Q4 2021 Aecon Group Inc Earnings Call
Yes.
Okay.
Good morning, and thank you for attending today's 2021 year end results for eight Congress My name as you saw and I'll be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
You'd like to ask a question. Please press star one on your telephone keypad.
I'd now like to pass the conference over to our host Adam Borg coffee.
Adam Please proceed.
Thank you Jason good morning, everyone and thanks for participating in our year end 2021 results conference call.
This is Adam organic speaking presenting to you. This morning are John <unk>, President and CEO , and David Smith, 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 one question before getting back into the queue to ensure others have a chance to contribute.
As noted on slide two 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. Although he couldnt believes these expectations reflected are reasonable we can give no assurance that the expectations will prove to be correct.
I'll now turn the call over to David.
Thank you Adam and good morning, everyone.
Briefly on <unk> consolidated results.
Our results by segment and then address they called financial condition reports all over into January .
Turning to slide three revenue for the year of $4 million with $384 million or 9% higher compared to 2020.
Adjusted EBITDA of 290 million a margin of 6% compared to 265 million a margin of seven 3% last year.
Operating profit of $119 million compared to operating profit of $50 million in 2020.
After adjusting for the impact of the maintenance related to the Canada emergency wage subsidy costs who's reported in both years.
Adjusted EBITDA of 207 million operating profit of $87 million in 2021.
Increased by $22 million and $17 million, respectively compared to last year.
Diluted earnings per share was 78 cents compared to diluted earnings per share of $1 29 and 2020.
Both amounts before adjusting for the impact of suits.
Reported backlog at $6 $2 billion at the end of 2021.
The backlog was $6 5 billion a year ago 6 billion at the end of the prior quarter.
As announced yesterday <unk> board of directors approved an increase to the quarterly dividend.
These payments tend to increase in the last 11 years.
Quarterly dividend will increase to $18 five per share or $17 five per share previously.
First increased quarterly payments.
For 2022.
Now looking at results by segment.
Turning to slide four construction revenue of $3 9 billion in 2021, with 301 million or 8% higher than last year.
Revenue is hiring nuclear driven primarily by an increased volume of refurbishment work in Ontario.
Utilities, driven by gas distribution and telecommunications work.
Partially offsetting these increases with lower revenue in industrial operations driven by decreased activity on mainline pipeline work in Western Canada.
Civil operations, driven by lower road building construction foundations work.
Adjusted EBITDA in the construction segment of $212 million a margin of five 4%.
Compared to 262 million a margin of seven 2% in 2020.
After adjusting pursues in both periods adjusted.
EBITDA was $180 million decreased by $2 million compared to 2020, primarily driven by lower volume from gross profit margin in civil and transportation solutions in industrial.
Decreases were largely offset by higher volume and gross profit margin in nuclear and utilities operations.
And contract awards in 'twenty, and 'twenty, one totaled $3 $6 billion compared to $3 3 billion in the prior year.
Construction backlog at the end of 2021 was $6 1 billion compared to $6 4 billion at the end of 2020.
Turning to slide five.
Concession revenues for the year was $69 million.
That's a 98 billion in 2020.
This lower year over year revenue was primarily due to decreased construction activity.
It should have been muted international airport redevelopment project.
It was completed in the fourth quarter 2020.
This decrease was partially offset by an increase therefore operations.
Commercial flight movements continued to recover more severe impacts of COVID-19 on passenger volume experienced in 2020.
Adjusted EBITDA in the concession segment $64 million.
<unk> by 22 million Thats, a 2020, primarily due to results from Bermuda.
Turning to slide six.
Year end April had a committed revolving credit facility of $600 million.
23 million was drawn and $3 million utilized.
Right.
As well as the $900 million facility provided by EDC OLED credit.
Hey, Colby committed facilities for both working capital and electric credit requirements totaled $1 $5 billion.
They'll get a credit facility maturities until the second half of 2023.
It's a quite limited property loans and leases in the normal course.
As of December 31st a Colo and cloud compliance with all debt covenants related to its credit facility.
Capital expenditures in 2022 are expected to be similar to 2021.
At this point I'll turn the call over to Sean.
Thank you Dave.
Turning now to slide seven.
The ongoing impacts of COVID-19 on ecommerce operations.
We continued to deliver solid results in 2021.
<unk> balance and diversified portfolio and a giant catch up on.
<unk> to be significant trends.
I went to the market opportunities across Canada to date.
The construction segment is aligned to the significant infrastructure investment commitments by all levels of government across Canada.
On a select basis internationally.
As well as by the private sector across the market sectors in which we participate.
The concession segment is purpose built for the large scale infrastructure projects being developed and brought to market by governments.
The volumes are.
And he's also targeting innovative development and private finance opportunities in power clean tech and other related markets.
Well I was participating other competition out of the five between projects identify all defined.
Turning to slide eight.
Backlog recurring revenue program and the pipeline of bidding opportunities for new work remain at strong levels across Canada.
New awards of $3 $7 billion in 2021.
<unk> 2020 by $413 million.
In early 2022 has already seen a number of new projects awarded.
Not included.
And backlog is included.
Including the Interstate 90 stay towards 18 interchange improvement project in Washington State and honestly its water supply tenant project in British Columbia.
And he couldnt partnership with them so selected as the preferred proponent on the Montreal Todo Apple orientation in Quebec.
And most recently and they cant consortium was named the first negotiation proponent.
It was a transformative go right and expansion of corridor works project in Ontario under our collaborative model.
With infrastructure, Ontario, and Metro links.
This potential award would be the largest project undertaken by economy, you need six degree.
Yeah.
These awards clearly demonstrates the strong demand for <unk> service needs for projects of all sizes and across our operating sectors and geographies Ara is a focus.
Eight Kony is also pre quantified on a number of large project bids.
Awarded over the next two years.
Including several procurements will be owned titles subway line and most recently the Scarborough will subway extension inflation rate and systems.
We expect demand for our services to remain healthy for the foreseeable future as the federal government and provincial governments across Canada.
Finally investment in infrastructure is a key source of stimulus as part of economy recovery plan and an essential part of the transition to a net zero carbon economy through more sustainable infrastructure.
Recurring revenue was up 28% in 2021 versus last year, primarily from growth in your television operation.
Recurring revenue is expected to continue to grow driven by demand in the utility sector and the concession segment is expected to see Apple traffic in Bermuda on seed.
Its recovery during 2022 from the impact of the COVID-19 pandemic.
I would also like to formally welcome our new employees from past peak electrical installation OPI, which was acquired in November 2021.
As the largest independent foodservice powerline contractor in British Columbia.
Providing maintenance construction and emergency restoration services for critical electrical infrastructure.
Majority and the Master service agreements and recurring revenue arrangements.
P. I E. The designated power line service provider for Idaho was the lower maintenance house and Ocado got into regions and also works with a variety of private sector customers.
Turning now to slide nine we are continuing our drive to beauty industry leader pizza sustained entities.
Last year, we announced our <unk> reduction target of 30% by 2030 and net zero by two solvency.
In 2021, we focused on operationalize these targets by integrating new technologies to reduce emissions across our portfolio and we are the first construction company in Canada to try Union electric mini excavator.
We also acquire technologies such as battery powered.
Solar powered equipment and battery packs to replace diesel on our project sites.
We further cemented our ESG commitment by becoming the first Canadian concession company to incorporate the sustainability linked credit facility tied to ESG objectives.
We plan to release, our next sustainability report in April 2022, and look forward to highlighting our achievements alcohol communities as we continue to focus on building what method to enable future generations to thrive.
Turning to slide 10.
Trends that I've spoken to already in terms of the strength of the concession market in Canada, both in public and private sector continued to be positive T. Mike well aligned to a call diversified construction segment.
He is a concession segment. In addition to expecting continued recovering traveled through the Bermuda Airport during two solid 22.
There are a number of opportunities to add to the existing portfolio of Canadian and international concession in the next 12 to 24 months.
Including in the U S.
Innovative projects with private sector clients that support our collective focus on sustainability.
They shouldn't win that you really thought.
The overall outlook for 2022 is positive as construction continues on a number of projects that ramped up into solid 20 in 2021.
The strong level of backlog and new awards during 2021.
And the strong demand environment for home services, including recurring revenue program.
Thank you, we'll now I'll turn the call over to analysts for questions.
Okay.
Thank you.
I'd like to ask a question. Please press star followed by one on your telephone keypad.
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We will now pause here briefly ask questions registered.
Yeah.
Our first question is with Yuri Lynk from Canaccord Genuity.
Please proceed.
Thank you and good morning, everyone.
Good morning, Gary.
Good morning, guys I don't know who wants to take this one but you mentioned the outlook for 'twenty two is positive.
But I I struggle to see how the construction segment EBIT grows this year.
You know your 12 month backlog is down about 5%.
And the margin comps are really tough.
At least through Q3, especially in light of the weakness we saw in the fourth quarter. So.
How do we get to growth in the construction segment and 22.
Julia will take this one.
I would ask two vectors to answer your question. The first one is about the quality of our backlog.
So as you know I've been repeating it.
The quality of the backlog is not an issue.
The issue is about selectivity of projects.
It's about going on the risky.
Our portfolio.
As you have seen.
All the indicators of what we decided to do go in the right direction.
Indicators.
About the kind of project.
Between.
As a part of.
In fixed price to unit price about the size of projects you have in off season from.
2018, I mean, we have not taken a project superior to 1 billion because we just want to go on with the woman.
At the moment.
We are more and more diversified.
Geography to deal with.
A quite stable.
And equally weighted.
And I went back to all these take between six and 7 billion busy so no no real issue with the quantity, it's a problem of selectivity.
Quality backlog and contracting mode.
A.
We're not doing it.
<unk> suite.
Or to the right I mean, it's are.
We have decided quite considerably I mean.
We are shaping the <unk> tomorrow.
No.
I'm convinced that this will drive it.
Better profitability.
If I take for example, the IATA suite.
Encore.
Project I mean, it's it's transformational for a.
And Tayo, but also for Medtronic, sending trucks or Tom how are you.
Of course for for a call not mean that eight say when you.
Calculate about what share a common phenomena.
It's about two works around 3 billion.
And operation you know we have a 28%.
The operation for 25 years between 2024 solid 50, I mean, the truly value is either owned six Gideon explore collaborating.
It will begin with the development phase of two years.
Well we will.
We as the client.
Together, what will be the sort of level for the train what strategy are we going to use in line with our offer and some deals did you exit what kind of works out well.
Are we going to do.
What will be the price I mean.
Clearly.
Transfer my team.
Wait for a car to work and this is a way to drive profit up My second answer my second vector will be about execution now.
Execution is key.
We are extremely happy with our continuous improvement program.
A lot of enthusiasm within the company most of our dropped side I just give you an example.
Hey.
You can see I mean, all the investor presentations, a picture is about Goony outreach and you can see the two Pete all these the Canadian side.
Louis you just cost.
A segment, we have something like 75 segment.
To do.
We wear.
Look at around.
40 days per segment.
Implementing our continuous improvement we went rather quickly to 10.
Seven.
A few days ago, we reached five days per segment.
Good morning, he keeps profitability goes it goes directly to the bottom line.
We are investing a lot in our economy, but key project management.
Group.
I mean, all this is important because it is money at the end of the day and last but not least I mean, we have stopped pretty reorganized our procurement and we are much much more efficient. So this is why we say that concentration.
Not a good trend.
But I can come back to that.
Joey.
A strong focus on profit growth, but intend to revenue I think if you look at the.
The comparison.
20 to 2019, where we came into 2020 with exactly the same and that is that all to be worked off over the next 12 months as we had in 2019.
And yet we still grew by 90% top volume.
Coming into this year so.
Really driven by recurring revenue.
It's driven by the level of New awards within the year.
Already had a significant.
A number of wins early this year you paid it happened a little Julia.
At year end position of basketball.
Looking at which is very similar.
In the last year.
It will look very different so we're not too too worried about the revenue side and as we've spoken about it.
It focuses on ensuring that revenue will be profitable.
Yes.
Okay. So the.
Margin weakness.
Sorry, the margin weakness that we saw in the fourth quarter, you don't see that spilling into 2022, that's my last question and I'll hop off.
Yeah, No I mean, if you look at.
The fourth quarter, we're really talking about.
Impacts following too.
Civil and urban transportation space.
Schools have a pool of projects, where we've come through.
Pretty tough operating environment.
Let me see if youll see overall.
Late in 2021.
Obviously supply chain disruptions.
And we made a lot of progress in settling some significant claim.
Claims in the quarter.
And.
The impact of all of that kind of.
Coming together, there's no one particular issue is.
Always significant.
Those factors.
They are cool so everyone wants to be a little lower in Q4, we don't see that moving over always seem to have some almost call impact daily in January .
But we're through that now very much back to normal throw a kobe perspective.
Be living with that.
For two years, but that also caused the initial wave.
Some impacts.
Pace of about a month or so.
And now in consensus.
Supply chain issue.
As always when you get some shifts.
Suddenly disruption we've been living with it.
The impact on supply chain now for so long enough that at all.
<unk>.
You work in a new bids.
Two arrangements, we're able to.
Back to that so we don't expect that to be something that impacts on inventories.
Thank you Phil.
Oh.
Thank you for your question.
Yes.
Our next question is with Jacob bout with CIBC Jacob. Please proceed.
Good morning.
I wanted to continue on with the.
The construction margin.
Question.
Maybe just help us.
Understand what the biggest drivers were how much was was army corn impact.
And then as far as the civil urging urban transportation projects.
You talked about claims adjustments.
Sure any could there be any positive adjustments to offset this in later quarters.
Yeah, so taking those together.
So overall I mean put things into context of the full year, our construction segment over the full year.
On a like for like basis, excluding sue so progression from 2020.
In an environment again, which was.
Subject to the law.
So we think the constriction segment across a year actually call.
Well.
So we know it will call.
As I said earlier.
If you looked at.
Yeah, where people are looking at EBITDA reported in the quarter of just over $60 million.
Consensus is just over 18.
Yeah, I would say the fact that I talked about in terms of overall supply chain.
And the projects.
Hopefully a very similar kind of impacts in terms of that.
Entrance.
Maybe I can add a few words on our I'll call. It Quinn.
I'll make a.
They call them in December .
January .
We all know it was not a strong as the data volumes.
But it will spread over I mean much quicker.
And we I mean from December .
Some occasion more than 60% of our pizza hut isolated to that.
At all levels of the company I I got Ali Kahn with very.
It's hard to isolate my principal seven date and on all our jobs I mean, it was it was 90 days so.
Yes, you would have affected this.
Although on the good side of it.
We are building a little by little all our emergency centers for call. It because the situation is getting better and better each year.
Liquidity.
And then do you get back to pre print pandemic levels as far as margins in 2022.
Yeah, what we're seeing.
And again, you'll go back to kind of pre Covid days as you say looking at 2019.
Uh huh.
And then just by coincidence the construction sector because as you know the concession concession segment will continue to be a ramp up in traffic.
Traffic recovers, but looking at the construction segment alone, we do expect to get back to pre pandemic levels for sure.
Okay.
Leave it there thank you.
Thank you Mr for your question.
Our next question is John Francois Lavoie.
With the starches capital manage capital market sorry.
Please proceed yes. Thank you very much good morning.
David just wanted to come back on the question for margin on the construction segment in 2020 do you mentioned for sure would go back to.
Pre pandemic level, but would it be.
Achievable to go beyond the 6% level I know you don't like to provide you don't provide specific guidance, but looking at consensus with the actual revenue target and the visibility that you have in the backlog I was just wondering if you could provide a bit more color on the potential for margin in construction.
Yeah no problem.
You probably answered your own question by saying, we don't give specific margin guidance, but I think if you go.
Go back to Jos Luis comments at the beginning.
It has it's the first question the focus is very much.
The margin profile of the work we are bidding.
The execution of that work.
Yeah, we feel pretty confident about the mix of work we have.
The 2022.
We feel.
We're confident about the progress, we're making on productivity and execution. So.
Yeah.
Joe.
All subject to.
Any.
Oh, the surprises we think with the.
We dealt with everything we know about right now, but we're in an environment, where things change quickly, but but absent any surprises in it yes.
Okay. That's good color and then moving on the free cash flow standpoint.
Or should we expect a positive reversal of working capital in 2022.
Significant consumption. We saw in 2021 are the ramp up of key Pro project will continue to consume some working capital.
Yeah, So we do expect.
Some seasonality in our cash flow.
We normally say no I think our working capital and the generation of cash flow in Q4 and Q1, sometimes it's more Q4 in Q1.
The reverse we expect to reverse this time around.
The biggest impact in Q4.
The issue we disclosed at the end of Q3.
The coastal gas pipeline.
In fact that how does that cash flow.
We've noted.
We've made a lot of progress on that front, so that will help.
Q1.
2022, as we've formalized.
Those agreements so that will benefit the first quarter us will the normal seasonal a winding so we should start to see that position.
In 2022 and get back to a more normal.
Our cash flow profile that we've seen historically.
Okay very helpful and maybe one last Bermuda, considering the Austin for 'twenty two it looks quite positive you increased your dividend once again I just wanted to pick your brain on your preference for M&A versus share buyback in the current context with the share price.
Unjustifiably being punished this morning.
Yeah, I mean, obviously the dividend has been a focus for a long period of time now over a decade.
We continue to see that as a.
Uh huh.
A predictable and consistent approach.
Our focus on that side of things, we do see opportunities.
The M&A side.
We are focused on.
Looking at where we can continue to grow the business Joey talked about our focus on recurring revenue.
Continuing to.
Look at the profile of the type of work we do so we're looking for M&A.
Opportunities that help us achieve that.
Thank you very much.
Yeah.
Thank you for your question.
Our next question is with Frederick Bastian with Raymond James.
Please proceed.
Yes.
Thanks, and good morning, everybody.
Would you mind discussing more the collaborative nature of go rail expansion projects that you are.
Recently secured and how we.
We should think about how the.
The development Phase, we will what transpire.
Transpire over the next few years.
Yes, I will do it.
Frederick.
We I've been advocating and working with all our clients.
It's about changing the contracting mode.
The Big and complex project I mean, basically speaking it.
S T, making major complex projects, especially the one whether with system integration.
On a lump sum price is extremely difficult. So we have been exploring all of these or to lose weight with our client to say.
We need to decline much more together, what we want to do and what is going to be the cost topic.
And this.
This is what we call the develop unsafe.
So we have been chosen on the on core expansion.
Graham.
I would say we have been through them on the capacity of our team.
The way, we have explained and put on the table is a very good strategy for service operation during the 25 years and hours of service operation.
Uh huh.
Good after.
Drive it.
The capex for <unk> tightening clustered <unk> now that we are being chosen now I mean at during two years.
You should produce some early work that we've got tenants that are important.
To enable when we begin after that.
The main works.
To go quick and to go better I mean doing since two years, we are going to finalize it.
<unk> strategy with metrics and some detail finalize it what are the infrastructure that op centurion equipment that all necessary.
And together, we redid it.
Behind that what can be the budget for this and we will work with our clients on a cost plus basis.
<unk> execution.
With a target price. So at this stage, we are negotiating with our target I would say.
He can't rule.
All of the project and then we will begin with the development phases. So it's it's what we call a progressive design build is what we call it.
Collaboration and we are extremely happy I mean that the economy has been a three years longer first feet.
And dropped one three times, we I can be happy because it's off of projects.
It was off of projects.
So the future the risk profile is.
Property defined as you can imagine.
Okay. Thanks for that additional colors on the way.
Second question relates to sort of the <unk>.
Progress you are making.
Entering the U S markets I know its been a been a mark or identified as an opportunity in some years back but.
We won a recent contract in Washington State and then Kishore.
Artistic for another one in Michigan.
I don't think it's a coincidence that these states are bordering Canada, but just wanted to know.
What maybe is this the culmination of many years of business development or are these.
These opportunities.
Presented themselves more recently.
Yeah, you, probably remember what I told you I mean, a few months ago.
We cannot ignore the United States.
We know there's a huge pipeline prospect trying to Canada.
When we have a neighbor of these five trends the new infrastructure Bill.
So we have been working a lot during the last four months.
What we have discovered is that it's not only about roads and bridges. It's also a lot about strategic tease about network about tech communications about increased capacity.
So we lose two vectors.
We will go I would say who Didnt T.
But certainly we are going to.
So the U S market in terms of keeping that we have decided that we will enter this market from our base <unk> Vancouver.
And go down the West coast progressing lethal is wide, but first drop we took 18 in Washington State.
So relatively small drop it's a walk or about $25 million. It's a job I mean extremely classy critical equals the bread and butter.
But we do I mean, all our division.
We have studied each extremely carefully we seek with us a very good team of local companies.
All right.
And then when we would expand and.
Joe maybe a little bigger maybe different kind of association with bigger companies.
And go down.
The West coast to go at least to California.
Yeah.
Probably the.
One of them or the biggest part of these infrastructure Bill there's a lot to do so this is a planning to see the utility that we are looking at the market.
The alliances we can do that.
As always I mean, 40, suede pump and it's what I I've always thought we're not gonna have a new country.
<unk> added to our new activity I mean, we haven't you could treat okay, but we do week on I would say our core business season. So that we don't have any any surprise.
Okay. Thanks, a lot appreciate it.
Okay.
Thank you for your question.
Cool.
Our next question is with Chris Murray from <unk> capital markets. Please proceed.
Yes, thanks folks good morning.
Turning back to the margin question, just a little bit just trying to understand a little bit of a disclosure on Q4.
Dave.
What was the huge contribution in Q4.
And you didn't call it out but.
Got to expect that Theres got to be some revenue that you probably lost in the quarter just due to on the call.
I'm, just trying to get a sense of what the normalized margin would have been for the quarter.
Yeah, the Suez impact was around $4 million in Q4.
So that's that piece of revenue.
As John said, we had.
Some impacts to in December .
I wouldn't say the revenue impact was hugely significant news it was more of a productivity impact.
The impact to us.
Through December so.
Revenue maybe kind.
Kind of in the $20 million range, but but.
That's significant.
Overall revenues just.
So folks who are just.
To schedule work.
Get the right crews.
With the right number of people so.
It was a bit more of a scramble.
December 10th.
Billable workforce.
Yes.
Okay, and so just I guess, what im trying to understand is as we go into 'twenty two I mean, I think the first.
The first thing I'm, assuming is that there'll be no more two statements next year and if we think about the call. It the $32 million of Skus that were in that were in earnings this year.
Should we be thinking about that back.
Backing out that $32 million as a contribution in kind of but then I think you also mentioned.
Thinking about 2022, maybe kind of like a pre COVID-19 here I'm.
I'm just trying to.
Is the assumption that you will overcome the loss of the $32 million margin type of thing.
Is that the right way to be thinking about this directionally.
Yeah, So you're right. The suit program has ended now so there won't be any contribution from that in 2022, but we've obviously been.
<unk> impacted by Covid throughout the year, including early in the year, including impacts on commuter as well, obviously do we expect to see recovering.
Through 2022, so when we look at.
Suits and Covid impacts together.
Assuming we continue in the operating environment, we're in right now which is really happening.
No impact on the business in terms of the current Covid situation.
Yes, we think we think those two kind of offset.
Allow us to get back to a kind of a pre COVID-19 type of.
Margin performance.
Okay, Great and then just just to make sure too I know in previous years, you sort of talked about the fact that just the first half of the year.
It might not be as substantially down in the second half just because of the nature of some of the work, but we should still be thinking that there will be some seasonality impacts into Q1 and Q2 again in 'twenty two or is that also fair to think.
That's right.
Q3, Q4, typically the highest revenue quarters.
You know that that has moderate to some extent over time, but it's still definitely the case.
I don't expect that seasonality to be any different this year really.
Alright Thats helpful. Thanks Bryce.
Thank you for your question.
Our next question is a choice Sun from Lawrencium Bank Securities. Please proceed.
Okay.
Great. Thank you good morning.
Maybe just quickly on the coastal gas link project here, obviously noticed the change in language in the disclosure that sounds pretty pretty positive here I'm just trying to get a sense from you in terms of how I guess comparable that youre feeling.
In terms of Derisking.
Free cash flow exposure there on that project if possible. Please thank you.
Maybe I became involved.
C G L.
C. G L is a very complex.
Project.
By nature, but also by the massive change.
All the regulation about erosion and sedimentation control so.
It's not only a problem at T G I F.
I think everybody's aware of it.
Same kind of issues that have been encountered in trans mountain in terms of coastal variety in terms of all scheduled being being pushed on that.
To the right. So those are complex.
The projects we have.
Laughter at the highest level.
With our clients.
Very good relation based on trust and transparency.
To make the best out of this difficult situation.
We have been during the last quarter.
We have reached.
Yeah.
Some agreements with our clients causes agreement up been formalized during Q1, so they have just six the cash.
Physician pool for Acorn.
You know that in addition.
We we have been in arbitration.
True.
Hi, Les.
Ron.
What is going to be declining.
Value for this project.
In between we are also working with our client.
To try to settle some a little dicey issues.
I'll be creation needs time, and Mike from two weeks ago, we are also advancing well.
Well.
Louis.
So this is at.
At the moment, where we are on operational way at TTM, maybe David you can take more financial part of it.
I mean, I think just building on what Charlie said obviously.
The disclosure at the end of Q3 was focused on cash flow.
We've obviously made it.
As disclosed Joey's comments, a lot of progress on that front.
Yeah.
Obviously, we work on these projects for quite a period of time now.
We've reflected.
The challenges we've had.
On the project.
Obviously other contracts.
Facing similar challenges, we've reflected that in how we position the project.
And so from that perspective.
That will serve as the number one concern it was really around cash flow and we've made good progress on that front.
Okay, Great that's helpful.
Maybe maybe just also I guess, a big picture question for John Luis Here, just in terms of the infrastructure spending potential let's call. It in Canada, I think people largely you were expecting.
We will pick up post Covid I.
I guess just based on what Youre seeing now like where are we in terms of that progress from a spending perspective for 2022 or are we still in the early days of seeing the full potential of government funding or the way it gets quite mature at this point.
You'll probably remember I mean, I told you one year ago.
I don't believe a shovel ready project and infrastructure.
Factory selling price, we're going to invest a lot on infrastructure, you talked off and on Monday morning.
So a yes.
Yes, I just give an example for example internal until they have you know a lot of works.
Our industry reputation all produced during the Covid because it will no more trucks than normal cough, because everybody was at home. So we got to load us towards that but.
Mainly.
The program on which our teams at the moment all preparing that has the first.
Yes.
I've been knowing and we are well on our write off of it.
Because we were ready to do so.
I would say.
Hendi the.
The pipeline units cost structure Chongqing.
Is there a strong correlation with coffee and waves that recovery plan, maybe not that much.
It is not the main driver. The main driver is that you have something like half a million.
A new company in Canada.
And lose people.
Our small immigrants and eat into highways and they need to.
Any communication that they need a better source of power was that just a source of communication.
Communication.
And I don't want to drive it.
What we are seeing at the moment.
The backlog to come back to something extremely positive for us I mean, you have adopted.
680.
Recurring revenue I mean.
Telecommunications is booming I mean high book, because the whole world.
Place Jesus.
I tell the team entity also so we are extremely happy to be well positioned.
I will say this morning, reviewing with one of my operational leader.
I would take you probably remember this company that we are.
Quite a few months ago. So now that he is well integrated.
I don't imagine.
The prospect the first week since you what does that mean, we are all working extremely strongly with idlewild. The GTA, we're working with <unk>, we're working towards that.
Private clients working with Manitoba Hydro I mean.
Uh huh.
Which of course, I mean, maybe talk to me a consequence of Covid.
It's not the main driver was the main driver.
There is a need and that we'd be up a bit.
Okay, Great Awesome, that's super helpful color. That's it for me. Thank you.
Okay.
Thank you for your question.
Our next question is with <unk> with <unk> capital. Please proceed.
Hi, Good morning, just wanted to.
Start off on the nuclear side, there's a competitor of yours recently ended a joint venture partnership those folks on nuclear decommissioning work in the U S. I know you can't comment on that partnership specifically, but how does this how does this event impact or inform your view of the U S nuclear market.
So maybe I will begin with what are we doing on the on the nuclear I mean at the mine in Canada. We are full speed ahead with the refurbishment of the opposite is also true power plant I mean, all P. G. We are all working with the second reactor we are extremely happy with the with our with the ramping up.
With the lessons learned from the first what was the second one.
We are.
Only a few dozens of day off the schedule to our clients is delighted with our work.
On Bruce power.
We are working on the first reactor.
We have added to our backlog of the second reactor dropped to four two comp.
G III keep generator so.
Our teams are getting better and better second point of importance.
The small modular reactor. So you are not to use that <unk> decided about these technology partner was going to be G. We are part of the team with <unk>.
Out of the cost structure.
And it's dollar.
Tripoli.
With this I mean, <unk> standard and go up because it is the right size that meets each of course carbon free energy I mean, the debate goes on trade.
In terms of safety you reactors following who she mahogany.
But I just remind you that.
Actively cooled for a minimum of seven date, we the power shut that short agent and without operate to action I mean, it's tough.
Italy, 18th we would be happy to work on.
United States.
We haven't quite two years ago was more company specialized in Wendy.
In Canada, and United States.
I have to say that during it.
The last two years because of Covid because of nuclear power plant were rather be next time to lead and to we think the plant.
People are working on Capex.
And mixing with people working on operation.
We have not seen a lot of activity during the last two years, but he is coming back and it's coming back rather.
I cannot comment on.
With the spending of the J D.
But it was all about.
Maintaining it.
You see plans and so hall, we all know.
Yes.
In the United States.
I guess.
You also say, maybe that's not a business you want to be in there that's not a market that you were going after at the moment.
And in United States, we are not pursuing this I mean have you didn't see when the title between we'd call out I mean do you crank. Its total tour our <unk> suppliers that we know perfectly and we are working in collaboration with them or not.
Future packaging, but entering into the mid <unk>.
Maintaining a project.
I can state is not part of our strategy.
Okay understood just quick just one last quick question.
Obviously, you mentioned this in your opening remarks and in the MD&A pursuing more transition.
Transition or sustainability related projects and opportunities can you just provide a bit more detail on that and perhaps quantify what the market opportunity is for you in Canada.
It's not.
To quantify but the waste coming definitely coming.
How do we look at ESG I mean first of all at the company. We are we are we are a citizen and.
And we have to take care of our planet. This is why we are the first construction company too.
Set up.
Targets on our greenhouse gas emission reduction from selling 30 and 2015, so up to meet I mean, we are we have a plan and we don't perfectly all we are going to reduce by 50% for 2030.
We don't have really accrue about met your own consultants <unk> equal cost we are working on it.
The second part I mean, our ought to look at the G.
Uh huh.
The business definitely E U R E.
New avenues of growth coming from everywhere may need the energy sector in the electrical sector.
<unk> energy.
You have probably not see that most of our tuck in acquisition during the last year was about it.
And we are extremely.
Focus on all of this new stream of businesses.
So much that we have.
Heidi to create a single point of entry at a corner.
In order to help our clients with their ambitious program regarding sustainability.
A single point of entry will.
Lewis to be more agile.
In our first suites more drawn now with solution and being able to share the words between all the sectors at a corner from a centralized point of view.
I mean do you think.
Think perfect example, video corridor project area projects that Joe already spoke to me really electrification of the rail system in the GTA to replace diesel.
These are the these are the types of capsule.
Acacia decisions being made.
Across all levels of government.
With private clients.
We're right in the middle.
All activities so.
It will drive our growth and our opportunity.
For the foreseeable future, we don't see that.
That trend going anywhere other than continuing over over the long period of time.
Okay.
Okay. Thank you for those details.
Thank you for your question.
Our next question is with Michael to home with TD Securities. Please proceed.
Thank you and good morning.
I was wondering if you can provide an update on traffic levels at the Bermuda Airport.
Through the first part of the year here in 2022, and maybe to put that into some context.
Just just give us a sense for.
How that's evolved from from what you would've seen in the fourth quarter.
Yeah. So.
Overall.
2021.
Traffic was up compared to previous year by about 50% still.
Still only around 50% in 2019 levels.
Do see that obviously is based on trucking OE.
All costs that are out there in the market plus our own knowledge of that pilot to the airlines and what's going on in terms of on the ground and Bermuda, we do see that growing to about 60% of 2019 levels on average over two.
2022.
There's a seasonality to that Q1 is.
Always the slowest quarter for traffic and it up but muted so.
Lately.
Joe.
Q4 was kind of impacted in the last month.
This December because of all Mccrone January 2022, the same kind of impact things of that picking up again, so I think.
You know Q1.
Won't be too dissimilar to.
For Q4.
And then you know.
We think through the course of the year it starts to ramp up quite nicely.
Okay. Thanks, Dave and then one follow up.
You were asked earlier about changes in noncash working capital in and I think most of the comments you made were around sort of a possible difference in seasonality Q4 versus Q1.
A reversal so it sounds like you expect more of a reversal in Q1 in 2022.
As opposed to what you would have historically seen in Q4 I'm just wondering for the full year of 2022 with it sounds like an expectation of some revenue growth in 2022, how do we think about the full year.
Purchases in noncash working capital.
Yeah, I think overall for the year.
We expect working capital to be fairly neutral.
Across the year.
And as you said some of that is due to growth.
<unk>.
You know the profile of the projects but.
Right.
All of this can be.
Throw it off by by timing close to the end of the year.
In terms of.
Where are you right into the revenue on certain projects and things like that but.
All things being equal based on what we see today, we expect it to be fairly neutral in 2022.
Okay. Thanks for that.
Thank you for your question.
Our next question is with Saba Hot Khan from RBC. Please proceed.
Okay, great. Thanks, and good morning, just I guess looking forward I think there's a bit of commentary we shared earlier on your outlook for 'twenty, two and some of the impact that Covid had through late last year, and then I guess as we think about the outlook do you think you've kind of in the.
Provisioning that you did cooling through Q4, taking into account some of the COVID-19 risk earlier in the year and maybe some of the disruptions I just trying to figure out if there's still larger negotiation to larger projects, where there's still discussions around recovery and how youre sort of risk managing that for kind of full year looking forward.
Yes.
I think consensus of those Q4 impacts.
We felt.
So we dealt with those in Q4, so we don't expect those to carry forward into <unk> into 'twenty two.
Okay.
But I guess in terms of what you said.
Alright.
<unk> sorry, other than the comments, we made earlier, which is the overall impact.
That continued through January .
January obviously, a pretty slow month for us anyway from a construction perspective.
And Kevin did that that would be the only thing that kind of carries into the first months of this year, but everything else. We feel we've dealt with in Q4.
Okay, Great and then I think you'd noted in the press release in the call around just opportunities for concessions.
Bermuda I guess is that something that's sort of opportunistic or are you actively looking to build out that concession segment and add more assets, but just trying to get understanding of where that is on the priority list then.
That's something you can.
Compared to the opportunities maybe on M&A or buybacks or is it that that big of a kind of a focus for you guys.
Generally speaking I will begin.
My side I mean.
<unk>.
Our strategy worked together concession on the construction segment.
We're not going to invest.
Brown senior debt.
That asset only to operate each week, we just see that our job is to develop a project is to engineer a project financing to build it and to operate.
And we are extremely interested in making a in following this model and I can say that supports the sustainability ways that I was talking about is getting us new opportunities with private.
Thanks, Susan.
He is a private companies about all the alternate energy issues.
This is generally speaking, yes, we want we want to pursue and we already took me maybe David you can put on that yeah.
Very much.
Focusing on those opportunities.
Some of these.
Things that we're.
We're working on through government procurement.
So, ontario lots of ways of Patriot opportunity.
The paper trail improvements in Calgary, the Petri opportunity.
And that concession is greenfield, so sometimes it's investing equity, but it's always around that long term revenue stream.
Again, all Colorado would be a perfect example of what is it 25 year operations and maintenance piece attached to the opportunity that our concessions group is heavily involved in and we will be participating in throughout the O&M.
But what am lifestyle. So so that's a big focus for us.
We're also looking at opportunities to replicate what we've done with commuter there are some.
Very interesting discussions going on.
Around that space that does take time to come to fruition.
And obviously with all the impacts of air travel over the last little while has been kind of a pullback, but those discussions are back up and running again.
We're looking we're looking across the board, but how we can continue to evolve the concession was group.
There's quite a number of very interesting opportunities.
For us to do that.
Okay, great. Thanks, very much for the color.
Yeah.
Thank you for your question.
There are no further questions waiting at this time, so I'd like to pass the conference over to the management team for closing remarks.
Super Thanks, very much everybody for attending today and as always feel free to reach out with any further questions. We look forward to connecting again next quarter have a great day.
That concludes the 2021 year end results for Econ Group Conference call. Thank you for your participation you may now disconnect your lines.
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