Dear Fellow Shareholders,
This past year, we made significant progress in moving Aecon forward as the number one Canadian infrastructure company. Full year revenue of $4.0 billion demonstrates steady growth, and we ended the year with a diversified and balanced backlog of $6.2 billion. Aecon’s Board of Directors approved an increase to the quarterly dividend to 18.5 cents per share from 17.5 cents per share previously, representing the tenth annual increase in the last eleven years, on the basis of continued financial strength and a positive outlook.
The Aecon of today is purpose-built with the multidisciplinary expertise, preeminent execution capabilities and sophisticated processes to deliver the most transformative infrastructure projects for generations to come. In 2021, we continued to expertly deliver these projects and augmented our backlog with significant new project awards – further solidifying our position as the preferred partner for our select clients, and the first-choice employer wherever we work.
We were pleased to acquire Pacific Electrical Installations (“PEI”), the largest independent, full-service powerline contractor in British Columbia. PEI provides maintenance, construction and emergency restoration services for critical electrical infrastructure, the majority under master service agreements and recurring revenue arrangements. PEI is the designated powerline service provider for BC Hydro for the Lower Mainland South and Okanagan regions, and also works with a variety of private sector customers.
Subsequent to year-end, ONxpress, a consortium in which Aecon holds an interest in both a civil joint venture undertaking construction, and an operations and maintenance partnership, was identified as the First Negotiations Proponent for the GO Rail Expansion - On-Corridor Works project in the Greater Toronto Area. This transformative project will electrify and modernize the GO rail network into a system that will deliver two-way, all-day service – a project unlike anything before in Canada.
Also subsequent to year-end, Aecon was awarded contracts for the Annacis Water Supply Tunnel project in British Columbia as well as the Interstate-90 / State Road-18 to Deep Creek Interchange Improvements and Widening project in Washington State, in the United States, and an Aecon consortium was selected as the preferred proponent for the Montreal-Trudeau International Airport REM Station project in Québec.
Building on this momentum, we were pleased to launch the Moving Aecon Forward Together 2022–2024 Strategic Plan, focusing on building what matters to enable future generations to thrive. The plan outlines four key focus areas designed to motivate a culture of safety, innovation, operational excellence, continuous improvement, and risk management to achieve best-in-class margins, growth and superior shareholder value:
- Unlocking our People’s Potential: We are focused on advancing programs that drive leadership and career development – building the capability and capacity to manage purpose-driven growth and new project delivery models while strengthening our safety culture, advancing workforce diversity, fostering innovation and leveraging sustainable construction practices.
- Driving Operational Excellence: We are committed to building projects safely, on-time and on-budget. Through a centralized continuous improvement team, we are increasing efficiency and effectiveness, strengthening our self-perform capabilities and widening our competitive advantage. By standardizing work, aligning project teams, and sharing best practices across the organization, we are empowering our people and maximizing stakeholder value.
- Adaptive Risk Management: We are prioritizing effective risk identification, mitigation and transparency, and nimble decision-making. By balancing our backlog across sectors, geographies, clients, and contract models, we remain agile in responding to market trends – enabling talent development across multiple types of projects.
- Executing Targeted and Disciplined Growth: We are targeting opportunities that offer lower risk, recurring revenues, long-term concessions and related operations and maintenance opportunities, geographic expansion, and a sustainable profile to propel our growth and diversify our business.
Sustainability is also integrated into Aecon’s business strategy in order to improve our competitive advantage, mitigate the risks and harness the opportunities that will come from the transition to a net-zero carbon economy. This positions Aecon to successfully deliver on the significant number of opportunities in sustainable infrastructure as we continue to refine our internal focus, leverage innovation, and introduce new methods and technologies throughout our operations. As we proudly announced in April of 2021, Aecon has adopted one of the most ambitious greenhouse gas emissions reduction programs in the construction industry, committing to a 30 per cent reduction in direct CO2 emissions by 2030 and net-zero by 2050. We look forward to publishing our 2021 Sustainability Report on Earth Day, celebrating Aecon’s key accomplishments and goals in responsible Environmental, Social and Governance (ESG) practices.
As we move forward, the overall outlook for 2022 is positive, as the infrastructure market in Canada continues to be strong and we are well positioned to capitalize on this momentum. Aecon is primed to successfully bid on, secure and deliver major infrastructure projects for government and the private sector, as demonstrated by recent contract awards. Bidding activity continues to be solid with a number of larger pursuits expected to be awarded in 2022. With this strong demand environment for Aecon’s services including recurring revenue programs supported by our diverse, strong level of backlog – Aecon is focused on project execution while selectively adding to backlog through a disciplined bidding approach that supports margin improvement. In the Concessions segment, in addition to expecting a gradual recovery in travel through the Bermuda International Airport during 2022, there are a number of opportunities to add to our existing portfolio of Canadian and international concessions, including in the US and on innovative projects with private sector clients, which support a collective focus on sustainability and the transition to a net-zero economy.
We are Aecon Proud of where we are today and are excited to lead the industry in transforming the infrastructure of tomorrow, with an unwavering focus on delivering shareholder value. Thank you for your continued support.