Aecon Group Inc.

Thank you, Amy. Good morning everyone and thanks for participating in our first quarter 2020 results conference call.

We hope that you're all keeping safe and well in this extraordinary time. This is Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, speaking, presenting to you this morning are Jean Louis Servranckx, President and CEO; and David Smales, Executive Vice President and CFO.

With respecting current best practices, we're presenting to you from separate locations, so please bear with us if there are any technical issues along the way. 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.

Following our comments, we will be glad to take questions from analysts. 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.

With that, I'll now turn the call over to Dave.

Thanks Adam and good morning, everyone. I'll touch briefly on Aecon's consolidated results, review results by segment and then address Aecon's financial position before turning the call over to Jean Louis.

Turning to slide 3, revenue for the three months ended March 31 of CAD748 million was CAD97 million or 15% higher compared to 2019. Adjusted EBITDA for the first quarter was CAD19.2 million a margin of 2.6% improved by CAD7.3 million or 61% compared to adjusted EBITDA of CAD11.9 million, a margin of 1.8% in Q1 last year, first quarter operating loss of CAD9.7 million improved by CAD1.1 million compared to an operating loss of CAD10.8 million in the same period in 2019.

Diluted loss per share of CAD0.19 in the quarter compared to a diluted loss per share of $0.16 in the same period last year. Reported backlog of CAD7 billion compares to backlog of CAD6.7 billion in year over year representing an increase of 3%.

Now turning to results by segment, as noted on slide 4, Construction revenue of CAD735 million in the first quarter was CAD97 million or 15% higher than the same period last year. This increase was driven by higher revenue in civil operations and Urban Transportation systems in both Eastern and Western Canada.

Revenue was also higher in utilities operations due in large part to the acquisition of Voltage Power in February and in Industrial operations primarily due to increased activity on mainline pipeline projects in Western Canada. Partially offsetting these increases was lower revenue from Nuclear operations driven by a reduction of the Darlington Nuclear facility in Ontario where work is winding down on the first unit of the main reactor refurbishment project ahead of ramping up in future quarters on the next units.

Adjusted EBITDA in the Construction segment of CAD16.5 million a margin of 2.2% increase by CAD9.2 million compared to CAD7.3 million, a margin of 1.1% in Q1 2019. This was primarily due to increased revenue in Industrial and Civil operations and Urban Transportation Systems and higher gross profit margin from Nuclear operations.

These increases were partially offset by lower gross profit margin in utilities. New contract awards of CAD896 million in the first quarter of 2020 were CAD334 million higher than the same period last year driven primarily by the award of Pattullo Bridge Replacement Project in BC.

Construction backlog at the end of the quarter was CAD6.9 billion which is CAD197 million higher than at the same time in 2019. Turning to slide 5, concessions revenue for the first quarter was CAD27 million, a decrease of CAD31 million or 53% compared to the same period last year, primarily as a result of lower Construction activity as the new airport terminal in Bermuda gets closer to completion.

Adjusted EBITDA in the Concessions segment of CAD14.3 million was an CAD0.5 million lower compared to CAD14.8 million in the same period last year. This was primarily related to operations in Bermuda resulting from the slowdown and then temporary suspension on March 20 of all commercial flights in and out to Bermuda due to COVID 19.

Turning to slide 6. Aecon's financial position, liquidity, and capital resources remain strong and are expected to be sufficient to finance operations and working capital requirements for the foreseeable future.

At March 31, Aecon had CAD105 million of cash on hand excluding cash in joint ventures of restricted cash and a committed revolving credit facility of CAD600 million of which CAD30 million was drawn and CAD75 million utilized for letter of the credit. When combined with an additional CAD700 million performance security guarantee facility to support letter of the credit provided by EDC Aecon's committed credit facilities for working capital and letter of credit requirements totaled CAD1.3 billion.

Aecon has no debt or working capital credit facility maturities until the second half of 2023. In the current environment however Aecon believes it is prudent to conserve cash and to eliminate nonessential spend and reduce discretionary capital investments as previously disclosed.

At this point, I will turn the call over to Jean Louis.

Thank you, Dave. Turning to slide 7, we're confident that Aecon's diversified portfolio, strong financial position, and Safety-First culture will be of great benefit as we navigate evolving market conditions and focus on the health and well being of our employees while successfully serving our clients.

The Construction segment is aligned to the significant infrastructure investment commitments by all levels of government across Canada as well as by the private sector. The Concessions segment is pursuing a number of large scale infrastructure projects that require private finance solutions and participating as a concessionaire on the five P3 projects identified on this slide.

Aecon expects that demand for its services will remain strong following the COVID 19 pandemic as the Federal government and provincial governments across Canada have identified the investment in Infrastructure as a key source of economic stimulus once the country reaches the recovery phase. Turning now to slide 8, as Dave mentioned earlier, backlog at the end of the quarter was CAD7 billion.

The timing of work to be performed for project in backlog as of March 31 is subject to some uncertainty due to the impact of COVID 19 and related slowdown, rescheduling and in some cases suspension of work for an indeterminate period. As such, we are not providing detail on estimated timing of backlog work off at this time but we will endeavor to do so as visibility improves.

In addition, certain projects that were expected to be available to Aecon to bid on to secure new revenue have been delayed. Any such delays are currently expected to be temporary and the current backlog and level of new award year to date have remained robust.

To date no projects that were previously recorded in Aecon's backlog have been canceled. Trailing 12 months recurring revenue was down 17% compared to last year as certain projects typically performed through their recurring revenue model in our utilities operations were undertaken as defined score backlog contracting the period.

Total revenue in utilities was higher versus the same period last year and demonstrates the flexibility Aecon has in our contracting model to meet our clients' needs. Turning now to slide 9, I would like to address the significant impacts from and corresponding measures we have put in place in response to the unprecedented events arising from the COVID 19 pandemic.

In terms of operational impacts with the majority of governments across the jurisdictions in which Aecon operates declaring a state of emergency in response to the COVID 19 pandemic, Aecon's operations have been impacted by way of suspension of certain of our projects, either by its clients or due to a broader government directive by disruption to the progress of projects due to the need to modify work practices to be meet appropriate health and safety standards all by all the COVID 19 related impact from the availability of labor or to the supply chain. The main impacts to date relate to the Bermuda International Airport Redevelopment Project where both commercial operations and construction of the new terminal have been suspended.

The Montréal REM LRT and partially Site C projects construction has been temporarily suspended and Nuclear operations where ramp-up on the next phase of refurbishment work has been delayed. While the impact to these projects as well as others will be to reduce revenue and the normal operations renewal, there is no guarantee that all related costs will be recovered and therefore it is possible that Q2 project margins could be impacted.

Aecon has activated continuity plans and a rigorous COVID-19 health and safety assurance process which meets or exceeds guidance by applicable government health authorities to minimize disruptions to its business and adapt to evolving market conditions and safety standards. These plans include stringent site prescreening processes, heightened hygienic and disinfection practices, physical distancing, provision of additional personnel protective equipment to frontline workers, team separation and staggered work hours where possible as well as extensive technology-enabled remote work initiative.

As Dave mentioned earlier, Aecon's financial position remains strong and is expected to be sufficient to finance its operations and working capital requirements for the foreseeable future. Turning now to slide 10, much of Aecon's outlook has been covered in our earlier comments, however I want to stress several key areas before turning the call over to analysts for questions.

While certain projects that were expected to be available to Aecon to bid on to secure new revenue have been delayed, any such delays are currently expected to be temporary as the current backlog and level of new award year to date have remained roust. To date, no projects that were previously recorded in Aecon’s backlog have been canceled.

Aecon expects that demand for its services will remain strong following the COVID 19 pandemic as the Federal government and provincial governments across Canada have identified investment in infrastructure as a key source of economic stimulus once the country reaches the recovery phase. Aecon continues to monitor developments and mitigate risk related to the COVID 19 pandemic and the impact on Aecon's projects, operations, supply chain and most importantly the health and safety of its employees.

At this time, the majority of governments across the jurisdictions in which Aecon operates have deemed the types of construction projects that constitute the majority of Aecon's contract to be essential services, and therefore operations are broadly continuing although in many cases on a modifies basis as noted. As it is an evolving situation, shifting directives and policies are expected to continue.

I will now personally thank all of Aecon's employees, in particular our frontline workers for their dedication, commitment, and professionalism during this challenging time. Thank you, be safe and we will now turn the call over to analysts for questions.

So, obviously a lot of moving parts. I understand that margins in Q2 likely to be impacted as I think you probably be carrying some overhead costs associated with the projects that are shut down, I get that, but are your clients trying to download the cost associated with delayed projects by not recognizing COVID 19 as a force majeure event?

Yes, Yuri it's an interesting question. Lot of four contracts are similar mainly speaking when we receive an instruction by government or an authority or a client to suspend we are covered for time and financial compensation.

When works being declared essential services are going on, the impacts on productivities are negotiable with our clients most of the time the delay is not an issue. And so far most of our clients have just gone through a very positive attitude in order to help us to navigate through this challenging time.

So the clients are buy and large going to be eating the resulting cost overruns and you don't expect to see a material amount of that downloaded to you?

As I said, most of our clients are very positive. The work is extremely collaborative to try to find the good response to this pandemic so what we can say is that most of our works are on as essential services works continue under stringent procedure.

As I told you that [indiscernible] applicable government requirements. And what we have just realized during the last five to six weeks now is that it works, it means that when our team followed the rules about screening, about hygiene, about this in infection, about physical distancing, about taking care of our shared tools about mask and about staggered work hours and team separation.

When our teams follow the rule, it works I mean we are very team positive case. On the other hand what we have been proving during the last week is that when a team doesn't follow the rules, it can it can become a problem and rather quickly.

So that after a certain discovery phase everybody now is well acquainted with what has to be done and we just have to be extremely focused on ramping our productivity and these in the new methodology of works and we're working very hard on it.

Okay thanks, last question from me and I guess related to that. Is there any way you can quantify or qualify the pace of backlog burn on the projects that are continuing at this point versus pre-shutdown?

Yeah, I mean the projects continuing, I don't, I mean really this from a revenue perspective not huge impact as Jean-Louis said. You know there is a period of time where we went through a little bit of description right around quarter end, where we were kind of working out what the appropriate work practices would be going forward.

But now we have got all the protocols in place work is progressing pretty much as normal on all those projects so it's only really the projects that are being kind of formally caught on hold where we're seeing any kind of gapping in revenue burn.

Okay I'll turn it over guys, thanks.

Maybe I'll start with the question to David, if I may. When we look at the concession rights in the cash flow from investment of CAD20.7 million so that’s down versus last year and I'm just trying to see you're not actually doing Construction right now in Bermuda should we expect a much smaller contribution on that concession rights in the cash flow from investing let's call it for the two quarters is that the way we should be thinking about this?

Yeah, that number was coming down anyway because we're getting near to the end of Construction of the new terminal. Obviously in a period of time here where Construction is ceased we're hopeful Construction will start up again in Bermuda in short order hopefully early May.

But the number was coming down anyway because we're through the bulk of the main Construction period where we had a lot more workers on site, a lot more activity we're really narrowing to just finishing the interior of the terminal and starting to get to the phase where we are commissioning all the systems and the equipment and baggage handling and all that kind of stuff. So the Construction piece in Bermuda has really ramped down anyway in terms of volume

Okay. Fair enough, and then in terms of once you start amortizing the new concession once you're done Construction of the new terminal is there a different pace of the amortizing concession assets on the cash flow statement vis-a-vis the income statement?

Well in the cash flow statement the amortization is non cash. I am not quite sure I follow your question.

I mean obviously once we go into the new terminal the amortization number comes down in the P&L because up until now we have been amortizing the existing terminal over the life of Construction going forward will be amortizing the new terminal over the remaining 27 years of the concession so, the absolute number in terms of amortization is coming down in the P&L-only mode, but I'm not sure what you're getting at in terms of cash flow side.

Sorry, not because yeah when I look at last year, for example, 2019 the concession rights on the cash flow statement like CAD160 million. So I am just trying to get a better sense in terms of how we should be thinking about this on the going forward basis?

Yeah so, that investment in concession rights is effectively the cost of Construction building up. And obviously as I said that's slowing down now as we reached the end of Construction once we reach the end of Construction that balance will start to be amortized down so, you got the amortization going to the P&L and that's effectively reducing the balance sheet concession right investment every period.

Okay right that's really helpful thank you. And then just in terms of you mentioned you're hoping for the Bermuda restart in May.

Can you may be provide an I mean maybe that’s a question for Jean-Louis based on kind of your conversations with clients. In terms of some opening up is that kind of what you guys are expecting that in May at some point most of these projects will get going again, how should I guess how your internally thinking about managing capacity and so forth to be able to ramp up on RAM, Bermuda and so forth?

What is important to note is that on most of the project that I have not been suspended. It's not zero one activity it means that we just know now that before the vaccine or adequate treatment will be in the market.

It will be a continuous ramp-up but with different methodology of work. So yes, we just considered that it's not even May.

We have begun to ramp up in productivity after a sort of a discovery phase by all our workers about this new method of working. We think that we have situation internally under control in terms of absenteeism we're probably benefited from a lot of other Construction projects that were not essential so the worker from those sides have just come to our side.

And what we have to be careful about is about supply chain to be sure that why we will ramp up progressively which we have already begun. We don't have default of our supply chain that can hamper this ramping but this is where we are at the moment.

Bermuda may be a little different as David said I mean most probably what we're hearing at the moment is that we may be able to resume Construction during the first half of May on all our finishing trade the rest being commissioning and integrating systems that may take a little more time because we asked to wait for experts being able to monitor the commissioning and coming from abroad Bermuda this is where we are at the moment.

Alright, and again going back to David so the, I believe you were capitalizing the interests on Bermuda. So that will start to get expensed once you physically finish the Construction right is that how we should be thinking about this?

Yeah, so I think we flagged in the outlooks in our year end release, we expect to get new terminal to open kind of midyear and that would mean we would start expensing the interest at that point in time as opposed to capitalizing it. Now it's more likely the airport will or the new terminal will open at the end of the year or early next year, so we'll continue to capitalize any interest through that Construction period and start to expense it once the new terminal opens so that will delay the expensing of that interest.

I just want to come back to your earlier question Max. Jean-Louis I think Max was also asking specifically about the other projects suspended like REM and Site C and what our expectations are for a restart on those projects.

Okay maybe I can comment on this, REM has been suspended by the province of Québec and then by CDD Q. our client we're now working for trying to reopen it during the first 15 days of May but of course as the decision of the government and we're working extremely closely with CDD Q and we'll be ready to come back to work as soon as the authorities allow it.

Type C has been partially suspended on all activities that are not on the critical part of the global project. Probably the trigger of this decision was about the camp you know that it's a remote place so we have a camp were most of our workers and workers of other companies all the joint ventures are living and to be careful, to be sure that they could not be an outburst of cases this decision was taken by Hydro BC so far there have not been any positive case in the camp of Type C it means that we're expecting probably a relaxing of those suspensions within the two to three weeks to come on this job of Type C.

Okay that's very helpful thank you very much, that's it from me.

Yeah good morning, everyone. With respect to Bermuda, could you comment a little bit about the, when the traffic will come back and if you could talk about the traffic these days and also what are the mechanism that protects you against the significant reduction in activity at the airport?

Thanks.

Yeah hi Benoit, so difference to our comments about the Construction site in Bermuda in the hope that we’re getting going again in May; the expectation is that the commercial traffic at the airport will take a little longer to open up again. So, certainly not before June and we'll see whether it is June or later but that's the new decision made by the government.

Our expectation is once the airport reopens for operations, it will take a period of time for traffic volumes to start to build up again. I honestly kind of expect this to be a quick return to normal in terms of air traffic, we'll see what happens with other airports and airlines generally but it’s going to take going to take a period of time for things to get back to normal for sure.

So, we're kind of envisaging a slow ramp-up once operations begin again at the airport. In terms of any kind of backstop, that's really that really kicks in over a longer period of time.

The real intent of that backstop which is minimum revenue guarantee provided by the government, is to protect the cash flow of the airport to the extent that there’s any shortfall required to repay the debt on the airports that's why the debt financing on the airport is nonrecourse to Aecon because it's all either generally specifically by the project or backstops by the government. We have not been to that scenario yet where that would kick in but obviously in the worst case scenario where this was extending over a little longer period of time, the debt repayments and the cash flow needed for those debt repayments is protected

Okay. Okay, that's great color David.

And with respect to some other concession opportunity that you were looking I was wondering if the pandemic will slow your ability to secure new projects to replace Bermuda or would it be the opposite where some governments might take the opportunity to renovate their airport during the downturn as a stimulus package?

I will answer this. I mean we are constructors and we're optimists always, so of course we just feel that from this crisis situation we can emerge better and better position on some of those markets and we just feel that it will create new opportunities we're ready for them.

So evidently the fact that we're not able to travel and to have one to one face-to-face discussions and meetings may not help, but this being said, I mean we just see this as being an opportunity to develop this sort of projects in the future and we're already doing it.

Okay and with respect to the government stimulus Jean-Louis, we go back to slide 7 where you show the six business segment, which segment would benefit the most from the government’s stimulus and would it be fair to say that some project may be fast tracked thereafter as a form of stimulus?

Yes, we have to be little careful about fast track because evidently, the major projects are long lead project with environmental assessments, with engineering that has to be fully developed before we can build them. What is sure is that roads and highways will benefit from this stimulus package.

I mean you have probably heard that Alberta has already announced that they will put in place a CAD2 billion plans for those jobs, they don't require a lot of engineering they may be resurfacing of the highway they may bring a maintenance or rehabilitation of specialist structures but we really think this can go very quick on the other hand utilities also should rebound very quickly as of commercial operators. I mean I’m extremely pushy to try to expand the network and the situation created by the COVID with more people working from home, just requires more power to all the utilities, it means that this also will most probably benefit from the stimulus package.

All other sectors are also well-positioned; also it may be probably better a bit stimulus than a short term one.

Okay, that's great color. And could you talk maybe a little bit about the potential opportunities with Voltage Power since you have completed the acquisition Jean-Louis?

Yes, we are very happy about this acquisition. It was a strategic target.

We are happy with the team the team is now with us from the month of February they are integrating very well. We want to develop in the markets of the power distribution; we are extremely competitive in this field and are known all over Canada although based in Manitoba.

And also some power fixation, so we just follow this with a lot of care we are very happy to see that the integration is going very well and we are looking forward for a lot of very interesting projects between Voltage and Aecon.

Okay thanks, and last one for me, could you maybe talk a little bit about whether there has been a shift in your capital allocation priority more specifically about the CapEx expectation for 2020, and also the desire to revisit your share buyback program with the first quarter results?

Yeah Benoit so certainly on the CapEx side we're pushing back anything that's kind of nonessential in terms of capital spend, obviously with most of our projects continuing on, they have their equipment needs and the other capital needs so we'll continue to fund those, but anything that isn't required and can be pushed off till next year or a later period we're certainly doing that. So, we expect CapEx to be lower than last year but no we don't have the ability to completely freeze it because most of our operations carry on.

In terms of NCIB obviously we pause that while we're in the blackout period and now coming out of that period. We’re back in to a period where we have the optionality and flexibility to opportunistic and we'll continue to monitor what's happening in the market and make decisions as and when but no fixed plans either way at this one will just continue to monitor how things unfold.

Okay and may be just a quick one could you talk about the timing for ramping up the second reactor on the Nuclear side given now the first one is winding down.

Yes, I can take this one. We are mechanically complete on the first unit that OPG Darlington from mid March and it's a great success you probably remember that the former units that’s two years ago had been extremely difficult, this one has been finalized for us on time and on budget, so now we have handed over the unit to OPG operation team that are just going to ramp it to be able to switch on this unit to the grid that should happen around the end of Q2.

From this moment where OPG could be in a position to disconnect the second reactor and allow us to enter in to the vault and to begin with our capacity works. And there is no signs of COVID-19 pandemic OPG is favoring the operation of the reactors to producers and is very cautious about mixing tools of construction with operation.

So this a disconnection of the second unit to be able to begin the refurbishment work will probably happen during Q4 but the decision of the exact date has not been taken and we know that OPG is now thinking about eventually bringing back a little earlier where the beginning of the works. So most probably before the end of the year and maybe earlier in Q4 or end of Q3, I mean it's a decision under OPG management.

Okay.

Regarding Bruce, regarding Bruce. So Bruce, beginning with the first reactor, everything is going as planned and it seems to be that we will be able to enter the first reactor at Bruce Power between the end of July and middle of August.

Okay, thank you very much for the time.

Thanks Benoit.

I appreciate your dealing with a bunch of disruptions that impact your ability to work at a normal pace but as you limit or spread the number of trades on site are you seeing a positive offsetting impact on employee productivity?

That's a very, very interesting question. I mean we're just discovering or figuring out that in some cases we can do more with less, and this is why this crisis at the end of the day I think will allow us to be better.

Just the physical distancing, just the fact that speaking may be an issue even if you have mask, so we have extremely focused employees on their own task and we just realized that it's a balancing effect. I mean of course wearing masks, being extremely careful about not sharing tools is an issue and has impacts on productivity, but on another hand now that people have realized that this really protects them there is a very strong focus on executing, and it is evident that we will have lessons learned from this crisis and that they will be very interesting for the company

Can you, I know it's maybe early days, but could you provide some of those positive lessons that you may be able to take away from this?

We have also realized that I mean most of our administrative staffs can work perfectly and very efficiently from home though it may be a little difficult to bring them back to the office. But sure I mean we will have to think about it, we'll have to think about it, our systems are functioning very well, everybody is connected, all our supporting teams are perfectly supporting our operation from home.

So it's probably a different way of looking at our offices, probably in terms of supporting teams that is going to be very, very interesting. In terms of what I call the operational excellence I told you about productivity, about focusing on the task, it's evident that this crisis will probably push for more prefabrication, more preassembling and having on site only the strictly necessary acts of the building.

Great. I appreciate your answers.

Thank you.

I had a question on your backlog. What percent could be at risk of termination or what percent could be at risk of being pushed out or delayed in your mind right now?

So, as I mentioned earlier, none of the projects that we are putting in backlog has been either canceled or postponed. I mean there may be some issue about our productivity when we are under essential services.

So we don't see a real impact on the volume of our backlog so far. On the other hand there is an extremely robust pipeline of pursuits and very diverse that perfectly fits with our different operating sectors.

So I would tend to say that we're not that much worried about the future, evidently as you can notice from what we have been telling you I mean from the beginning of this conference. I mean Q2 is going to be challenging, we're extremely focused on our productivity, we're focused on our job and we will take care of them, but not that much of worried about the backlog even without talking about additional short term shovel ready projects that both federal and provisional government are getting ready.

So this Rio Tinto termination you view as a one off?

Yes, I mean it's a very special case. As you know I mean we're going in joint venture with a share of 40%, works are fairly well advanced, it's not at all a problem of performance, it's much more a problem of safety and commercial.

We don't think the termination is appropriate and we're still studying all alternatives. It's a unique case and we're dealing with this unique case as we have to do it.

Okay. And then just on the Concessions, so you talked a bit about Bermuda revenue being tied to traffic volumes, is there, is it similar for the Canadian Concessions or how should we think about that?

Yeah, so the clearing Concessions, I guess two things. They are still primarily in the construction phase, so not in the concession phase yet other than Waterloo where we're a very small piece of that concession.

But the model in the Canadian P3 is very different in that they are essentially available prepayment models, they're not tied to traffic or overall ridership or revenue from those transportation systems. So, no impact at this stage because they're not really in the concession phase yet.

But there would be a very different model, there is no traffic risk on the Canadian P3s.

That's it for me. Thank you.

First question just relates to, perhaps for Dave, relates to whether or not you have seen any changes in collectability of receivables or receivables being extended at all, and as a follow on to that just your views or thoughts around how we should think about changes in cash flow and capital this year. Last quarter you talked about the full year looking I think sort of a relatively flat like not materially higher or lower so just wondering if you can provide an update on those fronts?

So no, we haven't really seen any issues around collectability of receivables. I mean if you look at our kind of project profile and client profile we work with primarily with governments or government agencies.

I would say if anything they are motivated to keep all their contractors well funded right now as part of the broader government push to support the drivers of the economy in the current situation we're in so, so from that perspective no concerns. And then even on the private client side, we only work with kind of blue chip private clients where we have very strong confidence in their funding and their ability to pay for the work that is done.

So whether it's utility clients or major manufacturing or processing clients we have no concerns over the financial viability of any of the customer base. So, no we don't expect – we haven't seen any impacts on collectability.

And then just in terms of the overall outlook for the year nothing really has changed in terms of our view of overall working capital. I think obviously we expect with some lower volume in Q2 for the projects that have been impacted that won't – I don't think it's large enough in the grand scheme of things to really impact the overall working capital profile.

Most of those projects are kind of milestone based or funded in advance because they're either P3s or very large civil projects and so our reviews haven't really changed in terms of the full year working capital outlook.

Okay and then I realized this is somewhat early days just in terms of how long the impacts of the COVID 19 pandemic have been affecting the situation in Canada. But as far as your bidding activity, have you seen any changes in competitive behavior and/or do you expect there to be any changes in competitive behavior coming out of this situation?

I will take this question, I mean in terms of our bidding activities all small and medium projects are just going on at the normal pace. Bigger projects have been postponed, not indefinitely.

Most of them have been postponed between six weeks and 2.5 months. In terms of delivering an RAQ proposal from our joint ventures or delivering and RSP bid it means that we're not that much worried about activity.

In terms of the competitiveness, I mean it's very early, what is sure is that this sort of crisis will probably make our competitors more prudent. I'll just take an example, usually this closes on force majeure we're not a big part of the negotiation of the contract evidently it's going to be become a very important point on the way you can have relief on time and on money is going to be a very interesting development so this is what I can answer as of today.

Okay that's helpful, thank you. And then just lastly just back on Bermuda as far as the operations of the existing airport, you provided some commentary around how we could possibly think about the airport reopening and taking some time for traffic volumes to normalize.

While the airport is closed, can you just talk about this is the downside risk as far as your Concessions segment from an EBITDA and cash flow perspective, I'm just trying to understand is this simply a situation where you may not receive what you would have otherwise expected in an ordinary environment or is there actually a situation where you are incurring cost here and there is actually material downside to the negative side.

Yeah, so Mike in terms of while the airport is essentially closed, I mean there is some – there is a very small volume of cargo traffic going in and out of the airport and a couple of other flights associated with just logistics, but while the airport is essentially closed to all commercial traffic, we have a fixed cost base there, it is give or take CAD1 million a month. So it's not huge from that perspective, obviously though from an EBITDA perspective Bermuda I think it's kind of the known is roughly two thirds of the Concessions EBITDA and so to the extent it's not operating and not generating revenue for a period of time, they are depending on how long that period of time is I think people can kind of estimate the impact that might have from an EBITDA perspective.

And cash flow isn't really impacted in the short term because all the cash being generated by those operations effectively kind of shifts in Bermuda is restricted cash and ends up being part of the cash that eventually goes to repay the debt and distributions, and those distributions aren't due to stop for a period of time anyway, so there is no short term cash impact from the suspension.

Okay that's helpful, thank you Dave.

So just maybe turning back to the pipeline a little bit and some other delays, I guess just trying to understand a couple of different things here. One, how much of the delays are call it mechanical, just difficulties in accessing processes and getting together with folks to move the paperwork along and how much of this is client sort of saying let's just hold off while maybe committing to funding or spending at this point?

We have not seen any client trying to pull off from funding or from putting on the market their projects, and this is very important, I mean maybe even these are contrary, on the other hand I mean you have probably seen the changes that are ahead of their Canadian Infrastructure Bank, I mean Michael Sabia from CDPQ is just setting in, I mean of course we like this because we have been dealing with CDPQ as we've acquired the REM project and we know that Michael knows how to get things done. So I would not be worried about the future of the pipeline.

The projects are there, clients are just - when there is a delay – they just take a sort of prudential attitude to say we don't know exactly how it's going to end up this COVID crisis, so let's have a little more weeks of understanding how it could work so that we can deal with the eventual impact and we launch our projects, so this is the way they're reacting. We do not see any projects, I mean, being stopped because of this crisis?

Okay and you're not seeing any change - differences in behavior between public sector and private sector clients then?

No that is not I mean as you know a very significant part of our activity is from public sectors and infrastructure I mean in those moments following the shock of this COVID, I mean infrastructure is going to be a major part of their action. We've much pleasant before exposure to private clients, it may be industrial and as you know we don't do any more high rise building or commercial building going with the real estate developer, so it is not that much an issue for us.

Okay my other question is just maybe a little more theoretical, I mean even coming into this you're still working for pretty healthy backlogs you’ve seen some good growth over the last couple of years, but part of the discussion was also around people and your capacity to even absorb more work. So the question is if there actually is stimulus dollars that come into the system how do you think Aecon is going to perform and how is the industry going to be able to absorb which is probably adding on to almost already record levels of work?

It's a very interesting point. What I've just said during the last monsoon you probably remember is that we're comfortable with the backlog between CAD6 billion and CAD8 billion.

I mean the aim of our company is not to grow extremely quickly. I mean it is to be more profitable, it's to be better organized on our side and it is to be in term of operational excellence to be the top company in Canada in terms of infrastructure.

So we're comfortable with our size. What is also sure is that we're not a holding company, I mean, we have boots on the ground, we have superintendents, we have team leaders, we have construction manager, we have field engineer working with us and we're in a constant process of educating of bettering the skills and the capacity of our people.

So I am not seeing at this stage any real issue with being able to take the good part of the stimulus package that will come in road and highway. I'm not worried about it.

As usually, we will be disciplined in bidding, but we will have to take these opportunities and our organization just makes us able to do it as you have seen, I mean between our organization, our own people, our financial strength, I think that Aecon is really very well equipped to navigate through this strong but temporary crisis and what will follow this crisis.

Okay, thank you very much.

Thanks very much Amy and thank you all for joining us today. Obviously, these are interesting times, so we're always available to speak afterwards.

Feel free to try and reach at your convenience, stay safe, and we look forward to speaking to you all soon. Thank you.