revenue was also higher from nuclear
operations by $47 million.
These increases were partially offset by lower volume in
conventional industrial ($53 million)
due to a decrease in contract mining in Western Canada of $60
million following the sale of this business in November 2018, and utilities operations
($10 million).
Operating loss in the Construction segment of $5.4 million in the first three months of 2019
improved by $7.7 million compared to
an operating loss of $13.1 million in
the same period in 2018, despite the sale of the contract mining
business in November 2018 which
contributed $4.1 million of operating
profit in the first quarter of 2018. An improvement in
operating loss from the balance of the Construction segment in the
first quarter of 2019 of $11.8
million was due to a combination of higher volume and
improved gross margin.
Construction backlog as at March 31,
2019 was $6,708 million, which
is $2,114 million higher than the
same time in 2018. The largest period-over-period increase in
backlog occurred in civil operations and urban transportation
systems ($2,006 million) driven
primarily by large project awards in 2018 including the Réseau
express métropolitain Montreal Light Rail Transit ("LRT"), the
Finch West LRT, and the Gordie Howe International Bridge
projects. Backlog also increased period-over-period in
utilities operations ($234 million),
while backlog was lower in conventional industrial and nuclear
operations by $66 million and
$60 million, respectively. New
contract awards of $561 million in
the first quarter of 2019 were $336
million lower than the same period last year.
CONCESSIONS SEGMENT
Activities within the Concessions segment include the
development, financing, build and operation of construction
projects by way of public-private partnership contract structures,
as well as integrating the services of all project participants,
and harnessing the strengths and capabilities of Aecon. The
Concessions segment focuses primarily on providing the following
services:
- Development of domestic and international Public-Private
Partnership ("P3") projects;
- Private finance solutions;
- Developing effective strategic partnerships;
- Leading and/or actively participating in development teams;
and
- Operations and maintenance.
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
$
millions
|
|
March
31
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
58.0
|
|
$
|
31.3
|
|
|
Gross
profit
|
$
|
7.8
|
|
$
|
6.8
|
|
|
Income from
projects accounted for using the equity method
|
$
|
3.0
|
|
$
|
1.4
|
|
|
Adjusted
EBITDA
|
$
|
14.8
|
|
$
|
9.9
|
|
|
Operating
profit
|
$
|
4.5
|
|
$
|
2.9
|
|
|
Backlog
|
$
|
41
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
Aecon holds a 100% interest in Bermuda Skyport Corporation Limited
("Skyport"), the concessionaire responsible for the Bermuda airport's operations, maintenance and
commercial functions, and the entity that will manage and
coordinate the overall delivery of the Bermuda International Airport Redevelopment
Project over a 30-year concession term. Aecon's participation
in Skyport is consolidated and, as such, is accounted for in the
consolidated financial statements by reflecting, line by line, the
assets, liabilities, revenue and expenses of Skyport.
However, Aecon's concession participation in the Eglinton Crosstown
LRT, Finch West LRT, Gordie Howe International Bridge, and Waterloo
LRT projects are joint ventures that are accounted for using the
equity method.
Revenue for the three months ended March
31, 2019 in the Concessions segment was $58 million, an increase of $27 million compared to the same period last
year. The higher revenue was primarily a result of the
Bermuda International Airport
Redevelopment Project and resulted from the impact of increased
construction activity related to the redevelopment of the
airport. Included in Concessions' revenue for the first three
months of 2019 and 2018 was $43
million and $18 million,
respectively, of construction revenue that was eliminated on
consolidation as inter-segment revenue.
Operating profit of $4.5 million
for the three months ended March 31,
2019, increased by $1.6
million compared to the same period in 2018 and was
primarily due to increased operating profit from management and
development fees for Canadian concessions.
Except for Operations and Maintenance ("O&M") activities
under contract for the next five years and that can be readily
quantified, Aecon does not include in its reported backlog expected
revenue from concession agreements. As such, while Aecon
expects future revenue from its concession assets, no concession
backlog, other than from such O&M activities for the next five
years, is reported.
DIVIDEND
Aecon's second quarter dividend of 14.5
cents per common share will be paid on July 3, 2019 to shareholders of record on
June 21, 2019.
OUTLOOK
"The overall outlook for 2019 remains solid, as our current
strong backlog, robust pipeline of future opportunities, and
ongoing concessions are expected to lead to another year of
improved like-for-like results compared to 2018," said Jean-Louis Servranckx.
CONSOLIDATED RESULTS
The consolidated results for the three months ended March 31, 2019 and 2018 are available at the end
of this news release.
|
|
March
31
|
|
December
31
|
$
thousands (unaudited)
|
|
2019
|
|
2018
|
|
|
|
|
|
Cash and cash
equivalents and restricted cash
|
$
|
746,968
|
$
|
824,345
|
Other current
assets
|
|
1,254,147
|
|
1,322,468
|
Property, plant and
equipment
|
|
311,187
|
|
266,199
|
Other long-term
assets
|
|
539,195
|
|
519,680
|
Total
Assets
|
$
|
2,851,497
|
$
|
2,932,692
|
|
|
|
|
|
Current portion of
long-term debt - recourse
|
$
|
42,917
|
$
|
32,505
|
Other current
liabilities
|
|
1,121,062
|
|
1,231,405
|
Long-term debt -
recourse
|
119,188
|
69,707
|
Long-term project
debt - non-recourse
|
376,294
|
383,746
|
Long-term portion of
convertible debentures
|
|
160,907
|
|
159,775
|
Other long-term
liabilities
|
|
226,454
|
|
230,492
|
|
|
|
|
|
Equity
|
|
804,675
|
|
825,062
|
Total Liabilities
and Equity
|
$
|
2,851,497
|
$
|
2,932,692
|
CONFERENCE CALL
A conference call and live webcast have been scheduled for
10 a.m. (Eastern Time) on Friday,
April 26, 2019. Participants should dial 647-689-5656
or 1-877-823-8624 at least 10 minutes prior to the
conference time. The reservation number is 2990233. An
accompanying presentation of the first quarter 2019 financial
results will be available after market close on April 25, 2019
at www.aecon.com/investing. For those unable to
attend the call, a replay will be available after 3 p.m. on April 26,
2019 at 1-800-585-8367 or 416-621-4642 until midnight on
May 10, 2019.
A live webcast of the conference call will also be
available at www.aecon.com/investing/IR_calendar. Participants
should join the webcast at least 15 minutes prior to the conference
time to register and install any necessary software. A replay of
the webcast will be available within 24 hours following the
call.
AECON 2019 ANNUAL GENERAL MEETING
Aecon's Annual General Meeting will be held on June 4, 2019 in Toronto, Ontario. Additional details will be
set out in the Management Information Circular to be filed on
SEDAR.
ABOUT AECON
Aecon Group Inc. (TSX: ARE) is a Canadian leader and
partner-of-choice in construction and infrastructure
development. Aecon provides integrated turnkey services to
private and public-sector clients in the Infrastructure and
Industrial sectors, and provides project management, financing and
development services through its Concessions segment. For more
information, please visit aecon.com and follow us on
Twitter, LinkedIn, and Instagram @AeconGroup.
STATEMENT ON FORWARD-LOOKING INFORMATION
The information in this press release includes certain
forward-looking statements. Although these forward-looking
statements are based on currently available competitive, financial
and economic data and operating plans, they 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 risks associated with
an investment in the common shares of Aecon and the risks related
to Aecon's business, including, but not limited to, the timing of
projects, unanticipated costs and expenses, general market and
industry conditions and operational and reputational risks,
including Large Project Risk and Contractual Factors.
Risk factors are discussed in greater detail in the section
on "Risk Factors" included in the Company's Management Discussion
and Analysis filed on April 25, 2019
and available through SEDAR at www.sedar.com. 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. Other
important factors, in addition to those discussed in this document,
could affect the future results of Aecon and could cause its
results to differ materially from those expressed in any
forward-looking statements. 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 statements, whether
as a result of new information, future events or otherwise.
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE THREE
MONTHS ENDED MARCH 31, 2019 AND 2018
|
(in thousands of
Canadian dollars, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31
|
March 31
|
|
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
650,334
|
$
|
543,325
|
Direct costs and
expenses
|
|
|
(603,537)
|
|
(496,355)
|
Gross
profit
|
|
|
46,797
|
|
46,970
|
|
|
|
|
|
|
|
Marketing, general
and administrative expenses
|
|
|
(43,347)
|
|
(47,183)
|
Depreciation and
amortization
|
|
|
(18,489)
|
|
(23,746)
|
Income from projects
accounted for using the equity method
|
|
|
2,511
|
|
846
|
Other
income
|
|
|
1,761
|
|
907
|
Operating
loss
|
|
|
(10,767)
|
|
(22,206)
|
|
|
|
|
|
|
|
Finance
income
|
|
|
616
|
|
203
|
Finance
costs
|
|
|
(4,765)
|
|
(5,118)
|
Loss before income
taxes
|
|
|
(14,916)
|
|
(27,121)
|
Income tax
recovery
|
|
|
5,093
|
|
7,876
|
Loss for the
period
|
|
$
|
(9,823)
|
$
|
(19,245)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
|
$
|
(0.16)
|
$
|
(0.32)
|
Diluted loss per
share
|
|
$
|
(0.16)
|
$
|
(0.32)
|
SOURCE Aecon Group Inc.