Aecon Group Inc.

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

This is Adam Borgatti speaking. Joining me are Jean-Louis Servranckx, President and CEO; Jerome Julier, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President, Finance.

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

As noted on Slide 2 of the presentation, listeners are reminded the information we are sharing with you today includes forward-looking statements and these statements are subject based on assumptions and subject to significant risks and uncertainties. Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct.

And with that, I’ll hand the call over to Jerome.

Thanks, Adam and good morning everyone. I am now going to speak to Aecon’s consolidated results, review the results by our segments and address the Aecon’s financial position before turning the call over to Jean-Louis.

Consistent with prior quarters, we provided additional information to help clarify the underlying results, excluding the impacts from the fixed price legacy projects and divestitures. Detailed direct tables are included in Slides 15 through 17 in the conference call presentation.

Let’s turn now to Slide 3. On a reported basis, revenue for the 3 months ended March 31, 2025 was $1.1 billion, $215 million or 25% higher compared to the same period in 2024.

Higher revenue was driven by increases in nuclear, industrial, utilities and civil operations, just partially offset by lower revenue in Urban Transportation Solutions. Adjusted EBITDA of $4 million compared to $33 million last year, and operating loss of $41 million in the quarter compared to an operating loss of $4 million last year.

Adjusted EBITDA and operating profit in the first quarter were largely impacted by negative gross profit of $29 million on a fixed price legacy project. Additionally, results were further impacted by weaker gross profit in civil operations in Western Canada and a decline in gross profit earned due to lower margins on LRT projects and Urban Transportation Solutions as these projects progress towards substantial completion.

Excluding the impacts from the legacy project, as adjusted revenue for the first 3 months ended March 31, 2025 of $1 billion compares to $772 million in the same period last year and adjusted EBITDA of $32 million compared to $32 million last year, essentially flat. Adjusted diluted loss per share in the quarter of $0.54 compared to a loss of $0.14 last year.

Aecon reported backlog of $9.7 billion at the end of the first quarter. This is a significant accomplishment from the operating teams as Aecon now stands at the highest reported backlog in its history.

New contract awards of $4.1 billion were booked in the quarter, largely from the target price contracts, Scarborough Subway Extension project and additional refurbishment work at the nuclear – the Pickering Nuclear Generating Station. Now looking at results by segment and turning to Slide 4.

Construction revenue of $1.1 billion in the first quarter was $214 million or 25% higher than the same period last year. Revenue is higher in nuclear operations, driven by an increased volume of refurbishment work in nuclear generating stations in Ontario and the United States and industrial operations primarily from the higher volume of steel construction work and industrial facilities in Western Canada.

Revenue is also higher in utility operations from an increased volume of electrical transmission work in the U.S., which benefited from our acquisition of Xtreme in the second half of 2024 and from an increase in battery energy storage system work and in civil operations primarily from the higher volume of foundations work. Partially offsetting these increases was lower revenue in Urban Transportation Solutions, largely from a lower volume of key work in Ontario and Quebec as three projects near completion.

On an as-adjusted basis, construction revenue was $1 billion compared to $770 million in the same period last year, representing a 34% increase. As noted, the new contract awards of $4.1 billion in the first quarter of 2025 were exceptionally high and compared to $960 million in the same period last year.

Turning now to Slide 5. Adjusted EBITDA of negative $1 million compared to $28 million last year and operating loss of $30 million compared to an operating profit of $7 million last year.

As previously mentioned, adjusted EBITDA in the first quarter was largely impacted by a negative gross profit of $29 million on fixed price legacy project. On an as-adjusted basis, adjusted EBITDA for the 3 months ended March 31, 2025 of $27 million compared to $28 million in the same period in 2024.

Operating profit in the quarter was similarly impacted by the negative gross profit of $29 million on a fixed legacy project as well as roughly $8 million of M&A related amortization costs. Absent these effects, operating profit in the quarter was effectively flat.

Turning to Slide 6. Concessions revenue for the first quarter was $2 million compared to $3 million in same period last year.

Adjusted EBITDA in the Concessions segment of $13 million in the quarter compared to $80 million last year and operating loss of $2 million compared to an operating profit of $1 million last year. On Slide 7, we brought this all together with the as-adjusted information excludes the impact of legacy projects and divestitures to provide insight into the underlying performance of the overall business.

On an as-adjusted basis, revenue for the trailing 12 months period ending March 31 was $4.4 billion compared to $3.8 billion in the same period last year, adjusted EBITDA was $349 million in the trailing 12-month period compared to $353 million in the period prior. For the Construction segment, on an as-adjusted basis, adjusted EBITDA was $307 million for the trailing 12-month period, representing a 7% margin.

As-adjusted EBITDA margin was impacted by lower fees earned from the earlier stages of collaborative projects as these approach the respective construction phases, the margin dilutive impact of performance in civil operations in Western Canada and the ramping up of projects with more appropriate contract execution structures. Turning to Slide 8.

At the end of the first quarter, Aecon held cash and cash equivalents of $38 million excluding $348 million of cash held in joint operations. In addition, at March 31, 2025, Aecon had committed revolving credit facilities of $850 million, of which $306 million was drawn, $8 million was utilized for letters of credit.

Draws on the credit facilities reflect increased working capital needs as Aecon ramps up its seasonal construction volumes. Aecon has no debt or working capital credit facility maturities until 2027, except equipment loans and leases in the normal course.

At this point, I’ll turn the call over to Jean-Louis to address business performance and outlook.

Thank you, Jerome. Turning to Slide 9, Aecon continues to build resiliency through a strong, balanced and diversified work portfolio.

Over the trailing 12-month period, 46% of Aecon’s construction revenue were generated from the utilities and nuclear sectors compared to 36% for the comparative period in 2024. Balancing growth and opportunity with proper risk management is key to Aecon’s future success.

We continue to maintain balance between our construction and concession segments, among our operating sectors throughout our diverse client base, utilizing appropriate contract models and across selected geographies. We are also embracing new opportunities to grow in areas linked to the energy and power sectors and in U.S.

and international markets. These opportunities are intended to diversify Aecon’s capabilities, provide new growth sectors and deliver more consistent earnings through economic cycles.

Turning to Slide 10, demand for Aecon’s services across our markets continues to be strong, with a record backlog of 9.7 billion at March 31, 2025, recurring revenue continuing to see robust demand and a strong bid pipeline, Aecon believes it’s positioned to achieve further revenue growth in 2025 and over the next few years and is focused on achieving improved profitability and margin predictability. The remaining backlog to be worked off on the 3 remaining legacy projects was $94 million or 1% of total backlog at March 31, 2025.

We are getting close and we are remaining focused on driving these projects to substantial completion with all three projects currently expected to be substantially complete by the end of the third quarter of 2025. Trailing 12 months recurring revenue was $1 billion comparable to the previous period and up over 20% versus 2 years ago, taking into account the divestitures of ATE and the 49.9% interest in Skyport in prior periods on a like-for-like basis.

Recurring revenues are typically executed on a non-fixed price basis with the majority being over and above our reported backlog figures. Turning to Slide 11 no0w.

Development phase work is underway on a number of major projects in which Aecon is a participant, including the Darlington Nuclear Project, the U.S. Virgin Island Airport redevelopment project, the Contrecœur Terminal Expansion, the GO Expansion On-Corridor Works project, the Winnipeg North End Treatment Plant project and the Howard Hanson Dam project.

These projects are being delivered using collative progressive design build model with the majority expected to move into construction phase in 2025. Turning to Slide 12, this week, Aecon was recognized at one of Canada’s Greenest Employers by Mediacorp Canada recognizing our commitment to creating a culture of environmental awareness.

Aecon also released its sixth sustainability report, showcasing our commitment to sustainability in both what we build and how we build it. The Oneida Energy Storage project is a great example of this, and we have made a great progress as the project now nears completion.

Aecon is also currently passed our goal of its 30% reduction by 2030 in Scope 1 and Scope 2 direct emissions based on intensity related to revenue, achieving a 34% cumulative reduction since 2020. Turning to Slide 13, Aecon is focused on achieving solid execution of its projects and selectively adding to backlog through a disciplined bidding approach that supports long-term margin improvement in the Construction segment.

As previously mentioned, revenue in 2025 is expected to be stronger than 2024 due to record backlog of $9.7 billion, the impact of business acquisitions completed in the second half of 2024, solid recurring revenue and a strong bid pipeline. Revenue growth is expected in most of the construction sectors.

In the Concessions segment, there are number of opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months. The three remaining legacy projects are expected to reach substantial completion by the end of the third quarter of 2025.

And that this is anticipated to lead to improved profitability and margin predictability. I want to be very clear in front of you we are dedicating all necessary resources to drive those remaining legacy projects to completion, while vigorously pursuing fair and reasonable settlement agreements with the respective clients in each case.

Until the three remaining projects are complete and the related claims have been resolved, there is a risk that profitability growth would be negatively impacted in future periods. As such, the completion and satisfactory resolution of claims of this project with the respective clients remains a critical focus for Aecon and its partners.

To close, we are excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value. And we thank our dedicated team members for their contributions and for reflecting our safety always culture.

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

Hi, good morning guys.

Good morning, Yuri.

Maybe for Jean-Louis, your underlying EBITDA margins continue to come down on a when you look at the trailing 12 months down from 8.4% to 7% as you outlined on Slide 7. Just trying to understand the – is that higher margin of 8.4%, does that reflect some of the higher risk that’s in those contracts and the 7% is more indicative of safer contracts, so you are taking less risk, but you would think you’d earn a lower margin.

I’m just trying to understand the – what’s structural and what’s kind of operational in the margin? And if you could help us with what kind of range that might shake out to as you book more of these collaborative contracts into your backlog?

Okay. Yuri, mainly speaking, you are right.

It means that with our backlog of $9.7 billion, we have built in terms of quality and quantity and exceptionally positioned for Aecon in the years to come. This backlog is built on discipline, and that’s good.

Now what we are looking more than anything is the predictability of our margin, no more bumps on the road. And this is quite important, no more deviation.

So when you look at the underlying profitability of the business, yes, I mean, the fact that we have derisked most of our backlog, you remember that we went from 70% to less than 30% of variable or collaborative project just means that there will be a slight decrease in global margin. But there will be a strong growth in revenue, and we are working extremely hard, and we are very confident so that we’ll be able to deliver no more bumps on the road.

So all in all, we think it’s quite good. Do you want to add anything Jerome to this?

Yes, Yuri, I mean it’s well said. The only thing I’ll maybe add is in the current period, as noted, we’ve got a dilutive margin impact from some execution in Western Canadian Civil.

So we say within the global size of our enterprise, as a margin headwind probably through to the balance of the year. And so that adds like a little bit of additional softness.

But your core thesis is right, is in the prior periods, stronger margins, but probably tied to a little bit higher risk appetite versus where we sit today is much more appropriate margin profile and consideration of the risk appetite that we are undertaking. We are just trying to create a little bit more of a boring company.

And those civil margins in Western Canada, can you just confirm that they are lower, but still positive or are they negative gross margins?

Yes. I mean, we don’t really provide detail on kind of a specific sub-sector basis, but let’s just say it’s a variety of projects and we are kind of focused in on completing them and gaining through the end of execution.

And is there a commonality on contract structure or anything like that, that you – go ahead.

Mainly speaking the projects that were taken quite a while ago and yes, the commonality is that there are fixed price jobs. It means, as I used to say, all fixed price jobs are not bad or all variable price are not always good, but when you say, is there a common route?

Yes, it is. Those project – none of those projects are of import size.

Yes. Maybe describe it a contributing factor, not the factor, right?

Yes. Okay.

And last one. I mean, I think on the last call, you guys kind of pointed to a 7.5% margin for underlying margin is not a bad place to be for 2025 underlying, is that for the construction business or was that overall and now with these civil projects, where does that number stand?

Thanks.

So previously we referenced our as-adjusted margin, right? So that’s the number that I would point out went from 8.4% to 7%.

It will operate within a range. We don’t provide guidance from a margin perspective for a variety of reasons.

But I think based on Jean-Louis commentary, the better risk profile on the backlog and the work programs that we are executing today comes with an alignment of a margin profile that’s appropriate for that, right? So I think you’d probably assume better risk more appropriate margin.

And then the diluted back to the margin on the Western Civil projects gets layered in on top of that. And so you have to kind of run from where we are today and draw a conclusion against that.

Thanks.

Hi, thanks for taking my questions. Just on the legacy contracts, can you speak to kind of your comfort around the costs you’ve talked about before related to the contracts and how comfortable you are with the cost given the timeline seems to be pushed out a little bit more on two of them?

Yes. I will take this one maybe give you some information on where we are on those three contracts.

We begin with [indiscernible] now because we have been speaking about [indiscernible] in Q1 results. Our bridge is substantially completed.

We are finalizing some lighting [indiscernible] traffic control, but the bridge is done. The Canadian POE has been totally handed over to the Canadian Border Agency.

They are all inside setting up their system in all rooms. The U.S.

DoE has begun to be transferred to the U.S. Border Agency and they are taking room after room to set up their equipment.

So we are comfortable with the end date that we have been giving to you. Eglinton & Finch, you remember that during last year, I was telling you construction is finished.

We are now in testing and commissioning. What I can tell you is that testing and commissioning is finished on both these projects.

I mean, system and train control are very delicate system and system integration is not always easy. We are now in the final phase before revenue service demonstration that is done by the TTC that will operate line.

So we are finalizing training the trainer and supervising the way the trainer from TTC are training the drivers, then we should begin something like June, our revenue service demonstration. So we are also comfortable physically on substantially completing this job midyear 2025.

In terms of economy, so you have noted what I said regarding the remaining backlog. It’s obviously still decreasing.

We are getting really close to the end. In terms of margin, yes, we are as of today within the parameters that we defined in July 2024, and this is good.

Okay, great. And then just a last question here, you have had one full quarter now of the United Engineers acquisition.

Can you just provide an update on that and how that’s progressing?

Yes, I can say that the more we discover, the more we discuss and we go deep within this company, the happier we are with this acquisition for a few reasons. United is an engineering company, but I would say a very practical engineering company because part of its activity is related to steam generator, and we know them very well because we have been working with them at Bruce for the last 5 years.

So, this is part of their activity. It’s an engineering company, and it’s an engineering company dedicated to power.

So, it’s nuclear, but it’s also thermal. It’s also renewable.

At the same time, it’s not only supply, but it’s – they are also quite good in transmission and distribution engineering. So, the idea is to grow this platform.

Other engineering company at the service of our growth in our activity for Aecon, but also at the service of other clients. And this is where it’s quite interesting.

It’s a sort of date of entry to a lot of utilities that we have not as clients before. So, yes, we are happy with the acquisition, and we are looking for growth with this acquisition.

Great. Thank you.

I will jump back in the queue.

Yes. Thanks folks.

I was wondering if we could talk a little bit about the U.S. utilities business to start.

A lot of concern our own business confidence in the U.S., and there has been some discussion in some of the early reporting that we have seen in Q1 that folks are being a little hesitant on spending. Just wondering what you folks are seeing in terms of demand for utilities right now and if that changes the U.S.

strategy at all at this point?

Basically no change, it means that we see for our activity related with power utilities, a high capacity of growth in the United States. I mean first because there is a lot to do, even if it’s not always here in terms of our supplies from where it’s going to come.

I mean one day you hear about coal coming back again, gas, but we know that there is a lot of purchase order on turbine and the market is a little stuck, renewable may go up and down, and it’s not extremely clear about the real consumption and necessity of power from the big data centers. But this being said, even taking out this power supply that at the moment is growing extremely strong.

The state of the grid, and we now know it because we have been in the United States for more than 1.5 years, studying everything. The state of the grid in terms of transmission and distribution is very poor.

And there is a lot of work to do. So, we still think that there will be growth.

And in addition, I mean we just begin the growth. I mean it’s a niche market for us, and we can be extremely selective on where we want to work, what kind of job and with which client.

Maybe Jerome, you give a little more?

Yes, for sure, Chris. And then look, as it relates specifically to our utility services operations in the United States, we are extraordinarily pleased with the teams that have joined us, critically in Michigan.

They are locked in. The client piece there is primarily funded at a rate base, right.

So, it’s less sentiment driven and more requirement driven. And then there is a minor point of the work that’s also just tied to storm impacts.

And when the power goes out, Aecon and Xtreme crews get roles to help support basically people back online. So, from our perspective, yes, we continue to kind of watch things very closely with regards to the overall macro environment, but largely across all of our sectors and in the concession space, our end markets are generally not tied too deeply to economic cycles, right.

Like we are just looking to build the infrastructure required for future generations throughout here. And it doesn’t really swing that hard depending on a tariff impact or an economic impact because a lot of this stuff just needs to get done, and our teams are out there doing it.

Okay. Great.

That’s helpful. The other question I had and this is more – maybe more a conceptual, but just we saw an application last week from Energy Alberta to build a new for 4,800 megawatt nuclear power plant in Alberta, very similar to what Bruce was being proposed to look like.

And I start thinking about a lot of the commentary that we have had over the past few years about, call it, the coordination and planning on some of the refurbishment projects to not overload the system and training. But all of a sudden, it feels like now we are starting to layer in new builds in future years.

And I am just wondering if you have an opinion or some thoughts around the feasibility or the reality of how you could actually get this stuff built because I still think you will be doing refurbishments well into the next decade anyway. And we are starting to see schedules that are talking about having new nuclear starting up in that same sort of timeframe.

So, just thoughts about the level of demand coming at you, not really even theoretical projects, but maybe real projects and how you think that, that gets addressed?

I will take this one. Nuclear, first of all, we are technology agnostic for new construction.

It means that we know extremely well can do. I will say, better than anybody else because we are refurbishing 100% of the reactors in Canada, the six at Bruce, the four at Darlington, the four at Pickering.

So, if on the new builds, it comes to can do. I mean I don’t see Aecon not being present on this one.

We know those machines extremely well. We also have a cooperation agreement with Toshiba Westinghouse for the AP1000.

And we are participating to the construction of the SMR, which is the GE Hitachi boiling water reactor. It means that we are ready for this.

We are ready for the new construction. Now, it will go up and down.

I mean there will be announcements. Some will go forward, some won’t go forward.

And we are preparing our team and our alliance to be perfectly fit for the purpose, depending on what is getting out. We are not worried, we are not preoccupied and the change in the market regarding contract model is perfectly in line with what we are ready to do with nuclear.

Okay. Very clear.

Thank you.

Good morning everyone.

Ian, good morning.

ONcore is obviously going to be a very large project that could help move the needle for Aecon. Could you maybe talk a little bit how you anticipate that project is going to enter backlog at this juncture and maybe how it scales up over the next number of years?

Yes. The main difference between the original idea and what is going to happen is that it’s going to be phased.

You remember that we were speaking a little down of 10 billion of investment. So, I think the total amount of investment has not changed.

I mean to modernize the GTA transport, but this is what is needed. Now, it’s a brownfield, it means that all those works are going to be executed under traffic.

We cannot close the railway during tenure. So, it’s just going to be paid between Lakeshore West, Lakeshore East, maybe Barry [ph], Union Station, but it will happen.

It will just happen probably in the double of time that was envisaged that was something like 4 years, 5 years. It will be steady.

We have a very strong team there. And we have begun preparatory works.

We have begun a track remediation, and we are working on a certain number of early works. So, this is happening, but probably slower, which is not bad when you see our backlog and what’s happening in other part of our activity.

So, we are happy about the project.

That’s helpful. And as it pertains to, call it, what’s transpired over the last few months in Canada, there seems to be a shifting sentiment that Canada needs to do a bit more of everything.

Are you starting yet to see any leading-edge activity in the bids you are doing, or is it still too early?

Can you repeat your question, please? I am not sure…

Yes. I guess the simple way to frame the question is, is everyone seems to want to build more stuff in Canada now.

Are you seeing any leading-edge activity for bidding on that, or is it still too early?

I think it’s still too early. First of all, we have to go through the Federal election so that we understand a little more about the programs to come.

Whatever happened, I mean with the backlog we have and the quality of what now we have been acquiring, I am not worried. But of course, I mean we have a special team that is working in terms of preparation on everything linked with sovereignty, defense, rare metals because this will come, it may not come at a super speed, but it will come, and we are getting ready for this.

Understood. Maybe I will just leave it there now and turn it back over for questions.

Thanks Ian.

Sorry. Is it better now?

Yes, we got it.

Okay. Perfect.

Thanks. I was wondering if it’s possible to get a comment on how we should be thinking about the working capital free up once the fixed price projects are fully behind it, as you said, in Q3.

So, yes, maybe any comment there? Thanks.

For sure. So, we don’t want to tie too preciously to any particular projects, Matt.

But the question on working capital is an important one. So, I will answer it kind of like a broader level at the Aecon level.

So, Q1, you would have seen a pretty meaningful investment in working capital, part of that has to do with the starting point, but part of it also just has to do with the amount of our programs that we are ramping into right now, right. So, you will see obviously this quarter was the highest Q1 from a revenue perspective that Aecon has ever delivered.

The outlook is quite robust and so we expect ongoing investments in working capital. So, through the year, we are probably looking at investment in working capital through to the end.

That being said, there is a big focus on working capital release on a number of projects and know that there is a number of folks whose full-time jobs are associated with that, right. So, I would say, but we don’t want to tie anything to any one or two projects.

But just at a global level, given the growth we are seeing, I think it’s very logical expected and appropriate to see investment working capital this year, just given we are taking the business.

That makes sense. And then Jerome, maybe just commenting around the comfort level of the kind of the envelope of losses you telegraphed previously just in terms of how that’s going to pace throughout the year?

Thanks.

Yes. So, look, within the previously disclosed potential risks and impacts like we are still within that envelope, right, so and through the completion of the projects.

So, no real change from that perspective. We analyzed a number of scenarios and possibilities and outcomes and options when it comes to this.

And we are still comfortable with what we disclosed previously. So, I think from that perspective, it’s kind of steady as she goes, right.

Like no real new news there. I want just to remind you about phasing.

We take it when it comes, right/ Like, we are now at the endgame of this particular test match and the pieces have been quite quickly. So, the impacts come when the impacts comes.

So, I wouldn’t be able to – I don’t think we can provide when we expect this. We expect that, we expect that, because we expected it would be taking it, which is what we saw in the quarter here with the project that we noted.

Yes. And then maybe just one quick one for Jean-Louis, if I may, in terms of concessions opportunities, obviously, you have kind of two smaller ones on the goal right now.

Can you talk about maybe your appetite for doing more on a prospective basis? Do you need to do more?

Maybe any color on that would be helpful. Thanks.

Yes. I mean mainly speaking, part of our strategy is to be able to develop, finance, integrate engineering, build and operate our assets when our clients allow us to do.

So, I mean, we this is a real good vector to create value. I mean we have just proved it with the Bermuda when we divested 29.9% of this airport.

So, yes, we are phasing opportunity. At the moment, we are very busy with U.S.

Virgin Island because we want to close during the year 2025. We are chasing other opportunities either in district energy power sectors, but we are extremely disciplined on this.

And we are chasing also a few airports because this is really our core competency. On another hand, you probably have noted that we are extremely close to commercial operation of Oneida.

And you remember that we have a part at the top level with Oneida, which is a battery storage, I mean the 250-megawatt near Toronto.

Okay. That’s it for me.

Thank you so much.

Great. Thanks and good morning.

Maybe just extending that working capital discussion from earlier, Jerome, that you kind of highlighted that working capital is going to be an investment. Should we generally just assume maybe it will be a negative free cash flow year?

Just trying to get your perspective on how you expect just overall cash and just leverage ratio to evolve kind of for the next three quarters. Thank you.

Yes. We look – for sure, the investment working capital, I mean there is a seasonal cadence to this, right.

So, as we landed the end of the year, obviously, there is always a little bit of back up and down depending on outflows and inflows, in particular with regards to our projects, right. Like the one thing that I think people are aware is when we look at our overall cash position, as it stands right now, we have got something like $350 million invested into our projects in cash and that investment and the amount of money that comes out of that can flex up and down.

So, it’s hard to kind of put a perfect pin to where we will be on the bid we print the balance sheet. But overall, I think the themes you highlight are appropriate ones, which is one, the business is growing, we are taking on very good work with the right risk-adjusted returns associated with them.

So, there is going to be investment in working capital versus where we were last year. I think that’s appropriate and expected.

They will be offsetting that, to a certain extent, will be releases from some of the things that we have ongoing today. But also remember, we do have some capital expenditures that we are putting into the business to support ongoing growth.

Some of those items can be a little bit chunkier, things like tunnel boring machines and depending when we take delivery of that that can move the cash figure a little bit. But overall, the thesis we have that underpins all of it is when we look to deploy capital resources within the business, there is a very keen focus from an operating capital committee on what are the returns associated with that capital is being deployed to make sure that we are kind of exceeding our thresholds.

Your next logical question would be, what’s that price hold [ph] and I will say that like it’s an appropriate one that exceeds our cost of capital.

Great. That’s helpful.

And apologies if I missed this next one, but just a bit more philosophical one, I know it’s expansion in the U.S. has been a bit of a focus.

Have you – has there been any change in sort of bidding there or anything like that given some of the headlines we have been seeing kind of geopolitical stuff just – or is that your strategy still go as it was previously? Thanks.

Okay. I will answer that.

There are two vectors in our strategy. With a common umbrella we will grow in the United States where we are extremely competing in our own country, Canada.

I am not going to open new business in a new country so. Then this being said, the two vectors, one is acquisition.

And you know that we acquired is a nuclear specialized company, now named Aecon Works [ph]. A few years ago, we have acquired Xtreme in July 2024, United in December, and we – the first one is growing quite nicely.

And the second one, Xtreme, as we have said, we are very happy about them, their professionalism and the agility. United, we are still defining the detailed strategic plan with them, but the idea to grow.

The second way of growing is organically through project. And this we are here extremely – we are still analyzing partnership, specialty contractors, availability of labor and quality of clients and budgets.

And once we are good with this, then we will move prudently and always within our whole competency. So, the rest, I know there is a lot of noise about tariffs.

As I have said, I mean Aecon is, not a manufacturer, Aecon is not an exporter. I mean if we work in United, it was going to be local.

And so on the first basis, it’s not a problem for us. So, we try to keep our head cool and one issue is that the extent of what is to be built in the United States in front of the number and the quality of the company existing in this market is a very good parameter for us.

Great. Thanks very much for the color.

Thank you. Good morning.

Hi Mike.

Obviously, a very significant increase in backlog in the first quarter, helped in part by the addition of the Scarborough subway extension and the Pickering nuclear refurbishment projects. With respect to the other collaborative projects that you have in development, are there any of those projects that are expected to convert and be added to backlog in either Q2 or Q3?

I would tend to say, yes, but we are always prudent. I mean obviously, the SMR, which is a collaborative contract is not yet in our backlog.

We are working, I mean with OPG on this. USVI, we are also working to try to get it closed in the year 2025.

It’s a very interesting progressive DBFOM and we are very happy about it. We are working with the Port of Montreal about contractor and with the City of Winnipeg about the sewage, the Phase 2 of the sewage treatment plant.

So, yes, they will most probably come to backlog in the months to come, but the development period are not over and the beauty of this development period is that you can calibrate it the way you want, just to be sure that end of the day, you have the perfect project for the client and perfectly priced for us.

Okay. That makes sense.

Thank you. Second question is about capital allocation.

In the outlook section of the release, you talked about planning to maintain a disciplined approach to capital allocation. Wondering though if you can provide a bit more detail around your capital allocation priorities including any commentary around potential for future acquisitions or additional acquisitions and also share buybacks and specifically on the subject of share buybacks.

I guess wondering if that takes on a greater priority in your mind, at the moment considering where the shares are trading.

Look, it’s a great question and one that’s got a robust discussion around the table here. So.

a couple of things, so one is we are – the most important thing for Aecon is to continue to grow and support the building of the business. And so from that perspective, the first port of call for our capital is going to be investments in working capital and investments in the equipment needed for growth, right.

So, on the equipment side, that’s really centered around our Western Road business, which is a very high-performing business with extraordinary leadership. And then on the utility side, that’s a business that does carry a degree of capital and investment just associated with things like bucket trucks and directional drills and other items.

So, those businesses are performing very, very well, they are hurdling and so they get capital. Now the next phase is we have got some growth capital associated with other items, a little bit chunkier items, so that goes there.

And because what comes next, if we are satisfied with the strength of the balance sheet, we then look to, one is obviously, we have got a pretty intense dividend program that distributes something in the order of $47 million a year to shareholders. We have historically supported that program and grown it over time.

And then the final piece that you know really well is M&A and then CIB. And so where we trade today, we have got a tactical program that’s been put in place.

It’s been put in place for our purpose. And so I would say that we will be monitoring that very closely and be making the appropriate disclosures as we execute on programs like that.

And then from an M&A standpoint, like the one challenge is it’s not like a programmatic situation for us. Like we are very precious about how we deploy that capital, the opportunities that we pursue, having existing capabilities from a safety, culture, technical background standpoint, end markets like the sectors that they are in and the geographies.

And so what I will see from an M&A perspective is we have seen a pretty robust bidding environment for assets that we have targeted. And it’s actually – it’s gotten much more intense over the last six months.

So, I think from that perspective, we just need to keep extraordinary discipline and try not to get too excited in pursuing things because there is a lot of dollars sort of chasing the types of assets that they know that not take on the ambitions. And so we just need to keep ourselves calm and every – but there is no M&A availability, there is availability of the shares in the market, which we would continue to view as an opportunity.

Okay. I appreciate all the detail and I will leave it there.

Thank you.

Thanks so much, Cathy and thank you all for joining us today. Feel free to reach out with any follow-up questions to us, and we will tune into the next call, and have a great rest of the day.