Q1 2025 Aecon Group Inc Earnings Call
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Operator: Good day, and thank you for standing by.
Speaker Change: Good day and thank you for standing by welcome to the Q1 2025 earnings call for eight Congress at this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during this session.
Operator: Welcome to the Q1 2025 Earnings Call for Aecon Group. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You'll then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again.
You will need to press star one on your telephone.
Speaker Change: Then here an automated message advising that your hand is raised to withdraw your question. Please press star one one again.
Operator: Please be advised that today's conference is being recorded.
Adam: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Adam for body, SVP corporate development and Investor Relations.
Adam Borgatti: I would now like to hand the conference over to your first speaker today, Adam Borgatti, SVP, Corporate Development and Investor Relations. Please go ahead. Thank you, Kathy. Good morning, everyone, and thanks for participating in our first quarter results conference call. This is Adam Borgatti speaking.
Speaker Change: Please go ahead.
Adam: Thank you Cathy good morning, everyone and thanks for participating in our first quarter results Conference call. This is that I'm forgetting speaking joining me are genre, we serve rocks president and CEO, Jerome Juliet Executive Vice President and CFO.
Adam Borgatti: Joining me are Jean-Louis Servranc, President and CEO, Jerome Julier, Executive Vice President and CFO, and Alistair MacCallum, Senior Vice President, Finance. Our earnings announcement was released yesterday evening, and we posted a slide presentation on 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 in. As noted on slide two of the presentation, listeners are reminded the information we're sharing with you today includes forward-looking statements, and these statements are based on assumptions subject to significant risks and uncertainties.
Speaker Change: Mccallum Senior Vice President Finance earnings announcement was released yesterday evening, and we posted a slide presentation on our website, which we'll refer to during the call all in 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.
Adam: As noted on slide two of the presentation.
Adam: Minded the information we're sharing with you today includes forward looking statements.
Adam: Statements are subject.
Adam: Based on assumptions and subject to significant risks and uncertainties, although aegon believes the expectations reflected in these statements are reasonable but can give no.
Adam Borgatti: Although AECON believes the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct.
Adam: Sure. It's that these expectations will prove to be correct.
Jerome Julier: And with that, I'll hand the call over to Jerome. Thanks, Adam, and good morning, everyone. I'm now going to speak to Aecon's consolidated results, review the results by our segments, and address Aecon's financial position before turning the call over to Jean-Louis. Consistent with prior quarters, we've provided additional information to help clarify the underlying results, excluding the impact from the fixed-price legacy projects and divestiture. Detailed rec tables are included in slides 15-17 in the conference call presentation. Let's turn now to slide three. On a reported basis, revenue for the three months ended March 31, 2025 was $1.1 billion.
Jerome: I'll hand, the call over to Jerome.
Jerome: Thanks, Adam and good morning, everyone.
Jerome: I'm now going to speak to a cost consolidated results review the results by segments and address the cost financial position before turning the call over to John.
Jerome: Consistent with prior quarters, we provided additional information to help clarify the underlying results excluding the impacts of it takes place of legacy projects and divestitures.
Jerome: Tables are included on slides 15 through 17 and conference call presentation.
Jerome: Let's turn now to slide three on a reported basis revenue for the three months ended March 31, 2025 was $1 1 billion.
Jerome Julier: That's $215 million or 25% higher compared to the same period in 2024. High revenue was driven by increases in nuclear, industrial, utilities, and civil operations. This is partially offset by lower revenue in urban transportation. Adjusted EBITDA of $4 million compared to $33 million last year, and operating loss of $41 million in the quarter compared to an operating loss of $4 million last year. Adjusted EBITDA and operating profit in the first quarter were largely impacted by negative gross profit of $29 million on a fixed-price legacy project. Additionally, results were further impacted by weaker gross profit in civil operations in western Canada and a decline in gross profit earned due to lower margins on LRT projects and urban transportation solutions as these projects progressed towards substantial completion.
Jerome: $150 million or 25% higher compared to the same period in July 24.
Jerome: Higher revenue was driven by increases of nuclear industrial utilities and civil operations.
Jerome: Firstly offset by lower revenue in urban transportation solutions.
Jerome: Adjusted EBITDA of $4 million compared to $32 million last year, and operating loss of $41 million in the quarter compared to an operating loss of 4 million last year.
Jerome: Adjusted EBITDA and operating profit in the first quarter were largely impacted by negative gross profit of $29 million fixed price legacy projects.
Jerome: <unk> results were further impacted by weaker gross profit civil operations in Western Canada, a decline in gross profit earned due to lower margins on allergy progestin urban transportation solutions as these projects progress towards substantial completion.
Jerome Julier: To screen the impacts from the Legacy Project, as adjusted revenue for the first three months ended March 31, 2025 of $1 billion compares to $772 million in the same period last year, and adjusted EBITDA of $32 million compared to $33 million last year. Adjusted diluted loss per share in the quarter of $0.54 compared to a loss of $0.045 last Aecon reported a backlog of $9.7 billion at the end of the first quarter. This is a significant accomplishment from the operating teams, as Aecon now stands at the highest reported backlog in its history. New contract awards of $4.1 billion were booked in the quarter, largely from the target price contract Scarborough Subway Extension Project and additional refurbishment work at the Pickering Nuclear Generating Station.
Jerome: Excluding the impacts from the legacy project. Additionally, as adjusted revenue for the first three months ended March 31.
Jerome: At $1 billion compares to 200.
Jerome: $772 million in the same period last year, and adjusted EBITDA of 32 million compared to $33 million last year.
Jerome: Actually flat.
Jerome: Adjusted diluted loss per share in the quarter.
Jerome: That's compared to a loss of last year.
Jerome: Hey, Con reported backlog of $9 7 billion at the end of the first quarter. This is a significant accomplishment from the operating teams as they call them now stands at the highest reported backlog in its history.
Jerome: New contract awards of $4 1 billion were booked in the quarter largely from the target price contracts Carbo subway extension project and additional refurbishment work at the nuclear.
Jerome: Pickering nuclear generating station.
Jerome Julier: Now looking at results by segment, turning to slide 4. Construction revenue of $1.1 billion in the first quarter was $214 million or 25% higher than the same period last year. Revenue is higher in nuclear operations, driven by an increased volume of refurbishment work in nuclear generating stations in Ontario and the United States, and in industrial operations, primarily from a higher volume of field construction work in industrial facilities in Western Canada. Revenue is also higher in utility operations, from an increased volume of electrical transmission work in the U.S., which benefited from our acquisition of Xtreme in the second half of 2024, and from an increase in battery energy storage system work, and in civil operations, primarily from the higher volume of foundation work in the U.S.
Jerome: Now looking at results by segment turning to slide four.
Jerome: Construction revenue of $1 1 billion in the first quarter was $214 million or 25% higher CPM.
Jerome: Great last year.
Jerome: Revenues higher nuclear operations, driven by an increased volume of refurbishment work in nuclear generating station in Ontario, and the United States and in industrial operations, primarily from a higher volume of steel construction work and industrial facilities in Western Canada.
<unk> was also higher and utility operations from an increased volume of electrical transmission work in the U S, which benefited from our acquisition of extreme in the second half of 'twenty 'twenty four and from an increase in battery energy storage system work.
Jerome: And in civil operations, primarily from the higher volume of foundations work.
Jerome Julier: Partially offsetting these increases with lower revenue in urban transportation solutions, largely from a lower volume of LRT work in Ontario and Quebec, as three projects near completion.
Jerome: Partially offsetting these increases was lower revenue in urban transportation solutions, largely from a lower volume of dollars to work in Ontario, and get back at three projects near completion.
Jerome Julier: On an as-adjusted basis, construction revenue was $1 billion compared to $770 million in the same period last year, representing a 34% increase. As noted, the new contract awards of $4.1 billion in the first quarter of 2025 were exceptionally high and compared to $960 million in the same period last year.
Jerome: On an as adjusted basis construction revenue was $1 billion compared to seven and $70 million in the same period last year, representing a 34% increase.
As noted the new contract awards of $4 1 billion in the first quarter of 2025 were exceptionally high and compared to $960 million in the same period last year.
Jerome Julier: Turning now to slide 5, adjusted EBITDA of negative $1 million compared to $20 million last year, an operating loss of $30 million compared to an operating profit of $7 million last year. As previously mentioned, the adjusted EBITDA in the first quarter was largely impacted by a negative gross profit of $29 million on a fixed-price legacy project. On an as-adjusted basis, adjusted EBITDA for the three months ended March 31, 2025 of $27 million compared to $28 million in the same period in 2024. Operating profit in the quarter was similarly impacted by the negative growth profit of $29 million on a fixed-price legacy project, as well as roughly $8 million of M&A-related amortization costs.
Jerome: Turning now to slide five adjusted EBITDA of negative $1 million compared to $20 million last year and operating loss of $30 million compared to an operating profit of 7 million last year.
Jerome: As previously mentioned adjusted EBITDA in the first quarter was largely impacted by negative gross profit of $29 million on fixed price IDC project.
Jerome: On an as adjusted basis adjusted EBITDA for the three months ended March 31 to 125, and 27 million compared to $28 million in same period of 'twenty 'twenty four.
Jerome: Operating profit in the quarter was similarly impacted by the negative gross profit of $29 million fixed price legacy project as well as roughly $8 million of M&A related amortization costs absent. These effects operating profit quarter was effectively flat.
Jerome Julier: Absent these effects, operating profit in the quarter was effectively flat.
Jerome Julier: Turning to slide 6, concessions revenue for the first quarter was $2 million compared to $3 million in the same period last year, adjusted EBITDA in the concession segment of $13 million in the quarter compared to $18 million last year, an operating loss of $2 million compared to an operating profit of $1 million last year.
Jerome: Turning to slide six concessions revenue for the first quarter was $2 million compared to 3 million same period last year adjusted EBITDA in the concessions segment of $13 million in the quarter compared to $80 million last year and operating loss of 2 million compared to an operating profit of one nine last year.
Jerome Julier: On slide 7, we brought this all together with the as-adjusted information to exclude the impact of legacy projects and divestitures to provide insight into the underlying performance of the overall business. On an as-adjusted basis, revenue for the $1.2 trillion period ending March 31 was $4.4 billion compared to $3.8 billion in the same period last year. Adjusted EBITDA was $349 million in the $1.2 trillion period compared to $353 million in the period prior. For the construction segment, on an as-adjusted basis, Adjusted EBITDA was $307 million for the trillion 12-month period, representing a 7% margin.
Jerome: On slide seven we brought us altogether.
Jerome: With the as adjusted for making <unk> excludes the impact of legacy projects and divestitures to provide insight into the underlying performance of the overall business.
Jerome: On an as adjusted basis revenue for the trailing 12 months period ended March 31 was $4 4 billion compared to $3 8 billion same period last year adjusted EBITDA was $349 million in trailing 12 month period compared to $353 million in the period prior.
Jerome: Well the construction segment.
Jerome: Adjusted basis, adjusted EBITDA was $307 million for the trailing 12 month period.
Jerome: Setting a 7% margin.
Jerome Julier: As-adjusted EBITDA margin was impacted by lower fees earned from the earlier stages of collaborative projects as these projects approached their respective construction phases, the margin diluted impact of performance and civil operations in Western Canada, and the ramping up of projects with more appropriate contract execution structures.
Jerome: As adjusted EBITDA margin was impacted by lower fees earned from the earlier stages of collaborative projects. These projects approach their respective construction Davis.
Jerome: Margin diluted impact of performance in civil operations in Western Canada, and the ramping up of projects with more appropriate contract execution structures.
Jerome Julier: Turn to slide 8. At the end of the first quarter, Aecon held cash and cash equivalents of $38 million, excluding $348 million of cash held in joint operations. In addition, at March 31, 2025, Aecon had committed revolving credit facilities of $850 million, of which $306 million was drawn and $8 million was utilized for letters of credit. Drawings on the credit facilities reflect increased working capital needs as Aecon ramps up its seasonal construction volume.
Jerome: Turning to slide eight at the end of the first quarter Aegon held cash and cash equivalents of $38 million, excluding $348 million of cash held in joint operations.
Jerome: Edition at March 31, 2025 acre on a committed revolving credit facilities of $850 million of which 306 million was drawn 8 million was utilized for letters of credit draws on our credit facilities reflect increased working capital needs of Descartes ramps up that seasonal construction volumes.
Jerome Julier: Aecon has no debt or working capital credit facilities maturities until 2027, except equipment loans and leases in the normal course.
Jerome: You guys know that our working capital credit facility maturities until 2027, except equipment loans and leases in the normal course.
Jean-Louis Servranc: At this point, I'll turn the call over to Jean-Louis to address business performance and outlets. Thank you, Jerome. Turning to slide nine. Aecon continues to build resiliency through a strong, balanced and diversified work portfolio. Over the trailing 12-month period, 46% of Aecon's construction revenue was generated from the utilities and nuclear sector. compared to 36% of the comparative period in 2020. Balancing growth and opportunity with proper risk management is key to Aecon's future. We continue to maintain balance between our construction and concession segments among our operating sectors throughout our diverse client base, utilizing appropriate contract models and across selected geographies.
Jerome: At this point I'll turn the call over to John will be to address business performance and outlook.
Jerome: Okay.
Speaker Change: Thank you Rob.
Jerome: Turning to slide nine.
Jerome: <unk> continues to build resiliency score strong balanced and diversified portfolio.
Jerome: Over the trailing 12 months' period, 46% of acorns construction revenue was generated from utilities and nuclear sectors compared to 36%.
Speaker Change: Alrighty peer leading to solid 24.
Speaker Change: Balancing growth and opportunity with proper risk management is key to <unk> future success.
Speaker Change: We continue to maintain balance between our construction and concession segments.
Speaker Change: Among our operating sectors throughout our diverse client base utilizing appropriate contract models and across selected geographies.
Jean-Louis Servranc: We are also embracing new opportunities to grow in areas linked to the energy and power sectors and in U.S. and international markets. These opportunities are intended to diversify Aecon's capabilities. provide new growth vectors and deliver more consistent earnings through economic cycles.
Speaker Change: We are also embracing new opportunities to grow in areas linked to the energy and power sectors and.
Speaker Change: And in the U S.
Speaker Change: National markets.
Speaker Change: These opportunities are intended to diversify <unk> capability.
Speaker Change: Provide new growth vectors and deliver more consistent earnings through economic cycles.
Jean-Louis Servranc: Turning to slide 10. Demand for Aecon's services across our markets continues to be strong. With a record backlog of $9.7 billion at March 31, 2025. recurring revenue. In addition to continuing to see robust demand and a strong bid pipeline, Aecon believes it's positioned to achieve further revenue growth in 2025 and over the next few years, and is focused on achieving improved profitability and margin prediction. The remaining backlog to be worked off on the three remaining legacy projects was $94 million, or 1% of total backlog, at March 31, 2025. We're getting close. We are remaining focused on driving these projects to substantial completion, with all three projects currently expected to be substantially complete by the end of the third quarter of 2025.
Speaker Change: Turning to slide 10.
Speaker Change: Demand for <unk> services across our markets continues to be strong.
Speaker Change: With a record backlog of $9 7 billion at March 31, South of 25.
Speaker Change: Our recurring revenue continuing to see robust demand and a strong bid pipeline Aegon believes it is positioned to achieve further revenue growth in 2025.
Speaker Change: The next two years.
Speaker Change: He is focused on achieving improved profitability and margin predictability.
Speaker Change: The remaining backlog to be worked off of the three remaining legacy project was 94 billion.
Speaker Change: 1% of total backlog at March 31, 2025.
Speaker Change: We're getting close.
Speaker Change: While remaining focused on driving these projects to substantial completion.
Speaker Change: All three projects currently expected to be substantially complete by.
Speaker Change: End of the third quarter of 2025.
Jean-Louis Servranc: Trailing 12 months recurring revenue was $1 billion, comparable to the previous period and up over 20% versus two years ago, taking into account the divestitures of APE and the 49.9% interest in Skyport in prior periods on a like-for-like basis. Recurring revenues are typically executed on a non-fixed price basis, with the majority being over and above our reported backlog.
Speaker Change: Trailing 12 months recurring revenue was 1 billion comparable to the previous period.
Speaker Change: Over 20% versus two years ago, taking into account the divestitures of AP and the <unk>.
Speaker Change: 49, 9% interest in Skyboard in prior periods on a like for like basis.
Speaker Change: Recurring revenues are typically executive qdoba, not fixed rate basis, with the majority being over and above our reported backlog figures.
Jean-Louis Servranc: Turning to slide 11 now, development phase work is underway on a number of major projects in which Aecon is a participant. including the Darlington New Nuclear Project, the US Virgin Islands Airport Redevelopment Project, the Contrecoeur Terminal Expansion.
Speaker Change: Turning to slide 11, now development phase work is underway on a number of major projects in which Acorn is a participant including the Darlington nuclear project. The U S. Virgin Islands Airport redevelopment project.
Speaker Change: Mineral expansion the <unk> expansion on corridor works project.
Jean-Louis Servranc: the Go Expansion on Corridor Works project, the Winnipeg North Earth Treatment Plant project, and the Orwood Anson Dam project. Projects are being delivered using collaborative progressive design build models, with the majority expected to move into construction phase in 2025.
Speaker Change: Winnipeg, North <unk> treatment plant project and the <unk> project.
Speaker Change: These projects are being delivered using collaborate.
Speaker Change: <unk> design build model.
Speaker Change: With the majority expected to move into construction phase in 2025.
Jean-Louis Servranc: Turning to slide 12 this week, Aecon was recognized as one of Canada's greenest employers by MediaCorp Canada, recognizing our commitment to creating a culture of environmental awareness. Aecon also released its sixth sustainability report, showcasing our commitment to sustainability in both what we build and how we build. The Oneida Energy Storage Project is a great example of this. And we have made great progress as a project now, Neil. Aecon is also currently past our goal of a 30% reduction by 2030 in Scope 1 and Scope 2 direct emissions based on intensity relative to revenue. achieving a 34% cumulative reduction since 2020.
Speaker Change: Okay.
Speaker Change: Turning to slide 12. This week <unk> was recognized as one of Canada's greenest employers by immediate Corp, Canada.
Speaker Change: <unk>, our commitment to creating a culture of and governmental awareness.
Speaker Change: <unk> also released its six planes IBD to report showcasing our commitment to sustainability in both what we build and how we built it.
Speaker Change: The old Meda energy storage project is a great example of this and we have made great progress as a project now nears completion.
Speaker Change: Kony is also currently passed our goal of a 30% reduction by 2030 in scope, one and scope direct divisions based on intensity related to revenue.
Speaker Change: <unk>, a 34% cumulative reduction since 2020.
Jean-Louis Servranc: Turning to slide 13, Aecon is focused on achieving solid execution of its projects and selectively adding to backlog through a disciplined bidding approach that supports long-term margin improvement in the construction For more information visit www.aecon.com As previously mentioned, revenue in 2025 is expected to be stronger than 2024 due to a record backlog of $9.7 billion, the impact of business acquisitions completed in the second half of 2024, solid recurring revenue, and a strong bid pipeline. Revenue growth is expected in most of the construction. 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.
Speaker Change: Turning to slide 13, Acorn is focused on achieving Sony the execution of its projects.
Speaker Change: Selectively adding to backlog through a disciplined bidding approach that.
Speaker Change: Paul its long term margin improvement in the construction segment.
Speaker Change: As previously mentioned revenue in 2025 is expected to be stronger than 2024 due to our record backlog of $9 7 billion.
Speaker Change: The impact of business acquisitions completed in the second half of 2020 call solid recurring revenue and a strong pipeline.
Speaker Change: Revenue growth is expected in most of the construction sectors.
Speaker Change: In the concessions segment, there are number of opportunities to add to the existing portfolio of Canadian and international concessions is the next 12 to 24 months.
Jean-Louis Servranc: The three remaining legacy projects are expected to reach substantial completion by the end of the third quarter of 2025. And this is anticipated to lead to improved profitability and margin prediction. I want to be very clear in front of you, we are dedicating all necessary resources to drive those remaining legacy projects to completion. while vigorously pursuing fair and reasonable settlement agreements with the respective clients in each case. Until the three remaining projects are complete and the related claims have been resolved, there is a risk that profitability could also be negatively impacted in future periods. As such, the completion and satisfactory resolution of claims of this project with the respective clients remains a critical focus for Aecon and its partners.
Speaker Change: The three remaining legacy projects are expected to reach substantial completion by the end of the third quarter of 2025.
Speaker Change: He is anticipated to lead to improved profitability and margin predictability.
Speaker Change: I want to be very clear in front of you. We are dedicating all necessary resources to drive it because it was the remaining legacy projects to completion.
Speaker Change: Vigorous keep pursuing fair and reasonable settlement agreements with the respective clients in each case.
Speaker Change: In terms of the three remaining projects are complete as it related claims that have been resort.
Speaker Change: There is a risk that profitability could also be negatively impacted in future periods.
Speaker Change: Such as the completion on satisfactory resolution of claims of this project with respective clients remains a critical focus for Acorn and its partners.
Jean-Louis Servranc: To close, we are excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value. And we thank our dedicated team members for their contributions and for reflecting our safety always.
Speaker Change: To close we are excited about the momentum we have built and remain focused on executing our strategy to drive long term shareholder value.
Speaker Change: And we thank our dedicated team members for their contributions and for reflecting our safety always culture.
Jean-Louis Servranc: Thank you.
Operator: We will now turn the call over to analysts. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
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 a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Operator: And now we can compile our Q&A broadcast.
Speaker Change: Compile our Q&A roster.
Operator: Our first question comes to the line of Yuri Lynk with Canaccord Genuity. Your line is now open. Hey, good morning, guys.
Speaker Change: Our first question comes from the line of Yuri Lynk with Canaccord Genuity. Your line is now open.
Yuri Lynk: Hey, good morning, guys.
Speaker Change: Good morning, good morning.
Yuri Lynk: Maybe for Jean-Louis... Your underlying EBITDA margins continue to... Come down on a when you look at the trailing 12 months down from 8.4 to 7% as you outlined on slide 7. Just trying to understand the, you know, is that higher margin of 8.4, does that reflect, you know, some of the higher risk that's in those contracts and, you know, the 7 is more? © The Bulletproof Executive 2013 Safer contracts, so you're taking less risk, but you would think you'd earn a lower margin. I'm just trying to understand what's structural and what's kind of operational in the margin, and if you could help us with that.
Yuri Lynk: Maybe for Sean.
Yuri Lynk: Your your underlying EBITDA margins continue to.
Yuri Lynk: To come down.
Yuri Lynk: When you look at the trailing 12 months down from eight 4% to 7% as you outlined on slide seven.
Yuri Lynk: Just trying to understand is that higher margin of eight 4% does that reflect some of the higher risk that's in those contracts and the seven is more.
Indicative of.
Yuri Lynk: For safer contracts. So you are taking less risk but.
Speaker Change: Thank you Darrin, a lower margin I'm, just trying to understand the.
Speaker Change: What structural and what's kind of operational and the margin and if you could help us with.
Yuri Lynk: you know, what What kind of range that might shake out to as you book more of these collaborative contracts into your background?
Speaker Change: What what.
Speaker Change: Kind of a range that might shake out to.
Speaker Change: As you book more of these collaborative contracts into your backlog.
Jean-Louis Servranc: OK, Yuri, mainly speaking your right. means that with our backlog of $9.7 billion, We have built. in terms of quality and quantity and exceptionally positioned. for Aecon in the years to come. This backdrop has been on discipline, and that's good. is the predictability of our margin, no more bumps on the road. And this is quite important, no more deviations. So, when you look at the underlying profitability of the business, yes. I mean, the fact that we have de-risked most of our backlog, you remember that we went from 70% CCRM server. less than 30% on variable or collaborative projects just means that there will be a slight decrease in global margin.
Speaker Change: Okay.
Yuri Lynk: Yuri mainly speaking Youre right.
Speaker Change: It means that we saw.
Speaker Change: Backlog of $9 7 billion.
Speaker Change: We have built.
Speaker Change: In terms of quality and quantity.
Speaker Change: Exceptionally position.
Speaker Change: For a call in the years to come.
Speaker Change: He is back.
Speaker Change: Bill or discipline.
Speaker Change: And Thats a good now.
Speaker Change: Now.
Speaker Change: What we are looking more than.
Speaker Change: Anything.
Speaker Change: Is the predictability of our margin no more pumps.
Speaker Change: The road.
Speaker Change: And this is quite important normal deviation. So when you look at the underlying it.
Speaker Change: Profitability of the business.
Speaker Change: Yes.
Speaker Change: I mean, the fact that we have derisked most of our backlog Youll remember that we.
Speaker Change: We went from.
Speaker Change: 70% fee crimson to less than 30% variable or collaborative project.
Speaker Change: It means that there will be a slight decrease in global margin.
Jean-Louis Servranc: There will be a strong growth in revenue. And we are working extremely hard and we are very confident so that we'll be able to deliver no more bumps on the road. So all in all, we think it's quite good.
Speaker Change: But.
Speaker Change: There will be a strong growth in revenue.
Speaker Change: And we are working extremely hard and we are very confident that we'll be able to deliver no more pumps on.
Speaker Change: So all in all we think it's quite good do you want to add anything to this.
Jerome Julier: Do you want to add anything Jerome to this? Yeah, Yuri. I mean, it's well said. The only thing I'll maybe add is in the current period, as noted, we've got a diluted margin impact from some execution in Western Canadian civil. So, you know, we take within the global size of our enterprise, you know, it acts as a margin headwind probably through to the balance of the year. And so that adds like a little bit of additional softness. But your core thesis is right, is, you know, in the prior periods, stronger margins, but probably tied to a little bit higher risk appetite versus where we sit today is, you know, much more appropriate margin profile and consideration of the risk appetite that we're undertaking, right?
Speaker Change: Yes.
Speaker Change: I mean, it's well said the only thing I'll maybe add is.
Speaker Change: In the current period as noted we've got a dilutive margin impact from some execution and western Canadian Civil So yes, we can.
Speaker Change: Within the global size of our enterprise.
Speaker Change: As as a margin headwind all the way through to the balance of the year and so that adds a little bit of additional softness but your core thesis is right is.
Speaker Change: In the prior period's stronger margins, but probably tightened a little bit higher risk appetite versus where we sit today is much more appropriate margin profile in consideration of the risk appetite that we are undertaking I. We're just trying to create a little bit more of a boring company.
Yuri Lynk: We're just trying to create a little bit more of a foreign company. And those civil margins in Western Canada, can you just confirm that they're lower but still positive, or are they negative gross margins? Yeah, I mean, we don't we don't really provide detail on a kind of a specific subsector basis, but let's just say like, you know, it's a it's a variety of projects. And we're kind of focused in on on completing them and getting them through to the end of X. And is there a commonality on contract structure or anything like that? I mean, mainly speaking, those are projects that were taken on quite a while ago, and yes, the commonality is that there are six files.
Speaker Change: And the civil margins in Western Canada can you can you just confirm that they are lower but still positive or are they are they negative gross margins.
Speaker Change: Yes, I mean, we don't we don't really provide detail on kind of a specific sub sector basis, but this is David.
Speaker Change: It's a variety of projects that we were kind of focused in on a completely new again and through to the end of execution.
Speaker Change: And is there a commonality on contract structure or anything like that.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Mainly speaking.
Speaker Change: Projects that were taken on quite a while ago.
Speaker Change: And yes, the commonality is that.
Speaker Change: <unk> 6000 jobs.
Jean-Louis Servranc: It means, as I used to say, all fixed-price jobs are not bad, or all variable prices are not always good, but when you say, is there a common root, yes. None of those projects are of important size. Yeah, maybe describe it as a contributing factor, not the factor, right? Yeah, okay.
Speaker Change: As I used to say all fixed price job I'll look bad.
Speaker Change: All variable price almost always good but.
Speaker Change: When you say is there are.
Speaker Change: Common routes.
Speaker Change: Yes. It is.
Speaker Change: Blues project, none of those project.
Speaker Change: All of the important sorry.
Speaker Change: Yes, Okay, maybe describe it as a contributing factor not not.
Speaker Change: Does that factor right.
Jerome Julier: And last one. I mean, I think on the last call, you guys kind of pointed to a seven and a half percent margin for underlying margin as not a bad place to be for 2025 underlying, is that So the construction business or was that overall and now with these civil projects, where does that number? So, we previously referenced our as-adjusted margin profile, right? So, that's the number that I would point out went from 8.4% to 7%. It will operate within a range. We don't provide guidance from a margin perspective for a variety of reasons, but I think, you know, based on Jean-Louis' commentary, the better risk profile on the backlog in the programs that we're executing today comes with an alignment of a margin profile that's appropriate for that, right?
Speaker Change: Yeah, Okay and last one I mean, I think on the last call you guys kind of pointed to a seven 5%.
Speaker Change: Margin for underlying margin is not a bad place to be.
Speaker Change: For 2025 underlying is that.
Speaker Change: For the construction business or was that overall and now with the civil projects, where does that number stand. Thanks.
Speaker Change: So.
Speaker Change: We previously referenced our adjusted margin profile right.
Speaker Change: For that.
Speaker Change: I want to make my 4% to 7%.
Speaker Change: It will operate within within a range. We don't we don't provide guidance from a margin perspective for a variety of reasons, but I think based on all of these commentary.
Speaker Change: Better risk profile on the backlog and the programs.
Speaker Change: Today comes at an alignment of a margin profile that's appropriate for that right. So I think you can probably assume.
Yuri Lynk: So, I think you can probably assume, you know, better risk, more appropriate margin, and then, you know, the diluted impact of the margin on the Western Civil projects gets layered in on top of that. And so, you have to kind of run from, you know, where we are today and draw a conclusion against that. Thank you.
Speaker Change: Better risk more appropriate margin and then the diluted impact of the margin on the western civil projects gets layered in on top of that and so you have to kind of run from where we are today and drop cushion against that.
Speaker Change: Thanks.
Speaker Change: Thank you.
Krista Friesen: Our next question comes to the line of Krista Friesen with CIBC. Your line is now open. Hi, thanks for taking my question.
Speaker Change: Our next question comes from the line of Christopher Friesen with CIBC. Your line is now open.
Christopher Friesen: Hi, Thanks for taking my question.
Krista Friesen: Just on the legacy contracts, can you speak to kind of your comfort around the costs you've talked about before, related to the contracts, and how comfortable you are with the costs, given the timeline seems to be pushed out a little bit more on on two of I will take this one, maybe give you some information on where we are on those three contracts.
Christopher Friesen: And just on the legacy contracts can you speak to kind of your comfort around.
Christopher Friesen: The costs, you've talked about before related to the contracts and how comfortable you are with the cost given the timeline seems to be pushed out a little bit more on <unk>.
Christopher Friesen: Okay.
Christopher Friesen: I'll take this one maybe gives you some information on where we all do the all new <unk> III contract.
Jean-Louis Servranc: We'll begin with Gordie Howe, because we have been speaking about Gordie Howe in those Q1 results. Our bridge... substantially completed. We are finalizing some lighting, barriers, traffic control, but the bridge is done. The Canadian POE has been totally handed over to the Canadian Border Agency. They are all inside, setting up their system in all rooms. The U.S. POE has begun to be transferred to the U.S. Border Agency, and they are taking room after room to set up their equipment. We are comfortable with the end date that we have been given.
Christopher Friesen: We begin with Gordie Howe, because we have been speaking about voting.
Christopher Friesen: In those Q1 results.
Christopher Friesen: Our bridge.
Christopher Friesen: Is <unk>.
Christopher Friesen: Substantially complete and we are finalizing some.
Christopher Friesen: Lighting.
Christopher Friesen: We have a terrific control, but the bridge is done.
Christopher Friesen: The Canadian being totally handed over to the Canadian border urgency. They are all inside setting up their system in all rooms.
Christopher Friesen: U S <unk>.
Christopher Friesen: Again to be transferred to the U S border Arjun.
Christopher Friesen: They are taking room after room to set up their equipment. So.
Christopher Friesen: We are comfortable with that.
Christopher Friesen: And date that we have been.
Jean-Louis Servranc: Eglinton and Finch. You remember that during last year, I was telling you construction is finished. We are now in testing and commissioning. What I can tell you is that testing and commissioning is finished on both these projects. I mean, system and train control are very delicate systems, and system integration is not always easy. We are now in the final phase before revenue service demonstration that is done by the that will operate the line. So we are finalizing training the trainer and supervising the way the trainer from TTC are training the drivers. Then we should begin something like June, our revenue service demonstration.
Christopher Friesen: We have been giving to you <unk>.
Christopher Friesen: <unk> turned in synch.
Christopher Friesen: You remember that during last year I was telling you construction is finished we're now in testing and commissioning what I can tell you is that testing and commissioning is finished on both these projects and system and train controller very dedicate.
Christopher Friesen: Our system and system integration is not always easy we all know ends up in the.
Christopher Friesen: In the final phase before revenue service demonstration that is done by the TTC.
Christopher Friesen: That will operate the line. So we are finalizing training the trainers and supervising the way the trainer from TTC of training the drivers.
Christopher Friesen: We should begin to something like June our revenue service demonstration. So we are also comfortable physically on substantially completing those job midyear 2025.
Jean-Louis Servranc: So we are also comfortable physically on substantially completing this job mid-year 2025.
Jean-Louis Servranc: In terms of economy, so you have noted what I said regarding the remaining backlog, it's obviously still decreasing. We are getting really close to the end. In terms of margin, yes, we are, as of today, within the parameters that we defined in July 2024.
Christopher Friesen: In terms of economy. So you have noted what I said regarding the remaining backlog.
Christopher Friesen: It's obviously still decreasing we are we are getting really close to the end.
Christopher Friesen: In terms of the margin, yes, we are as of today within the parameters that we defined in July 2024.
Christopher Friesen: It is good.
Krista Friesen: Okay, great. Thank you.
Speaker Change: Okay, great. Thank you and then just.
Krista Friesen: And then just a last question here. You've had one full quarter now of the United Engineers acquisition. Can you just provide an update on that and how that's progressing?
Speaker Change: Last question here <unk> had one full quarter now of the United Engineers acquisition can you just provide an update on that and how is that.
Jean-Louis Servranc: Thank you. Yeah, I can say that the more we discover, the more we discuss, and we go deep within this company, the happier we are with this acquisition for a few years. United is an engineering company, but I would say a very practical engineering company, because part of its activity is related to steam generators, and we know them very well because we have been working with them at Bruce for the last five years. So this is part of their activity. It's an engineering company, and it's an engineering company. It's dedicated to power. It's nuclear but it's also thermal, also renewable.
Speaker Change: Progressing thank you.
Speaker Change: Yes, I can see that.
Speaker Change: We discovered the more we discuss and we go deep within this company.
Speaker Change: Here, we are with this with this acquisition.
Speaker Change: Few reasons.
Speaker Change: United is.
Speaker Change: Engineering Company EBIT I would say a very practical engineering company because of its activity is related to steam generator, and we know them very well because we have been working with them at Bruce.
Speaker Change: For the last five years or.
Speaker Change: So this is part of their activity.
Speaker Change: It's an engineering company and it's been.
Speaker Change: An enduring company.
Speaker Change: Dedicated to power.
Speaker Change: Its nuclear but it also.
Speaker Change: It's also renewable at the same time, it's not only supply, but it's also quite good in transmission and distribution engineering. So the idea is to grow this platform either engineering it.
Jean-Louis Servranc: At the same time, it's not only for supply, but also quite good for transmission, distribution and downloads. The idea is to grow this platform... As an engineering company, at the service of our growth in the power activity for Aecon, but also at the service of other clients. And this is where it's quite interesting. It's a sort of gate of entry to a lot of utilities that we have not. Add volume. So, yes, we are happy with the acquisition and we are looking for growth with this acquisition.
Speaker Change: The company at the service of our growth in the power active.
Speaker Change: Activity for <unk>, but also at the service of other Clos.
Speaker Change: And this is where it's quite interesting it just sort of gauge off of entry to a lot of utilities that we have not.
Speaker Change: As volumes before so yes, we are we are happy with the <unk> acquisition.
Speaker Change: And we.
Speaker Change: We are looking for growth with this acquisition.
Krista Friesen: Great.
Krista Friesen: Thank you.
Krista Friesen: I'll jump back in the queue. Thank you.
Speaker Change: Great. Thank you I will jump back in the queue.
Speaker Change: Thank you.
Operator: As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced.
Speaker Change: As a reminder.
Speaker Change: Binder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Chris Murray: Our next question comes to the line of Chris Murray with ATB Capital Markets. Your line is now open. Yeah, thanks, folks. I was wondering if we could talk a little bit about the U.S. utilities business to start. A lot of concern around business confidence in the U.S. and there's been some discussion in some of the early reporting that we've seen out of KeyOne that folks are being a little hesitant on spending. Just wondering what you folks are seeing in terms of demand for utilities right now and if that changes the U.S. strategy at all.
Speaker Change: Our next question comes from the line of Chris Murray with ATB capital markets. Your line is now open.
Chris Murray: Yes. Thanks folks I was wondering if you could talk a little bit about the U S utilities business to start.
Chris Murray: A lot of concern around business confidence in the U S and there's been some discussion in some of the early.
Chris Murray: Reporting that we've seen out of Q1 that folks are being a little hesitant on spending just wondering what you folks are seeing in terms of demand for.
Chris Murray: Utilities, right now and if that changes so that the U S strategy at all at this point.
Jean-Louis Servranc: Basically, no change. It means that we see for our activity related with power. at the United States. First, because there's a lot to do, even if... It's not always clear in terms of power supplies, from where it's going to come. One day you hear about coal coming back again, gas, but we know that there's a lot of purchase order on turbine, and the market is a little stuck. Renewable may go up and down, and it's not extremely clear about the real consumption and necessity of power from the big data centers, but this being said, even taking out this power supply, that at the moment is growing extremely fast.
Chris Murray: Basically no change it means that we see for our activity related with the power utilities.
Chris Murray: At city of rules in the United States.
Chris Murray: Yeah.
Chris Murray: First because there is a lot to do even lift.
Chris Murray: It's not.
Chris Murray: Always.
Speaker Change: In terms of our supplies for weights go to Coke I mean, one day, you hear about core coming back again gas between those that.
Speaker Change: There's a lot of purchase order on turbine and the market is really sick.
Speaker Change: Renewable may go up and down and it's not.
Speaker Change: Truly clear about the real conception and necessity of power from the big data centers, but this being said even taking all of this power supply is that at the moment is growing extremely strong.
Jerome Julier: The state of the grid, and we now know it because we have been in the United States for more than one year and a half studying everything, the state of the grid, in terms of transmission and distribution, is very poor, and there's a lot of work.
Speaker Change: The state of the grid and we now do it because we have been in the United States with more than one year and a half studying everything the state of the grid in terms of transmission and distribution either he's very well.
Speaker Change: There's a lot of work to do.
Jean-Louis Servranc: So, we still think that there will be growth, and in addition, I mean, we just begin as a dwarf. I mean, it's a niche market for us, and we can be extremely selective on where we want to work, what kind of job, and with which client.
Speaker Change: So we still seeing that.
Speaker Change: There will be growth.
Speaker Change: Addition, I mean, we just begin the dwarf.
Speaker Change: It's a niche market for us.
Speaker Change: And we can be extremely selective on where do we want to work what kind of job and with which client maybe you won't you give a little more yes, yes.
Jerome Julier: Maybe, Jerome, you give a little more detail. Yeah, yeah, for sure, Chris. And then, look, as it relates specifically to our utility services operations in the United States, we're extraordinarily pleased with the teams that have joined us, particularly in Michigan. They're locked in. Remember, the client base there is primarily funded at a rate base, right? So, it's less sentiment-driven and more requirement-driven. And then, there's a minor part of the work that's also just tied to storm impacts, and when the wind power goes out, Aecon and Extreme Cruise get rolled to help support, basically getting people back online.
Speaker Change: First of all Chris and then as it relates specifically to our utility services operations in the United States.
Speaker Change: We're extraordinarily pleased split with the teams that have joined us.
Speaker Change: Particularly in Michigan.
Speaker Change: Locked in and out of the client base. There is primarily funded out of rate base right. So it's less sentiment driven and more requirement drove it.
Speaker Change: And then you know there is a minor part of the work. This also just tie to storm impacts setting.
Speaker Change: When the power goes out.
Speaker Change: Make on an extreme crews get roles to help support.
Speaker Change: Basically people back online so from our perspective.
Jerome Julier: So, from our perspective, yeah, we continue to kind of watch things very closely with regards to the overall macro environment, but largely across all of our sectors, and in the concession space, our end markets are generally not tied too deeply to economic cycles, right? Like, we're looking to build the infrastructure required for future generations to thrive here, but it doesn't really swing that hard depending on a tariff impact or an economic impact, because a lot of this stuff just needs to get done, and our teams are out there doing it. Okay, that's helpful.
Speaker Change: Yeah.
Speaker Change: We continue to kind of watch things very closely with regards to the overall macro environment.
Speaker Change: Largely across all of our sectors and then the concession space.
Speaker Change: Our end markets are generally not.
Speaker Change: Tied to deeply to economic cycles like we're just we're looking to build.
Speaker Change: Structure required for future generations to thrive here.
Speaker Change: Doesn't really it doesn't really swing that hard depending on.
Speaker Change: A tariff impact or an economic impact because a lot of this stuff just needs to get done and our teams are out there doing it.
Speaker Change: Okay, Great that's helpful.
Chris Murray: Um, the other question I had, and this is more, maybe more a conceptual, but just, we saw an application last week from Energy Alberta to build a new 4,800 megawatt nuclear power plant in Alberta, very, very similar to what Brucey was being proposed to look like. And I started thinking about a lot of the commentary that we've had over the past few years about, call it the coordination and planning on some of the refurbishment projects to not overload the system and training. But all of a sudden, it feels like now we're starting to layer in new builds in future years.
Speaker Change: Other question I had and this is more maybe more conceptual but just.
Speaker Change: We saw an application last week from energy Alberta.
Speaker Change: Build a new 440 800 megawatt nuclear power plant in Alberta.
Speaker Change: Very very similar to what do you see what's being proposed to look like.
Speaker Change: And I start thinking about.
Speaker Change: A lot of the commentary that we've had over the past few years about.
Speaker Change: Call it the coordination and planning on some of the refurbishment projects to not overload the system.
Speaker Change: Training, but all of a sudden it feels like now we're starting to layer in new builds.
Jean-Louis Servranc: And I'm just wondering if you have an opinion or some thoughts around. You know, the feasibility or the reality of how you could actually get this stuff built, because I still think you'll be doing refurbishments well into the next decade anyway. And, you know, we're starting to see schedules that are talking about having new nuclear starting up, you know, in that same sort of timeframe. So just thoughts about, you know, the level of demand coming at you and not really even theoretical projects, but maybe real projects and how you think that that gets addressed.
Speaker Change: In future years, and I'm just wondering.
Speaker Change: If you have an opinion or some thoughts around.
Speaker Change: The feasibility or the reality of how you could actually get this stuff still because I still think you'll be doing refurbishments well into the next decade anyway.
Speaker Change: We're starting to see schedules that are talking about having new nuclear starting up.
Speaker Change: In that same sort of timeframe. So just thoughts about the level of demand coming at you and not not really even theoretical projects.
Speaker Change: But maybe real projects and how you think that that gets addressed.
Jean-Louis Servranc: I will check this one, nuclear. First of all, we are technology agnostic for new construction. It means that we know extremely well can do, I will say better than anybody else, because we are refurbishing 100% of the reactors in Canada. The six at Bruce, the four at Darlington, the four at... So if on the new builds, it comes to CANDU, I mean, I don't see Aecon not being present on this one. We know those machines extremely well. We also have a cooperation agreement with Toshiba Westinghouse for the AP1000. And we are participating to the construction of the SMR, which is a GI-Tachi boiling water reactor.
Speaker Change: Okay.
Speaker Change: Take this one.
Speaker Change: Nuclear.
Speaker Change: First of all we are technology agnostic for new construction it means that we.
Speaker Change: We know who we will can do.
Speaker Change: Better than anybody else, because we are refurbishing, 100% of the reactor in Canada the seats at Bruce for Darlington The 43.
Speaker Change: So if it is on the new builds it comes to can do I mean I.
Speaker Change: I don't see a con not being present on this one we know those machines that extremely well.
Speaker Change: We are also offering.
Speaker Change: Cooperation agreement with Toshiba with thing ultimately AP 1000, and we are participating.
Speaker Change: The contraction of the <unk>, which is the Gi touchy boiling water reactor it means that.
Jean-Louis Servranc: It means that we're ready. We're ready for the new construction.
Speaker Change: We're ready for this we're ready for the new construction.
Operator: Now it will go up and down, I mean there will be announcements, some will go forward, some won't go forward, and we are preparing our team and our alliance. This is Okay, we'll leave it there. Thank you. Okay, thank you.
Speaker Change: Now it will go up and down there will be announcements. Some will go forward sold won't go forward.
Speaker Change: And we are preparing.
Speaker Change: Our team and our alliance to be perfectly fit for purpose, depending on what is what is getting out.
Speaker Change: We are not worried we're not preoccupied.
Speaker Change: The change in the market regarding contract model.
Speaker Change: Perfectly in line with what we are ready to do with Napier.
Speaker Change: Okay I'll leave it there thank you.
Speaker Change: Okay. Thank you.
Operator: Our next question. It's coming from the line of just one moment, please. Standby one moment.
Speaker Change: Yes.
Speaker Change: Our next question.
Speaker Change: It's coming from the line of.
Speaker Change: Just one moment please.
Speaker Change: And then one moment.
Ian Gillies: Our next question comes in the line of Ian Gillies with Stiefel. Your line is now open. Good morning, everyone. Morning. Encore is obviously going to be a very large project that could help move the needle for Aecon. Can you maybe talk a little bit about how you anticipate that project's going to enter backlog at this juncture and maybe how it scales up over the next number of years? Yes, the main difference between the original idea and what is going to happen is that it's going to be phased. You remember that we were speaking a little down of $10 billion of investment.
Speaker Change: Our next question question comes from the line of Ian Gillies with Stifel. Your line is now open.
Speaker Change: Morning, everyone.
Speaker Change: Hey, good morning.
Speaker Change: Encore is obviously going to be a very large project.
Speaker Change: To help move the needle for a con could you maybe talk a little bit.
Speaker Change: Anticipate that project's going to enter backlog.
Speaker Change: Sure.
Speaker Change: And maybe how how it scales up over the next number of years.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: The main difference between the original idea what is going to happen is that it's going to be trade.
Speaker Change: Remember that we were speaking.
Speaker Change: Down of 10 billion of investment so I think the total amount of investment has not changed I mean to modernize it.
Jean-Louis Servranc: So I think the total amount of investment has not changed. I mean, to modernize the GTA... Now it's a brownfield. It means that all those works are going to be executed under traffic. We cannot close the railway during 10 years. So it's just going to be a fade between Lakeshore West, Lakeshore East, maybe Barrie, Union Station. But it will happen. It will just happen probably in the double of time that was envisaged, that was something like four or five years. It will be steady. We have a very strong team there. And we have begun preparatory works.
Speaker Change: GTA.
Speaker Change: Transport.
Speaker Change: This is what is needed now it's a brown field. It means that it all works are going to be executed under traffic we cannot close the railway during during 10 years. So it's just going to be phased in between.
Speaker Change: Lakeshore West.
Speaker Change: <unk> East, maybe Barry Union station.
Speaker Change: But it will happen each will just happen.
Speaker Change: Probably in the double of time it.
Speaker Change: Is that towards the end with Asia towards something like 45 years. It will be steady we have a very strong team there and we have begun preparatory works we have begun.
Jean-Louis Servranc: We have begun a track remediation. And we are working on a certain number of early works. So this is happening, but probably slower, which is not bad when you see our backlog and what's happening in other part of our activity.
Speaker Change: A track remediation.
Speaker Change: We are working on a certain number of early works. So this is happening, but probably slower which is not bad when you see our backlog and what's happening in other part of our activity. So we are happy about this project.
Ian Gillies: So we are happy about this project. That's helpful, and... As it pertains to call it, what's transpired over the last few months in Canada, there seems to be a shifting sentiment that Canada needs to do a bit more of everything. Are you starting yet to see any leading edge activity in the bids you're doing? Or is it still too early? Can you repeat your question, please? I'm not sure I understood the first part. Yeah, I guess the simple way to frame the question is, is everyone seems to want to build more stuff in Canada now.
Speaker Change: Okay.
Speaker Change: That's helpful.
Speaker Change: As it pertains to call it what's transpired over the last few months in Canada.
Speaker Change: There seems to be shifting sentiment can it needs to do a bit more of everything.
Speaker Change: Are you are you starting yet to see any leading edge activity.
Speaker Change: And debates youre doing or is it still too early.
Speaker Change: Can you repeat your question please.
Speaker Change: Sure.
Speaker Change: Yes, I guess the simple way to frame. The question is as everyone seems to want to build more stuff in Canada now.
Jean-Louis Servranc: Are you seeing any leading edge activity for bidding on that? Or is it still too early? I think it's still too early. First of all, we have to go through the federal election so that we understand a little more about the programs to come. Whatever happens, I mean, with the backlog we have and the quality of what now we have been acquiring, I'm not worried. But of course, I mean, we have a special team that is working in terms of preparation on everything linked with sovereignty, defense, rare metals, because this will come. It may not come at a super speed, but it will come, and we are getting ready.
Speaker Change: Are you seeing any leading edge activity.
Speaker Change: We're bidding on that or is it still too early.
Speaker Change: I think it's still too early first of all.
Speaker Change: We have to go through the federal election.
Speaker Change: We understand a little more about the.
Speaker Change: Programs to come.
Speaker Change: A what.
Speaker Change: I mean with the backlog, we have and the quality of what now we have been acquiring it.
Speaker Change: I'm not worried but of course I mean, we have a special team that.
Speaker Change: He is working.
Speaker Change: Preparation on every seeing linked with sovereignty difference.
Speaker Change: Matters, because this is easily comp it may not come as a super speed, but it will come and we are getting ready for this.
Ian Gillies: Understood. Maybe I'll just leave it there now and turn it back over for questions. Thank you.
Speaker Change: Understood maybe I'll just leave it there now and turn it back over for questions.
Speaker Change: Thanks again.
Speaker Change: Thank you.
Maxim Sytchev: Our next question comes from the line of Maxim. NBCF, your line is now open. Hey Max, you're really, you're coming through very soft. Sorry, is it better now? Yeah, we got you. OK, perfect, thanks.
Speaker Change: Our next question comes from the line of Matt.
Speaker Change: Your line is now open.
Speaker Change: Hi, John.
Yeah.
Speaker Change: I'm actually really suffering.
Speaker Change: Sorry is it is it better now.
Speaker Change: Yes, we got you.
Maxim Sytchev: I was wondering if it's possible to get a comment on how we should be thinking about the working capital free up once the fixed price projects are fully behind it, as you said, in Q3. So, yeah, maybe any comment there.
Speaker Change: Okay. Thanks.
Speaker Change: Was wondering if it's possible to get a comment on how we should be thinking about the working capital free up.
Speaker Change: Once the fixed price projects are fully behind us.
Speaker Change: You spent in Q3.
Speaker Change: So maybe any comment there thanks.
Jerome Julier: Sure, so we don't want to tie too preciously to any particular projects, Matt, but the question on working capital is an important one, so I'll answer it kind of like a broader level at the Aecon level. So Q1, you would have seen a pretty meaningful investment in working capital. Part of that had to do with the starting point, but part of it also just has to do with the amount of work programs that we're ramping into right now, right? So you'll see, obviously, this quarter was the highest Q1 from a revenue perspective that Aecon's ever delivered.
Speaker Change: Sure.
Speaker Change: So we don't want to tie two two prices lead to any particular projects Matt.
Speaker Change: A question on working capital.
Speaker Change: <unk> is an important one saw all ancillary kind of like a broader level.
Speaker Change: Carnival. So Q1, you would have seen a pretty a pretty meaningful investment in working capital.
Speaker Change: Part of that is due at the starting point, but part of it also just has to do with the amount of work programs that we're ramping into right now right. So youll see obviously this quarter was the highest Q1 from a revenue perspective.
Speaker Change: <unk> ever delivered.
Jerome Julier: The outlook is quite robust, and so we expect ongoing investments in working capital. So through the year, we're probably looking at an investment in working capital through to the end. That being said, there is a big focus on working capital release on a number of projects, and know that there's a number of folks whose full-time jobs are associated with that, right? So I'd say we don't want to tie anything to any one or two projects, but just at a global level, given the amount of growth we're seeing, I think it's very logical, expected, and appropriate to see an investment in working capital this year, just given where we're taking it.
Speaker Change: Look is quite robust and so we expect ongoing investments in working capital so through the year, we're probably looking at an investment in working capital due to the yet that being said there is a big focus on working capital release on a number of projects and know that there's a there's a number of folks whose full time jobs are associated with.
Speaker Change: That right. So I'd say, we don't want anything to any one or two projects, but just.
Speaker Change: Global level, given the amount of growth, we're seeing I think it's very logical expected inappropriate to see investment working capital. This year, just given where data vendors.
Maxim Sytchev: That makes sense.
Jerome Julier: And that might maybe just commenting around the comfort level of the kind of the envelope of losses you telegraphed previously, just in terms of, you know, how that's that's going to pace throughout the year. Yeah, tell me, like, um... Within the previously disclosed, you know, potential risks and impacts, like, we're still within that envelope, right? So, and, you know, up through the completion of the projects. So, no real change from that perspective, you know, we analyze a number of scenarios and possibilities and outcomes and options when it comes to this, and we're still comfortable with what we disclosed previously.
Speaker Change: Yeah that makes sense and then maybe just commenting around the comfort level.
Speaker Change: The kind of the envelope of losses, you've telegraphed previously.
Speaker Change: Just in terms of how that's going to pace throughout the year.
Speaker Change: Yes.
Speaker Change: Within within the previously disclosed.
Speaker Change: Potential risks and impacts.
Speaker Change: We're still within that envelope right. So.
Speaker Change: Through the completion of the projects so no real change from that perspective.
Speaker Change: We analyzed a number of scenarios and possibilities and outcomes.
Speaker Change: And options when it comes to us and we're still we're still comfortable with with what we disclosed previously.
Jerome Julier: So, I think from that perspective, it's kind of steady as she goes, right? Like, no real new news there.
Speaker Change: So I think from that perspective, it's a it's kind of steady as she goes right like no no real new news there.
Jerome Julier: And phasing-wise, I was just reminded you asked about phasing, we take it when it comes, right? Like, we're now at the endgame of this particular chess match and the pieces are moving quite quickly, so the impacts come when the impacts come. So I wouldn't be able to, you know what, I don't think we can provide, like, okay, we expect this, we expect that, we expect that, because if we expected it, we'd be taking it, which is what we saw in the quarter here with the project.
Speaker Change: <unk> Yeah, Yeah, I would just remind me you asked about Beijing.
Speaker Change: We take it when it comes right like where we are now at the end game.
Speaker Change: This particular test match and the pieces are moving quite quickly so the FX impact.
The impact to come so I won't be able to.
Speaker Change: We can provide we expect this we expect that we expect that because we expected it would be taking it with what we saw in the quarter here with the project that we noted.
Jean-Louis Servranc: Yeah, and then maybe just one quick one for Jean-Louis, if I may, in terms of concessions, you know, opportunities, obviously, you have, you know, kind of two smaller ones on the go right now. Can you talk about maybe your appetite for doing more on a prospective basis? Do you need to do more? Maybe in any column that would be would be helpful. Yeah, I mean, mainly speaking, part of our work strategy... is to be able to develop. finance, integrate the engineering, build and operate our assets when our clients or lawyers So, I mean, this is a real good vector to create value.
Speaker Change: Yes, and then maybe just one quick one for Sean if I may in terms of concessions opportunities. Obviously, you have kind of two smaller ones on the call right. Now can you talk about maybe your appetite.
Speaker Change: For doing more on a prospective basis do you need to do more.
Speaker Change: Maybe any color on that would be helpful. Thanks.
Speaker Change: Yes, I mean, maybe it's peaking.
Speaker Change: Part of our strategy is.
Speaker Change: Is to be able to develop <unk>.
Speaker Change: <unk> integrates engineering build and operate our assets when our clients are lowest to do so.
Speaker Change: We this is a real good vector to create value I mean, do we have just proved it with the Bermuda when we when we divested 49, 9%.
Jean-Louis Servranc: I mean, we have just proved it with the Bermuda when we divested 49.9% of this airport. So, yes, we are chasing opportunity. At the moment, we are very busy with U.S. Virgin Islands because we want to close during the year 2025. We are chasing other opportunities, either in district energy, power sectors, but we are extremely disciplined on this. And we are chasing also a few airports, because this is really our core, our core conversation. On the other hand, you probably have noted that... We are extremely close to commercial operation on ANEIDA, and you remember that we have a part at the top level with ANEIDA.
Speaker Change: All of these all of these airports so.
Speaker Change: Yes, we are chasing opportunity at the moment, we are very busy with U S. Virgin Island, because we want to close during the year 2025.
Speaker Change: We are chasing other opportunities either in district energy power sectors.
Speaker Change: We are extremely disciplined on this and we are changing also the shoe airports because this is really.
Our core.
Speaker Change: Our core competency.
Speaker Change: Another and you probably have noted that.
Speaker Change: That too.
Speaker Change: We are extremely close to commercial operation on the later and Youll remember that we have a pop at the top level.
Jean-Louis Servranc: which is a battery storage, I mean the 250 megawatt near Toronto. Excellent.
Speaker Change: We the leader, which is a battery storage I mean, the 250 megawatt natural tool.
Maxim Sytchev: That's it for me. Thank you so much. Thank you.
Speaker Change: Okay excellent. Thank you so much.
Speaker Change: Okay.
Speaker Change: Thank you.
Sabahat Khan: Our next question comes from the line of Sabahat Khan with RBC Capital Markets. Your line is now open. Great, thanks and good morning. Maybe just extending that working capital discussion from earlier, Jerome, that you kind of highlighted that working capital is going to be an investment. Should we generally just assume maybe it'll be a negative free cash flow year? Just trying to get your perspective on how you expect just overall cash and just leverage ratio to evolve kind of for the next three quarters. Thank you. I mean, look. For sure, the investment work capital, I mean, There's a seasonal cadence to this, right?
Speaker Change: Okay.
Speaker Change: Our next question is comes from the line of Saba High Kahn with RBC capital markets. Your line is now open.
Speaker Change: Great. Thanks, and good morning, maybe just extending that working capital discussion from earlier Jerome that you kind of highlighted the working capital is going to be an investment should.
Speaker Change: Should we just assume maybe it will be a negative free cash flow, you're just trying to get your perspective on how you expect this overall cash and leverage ratio to evolve.
Speaker Change: Kind of for the next three quarters. Thank you.
Speaker Change: Yeah, I mean look.
Speaker Change:
Speaker Change: For sure the investment working capital I mean it.
Speaker Change: Theres a seasonal cans to this right so.
Sabahat Khan: So as we land near the end of the year, obviously there's always a little bit of flex up and down depending on outflows and inflows, in particular with regards to our projects, right? Like the one thing that I think people are keenly aware is when we look at our overall cash position, as it stands right now, we've got something like $350 million invested into our projects in cash. And that investment and the amount of money that comes out of that can flex up and down. So it's hard to kind of put a perfect pin into where we'll be on the day we print the balance sheet.
Speaker Change: As we land near the end of the year, obviously, there's always a little bit of flex up and down depending on.
Speaker Change: Outflows and inflows in particular with regards to our projects like the one thing that I think people are acutely aware of is when we look at our overall cash position as it stands right now we've got something like $350 million invested into our projects and cash.
Speaker Change: That investment in the amount of money that comes out of that can flex up and down so it's hard to kind of put a perfect pan into where it will be on the David the balance sheet, but overall I think the themes you highlight are appropriate ones, which is one.
Jerome Julier: But overall, I think the themes you highlight are appropriate ones, which is one, the business is growing, we're taking on very good work with the right risk-adjusted returns associated with them. So there's gonna be investment and working capital versus where we were last year. I think that's appropriate and expected. There'll be, I'll say that to a certain extent, will be releases from some of the things that we have ongoing today. But also remember, we do have some capital expenditures that we're putting into the business to support ongoing growth. Some of those items can be a little bit chunkier, things like tunnel boring machines, and depending on when we take delivery of that, that can move the cash figure a little bit.
Speaker Change: Business is growing we're taking on very good work with the right risk adjusted returns associated with them, so theres going to be investment in working capital.
Speaker Change: Versus where we were at last year I think thats.
Speaker Change: That's appropriate and unexpected.
Speaker Change: I'm, saying that to certain extent will be releases from some of the things that we have ongoing today.
Speaker Change: But also remember we do have some capital expenditures that we're putting into the business to support ongoing growth.
Speaker Change: Some of those items can be a little bit chunkier things like <unk> machines, and depending on when we take delivery of that that can move the cash bigger a little bit but overall the thesis we have that underpins all of it is when we look to deploy capital resources within the business. There is a very keen focus from an operating capital committee on what are the returns associated with that cap.
Jerome Julier: But overall, the thesis we have that underpins all of it is when we look to deploy capital resources within the business, there's a very keen focus from an operating capital committee on what are the returns associated with that capital that's being deployed to make sure that we're kind of exceeding our thresholds.
Speaker Change: Thats being deployed to make sure that we're kind of exceeding our thresholds. Your next logical question to be whatsapp.
Jerome Julier: Your next logical question would be, well, what's that threshold? And I'll say that it's an appropriate one that exceeds our cost.
Speaker Change: I'll say that it's an appropriate one that exceeds our cost of capital.
Sabahat Khan: Great, that's helpful.
Okay, Great that's helpful and I apologize if I missed this next one but just a bit more of a philosophical one I know expansion. The U S has been a bit of a focus is there.
Sabahat Khan: And apologies if I miss this next one, but just a bit more philosophical one. I know expansion in the U.S. has been a bit of a focus. Has there been any change in sort of bidding there or anything like that, given some of the headlines we've been seeing, kind of geopolitical stuff, or is that U.S. strategy still go as it was previously? Thanks.
Speaker Change: Any change in sort of bidding there or anything like that given some of the headlines we've been seeing kind of geopolitical stuff just or is that U S strategies still go as it was previously thanks.
Jean-Louis Servranc: Okay, I will answer that. There are two vectors in our strategy. With a common umbrella, we will grow in the United States, where we are extremely competent in our home country, Canada.
Speaker Change: Okay, I will answer that.
Speaker Change: There are two vectors in our strategy.
Speaker Change: With a common umbrella.
Speaker Change: We will grow in the United States.
Speaker Change: We like to be competed in our own country, Canada, I'm not going to open new business hit a new code. So.
Jean-Louis Servranc: I'm not going to open a new business in a new country. Then, this being said, the two vectors, one is acquisition, and you know that we acquired this nuclear-specialized company now named Aecon Works a few years ago. We acquired Xtreme in July 2024, United in December, and the first one is going quite nicely, and the second one, Xtreme, as we have said, we are very happy about them. With their professionalism and their agility, United, we are still defining the detailed strategy plan with them, but the idea is to grow. The second way of growing is organically through project, and this we are here extremely careful.
Speaker Change: So.
Speaker Change: Then he has been through the two vectors one is acquisition.
Speaker Change: And you know that we had quite as a nuclear specialized company.
Speaker Change: Now I'll name a called walks a few years ago, we acquired extreme in July 2020 call. It in the in December and we.
Speaker Change: The first one is growing quite nicely.
Speaker Change: And second one extreme as we have said we are very happy about the belts and professionalism.
Speaker Change: Agility.
We are still defining as a detailed strategy Glen with them, but the idea is to grow the second way of growing is organically Scoop project and this we are extremely fluid we are still.
Jean-Louis Servranc: We are still analyzing. partnership, specialty contractors, availability of labor, and quality of clients and budgets. And once we are good with this, then we will move. prudently and always within our core competencies. So, the rest, I know there's a lot of noise about tariffs, but as I've said, I mean, Aecon is not a manufacturer, Aecon is not an exporter, I mean, if we work in the United States, we're going to be local, and so, on a first basis, it's not a problem for us. So, we try to keep our head cool and what issue is that?
Speaker Change: Analyzing it.
Speaker Change: Partnership.
Speaker Change: Specialty contractors.
Speaker Change: The ability of labor and.
Speaker Change: Quality of clients and budgets.
Speaker Change: Once we are good with this.
Speaker Change: We will move up.
Speaker Change: Prudently and always within our core competence.
Speaker Change: So the rest of I know, there's a lot of noise about terrific as I say I mean.
Speaker Change: Harris.
Speaker Change: <unk> is not a manufacturer economies not an exporter I mean, if we work in United States, we're going to be local.
Speaker Change: And so on.
Speaker Change: On the first basis.
Speaker Change: It's not a problem for us.
Speaker Change: So we try to keep our head cooling what is sure is that.
Jean-Louis Servranc: The End. in front of the number and the quality of the company existing in this market is Very good.
Speaker Change: The extent of what is to be beat in United States.
Speaker Change: In front.
Speaker Change: The number and the quality of the company existing in this market.
Speaker Change: Is.
Speaker Change: Very good.
Operator: Ramit. Great. Thanks very much for the call.
Speaker Change: Parameter for us.
Speaker Change: Great. Thanks, very much for the color.
Operator: Thank you.
Speaker Change: Thank you.
Michael Tupholme: Our next question comes in the line of Michael Tupholme with T. D. Cowan. Your line is now open. Thank you. Good morning. Mike. Obviously, a very significant increase in backlog in the first quarter, helped in part by the addition of the Scarborough subway extension and the Pickering nuclear refurbishment projects.
Speaker Change: Our next question comes from the line of Michael <unk> with TD Cowen. Your line is now open.
Michael <unk>: Thank you good morning.
Speaker Change: Hi, Mike.
Speaker Change: Obviously, a very significant increase in backlog in the first quarter helped in part by the addition of the Scarborough subway extension in the Pickering nuclear refurbishment projects with respect to the other collaborative projects that you have in development are there any of those projects that are expected to convert and be added to backlog either Q2.
Jean-Louis Servranc: With respect to the other collaborative projects that you have in development, are there any of those projects that are expected to convert and be added to backlog in either Q2 or Q3? I would tend to say, yes, but we are always prudent. I mean, obviously, the SMR, which is a collaborative contract, is not yet in our backlog. We are working, I mean, with OPG on this, USVI. We are also working to try to get it closed in the year 2025. It's a very interesting, progressive DBFOM, and we are very happy about it. We are working with the Port of Montreal about Contra-Coeur, and with the city of Winnipeg about the sewage, the phase two of the sewage treatment plant.
Speaker Change: Or Q3.
Speaker Change: I would tend to say.
Speaker Change: Yes.
Speaker Change: We are always prudent I mean.
Speaker Change: Yeah.
Speaker Change: Obviously, the SMO, which is a collaborative contract is not yet.
Speaker Change: Our backlog, we all working with OTG.
Speaker Change: All of this.
Speaker Change: <unk>.
Speaker Change: We are also working to try to get it closed in the year 2045.
Speaker Change: Very interesting.
Speaker Change: <unk>, we are very happy.
Speaker Change: About it.
Speaker Change: We are working with portable tweet about contract.
Speaker Change: And with the city of what do you think.
Speaker Change: About the switch the phase two of this two which treatment plant.
Jean-Louis Servranc: So yes, they will most probably come to backlog in the month to come, but the development periods are not over, and the beauty of the development period is that you can calibrate it the way you want, just to be sure that at the end of the day, you have the perfect project for the client, and perfectly priced. Okay, that makes sense. Thank you.
Speaker Change: Yes.
Speaker Change: Most probably.
Speaker Change: Come to backlog in the months to come but the development period, Ottawa and the beauty of the development period is that you can calibrate it the way you want just to be sure that at the end of the day you have the perfect project for the client and perfectly priced for us.
Speaker Change: Okay that makes sense. Thank you second question is about capital allocation in the outlook section of the.
Michael Tupholme: Second question is about capital allocation in the Outlook section of The release you talk about Planning to maintain a disciplined approach to capital allocation. Wondering, though, if you can provide a bit more detail around your capital allocation priorities, including any commentary around potential for future acquisitions or additional acquisitions and also share buybacks, and specifically on the subject of share buybacks, I guess, wondering if that takes on a greater priority in your mind at the moment, considering where the shares are. Yeah, look, it's a great question and one that's got robust discussion around the table here.
Speaker Change: The release you talk about.
Speaker Change: Planning to maintain a disciplined approach to capital allocation I'm wondering though if you can provide a bit more detail around your capital allocation priorities.
Speaker Change: Including any commentary around potential for future acquisitions or additional acquisitions and also share buybacks.
Speaker Change: And specifically on the on the subject of share buybacks I guess wondering if that takes on a greater priority or in your mind.
Speaker Change: At the moment, considering where the shares are trading.
Speaker Change: Yes look it's a great question and one that's got robust discussion around the table here. So.
Jerome Julier: So, a couple of things. So one is we're The most important thing for Aecon is to continue to grow and support the building of the business. And so, from that perspective, the first port of call for our capital is going to be investments in working capital and investments in the equipment needed for growth, right? So, on the equipment side, that's really centered around our Western Road business, which is a very high-performing business with extraordinary leadership. And then, on the utility side, that's a business that does carry a degree of capital and investment just associated with things like bucket trucks and directional drills and other items. So, those businesses are performing very, very well.
Speaker Change: Couple of things so one is where.
Speaker Change: The most important thing for Acorn is to continue to grow and support the building of the business and so from that perspective.
Speaker Change: First the first part of call for our capital is going to be investments in working capital and investments in the equipment needed for growth right. So on the equipment side and that's really centered around our our western road business, which is.
Speaker Change: Very high performing business with extraordinary leadership.
Speaker Change: And then on the utility side, that's a business that does carry a degree of capital and investment just associated with things like market drops in directional drilling and other items. So those businesses are performing very very well with her hurdling until they get capital now that the next phase is we've got some growth capital associated with other items.
Jerome Julier: They're hurtling, and so they get capital. Now, the next phase is we've got some growth capital associated with other items, a little bit chunkier items. So, that goes there. Then, what comes next? If we're satisfied with the strength of the balance sheet, we then look to, one is, obviously, we've got a pretty intense dividend program that distributes something in the order of $47 million a year to shareholders. We've historically supported that program and grown it over time. And then, the final piece that you know really well is M&A and NCIB. And so, where we trade today, we've got a tactical program that's been put in place.
Speaker Change: <unk> items.
Speaker Change: So that those are then because what.
Speaker Change: What comes next for satisfied with the strength of the balance sheet. We then look to one is obviously we've got a.
Speaker Change: Pretty intense dividend program that distribute something in the order of $47 million a year to shareholders.
Speaker Change: Historically supported that program and growing it over time.
Speaker Change: And then the final piece that you know really well is M&A and then CIB and so where we trade today.
Speaker Change: Got it tactical program, that's been put in place that's been put in place for our purpose.
Jerome Julier: It's been put in place for a purpose. And so, I say that we will be monitoring that very closely and be making the appropriate disclosures as we execute on programs like that. And then, from an M&A standpoint, the one challenge is it's not like a programmatic situation for us. We are very precious about how we deploy that capital, the opportunities that we pursue, how they map to our existing capabilities from a safety, culture, technical background standpoint, and markets, like the sectors that they're in and the geographies. And so, what I'll say from an M&A perspective is we have seen a pretty robust bidding environment for assets that we've targeted.
Speaker Change: And so I say that.
Speaker Change: We will be monitoring that very closely and be making the appropriate disclosures as we execute on programs like that and then from an M&A standpoint like that the one challenge is it's not like a programmatic situation for us, but we are we are very precious about how we deploy that capital with the opportunities that we pursue having maps for existing capable.
Speaker Change: <unk> from a safety culture technical background standpoint, and markets like the sector that they're in and the geographies and so what I'll say from an M&A perspective, as we have seen.
Speaker Change: Pretty robust bidding environment for assets.
Jerome Julier: And actually, it's gotten much more intense over the last six months. So, I think from that perspective, we just need to keep extraordinary discipline and try not to get too excited in pursuing things because there's a lot of dollars who are chasing the types of assets that map to AECON's ambitions. And so, we just need to keep ourselves calm. And if there's no M&A availability, there is availability of the shares in the market, which we continue to view as an opportunity.
Speaker Change: That we've targeted.
Speaker Change: It's actually it has gotten much more intense over the last six months. So I think from that perspective, we just need to keep extraordinary disciplined and try not to get too excited and pursuing things because theres a theres a lot of dollars for Jason the types of assets that that.
Speaker Change: That map to enhance ambitions and so we just need to keep ourselves common IV.
Speaker Change: It doesn't no M&A availability.
Speaker Change: There is availability of the shares in the market, which we will continue to be as an opportunity.
Michael Tupholme: Okay, I appreciate all the detail and I'll leave it there. Thank you.
Speaker Change: Okay I appreciate all the detail and I'll leave it there. Thank you.
Speaker Change: Thank you.
Adam Borgatti: I'm showing no further questions at this time and would now like to turn it back to Adam Borgatti for closing remarks. Thanks so much, Kathy, and thank you all for joining us today. Feel free to reach out with any follow-up questions to us, and we will tune in to the next call.
Speaker Change: I'm showing no further questions at this time I would now like to turn it back to Adam for Carty for closing remarks.
Adam Carty: Thanks, Scott. Thanks, so much Kathy and thank you all for joining us today feel free to reach out with any follow up questions to us and we will tune into the next call have a great rest of the day.
Operator: And have a great rest of the day.
Operator: Thank you for your participation in today's conference.
Adam Carty: Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.
Operator: This does conclude the program and you may now disconnect.
Adam Carty: Okay.
Adam Carty: [music].
Adam Carty: Okay.
Adam Carty: Okay.
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Adam Carty: Okay.
Adam Carty: [music].
Adam Carty: Sure.
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Adam Carty: Sure.
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Adam Carty: Sure.