Aecon Group Inc.

Stephen King - Director of Corporate Development and Investor Relations John Beck - President and Chief Executive Officer David Smales - Executive Vice President and Chief Financial Officer

Yuri Lynk - Canaccord Genuity Frederic Bastien - Raymond James Michael Tupholme - TD Securities, Inc. Chris Murray - AltaCorp Capital Inc.

Jacob Bout - CIBC World Markets Inc.

Thank you. Good morning, everyone, and thank you for participating in our second quarter 2017 results conference call.

This is Stephen King speaking, and with me this morning are John Beck, Aecon's President and Chief Executive Officer; and David Smales, Executive Vice President and Chief Financial Officer. Our earnings announcement was released yesterday evening, and we have posted a slide presentation on the Investing section of our website, which we will refer to during this call.

As noted on Slide 2 of the presentation, listeners are reminded that the information we are sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties.

Although Aecon believes that the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct. I will now turn the call over to David Smales.

Thank you, Stephen, and good morning, everyone. I'll touch briefly on Aecon's consolidated results and then review results by segment before turning the call over to John.

Turning to Slide 3. Revenue of $686 million for the second quarter of 2017 was $153 million lower in the same period of last year, primarily driven by lower revenue in the Mining segment and lower roadbuilding volume and infrastructure due to unusually wet weather in Q2 of this year.

Adjusted EBITDA of $33 million, a margin of 4.8% for the quarter compared to $29.4 million, a margin of 3.5% last year. Adjusted EBITDA in the quarter included $2.9 million of restructuring expense related to Western Canadian operations.

Excluding this restructuring, adjusted EBITDA margin in the quarter was 5.2%. This impact is detailed on Slide 4 of the presentation.

Diluted earnings per share for the quarter was $0.01 compared to earnings per share of $0.12 in the prior year. On a pro forma basis, adjusting for the restructuring in Q2, EPS would have been $0.05 per share.

This decrease from the prior year was primarily driven by amortization of the intangible concession asset related to the Bermuda Airport Project. Backlog as at June 30, 2017, of $4.4 billion compares to backlog of $4.4 billion at March 31 and $4.9 billion as at the end of the second quarter last year.

Turning to results by segments. As noted on Slide 5, infrastructure revenue $235 million was $35 million or 13% lower than the same period last year due to lower volume in the transportation sector.

This was driven by decreased roadbuilding volume in Ontario, which was impacted by unusually wet weather in the quarter. Partially offsetting this decrease in roadbuilding was higher revenue in social infrastructure driven by the Bermuda International Airport Project construction.

Adjusted EBITDA in the Infrastructure segment of $8.4 million compared to $8.6 million in the prior year. Higher gross profit margin in the heavy civil sector largely offset lower volume and margin in transportation.

New contract awards of $160 million in the second quarter of 2017 compared to $198 million in the prior year. Turning to Slide 6.

In the Energy segment, revenue in the quarter of $330 million was $28 million or 8% lower than last year. Higher revenue from nuclear and pipeline work is offset by lower volume from oil-related fabrication, module assembly and field construction in Western Canada.

Adjusted EBITDA is $17.7 million, a margin of 5.4% was $1.3 million lower than the prior year of $19 million, a margin of 5.3%. This was driven by lower volume and profitability in Western Canada and lower margin in utilities in the quarter, offset to a larger extent by higher volume of margin in Eastern Canada.

New contract awards in Energy of $426 million in the second quarter of 2017 were $262 million lower than the same period in 2016. The variance was primarily due to a number of gas distribution, utilities and power generation awards received in the second quarter of 2016.

Turning to Slide 7. In the Mining segment, second quarter revenue of $117 million was $103 million or 47% lower than the same period in 2016.

This decrease was driven by lower volume of site installation work, with the completion of work at the K+S project in early Q2 of this year. Adjusted EBITDA in the second quarter of $1.4 million, a margin of 1.2%, decreased by $15.5 million compared to the prior year.

This decrease was driven by lower volume of site installation work. It also reflects timing of maintenance spend this year versus last, with higher maintenance expense for the contract mining business this year in the seasonally slow second quarter.

New contract awards in Mining of $93 million in Q2 2017 were $148 million lower than the prior year. The variance was driven by lower site installation in civil and foundations project awards.

Turning to Slide 8. In the Concessions segment, revenue of $37 million in the quarter compared to $1 million in 2016.

This increase was driven by Aecon's 100% interest in Bermuda Skyport Corporation Limited, the concessionaire responsible for the operations, maintenance and commercial functions at the L.F. Wade International Airport in Bermuda, and the entity is managing and coordinating the overall delivery of the airport redevelopment project over a 30-year concession term.

Of this $37 million revenue, $17 million relates to construction activity in Bermuda and is eliminated on consolidation as inter-segment revenue with the infrastructure segment. Adjusted EBITDA of $15.4 million in the quarter compared to adjusted EBITDA of $1.7 million in Q2 2016.

This increase in adjusted EBITDA was due to the Bermuda project and LRT concession project in Ontario. At this point, I'll turn the call over to John.

Thank you, David. Good morning, everyone.

Turning to Slide 9, Aecon ended the second quarter of 2017 with backlog of $4.4 billion, in line with backlog at the end of the first quarter. 67% of backlog duration is beyond the next 12 months, providing significant visibility and stability to Aecon's longer-term outlook, especially, when combined with Aecon's annual recurring revenue.

As noted on Slide 10, increased infrastructure investment is the key area of focus for Canadian Federal, Provincial and Municipal governments, with additional support expected from the planned $35 billion Canada Infrastructure Bank. Aecon is well positioned to successfully bid on, secure and deliver these projects as larger projects with longer procurement cycles rollout during 2017 and 2018.

Aecon is currently pursuing projects at the bidding on qualification stage that have total capital costs in excess of $25 billion. We are very positive on the impact of this level of investment and pipeline of projects will have on Aecon's growth and margin profile in the Infrastructure segment for the foreseeable future.

Turning to Slide 11. In the Energy segment, Aecon expects increased backlog and ongoing demand for gas distribution facilities, mainline pipeline expansions, utilities work and power and nuclear refurbishment.

In 2017, we'll continue to offset lower oil-related volume and enhance Aecon's margins from Energy-related work. Particular focus is on further expanding revenues from Aecon's Nuclear Refurbishment business.

A 15-year refurbishment project at the Bruce Power Nuclear Power Plant in Ontario is currently in the development and procurement phase, and Aecon is well-positioned to participate in this transformative project. In addition, Aecon has secured and is pursuing several more key mainline pipeline projects that will help to grow backlog and future revenue in the Energy segment.

As outlined on Slide 12, in the Mining segment, commodity prices generally remained soft, which is reducing the number of new projects moving from the development phase into construction. While Aecon is involved in a number of pursuits related to potential projects, and timing of one of these projects may move forward is uncertain.

Contract mining, which is primarily recurring revenue work, over and above what is reported as backlog for the segment, is expected to see growth in the second half of the year as producers look to increase throughput and a new operating site is coming online in late 2017. Turning to Slide 13.

The Concessions segment continues to play a significant role in driving value at Aecon, as demonstrated by the ramp up of construction and operations at the Bermuda International Airport during the first half of 2017. The Concessions group continues to partner with Aecon's other segments to focus on a significant number of P3 opportunities in Canada, and is actively pursuing a number of large-scale infrastructure projects that require private finance solutions.

It is also participating as a concessionaire on the Waterloo and Eglinton-Crosstown Light Rail projects, in addition to the Bermuda Airport Project. Referencing Slide 14.

The Company's balance sheet and financial capacity remain key advantages for Aecon, and its ability to grow and take advantage of the significant infrastructure investment, including P3s expected in coming years. And we are well-position to respond through an eventual rebound in oil and commodity markets.

Aecon continues to be disciplined in responding to requests for its services, becoming pre-qualified bidding, negotiating and carrying out work. And finally, on Slide 15, as Aecon experienced lower revenue in the first half of 2017, primarily in the Mining segment, and with an expectation of lower Mining revenue in the second half of the year when compared to 2016, we expect lower overall revenue in 2017.

However, offsetting this lower revenue is an expectation that adjusted EBITDA margin improvement will result in an overall improvement in adjusted EBITDA for the year. As usual, the second half of 2017 is expected to be stronger than the first half of 2017, reflecting the typical seasonality of Aecon's work.

Thank you, and we will now turn the call over to analysts for questions.

Hi, good morning, gentlemen.

Hi, Yuri.

Hi, Yuri.

Dave, on the Q1 call, you thought the Bermuda Airport would contribute about $5 million of EBITDA quarterly. It obviously did more than that, so can you just update us on what might happen in the quarter, and if there is seasonality involved at all with the traffic probably a little bit.

And what we should expect on a quarterly run-rate basis?

Yes, so, I'm not sure, on the Q1 call, Yuri, when I was talking to the impact in Q1 where we were only running for a short period of time. But the run rate in Q2 is pretty representative of what we expect going forward for the Concessions segment.

There is a little bit seasonality in the Bermuda Airport. Obviously, it has tourist traffic going through it.

And so Q2, Q3, the summer months would tend to be fairly similar and Q1, Q4 would be a little bit lighter in terms of volume. But not huge swings in the overall profitability in the segment as a result of that, kind of peak to trough, you're probably looking at something in the range of $3 million to $4 million of difference in terms of EBITDA run rate from summer to winter per quarter.

Okay. That's helpful.

And the other Concessions are still like Waterloo and Eglinton, they're still in the construction phase, so there is no real change to their – like the delta in the quarter was Bermuda, right?

Yes, sure.

Okay. Maybe one for John.

It's been pretty quiet, John, on the new awards front in the Infrastructure segment despite the number of projects that you are short listed on and bidding on, so when might we see some of these awards be released, and is this what you would have expected at the beginning of the year sitting with the backlog that you have now or is there some of these projects been delayed a bit?

So there has been no delays – no significant delays that I know off. The George Massey Tunnel project was big and because of the change in government in British Columbia, there maybe delay in the award of that.

But other than that, and when I look at the list of the projects [indiscernible] in British Columbia, yes, that's been delayed by a couple of months, and that's controversial right now as the result of the election, so we'll see. The REM project in Montréal is still as scheduled in Q3.

Gordie Howe Bridge still is at schedule in Q4. Ottawa Light Rail as scheduled in Q1 2018, Hamilton LRT as scheduled in Q1 2018.

Those are all requested proposals and we've already been pre-qualified and we expect those to proceed. And there is a whole list of other projects in request for prequalification, another six or seven large ones, both in Ontario and in BC that we expect so no delay.

If there is any delay in the startup of the Canada Infrastructure Bank, where we are still waiting for announcements. But again, they are saying they will be up and running by the end of the year.

So we will start to see some announcements from them in terms of projects probably sometime in the first half of the next year. So long answer to your question, no significant delays in process.

Okay. That's helpful.

So I mean, this is a pretty impressive list of very, very large projects that could be awarded in the next six to nine months. So as you prepare for these bids, I mean, are there any additional costs that we're seeing in your numbers now as you potentially – with bid costs or potentially staff up in anticipation of winning your fair share of this or – just wondering how we should interpret the numbers vis-a-vis the huge opportunity in front of the company?

So we do – we have [indiscernible] over the last kind of 12 to 18 months to work on this pretty significant pipeline of opportunities. So that would already be really reflected in the run rate you're seeing.

The list of RFPs that John went through, we've obviously already been through the prequal process on all of those and that involves some cost as well. So I think, the run rate you're saying is probably fairly typical now in terms of where we are at, in terms of resources to bid these types of projects.

As we go through 2018 and we see what the impact is of additional projects being added to the mix, then maybe we'll see a little bit of run up there as well, as we continue to be involved in more and more of these bids. But right now, for the next few quarters, it should be reasonably consistent.

Okay. Last quick one from me.

John, can you give us an update on the CEO search. Where we stand there?

Have you interviewed anybody? Do you have a search firm still engaged?

Just any color on what's going on there?

Yes. So we definitely have the search firm is still engaged.

Yes, we've had some interviews. And yes, we continue to shorten the long list to shorter list.

The process is fully underway. Obviously, I am still here and will continue to be here as long as required, but no longer than necessary.

It's an interesting process and we want to hire the right person for the continued success of the company.

You anticipate having this completed by the end of the year?

I can't tell you because we haven't found the right person yet. And then there will be a period during which that person will have to notice wherever they are, clearly they are going to be employed somewhere else.

So I can't tell you the exact time frame.

Okay. I better get back in the queue.

Thanks guys.

Thank you.

Hi, good morning.

Good morning, Frederic.

Just curious, just big picture, are you more encouraged by Aecon's prospects in the Oil and Gas sector than you were, say, at the beginning of the year?

I would say, generally, a little bit on the Contract Mining site because we are seeing some growth in our activities there this fall. But on the new construction side, I would say no.

And then the third one would be pipelines where – we're encouraged by the fact regarding some backlog in pipeline work in Q2 that will really start to kick in, in Q4 this year. And there are other pipeline opportunities out that we are acting on right now.

So Contract mining and pipelines still looking positive, as John said, new construction also is still very quiet.

Right. No, I was thinking more of – in the wake of your contract awards and the pipeline sector maybe that was looking up better than maybe it would have been three, six months ago.

But just wondering if you could do the same sort of analysis with respect to the Mining business? Any green shoes forming in specific verticals?

So mining, obviously, the Contract mining, I just mentioned, we are happy that that's going to be growing starting this fall. In terms of Mining installations, we are following our clients and their opportunities outside of Canada as well as in Canada.

We also know of some enlargements, improvements, constructions for efficiencies, environmental requirements in Canada. But they will not be emphasized that we saw with large K+S opportunity, at least not in the short-term.

But even other opportunities in [indiscernible] showing some green shoes. So I would say off balance a little better than it was six months ago.

We are also tracking the comment to the equipment manufacturers and people in that space. Yes, I think, their commentary kind of shines a little bit with what we are seeing in terms of – definitely, a lot of activity in the kind of small and medium size type projects that would be consequences of having deferred spends for quite a long period of time.

And I think, it's time to get to the point where people need to do things to replace inventory or perform upgrades. And so we're kind of encouraged by one of the equipment guys is seeing because they're usually at the front end of this process.

And so I would echo John's comment in terms versus six months ago, yes, I think we're seeing more productivity on the ground.

Thanks. Lastly for me.

Are you able to discuss the small contract that you secured in Manitoba? Just wondering to if that has the potential to grow in scope?

At this stage, it is kind of a discrete contract. But certainly, there are other opportunities on that side that may develop, so we'll see, but this has some potential, yes.

Thank you.

Thanks. Good morning.

I was wondering if you can provide an update on the work you're doing at Darlington. And then related to that, there is mention in your outlook I guess for several quarters now about the opportunities at Bruce.

Just wondering if you can also comment on where those potential opportunities sit and when we could start to possibly see some awards on that front?

Yes, so two things, first, Darlington, we're moving ahead, we've been out for a year now in the execution phase. Things are generally going well and on schedule.

It's a long hall with another eight years to go, excellent team on the ground and great cooperation with the client. Obviously, it's the beginning of the first one of four units, so still learning curve, but things are going well.

In terms of Bruce, we are actively involved in some of the procurement processes. We are winning work.

And we see no reason why we will not be able to win our fair share of work moving forward. Again, excellent relationships.

We have been on that project on and off for decades. And we have excellent roots on the ground and capability to participate in that work.

We are, no question, beefing up our nuclear team resources to be able to cope with what we expect to be growing volume in that front.

And just to follow on that, John, I realized it's not within your control. But in terms of timing for when you could actually see some contribution from Bruce, assuming you are successful, what should we be thinking about as this sort of middle of the next year or any sense on that?

Yes, it will be Q2, Q3 of next year. Correct.

Okay. Thank you.

And then secondly, I wanted to ask about the Mining segment and the margin performance there. So we saw a decline – fairly meaningful decline in the second quarter.

I appreciate you have some contract Mining work seasonally that's going to ramp up and then you also have some new work for the additional site that will benefit that area, but how should we think about the margin profile of that segment given some of the moving pieces and the seasonality.

So you're right, Mike. Q2 is the seasonally slowest quarter for Contract Mining.

And so we carry a fair bit of overhead with a lot less volume in the quarter as a result of that. And from a timing perspective, we also did more maintenance work in the second quarter this year in that business than we did in the previous year.

Normally, that would be more spread out over the year. But based on John's comments earlier about expecting to ramp up in volume as we go through the year, the timing and maintenance is driven a little bit by having all of we are ready for that ramp up in the second half.

So I certainly think, second quarter of this year is kind of low watermark for the margins in that segment. As we move into Q3, we will see some improvement.

But when we get to Q4, which is really starting to get into the busy seasons of contract mining, we expect margins to improve pretty significantly in segments in Q4, back to where we've seen them historically.

Okay, that's helpful. And then, if I just look a little further out into 2018, would it be sort of fair to assume that with a full year's contribution from the new site in contract mining running through the Mining segment next year, maybe less of this maintenance that you talked about for Q2, plus possibly some additional site installation work, we could see mining margins in 2018 should – there's no reason they shouldn't be meaningfully better on the whole than what we're likely to see this year?

Yes, I think, for 2018, we do expect – we've talked about Mining segment being kind of 10% to 12% margin business over the course of 12 months, when you take all the seasonality out of it. And I think that's where we would expect to be in 2018 based on what we see in front of us right now.

So Q2 this year and Q3 a little bit this year will be more of an anomaly, and from Q4 almost, we should be back to the normal in that business in terms of margins.

Okay, thanks. And then just lastly, Dave, in terms of the changes in non-cash working capital, in the second quarter a very large use of cash, and I guess a lot of that was related to higher unbuild revenue.

How should we think about that in the back half and then – and where you wind up on a full-year basis in 2017?

So in the back half – yes Q3 is also very much part of our busy season. And so I wouldn't expect to say that level of working capital unwind through Q3.

We'll see relatively consistent. But in Q4, as we wind down in certain areas of business, we should see that start to unwind.

There was also ramp up of certain projects and timing factors that were kind of a little higher in Q2 than it would normally be. But we do expect that to unwind fairly significantly by the end of the year.

So if I'm hearing you, you may not be back to flat or positive position by your-end, but certainly not anywhere near as negative as you've been through the first six months?

Yes. We may well be positive by year-end.

It just depends on timing of projects ramping up. And when you're working on some of these larger projects, some of the payments you receive are pretty significant, and when you see those couple of weeks before year-end or a couple of weeks after year-end can swing it, but it generally the seasonality of this year should be fairly consistent with what we've seen in the prior years.

Okay, thank you.

Thanks guys. Good morning.

Just I guess the first couple of questions just around some of the numbers in the quarter that were maybe a bit unusual. First of all, there was a $2.9 million in restructuring.

So this is sort of the second quarter in a row where you had some restructuring costs. So if you can just talk a little bit about what that's hoping to achieve, and any expectations for further costs that we should be aware of maybe throughout the rest of the year?

And then, Dave if you just want to maybe walk us through the amortization related to the Concessions? And how that it is going to impact you guys over the next several quarters.

I'm just trying to make sure we've got this modeled in correctly? So if you just want to maybe address those two kind of newer issues?

So on the restructuring side, most of that is related to combination in the west between our energy and mining groups, a lot of back office functions in areas where we feel we can support that business in Western Canada more effectively given the volume we see in the oil business today. And we talked a little bit about in Q1 commentary.

This is kind of the tail end of that restructuring at West. So no, we don't expect to see anything significant going forward other than, obviously, with [indiscernible] costs taken out in the last couple of quarters.

We'll start to see the benefit of that on a go forward basis in terms of our cost base. And we talked in our commentary about improving margin in the Energy segment as we continue to go forward, and this will certainly be an element of that.

On the amortization side, the additional amortization this quarter relate to Bermuda is amortization of the asset that is on the balance sheet, an intangible asset that represents the concession right to operate the existing airport while we are building the new terminal. We have to amortize that intangible asset over the life of the existing terminal before we transition over that approximately 3.5 years.

So the run rate you saw in Q2 will be a consistent run rate in terms of amortization until we switch operations to the new terminal approximately three years from now. And then the amortization will then dropdown because we will be amortizing the asset of the new terminal, but over the remaining 27 years of the concession.

So $8 million a quarter give or take, which is very rare in Q2, is the run rate going forward for the next three years.

Okay. And just for modeling purposes, is that actually tax deductible as well?

The concession in Bermuda is not a tax payer.

Okay, great. That's helpful.

Okay, and then just moving on to some of the other comments around, and I want to focus maybe a little bit on recurring revenue, and there is a couple of pieces to this. So first of all, you highlighted some margin pressures in your Ontario utilities business.

If we can get some more kind of color around that that would be great. And then just some of the other folks who participate in some of these utilities spaces, I've been talking especially in telecom about some of the 5G build-out and stuff like.

I was just wondering if you guys have any sort of thoughts and color around that, if that could be something that you could be seeing of all over 2018 and 2019?

So utility business in Q2 similar to our road building business, wet weather never helps in terms of productivity in that business, very much outdoor work and wet weather certainly had an impact not to the extent of what we saw in the transportation business, but still at the margin is kind of didn't help productivity in that business. Yes, the only other factor, we have been ramping up to meet the volume of additional utility work we're doing under the Fiber to the Home program.

And demand for that continues to be very strong. And so once we hit kind of the consistent run rate on that, the margins will reflect the learning curve we've gone through during the ramp up phase.

Both relatively small factors and margin wasn't significantly different in utilities in the quarter. But that would be the – maybe the two reasons why it's a little lower than a year ago.

On the 5G side, John, any comments on that?

No, we're working very closely with the communication companies and their future plans. And we are – I'd just say that one very large communication company considers us their prime contractor and wanted us to grow with them, but nothing specific on 2019.

Okay, great and then just one last one from me, if I can ask. There were some questions around that new oil sand site.

And maybe some conflict between the parties that are building that. Do you see any risk in delay of actually getting that into production at this particular point or you think this will just be something that will get itself worked out.

That's a dispute between shareholders and I would expect no change at all in and starting up. They all lot of revenues [indiscernible].

All right, thanks guys.

Good morning.

Good morning, Jacob.

So you talked about a big list that you have been short listed for, maybe you can talk about the level of competitiveness that you're seeing in this process with the bidding for the infrastructure projects?

Could you repeat that? Sorry, you were very faint.

Sorry, can you hear me now?

Yes, that's perfect.

Okay. The question here is just on the level of competitiveness that you're seeing in the infrastructure market right now.

You talked about a very long list that you've been short listed, is the level of competitiveness increasing or decreasing?

I would say it's decreasing for a couple of reasons. There is a lot of activity in the market that people are generally busy.

There is also the growth notwithstanding headlines in the U.S., activity has been increasing and we are seeing less pressure from our American competitors. Equally, the International competitors are now focusing as much on the U.S.

as they are on Canada, and again that's taking some pressure off. So all-in-all, we are feeling the opportunity to cautiously, carefully and then step-by-step increasingly [indiscernible].

Okay. There was just a question here on redeployment of the staff that was working on the K+S – mine.

How is that redeployment going, and then what type of impact do you expect on margins going forward? What was the impact, you think in the quarter?

So I think, obviously, in terms of finishing work at K+S early in the quarter and then being able to move over people onto other work including nuclear. A lot of that movement was happening in Q2, and so I wouldn't say Q2, we saw the full benefit belong to some of that overhead fully to work in the quarter whereas on a go forward basis we'll see the people in place, and they're up to speed with the work programs that they're going to be working on.

We'll see some benefit from that. I wouldn't say it would be a huge swing or a huge impact in Q2, but Q2 is more of a transition quarter that people coming off, people sets before they get fully deployed on to new projects.

Okay. And then the last question, just with the weather impact that you had, is there going to be any catch up here in the latter part of the year?

Essentially, it will depend a little bit how the weather is for the rest of the season, and to some extent how late into the season we're able to go. We're usually busy throughout the summer months and the real catch up is when you extend and carry on doing work to the end of the season that allows you to catch up work that you didn't do at the beginning of the season.

So still weather dependent, but I believe that potential in Q4 to see some catch up.

That’s it from me. Thank you.

Yes, just looking for a little bit of extra maybe clarity on the financial targets set for the year of higher EBITDA in 2017. We're already quite a bit higher in the first half.

So how do we think about back half 2017 EBITDA versus back half of 2016, because it was a pretty good year last year?

Yes, I think, without giving any [indiscernible] to specific numbers. So we do expect second half to continue to see this progress on EBITDA margins.

Obviously, we talked about revenue being down kind of year-to-date versus the prior year and in the outlook we referenced that we obviously expect mining revenue to be lower in the second half as well. So we expect lower revenue, but continued margin progression in the second half of the year versus second half of last year.

That should – EBITDA continue to improve. So not just kind of locking in where we are at the half year, but also seeing some progression in the second half.

Most of that, I would say, in terms of timing would be Q4 rather than Q3 is based on the timing of some of the new awards mainline pipeline, for example, will ramp up in Q4 rather than Q3. And so yes, I do still think there's progression in the second half and more so in Q4 than Q3.

Okay and the source of the margin improvement outside of the concessions business. I think you mentioned Energy and would it mostly be Energy and then some tighter costs, so the other Mining and infrastructure kind of we shouldn't expect too much.

Yes, it will cost base and energy would be a piece of it. Obviously, the growth in contract mining will be a positive as well from a margin perspective year-over-year.

Again, particularly in Q4, we expect much higher volume and concept mining in Q4 than a year-ago. And then just continued work within the [indiscernible] about margin in the infrastructure segments.

So I think the few moving pieces in each of the segments and so I think, all three segments look positive from a margin perspective.

Okay, thanks guys. End of Q&A

Okay. Thank you everyone for joining us on the call and have a great day.