Q1 2024 Aecon Group Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Aecon Group Incorporated Earnings Call for Q1 2024. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please press star 11 again.

Good day, and thank you for standing by.

Speaker Change: Welcome to the Q1, 'twenty 'twenty four Econ group incorporated earnings call.

At this time, all participants are in listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

You ask a question during the session you will need to press star one one on your telephone.

We'll then hear an automated message biting that your hand has been raised.

Speaker Change: To withdraw your question. Please press star one one again.

Operator: Please be advised that today's conference is being recorded. I would now like to hand this over to our first speaker today, Adam Borgatti. Adam, please go ahead. Thank you, Mark.

Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, this over to our first speaker today, Adam Borg Gaudy Adam. Please go ahead.

Adam Borgatti: Thank you, Mark. Good morning, everyone, and thanks for participating in our first quarter results conference call. With me today are Jean-Louis Saronc, President and CEO; Jerome Julliet, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President, Finance. Our earnings announcement was released yesterday evening, and we've posted a slide presentation on the investing section of our website, which we'll refer to during the call. Following our comments, we'll be glad to take questions from analysts, and we ask that analysts keep to one question and a follow-up before getting back into the queue to ensure others have a chance to contribute.

Speaker Change: Thank you Mark good morning, everyone and thanks for participating.

Speaker Change: Participating in our first quarter results conference call.

Speaker Change: With me today are John Let me start Ross, President and CEO, Jerome Julie Yates Executive Vice President and CFO, Alastair Mccallum Senior Vice President Finance.

Speaker Change: 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 the call.

Speaker Change: Following our comments, we'll be glad to take questions from analysts and we ask that analyst keep to one question and a follow up before getting back into the queue to ensure others have a chance to contribute.

Adam Borgatti: 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 uncertainty. Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct.

Speaker Change: As noted on slide two of the presentation listeners are reminded that the information we're sharing with you today includes forward looking statements.

Speaker Change: These statements are based on assumptions that are subject to significant risks and uncertainties.

Speaker Change: Although aegon believes the expectations reflected in these statements are reasonable we can give no assurance that these expectations will prove to be correct.

Adam Borgatti: Now, before I turn over the call, I'm pleased to welcome Jerome Julliet as AECON's Executive Vice President and Chief Financial Officer, effective April 8th, 2024. With nearly 20 years of finance, strategy, and capital markets experience, particularly in construction, engineering, and utility services, Jerome has been a trusted advisor to us and many of our clients and partners. Notably, he played key advisory roles in some of Aecon's most transformative transactions, including the divestiture of Aecon Transportation East and the strategic investment by Oaktree Capital Management in Aecon Utilities last year. With that, I'll hand the call over to Jerome. Thanks, Adam, and good morning, everyone.

Joan Jewelry: Now before I turn over the call I'm pleased to welcome Joan jewelry as a conflict decorative vice President and Chief Financial Officer effective April 8th 'twenty 'twenty four.

Joan Jewelry: Nearly 20 years of finance strategy and capital markets experience, particularly in construction engineering and utility services Jerome has been a trusted adviser to us and many of our clients and partners.

Joan Jewelry: Notably he played key advisory roles and some of it cosmos transformative transactions, including the divestiture of a contrast for Tvs and the strategic investment by Oaktree capital management can take on utilities last year with that I'll hand, the call over to Jerome.

Jerome: Thanks, Adam and good morning, everyone I'm excited to have joined Descartes.

Jerome Julliet: Thanks, Adam, and good morning, everyone. This is day 14 for me, and I've already found the passion, dedication, and innovative spirit that defines this business. A huge thank you to the team for their warm welcome and strong support during my onboarding. It's been critical for me.

Jerome: He was working for me that I have already done the passion dedication and innovative spirit that appliances business a huge thank you to the team for their warm welcome and strong sportsman. My Onboarding. It's been critical for me and I'm eager to collaborate with the leadership team and the balance of the business to develop and execute our strategies that are going to optimize our financial performance and create value for shareholders.

Jerome Julliet: I'm eager to collaborate with the leadership team and the balance of the business to develop and execute our strategies that are going to optimize our financial performance and create value for shareholders. With that, I'll now touch briefly on Aecon's consolidated results, review results by segments, and then address Aecon's financial position before turning the call over to Jean-Louis. Turning to slide four, revenue for the three months ended March 31st, 2024, of $847 million, was $261 million, or 24% lower compared to the same period in 2023.

Speaker Change: With that I'll now touch people.

Speaker Change: So any cost consolidated results review results by segment.

Speaker Change: Jesse constant position before turning the call over to John Lee.

Speaker Change: Turning to slide four revenue for the three months ended March 31, 2024, $847 million was $261 million or 24% lower compared to the same period in 2023.

Speaker Change: It's been included on Slide 16 of the conference call presentation to help contextualize, our Q1 revenue performance.

Speaker Change: Adjusted EBITDA of 33 million a margin of three 9% compared to $25 million for March of two 2% last year and operating loss of $4 million in the quarter compared to an operating profit of $6 million last year.

Speaker Change: Our operating profit was attributed primarily to the gain on sale of property plant and equipment of $11 million recognized in the same period of 2023.

Jerome Julliet: A table has been included on slide 16 of the conference call presentation to help contextualize our Q1 revenue performance: Adjusted EBITDA of $33 million, a margin of 3.9%, compared to $25 million, or a margin of 2.2% last year. An operating loss of $4 million in the quarter compared to an operating profit of $6 million last year. The lower operating profit was attributed primarily to a gain-on-sale property plant equipment of $11 million recognized in the same period last year.

Speaker Change: Diluted loss per share in the quarter of 10 cents compared to diluted loss per share of <unk> 15000 same period last year.

Speaker Change: Backlog of $6 $3 billion at the end of the quarter compared to backlog of $6 billion at the end of the first quarter in 2023, New contract awards of $963 million were booked in the quarter compared to 812 million in the prior period.

Speaker Change: When I look at the results by segment turning to slide five.

Speaker Change: Traction revenue of $844 million in the first quarter with 247 million or 22% lower than the same period last year revenue was lower in industrial operations, primarily due to decreased activity on mainline pipeline work following achievement of substantial completion on the project in the third quarter of 2023 Andrew.

Speaker Change: In urban transportation solutions from a lower volume of light rail transit work simple operations from a lower volume of building construction work as a result of the sale of the transportation piece in the second quarter of 2023 and utilities operations from a decreased volume telecommunications in oil gas distribution work, partially offset by an increased volume of high voltage electrical transmission and battery storage.

Jerome Julliet: Dulu loss per share in the quarter of $0.10 compared to Dulu loss per share of $0.15 in the same period last year, reported backlog of $6.3 billion at the end of our quarter compared to backlog of $6 billion at the end of the first quarter in 2023, and new contract awards of $963 million were booked in the quarter compared to $812 million in the prior period. I'm going to now look at the results by segment, turning to slide 5.

Speaker Change: Some work.

Speaker Change: Offsetting these decreases was higher revenue in our nuclear operations driven by more volume refurbishment work nuclear generating station in Ontario, and the United States.

Speaker Change: You contract awards of $960 million in the first quarter of 2009 or compared to 795 million in the same period last year backlog at the end of the first quarter was $6 2 billion compared to $5 9 billion at the end of the first quarter of 2023.

Jerome Julliet: The construction revenue of $844 million in the first quarter was $247 million, or 23% lower than the same period last year. Revenue was lower in industrial operations, primarily due to decreased activity on mainline pipeline work following the achievement of substantial completion on a project in the third quarter of 2023. And urban transportation solutions from a lower volume of light rail transit work, civil operations from a lower volume of road building construction work as a result of the sale of Aecon Transportation East in the 2nd quarter of 2023, and utilities operations from a decreased volume of telecommunications and oil gas distribution work, partially offset by an increased volume of high-voltage electrical transmission and battery storage system work.

Speaker Change: On slide six adjusted EBITDA $20 million, a margin of three 3% compared to $22 million a margin of 2% last year.

Speaker Change: Adjusted EBITDA increased by $6 million due to higher volume and gross profit margins in nuclear operations and higher gross profit margin urban transportation solutions our utilities. These.

Speaker Change: These increases were offset by a decrease in gross profit.

Speaker Change: Real operations.

Speaker Change: Our operating profit from operations was primarily due to lower seasonal operating loss contribution from a road building construction work following the sale of Acorn transportation Eastern second quarter of last year, and partially offset by lower gross profit margin for major projects in Western Canada.

Speaker Change: Now slide seven concessions revenue for the first quarter was $3 million compared to 17 million in the same period last year.

Speaker Change: The decrease in revenue was largely driven by the sale of $49, 9% adjustment Skype worked the Bermuda International Airport Concessionaires and use of equity method of accounting on a prospective basis for any cost pertained to 51% interest in Skyborne adjusted EBITDA assumptions have some segment of $18 million compared to $50 million last year, primarily due to improved results from the Bermuda Airport.

Jerome Julliet: Partially offsetting these decreases was higher revenue in our nuclear operations, driven by a higher volume of refurbishment work at nuclear generating stations in Ontario and the United States. New contract awards of $960 million in the first quarter of 2024 compared to $795 million in the same period last year. Backlog at the end of the first quarter was $6.2 billion compared to $5.9 billion at the end of the first quarter of 2023.

Speaker Change: An increase in management development fees.

Speaker Change: Our topic Bermuda continues to improve with an average of 81% in the first part of 2024 versus the pre pandemic level in the first quarter of 2019 and compared to an average traffic in the first quarter FY 'twenty, 372% of the pre pandemic level.

Jerome Julliet: Turning now to slide 6, Adjusted EBITDA of $28 million, a margin of 3.3%, compared to $22 million, a margin of 2% last year. Adjusted EBITDA increased by $6 million due to higher volume and gross profit margin in nuclear operations and higher gross profit margin in urban transportation solutions. These increases were offset by a decrease in gross profit due to industrial operations. Higher operating profit in civil operations was primarily due to a lower seasonal operating loss contribution from our road building construction work following the sale of Aecon Transportation East in the second quarter of last year, and partially offset by lower gross profit margins from major projects in Western Canada.

Speaker Change: Turning now to slide eight at the end of the first quarter Acorn held cash and cash equivalents of $123 million, excluding cash into an operations. In addition at March 31 2024.

Speaker Change: Revolving credit facilities of $850 million of which 76 million was drawn 7 million was utilized for letters of credit.

Speaker Change: No debt and working capital credit facility maturities until 2027, except equipment loans and leases in general.

Speaker Change: At this point I'll turn the call over to Charlie.

Charlie: Thank you Darryl.

Charlie: Speak first to the four legacy projects before addressing our business performance and outlook.

Charlie: Acorn and its joint venture partners remained focused on driving through legacy projects to completion.

Charlie: While pursuing fare and an order per settlement agreements in each case.

Charlie: Okay.

Charlie: The most recent interim settlements reached between the 11 joint ventures and the respective clients on each of the full project.

Jerome Julliet: Now over to slide 7, concessions revenue for the first quarter was $3 million compared to $17 million in the same period last year. The decrease in revenue was largely driven by the sale of a 49.9% interest in Skyport, the Bermuda International Airport concessionaire, and the use of the equity method of accounting on a prospective basis for Aecon to retain a 50.1% interest in Skyport. Adjusted EBITDA in the concession segment of $18 million compared to $15 million last year, primarily due to improved results from the Bermuda Airport and an increase in management and development.

Charlie: The accumulative adjustments made to forecast to date.

Charlie: The progress we are making toward completion.

Speaker Change: Every day, we are getting closer to the end.

Speaker Change: However, we acknowledge that despite the progress made to date.

Speaker Change: Risk remains assumptions estimates or circumstances change.

Charlie: At March 31, solid 24, the remaining backlog to be worked off of this project.

Charlie: $330 million compared to backlog of 420 billion at December 31, 2023.

Charlie: 801 billion at March 31, 2023.

Charlie: The four legacy projects.

Jerome Julliet: Passenger traffic in Bermuda continues to improve, with an average of 81% in the first quarter of 2024 versus the pre-pandemic level in the first quarter of 2019, and compared to an average of 72% in the first quarter of 2023.

Charlie: Comprised 9% of consolidated revenue.

Charlie: First quarter of 2024.

Charlie: 5% of backlog at March 31, 2024, compared to 16% of consolidated revenue in the full year 2023.

Charlie: And 7% of backlog at December 31, 2023.

Jerome Julliet: Turning now to slide 8, at the end of the first quarter, Aecon held cash and cash equivalents of $123 million, excluding cash-in-join operations. In addition, at March 31st, 2024, Aecon had committed revolving credit facilities of $850 million, of which $76 million was drawn, and $7 million was utilized for letters of credit. Aecon has no debt or working capital credit facility maturities until 2027, except for equipment loans and leases in the normal year.

Charlie: Okay.

Charlie: Turning to slide 10 E Commerce goal is to build a resilient company.

Charlie: Through a balanced and diversified portfolio, while enhancing critical execution capabilities and project selection to play to our strengths.

Charlie: We continue to leverage our self perform capabilities and one acorn approach to maximize value for clients. So we improved cost certainty and scheduled it.

Charlie: While offering a broad range of services from development.

Charlie: Hearing it investment and construction to longer term operations and maintenance to comp as a full infrastructure value chain.

Charlie: While we pursue and delivers a majority of our work in established markets.

Jean-Louis: At this point, I'll turn the call over to Jean-Louis.

Charlie: Embracing new opportunities to grow in areas linked to decarbonization.

Jean-Louis: Jerome, I will speak first to the four legacy projects before addressing our business performance and outlook. Aecon and its joint venture partners remain focused on driving those legacy projects to completion while pursuing fair and honorable settlement agreements in each case. The most recent interim settlements reached between the relevant joint ventures and the respective clients on each of the four projects, and the cumulative adjustments made to the forecast to date reflect the progress we are making toward completion. Every day, we are getting closer to the end.

Charlie: As you transition.

Charlie: In international markets.

Charlie: These opportunities are intended opens the long term to diversify <unk> geographic presence.

Charlie: Provide further growth opportunities.

Charlie: Have you been more consistent earnings through economic cycles.

Charlie: Turning now to slide 11.

Charlie: <unk> four <unk> services across Canada continues to be strong.

Charlie: <unk> backlog of $6 3 billion at March 31, 2024.

Charlie: Our recurring revenue programs continuing to see robust demand.

Jean-Louis: However, we acknowledge that despite the progress made to date, risk remains if assumptions, estimates, or circumstances change. At March 31st, 2024, the remaining backlog to be worked off on this project was $330 million, compared to a backlog of $420 million at December 31, 2023, and $801 million at March 31, 2023. The Full Legacy Project. 9% of consolidated revenue in the first quarter of 2024.

Charlie: And a strong pipeline.

Charlie: <unk> believes it is positioned to achieve further revenue growth over the next few years.

Charlie: And he is focused on achieving improved profitability and margin predictability.

Charlie: Okay.

Charlie: We are pursuing a balanced portfolio of worked delivered through both fixed and fixed price contracting models.

Charlie: With a goal of reducing fixed price work to balance risk with acceptable return.

Charlie: Trailing 12 months' recurring revenue of $1 1 billion.

Charlie: 30% versus the prior year period.

Charlie: And 54% versus two years ago.

Charlie: Contributions from the <unk> expansion on cargo works Scarborough subway extension projects.

Jean-Louis: And 5% of backlog at March 31st, 2024, compared to 16% of consolidated revenue for the full year 2023 and 7% of backlog at December 31st, 2020. Turning to slide 10, Aecon's goal is to build a resilient company through a balanced and diversified work portfolio while enhancing critical execution capabilities and project selection to play to our strengths. We continue to leverage our self-performed capabilities and one AECON approach to maximize value for clients through improved cost certainty and schedule while offering a broad range of services from development engineering, investment, and construction to longer-term operations and maintenance to cover the full infrastructure value chain. While we pursue and deliver the majority of our work in established markets, we are embracing new opportunities to grow in areas linked to decarbonization and the energy transition. And in the U.S. and international markets

Charlie: During the respective development phases, we are the primary drivers of the growth.

Charlie: Turning to slide 12.

Charlie: Development Phase work is underway to high consortiums in which <unk> is a participant.

Charlie: Daily physical expansion on Carnival works project Discoverable subway extension stations rail and system projects.

Charlie: The Darlington nuclear project.

Charlie: Terminal expansion in Waterworks project and.

Charlie: And most recently the U S. Virgin Islands Airport redevelopment project, which is under a collaborative design build finance operate and maintain modern.

Charlie: Yeah.

Charlie: These projects are being delivered using progressive design build motors and each project is expected to move into the construction phase in 2025.

Charlie: The <unk> expansion project also includes an operations and maintenance component.

Charlie: Over a 23 year term commencing January one south of 25.

Charlie: None.

Charlie: Debated work from the spy Progressive design build project.

Jean-Louis: These opportunities are intended, over the long term, to diversify Aecon's geographic presence, provide further growth opportunities, and deliver more consistent earnings through economic sites. Turning now to slide 11. Demand for AECON services across Canada continues to be strong, with a backlog of 6.3 billion at March 31st, 2024. Recurring revenue programs continue to see robust demand and a strong big pipeline. Aecon believes it is positioned to achieve further revenue growth over the next few years and is focused on achieving improved profitability and margin prediction. We are pursuing a balanced portfolio of work delivered through both fixed and... with the goal of reducing fixed price work. Balance Risk with Acceptable Risk

Charlie: Yet reflected in backlog.

Charlie: Turning to slide 13. This week <unk> released its first sustainability report.

Charlie: Advancing the energy transition.

Charlie: Showcasing our unwavering commitment to sustainability in our projects.

Charlie: <unk> methods, we use.

Charlie: This report highlights a hold the initiatives.

Charlie: Embedded sustainable innovations and work towards net zero construction.

Charlie: Our <unk> operations.

Speaker Change: <unk> is pleased to report continued progress towards its target.

Charlie: To achieve a 30% reduction in direct <unk> emissions.

Charlie: By 2030.

Charlie: With a reduction of 20%.

Charlie: To date in scope, one and two emissions.

Charlie: In 2020.

Jean-Louis: Trading 12 months recurring revenue of $1.1 billion was up 30% versus the prior year period and 54% versus two years ago. Contributions from the GO Expansion on Corridor Works and Scarborough Subway Extension Projects are the primary drivers of this growth. Turning to slide 12.

Charlie: Based on revenue intensity.

Charlie: Sustainability is part of our D&A up Acorn.

Charlie: And a key consideration in every decision we make as we continue to focus on building what matters.

Charlie: To enable future generations to thrive and.

Charlie: And transition to a net zero economy.

Charlie: Turning now to slide 14, this with strong demand growing recurring revenue program and diverse backlog in hand.

Jean-Louis: Development phase work is underway in five consortiums in which Aecon is a participant to deliver the Go Expansion on Corridor Works project, the Scarborough Subway Extension Station's Rail and System Project, the Darlington Nuclear Project, and the Contra-Coeur Terminal Expansion In-Water Works Project.

Charlie: The call is focused on achieving solid execution on its projects and selectively adding to backlog.

Charlie: <unk> bidding approach.

Charlie: <unk> long term margin improvement in the construction segment.

Jean-Louis: And most recently, the U.S. Virgin Islands Airport Redevelopment Project, which is under a collaborative design-build-finance-operate-and-maintain model. These projects are being delivered using progressive design-build models, and each project is expected to move into the construction phase in 2025. The GOExpansion project also includes an operations and maintenance component over a 23-year term commencing January 1, 2025. However, none of the anticipated work from those five progressive design-build projects is yet reflected in the backlog.

Charlie: The concession segment, a number of opportunities to add to the existing portfolio of Canadian and international concessions.

Charlie: The next two months.

Charlie: 24 months.

Charlie: Including projects with private sector clients.

Charlie: Broader collective focus on sustainability.

Charlie: The transition to a net zero economy, as well as private sector development expertise and investment to support the AG crop fracture mobile.

Charlie: Key connectivity and population growth.

Charlie: Our revenue in 2024 will be impacted by the three strategic transactions completed in 2023.

Jean-Louis: Turning to slide 30. This week, Aecon released its fifth sustainability report. Advancing the Energy Transition, showcasing our unwavering commitment to sustainability in our projects and the innovative methods we use. This report highlights Aecon's initiative to embed sustainable innovations and work towards net-zero construction throughout its operation. Aecon is pleased to report continued progress towards its target, to achieve a 30% reduction in direct CO2 emissions by 2030, with a reduction of 20%. Today it is Scope 1 and 2 emissions, since 2020, based on revenue 10. Sustainability is part of our DNA at Aecon and a key consideration in every decision we make as we continue to focus on building what matters. Thank you.

Charlie: The substantial completion of several large projects in 2023.

Charlie: The major projects currently in the development phase by consortiums in wheat.

Charlie: Kony is a participant.

Charlie: Being delivered using the progressive design build models.

Charlie: Which are expected to be towards the construction phase.

Charlie: 2025.

Charlie: Completion, and satisfactory resolution of claims of the four legacy project with our respective clients.

Charlie: Remains a critical focus for the company and its partners.

Charlie: The remainder of the business continued to perform as expected.

Charlie: Supported by the strong level of backlog and the strong demand environment for <unk> services.

Charlie: Including record revenue programs.

Jean-Louis: Turning now to slide 14, with strong demand, growing recurring revenue programs, and diverse backlog in hand, Aecon is focused on achieving solid execution on its projects and selectively adding to backlogs using a disciplined bidding approach that supports long-term margin improvement in the construction sector. In the concession segment, there are a number of opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 months. Twenty-four months, including projects with private sector clients that support a collective focus on sustainability and the transition to a net-zero economy, as well as private sector development expertise and investment, support aging infrastructure, mobility, connectivity, and population growth.

Speaker Change: Thank you we will now turn the call over to analysts for questions.

Speaker Change: Thank you at this time, we will conduct the question and answer session.

Speaker Change: As a reminder.

Speaker Change: To ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw press star one one again.

Speaker Change: Please standby, while we compile our Q&A roster.

Speaker Change: And now our first question will come from Yuri Lynk of Canaccord Genuity. Please go ahead Gerry.

Yuri Lynk: Good morning, gentlemen.

Speaker Change: Okay.

Yuri Lynk: Nice clean quarter.

Yuri Lynk: And I'd love to not lead off on NLS Teekay question, but.

Yuri Lynk: I have two when I when I look at your Dsos and your whip days.

Speaker Change: A materially higher year on year, despite the lower revenue in fact, I don't think Ive senior Whip this high.

Jean-Louis: Our revenue in 2024 will be impacted by the three strategic transactions, which will be completed in 2023, the substantial completion of several large projects in 2023, and the five major projects currently in the development phase by consortiums in which Aecon is a participant, being delivered using the Progressive Design Bill models, which are expected to move into the construction phase. Selma 25, remains a critical focus for the company and its partners, while the remainder of the business continued to perform as expected, supported by the strong level of backlog and the strong demand environment for Aecon services, including the Recording Revenue Program. Thank you. We will now turn the call over to analysts for questions.

Speaker Change: Sure.

Speaker Change: So youre not billing.

Speaker Change: And I'm, just wondering what's behind that.

Speaker Change: The arrive in web and Dsos in the corner.

Alistair MacCallum: It's alastair.

Alistair MacCallum: As you see.

Speaker Change: The negative working capital in Q1.

Speaker Change: Similar to what we had in Q1 2023.

Speaker Change: I think part of that was we had a very strong.

Speaker Change: Q4 in terms of.

Speaker Change: Bringing in.

Speaker Change: R R.

Speaker Change: Collections, and so I think that had a negative impact on on where we're sitting.

Speaker Change: At the end of Q1.

Speaker Change: Overall, our liquidity is at 890 million. This time last year, we were at $372 million. So we're in a much stronger place than we were.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw, press star 1, 1 again.

Speaker Change: Last year.

Speaker Change: And certainly.

Speaker Change: Build is always a critical focus for us and it's something that we continue to work on.

Speaker Change: Every day.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Second one for me just on the.

Speaker Change: Backlog.

Operator: Please stand by while we compile our Q&A roster. Now, our first question will come from Yuri Lynk of Conocor Ingenuity. Please go ahead, Yuri.

Speaker Change: Like you've got a bunch of these progressive design build <unk>.

Speaker Change: And we haven't been through a cycle with these type of contracts. So just.

Yuri Lynk: Nice, clean quarter. And I'd love to not lead off on an LSTK question, but I have to. When I look at your DSOs and your WIP days, which are materially higher year-on-year despite the lower revenue, I don't think I've seen your WIP this high. So, you're not billing, and I'm just wondering what's behind the rise in WIP and DSOs in the

Speaker Change: What should we expect.

Speaker Change: Backlog.

Speaker Change: How does it evolve over the next couple of years here as these projects move into the construction phase specifically.

Speaker Change: On corridor works project.

Speaker Change: I think the two year development phase ends in Q3 so.

Speaker Change: Does that go into backlog and does the whole thing go in at once or is backlog kind of phased in overtime.

Alistair MacCallum: So, Yuri, it's Alistair. So, as you see, you know, we have a negative working capital in Q1. It's very similar to what we had in Q1 2023. I think part of that was we had a very strong Q4 in terms of, you know, bringing in our AR and collections. And so I think that had a negative impact on where we're sitting at the end of Q1. But, I mean, overall, our liquidity is at $890 million.

Speaker Change: Yes, I'm going to take this one so we have.

Speaker Change: Now projected progressive.

Speaker Change: Design build mode. We are very happy about it we have been working on it for the last three years to modify the contractual mode.

Speaker Change: Prevalent.

Speaker Change: Industry.

Speaker Change: Encore.

Speaker Change: Comparable.

Speaker Change: Darlington SNL.

Speaker Change: And now U S Virgin Islands.

Speaker Change: The difference I mean, Chris.

Speaker Change: <unk>.

Speaker Change: The third one I mean, we are in charge of all construction services.

Alistair MacCallum: This time last year, we were at $372 million. So we're in a much stronger place than we were last year. And certainly, you know, unbuild is always a critical focus for us. And it's something that we continue to work on.

Speaker Change: The alliance between OTG Gi that she can relax.

Speaker Change: <unk>.

Speaker Change: Jewelry.

Speaker Change: Our self.

Speaker Change: The fourth one the joint venture with Pablo.

Speaker Change: Well the in waterworks.

Speaker Change: And the C swanda menu.

Yuri Lynk: Second one for me, just on the backlog. Like, you've got a bunch of these progressive design builds. I personally haven't been through a cycle with these types of contracts. So just what should we expect the backlog to be, and how will it evolve over the next couple of years here as these projects move into the construction phase, specifically the On Corridor Works project? I think that the two-year development phase ends in Q3. So does that go into backlog, and does the whole thing go in at once, or is backlog kind of phased in over time? Yes, I'm going to take this one, Yuri. So we do.

Speaker Change: A few a few weeks ago.

Speaker Change: Refurbishment and rehabilitation.

Speaker Change: Under a design build progressive.

Speaker Change: Finance operation maintenance, which is very.

Speaker Change: Very innovative model and we are quite happy.

Speaker Change: We have been working on during the last one year with the client.

Speaker Change: To set.

Speaker Change: Art.

Speaker Change: So.

Speaker Change: What can we expect in terms of backlog.

Speaker Change: So somewhat project E cigarettes.

Speaker Change: Correct.

Speaker Change: Maybe even more.

Speaker Change: It will depend on.

Speaker Change: On the on the development, if we come back to the first one.

Jean-Louis: Yes, I'm going to take this one, Yuri. So we now have five projects, and they're in a progressive, design-build mode. We are very happy about it, working on it for the last three years to modify the contractual mode that was prevalent in the industry. [inaudible] Darlington, SML, on Twitter, and now the U.S. Virgin Islands.

Speaker Change: Encore.

Speaker Change: Our development Phase will go up to the end of the year 2024.

Speaker Change: At this moment.

Speaker Change: Most probably.

Speaker Change: <unk>.

Speaker Change: Setup with the client the target price of the condition of execution of the two first bench of.

Speaker Change: The works.

Jean-Louis: So, there are differences. I mean, the two first ones are with Metrolinx. The third one, I mean, we are in charge of all construction services. It's an alliance between OPG, GI Tachi, and Atkin Relics for the fourth one is a joint venture with Pomelo, I mean, in Contracur, called the InWater Works. And the fifth one, I mean, you heard about it a few weeks ago, is the Refurbishment Rehabilitation under Design, Build, Progressive Finance, Operate, and Maintenance, which is a very innovative model, and we are quite happy. I mean, we have been working on it during the last one year with the client to set this model. So.

Speaker Change: So when you.

Speaker Change: We could expect.

Speaker Change: In terms of backlog for those two vendors.

Speaker Change: Around around $2 billion.

Speaker Change: <unk> will happen during the.

Speaker Change: The purion dose.

Speaker Change: Two full years.

Speaker Change: You probably remember do you have noted that in parallel.

Speaker Change: Evan.

Speaker Change: Into our preparation.

Speaker Change: Save it for the operation during 'twenty three years closer to January to solid earnings.

Speaker Change: We are very well advanced so we.

Speaker Change: At the moment, we are quite happy with the development and the quality of the collaboration with Metro links all these very big and very important project.

Jean-Louis: What can we expect in terms of the backlog? So some of all these projects are something, let's say... They're all C3.

Speaker Change: That's helpful gentlemen.

Speaker Change: It sounds like Youre book these in stages.

Jean-Louis: It may be even more, I mean, it will depend on... on the development phase. If we come back to the first one, which is the Encore, our development phase will go up to the end of the year 2024. At this moment, we will most probably have agreed with the client the target price and the condition of execution of the two first bundles of works. So we could expect, in terms of backlog for those two first bundles, around $2 billion.

Speaker Change: And.

Speaker Change: Am I right in assuming that you're taking some.

Speaker Change: The fixed price risk on these smaller phases.

Speaker Change: And then you renegotiate on each phase as it as it progresses, and thereby reducing the risks youre not youre.

Speaker Change: You are not on the hook for the entire scope of the project at once.

Speaker Change: Okay.

Speaker Change: Two questions here.

Speaker Change: The first one.

Speaker Change: About the same.

Speaker Change: Beijing.

Speaker Change: <unk>.

Speaker Change: Alright.

Speaker Change: <unk>.

Jean-Louis: These works will happen during a period of..., save for the operation during 23 years from the 1st of January 2025. We are very well advanced, so at the moment, we are quite happy with the development and the quality of the collaboration with Metrolinx on this very big and very important project.

Speaker Change: Program of electrification. It just means that we have decided to go for vendors.

Speaker Change: Vendors rather than full the top 20 key.

Speaker Change: And to fix everything now for the total Ethiopia program that made up more than eight years in terms of construction Scarborough for example will not have any been it.

Speaker Change: It will be the full project.

Jean-Louis: That's helpful, Jean-Louis. So, it sounds like you book these in stages. Am I right in assuming that you're taking some fixed price risk on these smaller phases, and then you renegotiate on each phase as it progresses, and thereby reducing the risk so you're not on the hook for the entire scope of the project at once.

Speaker Change: <unk>.

Speaker Change: We will not have neither any bundle I mean from the moment before.

Speaker Change: We will.

Speaker Change: Uh huh.

Speaker Change: Okay.

Speaker Change: Traction faces no vendor <unk> contract same thing.

Speaker Change: U S. Virgin Islands, there may be a phasing yet because those out to apples there may be a phasing but.

Operator: Thank you. Thank you. Thank you.

Operator: The first one, about the phasing, so GoTrain and Encore is a huge, program of electrification, it just means that we have decided to go for bundles rather than for the totality and to fix everything now for the totality of a program that may last more than eight years in terms of electricity. Scarborough, for example, will not have any vandals, and the full project, the SMR, will not have any bundles. I mean, from the moment before the end of the year, we will... Get in the contraction phase, no bundles, the totality of the job. Contracur, same thing.

Speaker Change: We most probably.

Speaker Change: We will not do any better.

Speaker Change: Effective at least for the moment only on oncor because of the complexity and because of the time.

Speaker Change: Second question, how do you unlock the development phases, we havent I mean.

Speaker Change: A few way to.

Speaker Change: And lock it in at the end.

Speaker Change: Encore.

Speaker Change: In addition to the fact that we bundle and we both decided I mean with maturities in our consortium to bundle. It I mean, it's not going to be a lump sum, it's going to be a target price.

Operator: The U.S. Virgin Islands, there may be a phased approach, because those are two airports; there may be a phased approach, but we will most probably not do any bundling. So the bundling effect is, for the moment, only on core because of the complexity and because of the time. Second question, how do you unlock a development phase? We have a few, I mean, there are a few ways of, and Lockheed at the end on Encore.

Speaker Change: We've gained share paint sure and we will finalize the negotiation of these target price.

Speaker Change: Andy gauge have pain share.

Speaker Change: Before the end of the year. So both of them for example at the moment contract.

Speaker Change: On a scheme where at the end.

Speaker Change: The development phase.

Speaker Change: You go into some price but.

Jean-Louis: In addition to the fact that we bundled, and we both decided, I mean, with Metrolinx and our consortium to bundle it, I mean, it's not going to be a lump sum. It's going to be a target price, with a gain share and a pain share. And we will finalize the negotiation on this target price. Andy Gage has paid a share before the end of the... Some of them, for example, at the moment, Contra Coeur is on a scheme where, at the end of the development phase, you go into a lump sum.

Speaker Change: We know that the.

Speaker Change: <unk> works with the contract in terms of scope and magnitude have nothing to do with.

Speaker Change: With all the calls so independent of the project and we restage.

Speaker Change: On on our strategy to be extremely cautious on andi lump sum pricing period to $1 billion.

Speaker Change: Okay. That's very helpful. I'll turn it over guys. Thanks.

Speaker Change: Thank you for the question. Please standby one moment, while we bring up our next question.

Jean-Louis: But you probably know that the in-water works of Contra Coeur, in terms of scope and magnitude, have nothing to do with on-call. So it depends on the project, and we stay firm on our strategy to be extremely cautious on any lump sum price superior to one.

Speaker Change: And our next question will come from Jason bound with CIBC go ahead, Jason Jacobs.

Jason Bound: Good morning.

Jason Bound: I had a question on <unk>.

Jason Bound: Revenue growth.

Jason Bound: And I know youre, saying recurring revenue.

Operator: Okay, that's very helpful. I'll turn it over, guys. Thanks.

Jason Bound: Is up year on year for the quarter, but when we take a look on a consolidated basis, its down 24% and I know the divestment of <unk>.

Operator: Thank you for the question. Please stand by one moment while we bring up our next question, and our next question will come from Jason Bout with CIBC. Go ahead, Jacob.

Jason Bound: <unk> and CGI I was speaking.

Jason Bound: Contributor last year, but when do you expect to see that consolidated revenue returning to topline growth.

Jacob Jonathan Bout: I had a question just on revenue growth, and I know you're saying recurring revenue is up year-on-year for the quarter, but when we take a look on a consolidated basis, it's down 24%, and I know the divestment of ATE and CGL was a big contributor last year. But, you know, when do you expect to see that consolidated revenue returning to top line growth? You know, also looking at your backlog here. In the potential, you know, additions with these five development projects, I mean, that's, I'm assuming primarily a kind of 2025 thing, but

Speaker Change: Also looking at your backlog here.

Speaker Change: And the potential additions with these five development projects.

Speaker Change: I'm, assuming primarily kind of a 2025.

Drum: Yeah, Hey, Jacob its drum here.

Drum: So youre right.

Jacob: Current current quarter, if you look on a by product basis.

Jacob: <unk> flat to last year below the down.

Jacob: Positive book to Bill in the quarter.

Jacob: 2024, we've been consistent saying is no expectation.

Jacob: Okay.

Jacob: Repositioning here and so I think the way to think about it would be relatively relatively flattish or low growth in 'twenty four and then 25 as Ali just mentioned.

Jerome Julliet: Hey, Jacob, it's Jerome here. So, you're right. You know, current quarter, if you look on a like-by-like basis, effectively flat to last year, but a little bit down. But positive buck to bill in the quarter. The 2024, we've, we've been consistent saying is there's no expectation for a big group here. It's really a repositioning year. And so I think the way to think about it would be relatively flattish or low growth in 24 and then 25, as we just mentioned.

Jacob: These projects kind of moving to execution.

Jacob: We expect to see a re engage on the growth front.

Speaker Change: Got it.

Jacob: Dax into my follow up question here, but.

Dax: Are you planning for this growth in 2025.

Dax: Are there going to be any labor availability issues or how should we be thinking about that.

Dax: So I think the way we look at it is you have a lot of these projects that we've been working on in this progressive phase. So take the two transit projects like the go program in Ontario, and the Scarborough, you've got a lot of availability of people coming off of the former projects for example, eglin tenant bench so.

Jacob Jonathan Bout: Kind of backs into my follow-up question here, but how are you planning for this growth in 2025? You know, are there going to be any labor availability issues? Or, you know, what should we be thinking?

Dax: We're able to kind of effectively transitioning lots of the labor and project management resources among them.

Dax: Similar with our international work coming off of Bermuda and elsewhere, we've been able to build a presence in the Caribbean to adequately staff. These projects. So we think we've got the right amount of people kind of moving to the next phase of the projects and as I said the restaurants.

Jean-Louis: the projects. And as I said, as Jerome said, it's a little bit of a transition period between 2023-2024. Another big contributor to revenue last year would have been the Site C project, where we've got lots of those people coming off, moving to John Hart, Hydro, and BC. So I think we're adequately staffed, always top of mind for sure on the labor side, but we don't feel any real main pressure points that are giving us more concern than normal. Yeah, maybe I'll jump in here.

Dax: A little bit of a transition timing between 'twenty three 'twenty four another big contributor to revenue last year would have been the site C project, where we've got lots of those people coming off moving John Hart Hydro in <unk>, So I think.

Dax: We're adequately staffed is always top of mind for sure on the labor side, but we don't see any real.

Dax: Main pressure points that are giving us more concern than normal.

Speaker Change: Yes, maybe I'll jump in at this moment.

Jean-Louis: Maybe I jump in here at this moment. I mean, we have finalized our strategic plan 2024-2027. The focus is on profitability and margin predictability over hyper growth of revenue.

Speaker Change: We are finalizing our strategy 2024 solid 27.

Speaker Change: Our focus is on profitability and margin predictability.

Speaker Change: Over hyper growth.

Speaker Change: Revenue.

Speaker Change: As I've been saying during the last quarter, we are extremely disciplined.

Jean-Louis: As I've been saying during the last quarter, we are extremely disappointed in terms of pursuits and in terms of bidding. And we are very happy. That's Zeus Efforts, ahhh. So the revenue stabilization in 2024 is pure math, and there's nothing special about it. And we have a lot, I mean, in our backpack, as you have mentioned, that will drive growth profitably.

Dax: In terms of suites.

Dax: And in terms of bidding and we are very happy to see that those efforts.

Dax: Yeah.

Dax: I'm, just beginning to bear fruit.

Dax: B.

Dax: Revenue stabilization in 2020 full is pure math.

Dax: Nothing special about it.

Dax: And we have a lot in our backpack.

Dax: Pete.

Dax: That will drive growth profitable growth.

Dax: Jessica.

Speaker Change: Thank you.

Speaker Change: Thank you.

Operator: One moment for our next question, and our next question will come from Frederic Bastien with Raymond James. Go ahead, Frederic.

Speaker Change: One moment for our next question.

Speaker Change: And our next question will come from Patrick <unk> with Raymond James Go ahead Patrick.

Frederic Bastien: Good morning, and welcome, Julien. There are a couple of items below the EBITDA line that I'd like you guys to shed some light on, if possible. The first one relates to construction amortization, which rose year over year despite the sale of ATE and the lower volume. So, that's the first one. I'm wondering if you could provide a bit more color there and then... The second one relates to the interest expense overall being lower, although you did include the accrued. Interest from Oak Tree's preferred shares, but there was also a fair value gain reported, so if you could provide a bit of color there, that would also be appreciated.

Patrick: Good morning, and welcome Julian.

Patrick: There are a couple of items below the EBITDA line that I'd like.

Patrick: You guys to shed some light on if possible. The first one relates to construction amortization, which which rose year over year. Despite the sale of <unk> and the lower volumes.

Patrick: So that's the first one I'm wondering if you could provide a bit more color there and then.

Patrick: Second one relates to the interest expense overall was lower you do.

Patrick: It included the accrued.

Patrick: Chest from Oaktree preferred shares, but there was also add.

Patrick: Fair value gain reported so if you could provide a bit color. There that would also be appreciated. Thank you.

Alistair MacCallum: Frederic and Alistair. So... The first one, I'll answer the second one first on the preferred share. So. Every quarter, we fair value the preferred share. And basically, there are about four or five different factors such as volatility, credit risk, risk, and risk-free rates.

Speaker Change: Hey, Frederic it's out there so.

Frederic: The first one.

Frederic: I'll answer the second one first on the preferred share so.

Frederic: Every corner, we fair value.

Frederic: Preferred share.

Frederic: And <unk>.

Patrick: Basically.

Patrick: Theres about four or five different factors such as volatility.

Patrick: Credit risk risk for risk free rates.

Alistair MacCallum: And so when we do that, this quarter, there was a $4.9 million gain on the preferred share. So that's really the answer to the first question. Part of that went to, 4.3 went to the P&L, and the remainder went to OCI. On your first question about depreciation, I think... When you look at the sessions, you'll see depreciation went down because of, uh... Equity Accounting through the sale of 49.9% of Bermuda. And then on the construction side, yes, we have a positive impact from the sale of ATE. And then we have additional amortization and depreciation on the rest of the construction, which offsets that. So. And Friday's Jerome Garrett, so maybe I'll just put on an extra layer.

Patrick: And so.

Patrick: When we do that.

Patrick: This quarter there was a four point.

Patrick: $9 million gain.

Patrick: On the on the preferred share.

Patrick: Sure.

Speaker Change: So that's that's really the answer to the first question.

Speaker Change: Part of that went to four.

Speaker Change: $4 three went to the P&L and the remainder went to OCI.

Speaker Change: On your first question around depreciation so thanks.

Speaker Change: When you look at.

Speaker Change: Concessions Youll see depreciation went down because of.

Speaker Change: Yeah.

Speaker Change: Equity accounting through.

Speaker Change: Through the sale.

Speaker Change: 49, 9% of Bermuda.

Speaker Change: And then on the construction side, yes, we have the positives.

Speaker Change: Impact from the sale of ETE and then we have additional.

Speaker Change: <unk>.

Speaker Change: Amortization and depreciation on the rest of the construction business.

Speaker Change: Which offset that so.

Speaker Change: Those are that's the reason.

Speaker Change: And Friday drove Europe, maybe I'll, just put an extra layer of contacts on the.

Jerome Julliet: And Fred, it's Jerome here. Maybe I'll just put an extra layer of context on the preferred shares. We really, you know, accounting aside, we really do just think about them on the basis of their terms, right? So, 27.5% of the equity value of the utilities business, or effectively the 12% PIC accrual. The rest of it, I just view as accounting.

Speaker Change: Preferred shares.

Speaker Change: We really accounting side, we really do you just think about them based on their terms right. So 25% of the equity value.

Speaker Change: The utilities business or actually the 12%.

Speaker Change: <unk> accrual.

Speaker Change: The rest of it just due to this accounting.

Speaker Change: Okay.

Speaker Change: Okay, I'm still not clear on the construction, our amortization because I would've expected. It would have gone lower will come in lower but it actually crept up year over year. Despite the sale.

Frederic Bastien: Okay, I'm still not clear on the construction or amortization because I would have expected it to have gone lower, would come in lower, but it actually crept up year over year despite the sale. [inaudible] It was interesting, but we can take that offline. I appreciate that. I recognize I asked you a question, so I'll just pass it over. Thank you.

Speaker Change: Of ETE and also you had recorded lots lower volumes. So I don't know if its impacted amortization should be impacted by volumes, but anyway something that time.

Speaker Change: I found was a.

Speaker Change: It was interesting, but we can take that offline I appreciate that.

Speaker Change: I recognize I asked two questions I'll just pass it over.

Operator: Thank you. Thank you for your question. Please stand by for our next question. And our next question comes from Jonathan Lamers with Mauritian Bank. Please go ahead, Jonathan.

Speaker Change: Alright.

Speaker Change: Thank you. Thank you for your question please standby for.

Speaker Change: Our next question.

Speaker Change: And our next question comes from Jonathan <unk> with <unk> Bank. Please go ahead Jonathan.

Jonathan: Good morning, Thank you.

Jonathan Lamers: Just another question on revenue. So slide 16 in the package showing that pro forma revenue was down 1% year-over-year, that's very helpful. Yet demand is clearly very strong, with new awards up 21% year-over-year. So my question is, as more of the overall business shifts to progressive design-build contracting models that have longer development phases, would you say it's taking longer for new project awards to translate into revenue?

Jonathan: Just another question on revenue so.

Jonathan: Slide 16 in the package is showing the pro forma revenue was down 1% year over year, that's very helpful.

Jonathan: Yes demand is clearly very strong with new awards up 21% year over year.

Jonathan: So my question is as more of the overall business shifts to progressive design build contracting models have longer development phases.

Jonathan: Would you say, it's taking longer for new project awards to translate into revenue.

Jonathan: Okay.

Jean-Louis: One of the key elements of our strategy is balancing it. For example, between sectors, we could push. I hope you enjoyed the video. And, as always, I will see you in the next video. Bye.

Jonathan: One of the key element of our strategy is balancing it.

Jonathan: Our activity.

Jonathan: Balance, which is sector, we could bring.

Jonathan: For example between sectors, we could push.

Jonathan: Nuclear in UTP.

Jean-Louis: But we have decided that our five sectors have to be balanced. Same thing for contractual mode, I mean, we can do MSA, we can do unit price, we can do target price, we can do lump sum. I mean, there's not such a world where we can say every lump sum is bad, and we'll only go for progressive or time and material. I gave, I mean, an example, for example, Kicking Horse. It was a job for a lump sum, a very complex job that we won in front of the two best companies in North America and in Europe. We were perfectly on time, perfectly on budget, and our client is extremely happy. Tomorrow morning, 10 o'clock, we are putting our TBM machine on Eglinton West.

Jonathan: But we have decided that our five sectors to be balanced.

Jonathan: <unk> full contractual mode. I mean, we can do MSA, we can do a unit price we can do target price we can do.

Jonathan: Not such a one way we can say is bad.

Jonathan: And we will only go for progressive or time and material now.

Jonathan: Hi.

Jonathan: I gave an example for example kicking off.

Jonathan: It was a job under some.

Jonathan: Very complex jobs that we won't need to one of the best company in North America and in Europe.

Jonathan: It was enough some drop.

Jonathan: We are perfectly on time.

Jonathan: Quickly on budget.

Jonathan: Volume is extremely happy.

Jonathan: Tomorrow morning, 10 o'clock.

Jonathan: Our TBA machine or adding to the west is getting out of the first side of it.

Jean-Louis: [inaudible] It's all kinds of works in terms of size. And in terms of complexity, for example, when there is system integration, we don't go anymore for lump-sum, and we go for progressive design bills. Of those ones, there is... the development phase, but you don't have to forget either that or Progressive Design Build, the preparation pre-bid period, when before it was between one year and maybe 15 months old. All in all, yes, there may be a little push down the line, but it's a real difference in terms of margin prediction.

Jonathan: Perfectly on time.

Jonathan: But it means that it will give them some job. So we don't see we don't want to do any more lump sum drove between extremely cautious.

Jonathan: And home segment.

Jonathan: Let's say some kind of wondering in terms of.

Jonathan: And in terms of complexity for example, Windsor is system integration, we don't go any more for lump sum and weak oil for progressive design.

Jonathan: One <unk>.

Jonathan: The development phase, but you don't have to forget that.

Jonathan: Aggressive design build it.

Jonathan: Scheme, if just two five months.

Jean-Louis: Yes. Okay. Thank you. And on the legacy project backlog that's remaining, the 330 million, can you provide a sense of how much of that relates to Gordie Howe Bridge and maybe the cadence of how you see that being worked off over the next two years?

Jonathan: <unk> pre beta period, when before it was between one year and maybe 15 months. So all in all yes.

Jonathan: They may be.

Jonathan: Push down the line.

Jonathan: It's a real difference in terms of margin predictability.

Jonathan: Okay.

Speaker Change: Yes, okay. Thank you.

Speaker Change: And on the legacy.

Speaker Change: Project backlog, that's remaining in the $330 million can you provide a sense of how much of that relates to Gordie Howe bridge.

Jean-Louis: So on the 330s, the majority is now on Gordie Howell. That means around two-thirds of the backlog is on Gordie Howell. Gordie Howell is a...

Speaker Change: Maybe the cadence of how you see that being worked off over the next two years.

Speaker Change: So on the 300 series a majority now is on Gordie Howe.

Speaker Change: Dave.

Speaker Change: Okay.

Speaker Change: Around two thirds of the backlog.

Dave: Good morning Al.

Jean-Louis: These four cards seem to be substantially completed by September 2025. In terms of execution, it is going quite well. Just to give you an example, this bridge, which is the longest span in North America, 851 meters, across the river from north to south, 53 segments of 15 minutes each, remaining three segments.

Dave: How is that.

Dave: This will be.

Dave: We substantially completed in September 2025.

Dave: In terms of exactly should equal lightweight just to give you an example.

Dave: Breach we cheeses.

Dave: Longest spanning North America 851 meters.

Dave: Across the river from North to South.

Dave: 53 segments.

Dave: 15, metros each remaining three segments.

Jean-Louis: Hey, then we have the port of. [inaudible] I would say I'm rather happy with the execution of this project. What else? I mean, CGL, from our perspective, the project is now substantially... Our team is focused on preparing for the upcoming arbitration, which you have noted. It starts immediately, I mean, Q3 2024. Given the proximity to the start of the arbitration, we just prefer to let the arbitration process play out. Rather than commenting further, I mean,

Dave: Then we have to.

Dave: Inventory I mean Canadian side.

Dave: American side, the interchange I 75, I mean on depreciated.

Dave: As we seek is on time.

Dave: So.

Dave: I would say I'm rather.

Dave: Accretion of this project.

Speaker Change: What else CGM.

Speaker Change: From our perspective.

Speaker Change: It is now essentially complete.

Speaker Change: Yes.

Speaker Change: <unk> is focused on preparing for the upcoming arbitration.

Speaker Change: It starts immediately I mean Q3 consignment withdrawal.

Speaker Change: Given the proximity.

Speaker Change: The arbitration, we just prefer to let the arbitration process play out.

Speaker Change: Other than commenting any further.

Jean-Louis: The two other ones are Eglinton & Finch, the LRT job in Toronto, construction is complete, we are now testing and commissioning, and most, I would say, of the issues remaining are the interfaces with Metrolinx and TTC with the operator. I just remind you that we are the maintenance operator, but we are not the operator, and we are just under testing and commissioning with those two jobs, pushing toward what we call a revenue service demonstration that should happen before the end of the year.

Speaker Change: Two other ones are eglinton and Finch LRT jumping to construction is complete we are now testing and commissioning.

Speaker Change: And what I would say each remaining all the interfaces.

Speaker Change: Metro links and TTC with the operator, I just remind you that we did.

Speaker Change: But we are not the operator and Rob just under testing.

Speaker Change: Testing and commissioning, we lose two job pushing toward what we call revenue service demonstration that should happen.

Jean-Louis: Thank you. That's very helpful. I have one other question on sustainability, if I can. I noticed that you highlighted in the slide the benefits of carbon reduction from the sustainability projects you're undertaking, with 75% of the backlog now tied to sustainability projects. Will the benefits from those show up in the reduction to emissions that you report, including the 20% reduction year-to-date at some point? Yeah, for sure. We're on a pretty good track

Speaker Change: Before the end of the year 2024.

Speaker Change: Thank you that's very helpful. I have one other question on sustainability, if I can.

Speaker Change: I noticed that.

Speaker Change: You'd highlighted in the slides.

Speaker Change: <unk> to carbon reduction from a sustainability projects are undertaken.

Speaker Change: With 75% of the backlog now tied to sustainability projects.

Speaker Change: Will the benefits from those show up in the reduction to our missions that you report, including the 20% reduction year to date at some point.

Speaker Change: Yes for sure it run a pretty good path.

Speaker Change: To achieve our targets and feel very confident in our ability to do so a lot of that is being done to renewables renewable and more sustainable fuels electrifying, our fleets, adding more electrification and alternative generation type assets on our project sites. So certainly on the path. We are very proud of the fab.

Jean-Louis: Yeah, for sure. We're on a pretty good path to achieve our targets and feel very confident in our ability to do so. A lot of that is being done through renewable and more sustainable fuels, electrifying our fleet, and adding more electrification and alternative generation type assets on our project sites. So, certainly on this path, we're very proud of the fact that we're working with some of the largest

Speaker Change: That we're working with some of the largest.

Speaker Change: Providers of equipment and fleet in the world on testing their newest equipment in Canada being among the first to procure them and trying to get as much as we can and that includes even our staff and fleet vehicles here trying to electrify those so.

Operator: Okay, thanks for your comments. Thanks.

Speaker Change: Well on the path to achieve our goals and hopefully sooner than anticipated.

Speaker Change: Okay. Thanks for your comments.

Speaker Change: Thanks.

Operator: Thank you for the question. Please stand by for our next question. Our next question will come from Michael at TD Security. Go ahead, Michael.

Speaker Change: Thank you for the question. Please standby for our next question.

Speaker Change: Our next question will come from Michael at TD Securities Go ahead Michael.

Michael: Thank you and good morning.

Michael Tupholme: My question is related to the Aecon Utilities business. I know earlier in the call you talked about this being a transition year, and the focus is really around margin improvement and earnings predictability. But just as it relates to revenues, it looks like the utilities business, which I think has been described as a... Fairly important growth area. It looks like you were sort of flattish year-over-year on a revenue basis. I'm wondering if you can just kind of talk a little bit about that. What you're seeing to start the year in that business and how we should also think about the year unfolding as it relates to Aecon Utilities and revenue.

Speaker Change: Yes.

Michael: My question is related to the utilities business.

Michael: I know earlier in the call you talked about this being a transition year and the focus is really around.

Michael: Margin improvement and earnings predictability, but just as it relates to the revenues it looks like the utilities business right. I think has been described as that.

Michael: Fairly important growth area. It looks like you were sort of flattish year over year on a revenue base I was wondering if you can just kind of talk a little bit about.

Michael: What youre seeing to start the year in that business and how we should also think about the <unk>.

Michael: Year unfolding as it relates to take on utilities and the revenues.

Speaker Change: Hey, Mike It's dropped good good question so cute.

Jerome Julliet: Hey, Mike, it's Jerome. Good question. So Q1 is the seasonally least significant quarter for the utilities business, given the amount of outdoor work that they tend to perform in the Canadian market. And the story there is just simply a little bit slower work programs on the telecom and oil and gas distribution sides of the business, partially offset by more high-voltage transmission distribution work, and as well as some work on large battery storage projects.

Mike: Q1 is the seasonally at least significant quarter for the utilities business given the amount of outdoor work that they tend to perform in the Canadian market and the story. There is just simply a little bit slower work programs on the telecom and oil and gas distribution side of the business, partially offset by more.

Speaker Change: High voltage transmission distribution work and as well doing some work on large battery storage projects. So.

Jerome Julliet: So we're not concerned with the year-over-year performance or quarter-to-quarter performance on this one. We're still very pleased with the overall development of the business, and we're still expecting growth coming through the back end of the year. This is a business where Q2, Q3, and Q4 are where they really demonstrate their mettle, and so I think our expectations continue to be aligned with that.

Speaker Change: We're we're not concerned with that.

Speaker Change: Year over year performance for quarter kind of quarter to quarter performance on this one we're still.

Speaker Change: Very pleased with the overall development of the business and we're still expecting growth kind of coming through the back end of the year right. This is a business where Q2, three four or where they really demonstrate their metal and so I think our expectations continue to be aligned with that.

Michael Tupholme: Okay, that's helpful. Thanks for that. Maybe just to follow on, a related but different part of the growth strategy, can you talk a little bit about what's happening with respect to the inorganic opportunities to grow that?

Speaker Change: Okay. That's helpful. Thanks, Thanks for that maybe just just a follow on.

Speaker Change: Related but different part of the growth strategy can you talk a little bit about.

Speaker Change: What's happening with respect to the inorganic opportunities.

Adam Borgatti: Yep, so Mike, it's Adam here. We've got quite a good pipeline ahead of us, working through that with our partner in Oak Tree, focused on US and Canada areas that we think we can still plug in geographically, and also in new territories where we're trying to establish initial presence with certain You know, small, mid-sized businesses we've talked about before in that $50 to $150 million range. We're not trying to get this thing too big right out of the gate but really use these as platforms to grow and expand what we described as land.

Speaker Change: To grow that business.

Speaker Change: Yes, so Mike it's Adam here, we've got quite a good pipeline ahead of us working through that with our partner in Oaktree.

Adam: Focused on U S Canada areas.

Adam: We can still plugging geographically and also in new territories, where we're trying to establish initial presence with certain.

Adam: <unk> mid size business as we've talked before in that $50 million to $150 million range. We're not trying to get this thing to outsize right out the gate, but really use this platform to grow and what we described Atlanta and expand our strategy.

Adam Borgatti: That's often in companies that have one or two verticals among the four that we participate in, and then we try and really apply, you know, Aecon's opportunities across our business to those businesses and really help them grow. So I think, you know, we've got a good pipeline ahead. We expect this to be a year of lots of activity. And so stay tuned.

Adam: That's often in companies that have one or two verticals among the four that we participate in and then we try and really apply <unk> opportunities across our business to those.

Adam: So those businesses and really help them grow so I think.

Adam: We've got a good as I said pipeline ahead, we expect this to be a year of lots of activity.

Michael Tupholme: Okay, perfect. And then maybe just one more quick one here to follow up on, I think it was the earlier question you had about working capital investment in the first quarter. Can you talk about how you'd expect that to evolve over the coming quarters and maybe where you think you'll land on a full-year basis?

Adam: So stay tuned.

Speaker Change: Okay, Perfect and then maybe just one more quick one here to follow up on I think it was.

Speaker Change: The earlier question you had about.

Adam: Working capital investment in the first quarter.

Speaker Change: Can you talk about how you'd expect that to evolve over coming quarters, and maybe where you think you'll land on a full year basis in terms of change.

Alistair MacCallum: Yeah, so it's Alistair, Mike, you know, as we talked about working capital.

Adam: Changes in noncash working capital.

Alistair MacCallum: Yes, so it's alastair.

Alistair MacCallum: As we've talked about working capital is weakest in Q1 and Q2 and then.

Alistair MacCallum: So I think, you know, overall, we're, you know.

Alistair MacCallum: Improves in Q3, and Q4 is really our strong quarter for <unk>.

Alistair MacCallum: Working capital.

Operator: Thank you all, and good night. As I said, Q4 was very strong in 2023, so, you know, that's had an impact on Q1, but expect it to be flat kind of for the year, and then obviously, subject to some of the settlements and arbitration discussions and results that come up.

Speaker Change: So I think.

Speaker Change: Overall as I said.

Alistair MacCallum: Q4 was very strong.

Alistair MacCallum: Q4 of 2023 so.

Alistair MacCallum: That's had an impact on our Q1, but expect to be to be flat kind of about a year and then obviously.

Alistair MacCallum: Subject to.

Alistair MacCallum: Some of the settlements.

Alistair MacCallum: And arbitration discussions and at <unk>.

Michael Tupholme: All right. Thanks for the detail.

Alistair MacCallum: That's coming from the legacy projects as well.

Speaker Change: Alright, thanks for the detail.

Operator: Thank you for that question. Please stand by for our next question. Our next question will come from Ian with Staples. Go ahead, Ian.

Speaker Change: Okay great.

Speaker Change: Thank you for that question. Please standby for our next question.

Speaker Change: Okay.

Speaker Change: Our next question will come from Ian with Stifel Go ahead Ian.

Ian Brooks Gillies: Morning, everyone. This one's directed at Jerome. I mean, the messaging from Aecon as a whole has been pretty consistent around Derisking the backlog EBITDA margin improvement over the last year to two years. I know it's early days for you, but is there anything else at the margin or anything else you'd like to see rounded out for targets you'd like to hit or metrics you intend to focus on that may be a bit different?

Ian: Good morning, everyone.

Ian: This one's directed Jerome I mean.

Ian: The messaging from Alcon as a whole has been pretty consistent around <unk>.

Ian: Derisking the backlog EBITDA margin improvement over the last call it year to two years.

Ian: I know it's early days for you, but is there anything else at the margin or anything else you'd like to see rounded out.

Ian: For targets you'd like to hit their metrics you intend to focus on them, maybe a bit different.

Jerome Julliet: Yeah, no, it's a...

Jerome Julliet: Yeah, it's a good question. As I mentioned, it's the 14th business day here.

Ian: Yes.

Speaker Change: It's a good question as I mentioned that.

Ian: 14th business day here.

Jerome Julliet: Look, maybe I'll take a step back and just comment on my initial observations coming into it. I think what I'll say is the strength and performance and sophistication of the team. I've witnessed it before; I worked as an advisor with them in 2023, and then kind of coming in and kind of seeing behind the curtain, it's actually exceeded my expectations. So, this is a business where both, I'd say, the corporate group, but also certainly the operating groups and the men and women who are executing the work do extraordinary jobs to make sure that they're very focused on executing the projects and managing cash flow.

Ian: Okay.

Ian: Maybe I'll take a step back and just comment on that.

Ian: What my initial observations coming into it I think what I'll say and is.

Ian: The strength and performance and sophistication of the team.

Ian: With this debt over iron work as an advisor with them in 2023.

Ian: And then kind of coming in and kind of seen behind the curtain.

Ian: Actually exceeded my expectations, even more so this.

Ian: This is a business where both I'd say the corporate group, but also certainly the operating themes and Dana the men and women who are executing the work.

Ian: The extraordinary jobs.

Ian: Kind of make sure that they are very focused on executing projects managing cash flow. So at the moment.

Jerome Julliet: So at the moment, I'd love to say that there's a magical item out there that was really weakly done that I could just swoop in and claim as my own, but I think this is largely going to be blocking and tackling, and then just moving forward thoughtfully, you know, producing capital, managing returns, and then allocating that capital in a kind of judicious manner. You know, we do have the benefit of, as we think about things on a go-for basis, Alistair mentioned, we've got lots of liquidity, and then also we've got a very strong partner in the utilities business with its own balance sheet to kind of pursue, you know, a slightly differentiated growth approach for that area of the business. So I'd say, like, in the early days, no concerns or issues, and I've been really kind of pleasantly surprised across the board. OK.

Ian: To say that there'll be a magical item out there that was kind of really weekly done that I can just kind of swoop in and claimants mile. But I think this is largely going to be blocking and tackling and then just moving forward thoughtfully.

Ian: <unk> capital.

Ian: Managing returns and then allocate that capital to justice manner. We do have the benefit of as we think about things on both of our basis also mentioned, we've got lots of liquidity.

Ian: And then also we've got a very strong partner.

Ian: These business on its own balance sheet to kind of pursue.

Ian: A slightly differentiated growth.

Ian: So it seemed like early days no no no concerns or issues and it's really kind of about probably pleasantly surprised across the board.

Ian Brooks Gillies: I'm going to save that question and re-ask it in a year's time. Switching to my second question, there's been a significant amount of announcements regarding EV plants and related activity in that area, specifically in Ontario. Can you maybe talk about your competitive position in that market or how you're thinking about pursuing it, just given it's likely going to be a high-growth area for the next, call it

Speaker Change: Okay, well I'm going to save that question re ask it in a year's time.

Ian: But maybe you sweat and switching to my second question there has been significant.

Ian: Amount of announcements regarding EV plants and related activity in that area, specifically in Ontario.

Ian: Can you maybe talk about your competitive positioning in that market or how youre thinking about pursuing that just given it seems to be going it's likely going to be a high growth area for the next call. It decade.

Jean-Louis: Yes, I can. Obviously, the energy transition is a game-changer for Aecon, and we are focused on it. We are at the moment in the bidding phase, I mean, of the Umicore plant near Toronto, and we are discussing it with the client. I mean, there is competition, but we are keen on this job. The rest will come. I mean, there are other plants that are coming. We just won't put a foot on it.

Speaker Change: Yes, I can.

Ian: Evidently energy transition that really is a game.

Speaker Change: <unk> Chandra from the corner.

Speaker Change: And we all focus on it.

Ian: At the moment in the bidding phase Umicore.

Ian: Plant.

Ian: Yeah tool tool.

Ian: And then and we are discussing with our clients I mean, the reasons there is competition, but.

Ian: Yes.

Ian: We are in with these drugs.

Ian: The rest will come that means all the plants that coming we just.

Jean-Louis: I mean, it has been the same strategy for battery storage with OMEGA, which is quite an important one, the first one of its kind, and we are extremely happy with the way this job is being executed. We are perfectly on time, and we learn a lot, and that's going to be key, I mean, for the next phase with ISO, or in the United States, or in other provinces of Canada. Okay, thanks very much. I'll turn it back over.

Ian: I mean, it has been the same.

Ian: Strategy for battery storage.

Ian: With the major which is quite an important one the first one of its kind.

Ian: And we should.

Ian: Should we be happy with the way these drop is.

Ian: Is is being executed.

Ian: Chris will pay on time, and we learned a lot.

Ian: That's.

Ian: Going to be key for us.

Ian: For the next stages with ISO or in the United States or in other.

Ian: In other provinces of Canada.

Ian: Okay.

Operator: Thank you for that question. I believe that is our last question for today. We will go ahead and turn this back over to Adam Borgatti for closing remarks. Oh, sorry, we just had one more question come up. Please hang on one moment. That's right. So our final question will come from Benoit Poirier. Please go ahead.

Speaker Change: Okay. Thanks, very much I'll turn it back over.

Speaker Change: Thank you for that question.

Speaker Change: I believe that is our last question for today.

Speaker Change: We will go ahead and turn it back over to Adam Borgata for closing remarks.

Speaker Change: Sorry, we just had one more question come up please.

Adam Borgatti: Please hang on one moment.

Adam Borgatti: Lightning round.

Adam Borgatti: Yes right.

Adam Borgatti: Our final question will come from Vanessa please.

Benoit Poirier: Good morning, gentlemen, and congratulations on the solid start. Could you maybe provide more colors?

Vanessa: Please go ahead.

Vanessa: Hey, good morning, gentlemen, and congrats for the solid start.

Vanessa: Could you maybe provide more color you've been able to book two airport wins in the quarter, what should we expect in terms of potential contribution.

Benoit Poirier: You've been able to book two airport wins in the quarter. What should we expect in terms of potential contribution going forward in terms of revenue and maybe timing? Also, probably more of a 2025 story, I would believe.

Vanessa: Going forward in terms of revenue and maybe timing also probably more of a 2025 story.

Adam Borgatti: Yeah, thanks, Benoit. You quoted the two airports booked in the corridor. One is a smaller construction-focused project, so there are no concessions related to the Anguilla Airport, but again, it does sort of solidify our presence and demonstrate the commitment to that area and that geography, and the type of work that we do is starting to bear more fruit in different types of projects, and hopefully, more to come. As it relates to the bigger one that we've discussed, which is the U.S. Virgin Islands development and rehabilitation of two airports there, it's still in the progressive phase, so tricky to talk about revenue contributions and or cadence at this point.

Vanessa: Billy.

Billy: Yes. Thanks, you quoted the two airports booked in the quarter. One is smaller construction focused projects. So there is no concessions related to the Angola airport, but again it does.

Billy: Sort of solidify our presence and demonstrate the commitment to that area in that geography, and the type of work that we do starting to bear more fruit in different types of projects and hopefully more to come there.

Billy: As it relates to the bigger one that we've discussed which is the U S. Virgin Islands development and rehabilitation of two airports there it's still in the progressive space. So tricky to talk about revenue contributions.

Adam Borgatti: But safer to say that it will be booked into probably the first half of 2025. And again, it'll follow a similar pattern that we've used in the past, which is taking over the operations of the existing airports while we use that to partially fund construction, take on leverage, and ring-fence the capital structures associated with those from what we know now. But again, the benefit of the progressive sort of approach to these is you've got some time now to really work with the clients to determine the best scheduling, what the optimal construction program looks like, any additions or areas that they'd like to tweak in the initial areas. So I think more to come on those, but we do expect more revenue contribution from those, as you said, in 25 versus 24 as they start to scale up a bit.

Billy: And or cadence at this point, but safer to say that it will be booked into probably the first half of 2025 and again it will follow a similar pattern that we've used in the past, which is taking over the operations of the existing airports while we.

Billy: Use that to partially fund construction take on leverage and ring fence the capital structures associated with those from what we don't know yet again the benefit of the progressive sort of or proceeds as you've got some time now to really work with the clients to determine best scheduling.

Billy: The optimal construction program looks like any additions or areas that you'd like to tweak in the initial areas. So I think more to come on those but.

Billy: We do expect more revenue contribution from those that you said that 25 versus <unk> 24, as they start to scale up a bit.

Benoit Poirier: Okay, and with respect to the recent REM delay that we've seen, are there any implications for you, or is it something that you've seen coming?

Speaker Change: Okay and with respect to their recent RCM daily that we've seen are there any implications for you or is it something that you've seen coming.

Jean-Louis: So, Benoit, good morning. No special implications. I mean, for us, those works are going perfectly as per the program. So, yes, we have heard that there are some discussions about the phasing between REM and GPMM, which is a group on which we are not in charge of operation and maintenance and rolling stock, but as far as our contract is concerned, there is no change. Okay, perfect. Thanks.

Speaker Change: No.

Speaker Change: Good morning.

Speaker Change: No no specialty applications.

Speaker Change: <unk> works perfectly REIT ASP ASP of the program towards a we yes, we have.

Speaker Change: Some discussion about the <unk>.

Speaker Change: Between <unk> and <unk>, which is the group on which we are not in charge offs operation at <unk>.

Speaker Change: Maintenance and rolling stock, but asset.

Speaker Change: Our contract is concerned there is no change.

Benoit Poirier: Okay, perfect. Thanks for the time, and congrats again.

Speaker Change: Okay perfect. Thanks for the time and congrats again.

Speaker Change: Thanks very much.

Operator: Thank you for your question. At this time, we have no further questions, excuse me, and I'd like to turn it back over to Adam Borgatti for closing remarks. Thank you.

Speaker Change: Thank you for your question at this time, we have no further.

Speaker Change: Questions excuse me.

Speaker Change: Like to turn it back over to Adam Borgata for closing remarks.

Adam Borgatti: Thanks, Mark. And thank you all for joining us today. As always, feel free to follow up with the team here with any further questions that you have. Appreciate your interest and consideration, and have a great rest of the day. We'll speak with you in the next quarter.

Adam Borgatti: Great. Thanks, Mark and thanks to all for joining us today as always feel free to follow up with Tim here with any further questions that you have.

Adam Borgatti: State your interest in consideration and have a great rest of the day, we'll speak with you on the next quarter.

Operator: Thank you. This does end our conference for today. It concludes our program, and you may now disconnect.

Adam Borgatti: Okay.

Speaker Change: Thank you. This does end our conference for today.

Speaker Change: This concludes our program and you may now disconnect.

Speaker Change: Yes.

Speaker Change: Okay.

Operator: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Operator: Okay.

Operator: [music].

Speaker Change: Okay.

Speaker Change: Okay.