TORONTO, May 3, 2016 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported results for the first quarter of 2016. 

"Aecon's first quarter results represent continued positive performance including increased revenue and Adjusted EBITDA in each of the Infrastructure, Energy, and Mining segments, and a new record backlog of $4.6 billion," said Teri McKibbon, President and Chief Executive Officer, Aecon Group Inc.  

HIGHLIGHTS

• Revenue of $691 million for the three months ended March 31, 2016 was higher by $189 million, or 38 per cent, compared to the same period in 2015 with increases reported in all segments.
  
  
• Adjusted EBITDA of $4.2 million (margin of 0.6 per cent) for the first quarter of 2016 compared to a negative Adjusted EBITDA of $7.1 million and a negative margin of 1.4 per cent on a like for like basis, excluding Aecon's previous ownership of IST and investment in the Quito airport concession, in the prior year.
  
  
• New contract awards of $2,038 million were booked in the first quarter of 2016 compared to $635 million in the first quarter of 2015, including the previously announced contract awarded to an Aecon JV 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.
  
  
• Record backlog as at March 31, 2016 of $4,608 million compares to backlog of $2,787 million as at March 31, 2015.
  
  
• Annual dividend increase of 15 per cent took effect with the first quarterly payment of 11.5 cents per share (increased from 10 cents per share) paid on April 1, 2016 to shareholders of record on March 22, 2016.

OPERATING AND FINANCIAL RESULTS

"In the Infrastructure segment, we expect to continue to achieve success in the pursuit of large-scale infrastructure projects, some of which will include our Concessions segment through the Public-Private Partnership model, and along with recently secured projects, these segments should experience ongoing growth over the next few years. In the Energy segment, Aecon expects increased backlog and ongoing demand for gas distribution facilities, as well as utilities, power and nuclear work, to offset lower oil related volume, while in the Mining segment the current backlog and recurring revenue work is expected to sustain the segment in 2016," said Teri McKibbon. "All four segments continue to bid on opportunities with the goal of delivering improved Adjusted EBITDA margin."

Revenue of $691 million for the three months ended March 31, 2016 was higher by $189 million or 38 per cent compared to the same period in 2015, or 40 per cent on a like for like basis excluding the period-over-period impact of the sale of IST in April 2015 with increases reported in all segments.

Adjusted EBITDA of $4.2 million (margin of 0.6 per cent) for the first quarter of 2016 compared to $6.5 million (margin of 1.3 per cent) for the first quarter of 2015. On a like for like basis in the first quarter, excluding IST and Aecon's previous investment in the Quito Airport Concession, Adjusted EBITDA of $4.2 million and margin of 0.6 per cent compared to a negative Adjusted EBITDA of $7.1 million and a negative margin of 1.4 per cent in the prior year, continuing Aecon's positive margin trend.

Record reported backlog as at March 31, 2016 of $4,608 million compares to backlog of $2,787 million as at March 31, 2015. New contract awards of $2,038 million were booked in the first quarter of 2016 compared to $635 million in the first quarter of 2015. 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. 

The sale of IST in April 2015 and the sale of Aecon's investment in the Quito airport concession in December 2015, including the classification of the Quito airport concession as "held for sale" from June 8, 2015, have impacted Aecon's results for the three months ended March 31, 2016 when compared to the same period in the prior year.  A summary of these impacts is included below:

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, and water and wastewater treatment markets.

For the three months ended March 31, 2016, revenue in the Infrastructure segment of $154 million was $38 million, or 32 per cent, higher than the same period last year.  The largest increase occurred in heavy civil operations largely due to continued ramp up on projects in Ontario. 

Operating loss in the Infrastructure segment in the first quarter of $19.0 million improved by $2.0 million over the same period in the prior year due to higher volume in heavy civil operations and higher gross profit margin from mechanical work in the water treatment sector. 

Infrastructure backlog at March 31, 2016 was $2,192 million, which is $863 million higher than the same time last 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 award in the third quarter of 2015 to a consortium in which Aecon has a 25 per cent interest.  Offsetting these increases was lower backlog in social infrastructure due to the work off of remaining buildings backlog during 2015.

New contract awards totaled $151 million in the first quarter of 2016 compared to $183 million in the same period in the prior year as increases in new contract awards in transportation operations were offset by lower new awards in heavy civil and social infrastructure operations.

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 the first quarter of 2016 of $301 million in the Energy segment was $51 million, or 20 per cent, higher than the same period in 2015 driven by higher revenue in both utilities and industrial operations. 

Operating loss of $4.9 million in the first quarter improved by $2.8 million compared to an operating loss of $7.7 million in the same period in the previous year.  Operating profit increased in both utilities and industrial operations in Eastern Canada due to higher volume and gross profit margin. Partially offsetting these increases was lower operating profit in Western Canada due to lower volume and gross profit margin.

Backlog at March 31, 2016 of $2,210 million in the Energy segment was $1,217 million higher than the same time in 2015, with a significant increase in industrial operations in Eastern Canada primarily from new awards in the power generation sector due in large part to the execution phase of the Darlington Nuclear Refurbishment project being awarded to a joint venture in which Aecon has a 50 per cent interest.

New contract awards of $1,822 million in the first quarter of 2016 were $1,534 million higher than in the same period in 2015.  The increase in new awards in 2016 primarily reflects the above impacts in industrial operations.

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 of $236 million in the first quarter of 2016 was $99 million, or 72 per cent, higher than in the same period of 2015. The majority of the increase was due to a higher volume of site installation work in the commodity mining sector primarily related to potash and oil sands projects. 

Operating profit in the Mining segment of $16.6 million increased by $4.3 million compared to the same period in the previous year. The majority of the operating profit improvement occurred in the commodity mining sector primarily due to higher volume.  This increase was partly offset by lower operating profit in contract mining operations due to the impact of unseasonably mild weather in northern Alberta that impacted productivity in the quarter.

Backlog at March 31, 2016 of $206 million was $259 million lower than at the same time in the previous year. Backlog decreased in the commodity mining sector primarily as the work off of existing site installation work outpaced new awards in the sector.  Backlog also decreased in contract mining operations largely due to work off of backlog related to new site development projects in Alberta, and in civil and foundations operations.

New contract awards of $66 million in the first three months of 2016 were $101 million lower than in the same period in 2015 due to a reduction in new awards for both site installation and contract mining work.

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 three month periods ended March 31, 2016 and 2015 was $0.8 million and $0.6 million, respectively.

For the three months ended March 31, 2016, operating loss of $0.7 million compares to an operating profit of $6.6 million in the same period of the previous year.  Most of the decrease in operating profit was due to the sale of Aecon's investment in the Quito airport concession on December 10, 2015 offset to some extent by increased profit contribution from LRT concession projects in Ontario. 

Aecon does not include in its reported backlog expected revenue from concession agreements.  As such, while Aecon expects future revenue from its concession assets, no concession backlog is reported.

DIVIDEND

As previously announced, the annual dividend to be paid to all shareholders of Aecon Common shares is 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 was paid on April 1, 2016 to shareholders of record on March 22, 2016.

OUTLOOK

"Aecon's strong backlog position and strategic diversification, combined with significant infrastructure spending, bodes well for Aecon's continued positive performance in 2016," said Teri McKibbon. "Aecon's strong and liquid balance sheet affords us the opportunity to capitalize on growth opportunities and positions us well to benefit from a rebound in resource and commodity markets."

CONSOLIDATED RESULTS
The consolidated results for the three months ended March 31, 2016 and 2015 are available at the end of this news release.

CONFERENCE CALL

A conference call has been scheduled for Wednesday, May 4, 2016 at 10:30 a.m. (ET) to discuss Aecon's first quarter 2016 financial results.  Participants should dial 416-981-9070 or 1-800-408-6335 at least 10 minutes prior to the conference time.  For those unable to attend the call, a replay will be available after 1:00 p.m. at 1-800-558-5253 or 416-626-4100 until midnight on May 11, 2016. The reservation number is 21808993.

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.