Revenues and earnings up, strong 2012 outlook reaffirmed, dividend increased
TORONTO, March 5, 2012 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported its results for the fourth quarter and full year 2011.
Highlights
- Revenues reached $2.90 billion for the year ($2.75 billion in 2010).
- EBITDA increased to $163.1 million for the year ($105.6 million in 2010) and operating profit increased to $100.5 million ($57.2 million in 2010), due primarily to improved margins in the Infrastructure and Industrial segments.
- Adjusted earnings per share (basic) increased to $1.01 ($0.57 in 2010) and adjusted earnings per share (diluted) increased to $0.84 ($0.54 in 2010).
- Annual dividend is increased to $0.28 per share ($0.07 per quarter) from $0.20 per share ($0.05 per quarter).
- Aecon's positive outlook through 2012 and 2013 is reaffirmed.
| Three Months Ended December 31 (1) |
Year Ended December 31 (1) |
|||||||||
| $ millions, except per share amounts | 2011 | 2010 | 2011 | 2010 | ||||||
| Revenues | $ | 790 | $ | 841 | $ | 2,896 | $ | 2,750 | ||
| Gross profit | 112.7 | 23.6 | 274.1 | 162.1 | ||||||
| EBITDA (2) | 73.6 | 34.2 | 163.1 | 105.6 | ||||||
| Depreciation and amortization | (16.8) | (14.3) | (62.5) | (48.4) | ||||||
| Operating profit (3) | 56.8 | 19.9 | 100.5 | 57.2 | ||||||
| Financing charges, net | (9.8) | (6.2) | (31.2) | (16.2) | ||||||
| Fair value gain (loss) on convertible debentures | (0.3) | 3.8 | 4.3 | 14.9 | ||||||
| Income tax (expense) | (9.8) | (0.9) | (11.4) | (9.4) | ||||||
| Profit attributable to shareholders | 36.7 | 15.1 | 57.6 | 41.8 | ||||||
| Adjusted profit attributable to Shareholders (4) | 36.9 | 12.4 | 54.5 | 31.0 | ||||||
| Earnings per share (diluted) | 0.49 | 0.20 | 0.84 | 0.57 | ||||||
| Adjusted earnings per share (diluted) (5) | 0.49 | 0.20 | 0.84 | 0.54 | ||||||
| Backlog - December 31 | $ | 2,390 | $ | 2,447 | ||||||
| (1) | Prior period results have been restated to an IFRS basis and therefore are comparable with the current period. |
| (2) | EBITDA represents earnings or losses before net financing expense, income taxes, depreciation and amortization, and non-controlling interests. |
| (3) | Operating profit (loss) represents the profit (loss) from operations before net financing expense, income taxes and non-controlling interests. |
| (4) | Adjusted profit (loss) attributable to shareholders represents the profit (loss) attributable to shareholders adjusted to exclude the after-tax fair value gain (loss) on the embedded derivative portion of Aecon's convertible debentures. |
| (5) | Adjusted earnings (loss) per share (diluted) represents earnings (loss) per share calculated using adjusted profit (loss) attributable to shareholders. |
Dividend Increase
Aecon's Board of Directors has approved an increase in the dividend to be paid to all holders of Aecon Common Shares. Annual dividends will increase to $0.28 per share, to be paid in four quarterly payments of $0.07 per share. Previously, Aecon paid an annual dividend of $0.20 per share ($0.05 each quarter). The first quarterly dividend payment under the new policy will be paid on April 2, 2012 to shareholders of record on March 23, 2012.
"On the basis of Aecon's improving financial performance and continued strong outlook, the Board has determined that Aecon is in a position to provide an additional return to our shareholders through increased dividends," stated John M. Beck, Aecon's Chairman and CEO.
Outlook, Backlog and New Business Awards
"Aecon's outlook entering 2012 is as positive as it has been in years. New project awards are strong, demand continues to build in our core transportation, resources and power sectors, and our focus on project execution and risk management is generating improved earnings," said Mr. Beck. "I believe these factors will result in consistent, sustainable earnings growth for Aecon through 2012 and 2013."
"In 2011, Aecon placed a greater priority on operations and strengthened the alignment of our operating divisions," said Teri McKibbon, Aecon's Chief Operating Officer. "This focus has served Aecon well and has resulted in improved financial performance."
New contract awards of $2.84 billion were booked in 2011 compared to $2.99 billion in 2010. Backlog at December 31, 2011 was $2.39 billion, compared to $2.45 billion the previous year.
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 partnership arrangements, including for example most of Aecon's mining and utilities businesses, where the value and/or timing of work to be carried out is not specified.
Fourth Quarter Business Highlights
- Aecon's Industrial West Division was awarded two contracts totaling $132 million for fabrication and module assembly work for a large oil sands project near Fort McMurray, Alberta.
- Aecon and partner Dufferin Construction were selected by Infrastructure Ontario and Metrolinx to design, build and finance an Air Rail Link (ARL) to the Toronto Pearson International Airport, and an ARL passenger station at the Airport.
- Aecon Mining was awarded a contract valued at approximately $80 million for site preparation and early works at a new potash mine in Saskatchewan.
- Aecon's Lockerbie and Hole Eastern Division signed a letter of intent with the Potash Corporation of Saskatchewan Inc. for a project valued at over $250 million to install the interior of a new process mill at the PotashCorp mine site near Rocanville, Saskatchewan.
- Maclean's magazine and Aon Hewitt recognized Aecon as one of the Best Employers in Canada. It is the fifth consecutive year Aecon has received the honour.
- Subsequent to the end of the quarter, a joint venture between Aecon Industrial and SNC-Lavalin was awarded a major contract by Ontario Power Generation to carry out the Darlington Retube and Feeder Replacement Project. The project's definition phase alone is expected to generate over $100 million in revenues for Aecon.
Segmented Results
Aecon reports its results in three operating segments: Infrastructure, Industrial and Concessions.
- Infrastructure
The Infrastructure segment includes all aspects of civil construction from highways, bridges and tunnels to airports, marine facilities, transit and power projects as well as utilities construction, building construction and mining operations.
| Infrastructure Segment Financial Highlights (1)(2) ($ millions) |
Three Months Ended December 31 |
Year Ended December 31 |
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| 2011 | 2010 | 2011 | 2010 | |||||||
| Revenues | $ | 507 | $ | 525 | $ | 1,703 | $ | 1,637 | ||
| EBITDA | 52.3 | 34.7 | 91.2 | 68.8 | ||||||
| Segment operating profit | 41.0 | 25.6 | 52.4 | 42.2 | ||||||
| Operating profit margin | 8.1% | 4.9% | 3.1% | 2.6% | ||||||
| Backlog - December 31 | $ | 1,424 | $ | 1,781 | ||||||
| (1) | Segment operating profit or loss represents the profit or loss from operations, before net interest expense, income taxes, non-controlling interests and corporate allocations of overhead costs and capital charges. |
| (2) | Operating profit margin is calculated as segment operating profit (loss) as a percentage of revenues. |
Infrastructure segment revenues of $1.70 billion in 2011 were 4% higher than the previous year, with increases from Mining and Utilities operations offsetting a decrease in Buildings revenue.
For the three months and year ended December 31, 2011, the operating results in the Infrastructure segment increased/(decreased) from the previous year as follows:
| ($ millions) | Three months Ended December 31 |
Year Ended December 31 |
| Civil and MaterialsCivil and Materials | ||
| Ongoing operations | $ (1.8) | $ (1.3) |
| Gain on sale of land in 2010 | - | (7.0) |
| Utilities | (1.1) | 16.2 |
| Mining | ||
| Ongoing operations | 9.1 | (2.7) |
| Gain on sale of equipment | 0.9 | 3.3 |
| Gain on acquisition of assets in 2010 | 0.1 | (13.8) |
| Buildings | 8.2 | 15.5 |
| Increase in segment operating profit | $ 15.4 | $ 10.2 |
Operating profit from Utilities operations increased by $16.2 million in 2011 due to improved volumes and profit margins from the unit's Ontario operations compared to the depressed margins and volumes reported in 2010. In Buildings, an operating loss of $4.3 million in 2011 was a $15.5 million improvement on the loss recorded in 2010. On a year over year basis, these improvements were partially offset by prior year gains of $7.0 million on the sale of land, and $13.8 million on the acquisition of the assets of Cow Harbour.
New contract awards were $1.35 billion in 2011 compared to $2.11 billion in 2010. Backlog at December 31, 2011 was $1.42 billion, a decrease of $357 million from a year earlier, due in part to a decrease of $239 million in Buildings backlog.
- Industrial
Industrial operations include all of Aecon's industrial manufacturing and construction activities including in-plant construction, fabrication of specialty pipe, assembly of custom module units and the design and manufacture of once-through heat recovery steam generators.
| Industrial Segment Financial Highlights ($ millions) |
Three Months Ended December 31 |
Year Ended December 31 |
||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||
| Revenues | $ | 276 | $ | 310 | $ | 1,120 | $ | 1,044 | ||
| EBITDA | 23.5 | (38.0) | 57.6 | (4.4) | ||||||
| Segment operating profit | 20.3 | (41.8) | 42.6 | (17.5) | ||||||
| Operating profit margin | 7.3% | (13.5)% | 3.8% | (1.7)% | ||||||
| Backlog - December 31 | $ | 966 | $ | 666 | ||||||
Industrial segment revenues increased 7% in 2011 to $1.12 billion. Most of the revenue growth came from Heavy Industrial operations, primarily in the commodities mining sector, which more than offset a decrease in revenues from site construction work in the oil sands.
For the three months and year ended December 31, 2011, operating profit in the Industrial segment increased/(decreased) from the previous year as follows:
| ($ millions) | Three months Ended December 31 |
Year Ended December 31 |
| Heavy Industrial (construction and fabrication) | $ 64.6 | $ 57.6 |
| Mechanical | (0.9) | 2.5 |
| IST | (1.6) | - |
| Increase in segment operating profit | $ 62.1 | $ 60.1 |
Most of the operating profit increase in the Industrial segment this year resulted from the year over year impact of operating losses on the Suncor Firebag III Central Plant facilities project recorded in 2010, and from increased operating profit in the commodities mining sector as a result of the increased revenues noted above.
Backlog of $966 million at December 31, 2011 represents a $300 million increase from a year earlier, and new contract awards of $1.42 billion in 2011 were $610 million higher than in 2010. Most of the increase in new awards occurred in Heavy Industrial operations, primarily in the commodities mining sector.
- Concessions
The Concessions segment includes the development, operation and financing of infrastructure projects by way of public-private partnership, build-own-operate-transfer or other alternative financing contract structures.
| Concessions Segment Financial Highlights ($ millions) |
Three Months Ended December 31 |
Year Ended December 31 |
||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||
| Revenues | $ | 11 | $ | 24.8 | $ | 81 | $ | 91 | ||
| EBITDA | 5.0 | 42.8 | 39.3 | 63.8 | ||||||
| Segment operating profit | 4.1 | 42.5 | 35.9 | 58.7 | ||||||
| Operating profit margin | 38.7% | 171.4% | 44.2% | 64.3% | ||||||
For the three months and year ended December 31, 2011, operating profit in the Concessions segment increased/(decreased) over the previous year as follows:
| ($ millions) | Three months Ended December 31 |
Year Ended December 31 |
| Quito Airport Concessionaire | $ (0.2) | $ 1.7 |
| Cross Israel Highway (CIH) | ||
| Operations | (2.6) | (0.4) |
| Gain on sale of investment in operator | - | 11.5 |
| Gain on sale of long-term concession investment | (36.1) | (36.1) |
| Other | 0.6 | 0.5 |
| Decrease in segment operating profit | $ (38.3) | $ (22.8) |
The largest contributor to the year over year decrease in operating profits in the Concessions segment was the $36.1 million gain in 2010 from the sale of Aecon's interest in the Cross Israel Highway concessionaire, which more than offset gains from the 2011 sale of Aecon's interest in Derech Eretz Highways Management Corporation Limited, the operator of the Cross Israel Highway. The increase in profits from the Quito airport concessionaire is primarily due to lower amortization charges for the new airport, which at year end was approximately 90% complete.
Consolidated Results
The Consolidated Results for the three months and years ended December 31, 2011 and 2010 are available at the end of this News Release.
Balance Sheet Highlights
| (thousands of dollars) (unaudited) | December 31, 2011 | December 31, 2010 | ||
| Cash and cash equivalents and restricted cash | $ | 221,290 | $ | 308,653 |
| Other current assets | 842,959 | 1,010,417 | ||
| Property, plant and equipment | 482,148 | 444,276 | ||
| Other long-term assets | 437,698 | 358,059 | ||
| Total Assets | $ | 1,984,095 | $ | 2,121,405 |
| Current liabilities | $ | 791,836 | $ | 1,075,038 |
| Non-recourse project debt | 137,078 | 27,333 | ||
| Other long-term debt | 142,581 | 129,435 | ||
| Convertible debentures | 251,429 | 249,751 | ||
| Other long-term liabilities | 171,294 | 180,250 | ||
| Equity | 489,877 | 459,598 | ||
| Total Liabilities and Equity | $ | 1,984,095 | $ | 2,121,405 |
Conference Call
A conference call has been scheduled for Tuesday, March 6, 2012 at 10:30 a.m. ET to discuss Aecon's 2011 year end financial results. Participants should dial 1-800-926-9793 or 416-981-9033 at least 10 minutes prior to the conference time. A replay will be available after 12:30 p.m. at 416-626-4100 or 1-800-558-5253 until midnight on March 13, 2012. The pass code is 21580513.
About Aecon
Aecon Group Inc. is one of Canada's largest and most diverse construction and infrastructure development companies. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and on a selected basis internationally. Aecon is pleased to be recognized as one of the Best Employers in Canada.
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 general global events outside Aecon's control, there are factors which could cause actual results, performance or achievements to vary from those expressed or inferred herein including risks associated with an investment in the common shares of Aecon and the risks related to Aecon's business, including Large Project Risk and Contractual Factors. Risk factors are discussed in greater detail in the section on "Risk Factors" in the Annual Information Form filed on March 30, 2011 and available at www.sedar.com. Forward-looking statements include information concerning possible or assumed future results of operations or financial position of Aecon, as well as statements preceded by, followed by, or that include the words "believes," "expects," "anticipates," "estimates," "projects," "intends," "should" or similar expressions. Important factors, in addition to those discussed in this document, could affect the future results of Aecon and could cause those results to differ materially from those expressed in any forward-looking statements.
Caution Regarding Non-GAAP Earnings Measures
This press release is based on reported earnings in accordance with International Financial Reporting Standards ("IFRS"). It is also based on EBITDA, Operating Profit, Adjusted Profit (Loss) Attributable to Shareholders and Adjusted Earnings (Loss) Per Share. These non-GAAP measures are derived from the Consolidated Financial Statements but do not have a standardized meaning prescribed by IFRS. Management believes that a significant number of the users of its Management's Discussion and Analysis ("MD&A") analyze the Corporation's results based on these performance measures and that this presentation is consistent with industry practice. Backlog is not a recognized performance measure under GAAP and does not have any standardized meaning prescribed by GAAP. Aecon believes that backlog is a useful complementary measure, commonly used by management and the investment community, to evaluate the Company's projected activity in future periods. There is no direct comparable measure to backlog in GAAP. Additional information on Non-GAAP Measures is included in the Company's MD&A.
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||
| FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2011 AND 2010 | |||||||||
| (in thousands of dollars, except per share amounts) | |||||||||
| For the Three months ended | Year ended | ||||||||
| Dec 31 2011 |
Dec 31 2010 |
Dec 31 2011 |
Dec 31 2010 |
||||||
| Revenue | $ | 790,340 | $ | 840,790 | $ | 2,896,167 | $ | 2,749,773 | |
| Direct costs and expenses | (677,596) | (817,186) | (2,622,034) | (2,587,634) | |||||
| Gross profit | 112,744 | 23,604 | 274,133 | 162,139 | |||||
| Marketing, general and administrative expenses | (41,618) | (29,300) | (138,832) | (116,275) | |||||
| Depreciation and amortization | (16,772) | (14,334) | (62,548) | (48,377) | |||||
| Income (loss) from construction projects accounted for using the equity method | 3,742 | 1,518 | 14,058 | 405 | |||||
| Other income (loss) | (1,249) | 38,427 | 13,721 | 59,313 | |||||
| Operating profit | 56,847 | 19,915 | 100,532 | 57,205 | |||||
| Finance income | 535 | 6,433 | 5,679 | 14,581 | |||||
| Finance costs | (10,358) | (12,612) | (36,923) | (30,735) | |||||
| Fair value gain (loss) on convertible debentures | (275) | 3,760 | 4,269 | 14,938 | |||||
| Profit before income taxes | 46,749 | 17,496 | 73,557 | 55,989 | |||||
| Income tax expense | (9,794) | (851) | (11,414) | (9,320) | |||||
| Profit for the period | $ | 36,955 | $ | 16,645 | $ | 62,143 | $ | 46,669 | |
| Attributable to: | |||||||||
| Shareholders | $ | 36,699 | $ | 15,076 | $ | 57,553 | $ | 41,848 | |
| Non-controlling interests | 256 | 1,569 | 4,590 | 4,821 | |||||
| $ | 36,955 | $ | 16,645 | $ | 62,143 | $ | 46,669 | ||
| Basic earnings per share | $ | 0.69 | $ | 0.27 | $ | 1.07 | $ | 0.76 | |
| Diluted earnings per share | $ | 0.49 | $ | 0.20 | $ | 0.84 | $ | 0.57 | |
Mitch Patten
Senior Vice President,
Corporate Affairs
Aecon Group Inc.
416-297-2615
[email protected]
www.aecon.com
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