Jacob Bout
Good morning. There's about $528 million backlog left of the four legacy fixed-price projects. Can you just sort of remind us, how you expect to work down that in the balance of 2023 and 2024 and 2025? And then maybe just as a follow-on there. How are you thinking about the risk of further negative cost reforecast? When do you expect that to subside?
Jean-Louis Servranckx
Yeah maybe I’ll take this one, Jacob. Yes we are around $500 million of remaining backlog for the four legacy project. In terms of declared backlog of $6.2 billion, it represents a little less than 10%. But when you add to this backlog, what is going to come most probably from the progressive design build, it's not even 5%.
As you know, on those four projects one has reached mechanical completion.
The three are the ones, I mean two will be completed in 2024 and we are really nearing completion and the other one around 2025.
It just means that this (the 528m remaining) will steadily decrease in the two to three quarters to come.
On other hand, let's maybe come back a little on the situation of those legacy projects. You have noted, we reached three major settlement agreements on three of these projects.
Those contract drill negotiation are extremely complex with a lot of parameters. But what is important is that they allow to have a much better clarity on schedule to completion and eventual attached liquidity damages.
They allow to have additional revenue and much more clarity and the way it's going to be distributed I mean the cash associated with it.
And Dave spoke about it. I mean we are favored in those agreements, a quick disposal of the cash from our client.
And then it gives us a better knowledge of the cost to come.
On the last one, you remember, we have reached mechanical completion and we were protected from early 2023 in terms of cash because our costs were covered on those one. So to come back to your risk question, cash is preserved on those jobs for the quarters to come and it is important.
Maybe my third point will be about – what else? What else on – when you take out those legacy projects from our results I mean you have noted the EBITDA for Q3, would have been 123. I mean trailing 12 months, 375. I mean I don't know a lot of companies with the structure of Aecon that can deliver 12% EBITDA.
It just means that the large majority of our business is very strong and it is very strong in a world where there is less and less contractors. And this is what is important. I mean we just have to stick to our strategy. We just have to stick to our discipline. You have noticed that the name of legacy project has not been invented by chance. From September 2018, we have not entered in any tenders project at Aecon. We have limited the size of our lumpsum job.
We have convinced a lot of our clients to go to progressive design build. And this is important. I mean we have invested money in our project management academy, in our continuous improvement program, in our net zero to understand when we decide to pursue a new job what are the risks associated and how can we tackle correctly those risks. So I think it is important also to note it.