- Revenues increase to $707 million as a result of Lockerbie and South
Rock acquisitions
- EBITDA grows to $48.5 million, continuing the pattern seen in 13 of
the last 15 quarters
- Net income dips to $19.6 million or $0.35 per diluted share
- Backlog reaches a record $1.92 billion
- Outlook remains positive overall, with Industrial markets still soft
Revenue, Operating Results and Net Income
-----------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ---------------------
$ millions, except per
share amounts 2009 2008 2009 2008
---- ---- ---- ----
Revenues $ 707 535 $ 1,661 1,274
Gross margin 76.2 68.7 172.2 138.9
EBITDA 48.5 44.4 91.6 81.8
Operating profit 34.0 37.3 54.0 62.5
Interest expense (4.3) (1.6) (9.0) (5.9)
Earnings before taxes 29.7 35.7 45.0 56.5
Income taxes (9.6) (12.2) (13.9) (16.4)
Net income 19.6 23.1 28.9 39.0
--------------------- ---------------------
Earnings per diluted share $ 0.35 0.45 $ 0.53 0.80
--------------------- ---------------------
---------------------
Backlog - September 30 $ 1,924 1,499
---------------------
---------------------
Third quarter revenues reached a record
Gross margin (representing revenues less direct costs and expenses) increased from
EBITDA (representing income from operations before interest expense, income taxes, depreciation and amortization, and non-controlling interests) grew to
Depreciation and amortization expense of
Operating profit (representing income from operations before interest expense, income taxes and non-controlling interests) decreased to
Earnings before taxes (representing income from operations before income taxes and non-controlling interests) in the quarter were
Net income decreased to
Outlook
-------
"Aecon's outlook remains positive," said John M. Beck, Chairman and CEO, Aecon Group Inc. "Our record backlog and the relative durability of our Infrastructure and Buildings markets bode well for continued strong financial performance through 2010 and into 2011."
"Our strong balance sheet, healthy backlog and robust bidding pipeline continue to provide reason for optimism," said
Backlog and New Business Awards
-------------------------------
Backlog at
Not included in backlog, but important to Aecon's prospects due to the significant volumes involved, are the expected revenues from Aecon's growing alliances and supplier-of-choice arrangements where the amount of work to be carried out is not specified.
New contract awards of
Third Quarter Business Highlights
---------------------------------
- In July 2009, the Constitutional Court of Ecuador issued a ruling
regarding airport charges and services, which could have an impact on
Aecon's concession interests in Quito, Ecuador. As the ruling is an
event of default under the project agreements, the project debt
(which remains non-recourse to Aecon, and which has not been called
by the lenders) has been reclassified as current debt. Negotiations
involving all parties are underway with a view to resolving the
outstanding issues raised by this ruling.
- In July 2009, the arbitration panel considering the second of two
major claims launched by Continental Foundation Joint Venture
("CFJV" in which Aecon is a 45% partner) in respect of the Nathpa
Jhakri hydroelectric project in India ruled substantially in the
joint venture's favour and dismissed a counter-claim for liquidated
damages filed against CFJV. The ultimate financial impact of these
awards is subject to a number of risks and uncertainties and the
exact financial impact of these awards, including the timing, is not
entirely clear at this time, but may (in addition to recovery of net
investment in the project) be in the range of $4 million to
$7 million.
- In September 2009, Aecon issued convertible unsecured subordinated
debentures resulting in total gross proceeds of $172.5 million. The
move strengthened Aecon's balance sheet and positioned it for working
capital investment in new project opportunities, and further improved
its liquidity in support of the surety capacity that may be required
for these projects.
- Average week day traffic on the Cross Israel Highway in September
2009 reached 121,000 vehicles, an 18% increase over September 2008.
- Nearly 3.5 million passengers passed through the existing Quito
airport in the first nine months of 2009, a 2.7% increase over the
same period in 2008.
Segmented Results
-----------------
Aecon reports its results in four operating segments: Infrastructure,
Buildings, Industrial and Concessions.
- Infrastructure
The Infrastructure segment includes all aspects of civil construction from
highways, bridges and tunnels to airports, marine facilities, transit and
power projects as well as utilities construction.
Financial Highlights Three Months Nine Months
($ millions) Ended Sept. 30 Ended Sept. 30
--------------------- ---------------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $ 341 $ 238 $ 686 $ 481
Segment operating profit(1) 24.9 16.9 14.2 14.7
--------------------- ---------------------
Return on revenue(2) 7.3% 7.1% 2.1% 3.0%
---------------------
---------------------
Backlog - September 30 $ 576 $ 581
---------------------
---------------------
(1) Segment operating profit or loss represents the profit or loss from
operations, before interest expense, income taxes, non-controlling
interests, and corporate allocations of overhead costs and capital
charges.
(2) Segment return on revenue is calculated as segment operating profit
(loss) as a percentage of revenues.
In the Infrastructure segment, third quarter revenues of
Segment operating profit of
Segment backlog at
- Buildings
The Buildings segment includes all aspects of Aecon's commercial, institutional and multi-unit residential building construction and renovation activities.
Financial Highlights Three Months Nine Months
($ millions) Ended Sept. 30 Ended Sept. 30
--------------------- ---------------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $ 121 $ 109 $ 344 $ 327
Segment operating profit (loss) 0.9 (0.9) 0.9 1.4
--------------------- ---------------------
Return on revenue 0.8% (0.8)% 0.3% 0.4%
---------------------
---------------------
Backlog - September 30 $ 630 $ 618
---------------------
---------------------
Third quarter revenues of
Segment operating profit of
Backlog of
- Industrial
Industrial operations include all of Aecon's industrial manufacturing and construction activities from in-plant construction to the fabrication of specialty pipe and the design and manufacture of Once-Through Steam Generators, as well as Aecon's commercial mechanical operations. The segment includes all of the Lockerbie & Hole operations acquired earlier this year.
Financial Highlights Three Months Nine Months
($ millions) Ended Sept. 30 Ended Sept. 30
--------------------- ---------------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $ 216 $ 172 $ 557 $ 426
Segment operating profit 13.1 21.2 43.2 45.8
--------------------- ---------------------
Return on revenue 6.1% 12.3% 7.8% 10.8%
---------------------
---------------------
Backlog - September 30 $ 717 $ 301
---------------------
---------------------
In the Industrial segment, third quarter revenues of
Industrial segment operating profit of
Segment backlog of
- Concessions
The Concessions segment includes the development, operation and financing of infrastructure projects by way of public-private partnership, build-own-operate-transfer or other alternative financing contract structures.
This segment focuses primarily on the operations, management, maintenance and enhancement of investments in transportation infrastructure concessions, including the Cross
Financial Highlights Three Months Nine Months
($ millions) Ended Sept. 30 Ended Sept. 30
--------------------- ---------------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $ 31 $ 16 $ 79 $ 47
Segment operating profit (loss) (0.2) 3.3 7.5 7.1
--------------------- ---------------------
Return on revenue (0.7)% 20.6% 9.5% 15.3%
--------------------- ---------------------
Concessions segment revenues of
Segment operating loss of
Aecon's investment in the Cross
Aecon does not include in its reported backlog potential revenues from operations management contracts and concession agreements. As such, while Aecon expects future revenues from its concession assets, no concession backlog is reported at
- Corporate and Other
Third quarter operating losses in the Corporate and Other segment increased by
Also negatively impacting the segment operating loss in the quarter were a
Consolidated Results
The Consolidated Results for the three months and nine months ended
Balance Sheet Highlights
-------------------------------------------------------------------------
(thousands of dollars) Sept. 30, 2009 Dec. 31, 2008
--------------- ---------------
-------------------------------------------------------------------------
Cash and cash equivalents, restricted cash,
marketable securities and term deposits $ 392,689 $ 321,067
-------------------------------------------------------------------------
Other current assets 752,083 502,925
-------------------------------------------------------------------------
Property, plant and equipment 198,741 102,333
-------------------------------------------------------------------------
Other long-term assets 335,485 262,539
-------------------------------------------------------------------------
Total Assets $ 1,678,998 $ 1,188,864
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Current liabilities $ 847,836 $ 543,839
-------------------------------------------------------------------------
Non-recourse project debt 70,000 118,665
-------------------------------------------------------------------------
Other long-term debt 63,363 45,160
-------------------------------------------------------------------------
Other long-term liabilities 251,194 98,935
-------------------------------------------------------------------------
Shareholders' equity 446,605 382,265
-------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 1,678,998 $ 1,188,864
-------------------------------------------------------------------------
Conference Call
A conference call has been scheduled for
About Aecon
Aecon Group Inc. is Canada's largest publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout
The information in this news release includes certain forward-looking statements. These "forward-looking" statements are based on currently available competitive, financial and economic data and operating plans but are subject to risks and uncertainties. The level of uncertainty associated with global economic events may impact the results of Aecon in a manner which is currently impossible to ascertain. In addition, factors could cause Aecon's actual results, performance or achievements to vary from those expressed or inferred herein, including without limitation, the successful integration of recent acquisitions, failure to achieve the targets associated with the construction of the new
Consolidated Statements of Income for the three months ended
September 30, 2009 and 2008 (in thousands of dollars, except share and
per share amounts) (unaudited)
2009 2008
------------------------------
Revenues $ 707,094 $ 534,665
Direct costs and expenses (630,921) (465,996)
------------------------------
76,173 68,669
------------------------------
Marketing, general and administrative expenses (28,937) (26,060)
Foreign exchange losses (1,007) (267)
Gain on sale of assets 41 195
Depreciation and amortization (14,501) (7,079)
Interest expense (4,330) (1,560)
Interest income 2,238 1,828
------------------------------
(46,496) (32,943)
------------------------------
Income before income taxes and non-controlling
interests 29,677 35,726
------------------------------
Income tax (expense) recovery
Current (16,634) (837)
Future 7,027 (11,314)
------------------------------
(9,607) (12,151)
------------------------------
Income before non-controlling interests 20,070 23,575
Non-controlling interests (432) (495)
------------------------------
Net income for the period $ 19,638 $ 23,080
------------------------------
------------------------------
Earnings per share
Basic $ 0.36 $ 0.46
Diluted $ 0.35 $ 0.45
Average number of shares outstanding
Basic 55,045,089 50,157,924
Diluted 56,729,786 51,051,438
Consolidated Statements of Income for the nine months ended
September 30, 2009 and 2008 (in thousands of dollars, except share and
per share amounts) (unaudited)
2009 2008
------------------------------
Revenues $ 1,661,216 $ 1,274,276
Direct costs and expenses (1,488,994) (1,135,346)
------------------------------
172,222 138,930
------------------------------
Marketing, general and administrative expenses (84,945) (62,503)
Foreign exchange losses (2,725) (158)
Gain on sale of assets 97 28
Depreciation and amortization (37,533) (19,320)
Interest expense (9,012) (5,949)
Interest income 6,903 5,487
------------------------------
(127,215) (82,415)
------------------------------
Income before income taxes and non-controlling
interests 45,007 56,515
------------------------------
Income tax expense (recovery)
Current (19,174) (2,128)
Future 5,265 (14,261)
------------------------------
(13,909) (16,389)
------------------------------
Income before non-controlling interests 31,098 40,126
Non-controlling interests (2,157) (1,175)
------------------------------
Net income for the period $ 28,941 $ 38,951
------------------------------
------------------------------
Earnings per share
Basic $ 0.54 $ 0.82
Diluted $ 0.53 $ 0.80
Average number of shares outstanding
Basic 53,443,813 47,343,406
Diluted 54,898,744 49,420,225
%SEDAR: 00004778EF
For further information: Mitch Patten, Senior Vice President, Corporate Affairs, Aecon Group Inc., (416) 297-2615, [email protected], www.aecon.com
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