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Press release from CNW Group

Aecon reports improved first quarter 2012 results

Wednesday, May 02, 2012

Aecon reports improved first quarter 2012 results18:03 EDT Wednesday, May 02, 2012TORONTO, May 2, 2012 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported improved results for the first quarter of 2012. Stronger results than the prior year were attributable to the performance of the Infrastructure and Industrial segments and the successful ramping-up of Aecon Mining.HIGHLIGHTSOperating loss for the period, typical of first quarter results due to the seasonal nature of Aecon's business, improved to $16.1 million compared to $28.7 million in the prior year.Q1 adjusted net loss attributable to shareholders of $17.4 million ($0.33 loss per diluted share) was recorded compared to an adjusted net loss of $26.9 million ($0.49 loss per diluted share) in Q1 2011.EBITDA improved to a positive $0.4 million on revenues of $502.2 million versus a negative EBITDA of $14.0 million on revenues of $512.0 million in Q1 2011.Backlog of $2.4 billion at March 31, 2012 was a Q1 record.Positive outlook affirmed with backlog growth in the Industrial segment reflecting strength of Canada's resources and power sectors coupled with steady infrastructure spending.Subsequent to quarter end, a significant award was announced to build six 10MW solar parks in Ontario.Annual dividend for 2012 (previously announced with 2011 year end results) takes effect; $0.28 per share ($0.07 per quarter) from $0.20 per share ($0.05 per quarter).  Three Months Ended March 31$ millions (except per share amounts) 2012 2011     Revenues$502.2$512.0Gross profit 36.9 16.2EBITDA(1) 0.4 (14.0)Depreciation and amortization (16.5) (14.7)Operating loss(2) (16.1) (28.7)Financing charges, net (8.1) (6.3)Fair value gain (loss) on debentures (2.8) 7.6Income tax recovery (expense) 7.8 7.1Profit attributable to non-controlling interests (0.3) (1.2)Loss attributable to shareholders (19.5) (21.5)Loss per share (diluted) (0.37) (0.39)Adjusted loss attributable to shareholders (3) (17.4) (26.9)Adjusted loss per share (diluted) (4)$(0.33)$(0.49)Backlog 2,379 2,326(1)     EBITDA represents earnings or losses before net financing costs, fair value gain(loss) on convertible debentures, income taxes, depreciation and amortization, andnon-controlling interests.(2)     Operating profit (loss) represents the profit (loss) from operations before netfinancing expense, income taxes and non-controlling interests.(3)     Adjusted profit (loss) attributable to shareholders represents the profit (loss)attributable to shareholders adjusted to exclude the after-tax fair value gain (loss)on the embedded derivative portion of Aecon's convertible debentures.(4)     Adjusted earnings (loss) per share (diluted) represents earnings (loss) per sharecalculated using adjusted profit (loss) attributable to shareholders."The Aecon team is making progress along our path of focused execution and delivering improved results," said John M. Beck, Aecon's Chairman and CEO. "Our first quarter results build on the foundation of steadily improving performance.  We are confident that Aecon's diverse capabilities across Canada will continue to attract additional contracts, as the sectors in which we are well positioned, grow and develop."Backlog at March 31, 2012 reached $2.4 billion, as a significant increase in Industrial drove consolidated backlog to a record level for the end of the first quarter. New contract awards of $491 million - an increase of $128 million - were booked in the quarter compared to $363 million in the first quarter of 2011.Not included in backlog, but important to Aecon's prospects due to the significant volumes involved, are the expected revenues 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.Subsequent to quarter end, the Company announced a significant award to build six 10MW solar parks in Ontario for Northland Power Inc. building on Aecon's track record in the construction of innovative, renewable and sustainable energy solutions.As previously announced with 2011 year end results, the Company's annual dividend for 2012 takes effect; the dividend has been raised to $0.28 per share ($0.07 per quarter) from $0.20 per share ($0.05 per quarter) and was paid for the first quarter on April 2, 2012.Aecon's liquidity position and capital resources are expected to be sufficient to finance its operations and working capital requirements for the foreseeable future.  At quarter end, the Company had cash and cash equivalents of $125.6 million and a committed bank facility of $262.5 million, of which $175.5 million was unutilized at March 31, 2012.OPERATING AND FINANCIAL RESULTS"The Aecon team is diligently working on increasing margins and continuous performance improvement.  This effort is demonstrating results particularly within Aecon Mining, with higher volumes and improved equipment utilization, and is starting to register across our various business units," said Teri McKibbon, Chief Operating Officer.  "In particular, our Buildings team has made considerable improvement since the losses incurred in the first quarter of 2011 and Industrial is picking up additional work that should yield beneficial results going forward."Aecon reports its results in three operating segments: Infrastructure, Industrial and Concessions.INFRASTRUCTURE SEGMENTThe Infrastructure segment includes all aspects of civil construction from highways, bridges and tunnels to airports, marine facilities, transit and power projects as well as utilities construction, buildings construction and mining operations.Financial Highlights   Three Months Ended March31$ millions (1) 2012 2011 Revenues$316.6$308.5 EBITDA (3.8) (19.8) Segment operating loss  (16.0) (30.3) Segment operating margin     (5.1)%     (9.8)% Backlog  1,403 1,957 (1) Commencing in 2012, the Infrastructure segment includes Lockerbie& Hole Contracting (previously included in the Industrial segment),building on the Company's "One Aecon" business strategy whereAecon expects to realize synergies between Lockerbie & HoleContracting and Aecon Buildings in the social infrastructure sector.First quarter revenues in the Infrastructure segment were slightly higher than Q1 2011, with revenue increases from mining - reflecting ongoing growth in the oil sands and resources sectors - and heavy civil operations. These were partly offset by declines in social infrastructure operations, primarily the Quebec buildings unit and mechanical operations in Western Canada.For the three months ended March 31, 2012, the operating loss in the Infrastructure segment decreased (increased) from the same period last year as follows:        Three Months Ended $ millions(1) March 31      Transportation$(1.5) Heavy Civil (1.3) Utilities (2.8) Mining 14.1  Social Infrastructure 5.8  Decrease in Infrastructure operating loss$14.3  (1) Commencing in 2012, the operating units within the Infrastructuresegment were reorganized to align with the segment's operatingmanagement structure into the sub-categories above.Operating profits in Mining operations for the first quarter of 2012 increased as a result of higher volume as well as higher margins due to a higher level of equipment availability and the mix of work in the current period.  Higher margins were achieved in Social Infrastructure due to the close out of certain mechanical projects and an improvement in its buildings operations compared to Q1 2011. Other business unit operating declines reflected lower margins on certain projects (Heavy Civil) and lower volumes for the quarter (Transportation and Utilities).Infrastructure backlog at March 31, 2012 was $1.403 billion, with new awards amounting to $204 million for the first quarter versus $210 million in the prior year.  The overall decline of $555 million versus a year ago was primarily due to Heavy Civil significantly working off major projects over the past 12 months.INDUSTRIAL SEGMENTIndustrial operations include all of Aecon's industrial manufacturing and construction activities including in-plant construction, fabrication of specialty pipe, assembly of custom module units and the design and manufacture of once-through heat recovery steam generators.Financial Highlights      Three Months Ended March 31$ millions 2012 2011 Revenues$176.4$184.4 EBITDA 6.3 5.8 Segment operating profit 4.5 3.6 Segment operating margin 2.5% 2.0% Backlog  976 368 Although revenues in the first three months of 2012 were slightly lower than in the prior year, operating profit increased for the period. The improvement in operating profit was mostly due to improved results from the commodity mining and power sectors.For the three months ended March 31, 2012, the operating profit in the Industrial segment increased/(decreased) over the same period last year as follows:        Three months ended $ millions March 31 Heavy Industrial (Construction and Fabrication)$2.7  IST (1.8) Increase in Industrial operating profit$0.9  Industrial backlog at March 31, 2012 of $976 million was $608 million higher than the comparable quarter last year.  Driving this substantial increase were several project awards in recent quarters in the commodity resource and power sectors.  Overall, new contract awards of $278 million in the first quarter of 2012, mostly in Heavy Industrial, doubled ($144 million higher) over the same period in 2011.CONCESSIONS SEGMENTThe Concessions segment includes the development, operation and financing of infrastructure projects by way of public-private partnership, build-own-operate-transfer or other alternative financing contract structures.Financial HighlightsThree Months Ended March31$ millions 2012 2011Revenues$9.9$22.6EBITDA 4.8 6.6Segment operating profit 3.9 5.8Segment operating margin 39.4% 25.6%Revenues and operating profit declined in the Concessions segment as a result of the sale in the third quarter of 2011 of Aecon's interest in the operator of the Cross Israel Highway.  The results for 2012 no longer include this operation ($1.9 million of operating profit in Q1 2011).The operating profit for the first quarter of 2012 includes the results from operating the existing Quito airport while the new airport is being constructed.  Construction was approximately 93 per cent complete at quarter end and the new airport is scheduled to open in October 2012.CONSOLIDATED RESULTSThe Consolidated Results for the first quarters of 2012 and 2011 are available at the end of this News Release.BALANCE SHEET HIGHLIGHTS (thousands of dollars) March 31, 2012 Dec. 31, 2011     Cash and cash equivalents and restricted cash$198,747$221,290Other current assets 762,090 842,959Property, plant and equipment 473,546 482,148Other long-term assets 458,757 437,698Total Assets$1,893,140$1,984,095     Current liabilities$713,665$791,836Non-recourse project debt 157,735 137,078Other long-term debt 137,583 142,581Convertible debentures 255,703 251,429Other long-term liabilities 168,955 171,294     Equity 459,499 489,877Total Liabilities and Equity$1,893,140$1,984,095CONFERENCE CALLA conference call has been scheduled for Thursday, May 3, 2012 at 9:30 a.m. ET to discuss Aecon's 2012 first quarter financial results. Participants should dial 416-981-9004 or 1-800-732-6870 at least 10 minutes prior to the conference time of 9:30 a.m. A replay will be available after 12:30 p.m. at 1-800-558-5253 or 416-626-4100 until midnight, May 10, 2012. The pass code is 21589359.INVESTOR DAYAecon is planning to provide an update of its strengths, capabilities and operations for institutional investors at an Investor Day in Toronto on Monday afternoon, June 18th.  For more information, please contact Irene Lucchetta ( AECONAecon 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 INFORMATIONThe 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 for the three months ended March 31, 2012 and 2011(in thousands of dollars, except share and per share amounts) (unaudited)            March 31March 31   2012 2011        Revenue $502,159 $512,015 Direct costs and expenses  (465,279) (495,767)Gross profit  36,880  16,248        Marketing, general and administrative expenses  (39,220) (32,061)Depreciation and amortization  (16,470) (14,669)Income (loss) from construction projects accounted  for using the equity method  2,072  763 Other income (loss)  624  1,043 Operating loss  (16,114) (28,676)       Finance income  892  2,458 Finance costs  (9,021) (8,814)Fair value gain (loss) on convertible debentures  (2,762) 7,640 Loss before income taxes  (27,005) (27,392)Income tax recovery  7,777  7,151 Loss for the period $(19,228)$(20,241)Attributable to:       Shareholders $(19,494)$(21,483) Non-controlling interests  266  1,242    $(19,228)$(20,241)              Basic loss per share $(0.37)$(0.39)Diluted loss per share $(0.37)$(0.39) For further information: Vince Borg Senior Advisor, Corporate Affairs Aecon Group Inc. 416-297-2615