TORONTO, Oct. 28, 2021 /CNW/ - Aecon Group Inc. (TSX: ARE)
("Aecon" or the "Company") today reported results for the third
quarter of 2021 with a year-over-year increase in revenue and
underlying profitability, and backlog of over $6 billion as at September
30, 2021.
"Aecon's third quarter results show steady revenue growth,
diversified backlog, and the turning of the corner at our
Bermuda airport concession as
global air travel begins its recovery," said Jean-Louis Servranckx, President & Chief
Executive Officer, Aecon Group Inc. "The market environment remains
strong as the federal government and provincial governments across
Canada remain committed to
investing in infrastructure as part of economic recovery plans and
we see strong underlying demand trends for our recurring revenue
programs with utilities clients."
HIGHLIGHTS
- Revenue for the three months ended September 30, 2021 of $1,163 million was $124
million, or 12 per cent, higher compared to the same period
in 2020.
- After adjusting for the impact of CEWS amounts reported in the
third quarter of 2020, Adjusted EBITDA of $95.5 million (margin of 8.2%) and Operating
Profit of $63.7 million in the third
quarter of 2021 increased by $27.3
million and $25.9 million,
respectively, compared to the same period in 2020. Adjusted EBITDA
and Operating Profit in the third quarter of 2020 included a net
positive impact from the Canada
Emergency Wage Subsidy ("CEWS") program of $69.0 million.
- Net income of $38.4 million
(diluted earnings per share of $0.56)
for the third quarter compared to net income, including the
after-tax impact of CEWS, of $73.6
million (diluted earnings per share of $0.99) in the same period in 2020.
- Reported backlog as at September 30,
2021 of $6,043 million
compares to backlog of $6,664 million
as at September 30, 2020.
- New contract awards of $682
million were booked in the third quarter of 2021, compared
to $448 million in the same period in
2020.
- Aecon has disclosed that a partnership in which it holds a 50
per cent interest, SA Energy Group, has commenced an arbitration to
resolve matters including, but not limited to, significant scope
changes, delays, and COVID-19 impacts on the Coastal GasLink
Pipeline project, which could result in a material impact to
Aecon's earnings, cash flow, and financial position if not resolved
favourably in a timely manner.
- Subsequent to quarter end:
-
- Aecon completed a pilot of Volvo Construction Equipment's ECR25
Electric compact excavator on a utilities project site in
Toronto, Ontario. Aecon is the
first construction company in Canada to use this model of electric,
zero-emission construction equipment on an active project
site.
- Aecon's second annual Sustainability Report – Building
Better Together – received the MarCom Platinum Award honouring
excellence in marketing and communication for the Digital Media and
E-Communication category.
CONSOLIDATED FINANCIAL HIGHLIGHTS(1)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
$ millions (except
per share amounts)
|
|
September
30
|
|
September
30
|
|
|
|
2021
|
|
|
2020
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
1,163.4
|
|
$
|
1,039.5
|
$
|
2,888.8
|
|
$
|
2,566.4
|
|
Gross
profit
|
|
123.3
|
|
|
162.2
|
|
272.5
|
|
|
277.3
|
|
Marketing, general
and administrative expense
|
|
(42.4)
|
|
|
(37.9)
|
|
(134.4)
|
|
|
(128.7)
|
|
Income from projects
accounted for using the equity method
|
|
4.0
|
|
|
4.4
|
|
10.4
|
|
|
9.9
|
|
Other
income
|
|
0.9
|
|
|
0.4
|
|
6.0
|
|
|
2.4
|
|
Depreciation and
amortization
|
|
(22.1)
|
|
|
(22.3)
|
|
(66.4)
|
|
|
(64.5)
|
|
Operating
profit
|
|
63.7
|
|
|
106.8
|
|
88.1
|
|
|
96.4
|
|
Finance
income
|
|
0.1
|
|
|
0.1
|
|
0.4
|
|
|
0.9
|
|
Finance
cost
|
|
(11.8)
|
|
|
(6.8)
|
|
(33.7)
|
|
|
(19.6)
|
|
Profit before
income taxes
|
|
52.0
|
|
|
100.1
|
|
54.8
|
|
|
77.7
|
|
Income tax (expense)
recovery
|
|
(13.6)
|
|
|
(26.5)
|
|
(17.2)
|
|
|
(21.6)
|
|
Profit
|
$
|
38.4
|
|
$
|
73.6
|
$
|
37.6
|
|
$
|
56.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
margin(4)
|
|
10.6%
|
|
|
15.6%
|
|
9.4%
|
|
|
10.8%
|
|
MG&A as a
percent of revenue(4)
|
|
3.6%
|
|
|
3.6%
|
|
4.7%
|
|
|
5.0%
|
|
Adjusted
EBITDA(2)
|
$
|
95.5
|
|
$
|
137.2
|
$
|
177.6
|
|
$
|
180.9
|
|
Adjusted EBITDA
margin(3)
|
|
8.2%
|
|
|
13.2%
|
|
6.1%
|
|
|
7.0%
|
|
Operating
margin(4)
|
|
5.5%
|
|
|
10.3%
|
|
3.0%
|
|
|
3.8%
|
|
Earnings (loss)
per share - basic
|
$
|
0.64
|
|
$
|
1.23
|
$
|
0.62
|
|
$
|
0.93
|
|
Earnings (loss)
per share - diluted
|
$
|
0.56
|
|
$
|
0.99
|
$
|
0.59
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog(2)
|
|
|
|
|
|
$
|
6,043
|
|
$
|
6,664
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
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This press release
presents certain non-GAAP and supplementary financial measures, as
well as non-GAAP ratios to assist readers in understanding the
Company's performance (GAAP refers to Canadian Generally Accepted
Accounting Principles). Further details on these measures and
ratios are included in the "Non-GAAP and Supplementary Financial
Measures" section of this press release.
|
(2)
|
This is a non-GAAP
financial measure. Refer to the "Non-GAAP and Supplementary
Financial Measures" section of this press release for more
information on each non-GAAP financial measure.
|
(3)
|
This is a non-GAAP
ratio. Refer to the "Non-GAAP and Supplementary Financial Measures"
section of this press release for more information on each non-GAAP
ratio.
|
(4)
|
This is a
supplementary financial measure. Refer to the "Non-GAAP and
Supplementary Financial Measures" section of this press release for
more information on each supplementary financial
measure.
|
Revenue for the three months ended September 30, 2021 of $1,163 million was $124
million, or 12%, higher compared to the third quarter of
2020. Revenue for the three months ended September 30, 2021 was higher in the Construction
segment ($108 million), driven by
higher revenue in nuclear operations ($81
million), utilities ($49
million), and industrial operations ($26 million). These increases were partially
offset by lower revenue in civil operations and urban
transportation systems ($48 million).
In the Concessions segment, higher revenue for the three months
ended September 30, 2021
($13 million), was primarily due to a
gradual improvement in commercial flight operations at the
Bermuda International Airport,
partially offset by decreased construction activity related to the
Bermuda International Airport
Redevelopment Project. In addition, inter-segment revenue
eliminations decreased by $3 million
primarily due to lower revenue between the Concessions and
Construction segments related to the Bermuda International Airport Redevelopment
Project.
Operating profit of $63.7 million
for the three months ended September 30,
2021 decreased by $43.1
million compared to an operating profit of $106.8 million in the same period in 2020,
primarily due to a decrease in gross profit of $38.9 million. Gross profit in the third quarter
of 2020 included a net positive impact from subsidy related to the
Canada Emergency Wage Subsidy
("CEWS") program ($69.0 million in
both the three and nine-month periods ended September 30, 2020), recorded as cost recovery
within gross profit in the Construction segment. After adjusting
for the impact of CEWS amounts reported in the third quarter of
2020, gross profit in the third quarter of 2021 increased by
$30.1 million compared to the same
period in 2020. In the Construction segment, gross profit increased
by $17.1 million primarily from
higher volume and gross profit margin in nuclear and higher volume
in utilities operations. These increases were partially offset by
lower volume in civil operations and urban transportation systems,
and lower gross profit margin in industrial operations. In the
Concessions segment, gross profit increased by $13.0 million, primarily from an increase in
airport operations at the Bermuda
International Airport as the impacts of the COVID-19 pandemic on
travel were less severe in the third quarter of 2021 compared to
the prior period.
Reported backlog as at September 30,
2021 of $6,043 million
compares to backlog of $6,664 million
as at September 30, 2020. New
contract awards of $682 million were
booked in the third quarter of 2021 compared to $448 million in the same period in 2020.
Year-to-date new awards totaled $2,477
million compared to $2,440
million in the prior period.
REPORTABLE SEGMENTS
Aecon reports its financial performance on the basis of two
segments: Construction and Concessions.
CONSTRUCTION SEGMENT
|
|
|
Three months
ended
|
|
|
Nine months
ended
|
|
|
$
millions
|
|
September
30
|
|
|
September
30
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
1,142.4
|
|
$
|
1,034.8
|
|
$
|
2,841.2
|
|
$
|
2,548.0
|
|
|
Gross
profit
|
$
|
111.3
|
|
$
|
163.5
|
|
$
|
253.4
|
|
$
|
276.2
|
|
|
Adjusted
EBITDA(1)
|
$
|
82.1
|
|
$
|
131.3
|
|
$
|
155.1
|
|
$
|
175.5
|
|
|
Operating
profit
|
$
|
63.4
|
|
$
|
112.6
|
|
$
|
104.7
|
|
$
|
122.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
margin(3)
|
|
9.7%
|
|
|
15.8%
|
|
|
8.9%
|
|
|
10.8%
|
|
|
Adjusted EBITDA
margin(2)
|
|
7.2%
|
|
|
12.7%
|
|
|
5.5%
|
|
|
6.9%
|
|
|
Operating
margin(3)
|
|
5.6%
|
|
|
10.9%
|
|
|
3.7%
|
|
|
4.8%
|
|
|
Backlog(1)
|
|
|
|
|
|
|
$
|
5,965
|
|
$
|
6,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the "Non-GAAP And Supplementary
Financial Measures" section of this press release for more
information on each non-GAAP financial measure.
|
(2)
|
This is a non-GAAP
ratio. Refer to the "Non-GAAP And Supplementary Financial Measures"
section of this press release for more information on each non-GAAP
ratio.
|
(3)
|
This is a
supplementary financial measure. Refer to the "Non-GAAP And
Supplementary Financial Measures" section of this press release for
more information on each supplementary financial
measure.
|
Revenue in the Construction segment for the three months ended
September 30, 2021 of $1,142 million was $108
million, or 10%, higher compared to the same period in 2020.
Revenue was higher in nuclear operations ($81 million), driven by a higher volume of
refurbishment work at the Darlington and Kincardine nuclear generating stations, both
located in Ontario, in utilities
operations ($49 million) primarily
due to increased volume of oil and gas distribution and
telecommunications work partially offset by lower high-voltage
electrical transmission work, and in industrial operations
($26 million) driven by a higher
volume of field construction work at gas and chemical facilities
partially offset by decreased activity on mainline pipeline work in
western Canada. These revenue
increases were partially offset by lower revenue in civil
operations and urban transportation systems ($48 million), driven by lower roadbuilding
construction work.
Operating profit in the Construction segment of $63.4 million in the three months ended
September 30, 2021 decreased by
$49.2 million compared to an
operating profit of $112.6 million in
the same period in 2020. As previously noted, Construction segment
operating profit in the third quarter of 2020 included the impact
of the CEWS program totalling $69.0
million. After adjusting for the impact of CEWS amounts
reported in the third quarter of 2020, operating profit in 2021
increased by $19.8 million due to
higher volume and gross profit margin in nuclear and utilities, and
from lower MG&A, depreciation and amortization expense in
industrial operations that offset lower gross profit margin in the
period. These increases were partially offset by lower volume from
civil operations and urban transportation systems.
Construction backlog as at September 30,
2021 was $5,965 million, which
was $631 million lower than the same
time last year. Backlog decreased period-over-period in civil
operations and urban transportation systems ($388 million), nuclear ($186 million), and industrial ($110 million), and increased in utilities
($53 million). New contract awards
totaled $657 million in the third
quarter of 2021 and $2,424 million
year-to-date, compared to $439
million and $2,409 million,
respectively, in the same periods last year. During the first nine
months of 2021, a number of Aecon consortiums were awarded
multi-year projects including the replacement of steam generators
at Units 3 and 4 of the nuclear generating station in Kincardine, Ontario, construction of the
Eglinton Crosstown West Extension Advance Tunnel project in
Toronto, Ontario, and the North
End Sewage Treatment Plant Upgrade: Headworks Facilities Project in
Winnipeg, Manitoba.
CONCESSIONS SEGMENT
|
|
|
Three months
ended
|
|
|
Nine months
ended
|
|
|
$
millions
|
|
September
30
|
|
|
September
30
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
21.7
|
|
$
|
9.0
|
|
$
|
50.0
|
|
$
|
44.6
|
|
|
Gross
profit
|
$
|
11.8
|
|
$
|
(1.2)
|
|
$
|
19.3
|
|
$
|
1.2
|
|
|
Income from
projects accounted for using the equity method
|
$
|
2.5
|
|
$
|
3.0
|
|
$
|
8.2
|
|
$
|
8.6
|
|
|
Adjusted
EBITDA(1)
|
$
|
21.8
|
|
$
|
8.0
|
|
$
|
47.5
|
|
$
|
27.1
|
|
|
Operating profit
(loss)
|
$
|
8.9
|
|
$
|
(3.2)
|
|
$
|
9.5
|
|
$
|
(3.0)
|
|
|
Backlog(1)
|
|
|
|
|
|
|
$
|
78
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. Refer to the "Non-GAAP And Supplementary
Financial Measures" section of this press release for more
information on each non-GAAP financial measure.
|
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 managing and coordinating the
overall delivery of the Bermuda
International Airport Redevelopment Project over a 30-year
concession term that commenced in 2017. 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 Light
Rail Transit ("LRT"), Finch West LRT, Gordie Howe International
Bridge, and Waterloo LRT projects are joint ventures that are
accounted for using the equity method.
For the three months ended September 30,
2021, revenue in the Concessions segment of $22 million was $13
million higher compared to the same period in 2020. Higher
revenue for the third quarter of 2021 was primarily due to an
increase in airport operations at the Bermuda International Airport Redevelopment
Project compared to the same period in 2020 ($15 million), partially offset by lower
construction revenue related to this project which was
substantially completed in the fourth quarter of 2020 ($4 million). Commercial flight operations in
Bermuda continue to operate at a
reduced volume due to COVID-19 compared to pre-pandemic levels but
have partially recovered from the more severe impacts experienced
in 2020. Included in Concessions' revenue for the three months
ended September 30, 2021 was $nil of
construction revenue that was eliminated on consolidation as
inter-segment revenue (2020 - $3.4
million).
Operating profit in the Concessions segment for the three months
ended September 30, 2021 increased by
$12.1 million compared to the same
period in 2020. The higher operating profit occurred primarily in
the Bermuda International Airport
Redevelopment Project and resulted from the above noted changes in
airport construction and operations.
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.
OUTLOOK
Through the first nine months of 2021, new awards of
$2.4 billion were similar to the same
period last year and resulted from steady demand for Aecon's
services across Canada in smaller
and medium sized projects, and also incorporated a number of
multi-year projects in the nuclear, civil, urban transportation,
and industrial sectors. Aecon is also pre-qualified on a number of
large project bids due to be awarded over the next two years.
Recurring revenue is expected to continue to grow in both the
utilities sector, based on the capital investment plans of a number
of key clients, particularly in telecommunications and
power-related work, and the Concessions segment as airport traffic
in Bermuda continues its recovery
from the impact of the COVID-19 pandemic. The Company expects that
demand for its services will remain healthy for the foreseeable
future as the federal government and provincial governments across
Canada have identified investment
in infrastructure as a key source of stimulus as part of economic
recovery plans.
While the COVID-19 pandemic is expected to continue to have some
impact in moderating overall revenue and profitability growth
expectations, the Company is encouraged by the generally positive
trend in the lifting of social and economic restrictions in recent
months in Canada. Although the
operating environment continues to be impacted by the requirement
to follow client decisions related to schedules or operating
policies or due to broader government directives to modify work
practices to meet relevant health and safety standards, the impact
on revenue is expected to continue to lessen going forward if the
current trend continues. Until normal operations fully resume,
however, there is no guarantee that all related costs will be
recovered and therefore it is possible that future project margins
could be impacted.
In the Concessions segment, commercial operations at the
Bermuda International Airport
continue to be challenged by COVID-19 related travel restrictions,
which have significantly impacted the aviation industry. An
increase in vaccination rates and the easing of travel restrictions
during the year have provided signs of a rebound, from very low
levels, in passenger traffic for the aviation industry. An ongoing
increase in vaccination rates and further easing of travel
restrictions are expected to lead to a corresponding gradual
improvement in travel through the Bermuda airport during the remainder of the
year and into 2022.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2021, Aecon had a committed revolving
credit facility of $600 million, of which $50 million was
drawn and $8 million utilized for letters of credit. On
June 30, 2021, Aecon completed a two-year extension of its
revolving credit facility which now matures on June 30, 2025.
As part of the extension, the Company incorporated a
sustainability-linked facility which is tied to the Company's core
environmental, social and governance (ESG) objectives. In the first
quarter of 2021, the performance security guarantee facility
provided by Export Development Canada to support letters of credit
was increased from $700 million to
$900 million. On June 30, 2021,
this facility was extended to June 30, 2023. This facility,
when combined with Aecon's committed revolving credit facility,
provides Aecon with committed credit facilities for working capital
and letter of credit requirements totaling $1,500 million. The Company has no debt or
working capital credit facility maturities until the second half of
2023, except equipment and property loans and leases in the normal
course. As at September 30, 2021, Aecon was in compliance with
all debt covenants related to its credit facility. Aecon's
financial position, liquidity and capital resources are subject to
the risks and uncertainties described in Section 10.2
"Contingencies" of Management's Discussion and Analysis of
Operating Results and Financial Condition dated September 30, 2021 regarding certain pending
legal proceedings to which Aecon is a party, in particular the
potential material impact to the Company if the current dispute
with CGL, as described below, is not resolved favourably in a
timely manner.
CONTINGENCIES
Coastal GasLink Pipeline, Sections 3 and 4
The project has been delayed and impacted by various events for
which SA Energy Group ("SAEG"), a partnership in which the Company
holds a 50% interest, asserts Coastal GasLink ("CGL") is
contractually responsible, including, but not limited to,
significant scope changes and delays by the client, unforeseen site
conditions, recoverable weather impacts and a suspension
implemented by the client as a result of regulatory restrictions
imposed due to the COVID-19 pandemic. SAEG asserts that it is
entitled to additional compensation for costs associated with those
delays and impacts. During the second quarter of 2021, CGL issued a
Change Directive instructing SAEG to proceed with completing the
remaining work on the project without an agreement as to the price
for that work and without making any interim additional payments on
account of the increased costs. In the third quarter, the
difference between costs being incurred by SAEG and compensation
being agreed to by CGL has further increased due to CGL's failure
to appropriately administer its change management process and its
unilateral decision to stop paying amounts it had previously agreed
to pay on an interim basis pending dispute resolution. As a result,
RB Somerville, the Company's 50% partner in SAEG, has expressed
that it will be unable to continue funding its share of the cash
flow requirements of the project beyond the first quarter of 2022
should the situation not improve. Should RB Somerville cease
funding its share of the cash flow requirements of the project, the
Company's requirement to fund further cash flow shortfalls from
that point on would double. If that were the case, and in the
absence of a resolution with CGL that improves the cash flow
situation on the project, the Company may not be in a position to
continue funding the project to completion (projected for the first
quarter of 2023). As SAEG believes it has strong contractual
entitlement to additional compensation that CGL is not addressing
on a timely basis, it has commenced an arbitration pursuant to the
terms of the contract to resolve the matter. While this commercial
dispute could result in a material impact to Aecon's earnings, cash
flow, and financial position if not resolved favourably in a timely
manner, the ultimate results cannot be predicted at this time.
CONSOLIDATED RESULTS
The consolidated results for the three and nine months ended
September 30, 2021 and 2020 are
available at the end of this news release.
CONSOLIDATED BALANCE SHEET
|
|
September
30
|
|
December
31
|
$
thousands
|
|
2021
|
|
2020
|
|
|
|
|
|
Cash and cash
equivalents and restricted cash
|
$
|
637,296
|
$
|
769,478
|
Other current
assets
|
|
1,658,570
|
|
1,431,532
|
Property, plant and
equipment
|
|
376,149
|
|
362,177
|
Other long-term
assets
|
|
719,449
|
|
724,212
|
Total
Assets
|
$
|
3,391,464
|
$
|
3,287,399
|
|
|
|
|
|
Current portion of
long-term debt - recourse
|
$
|
55,785
|
$
|
56,568
|
Other current
liabilities
|
|
1,529,631
|
|
1,473,034
|
Long-term debt -
recourse
|
|
169,585
|
|
143,534
|
Long-term project
debt - non-recourse
|
|
359,266
|
|
358,871
|
Long-term portion of
convertible debentures
|
|
172,675
|
|
169,057
|
Other long-term
liabilities
|
|
202,207
|
|
212,228
|
|
|
|
|
|
Equity
|
|
902,315
|
|
874,107
|
Total Liabilities
and Equity
|
$
|
3,391,464
|
$
|
3,287,399
|
CONFERENCE CALL
A conference call and live webcast has been scheduled for
10 a.m. (Eastern Time) on Friday,
October 29, 2021. Participants should dial 1-833-950-0062 or
1-226-828-7575 at least 10 minutes prior to the conference
time. The conference ID is 254589. An accompanying
presentation of the third quarter 2021 financial results will be
available after market close on October 28,
2021 at www.aecon.com/investing.
A live webcast of the conference call will also be available at
www.aecon.com/InvestorCalendar. Participants should join the
webcast at least 15 minutes prior to the conference time to
register and install any necessary software. For those unable to
attend the call, a replay will be available after 2 p.m. on October 29,
2021 at 1-866-813-9403 or 1-929-458-6194 or online until
midnight on November 12, 2021. The
access code is 462209. A replay of the webcast will
also be available within 24 hours following the call.
ABOUT AECON
As a Canadian leader in construction and infrastructure
development with global expertise, Aecon Group Inc. (TSX: ARE)
strives to be the number one Canadian infrastructure company and is
proud to be recognized as one of the Best Employers in Canada. Aecon safely, profitably and
sustainably delivers integrated solutions to private and
public-sector clients through its Construction segment in the
Civil, Urban Transportation, Nuclear, Utility and Industrial
sectors, and provides project development, financing, investment
and management services through its Concessions segment. Join our
online community on Twitter, LinkedIn, Facebook and Instagram
@AeconGroup.
NON-GAAP AND SUPPLEMENTARY FINANCIAL MEASURES
This press release presents certain non-GAAP and supplementary
financial measures, as well as non-GAAP ratios to assist readers in
understanding the Company's performance (GAAP refers to Canadian
Generally Accepted Accounting Principles). These measures do not
have any standardized meaning and therefore are unlikely to be
comparable to similar measures presented by other issuers and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
Management uses these non-GAAP and supplementary financial
measures, as well as certain non-GAAP ratios to analyze and
evaluate operating performance. Aecon also believes the financial
measures defined below are commonly used by the investment
community for valuation purposes, and are useful complementary
measures of profitability, and provide metrics useful in the
construction industry. The most directly comparable measures
calculated in accordance with GAAP are profit (loss) attributable
to shareholders or earnings (loss) per share.
Throughout this press release, the following terms are used,
which are not found in the Chartered Professional Accountants of
Canada Handbook and do not have a standardized meaning under
GAAP.
Non-GAAP Financial Measures
A non-GAAP financial measure: (a) depicts the historical or
expected future financial performance, financial position or cash
flow of the Company; (b) with respect to its composition, excludes
an amount that is included in, or includes an amount that is
excluded from, the composition of the most comparable financial
measure presented in the primary consolidated financial statements;
(c) is not presented in the primary financial statements of the
Company; and (d) is not a ratio.
Non-GAAP financial measures presented and discussed in this
press release are as follows:
- "Adjusted EBITDA" represents operating profit (loss)
adjusted to exclude depreciation and amortization, the gain (loss)
on sale 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 (refer to Section 9 - "Quarterly Financial Data" in
the Company's Management's Discussion and Analysis ("MD&A")
available through the System for Electronic Document Analysis and
Retrieval at www.sedar.com. for a quantitative reconciliation to
the most comparable financial measure).
- "Equity Project EBITDA" represents Aecon's proportionate
share of the earnings or losses from projects accounted for using
the equity method before depreciation and amortization, finance
income, finance cost and income taxes (refer to Section 9 -
"Quarterly Financial Data" in the Company's MD&A available
through the System for Electronic Document Analysis and Retrieval
at www.sedar.com. for a quantitative reconciliation to the most
comparable financial measure).
- "Backlog" means the total value of work that has not yet
been completed that: (a) has a high certainty of being performed as
a result of the existence of an executed contract or work order
specifying job scope, value and timing; or (b) has been awarded to
Aecon, as evidenced by an executed binding letter of intent or
agreement, describing the general job scope, value and timing of
such work, and where the finalization of a formal contract in
respect of such work is reasonably assured. Operations and
maintenance ("O&M") activities are provided under contracts
that can cover a period of up to 30 years. In order to provide
information that is comparable to the backlog of other categories
of activity, Aecon limits backlog for O&M activities to the
earlier of the contract term and the next five years.
Primary financial statements
Primary financial statements include any of the following: the
consolidated balance sheets, the consolidated statements of income,
the consolidated statements of comprehensive income, the
consolidated statements of changes in equity, and the consolidated
statements of cash flows.
Key financial measures presented in the primary financial
statements of the Company and discussed in this press release are
as follows:
- "Gross profit" represents revenue less direct costs and
expenses. Not included in the calculation of gross profit are
marketing, general and administrative expense ("MG&A"),
depreciation and amortization, income or losses from projects
accounted for using the equity method, foreign exchange, net
financing expense, gain (loss) on sale of assets and investments,
income taxes, and non-controlling interests.
- "Operating profit (loss)" represents the profit (loss)
from operations, before net financing expense, income taxes and
non-controlling interests.
The above measures are presented on the face of the Company's
consolidated statements of income and are not meant to be a
substitute for other subtotals or totals presented in accordance
with International Financial Reporting Standards ("IFRS"), but
rather should be evaluated in conjunction with such IFRS
measures.
Non-GAAP Ratios
A non-GAAP ratio is a financial measure presented in the form of
a ratio, fraction, percentage or similar representation and that
has a non-GAAP financial measure as one of its components.
A non-GAAP ratio presented and discussed in this press release
is as follows:
- "Adjusted EBITDA margin" represents Adjusted EBITDA as a
percentage of revenue.
Supplementary Financial Measures
A supplementary financial measure: (a) is, or is intended to be,
disclosed on a periodic basis to depict the historical or expected
future financial performance, financial position or cash flow of
the Company; (b) is not presented in the financial statements of
the Company, (c) is not a non-GAAP financial measure; and (d) is
not a non-GAAP ratio.
Key supplementary financial measures presented discussed in this
press release are as follows:
- "Gross profit margin" represents gross profit as a
percentage of revenue.
- "Operating margin" represents operating profit (loss) as
a percentage of revenue.
- "MG&A as a percent of revenue" represents marketing,
general and administrative expense as a percentage of revenue.
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. 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,
including statements regarding the sufficiency of Aecon's liquidity
and working capital requirements for the foreseeable future.
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. 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: the timing of projects, unanticipated costs and expenses, the
failure to recognize and adequately respond to climate change
concerns or public and governmental expectations on climate
matters, general market and industry conditions and operational and
reputational risks, including large project risk and contractual
factors, and risks relating to the COVID-19 pandemic. Risk factors
are discussed in greater detail in Section 13 – "Risk Factors" in
the Management's Discussion and Analysis filed on February 25, 2021. 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, except as required by applicable law.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of Canadian dollars, except per share amounts)
(unaudited)
|
|
|
For the three months
ended
|
For the nine months
ended
|
|
|
|
September
30
|
|
September
30
|
September
30
|
|
September
30
|
|
|
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,163,441
|
|
$
|
1,039,456
|
$
|
2,888,757
|
|
$
|
2,566,419
|
Direct costs and
expenses
|
|
|
(1,040,191)
|
|
|
(877,227)
|
|
(2,616,304)
|
|
|
(2,289,140)
|
Gross
profit
|
|
|
123,250
|
|
|
162,229
|
|
272,453
|
|
|
277,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing, general
and administrative expense
|
|
|
(42,376)
|
|
|
(37,868)
|
|
(134,380)
|
|
|
(128,698)
|
Depreciation and
amortization
|
|
|
(22,111)
|
|
|
(22,329)
|
|
(66,358)
|
|
|
(64,504)
|
Income from projects
accounted for using the equity method
|
|
|
3,957
|
|
|
4,353
|
|
10,375
|
|
|
9,894
|
Other
income
|
|
|
934
|
|
|
394
|
|
5,977
|
|
|
2,384
|
Operating
profit
|
|
|
63,654
|
|
|
(106,779)
|
|
88,067
|
|
|
96,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
|
137
|
|
|
139
|
|
403
|
|
|
885
|
Finance
cost
|
|
|
(11,820)
|
|
|
(6,816)
|
|
(33,666)
|
|
|
(19,561)
|
Profit before
income taxes
|
|
|
51,971
|
|
|
100,102
|
|
54,804
|
|
|
77,679
|
Income tax
expense
|
|
|
(13,542)
|
|
|
(26,478)
|
|
(17,195)
|
|
|
(21,632)
|
Profit for the
period
|
|
$
|
38,429
|
|
$
|
73,624
|
$
|
37,609
|
|
$
|
56,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
0.64
|
|
$
|
1.23
|
$
|
0.62
|
|
$
|
0.93
|
Diluted earnings
per share
|
|
$
|
0.56
|
|
$
|
0.99
|
$
|
0.59
|
|
$
|
0.83
|
SOURCE Aecon Group Inc.