Aecon builds record $3.4B backlog, but misses third-quarter earnings estimates
Company says Liberal infrastructure spending "bodes well" for 2016
TORONTO—Amid speculation Canada’s engineering and construction firms would be facing an uphill battle with low oil prices and slashed energy company capital budgets, Aecon Group Inc. has recorded $875 million in revenue for the third quarter of 2015.
Though the figure represents a 4 per cent revenue gain from the same quarter last year, the company’s earnings failed to inch up commensurately. Aecon’s earnings dropped to $76.1 million for Q3, or 35 cents per share, versus $77.3 million or 49 cents per share in 2014. The diluted earnings missed analyst expectations of 52 cents per share.
“Aecon’s strategic diversification remains a key strength, providing overall stability to our business,” Teri McKibbon, the firm’s president and CEO, said. “We are well positioned to work on the significant large-scale infrastructure and heavy civil opportunities on the horizon, and while there is still softness in commodity markets, we continue to bid and win work in the Energy segment, including a strong demand for fabrication and module services.”
Despite the earnings miss, the company has a relatively strong procurement track record on the year. The E&C firm has built its backlog to a record $3.4 billion, up significantly from $2.7 billion at the end of its 2014 fiscal third quarter.
Foremost among Aecon’s Canadian infrastructure highlights was the Eglinton Crosstown Light Rail Transit contract win; the company has a 25 stake in the consortium that will build the Toronto mega-project.
The company also pointed to the sale of its interest in Quito International Airport as a “milestone.” The company expects to receive US$195 million in proceeds when the sale closes.
“The outlook for the remainder of 2015 and into 2016 is positive due to Aecon’s strong backlog position, recurring revenue agreements and solid margin profile in each of our operating segments – which continue to bid on opportunities with the overarching goal of steady EBITDA margin improvement,” McKibbon said.
Meanwhile, the company is eagerly awaiting the new federal government’s spending agenda.
“The significant infrastructure commitments of the newly-elected Liberal federal government bode well for Aecon, as we are primed to deliver large-scale, multi-disciplinary infrastructure projects,” McKibbon added.