Aecon reports year-end 2024 results
Press Release
Toronto, Ontario – March 5, 2025: Aecon Group Inc. (TSX: ARE) (“Aecon” or the “Company”) today reported results for the fourth quarter and year-end 2024 including full year revenue of $4.2 billion and backlog of $6.7 billion at December 31, 2024.
“Driven by robust year-end backlog, significant new contract awards, contributions from strategic acquisitions, solid recurring revenue, and a strong bid pipeline, revenue in 2025 is expected to be stronger than 2024,” said Jean-Louis Servranckx, President and Chief Executive Officer, Aecon Group Inc. “Aecon is actively engaged in delivering several major long-term projects under more collaborative models and is focused on advancing them to the construction phase in 2025 and 2026. Aecon will maintain a disciplined capital allocation approach and remains focused on strategic investments in its operations to support access to new markets.”
HIGHLIGHTS
All quarterly financial information contained in this news release is unaudited.
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Revenue for the year ended December 31, 2024 of $4,243 million was $401 million, or 9%, lower compared to 2023. The lower revenue was primarily driven by decreased activity on mainline pipeline work in industrial operations following the achievement of substantial completion on a large project in 2023, and in urban transportation solutions from a decrease in light rail transit (“LRT”) work as three LRT projects near completion.
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Operating loss of $60.1 million (operating margin(4) of -1.4%) compared to operating profit of $240.9 million in 2023 (operating margin of 5.2%). Lower year-over-year operating profit was driven by a decrease in other income of $186.2 million primarily due to a lower year-over-year gain related to the sale of a 49.9% interest in the Bermuda International Airport concessionaire (“Skyport”) of $133.1 million and a lower gain on the sale of Aecon Transportation East (“ATE”) of $27.5 million. In addition, lower gross profit of $73.1 million contributed to the year-over-year decrease in operating profit. This decrease was primarily due to lower gross profit related to the four fixed price legacy projects of $57.6 million from negative gross profit in 2024 of $272.8 million compared to negative gross profit in 2023 of $215.2 million. These four fixed price legacy projects are discussed in Section 5 “Recent Developments”, Section 10.2 “Contingencies”, and Section 13 “Risk Factors” in the Company’s December 31, 2024 Management’s Discussions and Analysis (“MD&A”).
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Adjusted EBITDA(1)(2) of $82.6 million for the year ended December 31, 2024 (Adjusted EBITDA margin(3) of 1.9%) compared to Adjusted EBITDA of $143.4 million (Adjusted EBITDA margin of 3.1%) in 2023.
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Loss attributable to shareholders of $59.5 million (diluted loss per share of $0.95) for the year ended December 31, 2024 compared to profit attributable to shareholders of $161.9 million (diluted earnings per share of $2.10) in 2023.
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Adjusted loss attributable to shareholders(1)(2) of $61.6 million (diluted adjusted loss per share(1)(2) of $0.99) for the year ended December 31, 2024 compared to adjusted profit attributable to shareholders(1)(2) of $160.9 million (diluted adjusted earnings per share(1)(2) of $2.09) in 2023.
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Reported backlog at December 31, 2024 of $6,662 million compared to backlog of $6,157 million at December 31, 2023. New contract awards of $4,747 million were booked in 2024 compared to $4,505 million in 2023.
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On December 2, 2024, Aecon’s subsidiary, Aecon Utilities Group Inc., acquired Ainsworth Power Construction, an electrical services and power systems business unit of Ainsworth Inc.
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On December 17, 2024, Aecon closed the previously disclosed acquisition of United Engineers & Constructors (“United”).
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On December 23, 2024, Aecon’s common shares were added to the S&P/TSX Composite Index – the principal benchmark for Canadian equity markets which includes the largest and most liquid publicly traded companies in Canada.
- Subsequent to year-end:
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An Aecon joint operation was awarded a collaborative contract by Ontario Power Generation which includes the definition phase work for the retube, feeder and boiler replacement of Units 5, 6, 7 and 8 at the Pickering Nuclear Generating Station in Ontario. Aecon holds a 50% interest in the joint operation and its share of the approximately $1.1 billion early works portion of the contract was added to its Construction segment backlog in the fourth quarter of 2024. The remaining portion of the contract is valued at approximately $1 billion, and Aecon will add its share to backlog in the first quarter of 2025.
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An Aecon-led consortium completed the collaborative development phase and reached commercial close on the Scarborough Subway Extension Stations, Rail and Systems progressive design-build transit project. Aecon’s share of the target price contract is valued at over $2.8 billion and will be added to its backlog in the first quarter of 2025.
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CONSOLIDATED FINANCIAL HIGHLIGHTS(1)
| Three months ended Year ended | ||||||||||||
| $ millions (except per share amounts) | December 31 | December 31 | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenue | $ | 1,267.0 | $ | 1,130.2 | $ | 4,242.7 | $ | 4,643.8 | ||||
| Gross profit | 107.2 | 98.0 | 182.5 | 255.6 | ||||||||
| Marketing, general and administrative expense | (57.1) | (51.8) | (213.2) | (177.8) | ||||||||
| Income from projects accounted for using the equity method | 1.6 | 5.5 | 21.2 | 18.7 | ||||||||
| Other income | 4.1 | 2.6 | 37.3 | 223.5 | ||||||||
| Depreciation and amortization | (26.2) | (14.6) | (87.8) | (79.1) | ||||||||
| Operating profit (loss) | 29.6 | 39.6 | (60.1) | 240.9 | ||||||||
| Finance income | 1.9 | 2.2 | 8.6 | 7.7 | ||||||||
| Finance cost | (8.3) | (21.4) | (25.1) | (71.0) | ||||||||
| Profit (loss) before income taxes | 23.1 | 20.3 | (76.5) | 177.5 | ||||||||
| Income tax (expense) recovery | (9.0) | (10.7) | 17.1 | (15.7) | ||||||||
| Profit (loss) | $ | 14.1 | $ | 9.7 | $ | (59.4) | $ | 161.9 | ||||
| Non-controlling interests | $ | (0.1) | $ | – | $ | (0.1) | $ | – | ||||
| Profit (loss) attributable to shareholders | $ | 14.0 | $ | 9.7 | $ | (59.5) | $ | 161.9 | ||||
| Gross profit margin(4) | 8.5% | 8.7% | 4.3% | 5.5% | ||||||||
| MG&A as a percent of revenue(4) | 4.5% | 4.6% | 5.0% | 3.8% | ||||||||
| Adjusted EBITDA(2) | $ | 76.3 | $ | 70.2 | $ | 82.6 | $ | 143.4 | ||||
| Adjusted EBITDA margin(3) | 6.0% | 6.2% | 1.9% | 3.1% | ||||||||
| Operating margin(4) | 2.3% | 3.5% | (1.4)% | 5.2% | ||||||||
| Adjusted profit (loss) attributable to shareholders(2) | $ | 16.3 | $ | 7.8 | $ | (61.6) | $ | 160.9 | ||||
| Earnings (loss) per share – basic | $ | 0.22 | $ | 0.16 | $ | (0.95) | $ | 2.62 | ||||
| Earnings (loss) per share – diluted | $ | 0.21 | $ | 0.15 | $ | (0.95) | $ | 2.10 | ||||
| Adjusted earnings (loss) per share – basic(2) | $ | 0.26 | $ | 0.13 | $ | (0.99) | $ | 2.61 | ||||
| Adjusted earnings (loss) per share – diluted(2) | $ | 0.25 | $ | 0.12 | $ | (0.99) | $ | 2.09 | ||||
| Backlog(as at end of period) | $ | 6,662 | $ | 6,157 | ||||||||
(1) This press release presents certain non-GAAP and supplementary financial measures, as well as non-GAAP ratios to assist readers in understanding the Company’s performance (GAAP refers to Canadian Generally Accepted Accounting Principles). Further details on these measures and ratios are included in the “Non-GAAP and Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release.
(2) This is a non-GAAP financial measure. Refer to the “Non-GAAP and Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release for more information on each non-GAAP financial measure.
(3) This is a non-GAAP ratio. Refer to the “Non-GAAP and Supplementary Financial Measures” section of this press release for more information on each non-GAAP ratio.
(4) This is a supplementary financial measure. Refer to the “Non-GAAP and Supplementary Financial Measures” section of this press release for more information on each supplementary financial measure.
Revenue for the year ended December 31, 2024 of $4,243 million was $401 million, or 9%, lower compared to 2023. Revenue was lower in the Construction segment ($352 million) driven by lower revenue in industrial ($460 million), urban transportation solutions ($198 million), and civil operations ($14 million), partially offset by higher revenue in nuclear ($282 million) and utilities operations ($38 million). This lower revenue was primarily driven by decreased activity on mainline pipeline work in industrial operations following the achievement of substantial completion on a large project in 2023, and in urban transportation solutions from a decrease in LRT work as three LRT projects near completion. In the Concessions segment, revenue was $61 million lower in 2024 compared to the prior year primarily due to the use of the equity method of accounting in 2024 for Aecon’s 50.1% retained interest in Skyport following the sale of a 49.9% interest in Skyport in the third quarter of 2023. These amounts were partially offset by higher revenue in Corporate and Other after inter-segment revenue eliminations ($12 million).
Operating loss of $60.1 million for the year ended December 31, 2024 compares to operating profit of $240.9 million for the year ended December 31, 2023, a decrease of $301.0 million. Lower year-over-year operating profit was driven by a decrease in other income of $186.2 million. This decrease was primarily due to a lower year-over-year gain related to the sale of a 49.9% interest in Skyport of $133.1 million (a gain of $5.9 million from incremental proceeds in 2024 compared to a gain on sale of $139.0 million in 2023) and a lower gain on the sale of ATE of $27.5 million (a gain of $9.0 million from incremental proceeds in 2024 compared to a gain on sale of $36.5 million in 2023). Also contributing to the decrease in other income were lower gains on the sale of property, buildings, and equipment of $27.7 million and a lower fair value remeasurement gain on financial instruments of $0.2 million, partially offset by higher foreign exchange gains of $2.3 million.
In addition to the above noted decrease in other income, lower gross profit of $73.1 million also contributed to the year-over-year decrease in operating profit. In the Construction segment, gross profit decreased by $49.8 million. This decrease was primarily due to lower gross profit related to the four fixed price legacy projects of $57.6 million from negative gross profit in 2024 of $272.8 million compared to negative gross profit in 2023 of $215.2 million. These four fixed price legacy projects are discussed in Section 5 “Recent Developments”, Section 10.2 “Contingencies”, and Section 13 “Risk Factors” in the Company’s December 31, 2024 MD&A. Partially offsetting the impact of these four fixed price legacy projects in 2024 was higher gross profit in the balance of the Construction segment of $7.8 million, driven by higher volume and gross profit margin in nuclear and utilities operations, as well as higher gross profit in industrial operations, partially offset by lower gross profit margin in civil operations and a volume driven decrease in gross profit in urban transportation solutions. In the Concessions segment, gross profit in 2024 decreased by $33.9 million compared to 2023 primarily from the use of the equity method of accounting in 2024 for Aecon’s 50.1% retained interest in Skyport following the sale of a 49.9% interest in this project in the third quarter of 2023, while in Corporate and Other, gross profit increased by $10.7 million as a result of higher inter-segment cost recoveries from projects.
Marketing, general and administrative expense (“MG&A”) increased in 2024 by $35.4 million compared to 2023. The increase in MG&A was primarily due to higher personnel costs reflecting more typical levels in MG&A, ongoing investments to support growth and acquisitions, particularly in utilities operations with the expansion of its U.S. operations and the Xtreme Powerline Construction (“Xtreme”) acquisition in 2024, and from higher acquisition related transaction costs in 2024 ($9.9 million). This higher MG&A in 2024, was partially offset by lower MG&A related to the ATE operations which was sold in the second quarter of 2023 ($5.9 million). MG&A as a percentage of revenue increased from 3.8% in 2023 to 5.0% in 2024.
Reported backlog at December 31, 2024 of $6,662 million compares to backlog of $6,157 million at December 31, 2023. New contract awards of $4,747 million were booked in 2024 compared to $4,505 million in 2023. The reported 2024 awards include $275 million of backlog acquired at the time the acquisitions of United, Ainsworth Power Construction, and Xtreme closed.
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