Q2 2021 Aecon Group Inc Earnings Call

Okay.

Good day, and thank you for standing by.

Welcome to the Aitken group Q2, 2021 and for earnings Conference call.

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I would now like behind the confidence you'll break and your speaker today, Mr. Adam for Getty. Please go ahead.

Thank you rang and good morning, everyone and thanks for participating in our second quarter 2021 and results conference call.

This is Adam Borg and speaking and presenting to you. This morning are showing what we said wrong, President and CEO and David sales Executive Vice President and CFO.

Our earnings announcement was released yesterday evening, and we posted a slide presentation on the investing section of our website, which we will refer to during this call.

Following our comments, we'll be glad to take questions from analysts and we ask that analyst keep to 1 question and a follow up before getting back into the queue.

As noted on slide 2 of the presentation listeners are reminded that the information we're sharing with you. Today includes forward looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties.

And though the egg, 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 I'll turn the call over to day.

Thanks, Adam and good morning, everyone.

And I'll start by summarizing <unk> consolidated results.

Results by segment, and then address <unk> financial position before turning the call over to Jean Louis.

Turning to slide 3 revenue for the second quarter of $971 million.

And $92 million or 25% higher compared to Q2 last year.

Adjusted EBITDA for the first quarter of $61 million, a margin of 6.3% improved by $57 million compared to adjusted EBITDA of 24 million a margin of 3.1% in Q2 last year.

Diluted earnings per share 27 cents in the quarter improved by 37, <unk> compared to diluted loss per share of 10 cents and the same period last year.

Reported backlog of $6.5 billion compares to backlog of $7.3 billion a year earlier and <unk>.

$5.9 billion at the end of the first quarter.

Now turning to results by segment as new.

On slide for construction revenue of 955 million and the second quarter was $177 million from 23% higher than the same period of last year Q2 nuclear refurbishment work in Ontario, and major projects and civil operations and had been transportation systems and.

Gas distribution and telecommunications work and the utilities sector.

Adjusted EBITDA from construction $51 million.

And margin of 5.3% increased by $23 million compared to $28 million and margin of 3.6% and <unk>.

Q2 last year, driven by higher volume and gross profit margin and nuclear.

And they are and transportation systems and utilities.

These increases were partially offset by lower volume and gross profit margin from industrial operations.

New contract awards of $1.6 billion and the second quarter compared to $1.1 billion and the same period last year.

This was driven by strong demand across Canada, and smaller and medium sized projects as well as a number of multiyear project awards in the quarter, including the replacement steam generators at unit 3 and for the Bruce nuclear facility in Ontario.

Construction of the Eglinton cross tie and West extension tunnel and Toronto.

And the north and wastewater plant upgrade project and Winnipeg.

Turning to slide 5.

<unk> revenue for the second quarter of 170 <unk>.

<unk> million dollars was 8 million higher compared to the same period last year, primarily due to increased activity at Bermuda Airport, where all commercial flight operations were suspended your and your second quarter last year due to Covid.

Although the year over year revenue increase and gradually improving traffic levels and positive commercial flight operations and Bermuda is still operating at a significantly reduced volume compared to pre pandemic levels.

Yeah.

Adjusted EBITDA and the concessions segment of $16 million was 11 million higher than last year, driven by improving traffic and beneath it.

Turning to slide 6 acorns financial position liquidity and free cash flow remains strong.

At the end of Q2 equal and had a committed revolving credit facility to $600 million and of which $10 million withdrawn and 10 million and utilized for letters of credit.

On June 30, equal and completed a 2 year extension and the credit facility, which now matures on June 32025.

As part of the extension acreage and incorporate sustainability linked to metrics tied to a number of the company's ESG objectives. The first Canadian construction complete to incorporate your feature.

Also on June 30 day $900 million performance security guarantee facility provided by EDC to support letters of credit was extended by 2 years to June 2020.3.

<unk> committed facilities for working capital and electric credit requirements total $1.5 billion.

<unk> has no debt or credit facility maturities until the second half of 2020, 3 except for equipment and property loans and leases and the normal course.

This point I'll turn the call over to Joe Louis.

Yeah.

Thank you David.

Turning to slide 7 day.

Despite the ongoing impact of COVID-19 on <unk> operations.

Continued to deliver solid results in the quarter.

We remain confident that a balanced and diversified portfolio strong financial position and a giant picture.

Will enable us to continue to execute going forward.

And the construction segment is aligned to the significant infrastructure investment commitments by all levels of government across Canada as well.

And by the private sector across the market sectors in which we participate.

And as the concession segment is pursuing a number of large scale infrastructure project and targeting innovative and development and private finance opportunities and industrial.

Our clean tech and other related markets.

As and when that is participating as a concessionaire on day 5 peachtree projects identified on the slide.

Turning to slide 8.

Backlog at recurring revenue programs and the pipeline of bidding opportunities for new work remain at strong levels across Canada.

During the quarter New awards for moved $1.6 billion.

Demonstrating to a diversity across geography, and size and duration of projects and end market sectors.

A cornerstone sold for quantified on a number of large projects due.

Due to be awarded over the next 12 to 18 months and.

And demand for our core capabilities continues to be extremely robust.

And we expect demand for services to remain healthy for the foreseeable future.

Federal government and provincial governments across Canada of identify investment and infrastructure.

K source of stimulus as part of economy recovery plans.

Trailing 12 months recurring revenue was up 23% versus the prior period.

Primarily from growth and utilities operations.

Recurring revenue is expected to continue to grow based on the capital investment plan for off a number of key clients.

Securely and the telecommunications and power sectors.

As well as from the recovery of aviation traffic and the Bermuda International apples.

Turning to slide 9 in addition to just sustainability linked credit facility expansions that Dave mentioned.

We are continuing our driver.

And industrial leader in sustain and BTT as we undertake initiatives to honestly innovation reduce emissions.

Boost efficiency and improve business performance.

And.

And then going for Crystal Hall with sustainability program is to pilot new technologies to reduce emissions on our construction sites and in our facilities.

We are currently undergoing clients to utilize the solar energy to replace bullshit and fuel generators to provide power on certain project sites across Canada.

When asked to power all training and innovation Center in Ontario.

We are also contributing to a partnership between the government of Canada, and the sentiment Association of Canada.

To advance global leadership in low carbon concrete production.

With the goal to provide a roadmap to HSN and sector reach net zero carbon concrete by 2 solvent and 50.

Turning to slide 10.

And he called the overall outlook for 2021 remains positive.

Supported by strong backlog and Ricky.

Regarding revenue programs and pipeline of bidding opportunities for new work.

Although the pandemic is expected to continue to have some impact and moderating overall revenue and profitability growth expectation and to solve and 'twenty 1.

We are encouraged by a generally positive trend.

And this team of social and economic restriction.

And 1 sees and Canada.

And the impact on revenue is expected to lessen going forward and if this trend continues.

And the concession segment and increase and vaccination rates and the easing of travel restrictions during the second quarter provided early signs are for rebound from very low level and in.

Passenger traffic for the aviation industry.

This is expected to lead to a corresponding gradual improvement and travels through the Bermuda output during the remainder of the year and into 2 solve and 'twenty 2.

Okay.

As I stated earlier.

Overall, our group for 2021 remains positive as construction continues on a number of project that ramped up in 2019 and 2020.

We are encouraged by the level of backlog and New awards during 2021 and.

And the strong demand environment for <unk> services going forward.

Including record revenue programs, all subject to the unknown impact of COVID-19, and going forward.

Thank you moving now turns a corner over to analysts for questions.

Thank you.

And as a reminder to ask a question. Please press star 1 on your telephone Keybank and again Thats Star 1 to ask a question.

Please stand by while we compile a little and the roster.

Your first question comes from Geely link from Canaccord Genuity. Your line is open.

Hey, good morning, guys.

Good morning morning, and Iraq.

Nice quarter.

And finally, we wanted to dig in a little bit on the New awards.

Non stock nicely.

Just wondering what you expect for the back half of the year in terms of New Awards wondering this.

The projects such as Shortlisted on.

Would allow you to and the year with maybe a higher backlog and then where you stand today.

And secondly, and in relation to that and so to just comment on some of them.

New projects that are that are entering the pipeline and the nature and not work and how it lines up with your core competencies.

Okay. Thank you for this question so.

Remember the kind of and <unk> 3 months ago at the end of Q1 when that our backlog was something like $5.9 billion out of the question.

Are you worried and.

Are you anxious and I said, no I'm not because of the quality and.

And the balanced profile.

Our backlog is what is important and not in absolute value on a Friday evening.

So effectively I'm very happy today and.

And with a $6.5 billion backlog plus recurring revenues for <unk>.

Sweep the sand at the well.

And then 500.

All of the parameters within the tobacco and got very interesting So new awards and as you say $1.6 billion.

We had something like 250 million and pull the 2 steam generator.

$250 million for Eglinton West tunnel.

200 million full we pay for water treatment plant 50 million for an excellent pipeline and you can see from some very diverse in terms of M. <unk>.

Sectors, but also in terms of.

And of geographies and.

And.

And he's being say debt.

Hugh.

We continued at 800, and we build it with discipline.

Our backlog it means that I'm not discovering with my team on Monday morning, what is the backhaul, we try as a backlog.

And to shape and we won't ask for our strategic plan and the future of a connectivity.

And and this is what is important and so.

Yes, they are.

Projects and the pipeline on which we have either already submitted a proposal.

Or we have been qualified and we are working to deliver couple of total during Q.

<unk> for.

And we would not go further in may in detail, but.

And he sees about T V.

And as he sees about industrial sees about nuclear tool.

And I'm not worried about the development of our backlog for the months to come.

Okay got it.

And 1 last question maybe for Bob.

And it's possible.

The reasons.

And construction margin.

As we look ahead and us and.

Revenue from continuing to grow over the next few years.

And.

And the opportunity more and.

Gross margin or operating leverage.

And what kind of revenue and your and your current overhead.

Yes, I think it's a little bit of both.

And you're in terms of margin development obviously.

Dry in such a strong.

And market environment is too.

And Shaw.

And we maximize.

Bid margin.

Reflecting the fact that.

There's fewer and fewer bidders because some of these projects.

But it's also about project selection.

And making sure that as Youll Luis already said very strategic about projects that are already to the backlog and that they meet our margin expectations and profiles. So so certainly that would force feed into the gross margin piece.

But as we see top line growth.

We don't expect to.

The kind of overhead structure too.

Grow at the same the same pace. So we do expect some leverage impact too. So I think there's 2 positive dynamic going forward both based on the strength.

The end markets that we're in right now.

Okay. That's 2 from me I'll turn it over and thanks guys.

Your next question comes from then like play and from Desjardins Capital. Your line is open.

Yes, good morning, everyone.

Yes.

Just wanted to Kona and Benoit from the 2 yeah. Good morning, just wanted to come back on the 2 project pursuits and the U S. So you disclosed the project and the Washington State and Louisiana could you talk about your strategy to organically entered the U S market the targeted states and.

And also the sectors that you were looking up.

Yes.

And.

The United States and is becoming more stable.

This is evident and.

That's great and debt.

Laughter.

Around 1000 and billions for infrastructure within the next 15 years.

And may be achieved and.

Yeah.

Not everything is about our infrastructure.

But I would say quite a good share will be sold.

We have.

2.

Take care.

And Bob this market, because it's going to be most probably.

A very quickly growing market.

And as big cities.

Foreign countries, so I've always the same principle.

Organically, we will only go.

And where it <unk> our core competencies.

And we will try to choose the best path net.

To help us.

To make it good.

We have knowledge of T..3 because Canada has been quite advanced and in the PC industry, we have our own technical knowledge and.

The language is the same between the United States, and Canada, and I Hope Youll see we need local partners and we also need P of our size and just to help us and.

And in front of the structures on for Deane.

Geographically, we we all know that selectivity and you didn't see.

And you have noticed that 1 of the first switches and Washington State we are extremely stronger.

Our major project component and <unk> in Western Canada, So it's quite easy.

2 shifts and teams.

And to the.

And north West States of Iowa, and I'd, just state, but we.

We will go on a case by case basis and trying to create to chemo.

For different project, and it's not going to change too much to take advantage of of a learning curve.

And.

And working in this country.

Okay. Okay, that's great and just with respect to your M&A strategy Zone. We you previously mentioned and your interest to do something maybe a little bit more larger unusual and eastern Canada. So could you talk about the pipeline of a fortune.

These and why to the intention to bolster your position in these regions.

Yes.

And there are 2 kinds of opportunity for for external growth I mean, the tuck in activity that we do on a regular basis.

And just to complement or geography or some.

Specialty and and we are quite chosen and then may be for more.

Turing.

Acquisition.

And we are having a look at it and.

Yes, we all we are looking at the eastern Canada, but not only the east of Canada, when we added the capacity.

Our balance sheet to make very interesting operation.

And we.

We are always alert.

And just to be sure we can find the right company and we will be ready to go.

Okay. Thank you very much gentlemen.

Your next question comes from and Jacob bout from CIBC. Your line is open and good.

Morning.

Jacob.

And to go back to the.

And the margins.

And specifically are you seeing any evidence of cost inflation.

And maybe comment on the availability of labor.

Construction is a BOP heightens Jake for what it means.

And nothing new.

Yeah.

What we are we are seeing at the moment, yes, there is some inflation and the price of commodities.

And it's gone down and certain aspects.

But.

Do you see the trend at the moment, we are used to lead we cycle either by protecting us when we signed the contract with clients.

All of our I would feel for rational and <unk>.

<unk> for.

For example, when when and price is going up.

You you just try not to procure in bulk too much just procure.

I mean.

The best way you can.

And for example, when you think the price is going down.

You try to renegotiate.

Zempel.

We are renegotiating a quite a number of subcontract that we ought to sign during the Covid time, and because of the risk because of the unknown and the level of price was higher and then he is now with the vaccine and with <unk>.

Test and we are renegotiating.

Some of our.

Subcontracts, so I would say so far.

We know how to deal with this and I am not that much worried in terms of.

Nathan.

And as I used to say.

The fact that oil and gas is decreasing and have just shifted quite a number of people willing to infrastructure construction.

And we also took advantage of the closing down of <unk>.

Quite a few of the building jumped during the first months of Covid to attract new kind of workers and that just feel IP.

Just feel happy with us.

And.

And he is a management.

I would say yes.

<unk> and the <unk>.

Market of that management is cancer.

But so far we can that we can and delete.

And in Q T for the.

Top project directors have always been.

I would say are fighting sport and and we are we are on it so.

And we can manage it and and it's not a point off of great concern at the moment.

Okay.

And my second question is just on Bermuda.

<unk> and that you saw and the second quarter, what are you seeing so far and the third quarter and how is that.

How is that expected to ramp in your mind.

Yes, so we did see improvement through the second quarter from when we came in for the quarter.

We were kind of and the low to mid teens in terms of percentage.

Traffic versus kind of the base year, which we view as 2019, you can't really compare to 2020, because the airport will ship for much of that period. So when we compare to 2019, we saw a ramp up from kind of low to mid teens and the start of the quarter to 225, 30%.

By by the end of the quarter.

And based on and it's still obviously early in Q3, but based on what we see right now we expect that kind of ramp to continue through Q3 and.

For the end of the year, so that by the end of the year.

And all else being equal.

No.

And.

Reversion back to restrictions and Lockdowns and.

For the travel restrictions, we see getting to something in the range of 50%.

For 2019 traffic by the end of the year like for the last month or 2 of the year.

And then obviously if all goes well 2022 should see that continue to improve so that's kind of how we see things right now.

And.

And yes, it's definitely all and.

Improving.

Moving track correctly.

And the 2019, what was that split between U S U K and and.

Canada, Russia, and the world as far as origin at origination of traffic.

Yes. So you are typically represents.

2 thirds to 75%.

For full traffic and open.

Me too.

Okay.

That's helpful. Thank you.

And maybe I can add to give some colors.

And last Friday.

And our Bermuda Airport oldest gateways, where food and I.

We are playing on each gateway on Friday afternoon, and we have not sufficient food and drink to capture.

So much crowded was the Apple and so from time to time I mean after 5 quarters of.

Kavita.

We can just begin to smite again.

Your next question comes from Maxine Jacquet from National Bank Financial Your line is open.

Hi, good morning, gentlemen.

Good morning.

I was wondering if you don't mind, providing a bit more color on the reason for the jump and recurring revenue I think you mentioned, that's up 23% year on year.

Yeah. So that's the first question.

And the <unk>.

I'll just see telecommunication is is a big driver this is a.

And 1 of the consequences of.

And of Covid.

And people need more connectivity and.

Even in quiet remote place and they need more volume of data.

There is a.

And very strong movement of.

And new Capex from.

And our usual clients gas distribution and for example, with Enbridge. He is also very very active.

And the electrical transmission and I mean, it and say, it's becoming all of us that we will use more and more electricity.

In the years to come and Nancy and electricity I mean in addition to be produced as to be transmitted and distributed sales. They are also quite an interesting movement of new capex.

This is what creates and at least 23% increase and this is why we think.

And it's not going to stop here.

What is also very interesting is the I mean I'm not tarnished.

And with a real robust and there's still follower utility sectors.

It's a sector that has learned and I mean to do a lot with little extremely agile to take new jobs.

Find new way of agreement with clients on.

And I'm extremely happy with the.

And the way the utility sector economies are either holding.

Yes.

And then suddenly just maybe as a follow up on this how does the M&A strategy fit into this.

Utilities recurring revenue component if that's possible. Thank you.

Okay great.

Have you didn't see it.

<unk>.

And on being able to attract and to Mexico edition and this in the sector.

As I've already said I mean.

Im working a lot on.

Balance at TVT off.

Oh for Acorn on our balanced portfolio and we have been working hard during the last 3 years.

And.

We're extremely happy after the.

The pandemic to see how robust the strategic sector. Yes. So yes, we are always changing for new company.

And that can bring this as soon as the recurrent revenue.

Right. Okay. That's super helpful. And then maybe just 1.

<unk> cleanup in terms of the ESG objectives that are part of your credit facility do you mind.

Talking about what exactly.

What are the triggers for these things on the on the ESG side.

What are the.

What are the drivers for <unk>.

And then the benchmarks that you have to meet and order too.

Respect the agreement.

So this for metrics and Mexico into into that structure.

The first is on greenhouse gas emissions.

The second news around <unk>.

Safety metrics.

The third is.

Spend with with indigenous suppliers and subcontractors.

And the forces.

And in terms of.

Our use of preferred suppliers and the.

Conformance with ESG and diversity and inclusion practices. So so those are the 4 areas we focus on.

Theres obviously.

And for each of those different by category.

And ultimately.

And the impact in terms of <unk>.

Upside potential pricing.

Is it too.

5 basis points either way.

Okay. Okay wonderful, let's say from you. Thank you so much.

Thanks, Mike.

Okay.

Your next question comes from Chris Murray from <unk> capital markets. Your line is open.

Yes, thanks folks good morning.

Maybe turning to the going back to the concessions business.

And looking at the EBITDA margin and the quarter.

Certainly, 95% is a pretty pretty high margin.

But just wanting to maybe understand.

Is that kind of a normalized number and I appreciate there's a lot of changes going on.

But is that how we should be thinking about the margin profile of the O&M business in Bermuda or was there something else and kind of skews that number this quarter.

Yeah no share.

Certainly skewed given.

The current level of traffic and Bermuda don't forget we have other concessions were.

Also small levels of income coming in and tourism.

And with fees and things like that so where revenue is particularly low in Bermuda and those those have the impact of increasing that margin, but but really if you look at 2019 that would give you a much better benchmark in terms of the <unk>.

<unk> for that sector.

Obviously, we've transitioned to the new terminal but.

It's still not that much different in terms of.

Current.

Expectations of <unk>.

And once we get back to normal so the margin profile would be more in line with.

What we saw in 2019.

Okay, and then you mentioned earlier and the call that your expectations would be to maybe about 50% of.

Of prior levels and make the comment that this morning, Your Canada came out and you've talked about the fact that they are starting to see bookings.

And kind of the winter seasons for January and above 2019 levels now and certain week into the Caribbean.

Just wondering.

And how quickly you can ramp up capacity as that.

And John let me kind of alluded to the fact, you guys ran out of food and beverage.

But as it is at a thing of people or is there more development left to do.

Gates to finish and alike.

Are there any restrictions on you guys getting back to full.

Full capacity, if all of a sudden materializes, maybe quicker and youre expecting.

Yeah, no no restrictions for all.

Yeah.

Joe Louis was kind of tongue and cheek talking about what happened last week, which was really just a function of.

Being set for a certain.

Level and.

And things things ramping up quickly that particular day, but.

No I mean everything is finished to the airport and the capacities in place to be at or above effected more than 2019 levels of cash to the new airport.

Higher than it was at the old terminal.

And it's really just a question.

And as flights are added and as passenger flow Inc.

<unk>.

We can ramp up pretty comfortably alongside debt. So so no. There's no restrictions that would take any time to implement.

Great. That's helpful. Thank you.

Your next question Congress from Chad that had Ken from RBC capital markets and children.

Alright, Thanks, and good morning, just on the commentary earlier on the U S side, how far along is that process in terms of youre assessing that market are you looking at specific projects already or is it still and sort of due diligence phase to see if the market makes sense.

We are looking at specific projects, we have just been prequalified for a breach with.

<unk> and Louisiana.

And we have a few project and in our per suite leased. So we are we are just ramping up.

And complex.

And afterwards.

Okay, and then I guess as you look at those projects for your inventory B share are you looking at and look we need to make the exact from return on the Canadian side, whatever whatever benchmarks used internally or is it look the size of the opportunity is much bigger and so the absolute dollars, maybe matter and love it for us or how you're assessing the opportunities.

On the U S side versus the Canadian.

And so far and we.

Don't know exactly what is going to happen, we don't know exactly what kind of projects will come first.

So.

And the decision of a corny too focused on our core competency.

And our focus on the right partners and in addition, and soft partners, we have been already working with and Canada, Egypt case for <unk> for example.

Because we are building 2 new Bridge, Inc.

And in Vancouver together.

Better for US and then we shall see how all of these develop and all these plants and.

We'll probably be able to refine our approach.

Just to add to that just to add to that separate and there's no philosophy, where we're saying we're going to go into the U S market.

Margin expectation I mean, obviously, we will partner with.

The Big International.

Companies.

And <unk>.

M qualify and bid these projects and.

They have their own margin expectations as well and we'll we'll make sure we're aligned and.

We wouldn't and go into the U S market, we didn't think the margin essentially and that market was strong.

We think there is the right time, because there's going to be a lot of demand and that market, but b, because we think and supports our margin expectations. So.

There's no concept to the U S by our way into that market I mean, thats not foresee in any way shape or for.

And I guess, if I could just follow up quickly I guess was that part of sort of deciding on those specific regions and the U S sort of and northwest or was it the type of opportunities are available and what kind of embedded or decision to that region.

Yes.

Region I was talking about it just because it excludes from <unk>.

Our days in AR and British Columbia, We also know that some states and.

Easier to work with so.

So I would say and each.

It's a project the project.

And decision.

And we just try to follow our guidelines and Oh.

The scope of work and and.

<unk> partnering in other.

And as you say I mean, a total solar Bob so which states and under what circumstances.

Great. Thank you.

Your next question comes from and try and Shine from Laurentian Bank kill and children.

Good morning, gentlemen.

Sure Bonnie.

And maybe I'll just start with generally if I may just have a question on debt business development side, especially for concessions I think at some point you had a team sourcing process and international market, obviously, I presume that mean.

And pretty challenging by Covid. So I'm, just wondering just sort of any update on that front and now that travel is becoming easier.

Yes, Youre right I mean, we we have a team at Inc.

Focusing on future international activity.

It may be and other <unk> scheme, like Bermuda, H E B and Dora.

Private initiative or or.

Tender on a on a piece for your basis or a design and build.

Job, but if you didn't see and Youre right I mean coffee that out and he served a lot.

And this activity.

Most of the territory, you haven't been totally locked down and mill capacity to until when you and I mean high level of quarantine so VSAT for dawn.

Rather down but.

We are back we are back on the road and I can tell you from for example, 2 day.

And we have 2% from from lease team, while abroad that have been traveling and safe.

We need and will come back on track for this.

Great that's helpful.

And I just have another question for Dave.

On the free cash flow I think you guys have had a few years, so a very strong robust conversion.

And from adjusted EBITDA and free cash flow should we be expecting.

Similar run rate for 2021 or is there any thing and usual potentially working capital debt, we should be aware off.

Okay.

Specifically I mean, obviously, we always call out the usual seasonality, but over and over the course of the year.

And we expect the profile to be to be relatively similar to a normal baseline year, obviously 2020.

Had a number of other things going on in terms of timing of projects.

And being suspended or ramping up again.

<unk> some of the normal seasonality, but.

When you look at.

And our base year like 2019 for example, we don't expect anything particularly unusual.

Okay, Great. That's it for me thank you very much.

Your next question comes from Michael <unk> Fahmy from TD Securities. Your line is open.

Thanks, Good morning.

Good morning.

I just just 1 question for me.

And I guess I'm looking at the outlook commentary that you provided in the second quarters M. DNA.

If I compare what you've said to some of the commentary and the and the first quarter. There Theres a lot of similarity, but 1 thing that does seem to differ as there was referenced and the first quarter too.

Seeing some delays on projects and commenting on how that may impact the business that that type of commentary is absent from this quarter's M. DNA.

I guess I'm just wondering if you can speak to is that simply and evolution of the economy reopening and things sort of getting back to normal or.

If you can just speak to what you've seen in terms of those delayed projects that'd be helpful.

And my answer would be the following.

None of our projects and backlog.

Has it been canceled due to COVID-19, but.

That's been some of them have been pushed down to the line.

And what you'll.

Not TCE the judge that business is coming back and.

Just coming back to normal and we all we have more and more busy BTT the pipeline is.

And is extremely strong and we cannot hear from our clients.

Our wish to decrease the amount of projects that they would like to put it on the market I mean, it is a contrary so it may explain and I mean, what's you up and notice to the wording.

Okay. That's helpful. Thank you.

Your next question comes from Maggie like and Fran I E capital healing and shopping.

Hi, good morning.

Just wanted to go back to a previous question on on additional opportunities and project pursuits that are outside of Canada.

Are you expecting the focus going forward and the pipeline to be more towards U S and international opportunities.

And if that's the case, how do you think about the both the risk and return trade offs of pursuing projects call it and non core markets versus maybe in Canada.

So.

And the answer to your first question is no I mean, we are going to stay focused on Canada. If you didn't see as I used to say candidates often millions of new customers every year.

The new new commerce need the freshwater.

Treated water transportation systems bridges.

Power.

And and the market for infrastructure is going to stay strong.

We have a cold and we are stronger and stronger and in Canada and in terms of geography, 10, plus capacity. So Canada will remain the point number 1.

In terms of activity and in person.

And he is being say, we cannot refuse to look at the U S market and then may be quite interesting opportunity.

Hi.

We are not.

And yet.

And that Ah I will manage this is what I call the discipline and.

And I wouldn't manage to only tried to go on specific project and the U S where I'm convinced.

Is that we can have a very good trajectory because.

Thanks to our reference <unk>, thanks to our capacity, thanks to our history to our partnering it.

Internationally is mostly the same kind of.

Answer.

We will pick the projects, where we think we can add value to our clients not at any price not and.

Any contractual condition and always with a with a <unk>.

Right Paul.

Okay got it and it sounds like selectivity and productivity is the right word and I mean for international activity and quite Canada.

Okay. So just the other day of extra capacity and Youre looking selectively and opportunities.

Okay. That's helpful. Yes.

All right.

Yes, maybe I can come back from your question too.

The last question of you read at the beginning.

Of the session.

About.

Our overhead and our support and.

Services capacity.

What has it been extremely interesting in this COVID-19 crisis hit that we just discussed is that we can work better and.

We can do better we can do more with the same all we can do the same thing with less.

It's not only about being flexible, but we have suppressed a lot of.

And then trying to time and it means that we the same capacity with the same size of our support centers.

I mean, we can tackle new opportunities and what he's quite interestingly and we have to get out from the profit better.

And we and then we entered and and we try to capitalize on everything and we think.

Emerge as a good ideas to organize ourselves.

Okay. That's helpful.

I don't know how much you can say.

And about the specific projects, but I'm just wondering if you had any comments on follow up work at Bruce power or for the sewage treatment plant and Winnipeg and any color on either the timing or the scale of the additional contracts that you could win for those projects.

Yeah.

Yes, Hi, Bruce power.

There are 6 reactors to be refurbished we all on the number 1 reactor we have.

Our preferred supplier agreement.

And for the next reactors.

And the conditions are all changing.

We have already secured.

And for the steam generator, which is quite an interesting job number 3 and for each of the 6 ended the third 1 we are negotiating at the moment.

<unk> for the second reactor and to which condition, we could do it taking into into account.

As a M.

And the learning curve that we have and clear.

And I remind you we had our first unit in Darlington and to solve and 18 and 19.

And then we just started up in 2022 units, which are the second into third 1 operationally we are doing extremely well we are in advance of the scheduled.

And from a scheduled and more than 30 days and are in LPG around 20 days and in Bruce So I'm extremely happy with the ramping up for our operational capacity and we will look at.

And when they're sick.

Getting.

What was the unit is coming down the line Bruce or P. G stall and I mean, we have a contract for the for units to be to be refurbished.

We need peg.

And what we Havent.

1 is just the first part of a much bigger schema and.

And we just see Inc.

The facts to be up for the first contract.

And on which I can say that mobilization and is going quite well.

Help us to be very well positioned for and for the rest of the drop.

Okay, Great and just 1 last question for me on the Lake Erie connector, and if theres any spin and discussions.

And the project or maybe your expectations surrounding the potential timelines and when.

Related to that that situation.

No discussion at <unk> for the moment with a with eventual client so nothing special to say on this 1.

Okay. Thank you, okay and that's awesome.

Yes.

Yeah.

Your next question comes from Ian Gillies Cramps Stifel and children.

Good morning, everyone.

Good morning.

Would you be willing to put in other projects similar in size to Bermuda Airport on the balance sheet at this point and time, given the improved outlook or would you need to divest that project first before and doing another project and similar size.

So.

Usually for either David or myself will give an answer but okay. I will give this to David but I think we have exactly the same answer.

And so it's going to EBITDA.

Well, yes, absolutely we would be open to that.

It was already being a question about international BD.

<unk>.

And this is what are the areas we're focused on.

We think.

C C.

<unk> solution, we bring to some of the smaller.

Island airports.

And is fairly unique.

And we think we've got a good model that we can replicate elsewhere and Thats pub for BD team are focused on obviously as we've already said COVID-19 put some of those conversations on ice for a while but.

There are a few of those that.

Definitely ramping up again and as <unk>.

Interest and that model. So we would absolutely look to do that again.

In terms of.

Bermuda itself at this point, there's no plans to monetize our investment day.

And we're more focused on getting the airport back.

For full operations.

And being a long term partner with.

So the EBIT.

That's very helpful.

And as fashion that we don't have anything else to and the other question I wanted to ask was around our expectations and.

And the M&A world with.

And with all of the stimulus spending expected to happen and just curious whether that's probably a material headwind at this point or whether you think that's an issue and can be worked through over the course.

Yes.

Yes.

For new market right now because you've obviously got people who are coming through.

Period, there has been impacted by Covid and then as you say there is also expectations around stronger market going forward, but I think a lot of other things we're looking at.

And our opportunity similar to ones we've already.

And.

<unk>.

Companies are getting to a point, where they need a partner like hey call them to help them accelerate their growth and that's true.

And what we're looking for when we when we look at these opportunities where we can bring some synergy too and some size and scale and our client relationships and everything else to help those companies.

Real quickly.

And so.

They're looking at and markets growing but they're also looking at their own ability to continue.

<unk> continued to keep pace with that from a balance sheet perspective, and so they called.

Gold is a good long term hold for that business. So so we think it plays into our strength.

Byron strategic assets and.

There's some short term and I think dislocation in terms of expectations, but nothing.

Think wood.

It would be less thing and we cannot overcome.

That's helpful.

And you very much I'll turn it back over and hopefully my audio work for the first time and a while.

Thanks, Steve.

Yeah.

Yeah.

Your next question comes from benign planning from the Chinese capital and children.

Yes, yes, well come back just related to the port modernization project and sales Isa.

And could it be turn like a concession and the project over time.

No I don't think so but and while this project has been taken by the Caribbean and development Bank.

And they have a plan about it and.

I don't think the maintenance and that could be and evolution.

And we all scale.

And in the frame of the design.

Design and build a pure construction job Inc.

And at the moment.

Okay and.

Last 1 for me just with respect to the deal fortunate DS and the U S. You talked about the proximity a versus B C could you talk a little bit about the strategy.

And to source the employees', assuming you're successful with those U S. A fortunate these are childhood.

This is exactly why we don't want to go alone.

To build a project to United States, and we want to go with stronger.

American and PR and local P M. Because the rules are different and the trade unions update friends and.

The regulation.

On the other trends in terms of management and there's not that much of an issue.

I would say and a great proportion of.

Off of our manager in Western Canada, and Americans. So they can perfectly cross the border.

In terms of trade and he sees and why we we need partnering and then did you see what you have in mind.

Okay. Thank you very much for the time.

Okay.

Your next question comes from Gregory Baskin for and Leland games heal and children.

Good morning, guys.

You bought a small special you bought a small specialty and nuclear business. A couple of years back just wondering if you could comment firstly on how their expertise is helping you.

Your refurbishment activities and Canada, and secondly, whether you can leverage their relationships to pursue.

Nuclear work down and U S.

Yes.

And can be happy with the expertise of walks and.

And in Canada and ma'am.

Nuclear and especially new clear welding it.

We have been using and then from the moment, we acquired them I mean, non Darlington the first unit and we.

The excellent results.

Those results have been share with our team that Bruce.

And we have decided and cooperation with our client I mean, OTG and Bruce to create and.

Can bridge, we have econ nuclear is new.

I'll just add.

And then and welding center of excellence and I can say that most of the teachers.

Coming from work. So we all we are extremely happy and and we think between the east and push it to be.

Even more productive.

And economically.

Yeah.

And even better.

The major component and refurbishment for Bruce and <unk>.

These being said I mean, United States is a huge market for new clear everybody now and realize that.

In front of the all of the issues related with climate change.

And greenhouse gas emission I mean, you cannot get freed up nuclear you need to use for Europe.

To cope with the increasing demand of electricity for the huge program and this program has been coupon and quite to see me a whole time in.

In March 2020, due to kavita, but it.

Just coming back now.

And so we.

And we are beating walks.

And on their normal kind of job, which is a a few dolphins and million, but we will know and try to internally joint venture all of it.

And from there.

And.

But it should be contracting Canada with work to try to go and United States.

Towards projects above $100 million. So we are on our way to deploy a new strategy.

Alright.

And Thats good day here, okay. Thanks, a lot and great results.

Thanks for that.

There is no further question and this time and make.

Thank you.

Very good. Thank you very much rained and thank you all for your attendance and as always feel free to reach out for questions. After the call and have a great rest of the day, we'll speak to you next quarter.

That's all for today's conference call. Thank you all for joining Huron and artist.

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