TORONTO, March 1, 2016 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported results for the fourth quarter and full year 2015, concluding a year that saw progress on revenue and margin performance, successful completion of the sale of Aecon's interest in the Quito airport, and record year-end backlog of $3.3 billion as at December 31, 2015. Aecon's Board of Directors approved an increase in the annual dividend to 46 cents per share from 40 cents per share.

"The fourth quarter capped a year which saw revenue growth in each of Energy, Mining, and Infrastructure, and further year over year improvement in consolidated Adjusted EBITDA margin on a like for like basis, driven by a focus on both the pursuit of large-scale, sophisticated projects with key clients in our core end-markets, as well as strong and consistent execution performance," said Teri McKibbon, President and Chief Executive Officer, Aecon Group Inc. "Aecon's diverse portfolio and unique turnkey capabilities enable us to provide enhanced value to our clients and partners and has made Aecon increasingly resilient to economic headwinds in any one industry or geography." 

HIGHLIGHTS

• Revenue of $2,918 million in 2015 was higher than 2014 by $304 million, an increase of 12 per cent, or 14 per cent on a like for like basis excluding dispositions, with increases in all of Aecon's segments.
  
  
• Adjusted EBITDA of $169.8 million (margin of 5.8 per cent) for 2015 compared to $170.2 million (margin of 6.5 per cent) for 2014.
  
  
• For 2015, on a like for like basis, Adjusted EBITDA was $146.8 million versus $110.3 million in 2014 and Adjusted EBITDA margin was 5.0 per cent versus 4.3 per cent in 2014.
  
  
• New contract awards of $3,526 million were booked in 2015 compared to $3,495 million in 2014 and record year-end backlog as at December 31, 2015 of $3,261 million compared to backlog of $2,654 million as at December 31, 2014.
  
  
• Subsequent to year-end, as previously announced, an Aecon JV was awarded a $2.75 billion contract for the execution phase of the Darlington Nuclear Generating Station Refurbishment project in Ontario. Aecon's $1.375 billion share marks the single largest contract award in Aecon's history and will be added to Energy segment backlog in the first quarter of 2016.
  
  
• As previously announced, Aecon completed the sale of its 45.5 per cent interest in the Quito International airport concession for gross proceeds of $292 million on December 10, 2015. The monetization of Aecon's investment generated net cash proceeds of $247 million, with a gain of $48.8 million recorded in the fourth quarter of 2015.
  
  
• Annual dividend is increased to 46 cents per share (11.5 cents per quarter) from 40 cents per share (10 cents per quarter).

OPERATING AND FINANCIAL RESULTS

Revenue for the year ended December 31, 2015 was higher by $304 million compared to 2014 with increases reported in all segments.

Adjusted EBITDA of $169.8 million (margin of 5.8 per cent) for 2015 compared to $170.2 million (margin of 6.5 per cent) for 2014. On a like for like basis, excluding Quito and IST, Adjusted EBITDA was $146.8 million versus $110.3 million in 2014 and Adjusted EBITDA margin was 5.0 per cent versus 4.3 per cent in 2014. 

Operating profit of $142.6 million for the year ended December 31, 2015 improved by $78.9 million compared to 2014. Contributing to this performance in 2015 was an increase in gross profit of $27.0 million with the largest increase occurring in the Mining segment due to higher volume in the commodity mining sector and higher volume and gross profit margin from civil and foundations work related to mining projects.  

Operating profit was also impacted in 2015 by realized gains on the disposal of subsidiaries and joint venture investments totaling $62.9 million.  A gain of $48.8 million was recorded in the Concessions segment as a result of the sale on December 10, 2015 of its 45.5 per cent share in the Quito airport concession. In addition, Aecon realized a gain in the Energy segment in the second quarter of 2015 of $14.1 million as a result of the sale on April 10, 2015 of its wholly owned subsidiary IST.

The sale of IST and Aecon's share in the Quito airport have impacted Aecon's results for the three months and year ended December 31, 2015 when compared to the same periods in the prior year.  A summary of these impacts is included below:

Backlog as at December 31, 2015 of $3,261 million compares to backlog of $2,654 million as at December 31, 2014.  New contract awards of $3,526 million were booked in 2015 compared to $3,495 million in 2014.

Not included in backlog, but important to Aecon's prospects due to the significant volume involved, is the expected recurring revenue from Aecon's alliances and supplier-of-choice arrangements where the amount and/or value of work to be carried out is not specified. 

REPORTING SEGMENTS 

Aecon reports its 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, water and wastewater treatment and social infrastructure markets.

For the year ended December 31, 2015, revenue in the Infrastructure segment of $959 million was $87 million, or 10 per cent, higher than in the previous year. Revenue was higher in heavy civil and transportation operations, while revenue was lower in social infrastructure operations. 

Operating profit in the Infrastructure segment of $29.6 million improved by $25.2 million compared to an operating profit of $4.4 million in 2014.  Operating profit improved in social infrastructure and transportation operations primarily due to higher volume and gross profit margin in Ontario and Western Canada. However, operating profit decreased in heavy civil operations due to lower gross profit margin in 2015 compared to 2014.

Infrastructure backlog at December 31, 2015 was $2,195 million, $932 million or 74 per cent higher than the previous year.  The largest year-over-year increases in backlog occurred in transportation and heavy civil operations due in large part to the Eglinton Crosstown Light Rail Transit (LRT) project being awarded to a consortium in which Aecon has a 25 per cent interest. New contract awards totalled $1,891 million in 2015 compared to $1,314 million in the prior year.  The increase in new awards was due mainly to the above noted Eglinton Crosstown LRT project.

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 fabrication and module assembly. The Energy segment focuses primarily on the following sectors: power generation, oil and gas, pipelines, utilities, and energy support services.

Revenue in 2015 of $1,268 million in the Energy segment was $17 million, or 1 per cent, higher than in 2014 with higher revenue in industrial operations largely offset by lower revenue in utilities operations and the impact of the sale of IST in April, 2015.

Operating profit in the Energy segment of $46.3 million decreased by $10.2 million compared to the previous year, with the majority of the reduction in utilities operations, due to lower pipeline volume in Western Canada, and in industrial operations in Atlantic Canada. Partially offsetting these decreases was a volume driven increase in operating profit in industrial operations in Western Canada and Ontario. Also impacting operating profit in the Energy segment was the net impact of a gain on sale of IST ($14.1 million) offset in part by a lower operating profit contribution year-over-year from IST operations as a result of the sale.

Backlog at December 31, 2015 of $735 million was $220 million lower than the same time in 2014, with an increase in utilities ($71 million) offset by lower backlog in industrial operations ($291 million). New contract awards of $1,048 million in 2015 were $282 million lower than in 2014.  The decrease in new awards in 2015 primarily reflects the above impacts in industrial operations as well as the impact on awards from the sale of IST.

MINING SEGMENT

The Mining segment offers turnkey 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 environmental reclamation.

Revenue in the Mining segment in 2015 of $706 million was $190 million, or 37 per cent, higher than in the previous year.  The majority of the increase was due to a higher volume of site installation work in the commodity mining sector primarily related to potash projects, and higher revenue from civil and foundations work related to mining projects. Partially offsetting these increases was lower revenue from contract mining where higher revenue from work at new site development projects in Alberta was more than offset by reduced volume from other traditional contract mining work.

Operating profit in the Mining segment in 2015 of $51.1 million increased by $30.4 million compared to the previous year.  Operating profit in the commodity mining sector increased primarily due to higher volume, and in civil and foundations work operating profit increased due to higher gross profit margin from ongoing projects, which more than offset lower income from projects reported under the equity method. 

Backlog at December 31, 2015 of $331 million was $105 million lower than the same time in the previous year.  Backlog decreased in the commodity mining sector ($59 million) primarily as the work off of existing site installation work related to potash projects outpaced new awards in the sector. New contract awards of $601 million in 2015 were $274 million lower than in 2014.

CONCESSIONS SEGMENT

The Concessions segment includes the development, financing, design, construction and operation of infrastructure projects by way of build-operate-transfer, build-own-operate-transfer and other public-private partnership contract structures. 

Revenue reported in the Concessions segment for the years ended December 31, 2015 and 2014 was $3.7 million and $2.9 million, respectively. 

On December 10, 2015, Aecon sold its 45.5 per cent share in the Quito airport concession for gross proceeds of $291.6 million, representing a gain of $48.8 million.  From June 8, 2015 until it was sold on December 10, 2015, Aecon's investment in the Quito airport concession was classified as "held for sale" on its consolidated balance sheet and all equity accounting for the joint venture ceased during this period.  Therefore, operating results from the Quito airport concession subsequent to June 8, 2015 have not been reported within the Concessions segment, thereby impacting the segment's results for the three months and year ended December 31, 2015 when compared to the same periods in 2014.

Operating profit of $57.6 million in 2015 represents a $38.9 million increase compared to the prior year. The increase in operating profit was due to the above noted gain on sale of the Quito airport concession of $48.8 million.  The balance of the year-over-year change results from a reduced contribution from the Quito airport concession in 2015 for the reasons cited above, offset in part by increased profit contribution from recent light rail transit concession projects in Ontario. 

DIVIDEND

The annual dividend will increase to 46 cents per share (from 40 cents per share) to be paid in four quarterly payments of 11.5 cents per share (from 10 cents per share).  The first increased quarterly payment will be paid on April 1, 2016 to shareholders of record on March 22, 2016.

OUTLOOK

"Aecon's diverse and flexible business model paired with strong infrastructure spending commitments by all levels of government bodes well for Aecon's ability to capitalize on the opportunities ahead," said Teri McKibbon. "Aecon's strong backlog position in all of our segments, in particular when combined with the $1.375 billion Darlington nuclear contract award announced in the first quarter of 2016, demonstrates resiliency in our business and provides confidence in continued progress in 2016 and beyond."

CONSOLIDATED RESULTS
The consolidated results for the years ended December 31, 2015 and 2014 are available at the end of this news release.

CONFERENCE CALL

A conference call has been scheduled for Wednesday, March 2, 2016 at 10:30 a.m. (ET) to discuss Aecon's fourth quarter 2015 financial results.  Participants should dial 416-359-3128 or 1-800-622-2443 at least 10 minutes prior to the conference time.  For those unable to attend the call, a replay will be available after 12:30 p.m. at 1-800-558-5253 or 416-626-4100 until midnight on March 9, 2016. The reservation number is 21804030.

ABOUT AECON

Aecon Group Inc. (TSX: ARE) is a Canadian leader and partner-of-choice in construction and infrastructure development.  Aecon provides integrated turnkey services to private and public sector clients in the Infrastructure, Energy and Mining sectors and provides project management, financing and development services through its Concessions segment. Aecon is also pleased to be consistently recognized as one of the Best Employers in Canada. For more information, please visit www.aecon.com and follow us on Twitter at @AeconGroup.

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.

SOURCE Aecon Group Inc.