Q3 2020 Aecon Group Inc Earnings Call
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I would like to hand, the conference over to your speaker today on Borgata. Please go ahead Sir.
Thank you Ian good morning, everyone and thanks for participating in our third quarter Twentytwenty results Conference call. This is Adam more guidance senior Vice President of corporate development and Investor Relations speaking presenting to you. This morning are shown that Lisa Roberts, President and CEO, and David Smiles Executive Vice President and CFO.
Our earnings announcement was released yesterday evening, and we have posted a slide presentation on the investing section of our website, which we will refer to during this call. Following our comments, we will be glad to take questions from analysts.
As noted on slide two of the presentation listeners are reminded that the information we are sharing with you. Today includes forward looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties. Although econ believes that the expectations reflected in these statements are reasonable we can give no assurance that these expectations will prove to be correct.
With that ill now turn the call over to Dave.
Thanks, Adam and good morning, everyone I'll touch briefly on a quarterly consolidated results review results by segment and then address say comes financial position before turning the call over to Joe Louise.
Turning to slide three.
Option to take over the operations as a result of co we'd like to continue to impact results in the third quarter.
Muting, what would otherwise have been a strong quarter of revenue growth.
Overall revenue for the three months ended September 32000, $21 billion was $14 million or 1% higher compared to the same period last year.
Adjusted EBITDA in the third quarter of $137 million.
I want you to 13.2%.
Increased by $46 million or 51% compared to adjusted EBITDA of $91 million and margin of 8.9% in Q3 last year and operating profit of $107 million was $48 million higher than Q3 last year.
Diluted earnings per share of 99 cents in the quarter compared to diluted earnings per share of 60 cents in the same period last year.
A country results included a net positive impact to adjusted EBITDA operating profit from the Canada emergency rich subsidy or sues program of $69 million in the third quarter.
Which reflected the net benefit from the program for the period from March 15 to September 26 2020.
The subsidy offset the impacts of COVID-19 on E Commerce business since March 2020, while assisting a call to maintain normal employment levels through this period.
Management estimates that the impact to COVID-19 on a comes because this was a reduction in revenue operating profit and adjusted EBITDA of $141 million $29 million and $31 million respectively. In the three month period ended September 3300 $9 million is set.
$1 million and $68 million, respectively in the nine months year to date.
Reported backlog of $6.7 billion compared to backlog of 6.6 billion a year ago.
Now looking at results by segment.
Turning to slide four construction revenue of $1 billion in the third quarter was $34 million or 3% higher than the same period last year.
Revenue was higher in the industrial operations, primarily due to increased activity on mainline pipeline projects in Western Canada and in civil operations in urban transportation systems, driven by increases in major projects and road building operations in both eastern and Western Canada.
Revenue was also higher in utilities due in large part to the acquisition of voltage power in February 2020.
Partially offsetting these increases was lower revenue from nuclear operations, driven primarily by a decrease in work and adapting to nuclear facility in Ontario as work on the next unit domain react to refurbishment was delayed due to covert died.
Adjusted EBITDA in the construction segment and $131 million, a margin of 12.7% increase by $58 million compared to $73 million a margin of 7.3% in Q3 2019.
The construction segment included a net positive impact of $69 million in the third quarter from the sous program covering the period from March 15 to September 26.
After excluding the estimated adjusted EBITDA in the third quarter decreased by 11 million compared to the same period in 2019 due.
Due to lower gross profit margin in civil operations, and urban transportation systems and from a volume driven decrease in nuclear work.
This was partially offset by higher operating profit in industrial operations, primarily from increased volume and in utilities, driven by higher volume and gross profit margin in the current quarter.
New contract awards of $439 million in the third quarter 2020.
359 million lower than the same period last year, driven primarily by lower awards in industrial nuclear and utilities.
Construction backlog at the end of the quarter was $6.6 billion $89 million higher at the same time in 2019.
Turning to slide five concept.
Concessions revenue for the third quarter was $9 million.
Decrease of $52 million or 85% compared to the same period last year.
Upon reopening of the Bermuda International Airport on July 1st following co lead 19 related closure in March.
Commercial flight operations have been significantly reduced volume compared to the prior year due to the pandemic.
Adjusted EBITDA in the concession segment of $8 million, which 17 million lower compared to the same period last year due to a COVID-19 impact on the new director for operations.
Turning to slide six A. comes financial position liquidity and capital resources remained strong and they are expected to be sufficient to finance operations and working capital requirements for the foreseeable future.
As of September 32020, $856 million of cash on hand, excluding cash enjoyed operations and restricted cash.
And committed revolving credit facility of 600 million of which nothing was drawn and $7 million utilized for letters of credit.
When combined with an additional $700 million performance security guaranteed facility to support letters of credit provided by MVC.
Cones committed credit facilities for working capital letter of credit requirements totaled $1.3 billion.
Called has no debt or working capital credit facility maturities until the second half of Twentytwenty, three except equipment loans and leases in the normal course.
At this point I will turn the call over to John Murray.
Thank you Dave.
Turning to slide seven this.
Despite the impact of the 19 on eight homes third quarter results.
Our ability to respond with agility to these challenging times to deliver our services effectively while ensuring the health and safety of our dedicated employees.
And demonstrates the resilience of our business.
We remain confident that eight comes balanced and diversified portfolio strong financial position.
Safety first culture will be of great benefit as we continue to navigate evolving market conditions.
Specifically the construction segment is aligned to the significant infrastructure investment commitments by all levels of government across Canada.
As well as by the private sector and the concessions segment is pursuing a number of large scale infrastructure projects that require private finance solutions.
As well as participating as a concessionaire on the fight discrete projects I'd.
Identified on this slide.
Turning to slide eight.
The current backlog and level of New awards year to date have remained strong with a backlog of $6.7 billion.
At the end of the third quarter of 2020.
We took over.
$107 million higher than the same time last year.
The company expects the demand for it services will remain strong for late the COVID-19 pandemic as the federal government and provincial governments across Canada, I've identified investment in infrastructure as a key source of economic stimulus as part of the recovery plan.
Trailing 12 months' factoring revenue was down 15% compared to last year, primarily as a result of the suspension of commercial flight operation on March 22020 at the Bermuda International Airport.
Followed by a lower volume of commercial flights compared to the prior year. After a reopening of the appelt on July sort of solvent 20.
Due to the pending.
As noted on slide nine.
In the third quarter 800, released its first sustainability report entitled.
Building the infrastructure of a better tomorrow.
This report highlights the progress initiative and commitments of Acorn, environmental social and government or energy processes and strategies.
This report also demonstrate a calm evolving initiative to embedded sustainability in our operations and relationships with our clients communities investors and all stakeholders.
The infrastructure Econ builds is critical in eight ml building society to adapt to a changing climate.
By transitioning to a lower carbon circular economy.
Moving forward Econ, we look to continuously improve in establishing and measuring key matrix setting, meaning two goals and targets and leading the industry in sustainable infrastructure construction and development.
We invite all of you to review the report on our website and welcome your comments and feedback.
Turning to our outlook on slide 10.
Eight homes operations continued to be impacted by the COVID-19 pandemic either by client decisions related to scheduled operating policy.
Due to broader government directives to modify work practices to meet the relevant health and safety standards.
In particular during the fourth quarter nuclear operations are expected to only be in the ramp up phase rather than full run rates for the next stage of work on a number of projects that were already generally scheduled to start earlier in the year.
Were delayed due to Colby 19th.
In the concession segment commercial operations at the Bermuda International Airport continue to recover slowly due to COVID-19 related travel restrictions, which have significantly impacted the whole affiliation industry.
The New airport terminal is expected to be opened for operation on December nine 2020.
Which will mark a significant milestone for acre.
800 continues to monitor developments and mitigate risks related to the probably 19 pandemic and the impact on acorn's projects operation supply.
Supply chain.
And most importantly, the health and safety of its employee.
As this situation may continue to evolve for some time shifting Directv and policies from clients in government I expected to continue.
The overall outlook for 2020 remain solid and 2021 is expected to be a stronger us construction continues on a number of projects.
Ramped up in 2019 and 2020.
The strong level of New awards in 2020.
And the strong demand environment for Acorn services fourth.
All subject to the unknown impact of COVID-19 going forward.
In closing I want to personally thank.
All of our 800 employees.
In particular, our frontline workers for the dedication strong.
Strong commitment and professionalism during this challenging time.
Thank you the old safe and we will now turn the call over 24 questions.
At this time, if you'd like to ask a question over the phone lines. Please press Star then one on your telephone keypad.
We'll now pause for a moment to compile the tumor thereafter.
For our first question comes from the line of Yearnings link of Canaccord Genuity. Your line is open.
Hi, guys.
Just it sounds like the number of delays weve encountered.
Since your last update back in August.
Amplified a little bit because of the cold.
A fair characterization and can you put any more on the bone in terms of exactly what you are seeing on the ground.
Yes, Hi, Uri.
I wouldn't say intensified I mean, the ones that we flagged.
As we enter Q3 are the ones that we experienced so we knew for example site C was going to be a ramp up phase.
As we go back to work on that sorry.
We knew nuclear was going to be.
Suspended through Q3, and just starting to get into ramp up again.
At the end of the quarter and through Q4.
They are obviously the two major projects is this loss of smaller projects having.
Have impacts.
So.
But nothing outside and what we were expecting I think pretty much played out the way we saw back in Q2, we had a number of other projects.
That were impacted for example, our OEM and things like that so.
Further a bit of a mixed bag, but nothing really that we weren't expecting.
This is Mary.
Maybe you re I can add a few words about covered impact, which you won't soon and they said that it's it's complex, but I think it's bothering trusting them.
From the beginning of this pandemic that simops it teams I mean.
No all our employees.
18.
Employees only from a contested positive.
Hey, Jim.
When that some of our employees test positive we immediately sell isolate.
At School training program, the one that could have been in contact.
I presume.
In October for example, we have sent by the latest 150 people.
And what did extremely I mean, weve what is important is that as of today.
Known of the zoo's at 150 people that have been isolated.
It's positive.
Just means that.
With all the measures we have taken at a corner.
Stringent.
Social distancing wearing a mask washing and not sharing tools not sharing containers for lunch or pull with it I mean, if you follow the rules with discipline.
It's not probable.
Probable that you don't get covered at Paycom.
And this is very important because this discipline that we have experience and the lessons learned I mean will help us to navigate through this second wave. It I mean, probably much better because they are not caught by surprise and we know what works now.
We are confident boundary and he didnt clear I mean, we cannot let Howard one down I think nothing is granted we are killing despite for a few months from now but.
This is where we are and what is the situation.
Okay. That's helpful.
Maybe just switching gears to the margin side.
You called out in the slide deck that civil and.
Institution margins were lower within the construction business just wondering.
What's behind that and this that's.
Related to some of the headlines we've seen them in regards to the Clinton project and the losses there.
Yes, I mean, I think you'll be able to see from the numbers.
The work wasn't any kind of material shift in margins.
A little lower than a year ago, but part of that is obviously the impact too.
Colgate and lower revenue versus the overhead base. So there's an element of that across each of the sectors.
And obviously, we will occur all our projects every quarter in terms of weather.
The margin profile each of those projects and adjust and there's really two quarter to quarter, but nothing.
Nothing.
Nature that we felt we needed to call out.
Nothing, particularly unusual in the numbers this quarter a lot of is often timing or mix.
So no material change shoes.
[music].
The normal kind of timing and mix issues and looking at the margins across all our jobs.
Maybe Yuri I can add a few words on Egginton because you you asked about it so.
Again to me that is a major projects and as all major projects has its own.
Complexity, we have a very strong team.
Looking at internal under cross screen so.
What has happened during the last.
Two weeks I mean, everybody knows that discovery 19 is the is a global pandemic.
And he is ravaging I mean domestic and global economy.
What we.
We have been doing is.
Buying on call to get natural incentive infrastructure, Ontario.
Declare an emergency on the job because it has not been done despite the fact that the province, and the CP Board declared emergency more than seven months ago.
Okay.
Decoration of emergency to our contract gives us much more capacity.
To be compensated and to get relief for a time and and cost so.
Construction companies are are vastly I mean quarter adverse mean, we usually.
Try to find resolution of our complete conflicts through.
Through our contracts, but we just need a fair and reasonable resolution of our problem I remind you that the NP three and continue the peace sweet.
The third piece partnership.
And we also have done this to defend all our subcontractors and partners and supply chains, while while suffering these being paid.
We work extremely hard on on.
On Egginton I mean.
The Truvue can go through I mean, along the 20 kilometers line and you just can't see I mean, the brand, but the work is progressing well it's hard we were under very stringent safety.
Conditions, we are suffering from supply chain issue.
Hi, Emagin everybody is aware of the the concrete supply problem in the key areas that is.
At this moment.
But we are strong companies, we are exploring in delivering large complex project and we are.
We are fighting everyday.
Every night, the apples to our client a stage opening for Ellington.
And and this is where we are at the moment I will say business as usual, but major projects have.
Their own difficulties.
Okay, that's fair.
Now I'll turn it over guys. Thanks.
Thanks you.
Your next question comes from line of Jacob.
See how do you see your line is open.
Good morning.
Wanting for injection wanted to pick up on the margin question.
Maybe talk a bit about the impact of nuclear on margins in the quarter end.
What kind of.
Proven or are you expecting in the fourth quarter and two in the spring next year.
So I think.
Obviously, we had.
A big drop in our nuclear revenue in Q3 versus a year ago.
Uhhuh, which impacts the mix I think it will be back at full run rate in in Q4, it will take us a quarter so too.
To get back to the kind of volumes, we saw through 2019, when we were working.
Follow on the.
First unit to be refurbished so it will start to move.
Back in the right direction through Q4 revenue will be.
Pretty much.
Full pace in 2021.
There's always margin mix impacts.
Not just.
Luxurious nuclear.
That clearly is one of the areas.
We generally have a positive impact and without not being in Q3.
As the opposite impact this quarter, but I mean, we never talk about specific margins in.
In our operations, but I think everybody knows us one that normally has positive impact that was missing in Q3.
Okay, maybe I can add a few operational.
Look at our jobs, meaning that in Darlington and.
With LPG.
The operation to have now starting on the second uniquely.
Three we are well advanced in our distributing activities more than 1000 people on site.
He has been delayed but it's ramping up well we also work on the turbine generator.
Elements.
In Bruce we have begun on the on the on the first reactor that was shut down with delayed but so we enter into the vault of unit six early October we have more than 900 people working and we are also working in the steam generator.
Of this.
Reactors, so yes, it's ramping up with some delayed but but we are well we are well on right for those big projects.
Thank you for that and then.
Just a question around the the backlog finished sizable decline in the civil and urban transportation systems.
Just talk about is this just a timing thing or or.
How should we be thinking about.
Okay.
I'm comfortable with our backlog I've always say that I'm comfortable between 6.5 and seven.
Can even go up 7.5 billion I think the than.
The role figure add itself I mean is it not an issue what is extremely important needs to do is to see that as this backlog is very well balanced it's very important for us.
Two two wind projects, where we are confident that our best team can be posted.
It's also good to see that the proportion to be expected within the next two months I mean, it is quite strong which gives the sort of future outlook for 2021.
Which is interesting.
And that and the quality of the backlog. It is also up but most important as I've already told you.
We are extremely disciplined.
On on.
Our first suites.
On the way we paid we will review all conditions.
And when we targeted job, we know perfectly why we targeted and what can we do our can we put.
Put in place the best design out can we integrate perfectly designed with our construction teams. So.
He is where we are we are not starving. We average three major jobs of urban transportation system at the moment on the goal, which are intended change and the Rand.
In Australia, probably not is that CPQ have announced that they will be for that project up to the renminbi in Montreal.
We are quiet focused on executing our jobs.
And targeting perfectly the jobs of the future.
Okay. Thank you for that.
Your next question comes from the line of Frederic Bastien of Raymond James Your line is open.
Thanks, and good morning, John the way I was wondering if you could provide an update you did a great job providing updates on and Clinton I am wondering if you could switch and move out west and discuss how sites. He is progressing.
So sites. He is also a massive massive job.
I remind you that our job.
Is about the speedway in the generating station.
It's about.
Building 700000 cubic metre of concrete.
We are running extremely rapidly from the moment.
Hi, Joel Beatty shifting the the posture suspension.
We reached a very important milestone I mean.
During the last week, because we have now executed 200000 to become the 700000 cubic.
We are.
Aiming to deliver these job during the year 2023, we add the very.
Subsequent discussions and negotiations with I do we'll be happy about the consequences.
Direct and in direct.
Following the suspension.
For the COVID-19, I remind you that they see the account job and I will be here have been extremely prudent in managing this and dania.
We are also discussing with them.
Owns it means that.
That we can put.
Put in place to recover this partial suspension. So so far so good on this job.
There's been some some technical issues I mean, you have read all the articles they are all related with the foundations and geotechnical, which are totally outside.
Our scope of work.
So what I, what I would say that for us on site C is business as usual.
We are almost.
I'm, 100% of our.
Capacity and this is where we are.
Thanks, Henry and I, just want to go back and make sure that I'm not misinterpreting. The information we provided in respect to to Darlington.
And the ramp up of work on the next unit.
Delays that are highlighted in the press release and M&A really go back to the decision taken by a client in the spring and and in short to make sure that that's correct and that's not new or more recent delays.
Are impacting the job.
No. It's exactly this I remind you that and the production of energy is the is an essential services, even a super essential service, so both or PG and Bruce.
When the Pennsylvania.
Reached on target or decided to.
Gives the highest priority to the operation of the power plant.
I remind you that when we enter into a reactor its more than 1000 people entering this factor with that with the risk of infection at the moment, where we did not know exactly I mean out of the coffee that could be disseminated to what we have the right ways of doing so they decided to postpone.
<unk>.
The beginning of.
The second unit of Darlington units, three or the opportunity to Bruce.
Two focused on safe operation of the existing power plant then ones that we're seeing I mean, it will stabilize we had the authorization to begin and all the competition from the owners.
On our way I mean, we are organized on on both jobsite than and we are very happy about the way we.
We are running was drilled at the moment.
Thanks, My last questions on potential M&A, and how you're looking at the markets right now.
Yeah, obviously cut a good financial position things seem to be gone in the right direction. So I was wondering if theres opportunities for you to.
Continue adding sort of this or expanding that service.
Service line that you have I mean, we've seen a few acquisition this past year, but hi, how you how you think.
Thinking about M&A right now.
Okay. So you can imagine that said during the last month.
I mean, the the the focus of.
The management of this company.
Wells on protecting our people.
Indicating efficiency I mean on.
With them under I would say global uncertainty about ensuring the continuity of works and this is what we have done and I'm very happy about the way Commnet reacted.
Of course I mean.
In a either.
He is an important topic for us we have the capacity.
I've seen with our financial strengths.
We are we are looking everyday at the.
New possibilities offered tuck in acquisitions.
We are active on this but.
So far I mean, there is nothing we can specifically at least at this stage.
Thanks, Bob.
Very good results.
Okay.
Your next question comes from the line of 10 Watts or you have to ensure that capital. Your line is open.
Yes, thank you very much.
And congratulations for the results just looking at Bermuda Airport would it be possible to do to provide some color about the transition to the new terminal in December whether it will bring in.
Incremental costs and how should we be looking.
The EBITDA contribution of Bermuda, as we look through Q4 and 2021.
Yes, Hi, Ben so yes.
Yes, no significant change in cost base from one terminal to the.
Personnel numbers and those kind of things still.
Don't really change.
Obviously.
As we look forward in terms of.
The profitability, therefore, it's all going to be driven by traffic and recovery.
We are seeing steady improvement month to month.
Since the airport reopened in July.
Who added.
It looks like based on October that's continuing.
Albeit still at low levels compared to what we would see as normal.
Traffic.
Very hard to predict how that's going to unfold as we go through the winter and into next year I would say that the.
The one positive is the winter is normally the slowest period anyway for traffic in an hour per meter.
And so we'll we'll have to see how it ramps up again in the spring when it starts to get more into.
A busier time of the year.
Hopefully with the device.
Developments on the vaccine side and things like that.
Hopefully, we see a good recovery in 2021, but until we get through the winter and Haley.
Pandemic evolves and vaccines and things are very hard to predict what 2021 will look like at this point.
And to say things are gradually improving commuters reputation I would say is second to long in terms of the safety the island.
So effectively a co lead free Iowa today, they have very.
Stringent protocols in terms of all people coming into the island in terms of testing and things like that so.
So far so good.
But still uncertainty out there and what next year looks like.
Okay, that's great and with respect to bidding pipeline I'll use we project pursuits over 40 billion very robust.
We saw also the three year trust structure plan that was given by or updated by the Canada infrastructure banner bank not too long ago. So are there any projects that we should be watching.
In the near term and in terms of awards is the cause is 19.
Creating some delays in terms of awarding those big pursuits.
So first of all been why what he wants to be noted that none of our project in our backlog.
As being canceled for obvious reasons I mean.
Life goes on we are essential services.
After millions of new customers arrive into Canada every year the meeting craft structure, we are a builder of infrastructure.
Second point, yes, the pipeline is strong.
And im not anxious about our future activity.
Very much focused on targeting the right projects and winning them with the right margin. So.
We have been pre qualified on on on a few projects for example at getting to in West Tennessee.
Scarborough tendered prolongation boxing.
In Toronto we.
We are on that.
Issued.
Qualification documents for on top of your line two main job, which all the stations and the channel within the Toronto downtown very similar to Egginton.
And but also.
Rolling stock and signaling for the on top of your line.
And.
If we want to speak about Capex, because capex is going to be very active in terms of new projects that have been qualified on the capex lofty scheme.
We have issued to pre qualification document for the two harbors I mean, the launch harboring cut back and and.
The second one in.
In Montreal Contrail Tara.
But we are also I mean preparing ourselves for the dirty, though they all four pulled a little too although.
The selling and maintenance capex.
Capex, it's a full via rail projects, where we have been pre qualified but in that are there any.
Really keyed in Montreal and in Toronto.
In the west and mean to allow key upcoming.
We are pre qualified on Calgary Green line.
We will follow.
Very.
Focusing clean.
Ray.
Prolongation in Vancouver, B., the Robert Bank, when it's when it's coming out plus plus a few other projects. So.
Not that much of issues and we just passed to select the best project for Us where our teams can perform the best we have to select the best Engineering company.
As the best partner and Matt and just proceed forward.
That's great color zone, we and they did just looking at accounts receivable and accounts payable there was a sequential jump.
On your balance sheet, but anything to pointed out or it's mostly related to typical seasonality and driven by higher revenues.
Yes, that's exactly right.
It really is.
The seasonal high point.
The Q3.
For working capital starts to unwind through Q4.
And through Q1 show.
Expect that to be the.
Same patent next year and.
So far it's very much in line with what we would normally expect to see from a seasonality perspective.
Okay. Thank you very much for the time.
Your next question comes from so that kinds of RBC capital. Your line is open.
Okay, Thanks, and good morning.
Just on the the planned opening of the new terminal at Bermuda I guess, there is another way to really partially open an airport, but is there any way you're thinking about maybe opening where maybe lower fixed cost for personnel just given the current activity levels or is that an option maybe not on the table given that as an airport.
We.
We basically I mean do not work with with a with a plan b that would be a soft opening we are we've got substantial completion on all our construction activities.
Both CV and all systems.
On the 26 of September we are aiming to open the airport on the nine some December I mean, an airport terminal.
Turning his either open or close the fleet will be open with all its facilities I just remind you would see in a state of the art.
Port terminal.
Say, a very much advance in all touch screen.
Systems and subsystems about E gate.
It's a very modern terminal late said with pre clearance to the United States. So.
We will open it with with its capacity, we can see that the traffic is ramping up I mean from the months of June that will that zero.
In October we should be around 23% in front of last year and this is ramping up.
So we are we are ready to go.
Okay, and then given that is I guess near terminal how would you compare the fixed cost base to operate this terminal versus the older ones.
It is very similar server I mean, it's essentially.
The.
Dealing with this.
The same.
Same number.
Number of when it's a full capacity the same number five same number of passengers same processes.
The same mix of our stuff versus the status of the airlines and the functions that they perform.
So it's.
It's very similar I mean, you're talking about essentially just moving from one building to another primarily.
Obviously.
A lot more to use terminal in terms of Sip concessions and retail and food and beverage and those kind of things, but they're all staffed by the sub concessionaires the.
The retailers in the <unk>.
Franchisees, who the restaurants not no.
Stuff so.
It is very comparable.
Okay. Thanks, and then they provided some good color on the projects. They are in the process for I guess are you noticing a different change in pace with some of the recent infrastructure announcement, we're seeing headlines.
At least the government inventory trying to accelerate projects to the pipeline, but do you think some of those dollars start to show up in your backlog.
Through 2021, or so I'm just wondering if there is a more accelerated pace of project moving through the pipeline given the need for economic stimulus.
Yeah.
Yes, I mean definitely there has not been a halt or decrease meaning that in the announcement, we can see in Ontario for example, or in Quebec.
Even in a sort of acceleration of new projects coming and Matt.
Time for Rx Q and expected time for RSP as being you.
Reduced we just mean that all our clients are eager to proceed with the works I mean have you Didnt Cree as the recent provincial election in DC, how many can slow down the announcement, but a lot of fuel.
Future projects are already ready to go. So we are we are not that much worried about that.
Great. Thank you.
Your next question comes from the line of Mona Nazir of Laurentian Bank. Your line is open.
Good morning, and thank you for taking my question.
So just a follow up from the last line of questioning Inlet guide to current infrastructure.
Let me say mountains infrastructure bank, and probably some type of pattern.
I know you don't give guidance like how do you think that that move closer into the core for next year.
Got it would be similar to current construction costs that could be.
Okay.
Mainly.
The year 2021, we'll be done with what we have in our backlog at the moment.
Evidently.
We just can't see that infrastructure is part of the stimulus.
Plan.
As we have always stayed I mean.
Declaring it.
Stimulus on Friday, and having solar ready projects on Saturday and that big.
Big start of the work on Monday, I mean, not 50 billion in cost structure.
No needles three activities before beginning birds.
Well it definitely hear you probably have not is that the new CEO of key idea has been nominated the officially yesterday.
So we we just seems that in addition to what we have in our backlog and which is strong for 2021, I mean, other project, which will come and will supplement our 6.7 billion that we have at the moment in our backpack.
Just two.
Point to a couple of metrics as well on a boat mix.
Look.
Our current backlog and the duration of that backlog. If you look at work to be performed over the next 12 months.
We're currently sitting at $2.9 billion backlog versus a year ago, where work over the next 12 months was.
Just under 2.5, so it's about 17% increase in next 12 month backlog versus where we were a year ago and then you layer on top of that 2.9.
So roughly 500 million plus of recurring revenue every year.
Thats, knowing that backlog and then the work that we win through the course of the year.
Also perform in the <unk> and that would be a lot of kind of seasonal transportation road building type businesses.
Which as we know it in Q3 saw good revenue growth this year versus a year ago, we expect those transportation roadbuilding businesses to be strong next year.
Based on the fact that that's the quickest way for governments to.
Put dollars to work in terms of infrastructure stimulus, there's a lot less design and engineering involved and it's really a question of funding the purchase of the various provincial transportation authorities, which is what each other provinces is being and I have been announcing in the last couple of months. So so when you put all that together.
We feel pretty good about that.
Revenue profile for next year.
We are we sit today going into 2021.
Perfect Thats really appreciated.
Secondly, talking that add to the capex related cost incurred so far we've seen the light impact will kill totaling 35 million in Q3 had about 31 million and just wondering how should we kind of think about these costs going forward.
For Q4, even into luxottica, keeping there will be.
Morry connect traffic fall off or would it be kind of flat.
Yes, so evidently.
From some of the projects, we talked about today, we expect that covert lighting impact that.
[noise] impact.
Moderate somewhat in the fourth quarter.
As you know we talk to the nuclear operations.
And they are ramping up rapidly.
Sorry, I see back here.
For the full run rate.
As opposed to where those two were in in the third quarter.
And so barring any unforeseen developments at this point, we do expect that covert impact should be moderating in Q4 and into.
In jewelry 2021.
The only.
Area that will continue to be most significantly impacted the.
From coal that is Bermuda.
As I mentioned earlier that is also moving in the right direction in terms of.
Traffic.
And so as long as that continues to impact our concession should also be a moderating as we're moving forward.
Okay. Thanks, I will turn into the Bermuda are applied I understand that the appliance opened at the July the incoming targeted primarily to fund.
But just looking at HB, so our motto.
Okay outlook for Tony Tony is quite good so many entry into high capex, but to be down 65% year over year, even 2021 recent relates really to revenue.
Got to be happened 20 low teens.
Just wondering given your comments of annual revenue on the unique.
Okay Tito that performance.
Ultimately vary from an overall industry outlook.
Just as a follow up for rebar and lower revenue ex Tac is that it will provide part of bringing on a partner okay.
Okay.
Yes, I mean I think.
Obviously.
Neither will be.
Not dissimilar to what are the.
Airports around the world experience.
I expect there will be some impacted more than others, depending on where they are we we actually think Bermuda will outperform the average.
But how much variation there is from the average remains to be seen we're certainly not.
Uhhuh.
I think being.
Overly bullish in terms of the year in terms of our offer relative to anywhere else, but there are certain features are being at island. Therefore, the definitely positive.
And as I mentioned earlier, the fact that there is no cobot on the island of Bermuda and the.
Protocols, they have going into it.
Relative to the.
Caribbean Islands for example is nowhere near as tourism driven.
As some of those other ilo, so so within commuter should perform well relatively.
Who.
And we will occur all the forecasts.
Camilo.
Yeah.
But we don't disagree that the numbers you quo, probably fairly realistic for the overall airline industry in 2021, but.
It's going to depend a lot on vaccines and things like that.
Perfect perfect helpful. Thank you.
Your next question comes from line of Chris Murray of TD Capital. Your line is open.
Thanks, guys good morning.
So Dave just maybe a couple more questions around Bermuda, So fair to think that now.
Now that Youve risk now that you've had substantial completion.
Construction revenues are basically done at this point.
Is that fair to say.
Yes, that's right okay.
Okay great.
And so if we think about the concessions business as a whole.
Actually as we go into 21, I mean, certainly the puts and takes will be hopper.
How bermuda moves around but when I think about the rest of your concessions is there anything that we should be thinking about in terms of.
Either earnings or or revenue.
Which stage of completion or or even some asset recycling.
In the 2021.
Yes. So good question I mean, the Canadian concessions should be very stable in 2020 rockets, sorry, 2021 relative to 2020.
Who.
If you think about.
[music].
The stage of those concessions is still pretty much in the construction phase it will be throughout 2021. So we don't expect to see really any change in the profile from the Canadian concessions.
Okay in terms of asset recycling, I mean again that wouldn't happen.
During construction.
With respect to Bermuda and this this also answers the second part Moelis question.
There is no.
No plan to do anything different with Bermuda right now the focus is really around opening the new airport.
And.
Navigating through the pandemic and making sure the air traffic gets back to normal and.
Is it.
Smooth and efficient operation.
Okay Fair enough and then just thinking about Q4 and accused payments.
I think you've mentioned in some of your commentary that you've you've applied for the program.
I think it's fair.
The payments maybe.
Is it fair to think that the tail off as you expected the covered the Covidien pack might also tell off into Q4, but how do we think about.
The impact on cash flow in Q4, and any additional payments as we go forward with two and just the way you've actually seen a program now.
Yes, so ill.
You are right, we do expect to see that tail off some wall in in Q4, and obviously the program has been extended to the summer of next year.
And the details around what the program will look like next year haven't been.
And the person defined at this point, but we do expect the run rate certainly two or to tail off.
As we go forward the.
Turning to cash flow, we expect Q4.
To receive another approximately $40 million.
From the.
Applications, we have already made through to the end of September.
Any further applications will likely be.
Q1 cash flow.
Based on timing of when we would expect two to follow.
Okay fair enough. Thanks.
Thanks folks.
Thanks, Chris.
Again, it seems like last question over the phone lines. Please press Star then one on your telephone Keypad. Your next question comes from line of Michael too.
Tough TD Securities. Your line is open.
Thanks, very much good morning.
Morning.
Morning, Yes. My first question is just regarding nuclear and I apologize if you've covered this already but I was just hoping you could comment on how we should be thinking about the nuclear business in 2021 with projects now ramping back up here in the fourth quarter.
On a year over year basis, 2021 versus 2020, because because you were impacted in 2020 by.
The fact that there were some delays or just trying to get some sense for.
The the way, we should think about that ramp up and year over year comparisons.
Hey have you see 2021.
We'll be stronger.
For.
Our nuclear business.
We are.
For the first time two units.
And the construction, putting one units at Darlington.
And when do you think that Bruce.
We are not only working on the reacts to itself, but we also work on the turbine in Darlington and on the steam generator Andrew's. So it definitely going to be stronger 2020, with a sort of transition year plus the coffee the impact.
It is being paid I mean, we are preparing I mean.
Beyond the refurbishment of the units what what are what can be the future of nuclear.
About waste treatment you can imagine that onto the refurbishment are creating a lot of metal west and just need to be treated and need to be to water and it's about beginning to prepare the dismantling of fixing for example, and it's about.
Turning off the.
The small modular reactor, you see that Canada, and Ontario, uptake and quite a proactive stance I mean.
Towards this new line of business.
And we are well ahead in our partnerships and.
Our preparation for conclude although they will not of course materialize during the year 2021.
Okay. Thanks for that and then my second question.
Is really about the pipe, but the pipeline and the outlook and you provided a lot of good.
Commentary and detailed there already generally in terms of some of the large projects are pursuing I guess just sort of a couple part question here first off.
Can you just talk about how you feel about the the bid pipeline today relative to the way you would have felt.
A quarter ago and when you did your August call at the time of the Q2 results I don't know if there's much difference there and then secondly.
I'm just wondering if there are any parts of the business that that are important to.
Q Acorn in terms of sectors.
That you are seeing any notable weakness in right now due to due to coded.
But there's nothing there that at all concerning to you in terms of the project opportunity set.
There is no big difference I mean between today in our last call I mean end of July.
Of this year.
We were not anxious we are we are not anxious a in addition, I mean to the major projects have been telling you about I mean, we are pursuing.
A lot of projects a medium size or even small size I mean for example, our utilities business is going quite well.
We work a lot.
Telecommunication, we are strong there with his bell and tell us.
A little bit this all this social dispensing and.
The news a new normal just to improve to a much more.
Capacity for so.
All use the internet and data. So we are we are working a lot for for Enbridge.
I remind you for example that the C. I'd as announced in October something like 2 billion for broadband in maintenance of communities. So we are following some job at district energy deal sort of renewable.
Renewable power I mean, even for these jobs, which are not the mega projects, which are smaller medium jobs. I think we are very much position. So.
We are organized into construction.
With six sectors, they are very well balance and it's very important for us to our resilience.
And the way, we just cannot see I mean, any any really shoes.
With our different business lines I mean today.
All in.
Looking to the future with with optimism.
Perfect. Thank you and then just one one last one.
The question I guess about the competitive landscape and whether or not you've seen any changes there in the last quarter and I realize that some of the large infrastructure projects are only so many firms capable of pursue.
Pursuing those kinds of projects and so maybe maybe those are a little more insulated, but but just generally speaking.
Have you seen any any changes in the competitive landscape in terms of heightened competitive pressures.
Not that much I remind you that most of the big projects goals, who pre qualification stage, where the our owners usually pre qualified three group.
What is very important for us is that.
Progressing I mean, our trains and our professionalism we.
We can in advance to lose a bidding process assembled the best group I.
I mean, the best foreign partner, when do kids and accessories, the best engineering companies.
And this is what is important I think we are progressing.
Quite well.
Our professionalism and the professionalism of all the layers and in in the economy.
He is one of my most important point of focus.
And.
This is much more important for me in terms of knowing.
Always going to be the future than a real.
Changing that.
Competitiveness of the market I mean.
We are and we asked to be better and better every day in the access of on Baby I mean, we we are because we have to build it.
Better than any other company and this is why we are working on it.
Thank you for each other.
Thank you.
There are no further questions at this time I turn the call back over to <unk>.
Speakers.
Thanks, very much and I appreciate everyone's time today, if you have any questions always feel free to follow up and if we don't speak we will be back online. After our Q4 results in the new year have a great safety animalistic Nelson. Thanks.
This concludes today's conference call you may now disconnect.
Okay.
[music].
Okay.
[music].
Yes.