Mr. Jean-Louis Servranckx reports
AECON REPORTS 2018 RESULTS INCLUDING RECORD REVENUE, ADJUSTED EBITDA, AND YEAR-END BACKLOG
Aecon Group Inc. had strong results for the fourth quarter and full-year 2018, concluding a year that saw revenue, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and backlog reach record levels. Aecon's board of directors approved an increase to the quarterly dividend to 14.5 cents per share from 12.5 cents per share previously.
"Aecon's 2018 year-end results illustrate the progress made to deliver consistent performance through scale in core capabilities, end-market diversity and operational excellence," said Jean-Louis Servranckx, president and chief executive officer of Aecon Group. "We continue to be focused on developing our strong team of people, an unwavering commitment to safety, successful project execution and improving profitability."
Highlights:
- Record annual revenue for the year ended Dec. 31, 2018, of $3,266-million was $461-million, or 16 per cent, higher compared with 2017, with increases across all three segments;
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Record annual adjusted EBITDA of $207-million (margin of 6.3 per cent) for 2018, compared with adjusted EBITDA of $156.5-million (margin of 5.6 per cent) in 2017;
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Operating profit of $89.4-million for 2018 increased by $35.8-million, compared with operating profit of $53.6-million in 2017;
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Net profit of $59-million and diluted earnings per share of 94 cents in 2018, compared with $28.2-million and 46 cents, respectively, in 2017.
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Backlog as at Dec. 31, 2018, of $6.8-billion compares with backlog of $4.2-billion a year earlier and represents the highest year-end backlog in Aecon's history;
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Quarterly dividend is increased to 14.5 cents per share from 12.5 cents per share previously;
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Record new contract awards of $5.8-billion were booked in 2018, compared with $2.8-billion in 2017;
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In the fourth quarter of 2018, new contracts awarded included:
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A joint venture in which Aecon holds a 40-per-cent interest was awarded a $267-million contract by Metro Vancouver (Greater Vancouver Water District) for the Second Narrows water supply tunnel project in British Columbia;
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An Aecon 50/50 joint venture was awarded a $526-million contract by TransCanada Corp. for Spreads 3 and 4 of the Coastal GasLink pipeline project in British Columbia;
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Subsequent to quarter-end, Aecon was awarded an $89-million contract by Alberta Transportation for the Bow River bridge twinning project in Alberta;
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On Nov. 23, 2018, Aecon announced the closing of the sale of the contract mining business for $199.1-million, subject to customary closing adjustments.
CONSOLIDATED FINANCIAL HIGHLIGHTS (1)
(in millions of dollars, except per-share amounts)
Three months ended Year ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2018 2017 2018 2017
Revenue $948.5 $ 685.0 $3,266.3 $2,805.7
Gross profit 105.6 97.1 357.1 319.0
Marketing, general and
administrative expenses (44.3) (46.4) (178.5) (186.5)
Income from projects accounted
for using the equity method 6.2 2.2 13.2 8.4
Other income 0.4 3.5 1.5 6.3
Depreciation and amortization (25.3) (24.0) (103.8) (93.5)
Operating profit (2) 42.6 32.5 89.4 53.6
Financing expense, net (6.9) (6.1) (22.4) (22.8)
Profit before income taxes 35.7 26.4 67.0 30.8
Income tax expense (7.9) (5.4) (8.0) (2.6)
Profit $27.9 $ 21.1 $59.0 $28.2
Gross profit margin 11.1% 14.2% 10.9% 11.4%
MG&A as a percentage of revenue 4.7% 6.8% 5.5% 6.6%
Adjusted EBITDA (3) 72.4 58.0 207.0 156.5
Adjusted EBITDA margin 7.6% 8.5% 6.3% 5.6%
Operating margin 4.5% 4.7% 2.7% 1.9%
Earnings per share -- basic $0.46 $ 0.36 $0.99 $0.48
Earnings per share -- diluted $0.41 $ 0.33 $0.94 $0.46
Backlog $6,821 $4,247
Notes:
(1) This press release presents certain non-GAAP (generally accepted accounting
principles) and additional GAAP 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 in the consolidated financial statements. Further details
on non-GAAP and additional GAAP measures are included in the company's
management discussion and analysis and available through SEDAR.
(2) Operating profit (loss) represents the profit (loss) from operations, before
net financing expense, income taxes and non-controlling interests.
(3) 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 equity project EBITDA from projects accounted for using
the equity method.Operating and financial results
Revenue for the year ended Dec. 31, 2018, of $3,266-million was $461-million, or 16 per cent, higher compared with 2017. The largest increase occurred in the infrastructure segment ($358-million), driven by higher revenue in major projects ($298-million) and transportation operations ($60-million). Revenue was also higher in the industrial segment ($63-million), driven by higher volume in utilities ($119-million) and conventional industrial operations ($54-million), offset partially by lower revenue in nuclear operations ($110-million). Revenue was also higher in the concessions segment ($88-million), which was partially offset by intersegment revenue eliminations that increased by $48-million, primarily due to revenue between the concessions and infrastructure segments related to the Bermuda International Airport redevelopment project.
Operating profit of $89.4-million for the year ended Dec. 31, 2018, increased by $35.8-million compared with operating profit of $53.6-million in 2017, driven by higher gross profit of $38.1-million. The largest gross profit increase occurred in the infrastructure segment ($19.6-million) due to the impact of higher volume, which offset lower gross profit margin in transportation operations. Gross profit also increased in the concessions segment ($18.9-million), due to operations related to the Bermuda International Airport redevelopment project and management and development fees for Canadian concessions; as well as in the industrial segment ($500,000), primarily from a volume-driven increase in utilities, which offset lower gross profit from nuclear due to lower volume.
Reported backlog as at Dec. 31, 2018, of $6,821-million compares with backlog of $4,247-million as at Dec. 31, 2017. This backlog position represents the highest reported year-end backlog position in Aecon's history. New contract awards of $5.84-billion were booked in 2018, compared with $2,849-million in 2017.
Dividend
Aecon's board of directors has approved an increase to the quarterly dividend to 14.5 cents per share from 12.5 cents per share previously. The first increased dividend will be paid on April 1, 2019, to shareholders of record on March 22, 2019.
Outlook
"The overall outlook for 2019 remains solid as our current strong backlog, robust pipeline of future opportunities and ongoing concessions are expected to lead to an improved adjusted EBITDA margin," said Mr. Servranckx.
Conference call
A conference call and live webcast has been scheduled for 10 a.m. Eastern Time on Wednesday, March 6, 2019. Participants should dial 647-689-5656 or 1-877-823-8624 at least 10 minutes prior to the conference time. The reservation number is 6986937. An accompanying presentation of the fourth quarter and year-end 2018 financial results will be available after market close on March 5, 2019, on the company's website. For those unable to attend the call, a replay will be available after 3 p.m. on March 6, 2019, at 1-800-585-8367 or 416-621-4642 until midnight on March 20, 2019.
A live webcast of the conference call will also be available on Aecon's website. Participants should join the webcast at least 15 minutes prior to the conference time to register and install any necessary software. A replay of the webcast will be available within 24 hours following the call.
Aecon 2019 annual general meeting
Aecon's annual general meeting will be held on June 4, 2019, in Toronto, Ont. Additional details will be set out in the notice of meeting and record date to be filed on SEDAR.
About Aecon Group Inc.
Aecon Group is a Canadian leader and partner of choice in construction and infrastructure development. Aecon provides integrated turnkey services to private-sector and public-sector clients in the infrastructure and industrial sectors and provides project management, financing and development services through its concessions segment.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars, except per-share amounts)
For the three months ended For the year ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2018 2017 2018 2017
Revenue $948,514 $685,014 $3,266,291 $2,805,728
Direct costs and expenses (842,914) (587,895) (2,909,171) (2,486,705)
Gross profit 105,600 97,119 357,120 319,023
Marketing, general and
administrative expenses (44,348) (46,365) (178,522) (186,538)
Depreciation and amortization (25,250) (23,969) (103,832) (93,548)
Income from projects accounted for
using the equity method 6,207 2,217 13,150 8,417
Other income 431 3,499 1,506 6,281
Operating profit 42,640 32,501 89,422 53,635
Finance income 204 290 1,256 895
Finance costs (7,110) (6,347) (23,651) (23,704)
Profit before income taxes 35,734 26,444 67,027 30,826
Income tax expense (7,868) (5,364) (8,013) (2,650)
Profit for the period $27,866 $21,080 $59,014 $28,176
Basic earnings per share $0.46 $0.36 $0.99 $0.48
Diluted earnings per share $0.41 $0.33 $0.94 $0.46
We seek Safe Harbor.
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