Aecon Group Inc T.ARE

Third Quarter 2021 Results

[Betteryear2]

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.

[sunshine7]

How concerning is this clause? 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

[Blueswin]

I am guessing this is why the stiock price is getting clobbered!

[BearBullBrian]

Seems like a good guess to me. Creates a buying opportunity into a tremendous backlog, plus increased demand for infrastructure on the way, although relying on Governments for business is not always a good bet. BBB

[Dividends]

Not happy with this! Hopefully we bounce back quickly and reward shareholders 

[Justhalffull]

Well the Coastal Gas Pipline was [is] a $526 million project, so I suppose it would put some pressure on the sp if it gets further delayed and replanned.

[SusanBolland]

good point

[fishbeecee]

It was concerning enough for the company to draw investors attention to it as they see it as a major risk???? The question is will it be a buying opportunity or will we see a disasterous result like a dividend cut

[Shirtlessnomore]

Do they see it as a major risk or are they just being lemmings jumping off the cliff as we've seen Canadians do for the last 18 months? I see the latter. I have just taken major advantage of RCI and their family drama, FN and their financials suffering a bit from covid and now this which WILL have a positive day tomorrow or I'll add more. Cheers and gl.

[Justhalffull]

I think it is a significant risk, whether major or not I guess depends on the resolution.  In essence, their 50/50 partner claims the owner is responsible for increased costs due to several factors.  The owner has refused to pay the increased billings, and Aecon partner in SAEG, RB Somerville has stated that they will be unable to fullfill their cash flow requirements for the project

[Dividends]

We won't lose it all. Sue back and make us rich! i think Aecon could pay us a special dividend just for holding. Keep delivering projects and billing hard  filthy animals those partners 

[Justhalffull]

That;s not really good investment strategy.  Investing is all about risk.  Reduce it where you can, take it where you think it's ok That's individuals choice based on their risk tolerance.  At my age, I'm out unless it falls below $15.   Ill try BDT instead.