TORONTO, Nov. 4, 2013 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported results for the third quarter of 2013, including higher Adjusted EBITDA(1) of $79.5 million, with a margin of 8.9 per cent, as compared to $68.6 million, with a margin of 8.4 per cent, in the third quarter of 2012.
"Aecon delivered strong results in the third quarter of 2013. We anticipate that our fourth quarter results will be consistent with the usual seasonal trend, and that Aecon will complete 2013 with solid financial performance by continuing to execute our strategy with discipline and focus on the bottom line," said John M. Beck, Chairman and Chief Executive Officer.
HIGHLIGHTS
- Revenue increased by $77 million, or nine per cent, for the three months ended September 30, 2013, compared to the same period in 2012.
- Adjusted EBITDA for the third quarter increased to $79.5 million on revenue of $897.3 million (margin of 8.9 per cent) versus Adjusted EBITDA of $68.6 million on revenue of $820.5 million (margin of 8.4 per cent) in the third quarter of 2012.
- Operating profit for the third quarter of 2013 increased to $57.6 million from $52.1 million in the prior period.
- Backlog remained at $2.1 billion, in line with prior quarters this year.
- Positive outlook affirmed for the last quarter of 2013 and into 2014.
| (1) | See the Consolidated Financial Highlights section for the definition of Adjusted EBITDA. While the definition of EBITDA is unchanged from the previous quarter, in accordance with the requirements of CSA Staff Notice 52-306 (Revised) - Non-GAAP Financial Measures and Additional GAAP Measures, the Company has renamed the defined term from "EBITDA" to "Adjusted EBITDA". |
| CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| $ millions (except per share amounts) (1) (2) | September 30 | September 30 | ||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Revenue | $ | 897.3 | $ | 820.5 | $ | 2,162.4 | $ | 1,955.0 | ||||
| Gross profit | 94.1 | 98.8 | 175.9 | 185.7 | ||||||||
| Marketing, general and administrative expenses | (31.1) | (39.6) | (113.7) | (119.1) | ||||||||
| Income from projects accounted for using the equity method | 9.5 | 7.3 | 26.6 | 21.4 | ||||||||
| Other income | 0.1 | - | 0.6 | 0.7 | ||||||||
| Depreciation and amortization | (15.0) | (14.5) | (46.8) | (42.9) | ||||||||
| Operating profit (3) | 57.6 | 52.1 | 42.6 | 45.7 | ||||||||
| Financing expense, net | (9.7) | (6.1) | (27.8) | (22.0) | ||||||||
| Fair value gain (loss) on convertible debentures | (2.8) | 1.7 | (2.4) | 0.3 | ||||||||
| Profit before income taxes | 45.1 | 47.7 | 12.5 | 23.9 | ||||||||
| Income tax recovery (expense) | (10.7) | (11.9) | (0.1) | (2.7) | ||||||||
| Profit | $ | 34.4 | $ | 35.8 | $ | 12.4 | $ | 21.2 | ||||
| Adjusted profit (4) | $ | 36.4 | $ | 34.6 | $ | 14.2 | $ | 21.0 | ||||
| Gross profit margin | 10.5% | 12.0% | 8.1% | 9.5% | ||||||||
| MG&A as a percent of revenue | 3.5% | 4.8% | 5.3% | 6.1% | ||||||||
| Adjusted EBITDA(5) | 79.5 | 68.6 | 105.0 | 94.1 | ||||||||
| Adjusted EBITDA margin | 8.9% | 8.4% | 4.9% | 4.8% | ||||||||
| Operating margin | 6.4% | 6.3% | 2.0% | 2.3% | ||||||||
| Earnings per share - basic | $ | 0.65 | $ | 0.67 | $ | 0.23 | $ | 0.40 | ||||
| Earnings per share - diluted | $ | 0.53 | $ | 0.50 | $ | 0.22 | $ | 0.38 | ||||
| Adjusted earnings per share- basic (6) | $ | 0.69 | $ | 0.65 | $ | 0.27 | $ | 0.40 | ||||
| Adjusted earnings per share- diluted | $ | 0.53 | $ | 0.50 | $ | 0.25 | $ | 0.38 | ||||
| Backlog | $ | 2,090 | $ | 2,777 | ||||||||
| (1) | This press release presents certain non-GAAP and additional GAAP (GAAP refers to Canadian Generally Accepted Accounting Principles) financial measures to assist readers in understanding the Company's performance. Non-GAAP financial measures are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with GAAP. Further details on non-GAAP and additional GAAP measures are included in the Company's Management's Discussion and Analysis and available through the System for Electronic Document Analysis and Retrieval at www.sedar.com. | |
| (2) | Certain 2012 amounts in this press release have been restated due to the adoption of IFRS 11, "Joint Arrangements" and IAS 19 (2011), "Employee Benefits". See Note 4 "New Accounting Standards" in the September 30, 2013 Consolidated Financial Statements for further details. | |
| (3) | "Operating profit (loss)" represents the profit (loss) from operations, before net financing expense, income taxes and non-controlling interests. | |
| (4) | "Adjusted profit (loss)" represents the profit (loss) adjusted to exclude the after-tax fair value gain (loss) on the embedded derivative portion of Aecon's convertible debentures. | |
| (5) | "Adjusted EBITDA" represents operating profit (loss) adjusted to exclude depreciation and amortization, the gain (loss) on sales of assets and investments, and net income (loss) from projects accounted for using the equity method, but including "JV EBITDA" from projects accounted for using the equity method. | |
| (6) | "Adjusted earnings (loss) per share" represents earnings (loss) per share calculated using adjusted profit (loss). |
OPERATING AND FINANCIAL RESULTS
"We continue to improve our margins and are making good progress on all our major projects," said Teri McKibbon, President and Chief Operating Officer. "With our steadfast focus on execution, three core market sectors, safety, and disciplined bidding approach, we expect to continue to improve our operating and financial performance. Our Infrastructure segment is currently going through a transition, as we have completed some significant heavy civil assignments, continue to re-focus our social infrastructure business, and are being selective in the more competitive environment in the municipal transportation sector. At the same time, our Energy segment is performing very well and although Mining experienced lower volume and margin due to mix this quarter, it has performed strongly year to date as a whole."
Revenue for the three and nine months ended September 30, 2013 increased by $77 million, or 9 per cent, and $207 million, or 11 per cent, respectively, compared to the same periods in 2012. In both periods, the higher revenue resulted primarily from an increase in the Energy segment driven by pipeline work in Western Canada and growth of utilities work in Ontario.
Adjusted EBITDA for the third quarter increased to $79.5 million on revenue of $897.3 million (margin of 8.9 per cent) versus $68.6 million on revenue of $820.5 million (margin of 8.4 per cent) in the third quarter of 2012. For the nine months, Adjusted EBITDA was $105.0 million (margin of 4.9 per cent, or 5.7 per cent excluding a specific project writedown reported in the first quarter) versus $94.1 million (margin of 4.8 per cent) in the same period in 2012.
Operating profit for the third quarter of 2013 increased by $5.5 million to $57.6 million, from $52.1 million in the same period last year. For the nine months, operating profit was $42.6 million, compared to $45.7 million for the same period in 2012.
Backlog was $2.090 billion at September 30, 2013, in line with prior quarters this year. New contract awards of $772 million were booked in the third quarter of 2013, compared to $938 million in the same period of 2012. New contract awards of $1,824 million were booked in the first nine months of 2013, compared to $2,385 million in the same period of 2012.
Not included in backlog, but important to Aecon's prospects due to the increasingly significant volume involved, is the expected recurring revenue from Aecon's growing alliances and supplier-of-choice arrangements where the amount and/or value of work to be carried out is not specified. This recurring revenue currently represents approximately 25 per cent of overall revenue.
REPORTING SEGMENTS
Aecon reports its 2013 financial performance on the basis of four segments: Infrastructure, Energy, Mining, and Concessions.
INFRASTRUCTURE SEGMENT
The Infrastructure segment includes all aspects of the construction of both public and private infrastructure, primarily in Canada, and on a selected basis, internationally. The Infrastructure segment focuses primarily on the transportation, heavy civil and social infrastructure markets.
| Financial Highlights | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| $ millions | September 30 | September 30 | ||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Revenue | $ | 332.4 | $ | 371.0 | $ | 722.1 | $ | 853.4 | ||||
| Gross profit | $ | 28.8 | $ | 41.3 | $ | 21.6 | $ | 51.3 | ||||
| Adjusted EBITDA | $ | 25.4 | $ | 29.6 | $ | (5.8) | $ | 18.2 | ||||
| Operating profit (loss) | $ | 20.9 | $ | 26.0 | $ | (18.4) | $ | 6.6 | ||||
| Adjusted EBITDA margin | 7.6% | 8.0% | (0.8)% | 2.1% | ||||||||
| Operating margin | 6.3% | 7.0% | (2.6)% | 0.8% | ||||||||
| Backlog | $ | 925 | $ | 1,267 | ||||||||
Revenue in the third quarter of 2013 in the Infrastructure segment of $332 million was lower by $39 million compared to $371 million reported for the same period last year. This was primarily due to the completion of several large projects in heavy civil operations in the latter part of 2012 including the Quito airport project and Autoroute 30 project in Quebec, which generated significant revenue in the first nine months of last year, including the third quarter. For the nine months ended September 30, 2013, revenue was $722 million as compared to $853 million, for the above noted reasons. In addition, lower revenue was reported for social infrastructure operations, primarily in buildings operations in Quebec and Ontario as Aecon continued to re-focus its mandate in this market.
For the third quarter of 2013, the Infrastructure segment had an operating profit of $20.9 million, $5.1 million lower than the operating profit of $26.0 million in the same period in 2012. Most of the decrease in operating profit occurred in heavy civil operations as a result of lower revenue during the quarter and lower margins in transportation operations. For the nine months ended September 30, 2013, the operating loss in the Infrastructure segment of $18.4 million compared to an operating profit of $6.6 million in the same period in 2012, as operating profit in transportation and social infrastructure operations dropped by $16 million and $6 million respectively. The transportation reduction was primarily due to the specific project writedown reported earlier this year.
Infrastructure backlog at September 30, 2013 was $925 million, $342 million lower than the same time last year with the largest decreases occurring in heavy civil and social infrastructure due to project work-off in the last twelve months and lower contract awards in comparison to the prior year. New contract awards totaled $230 million in the third quarter of 2013 and $527 million for the first nine months of 2013, compared to $211 million and $784 million, respectively, in the same periods last year.
ENERGY SEGMENT
The Energy segment encompasses a full suite of service offerings to the energy market including industrial construction and manufacturing activities such as in-plant construction, site construction and module assembly. The Energy segment focuses primarily on the following sectors: oil and gas, power generation, utilities, and energy support services.
| Financial Highlights | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| $ millions | September 30 | September 30 | ||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Revenue | $ | 406.9 | $ | 265.2 | $ | 930.0 | $ | 650.7 | ||||
| Gross profit | $ | 52.4 | $ | 32.8 | $ | 88.5 | $ | 71.6 | ||||
| Adjusted EBITDA | $ | 38.9 | $ | 18.0 | $ | 44.2 | $ | 27.5 | ||||
| Operating profit (loss) | $ | 35.2 | $ | 14.6 | $ | 34.5 | $ | 18.3 | ||||
| Adjusted EBITDA margin | 9.6% | 6.8% | 4.8% | 4.2% | ||||||||
| Operating margin | 8.7% | 5.5% | 3.7% | 2.8% | ||||||||
| Backlog | $ | 1,028 | $ | 1,027 | ||||||||
In the Energy segment, third quarter 2013 revenue of $407 million was $142 million or 53 per cent higher than the same period of 2012. The increase occurred mostly in utilities, as a result of pipeline work in Western Canada and from gas distribution work in Ontario. For the nine months ended September 30, 2013, the Energy segment reported revenue of $930 million compared to revenue of $651 million in the comparative period last year, representing a $279 million or 43 per cent increase.
The Energy segment operating profit of $35.2 million for the third quarter was $20.6 million higher than the third quarter of 2012. The majority of the increase in operating profit came from utilities operations with the balance attributable to construction operations in Central Canada and from IST. For the nine months ended September 30, 2013, the operating profit of $34.5 million was $16.2 million greater than the operating profit of $18.3 million reported in the same period last year. The increase in operating profit is due to higher volume in utilities operations, primarily from pipeline work, which contributed $11 million of the overall operating profit increase year to date.
Energy segment backlog at September 30, 2013 of $1,028 million was $1 million higher than the same time last year, reflecting new contract awards for construction projects in Western Canada, largely offset by a reduction in utilities backlog due to the work off of significant pipeline projects in Western Canada. New awards of $457 million in the third quarter were $152 million lower than in the same period of 2012, and new awards of $961 million for the first nine months of 2013 were $297 million lower than the same period in 2012. Most of the decrease in new awards occurred in utilities operations in Western Canada which benefited from significant multi-year pipeline project awards in 2012.
MINING SEGMENT
The Mining segment offers turn-key services consolidating Aecon's mining capabilities and services across Canada, including both mine site installations and contract mining. This segment offers construction services that span the scope of a project's life cycle: from overburden removal and resource extraction, to processing, and then to environmental reclamation.
| Financial Highlights | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| $ millions | September 30 | September 30 | ||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Revenue | $ | 172.7 | $ | 185.1 | $ | 536.4 | $ | 452.9 | ||||
| Gross profit | $ | 13.0 | $ | 25.0 | $ | 66.2 | $ | 63.2 | ||||
| Adjusted EBITDA | $ | 7.3 | $ | 22.1 | $ | 52.2 | $ | 53.8 | ||||
| Operating profit | $ | 1.9 | $ | 16.8 | $ | 33.2 | $ | 37.5 | ||||
| Adjusted EBITDA margin | 4.2% | 11.9% | 9.7% | 11.9% | ||||||||
| Operating margin | 1.1% | 9.1% | 6.2% | 8.3% | ||||||||
| Backlog | $ | 137 | $ | 483 | ||||||||
Revenue of $173 million in the Mining segment for the third quarter of 2013 was $12 million or 7 per cent lower than in the third quarter of 2012, mainly due to a decrease in contract mining revenue, partially offset by an increase in site installation work in the commodities mining sector. For the nine months, the Mining segment reported revenue of $536 million compared to revenue of $453 million in the comparative period last year, representing an $83 million or 18 per cent increase. Substantially all of the increase was due to the higher volume of site installation work in the commodities mining sector.
Operating profit for the Mining segment of $1.9 million was $14.9 million lower than the same period last year, due to lower volume and margin in contract mining operations mostly in Western Canada. Reduced margin was primarily due to a significant change in mix resulting in lower productivity and lower utilization of larger equipment. For the nine months ended September 30, 2013, operating profit of $33.2 million was $4.3 million lower than the same period last year. The decrease in operating profit is primarily due to lower margins in contract mining, as adverse weather conditions and other productivity issues in 2013 resulted in extended unfavourable site conditions and reduced project efficiencies, partly offset by higher operating profit from site installation work in the commodity mining sector.
Backlog in the Mining segment at September 30, 2013 was $137 million, which was $346 million lower than the same time last year as work progressed on several large projects throughout the past year. New contract awards of $100 million in the third quarter of 2013 were $8 million lower than the same period of 2012, and new awards of $363 million for the first nine months of 2013 were $48 million higher than the same period last year.
CONCESSIONS SEGMENT
The Concessions segment includes the development, financing, construction and operation of infrastructure projects by way of build-operate-transfer, build-own-operate-transfer and other public-private partnership contract structures.
| Financial Highlights | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| $ millions | September 30 | September 30 | ||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Revenue | $ | 0.6 | $ | 0.7 | $ | 2.0 | $ | 1.8 | ||||
| Gross profit | $ | (0.1) | $ | (0.1) | $ | (0.3) | $ | (0.5) | ||||
| Income from projects accounted for using the equity method | $ | 5.7 | $ | 4.6 | $ | 18.6 | $ | 12.9 | ||||
| Adjusted EBITDA | $ | 11.9 | $ | 5.8 | $ | 32.3 | $ | 15.7 | ||||
| Operating profit | $ | 5.1 | $ | 3.5 | $ | 16.4 | $ | 9.5 | ||||
With the adoption of IFRS 11 "Joint Arrangements" on January 1, 2013, Aecon's investment in the Quito airport concessionaire is now reported using the equity method of accounting, rather than proportionate consolidation. Revenue for the Concessions segment was $0.6 million for the third quarter of 2013 compared to $0.7 million for the same period last year. Revenue for the nine months ended September 30, 2013 and 2012 was $2.0 million and $1.8 million respectively.
Operating profit for the third quarter of 2013 was $5.1 million compared to $3.5 million for the same period last year. For the nine months ended September 30, 2013, operating profit of $16.4 million was $6.9 million higher than the same period last year. Most of the increase in operating profit resulted from higher revenue in Quiport JV following the transition of operations from the old Quito airport to the new Quito airport in February 2013 and year-over-year passenger growth.
CONSOLIDATED RESULTS
The consolidated results for the three and nine months ended September 30, 2013 and 2012 are available at the end of this news release.
| Balance Sheet Highlights | |||||
| September 30 | Dec. 31 | ||||
| $ thousands (unaudited) | 2013 | 2012 | |||
| Cash | $ | 87,271 | $ | 66,977 | |
| Other current assets | 989,510 | 996,836 | |||
| Property, plant and equipment | 509,942 | 508,553 | |||
| Other long-term assets | 327,637 | 291,247 | |||
| Total Assets | $ | 1,914,360 | $ | 1,863,613 | |
| Current liabilities | $ | 1,070,996 | $ | 834,849 | |
| Long-term debt | 127,009 | 146,048 | |||
| Convertible debentures - long term portion | 91,108 | 253,189 | |||
| Other long-term liabilities | 81,790 | 86,369 | |||
| Equity | 543,457 | 543,158 | |||
| Total Liabilities and Equity | $ | 1,914,360 | $ | 1,863,613 |
CONFERENCE CALL
A conference call has been scheduled for Tuesday, November 5, 2013 at 10 a.m. (ET) to discuss Aecon's 2013 third quarter financial results. Participants should dial 416-981-9004 or 1-800-709-0218 at least 10 minutes prior to the conference time. A replay will be available after 12 p.m. at 1-800-558-5253 or 416-626-4100 until midnight on November 12, 2013. The reservation number is 21676270.
ABOUT AECON
Aecon Group Inc. is a Canadian leader in construction and infrastructure development providing integrated turnkey services to private and public sector clients. Aecon is pleased to be consistently recognized as one of the Best Employers in Canada.
STATEMENT ON FORWARD-LOOKING INFORMATION
The information in this press 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. In addition to events beyond Aecon's control, there are factors which could cause actual or future results, performance or achievements to differ materially from those expressed or inferred herein including, but not limited to: interest and foreign exchange rates, global equity and capital markets, business competition and operational and reputational risks, including Large Project Risk and Contractual Factors. Readers are referred to the specific risk factors relating to and affecting Aecon's business and operations as filed by Aecon pursuant to applicable securities laws. Forward-looking statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, ongoing objectives, strategies and outlook for Aecon. Forward-looking statements, may in some cases be identified by words such as "will," "plans," "believes," "expects," "anticipates," "estimates," "projects," "intends," "should" or the negative of these terms, or similar expressions. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Aecon undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
| Consolidated Statements of Income | ||||||||||||||||||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 | ||||||||||||||||||||||||||||||
| (in thousands of Canadian dollars, except per share amounts) (unaudited) | ||||||||||||||||||||||||||||||
| For the three months ended | For the nine months ended | |||||||||||||||||||||||||||||
| September 30 | September 30 | September 30 | September 30 | |||||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||
| Revenue | $ | 897,315 | $ | 820,477 | $ | 2,162,395 | $ | 1,954,966 | ||||||||||||||||||||||
| Direct costs and expenses | (803,229) | (721,653) | (1,986,479) | (1,769,291) | ||||||||||||||||||||||||||
| Gross profit | 94,086 | 98,824 | 175,916 | 185,675 | ||||||||||||||||||||||||||
| Marketing, general and administrative expenses | (31,119) | (39,566) | (113,718) | (119,115) | ||||||||||||||||||||||||||
| Depreciation and amortization | (14,973) | (14,476) | (46,751) | (42,877) | ||||||||||||||||||||||||||
| Income from projects accounted for using the equity method | 9,523 | 7,314 | 26,582 | 21,376 | ||||||||||||||||||||||||||
| Other income | 74 | 7 | 638 | 665 | ||||||||||||||||||||||||||
| Operating profit | 57,591 | 52,103 | 42,667 | 45,724 | ||||||||||||||||||||||||||
| Finance income | 374 | 242 | 1,727 | 1,617 | ||||||||||||||||||||||||||
| Finance costs | (10,050) | (6,302) | (29,509) | (23,642) | ||||||||||||||||||||||||||
| Fair value gain (loss) on convertible debentures | (2,830) | 1,666 | (2,410) | 316 | ||||||||||||||||||||||||||
| Profit before income taxes | 45,085 | 47,709 | 12,475 | 24,015 | ||||||||||||||||||||||||||
| Income tax expense | (10,715) | (11,899) | (130) | (2,748) | ||||||||||||||||||||||||||
| Profit for the period | $ | 34,370 | $ | 35,810 | $ | 12,345 | $ | 21,267 | ||||||||||||||||||||||
| Basic earnings per share | $ | 0.65 | $ | 0.67 | $ | 0.23 | $ | 0.40 | ||||||||||||||||||||||
| Diluted earnings per share | $ | 0.53 | $ | 0.50 | $ | 0.22 | $ | 0.38 | ||||||||||||||||||||||
SOURCE: Aecon Group Inc.
Vince Borg
Senior Vice President, Corporate Affairs
Aecon Group Inc.
416-297-2615
[email protected]
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