Aecon Group Inc.

Thank you, Reign. Good morning, everyone, and thanks for participating in our second quarter 2021 results conference call.

This is Adam Borgatti speaking. And presenting to you this morning are Jean-Louis Servranckx, President and CEO; and David Smales, Executive Vice President and CFO.

Our earnings announcement was released yesterday evening, and we posted a slide presentation on the Investing section of our website, which we will refer to during this call. Following our comments, we'll be glad to take questions from analysts and asked the analysts to keep one question and a follow-up before getting back into the queue.

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

Although Aecon that the expectations reflected in the statements are reasonable, we can give no assurance that these expectations will prove to be correct. With that, I'll turn the call over to Dave.

Thanks, Adam, and good morning, everyone. I'll start by summarizing 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 second quarter of $971 million was $192 million or 25% higher compared to Q2 last year.

Adjusted EBITDA for the first quarter of $61 million, a margin of 6.3%, improved by $37 million compared to adjusted EBITDA of $24 million, a margin of 3.1% in Q2 last year. Diluted earnings per share of $0.27 in the quarter improved by $0.37 compared to a diluted loss per share of $0.10 in the same period last year.

Reported backlog of $6.5 billion compares to backlog of $7.3 billion a year earlier and $5.9 billion at the end of the first quarter. Now turning to results by segment.

As noted on Slide 4, Construction revenue of $955 million in the second quarter was $177 million or 23% higher than the same period last year due to nuclear refurbishment work in Ontario, major projects in civil operations and urban transportation systems and gas distribution and telecommunications work in the utility sector. Adjusted EBITDA from Construction of $51 million, a margin of 5.3%, increased by $23 million compared to $28 million, a margin of 3.6% in Q2 last year, driven by higher volume and gross profit margin in nuclear, civil and urban transportation systems and utilities.

These increases were partially offset by lower volume and gross profit margin from industrial operations. New contract awards of $1.6 billion in the second quarter compared to $1.1 billion in the same period last year.

This was driven by strong demand across Canada in smaller and medium-sized projects as well as a number of multiyear project awards in the quarter, including the replacement of steam generators at Units 3 and 4 of the Bruce Nuclear Facility in Ontario, construction of the Eglinton Crosstown West Extension Advance Tunnel in Toronto and the North End Wastewater Plant Upgrade Project in Winnipeg. Turning to Slide 5.

Concessions revenue for the second quarter of $17 million was $8 million higher compared to the same period last year, primarily due to increased activity at Bermuda Airport where all commercial flight operations were suspended during the second quarter last year due to COVID. Although the year-over-year revenue increase and gradually improving traffic levels are positive, commercial flight operations in Bermuda are still operating at significantly reduced volume compared to pre-pandemic levels.

Adjusted EBITDA in the Concessions segment of $16 million was $11 million higher than last year, driven by improving air traffic in Bermuda. Turning to Slide 6.

Aecon's financial position, liquidity and free cash flow remains strong. At the end of Q2, Aecon had a committed revolving credit facility of $600 million, of which $10 million was drawn and $10 million utilized for letters of credit.

On June 30, Aecon completed a two-year extension of the credit facility, which now matures on June 30, 2025. As part of the extension, Aecon incorporated sustainability-linked metrics tied to a number of the Company's ESG objectives, the first Canadian construction company to incorporate such a feature.

Also on June 30, the $900 million performance security guarantee facility provided by EDC to support letters of credit was extended by two years to June 30, 2023. Aecon's committed facilities for working capital and letter of credit requirements totaled $1.5 billion.

Aecon's low debt or credit facility matures until the second half of 2023 except equipment and property loans and leases in the normal course. At this point, I'll turn the call over to Jean-Louis.

Thank you, Dave. Turning to Slide 7.

Despite the ongoing impact of COVID-19 on Aecon's operations, we continued to deliver split results in the quarter. We remain confident that Aecon's balanced and diversified portfolio, strong financial position and agile culture will enable us to continue to execute going forward.

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 across the market sectors in which we participate. The Concessions segment is pursuing a number of large-scale infrastructure projects and targeting innovative development and private finance opportunities in industrial, power, clean tech and other related markets as well as participating as a concessionaire on the 5 P3 projects identified on the slide.

Turning to Slide 8. Backlog recurring revenue program and the pipeline of bidding opportunities for new work remain at strong levels across Canada.

During the quarter, new awards of almost $1.6 billion demonstrated Aecon's diversity across geography, size and duration of projects and end market sectors. Aecon is also prequalified on a number of large project beets due to be awarded over the next 12 to 18 months, and demand for our core capabilities continues to be extremely robust.

And we expect demand for our services to remain healthy for the foreseeable future as the federal government and provincial governments across Canada have identified investments in infrastructure as a key source of stimulus as part of economic recovery plans. Trailing 12 months recurring revenue was up 23% versus the prior period, primarily from growth in utilities operations.

Recurring revenue is expected to continue to grow based on the capital investment plans of a number of key clients, particularly in the telecommunications and power sectors as well as from the recovery of aviation traffic at the Bermuda International Airport. Turning to Slide 9.

In addition to the sustainability-linked credit facility expansion that Dave mentioned, we are continuing our drive to be an industry leader in sustainability as we undertake initiatives to harness innovation, reduce additions, boost efficiency and improve business performance. An ongoing focus of our sustainability program is to pilot new technologies to reduce emissions on our construction site and in our facilities.

We are currently undergoing try to utilize solar energy to replace fossil fuel generators to provide power on certain project sites across Canada as well as to power our training and innovation center in Ontario. We are also contributing to a partnership between the government of Canada and the Cement Association of Canada to advance global leadership in low-carbon concrete production, with a goal to provide the road map to help the cement sector reach net zero carbon concrete by 2050.

Turning to Slide 10. Aecon's overall outlook for 2021 remains positive, supported by strong backlog, recovering revenue programs and pipeline of bidding opportunities for new work.

Although the pandemic is expected to continue to have some impact in moderating overall revenue and profitability growth expectations in 2021, we are encouraged by the generally positive trend in the lifting of social and economic distraction in recent months in Canada, and the impact on revenue is expected to lessen going forward if this trend continues. In the Concessions segment, an increase in vaccination rates and the easing of travel restrictions during the second quarter provided early signs of a rebound from very low label passenger traffic for the aviation industry.

This is expected to lead to a corresponding gradual improvement in travel through the Bermuda airport during the remainder of the year and into 2022. As I stated earlier, the overall outlook for 2021 remains positive as construction continues on a number of projects that ramped up in 2019 and 2020.

We are encouraged by the level of backlog and new awards during 2021 and the strong demand environment for Aecon services going forward, including recurring revenue programs all subject to the unknown impacts of COVID-19 going forward. Thank you.

We will now turn the call over to analysts for questions.

Another nice quarter. Jean, I wanted to dig in a little bit on the new awards.

They bounced back nicely. Just wondering, what you expect for the back half of the year in terms of new awards, wondering if the projects that you shortlisted on would allow you to end the year with maybe a higher backlog than where you stand today?

And secondly, in relation to that, if you could just comment on some of the new projects that are entering the good pipeline and the nature of that work and how it lines up with your core competencies?

Okay. Thank you for this question.

So you probably remember the kind of anxiety three months ago at the end of Q1 when our backlog was something like $5.9 billion. I had a few questions, about are you worried, are you anxious, and I say, no, I'm not because of quality and the balanced profile of our backlog is what is important, not an absolute value on aside from anything.

So effectively, I'm very happy today with a $6.5 billion backlog plus recurring revenues that are up 23% at the -- more than 500. All the parameters within the backlog are very interesting.

So new awards, as you said, $1.6 billion. We have something like $250 million for the two steam generator, $250 million for Eglinton West Tunnel, $200 million for Winnipeg Water Treatment Plant, $50 million for Exxon pipeline.

As you can see, it's also very diverse in terms of our sectors, but also in terms of geographies. This being said, you -- we consider in Aecon that we build with discipline a backlog.

It means that I'm not discovering with my team on Monday morning, what is the backlog? We drive the backlog to shape and we want as per our strategic plan, the future of Aecon activity, and this is what is important.

So yes, there are projects in the pipeline on which we have either already submitted a proposal or we have been prequalified, and we are working to deliver a proposal during Q3 or Q4. I will not go further in detail, but this is about civil, this is about industrial, this is about nuclear, too.

And I'm not worried about the development of our backlog for the months to come.

Okay. Got it.

And second and last question, maybe for Dave. Just talk about the leaders when you think about the construction EBITDA margin as we look ahead and assume revenue can continue to grow over the next few years.

Is the opportunity more on gross margin or operating leverage, what kind of revenue can your current overhead support?

Yes. I think it's a little bit of both new in terms of margin development.

Obviously, drive in such a strong environment is to ensure that we maximize our bid margin, reflecting the fact that there's fewer and fewer bidders for some of these projects. But it's also about project selection, and making sure that, as Jean-Louis has already said, very strategic about projects that we're adding to the backlog and that they meet our margin expectations and profile.

So certainly, that would all feed into the gross margin piece. But as we see top line growth, we don't expect the kind of overhead structure to grow at the same at the same pace.

So we do expect some leverage impact too. So I think there's two positive dynamics going forward both based on the strengths of the end markets that we're in right there.

Yes. I just wanted to comment on the -- I just wanted to come back on the two project pursuits in the U.S.

So do you disclose a project in the Washington state and Louisiana? Could you talk about your strategy to organically enter the U.S.

market, the targeted states and also the sectors that you're looking at?

Yes, Benoit. United States is becoming more stable.

This is evident. And there's a great chance that a bill of around $1,000 billion for infrastructure within the next 15 years may be achieved.

Not everything is about our infrastructure, but I would say quite a good share will be. So we have to take care about this market because it's going to be most probably a very quickly growing market.

This being said, it's a foreign country, so always the same principle. Organically, we will only go where it is our core competencies.

And we will try to choose the best partners to help us to make it good, meaning that we have knowledge of P3 because Canada has been quite advanced in the P3 industry. We have our own technical knowledge.

The language is the same between United States and Canada, obviously. We need local partners, and we also need peers of our size, just to help us in front of the structure of the deal.

Geographically, we are not that selective. Evidently, you have noticed that one of the Perrite in Washington State.

We are extremely strong with our major project component in Western Canada. So it's quite easy to shift teams to the North West states of United States, but we will go on a case-by-case basis, trying to create a team for different projects.

That's not going to change too much to take advantage of a learning curve in working in this country.

Okay. Okay.

That's great. And just with respect to your M&A strategy, Jean, you previously mentioned your interest to do something maybe a little bit more larger than usual in Eastern Canada.

So could you talk about the pipeline of opportunities and why to the intention to bolster your position in these regions?

Yes. I mean there are two kinds of opportunity for external growth.

I mean the tuck-in activity that we do on a regular basis, just to complement a geography or some specialty, and we are quite use. And there may be some more structuring acquisition, and we are having a look at this.

And yes, we are looking at the east of Canada, but not only the east of Canada. When we have the capacity through our balance sheet to a very interesting operation and we are always alert and focused to be sure we can find the right company, and we will be ready to go.

Wanted to go back to the margins. And specifically, are you seeing any evidence of cost inflation?

And maybe comment on the availability of Bermuda?

Construction is about cycles, Jacob. It means that there is nothing new.

What we are seeing at the moment, yes, there is some inflation in the price of competitive. It has gone down in certain aspects, but this is a trend at the moment.

We are used to leave recycle either by protecting us when we sign a contract with clients. All of our, I would say, operational agility -- I mean, for example, when the price is going up, you just try not to procure in bulk too much.

You just procure the best way you can. And for example, when you think the price is going down, you try to renegotiate.

As an example, we are negotiating quite a number of subcontracts that we had to sign during the COVID time. And because of the risk, because of the unknown, the level of price was higher than it is now with a vaccine, with a rapid test, and we are renegotiating some of our subcontracts.

So I would say so far, we know how to deal with this, and I'm not that much worried. In terms of labor, as I used to say, the fact that oil and gas is decreasing and just shifted quite a number of people into infrastructure construction.

We also took advantage of the closing down of quite a few of the building jobs during the first months of COVID to attract new kind of workers that just feel happy with us, the management, I would say, is 10x -- the market of the management is 10. But so far, we can handle it.

Top executive, top project directors have always been, I would say, a fighting sport, and we are on it. So we can manage it, and it's not a point of great concern at the moment.

Okay. And my second question is just on Bermuda.

The utilization that you saw in the second quarter, what are you seeing so far in the third quarter? And how is that expected to ramp in your mind?

Yes. So we did see improvement through the second quarter.

From when we came into the quarter, we were kind of in the low-to mid-teens in terms of percentage of traffic versus kind of the base year, which we view as 2019. You can't really compare to 2020 because the airport will ship for much of that period.

So when we compare to 2019, we saw a ramp-up from kind of low to mid-teens at the start of the quarter to kind of 25%, 30% by the end of the quarter. And based on still obviously early in Q3, but based on what we see right now, we expect that kind of ramp to continue through Q3 and through the end of the year.

So that by the end of the year, all else being equal and no sudden reversion back to restrictions in lot bands and further travel restrictions. We see getting to something in the range of 50% of 2019 traffic by the end of the year, like for the last month or two of the year.

And then obviously, if all goes well, 2022, we should see that continue to improve. So that's kind of how we see things right now.

And yes, it's definitely on an improving through COVID.

And in 2019, what was that split between U.S., U.K. and Canada or rest of the world as far as origination of traffic?

Yes. So U.S.

typically represents two-third to 75% of all traffic in Bermuda.

That's helpful.

Maybe I can add to give some color. Last Friday, in our Bermuda Airport, all the gateways were full.

I mean we had a plane on each gateway on Friday afternoon, and we have not sufficient food and drink to cater so much crowded with the airport. So from time to time, I mean, after five quarters of COVID, we can just begin to smile again.

I was wondering, if you don't mind, providing a bit more color on the reason for the jump in recurring revenue. I think you mentioned it's up 23% year-on-year.

Yes, so that's the first question.

Obviously, telecommunication is a big driver. This is one of the consequences of COVID.

People need more connectivity, even in quite remote place. They need more volume of data.

So there is a very strong movement of new CapEx from our usual clients. Gas distribution, for example, with Enbridge is also very, very active.

Electrical transmission, I mean, it's becoming obvious that we will use more and more electricity in the years to come, and this electricity in addition to be produced has to be transmitted and distributed. So there is also quite an interesting movement of new CapEx on this.

This is what creates this 23% increase. And this is why we think it's not going to stop here.

What is also very interesting is the -- I mean I'm astonished with a real robustness of our utility sector. It's a sector that I have learned, I mean, to do a lot with a little extremely agile to take new jobs to find new way of agreement with its clients.

I'm extremely happy with the way the utility sector at Aecon is evolving.

Yes. It's great.

And then, Jean, just maybe as a follow-up on this, how does the M&A strategy fit into this utilities recurring revenue component, if it's possible?

Evidently, we are extremely keen on being able to attract and to make acquisition in this sector. As I've already said, I mean, I'm working a lot on the balanced activity of Aecon on our balanced portfolio, and we have been working hard during the last three years.

And we're extremely happy after this pandemic to see how robust this utility sector here. So yes, we are always chasing for a new company that can bring us with recurrent revenue.

Right. Okay.

That would helpful. And then maybe just one small cleanup.

In terms of the ESG objectives that are part of your credit facility, do you mind talking about what exactly the triggers for these things on the ESG side?

What are the…

What are the drivers for -- or, I guess, the benchmarks that you have to meet in order to respect the agreement?

Yes. So -- There's four metrics make built into that structure.

The first is on greenhouse gas emissions. The second is around safety metrics.

The third is spend with indigenous suppliers and subcontractors. And the fourth is in terms of use of preferred suppliers and their conformance with ESG and diversity and inclusion practices.

So those are the four areas we focus on. There's obviously targets built in for each of those that differ by category.

And ultimately, the impact in terms of the upside potential on pricing is up to 5 basis points either way.

Just maybe turning to the -- going back to the Concessions business and looking at the EBITDA margin in the quarter, certainly, 95% is a pretty high margin. But just wanting to maybe understand, is that kind of a normalized number?

And I appreciate there's a lot of changes going on, but is that how we should be thinking about the margin profile of the O&M business in Bermuda? Or was there something else that kind of skews that number this quarter?

Yes. No, certainly skewed given the current level of traffic in Bermuda.

Don't forget we have other concessions where there's also small levels of income coming in, in terms of management fees and things like that. So where revenue is particularly low in Bermuda, those have the impact of increasing that margin.

But really, if you look at 2019, that would give you a much better benchmark in terms of margins for that sector. Obviously, we've transitioned to the new terminal, but it's not that much different in terms of current expectations of traffic once we get back to normal.

So the margin profile would be more in line with what we saw in 2019.

Okay. And then you mentioned earlier in the call that your expectation would be to maybe about 50% of prior levels.

I'll make the comment that this morning, Canada talked about the fact that they're starting to see bookings in kind of the winter season, so January at above 2019 levels now in certain weeks into the Caribbean. So just wondering how quickly you can ramp up capacity.

Is that a -- Jean-Louis kind of alluded to the fact you guys ran out of food and beverage. But is that a thing of people?

Or is there more development left to do additional gates to finish? And like are there any restrictions on you guys getting back to full capacity if all of a sudden to materialize is maybe quicker than you're expecting?

Yes. No, no restrictions at all.

Jean-Louis was kind of talking about what happened last week, which was really just a function of being set for a certain level and things ramping up quickly that particular day. But no, I mean, everything is finished to the airport.

The capacity is in place to be at or above. In fact, more than 2019 levels of capacity of the airport is higher than it was at the old terminal.

And it's really just a question of as flights are added and its passenger flow increases, we can ramp up pretty comfortably alongside that. So there's no restrictions that would take any time to implement.

Just on the commentary earlier on the U.S. side, how far along is that process in terms of our U.S.

sets in that market? Are you looking at specific projects already?

Or is it still in sort of due diligence phase to see if the market makes sense?

No, we are looking at specific projects. We have just been prequalified for a bridge with plenary and Acciona in Louisiana.

We have a skew project in our list. So we are just ramping up in front of U.S.

Okay. And then I guess as you look at those projects, you want to be sharing are you looking at, look, we need to make the exact return on the Canadian side, whatever benchmark to use internally?

Or is it look, the size of opportunity is much bigger, so the absolute dollars may be matter a little bit more? So how are you expecting the opportunities on the U.S.

side versus the Canadian?

So far, we don't know exactly what is going to happen. We don't know exactly what kind of project will come first.

So the decision at Aecon is to focus on our core competency and focus on the right partners. And in addition with our partners, we have been already working with in Canada, it's a case for Acciona, for example, because we are building the Pattullo Bridge in Vancouver together, and it's better for us.

And then we shall see how all these develop and all these ramp-ups, and we'll probably be able to refine our approach.

Just to add to that, Saba, there's no philosophy where we're saying we're going to go into the U.S. market a lower margin expectation.

I mean, obviously, we'll partner with other big international companies as we qualify and bid these projects, and they have their own margin expectations as well, and we'll make sure we're aligned and we wouldn't let go into the U.S. market.

We didn't think the margin potential in that market was strong. We think now is the right time because A, there's going to be a lot of demand in that market; but B, because we think it supports our margin expectations.

So there's no concept to the U.S. buying our way into that market.

I mean that's not foreseen in any way, shape or form.

And I guess if I could just follow up quickly, I guess, was that part of sort of deciding on those specific regions in the U.S. sort of the Northwest?

Or was it the type of opportunities available? And what kind of that is your decision to that region?

Yes. I mean, the region I was talking about is just because it's closed from our base in British Columbia.

We also know that some states are easier to work with. So, I would say it's a project per project decision, and we just try to follow our guidelines about scope of work and about partnering.

In addition, as you say, I mean it's also about which state and under which circumstances.

Maybe I'll just start with Jean-Louis, if I may. I just have a question on the business development side, especially for Concessions.

I think at some point, you had a team-sourcing process in the international market. Obviously, I presume that's being made pretty challenging by COVID.

So I'm just wondering, if there's any update on that front now that travel is becoming easier.

Yes, you're right. I mean we have a team at Aecon on focusing on future international activity.

It may be under a G2G scheme like Bermuda, it may be under a private initiative or tender on a P3 basis or a design and build job. Evidently, and you're right, I mean, COVID has disturbed a lot this activity.

Most of the territory have been totally locked down, no capacity to enter. Or when you enter, I mean, high level of quarantine.

So this has gone rather down, but we are back on the road. And I can tell you, for example, today, we have two person from this team who are abroad that have been traveling and safe.

So we'll come back on track with this.

Great. That's helpful.

And I just have another question for Dave. Just on the free cash flow, I think you guys have had a few years to very strong, robust conversion from adjusted EBITDA to free cash flow.

Should we be expecting a similar run rate for 2021? Or is there anything unusual potentially in working capital that we should be aware of?

Not specifically. I mean, obviously, we always call out the usual seasonality.

But over the course of the year, we expect the profile to be relatively similar to a normal baseline year. Obviously, 2020 had a number of other things going on in terms of timing of projects being suspended or ramping up again that kind of disturbs some of the normal seasonality.

But when you look at a beast year like 2019, for example, we don't expect anything particularly unusual.

Just one question for me. And I guess I'm looking at the outlook commentary that you provided in the second quarter's MD&A.

If I compare what you've said to some of the commentary in the first quarter, there's a lot of similarity, but one thing that does seem to differ is there was reference in the first quarter to seeing some delays on projects and commenting on how that may impact the business. That type of commentary is absent from this quarter's MD&A, I guess, I'm just wondering if you can speak to, is that simply an evolution of the economy reopening and things sort of getting back to normal?

Or if you can just speak to what you've seen in terms of those delayed projects that would be helpful.

My answer would be the following. None of our projects that were in backlog has been canceled due to COVID, but there has been -- some of them have been pushed down the line.

What you notice is just that business is coming back to normal, and we have more visibility. The pipeline is extremely strong.

And we cannot hear from our clients a wish to decrease the amount of projects that they would like to put on the market. I mean it is a contrary.

So it may explain, I mean, what you have noticed in the wording.

Just wanted to go back to a previous question on additional opportunities in new project pursuits that are outside of Canada. Are you expecting a focus going forward in the pipeline to be more towards U.S.

and international opportunities? And if that's the case, how do you think about both the risk and the return trade-off of pursuing projects hovering on noncore markets versus maybe in Canada?

So the answer to your first question is no. I mean, we are going to stay focused on Canada.

Evidently, as I used to say, Canada is 0.5 million of newcomers every year. Newcomers need fresh water, treated water, transportation systems, bridges, power.

And the market for infrastructure is going to stay strong. We at Aecon, we are stronger and stronger in Canada in terms of geography, in terms of capacity.

So Canada will remain the point number one in terms of activity. This being saying, we cannot refuse to look at the U.S.

market, and they may be quite interesting opportunity. We are not starving.

It means that I will manage, this is what I call the discipline, I will manage to only try to go on specific projects in the U.S. where I'm convinced that we can have a very good trajectory because, I mean, thanks to our references, thanks to our capacity, thanks to our history, to our partnering, international is more the same kind of answer.

We will pick the projects where we think we can add value to our clients, not at any price, not under any contractual condition and always with the right partner.

Okay. No.

It just sounds like...

Selectivity is the right word, I mean, for international activity outside Canada.

Okay. So just you have a bit of extra capacity and you're looking selectively at opportunities.

Okay, that's helpful. I just...

Yes. I just -- maybe I can come back.

I mean from your question to the last question of Yuri at the beginning of this session about our overhead and our support services capacity. What has been extremely interesting in this COVID crisis is that we just discovered that we can work better.

We can work better. We can do more with the same or we can do the same thing with less.

It's not only about being flexible, but we have suppressed a lot of transit time. It means that with the same capacity with the same size of our support centers, I mean, we can tackle new opportunities.

And this is what is quite interesting, and we have to get out from this COVID better than we entered. And we try to capitalize on everything we think has emerged as a good idea to organize ourselves.

Okay. That's helpful.

I don't know how much you can say about these two specific projects, but I'm just wondering if you had any comments on follow-up work at Bruce Power or for the sewage treatment plant in Winnipeg. Any color on either the timing or the scale of the additional contracts that you could win for those projects?

Yes. At Bruce Power, there are six reactors to be refurbished.

We are on the number one reactor. We have a preferred supplier agreement for the next reactors.

The conditions are changing. We have already secured for the steam generator, which is quite an interesting job, unit number three and four, which are the second and the third one.

We are negotiating at the moment with Bruce Power for the second reactor under which condition we could do it. Taking into account the learning curve that we have in nuclear, I remind we had a first unit in Darlington in 2018 and '19.

Then we just started up in 2020, two units, which are the second and the third one. Operationally, we are doing extremely well.

We are in advance of the schedule. In front of the schedule, more than 30 days in OPG, around 20 days in Bruce, so I'm extremely happy with the ramping up of our operational capacity, and we will look -- we will seek getting all the units coming down the line of Bruce OPG.

I mean we have a contract for the four units to be refurbished. Winnipeg, I mean what we have won is just the first part of a much bigger scheme.

And we just think that the fact to be here for the first contract on which I can say that mobilization is going quite well, will help us to be very well positioned for the rest of the job.

Okay. Great.

And just one last question for me on Lake Erie Connector, if there's any discussions around that project or maybe your expectations surrounding potential time lines and work related to that situation?

No discussion at Aecon for the moment with eventual clients, so nothing special to say on this one.

Would you be willing to put another project similar in size to Bermuda Airport on the balance sheet at this point in time given the improved outlook? Or would you need to divest that project first before doing another product in a similar size?

So usually, it's either David or myself will give an answer, but okay, I will give this to David, but I think we have exactly the same answers. Go on, David.

Well, yes, absolutely, we'd be open to that. There's already been a question about international BD, and this is one of the areas we're focused on.

We think the solution we bring to some of these smaller island airports is fairly unique, and we think we've got a good model that we can replicate elsewhere. And that's part of what our BD team is focused on.

Obviously, as we've already said, COVID put some of those conversations on ice for a while, but there are a few of those that are definitely ramping up again, and there's definitely interest in that model. So we would absolutely look to do that again.

In terms of Bermuda itself, at this point, there's no plans to monetize our investment there. We're more focused on getting the airport back to full operations and being a long-term partner with Bermuda.

That's very helpful. If Jean-Louis doesn't have anything else to add, the other question I wanted to ask was around your expectations in the M&A world.

With all the stimulus spending expected to happen, I'm just curious whether that's posing a material headwind at this point or whether you think that's an issue that can be worked through over the course of time?

Yes. It's funny market right now, because you've obviously got people who are coming through a period that's been impacted by COVID.

And as you say, there's also expectations around a stronger market going forward, but I think a lot of the things we're looking at are opportunities similar to ones we've already acted on where companies again to a point companies where they need a partner like Aecon to help them accelerate their growth. And that's certainly what we're looking for when we look at these opportunities, where we can bring some synergy to -- and some size and scale and our client relationships and everything else to help those companies grow quickly.

So they're looking at end markets growing, but they're also looking at their own ability to continue to keep pace with that from a balance sheet perspective, and so they view Aecon as a good long-term home for their business. So we think it is into our strengths as a buyer of strategic assets, and there's some short-term, I think, dislocation in terms of expectations, but nothing that I think would everlasting and we can't overcome.

Yes. Yes.

Welcome back. Just related to the port modernization project in Saint Vincent, could it be turned like a concession project over time?

No, I don't think so. Benoit, the project has been taken by the Caribbean Development Bank.

And they have a plan about it. I don't think there could be an evolution, and we are still in the frame of design and build a pure construction job in event at the moment.

Okay. And last one for me.

Just with respect to the opportunities in the U.S., you talk about the proximity versus BC. Could you talk a little bit about the strategy to source the employees assuming you're successful with those U.S.

opportunities?

This is exactly why we don't want to go alone to build a project in the United States, and we want to go with stronger American peer and local peers because the rules are different, the trade unions are different, the regulations are different. In terms of management, there's not that much of an issue.

I would say, a great proportion of our managers in Western Canada or Americans, so they can perfectly cross the border. In terms of trade, this is why we need partnering and this is what we have in mind.

You bought a small specialty nuclear business a couple of years back, just wondering, if you could comment firstly on how their expertise is helping your refurbishment activities in Canada? And secondly, whether you can leverage their relationships to pursue nuclear work down in the U.S.?

Yes. We are extremely happy with the expertise of works in nuclear and especially in nuclear welding.

We have been using them from the moment we acquired them, I mean, on Darlington, the first unit, and we had the excellent results. These loose results have been shared with our team at Bruce.

And we have decided in cooperation with our clients, I mean, OPG and Bruce, to create in Cambridge, where the Aecon nuclear is large, a welding center of excellence. And I can say that most of the teachers are coming from work.

So we are extremely happy, and we think it will help us to be even more productive and economically even better on the major component refurbishment for Bruce and OPG. This being said, I mean, United States is a huge market for nuclear.

Everybody now has realized that in front of the issues related with climate change and greenhouse gas emission, I mean, you cannot get rid of nuclear. You need to use nuclear to cope with the increase in the demand of electricity.

So there's a huge program. This program has been put on quite a severe hold, I mean, in March 2020 due to COVID, but it's just coming back now.

So, we are bidding who works on their normal kind of job, which is a few dozens million. But we will now try to internally joint venture our teams from the much bigger contract in Canada with works to try to go in United States towards projects above $100 million.

So we are on our way to deploy this strategy.

Very good. Thank you very much, Reign, and thank you all for your attendance.

As always, feel free to reach out for questions after the call, and have a great rest of the day. We'll speak to you next quarter.