Aecon Group Inc.

Thank you, Jason. Good morning, everyone, and thanks for participating in our year-end 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 we ask that analysts to keep one question before getting back into the queue to ensure others have a chance to contribute.

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 believes these expectations reflected are reasonable, we can give no assurance that the expectations will prove to be correct. And with that, I will now turn the call over to Dave.

Thank you, 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 year of $4 million was $334 million or 9% higher compared to 2020.

Adjusted EBITDA of $239 million, a margin of 6% compared to $265 million, a margin of 7.3% last year, and operating profit of $119 million compared to operating profit of $150 million in 2020. After adjusting the impact of amounts related to the Canada Emergency Wage Subsidy or CEWS reported in both years, adjusted EBITDA of $207 million and operating profit of $87 million for 2021 increased by $22 million and $17 million, respectively, compared to last year.

Diluted earnings per share for the year was $0.78 compared to diluted earnings per share of $1.29 in 2020, both amounts before adjusting for the impact of CEWS. Reporting backlog of $6.2 billion at the end of 2021 compared to backlog of $6.5 billion a year ago and $6 billion at the end of the prior quarter.

As announced yesterday, Aecon’s Board of Directors approved an increase to the quarterly dividend with this being the 10th increase in the last 11 years. The quarterly dividend will increase to $0.185 per share, or $0.175 per share previously, with the first increased quarterly payment to occur on April 4, 2022.

Now looking at results by segment. Turning to Slide 4, construction revenue of $3.9 billion in 2021 was $301 million, or 8% higher than last year.

Revenue is higher in nuclear, driven primarily by an increase volume and refurbishment work in Ontario, and in utilities driven by gas distribution and telecommunications work. Partially offsetting these increases with lower revenue and industrial operations, driven by decreased activity on mainline pipeline work in Western Canada and in civil operations driven by lower roadbuilding construction and foundations work.

Adjusted EBITDA in the Construction segment of $212 million, a margin of 5.4% compared to $262 million, a margin of 7.2% in 2020. After adjusting for CEWS in both periods, adjusted EBITDA of $180 million decreased by $2 million compared to 2020, primarily driven by low volume and gross profit margin in civil, urban transportation solutions and industrial.

These decreases will largely offset by higher volume and gross profit margin in nuclear and utilities operations. New contract awards in 2021 totaled $3.6 billion compared to $3.3 billion in the prior year.

The construction backlog at the end of 2021 was $6.1 billion compared to $6.4 billion at the end of 2020. Turning to Slide 5.

Construction revenue for the year was $69 million compared to $98 million in 2020. This lower year-over-year revenue was primarily due to decreased construction activity related to the Bermuda International Airport Redevelopment Project, which was completed in the fourth quarter of 2020.

This decrease was partially offset by an increase in airport operations as commercial flight has continued to recover the more severe impacts of COVID-19 on passenger volume experienced in 2020. Adjusted EBITDA in the Concessions segment of $64 million increased by $22 million versus 2020, primarily due to results Bermuda Airport.

Turning to Slide 6. As of the year-end, Aecon had a committed revolving credit facility of $600 million, of which $23 million withdrawn and $3 million utilized for letters of credit, as well as the $900 million facility provided by EDC to support letters of credit.

Aecon’s committed facilities for both working capital and electric credit requirements totaled $1.5 billion. Aecon has no debt or credit facility maturities until the second half of 2023, except equipment and property loans and leases in the normal course.

As of December 31, Aecon was in compliance with all debt covenants related to its credit facility. Capital expenditures in 2022 are expected to be similar to 2021.

At this point, I’ll turn the call over to Jean-Louis.

Thank you, Dave. Turning now to Slide 7, despite the ongoing impacts of COVID-19 on Aecon’s operations, we continue to deliver solid results in 2021.

Aecon’s balanced and diversified portfolio and agile culture continue to be significant strength and are well suited to the market opportunities across Canada today. The Construction segment is aligned to the significant infrastructure investment commitments by all levels of government across Canada and on a select basis internationally, as well as by the private sector across the market sector in which we participate.

The Concession segment is purpose built for the large scale infrastructure projects being developed and brought to market by governments with the P3 and Alliance model and he’s also targeting innovative development and private finance opportunities in power, clean tech and other related markets, as well as participating as a concessioner of the five P3 projects identified on this slide. Turning to Slide 8.

Backlog recurring revenue program and the pipeline of bidding opportunities for new work remain at strong levels across Canada. New awards of $3.7 billion in 2021 exceeded 2020 by $413 million.

And early 2022, as already seen a number of new projects awarded, but not included in a year-end backlog, including the Interstate-90 / State Road-18 Interchange Improvements project in Washington State and the Annacis Water Supply Tunnel project in British Columbia. An Aecon partnership was also selected as a preferred proponent of the Montreal-Trudeau Airport REM Station in Québec.

And most recently, an Aecon consortium was named First Negotiations Proponent for the transformative GO Rail Expansion, On-Corridor Works project in Ontario and there are collaborative model with Infrastructure Ontario and Metrolinx. This potential award would be the largest project undertaken by Aecon in its history.

This award clearly demonstrates a strong demand for Aecon services for projects of all sizes and across our operating sectors and geographic areas of focus. Aecon is also prequalified on a number of large project bids to be awarded over the next two years, including several procurements on the Ontario subway line, and most recently, the Scarborough subway extension station raised and systems.

We expect demand for our services to remain healthy for the foreseeable future, as the federal government and provincial governments across Canada have identified investment in infrastructure as a key source of stimulus as part of the economic recovery plan and an essential part of the transition to a net zero carbon economy through more sustainable infrastructure. Recurring revenue was up 28% in 2021 versus last year, primarily for growth in utilities operation.

Recurring revenue is expected to continue to grow driven by demand in the utility sector and the Concession segment is expected to see airport traffic in Bermuda continue its recovery during 2022 from the impact of the COVID 19 pandemic. I would also like to formally welcome our new employees from Pacific Electrical Installations or PEI, which got acquired in November 2021.

PEI is the largest independent full-service powerline contractor in British Columbia, providing maintenance, construction and emergency restoration services for critical electrical infrastructure is the majority and the master service agreements and recurring revenue arrangements. PEI is the designated designated powerline service provider for BC Hydro for the Lower Mainland South and Okanagan regions, and also works with a variety of private sector customers.

Turning now to Slide 9, we are continuing our drive to be an industry leader in sustainability. Last year, we announced our GHG reduction target of 30% by 2030, and net zero by 2050.

In 2021, we focused on operationalizing these targets by integrating new technologies to reduce emissions across our portfolio, and we’re the first construction company in Canada to try an electric mini excavator. We also trialed technologies such as battery power tools, solar power equipment and battery packs to replace diesel use on our project sites.

We further cemented our ESG commitments by becoming the first Canadian construction company to incorporate a sustainability-linked credit facility tied to ESG objectives. We plan to release our next sustainability report in April 2022, and look forward to highlighting our achievements and opportunities as we continue to focus on building what matters to enable future generations to thrive.

Turning to Slide 10, the trends that I’ve spoken to already in terms of the stress of the construction market in Canada, both in the public and private sector, continue to be positive and well aligned to Aecon diversified construction sector. In the Concession segment, in addition to expecting continued recovery in travel through the Bermuda Airport during 2022, there are a number of opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months, including is the U..S and an innovative project with private sector clients that support a collective focus on sustainability and the transition to a net zero economy.

The overall outlook for 2022 is positive as construction continues on a number of projects that ramps up in 2020 and 2021; as a strong level of backlog and new award during 2021; as a strong demand environment for Aecon services, including recurring revenue programs. Thank you.

We’ll now turn the call over to analyst for questions.

Thank you, and good morning, everyone.

Good morning, Yuri.

I don’t know – good morning, guys. I don’t know who wants to take this one.

But you mentioned the outlook for 2022 is positive. But I struggled to see how the Construction segment EBITDA grows this year, your 12-month backlog is down about 5% and the margin comps are really tough, at least through Q3, especially in light of the weakness we saw in the fourth quarter.

So how do we get to growth in the Construction segment in 2022?

Yuri, I will take this one. I would add two vectors to answer your question.

The first one is about the quality of our backlog. So as you know, and as I’ve been repeating it, the quality of backlog is not an issue.

The issue is about selectivity of projects and it’s about going on derisking our portfolio, our backlog, as you have seen, all the indicators of what we decided to do go in the right direction. I mean, indicator is about the kind of project decreasing the part of lump sum and fix price to unit price about the size of project you have not seen that from September 2018.

I mean, we have not taken a project superior to $1 billion, because we just want to go on with the one at the moment. We are more and more diversified.

Geographically, our sectors, I mean are quite stable and equally weighted. And our backlog exchange between $6 billion and $7 billion.

So no real issue with the quality. It’s a problem of selectivity and quality of backlog and contracting more than a – we’re not doing extreme swing to the left or to the right.

I mean, it’s – we have decided quietly, but firmly. I mean, we are shaping the activity of tomorrow, knowing and convinced that this will drive better profitability.

If I take, for example, the [indiscernible] On-Corridor project, I mean, it’s transformational for Ontario, but also for Metrolinx and Infrastructure Ontario and, of course, for Aecon. I mean, the – it’s – when you calculate about what share a car can add, I mean, it’s about to works around $3 billion and operation, we have 28% of operation for 25 years between 2024 up to 2050.

I mean, the cumulative value is around $6 billion. It’s all collaborative.

It will begin with the development phase of two years where we will with the client sit together what will be the service level for the train? What strategy are we going to use in line with our offer?

And from this director, what kind of works? How are we going to do this?

What will be the price? I mean, it’s a totally transformative way for Aecon to work and this is a way to drive profit up.

My second answer – my second vector will be about execution. Execution is key.

We are extremely happy with our continuous improvement program. A lot of enthusiasm within the company on most of our job site, I will give you an example.

You can see, I mean, on the Investor presentation, the picture is about Gordie Howe Bridge, and you can see the two pillars in the Canadian side. [indiscernible] you just cast segment by segment, we have something like 75 segments to do.

We were stuck at around 14 days per segment, then we implemented our continuous improvement. We went rather quickly to 10, then seven, and a few days ago, we reach five days per segment.

This is profitability. It goes directly to the bottom line.

We are investing a lot in our Aecon Liberty [ph] Project Management Group. I mean, all this is important because this is money at the end of the day.

And last but not least, I mean, we have thoughtfully reorganized our procurement and we are much, much more efficient. So this is why we say that construction, I mean, is not a good trend.

Yuri, if I could just answer that and you can tell from Jean-Louis answer, the strong focus on profit growth returned to revenue. I think if you look at the comparison of 2020 to 2019, where we came into 2020 with exactly the same amount of backlog to be worked on over the next 12 months as we had in 2019.

And yet we still grew by 9% top line coming into this year. So it’s really driven by recurring revenue.

It’s driven by the level of new awards within the year, and we’ve already had a significant number of wins early this year. If they’d have happened a month earlier that year-end position in backlog that you’re looking at, which is very similar to the position at the end of last year.

It would look very different. So we’re not too worried about the revenue side.

I mean, as Jean-Louis spoken about, the big focus is on ensuring that revenue growth is possible.

Okay. So the margin weakness – sorry, that the margin weakness that we saw in the fourth quarter, you don’t see that spilling into 2022?

That’s my last question. I’ll hop off.

Yeah. No, I mean, if you look at the fourth quarter, I mean, we’re really talking about impacts confined to civil and urban transportation space, small handful of projects, where we’ve come through pretty tough operating environment, the resurgence of Omicron late in 2021, obviously, supply chain disruptions, and we’ve made a lot of progress in settling some significant claims in the quarter.

And the impact of all that kind of coming together, the one particular issue is always significant out of those factors, but combined, caused the numbers to be little lower in Q4, but we don’t see that moving over. Obviously, there was some Omicron impact early in January, but went through that now very much back to normal from a COVID perspective, something we’ve been living with for two years, but that all across initial wave did have some impact for a space of about a month or so.

And now it is a supply chain issue. It’s always when you get some shifts, sudden disruption.

We’ve been living with the impacts of supply chain now for so long enough, but all our new work that you did some contractual arrangements we’re able to factor that in. So we don’t expect that to be something that impacts our numbers going forward.

Thank you.

[indiscernible]

Good morning. I wanted to continue on with the construction margin question.

Maybe just help us out understand what the biggest drivers were? How much was Omicron impact?

And then as far as the civil urgent urban transportation projects, you talked about claims adjustments. Is there any – could there be any positive adjustment sauce at this and in later quarters?

Yeah. So taking those together, I mean, if you look overall, I mean, put this into context of the full year, our Construction segment of the full year.

So on a like-for-like basis, excluding CEWS, saw progression from 2020, which – in an environment again, which was subject to long in 4Q. So we think the construction segment across the year actually performed well.

With Omicron, as I said earlier, if you look at what people are looking at EBITDA reports of just over $60 million versus consensus of just over $80 million, I would say the fact that I talked about in terms of Omicron supply chain and projects, roughly a very similar kind of impacts in terms of that inference.

Maybe I can add work on Omicron. Omicron has [indiscernible] economy from December to the end of January.

As we all know, it was not as strong as the Delta variant. But it was spread over, I mean, much quicker.

And we add, I mean, from December, in some cases, more than 50% of our people isolated. I mean, at all level of the company, I got Omicron with very mild symptom, good ad to isolate myself for seven days.

And on all our jobs, I mean, it was like this. So yes, it had affected us on the good side of it.

I mean, we are closing little by little all our emergency centers for COVID because the situation is just getting better and better, extremely quickly.

And then, do you get back to pre-pandemic levels as far as margins in 2022?

Yeah, we’re actually – and again, going back to kind of pre-COVID days, as you say, looking at 2019, and this by Construction segment because as you know, the Concession segment will continue to be a ramp-up as traffic recovers. Looking at the Construction segment alone, yet, we do expect to get back to pre-pandemic levels for sure.

I’ll leave it there. Thank you.

Yes. Thank you very much.

Good morning. So, David, just wanted to come back on the question for margin on the Construction segment in 2020.

Do you mention for sure would go back to pre-pandemic level, but would it be achievable to go beyond the 6% level? I know you don’t like to provide – or you don’t provide specific guidance, but looking at consensus with the actual revenue target and the visibility that you have in the backlog, I was just wondering if you could provide a bit more color on the potential for margin construction, please?

Yeah, no problem, Jean. I mean, you partly answered your own question by saying we don’t give specific margin guidance.

But I think if you go back to Jean-Louis comments at the beginning in answer to the first question, the focus is very much on the margin profiles, the work we’re bidding, the execution of that work, and we feel pretty confident about the mix of work we have for 2022. We feel very confident about the progress we’re making on productivity and execution.

So, all subject to any other surprises, we think we’ve dealt with everything we know about right now. But we’re in an environment where things change quickly but absent any surprises and yes.

Okay, that’s great color. And then moving on the free cash flow standpoint, should we expect a positive reversal of working capital in 2022, given the significant consumption we saw in 2021, or the ramp-up of key growth [ph] project will continue to consume some working capital?

Yeah. So, we do expect – there’s always some seasonality in our cash flow, where we normally see no winding of working capital generation of cash flow in Q4 and Q1, and sometimes, it’s more Q4 and less Q1.

And sometimes, it’s the reverse. We expect the reverse this time around.

The biggest impact in Q4 was the issue we disclosed at the end of Q3 around the Coastal GasLink Pipeline and the impact that had on our cash flow, as we’ve noted, we’ve made a lot of progress on that front. So that will help in Q1 2022, as we’ve formalized those agreements.

So that will benefit the first quarter where the normal seasonal unwinding. So we should start to see that position improve in 2022 and you get back to a more normal cash flow profile that we see historically.

Okay, very helpful. And maybe one last for me.

Considering the option [ph] for 2022 looks quite positive, you increased your dividend once again. I just wanted to pick your brain on your preference for M&A versus share buyback in the current context with the share price that is unjustifiably being furnished this morning?

Yeah, I mean, obviously, dividend has been focused for a long period of time, over a decade, and we continue to see that as a predictable and consistent approach that’s focus on that side of things. We do see opportunities on the M&A side and we are focused on looking at where we can continue to grow the business, which already talked about a focus on recurring revenue and continuing to look at a profile of the type of work we do.

So we’re looking for M&A opportunities that help us achieve that.

Thank you very much.

Thank you, Jean.

Thanks, and good morning, everybody. Would you mind discussing more the collaborative nature of the GO Rail Expansion project that you recently secured?

And how we should think about how the development phase will transpire over the next few years?

Yes, I will do it, Frederic. We have been advocating and working with all our clients about changing the contracting motive of the big and complex projects.

I mean, basically speaking it estimating those major complex projects, especially the one where the system integration on a lump sum price is extremely difficult. So we have been exploring all of these ways with our clients, to say, we need to define much more together what we want to do, and what is going to be the cost of it.

And this is what we call the development phase. So we have been chosen on the On-Corridor Expansion program.

I would say we have been chosen on the capacity of our team. I would say, the way we have explained and put on the table the various strategy for service operation during the 25 years and hours of service operation, I mean, could after drive the CapEx for Metrolinx and Infrastructure Ontario.

Now that we have been chosen, I mean, during two years, in addition to do some early works, I mean that will happen and that are important to enable, when we begin after the two years of the made works, I mean, to go quicker and to go better. I mean, during some two years, we are going to finalize the operation strategy with Metrolinx and from this finalize, what are the infrastructure that are necessary and the equipment that are necessary.

So this and together, we will define what can be the budget for this. And we will work with our clients on a cost-plus basis during execution with a target client.

So, at this stage, we are negotiating with our clients. I would say the detail ruler of the project and then we will begin with the development phases.

So it’s what we call progressive design build is what we call a collaboration. And we are extremely happy, I mean that Aecon has been a three-year longest first fit.

And to have worn these first fit, I mean, we are extremely happy because these are the projects of the future. The risk profile is totally different as you can imagine.

Okay, thanks for that additional colors, Jean-Louis. Second question relates to sort of the progress you are making entering the U.S.

markets. I know it’s been a marker identified as an opportunity a few years back, but you won a recent contract in Washington State, and then you’re shortlisted for another one in Michigan.

And I don’t think it’s a coincidence that these states are bordering Canada. But just wanted to know, maybe, is this the culmination of many years of business development?

Or have these opportunities kind of presented themselves more recently?

Yeah. You probably remember what I told you.

I mean, a few months ago, we cannot ignore United States. Although we know there’s a huge pipeline for infrastructure in Canada, when we have a neighbor of this size, plus the new infrastructure bill.

So we have been working a lot during the last four months. What we have discovered is that it’s not only about roads and bridges, it’s also a lot about activities about network of optic communication, about increased capacity.

And so with those two vectors, we will go, I would say prudently. But steadily, we are going to enter the U.S.

market. In terms of civil, we have decided that we will enter this market from our bases in Vancouver and go down the West Coast progressively.

So this is why the first job we took it in Washington State, it’s a relatively small job. It’s a $125 million.

It’s a job I mean, extremely classical for Aecon, which is a bread-and-butter that we do, I mean, on all our divisions. We have studied extremely carefully.

We seek we have with us a very good team of local companies and designer. And then we will expand on job maybe a little bigger, maybe different kinds of association with bigger companies and go down the West Coast to go at least to California, where they’re at – it’s probably the one of the biggest part of this infrastructure bill, there’s a lot to do.

So this is a plan in civil. In utilities, we are looking at the market, looking at the alliances we can do.

But as always, I mean, for these two examples, it’s what I have always told we’re not going to add a new country and add it to a new activity. I mean, we have a new country.

Okay. But we do it on, I would say, our core businesses, so that we don’t have any surprise.

Thanks a lot. I appreciate it.

Yeah, thanks, folks. Good morning.

Maybe turning back to the margin question just a little bit, just trying to understand a little bit of disclosure on Q4. They’ve just what was a huge contribution in Q4?

And you didn’t call it out, but I got to expect that there’s got to be some revenue that you’ve probably lost in the quarter just due to Omicron. Just trying to get a sense of what the normalized margin would have been for the quarter?

Yeah, this CEWS impact was around $4 million in Q4. So that’s that piece.

I mean, turn the revenue, as Jean-Louis said, we had some impacts through December. I wouldn’t say the revenue impact was hugely significant, it was more of a productivity impact.

The impact is through December. So revenue, maybe kind of in the $20 million range, but not that significant overall revenue, it’s just tougher to schedule work and get the right crews with the right number of people.

So it was a bit more of a scramble in December in terms of availability workforce.

Okay. And so just I guess what I’m also trying to understand is, as we go into 2022, I mean, I think the first thing I’m assuming is that there’ll be no more huge payments next year.

And if we think about the, call it, the $32 million of queues that we’re in – that we’re in earnings this year, should we be thinking about that backing out that $32 million as a contribution and kind of – but then I think you also mentioned, thinking about 2022 may be kind of, like a pre-COVID year, I’m just trying to – so is the assumption that you’ll overcome the loss of the $32 million and margin type of thing. Is that the right way to to be thinking about this directionally?

Yeah, so you right. The CEWS program has ended now.

So there won’t be any contribution from that in 2022. But we’ve obviously been impacted by COVID throughout the year, including early in the year, including impacts on Bermuda as well, obviously, we expect to see recovering through 2022.

So when we look at CEWS and COVID impacts together, assuming we continue in the operating room right now, which is really having no impact on the business in terms of the current COVID situation. Yeah, we think those two kind of offset and allow us to get back to kind of a pre-COVID type of margin performance.

Okay, great. And then just to make sure, too, I know, in previous years, you’ve sort of talked about the fact that just the first half of the year might not be as substantially down as the second half just because of the nature of some of the work.

But we should still be thinking that there will be some seasonality impacts into Q1, in Q2, again in 2022, it that also fair to think?

That’s right. There’s Q3, Q4, typically the highest revenue quarters.

That has moderated to some extent over time, but it’s still definitely the case. And don’t expect that seasonality to be any different this year, really.

All right. That’s helpful.

Thanks, guys.

Great, thank you. Good morning.

Maybe just quickly on the Coastal GasLink project here, obviously, noticed the change in language in the disclosure, sounds pretty, pretty positive here. I’m just trying to get a sense from you in terms of how, I guess, comfortable that you’re feeling in terms of derisking the free cash flow exposure there on that project, if possible, please?

Thank you.

Maybe I begin about CGL. CGL is a very complex project, by its nature, but also by massive change in all the regulation about erosion and sedimentation control.

So it’s not a new problem at CGL. I think everybody is aware of the same kind of issue that have been encountered in Transmountain in terms of cost overrun, in terms of schedule being pushed on to the right.

So those are complex projects. We have developed at the highest level with our clients very good relation based on trust and transparency.

To make the best out of this difficult situation, we are enduring the last quarter. We have reached some agreements with our clients, all those agreement have been formalized during Q1.

So they have just six of the cash position for Aecon. That in addition, we have begin an arbitration to decide later on what is going to be the final value for this project.

In between, we are also working with our client to try to settle some list of [indiscernible] issues, because arbitration is diamond when consuming. So we are also advancing well on those issues.

So this is at the moment where we are on an operational way at CGL. Maybe, David, you can take more financial part of it.

Yeah, I mean, I think just building on what Jean-Louis said, obviously, the disclosure at the end of Q3 was focused on cash flow. And we’ve obviously made – it’s disclosed now.

Jean-Louis is kind of progress on that front. We’ve obviously been working on this project for quite a period of time now.

And we’ve reflected the challenges we’ve had on the project. And obviously, the contractor is facing similar challenges.

We’ve reflected that in how we’ve positioned the project. And so from that perspective, that was never the number one concern, it was really around cash flow, and we’ve made good progress on that front.

Okay, great. That’s helpful.

And maybe just also, I guess, a big picture question for Jean-Louis here. Just in terms of the infrastructure spending potential, let’s call it in Canada, I think people largely were expecting a meaningful tick up post-COVID.

I guess just based on what you’re seeing now, like, where are we in terms of that progress from a standing perspective for 2022? Are we still in the early days of seeing the full potential of government funding or like it’s quite mature at this point?

You probably remember, I mean, I told you more than one year ago. I don’t believe in shovel ready projects and infrastructure.

So the fact you said on Friday, we were going to invest a lot on infrastructure. It doesn’t happen on Monday morning.

So yes, I just give an example. For example, in Toronto, there’s been a lot of works done industry, rehabilitation of bridges during the COVID, because there was no more trucks and no more cars, because everybody was at all so we’d have a loaders to work there.

But mainly, the program on which our teams at the moment are preparing themselves the first week, our first week that we have been knowing and we knew they were on our radar for the last two to three years, we were ready for this. So I would say, it’s steady, the pipeline infrastructure is strong.

Is there a strong correlation with COVID and with recovery plan, maybe not that much, which is not the main driver. The main driver is that you have something like half a million new comment in Canada and lose people, I mean, are smart immigrants, they need the better highways and the better telecommunications, they need the better source of powers, better source of communication, and all these drives what we are seeing at the moment from the backlog to come back to something extremely positive for us.

I mean, you have noticed this $680 million in recurring revenue. I mean, telecommunication is booming, I mean, fiber to the home to rural places, alternative energy or all sorts of – we are extremely happy to be well positioned.

I was this morning reviewing with one of my operational leader above Bartek.[ph] You probably remember this company that we acquired a few months ago. So now that it is well integration.

You can only imagine the prospect to persuade since you was, I mean, we are now working extremely strongly with Hydro One on the GTA. We working with Hydro BC.

We’re working in Fort McMurray with some private clients. We’re working with Manitoba Hydro.

I mean, there’s a boom, which, of course, I mean, maybe partly a sequence of COVID, but it’s not the main driver. So the main driver is that Canada is growing and there’s a need and that we the opposite.

Okay, great. Awesome.

That’s super helpful color. That’s it for me.

Thank you

Hi, good morning. Just wanted to start off on the nuclear side, there’s a competitor of yours recently ended a joint venture partnership, those focused on nuclear decommissioning work in the U.S.

I know you can’t comment on that partnership specifically, but how does this event impact or inform your view of the U.S. nuclear market?

So maybe I will begin with what are we doing on the nuclear, I mean, at the moment in Canada. We are full speed ahead with the refurbishment of the offset two power plant.

I mean, OPG, we are now working with a second reactor. We are extremely happy with the ramping up, with the lessons learned from the first one to the second one.

We are early few thousands of day on the schedule. Our client is delighted with our work.

On Bruce Power that we are working on the first reactor. We have added to our backlog the second reactor.

There are obviously four to come. There are up to three keep generator.

So this is good. Our teams are getting better and better.

Second point of importance. Small modular reactor, so you will have, Naji, that OPG have decided about this technology partner was going to OPG.

We are part of the team with OPG and GE as a constructor and an installer. We are extremely happy with this.

I mean, SMR is 300 megawatts, which is the right side. I mean it’s of course carbon-free energy.

I mean, the debate is close on this. In terms of safety, it was new reactors, following Fukushima are getting much better.

I just remind you that passively cooled for a minimum of seven days with a power shortage and without operator action, I mean, it’s totally innovative. We are extremely happy to work on this.

United States, we have acquired three years ago as more companies specialize in Wendy [ph]t hat we are using in Canada and United States. I have to say that during the last two years because of COVID and because of nuclear power plants, we’re rather reluctant to let enter within the plant.

People working on CapEx and mixing with people working on operation, we have not seen a lot of activity during the last two years. But it’s coming back and it’s coming back rather quickly.

I cannot comment on the pending of the JV, particularly all about dismantling existing demands. And so far, we are not in this business in the United States.

I guess you’re also saying maybe that’s not a business you want to be in? No, that’s not the market that you’re going after at the moment?

And in United States, we’re not pursuing this with evidently when the time for bickering [ph] will come. I mean, bickering is totally is our city suppliers that we know perfectly.

And we are working in collaboration within adopt future packaging, but entering into mega dismantling projects in the United States is not part of our strategy.

Okay, understood. That’s great.

Just one last quick question. Obviously, you mentioned this in your opening remarks and in the MD&A, pursuing more transition or sustainability-related projects and opportunities.

Can you just provide a bit more detail on that and perhaps quantify what the market opportunity is for you in Canada?

It’s not easy to quantify, but the wave is coming definitely. I mean is over, how do we look at ESG?

I mean, first of all, as a company we are a citizen, and we have to take care of our planet. So this is why we are the first construction company to have set up targets on greenhouse gas emission reduction from 2030 and 2050.

So, I have to admit, I mean we have a plan and we know perfectly how we are going to reduce by 30% for 2030. We don’t have really a clue about Net Zero in 2015, justbecause we are working on it.

The second part, I mean, how to look at ESG as a business, I mean definitely you are here new avenues of growth coming from everywhere, mainly the energy sector, I mean, electrical sector, alternate energy. So you have probably noticed that most of our trucking acquisition during the last year was about this.

And we are extremely focused on this new stream of businesses. So much that we have decided to create a single point of entry at Aecon in order to help our clients with their ambitious program regarding sustainability.

The single point of entry will allow us to be more agile in our first suites, more drawing in our solution and being able to share the worlds between all the sectors at Aecon from a centralized point of view.

I mean, not GTA. The perfect example would be the On-Corridor project area project and GO Rail sold to.

I mean, clearly, legislation is a rail system in the GTA to replace diesel. These are the types of capital allocation decisions have been made across all levels of government, with private clients, and we’re right in the middle of all activities.

So it will drive growth and opportunity here for the foreseeable future. We don’t see that trend going anywhere other than continuing over this long period of time.

Okay, thank you for those details.

Thank you. Good morning.

I was wondering if you can provide an update on traffic levels at the Bermuda Airport through the first part of the year here in 2022. And maybe to put that into some context, just give us a sense for how that’s evolved from what you would have seen in the fourth quarter?

Yeah. So overall, for 2021, traffic was up compared to previous year by about 50%, but it was still only around 30% in 2019 levels.

We do see that this is based on tracking all the forecasts that are out there in the market plus our own knowledge and the plans of the airlines and what’s going on in terms of on the ground in Bermuda. We do see that growing to about 60% in 2019 levels on average over 2022.

There’s a fair bit seasonality to that. Q1 is always the slowest quarter for traffic in and out Bermuda.

So clearly, Q4 was kind of impacted in the last month December, because of Omicron. January 2022, the same kind of impact, things are now picking up again.

So I think Q1 won’t be too dissimilar to Q4. And then we’ve through the course of the year, it starts to ramp up quite nicely.

Okay, thanks, Dave. And then one follow-up.

You were asked earlier about changes in non-cash working capital. And I think most of the comments you made were around sort of a possible difference in the seasonality Q4 versus Q1 reversal.

So it sounds like you expect more of a reversal in Q1 in 2022 as opposed to what you would have historically seen in Q4. I’m just wondering for the full year of 2022 with, it sounds like an expectation of some revenue growth in 2022.

How do we think about the full year for changes in non-cash working capital?

Yeah, I think overall for the year, we expect working capital to be fairly neutral across the year. As you said, some of that is due to growth and the profile of projects.

But overall –and all of this can be thrown off by timing close to the end of the year, in terms of where your answers are ramping up on certain projects and things like that. But all things being equal based on what we’ve seen today, we expect it to be fairly neutral in 2022.

Okay, thanks for that.

Great. Thanks and good morning.

Just I guess looking forward, I think there’s a bit of commentary shared earlier on your outlook for 2022 and some of the impacts that COVID had through late last year. And I guess as we think about the outlook, do you think you’ve kind of in the provisioning that you did going through Q4, taking into account some of the COVID risk earlier in the year and maybe some of the disruptions?

Like just trying to figure out, they’re still larger negotiation, the larger projects where there’s still discussions around recovery and how your server is managing that for the kind of the full year looking forward?

Yeah. No, I think in terms of those Q4 impacts, we felt that we dealt with those in Q4, so we don’t expect those to carry forward into into 2022.

Okay. But I guess in terms of…

Sorry, sorry. Sabahat, sorry, other than the comments we made earlier, which is the Omicron impact continued through January.

January, obviously, is a pretty slow month for us anyway, from a construction perspective in Canada, but that would be the only thing that kind of carries into the first month of this year. But everything else, we feel we dealt with in Q4.

Okay, great. And then I think you noted in the press release in the call around just opportunities for concessions, like outside of Bermuda.

I guess, is that something that’s sort of opportunistic? Or are you actively looking to build out that Concession segment and add more assets to sort of get understanding of what that is on the priority list?

And is that something you see only compared to the opportunities, maybe on M&A or buybacks isn’t that that big of a kind of a focus for you guys?

Generally speaking, I will begin on my side. I mean, our strategy is to work together Concession and Construction segments.

We’re not going to invest in brownfield assets only to operate it. We’ve just seen that our job is to develop a project, is to engineer a project, is to finance it, is to build it and to operate.

And we are extremely interested in following this model. And I have to say that all the sustainability ways that I was talking about, is giving us new opportunities with private sectors, with private companies about all those alternate energy issues.

So this is generally speaking, yes, we want to pursue and we already said this. Maybe David, you can add it along.

Yeah, I mean, very much we’re focusing on those opportunities to make some of these things that we’re working on through government procurement. So Ontario line subway is a P3 opportunity.

Paper trail improvements in Calgary, the P3 opportunity and our constructions group. Sometimes it’s investing equity, but it’s always around that long-term revenue stream.

And, again, On-Corridor would be a perfect example of where there’s a 25-year operations and maintenance piece attached to that opportunity that our concessions group is heavily involved in, and will be participating in throughout the board and lifespan. So that’s a big focus for us.

And we’re also looking at opportunities to replicate what we’ve done in Bermuda. There are some very interesting discussions going on around that space that these take time to come to fruition.

And obviously, with all the impacts on air travel over the last little while, it’s been kind of a pullback. But those discussions would backup the ring again, and we’re looking across the board for how we can continue to evolve that concessions group and there’s quite a number of very interesting opportunities for us to do that.

Okay, great. Thanks very much for the color.

Super. Thanks very much everybody for attending today and as always, feel free to reach out with any further questions.

We look forward to connecting again next quarter. Have a great day.