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Aecon reports full year 2013 results – Increases dividend

Mar 11, 2014

Toronto, Ontario – March 11, 2014: Aecon Group Inc. (TSX: ARE) today reported results for the fourth quarter and full year 2013, including higher Adjusted EBITDA(1) of $184.0 million for 2013 as compared to $171.9 million in 2012, and Adjusted EBITDA of $79.1 million for the fourth quarter of 2013 compared to $77.9 million in the comparable period of 2012. Aecon’s Board of Directors approved an increase in the annual dividend to $0.36 per share from $0.32 per share.

“Aecon’s 2013 results represented another year of solid progress. Our focus remains on margin growth, operational execution, and financial performance,” said John M. Beck, Chairman and Chief Executive Officer.  “With our balanced and diversified strategy within three core target markets – infrastructure, energy and mining – and the robust pipeline of bidding opportunities on the horizon, we will maintain a disciplined bidding approach and seek out projects with a margin profile that will contribute towards meeting our Adjusted EBITDA margin target of nine per cent in 2015.”


  • Revenue grew by $182 million, or 6 per cent, to $3,069 million for 2013 as compared to $2,887 million in 2012.
  • Adjusted EBITDA for 2013 increased to $184.0 million on revenue of $3,069 million as compared to $171.9 million on revenue of $2,887 million for 2012.
  • Adjusted EBITDA was $79.1 million (margin of 8.7 per cent) on revenue of $906.2 million for the fourth quarter of 2013 as compared to $77.9 million (margin of 8.4 per cent) on revenue of $932.1 million for the fourth quarter of 2012.
  • Backlog was $1.8 billion at December 31, 2013.  Included in year-end backlog is a $100 million contract to construct Union Gas’ new compressor facility at its Parkway West site near Milton, Ontario.  Work commenced in the first quarter of 2014 and is expected to be complete in the fourth quarter of 2015.
  • Subsequent to year end, the following Aecon-led projects were announced:
    • An award of the John Hart Generating Station civil construction contract in British Columbia, with approximately $225 million in revenue expected to Aecon’s account; and 
    • A recommendation as the preferred proponent for the Region of Waterloo Stage 1 Light Rail Transit project for which Aecon’s portion of the construction contract is expected to be approximately $250 million, subject to closing. 
  • Annual dividend is increased to $0.36 per share ($0.09 per quarter) from $0.32 per share ($0.08 per quarter).
  • Positive outlook heading into 2014, with opportunities to grow backlog and continue progress towards the Company’s nine per cent EBITDA margin target in 2015.

(1) See the Consolidated Financial Highlights section for the definition of Adjusted EBITDA.  While the definition of EBITDA is unchanged from the previous year, in accordance with the requirements of CSA Staff Notice 52-306 (Revised) – Non-GAAP Financial Measures and Additional GAAP Measures, the Company has renamed the defined term from “EBITDA” to “Adjusted EBITDA”.

   Three months ended  Year ended 
 $ millions (except per share amounts) December 31  December 31 
   2013  2012(2)  2013  2012(2) 
 Revenue$ 906.2 $ 932.1 $ 3,068.6 $ 2,887.1 
 Gross profit  94.6   93.3   270.5   278.9 
 Marketing, general and administrative expenses  (34.3)   (38.6)   (148.0)   (157.7) 
 Income from projects accounted for using the equity method  11.3   34.3   37.9   55.7 
 Other income (expense)  (0.7)   0.4   -    1.1 
 Depreciation and amortization  (16.3)   (17.8)   (63.0)   (60.6) 
 Operating profit(3)  54.6   71.6   97.3   117.3 
 Financing expense, net  (10.6)   (5.1)   (38.3)   (27.2) 
 Fair value gain (loss) on convertible debentures  (7.3)   3.9   (9.8)   4.3 
 Profit before income taxes  36.7   70.4   49.2   94.4 
 Income tax expense  (8.4)   (14.1)   (8.6)   (16.8) 
 Profit$ 28.3  $ 56.3  $ 40.6  $ 77.6 
 Profit$ 28.3 $ 56.3 $ 40.6 $ 77.6 
 Fair value (gain) loss on convertible debentures  7.3   (3.9)   9.8   (4.3) 
 Income tax on fair value (gain) loss  (1.9)   1.0   (2.6)   1.1 
 Adjusted profit(4)$ 33.6 $ 53.4 $ 47.8 $ 74.4 
 Gross profit margin 10.4%  10.0%  8.8%  9.7% 
 MG&A as a percent of revenue 3.8%  4.1%  4.8%  5.5% 
 Adjusted EBITDA(5)  79.1   77.9   184.0   171.9 
 Adjusted EBITDA margin 8.7%  8.4%  6.0%  6.0% 
 Operating margin 6.0%  7.7%  3.2%  4.1% 
 Earnings per share - basic$ 0.54 $ 1.06 $ 0.77 $ 1.46 
 Earnings per share - diluted$ 0.48 $ 0.71 $ 0.72 $ 1.18 
 Adjusted earnings per share - basic(6)$ 0.64 $ 1.01 $ 0.91 $ 1.41 
 Adjusted earnings per share - diluted(6)$ 0.50 $ 0.71 $ 0.84 $ 1.18 
 Backlog      $1,773 $2,428 

(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

(2)     Certain 2012 amounts in this press release have been restated due to the adoption of IFRS 11, “Joint Arrangements” and IAS 19 (2011), “Employee Benefits”.  See Note 4 “New Accounting Standards” in the December 31, 2013 Consolidated Financial Statements for further details.

(3)     “Operating profit (loss)” represents the profit (loss) from operations, before net financing expense, income taxes and non-controlling interests. 

(4)     “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.

(5)     “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.

(6)     “Adjusted earnings (loss) per share” represents earnings (loss) per share calculated using adjusted profit (loss).


 “Aecon has emerged as the premier construction and infrastructure development company for large, complex, multi-disciplinary projects – the result of our drive to diligently work in leading joint ventures, on sophisticated multi-year projects,” said Teri McKibbon, President and Chief Operating Officer.  “The Eglinton Crosstown LRT tunnel project, John Hart Generating Station civil construction contract, and most recently the recommendation of Aecon’s joint venture for the Waterloo Region LRT project are strong indications of what we can expect as we move forward in 2014.” 

Revenue of $3,069 million for the year ended December 31, 2013 increased by $182 million compared to $2,887 million in 2012.  The 6 per cent increase in revenue resulted primarily from a $377 million increase in the Energy segment.

Adjusted EBITDA increased to $184.0 million (margin of 6.0 per cent) for the year ended 2013, versus $171.9 million (margin of 6.0 per cent) for the year ended 2012.  (The year-over-year increase occurred notwithstanding a specific project provision that affected the Infrastructure and Energy segments in 2013.) 

Operating profit decreased to $97 million for the year ended December 31, 2013, from $117 million in 2012, in part from the specific project provision in the Infrastructure and Energy segments noted above, as well as from lower operating profit in the Concessions segment following the impact in 2012 from both the release of project contingencies and a reduction of income taxes related to the Quito airport project that did not repeat in 2013. 

Backlog was $1,773 million at December 31, 2013, compared to $2,428 million at the end of 2012.  New contract awards of $2,413 million were booked in 2013 compared to $2,985 million in 2012. 

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 overall 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.

 Financial Highlights            
   Three months ended  Year ended 
 $ millions December 31  December 31 
   2013  2012  2013  2012 
 Revenue$ 277.9 $ 341.6 $ 1,000.0 $ 1,195.0 
 Gross profit$ 13.9 $ 11.4 $ 35.4 $ 62.7 
 Adjusted EBITDA$ 4.6 $ 3.1 $ (1.2) $ 21.2 
 Operating profit (loss)$ 0.2 $ (0.9) $ (18.2) $ 5.7 
 Adjusted EBITDA margin 1.7%  0.9%  (0.1)%  1.8% 
 Operating margin 0.1%  (0.3)%  (1.8)%  0.5% 
 Backlog      $ 820 $ 1,120 

  For the year ended December 31, 2013, revenue in the Infrastructure segment of $1 billion decreased by $195 million over the prior year. Most of the decrease occurred in heavy civil operations following the completion of several large projects in the latter part of 2012, including the Quito airport project and the Autoroute 30 project in Quebec.  In addition, revenue also decreased in social infrastructure operations, primarily in the buildings business in Quebec and Ontario as Aecon continues to re-focus its operations in this sector, as well as in its mechanical operations in Western Canada.  These decreases were partly offset by an increase in revenue in the transportation operations due to a higher volume of road building work in Ontario.

For the fourth quarter, operating profit was $0.2 million compared to an operating loss of $0.9 million in the comparable period of 2012.  The operating loss in the Infrastructure segment for 2013 was $18.2 million compared to an operating profit of $5.7 million in 2012. A year-over-year decrease in transportation operations occurred primarily as a result of the segment’s 50 per cent share of the previously noted project loss in 2013. There was also a reduction in operating profit from social infrastructure operations related to the mechanical business in Western Canada as a result of lower volume of work and lower margin compared with 2012. A decline in heavy civil operations was mostly volume driven.

Infrastructure backlog at December 31, 2013 was $820 million, which is $300 million lower than the same time last year with most of the decrease occurring in social infrastructure and transportation operations, due to lower contract awards in comparison to the prior year. New contract awards totaled $700 million in 2013 compared to $986 million in the prior year.  The year-end backlog does not include the two projects announced subsequent to year end and discussed above totaling nearly $500 million. 


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. 

 Financial Highlights            
   Three months ended  Year ended 
 $ millions December 31  December 31 
   2013  2012  2013  2012 
 Revenue$ 466.4 $ 368.3 $ 1,396.4 $ 1,018.9 
 Gross profit$ 64.6 $ 52.0 $ 153.1 $ 123.6 
 Adjusted EBITDA$ 53.3 $ 35.7 $ 97.4 $ 63.2 
 Operating profit$ 49.6 $ 32.1 $ 84.1 $ 50.4 
 Adjusted EBITDA margin 11.4%  9.7%  7.0%  6.2% 
 Operating margin 10.6%  8.7%  6.0%  4.9% 
 Backlog       $876 $997 

The Energy segment reported revenue of $1,396 million for the year 2013, an increase of $377 million, or 37 per cent, compared to revenue of $1,019 million in the previous year. Substantially all of the increase was a result of higher volume in utilities operations, primarily from pipeline work in Western Canada and from gas distribution work in Ontario.

Operating profit for the Energy segment of $84.1 million for the year increased by $33.7 million compared to 2012 with improvements in both utilities and industrial operations. The increase in operating profit from utilities operations of $12 million is primarily attributable to higher volume and the increase in industrial operations of $22 million is due to higher volume and margin from fabrication projects in Atlantic Canada and IST, as well as from higher volume in Central Canada, primarily from power generation projects. These increases were partly offset by lower operating profit from industrial operations in Western Canada due to lower volume and the segment’s 50 per cent share of the previously noted project loss in 2013.

Energy segment backlog at December 31, 2013 of $876 million was $121 million lower than the end of last year primarily due to lower backlog in utilities operations as a result of significant work off on pipeline projects in Western Canada throughout 2013. This reduction in backlog was partially offset by new contract awards for site construction projects in the resources sector in Western Canada. New contract awards of $1,275 million in 2013 were $322 million lower than in 2012.  Most of the decrease in new awards occurred in utilities operations in Western Canada which obtained significant multi-year pipeline project awards in the previous year.


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 then to environmental reclamation. 

 Financial Highlights            
   Three months ended  Year ended 
 $ millions December 31  December 31 
   2013  2012  2013  2012 
 Revenue$ 169.4 $ 223.9 $ 705.8 $ 676.7 
 Gross profit$ 20.5 $ 34.3 $ 86.7 $ 97.5 
 Adjusted EBITDA$ 22.3 $ 32.0 $ 74.5 $ 85.8 
 Operating profit$ 14.8 $ 23.7 $ 48.0 $ 61.3 
 Adjusted EBITDA margin 13.2%  14.3%  10.6%  12.7% 
 Operating margin 8.7%  10.6%  6.8%  9.1% 
 Backlog       $77 $311 

For the year ended December 31, 2013, the Mining segment increased revenue by $29 million to $706 million compared to revenue of $677 million in the previous year.  The majority of the increase was due to higher volume of site installation work in the commodity mining sector and from contract mining projects in the oilsands. Partially offsetting these increases was lower volume of civil construction projects related to mining, primarily in Western Canada due to the completion of significant projects in 2012.

In the Mining segment, operating profit of $48 million for the year decreased by $13.3 million compared to last year. The decrease was mainly due to lower operating profit from civil construction projects due to lower volume as well as lower margin in contract mining operations in Western Canada. Contract mining was impacted by adverse weather conditions, a significant change in mix versus the prior year, and other productivity factors in 2013, resulting in challenging site conditions, lower utilization of larger equipment and reduced project efficiencies.  Partially offsetting these decreases were volume driven improvements from site installation work in the commodity mining sector.

Backlog in the Mining segment at December 31, 2013 of $77 million was $234 million lower than last year as a result of the completion of work on a number of significant projects throughout 2013. New contract awards of $472 million in 2013 were $106 million higher than in 2012.  


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.  

 Financial Highlights            
   Three months ended  Year ended 
 $ millions December 31  December 31 
   2013  2012  2013  2012 
 Revenue$1.0 $ 1.1 $3.0 $2.9 
 Gross profit$ (4.4) $ (4.4) $ (4.7) $ (4.9) 
 Income from projects accounted for using the equity method$5.0 $ 28.9 $23.6 $41.8 
 Adjusted EBITDA$7.5 $ 12.3 $39.8 $28.1 
 Operating profit$0.2 $ 23.7 $16.6 $33.2 

For the year ended December 31, 2013, operating profit of $16.6 million was $16.6 million lower than the same period last year.  Included in the 2012 results was an $11 million benefit from the reduction of previously accrued income taxes, as well as the release of $7.4 million in contingencies and other items, related to the Quito airport project.  After accounting for the impact of these 2012 specific items, the remaining year-over-year increase in Concessionsoperating profit resulted from higher revenue in Quiport JV following the transition of operations from the old Quito airport to the new Quito airport in February 2013 and year-over-year passenger growth. 


“The Board decided to increase the annual dividend on the basis of Aecon’s continued financial progress and positive outlook,” said John M. Beck.

The annual dividend will be paid to all shareholders of Aecon Common shares and will increase to $0.36 per share (from $0.32 per share) to be paid in four quarterly payments of $0.09 per share (from $0.08 per share).  The first increased quarterly payment will be paid on April 1, 2014 to shareholders of record on March 21, 2014.  


The consolidated results for the three months and years ended December 31, 2013 and 2012 are available at the end of this news release.

Balance Sheet Highlights    
  December 31 December 31
  $ thousands (unaudited) 2013 2012
Cash and cash equivalents and restricted cash$ 244,536 $ 66,977
Other current assets  885,052  996,836
Property, plant and equipment  512,257  508,553
Other long-term assets  351,741  291,247
Total Assets$ 1,993,586 $ 1,863,613
Current liabilities$ 940,356 $ 834,849
Long-term debt  123,128  146,048
Convertible debentures - long term portion  248,817  253,189
Other long-term liabilities  94,677  86,369
Equity  586,608  543,158
Total Liabilities and Equity$ 1,993,586$ 1,863,613


A conference call has been scheduled for Wednesday, March 12, 2014 at 10 a.m. (ET) to discuss Aecon’s 2013 year-end financial results.  Participants should dial 416-981-9033 or 1-800-941-7616 at least 10 minutes prior to the conference time.  A replay will be available after 12 p.m. at 1-800-558-5253 or 416-626-4100 until midnight on March 19, 2014. The reservation number is 21707142.

(in thousands of Canadian dollars, except per share amounts) (unaudited)
  For the three months endedFor the Year ended
  December 31December 31December 31December 31
Revenue$ 906,213$ 932,139$ 3,068,608$ 2,887,106
Direct costs and expenses  (811,655)  (838,883)  (2,798,134)  (2,608,184)
Gross profit  94,558  93,256  270,474  278,922
Marketing, general and administrative expenses  (34,286)  (38,591)  (148,004)  (157,707)
Depreciation and amortization  (16,273)  (17,763)  (63,024)  (60,640)
Income from projects accounted for using the equity method  11,270  34,302  37,852  55,680
Other income (loss)  (680)  416  (42)  1,079
Operating profit  54,589  71,620  97,256  117,334
Finance income  226  486  1,953  2,104
Finance costs  (10,780)  (5,615)  (40,289)  (29,257)
Fair value gain (loss) on convertible debentures  (7,340)  3,944  (9,750)  4,260
Profit before income taxes  36,695  70,435  49,170  94,441
Income tax expense  (8,442)  (14,095)  (8,572)  (16,845)
Profit for the period$ 28,253$ 56,340$ 40,598$ 77,596
Basic earnings per share$ 0.54$ 1.06$ 0.77$ 1.46
Diluted earnings per share$ 0.48$ 0.71$ 0.72$ 1.18


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.