Press release from CNW Group
Aecon reports first quarter 2014 results
Wednesday, May 07, 2014
Aecon reports first quarter 2014 results17:01 EDT Wednesday, May 07, 2014
TORONTO, May 7, 2014 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported results for the first quarter 2014 including higher Adjusted EBITDAof $3.1 million as compared to an Adjusted EBITDA loss of $11.3 million in the first quarter of 2013, and backlog of $2.2 billion at March 31, 2014, as compared to $1.8 billion at December 31, 2013.
"Our focus on execution is yielding results and Aecon's first quarter represents a solid start to the year. We anticipate that revenue and therefore profits will be even more weighted to the second half of 2014 than is usually the case due to the ramp up of significant new projects currently underway," said John M. Beck, Chairman and Chief Executive Officer, Aecon Group Inc. "With Aecon's balanced and diversified portfolio of work in three core market sectors of infrastructure, energy and mining, and our strong backlog of higher margin work, we maintain a positive outlook and anticipate making continued progress through 2014 to our Adjusted EBITDA margin target of 9 per cent in 2015."
- Adjusted EBITDAfor the first quarter of 2014 increased to $3.1 million (margin of 0.7 per cent) on revenue of $462 million as compared to an Adjusted EBITDA loss of $11.3 million (margin loss of 2.0 per cent) on revenue of $567 million for the first quarter of 2013.
- Backlog of $2.2 billion at March 31, 2014 was approximately $400 million higher than at year end 2013.
- New contracts in the first quarter of 2014 totaled $867 million compared to $212 million in the first quarter of 2013.
- Subsequent to quarter end, Aecon and its joint venture partner announced that they were selected for the York Viva Bus Rapid Transit project in Ontario, with an expected $130 million in revenue to Aecon's account. Aecon was also awarded a $94 million contract for the reconstruction and widening of Second Concession Road for York Region.
- Increased annual dividend took effect with the first quarterly payment of $0.09 per share (increased from $0.08 per share) paid on April 1, 2014 to shareholders of record on March 21, 2014.
|CONSOLIDATED FINANCIAL HIGHLIGHTS(1)|
|Three months ended|
|$ millions (except per share amounts)||March 31|
|Marketing, general and administrative expenses||(41.0)||(44.8)|
|Income from projects accounted for using the equity method||7.3||8.4|
|Foreign exchange gains||0.4||0.1|
|Gain on sale of assets||-||0.2|
|Loss on disposal of a subsidiary||(2.6)||-|
|Depreciation and amortization||(16.8)||(17.5)|
|Operating loss (2)||(23.2)||(31.1)|
|Financing costs, net||(11.1)||(8.7)|
|Fair value loss on convertible debentures||(1.7)||(2.2)|
|Loss before income taxes||(36.0)||(42.0)|
|Income tax recovery||10.1||12.1|
|Fair value loss on convertible debentures||1.7||2.2|
|Income tax on fair value loss||(0.5)||(0.6)|
|Adjusted loss (3)||$||(24.7)||$||(28.3)|
|Gross profit margin||6.4%||4.0%|
|MG&A as a percent of revenue||8.9%||7.9%|
|Adjusted EBITDA Margin||0.7%||(2.0)%|
|Loss per share - basic||$||(0.49)||$||(0.56)|
|Loss per share - diluted||$||(0.49)||$||(0.56)|
|Adjusted loss per share - basic (5)||$||(0.47)||$||(0.53)|
|Adjusted loss per share - diluted (5)||$||(0.47)||$||(0.53)|
|(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 profit (loss)" represents the profit (loss) adjusted to exclude the after-tax fair
value gain (loss) on the embedded derivative portion of convertible debentures.
|(4)||"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 "JV EBITDA"
from projects accounted for using the equity method.
|(5)||"Adjusted earnings (loss) per share" represents earnings (loss) per share calculated
using adjusted profit (loss).
OPERATING AND FINANCIAL RESULTS
"With an improved mix of work in our Infrastructure segment, a strong market environment for our Energy segment, and targeted opportunities in Mining, we move forward in 2014 with a focused, disciplined approach to a robust pipeline of opportunities," said Teri McKibbon, Aecon's President and Chief Operating Officer. "The scope of opportunities suited to Aecon's capabilities covers the breadth of Canada."
Revenue of $462 million in the first quarter of 2014 compared to revenue of $567 million in the same period of 2013. Lower revenue resulted primarily from decreases in the Mining segment, primarily from site installation work, and in the Infrastructure segment mostly in buildings operations.
Adjusted EBITDAfor the first quarter of 2014 increased to $3.1 million (margin of 0.7 per cent) compared to an Adjusted EBITDA loss of $11.3 million (margin loss of 2.0 per cent) for the first quarter of 2013.
Operating loss for the period of $23.2 million improved by $7.9 million compared to the same period in 2013. Included in the quarter-over-quarter improvement is the impact of a $19 million provision on a specific project reported in the first quarter of 2013, offset to some extent by the impact of lower volume in the Mining segment in the first quarter of 2014.
Backlog was $2,178 million at March 31, 2014, compared to $2,073 million at March 31, 2013. New contract awards of $867 million were booked in the first quarter of 2014 compared to $212 million in the first quarter of 2013. Among other contracts, the following major projects were booked in the first quarter:
- John Hart Generating Station in British Columbia: a joint venture of Aecon (60%) and SNC-Lavalin Constructors Pacific Inc. (40%) for the civil construction scope, with Aecon's portion of the contract representing $225 million; and
- Waterloo Region Light Rapid Transit: a joint venture partnership of Aecon (51%) and Kiewit (49%), with a backlog value to Aecon's account of approximately $250 million.
Subsequent to quarter end, Aecon and its joint venture partner (Dufferin Construction) announced that they were selected for the York Viva Bus Rapid Transit project in Ontario, with an expected $130 million in revenue to Aecon's account. Aecon was also awarded a $94 million contract for the reconstruction and widening of Second Concession Road for York Region. Work on this project will commence in the second quarter and is expected to be complete in the third quarter of 2016.
Not included in backlog, but important to Aecon's prospects due to the increasingly significant volume involved, is the expected recurring revenue from Aecon's growing alliances and supplier-of-choice arrangements where the amount and/or value of work to be carried out is not specified. This recurring revenue currently represents approximately 25 per cent of annual revenue.
Aecon reports its financial performance on the basis of four segments: Infrastructure, Energy, Mining, and Concessions.
The Infrastructure segment includes all aspects of the construction of both public and private infrastructure, primarily in Canada, and on a selected basis, internationally. The Infrastructure segment focuses primarily on the transportation, heavy civil and social infrastructure markets.
|Three Months Ended|
|$ millions||March 31|
|Adjusted EBITDA margin||(15.7)%||(19.8)%|
In the first quarter of 2014, revenue in the Infrastructure segment of $107 million was $42 million lower, or 29 per cent, over the same period last year. Approximately half of the decrease in revenue occurred in social infrastructure operations, primarily from less ongoing work in buildings operations in Ontario compared to the prior year and from the closure of the Seattle operations during the first quarter of 2014. In addition, heavy civil and transportation operations also experienced a decrease in revenue during the first quarter of 2014 as many large heavy civil projects were nearing completion, and a severe winter in Ontario and other timing issues affected road building work.
Operating loss in the Infrastructure segment of $23.3 million improved by $10.3 million over the same period in the prior year. The largest improvement occurred in transportation operations primarily from the impact in the first quarter of 2013 of the segment's $9.7 million share of a specific project provision.
Infrastructure backlog at March 31, 2014 was $1,277 million, $256 million higher than the same time last year with most of the increase occurring in heavy civil operations. New contract awards totaled $563 million in the first quarter of 2014 compared to $49 million in the same period in the prior year, with significant project awards received in 2014 for the John Hart Generating Station and Waterloo Region Light Rail Transit Project.
The Energy segment encompasses a full suite of service offerings to the energy market including industrial construction and manufacturing activities such as in-plant construction, site construction and module assembly. The Energy segment focuses primarily on the following sectors: oil and gas, power generation, pipelines, utilities, and energy support services.
|Three months ended|
|$ millions||March 31|
|Operating profit (loss)||$||0.2||$||(13.4)|
|Adjusted EBITDA margin||1.6%||(4.1)%|
Revenue in the first quarter of 2014 of $248 million in the Energy segment was in line with the same period of 2013, as increases from utilities operations were offset by lower revenue from industrial operations.
Operating profit in the Energy segment of $0.2 million was $13.6 million higher than the same period last year. The quarter-over-quarter improvement is partially due to the Energy segment's $9.7 million share of a specific project provision in the first quarter of 2013. The remaining increase is mainly due to increased volume and margin from power generation projects in Central Canada and from higher volume in Atlantic Canada.
Backlog at March 31, 2014 of $821 million for the segment was $20 million higher than the same time last year with most of the increase occurring in industrial operations in Western Canada, primarily as a result of project awards for site construction projects in the oil sands during the past year, offset by lower backlog in utilities operations due to the work-off of pipeline projects. New contract awards of $193 million in the first quarter of 2014 were $142 million higher than in the same period in 2013.
The Mining segment offers turn-key services consolidating Aecon's mining capabilities and services across Canada, including both mine site installations and contract mining. This segment offers construction services that span the scope of a project's life cycle: from overburden removal and resource extraction, to processing and environmental reclamation.
|Three months ended|
|$ millions||March 31|
|Adjusted EBITDA margin||11.1%||15.7%|
Revenue in the first quarter of 2014 of $108 million in the Mining segment was $64 million lower than in the same period of 2013. Substantially all of the revenue decrease was from a lower volume of site installation work in the commodity mining sector following the completion of a substantial project during 2013.
For the three months ended March 31, 2014, operating profit of $4.3 million was $14.4 million lower than the same period last year. The majority of the period-over-period decrease in operating profit resulted from the above noted lower volume of site installation work in the commodity mining sector.
Backlog at March 31, 2014 of $80 million was $171 million lower than the same time last year. New contract awards of $111 million in the first quarter of 2014 were $1 million lower than in the same period in 2013.
The Concessions segment includes the development, financing, construction and operation of infrastructure projects by way of build-operate-transfer, build-own-operate-transfer and other public-private partnership contract structures.
|Three Months Ended|
|$ millions||March 31|
Income from projects accounted for using the equity
Revenue reported in the Concessions segment for the three months ended March 31, 2014 and 2013, was $0.6 million.
For the three months ended March 31, 2014, operating profit of $4.5 million was $1.7 million lower than the same period last year as increases in revenue and Adjusted EBITDA from the new Quito airport concessionaire were offset by higher interest and amortization charges related to Quito operations. With the opening of the new Quito airport on February 20, 2013, the project commenced expensing interest (whereas prior to the opening of the new airport, interest was being capitalized) and began amortizing airport assets that were put into service. From an operating profit perspective, the first quarter of 2013 included approximately one month of interest and amortization expense related to the new airport, whereas the first quarter of 2014 includes a full three months of interest and amortization charges.
As previously announced, the annual dividend to be paid to all shareholders of Aecon Common shares is $0.36 per share (up from $0.32 per share) to be paid in four quarterly payments of $0.09 per share (up from $0.08 per share). The first increased quarterly payment was paid on April 1, 2014 to shareholders of record on March 21, 2014.
The consolidated results for the three months ended March 31, 2014 and 2013 are available at the end of this news release.
|Balance Sheet Highlights|
|March 31||Dec. 31|
|$ thousands (unaudited)||2014||2013|
|Cash and cash equivalents and restricted cash||$||150,585||$||244,536|
|Other current assets||836,334||885,052|
|Property, plant and equipment||501,809||512,257|
|Other long-term assets||380,705||351,741|
|Convertible debentures (long term portion)||250,855||248,817|
|Other long-term liabilities||94,629||94,677|
|Total Liabilities and Equity||$||1,869,433||$||1,993,586|
A conference call has been scheduled for Thursday, May 8, 2014 at 9:30 a.m. (ET) to discuss Aecon's 2014 first quarter financial results. Participants should dial 416-981-9011 or 1-800-734-8507 at least 10 minutes prior to the conference time. A replay will be available after 11:30 a.m. at 1-800-558-5253 or 416-626-4100 until midnight on May 15, 2014. The reservation number is 21713584.
Aecon 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 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. 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|
|(in thousands of Canadian dollars, except per share amounts) (unaudited)|
|For the three months ended|
|March 31||March 31|
|Direct costs and expenses||(432,424)||(544,934)|
|Marketing, general and administrative expenses||(40,996)||(44,814)|
|Depreciation and amortization||(16,828)||(17,511)|
|Income from projects accounted for using the
|Other income (loss)||(2,139)||297|
|Fair value gain on convertible debentures||(1,705)||(2,156)|
|Loss before income taxes||(36,041)||(42,002)|
|Income tax recovery||10,140||12,090|
|Loss for the period||$||(25,901)||$||(29,912)|
|Basic loss per share||$||(0.49)||$||(0.56)|
|Diluted loss per share||$||(0.49)||$||(0.56)|
SOURCE Aecon Group Inc.
For further information:
Senior Vice President, Corporate Affairs
Aecon Group Inc.