Q2 2025 Aecon Group Inc Earnings Call

Day and thank you for standing by. Welcome to the second quarter, 2025 aeon Group, Inc, earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message advising. Your hand is raised.

To withdraw your question, please press *1 1 again.

Adam Borgatti: Thank you, Gigi. Good morning, everyone, and thanks for participating in our second quarter results conference call. This is Adam Borgatti speaking. Joining me today are Jean-Louis Servranckx, President and CEO, Jerome Julier, Executive Vice President and CFO, and Alistair MacCallum, Senior Vice President, Finance. Our earnings announcement was released yesterday evening. We posted a slide presentation on our website, which we will refer to during this call. Following our comments, we will be glad to take questions from analysts. We ask that the analysts keep to one question and a follow-up before getting back into the queue. As noted on slide two of the presentation, listeners are reminded that the information we are sharing with you today includes forward-looking statements. These statements are based on assumptions subject to significant risks and uncertainties.

Please be advised that today's conference is being recorded, I would now like to hand the conference over to your speaker today. Adam bridgey, senior vice president of corporate development and investor relations. Please go ahead.

Thank you, Gigi. Good morning, everyone, and thanks for participating in our second quarter results conference call.

This is Adam Betty speaking joining me today or John Louisa wrongs president and CEO, Jerome julier, Executive Vice President and CFO and Alistair McCallum, senior vice, president Finance.

To during this call.

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

Adam Borgatti: Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that the expectations will prove to be correct. With that, I will hand the call over to Jerome.

Jerome Julier: Good morning, everyone. I will now speak to Aecon's consolidated results, review results by segment, and address Aecon's financial position before turning the call over to Jean-Louis. Additional information has been provided to help clarify the underlying results, excluding impacts from the fixed price legacy projects and divestitures. Detailed reconciliation tables are included on slides 13 through 15 in the conference call presentation. Turning to slide three, on a reported basis, revenue for the three months ended June 30, 2025, a total of $1.3 billion, was $448 million or 52% higher compared to the same period in 2024. Revenue grew across all operating sectors with strong performances in industrial, nuclear, and civil operations. Revenue growth also benefited from the impact of the acquisitions of Extreme Power Line Construction, Ainsworth Power Construction, and United Engineers and Constructors that occurred in the second half of 2024.

As noted on slide 2 of the presentation listeners are reminded that the information we're sharing with you today includes forward-looking statements and that these statements are based on assumptions subject to significant risks and uncertainties although won believes the expectations reflected. In these statements are reasonable. We can give no assurance that the expectations will prove to be correct. And with that, I'll hand the call over to Jerome.

Additional information has been provided to help clarify the underlying results. Excluding impacts from the fixed price I guess, you projects in the best interests.

Detailed reconciliation tables are included on slides 13 through 15 and the conference call presentation.

Turn it aside 3 on a reported basis. Revenue for the 3 months, ended June 30th 2025 of 1.3 billion was 448 million or 52% higher compared to the same period in 2024.

Revenue. Grew across all operating sectors with strong performances, in industrial, nuclear, and civil operations.

Jerome Julier: Adjusted EBITDA of $41 million compared to a negative $154 million last year, an operating profit of $2 million in the quarter compared to an operating loss of $166 million last year. Adjusted EBITDA and operating profit in the second quarter of 2024 were negatively impacted by $237 million in legacy project losses versus $39 million in losses on legacy projects in the second quarter of 2025. Excluding the impacts from the legacy projects and divestitures, adjusted revenue for the three months ended June 30, 2025, of $1.3 billion compared to $975 million in the same period in 2024. Adjusted EBITDA is adjusted of $80 million compared to $78 million last year, driven by strong contribution from core construction activities, which more than offset the anticipated normalization in concessions EBITDA, which benefited from incremental proceeds from the partial sales Skyport and additional management and development fees in the prior period.

Revenue growth also benefited from the impact of the acquisitions of Extreme Power, Line Construction, Ainsworth, Power Construction, and United Engineers and Constructors that occurred in the second half of 2024.

Adjusted Eva 41 million compared to a negative 154 Million last year and operating front of 2 million in the quarter compared to an operating loss of 166 Million last year.

adjusted Ava and operating profit in the second quarter of 2024 were negatively impacted by 237 million in Legacy project losses versus 39 million in losses on the Legacy projects and the second quarter of 2025

Excluding the impacts from the Legacy projects and destitute. As adjusted revenue for the 3 months, ended June 30th 2025 of 1.3 billion compared to 975 million in the same period in 2024.

adjusted e but does adjusted of 80 million compared to 70 million last year driven by Sean contribution from a Core Construction activities

Jerome Julier: Adjusted diluted loss per share in the quarter of $0.09 compared to a loss of $2.03 last year. Aecon's reported backlog of $10.7 billion at the end of the second quarter was the highest reported backlog in its history, surpassing the previous record of $9.7 billion set in the last quarter. The increase in backlog is a result of significant efforts through collaborative models with our clients, and Aecon anticipates a moderation in backlog growth given current levels. New contractor awards of $2.4 billion were booked in the quarter, primarily from the Alliance contractor awarded for the execution phase of the Darlington New Nuclear Project in Ontario, where Aecon is leading the construction of North America's first commercial grid-scale small modular reactor, or SMR, for Ontario Power Generation. Looking at results by segment.

It's more than offset the anticipated, normalization, and concessions. Even, but uh, which benefited from incremental proceeds from the partial sales, Skype port and additional management and development fees in the prior period.

Adjusted diluted loss per share in the quarter of 9 cents compared to a loss of 2.3 cents last year.

Take homes reported backlog of 10.7 billion. At the end of the second quarter was the highest reported backlog in its history surpassing. The previous record of 9.7 billion 7 the last quarter.

The increase in backlog is a result of significant efforts through collaborative models with our clients and they kind of anticipate to moderation. Backlog growth given current levels

new contract rewards of 2.4 billion. Were booked in the quarter, primarily from the alliance contract, awarded for the execution, phase of the Darlington new nuclear project in Ontario.

Where a con is leading the construction of North America's first commercial grid scale, small modular reactor or SMR for Ontario, power generation.

Jerome Julier: Turning to slide four, construction revenue of $1.3 billion in the second quarter was $447 million or 52% higher than in the same period last year. Revenue was higher in industrial operations, driven primarily by an increased volume of field construction work in Western Canada and the impact on revenue of the Coastal Gas Link Pipeline Project Settlement Agreement in 2024, and in nuclear operations from an increased volume of refurbishment and engineering services work at nuclear generating stations in Ontario and the United States. Revenue was also higher in civil operations from a higher volume of major projects, road building construction, and foundation work, and urban transportation solutions primarily from an increase in mass transit project work in Ontario and utility operations from a higher volume of gas distribution work in Canada and electrical transmission work in the U.S.

Now, looking at results by segments,

Turning to slide 4 construction Revenue 1.3 billion in the second quarter was 447052 percent higher than in the same period last year.

Revenue is higher in industrial operations, driven primarily by an increased volume of Field construction. Work in western Canada.

And the impact on revenue of the coastal gasoline pipeline project settlement agreement in 2024.

And nuclear operations from an increased volume of refurbishment and Engineering Services, work at Nuclear Generating stations in Ontario and the United States.

Revenue is also higher in civil operations, from a higher volume of major projects Road building construction and foundation work.

In urban Transportation Solutions, primarily from an increase in mass transit Project work in Ontario.

Jerome Julier: following the acquisition of Extreme in the second half of 2024, partially offset by a lower volume of telecommunication work. On an adjusted basis, construction revenue was $1.3 billion compared to $973 million in the same period last year, representing a 31% increase. New contractor awards of $2.3 billion in the second quarter of 2025 more than doubled the $764 million in new awards booked in the same period last year. Turning now to slide five, adjusted EBITDA of $40 million compared to a negative $173 million last year and operating profit of $15 million compared to an operating loss of $185 million last year.

And utility operations from a higher volume of gas distribution working in Canada and electrical transmission work. In the US following the acquisition of extreme in the second half of 2024.

Partially offset by a lower volume of top communication work.

On an asset adjusted basis, construction Revenue was 1.3 billion compared to 973 million in the same period last year. Representing a 31% increase.

You contract for awards of 2.3 billion in the second quarter of 2025 more than doubled, the 700.

64 million in new Awards. Booked in the same period last year.

During now slide 5 adjusted e but uh 40 million compared to a negative 173 Million last year.

Jerome Julier: On an adjusted basis, adjusted EBITDA for the three months ended June 30, 2025, of $79 million compared to $64 million in the same period in 2024, with improved performance driven by higher volume and gross profit margin in nuclear and utility operations and higher volume in industrial operations, offset in part by lower operating profit in civil from Western operations and in urban transportation solutions from lower gross profit on mass transit projects that are now nearing completion. Turning to slide six, concessions revenue for the second quarter was $2 million compared to $2 million in the same period last year. Adjusted EBITDA in the concessions segment of $16 million in the quarter compared to $30 million last year, and operating profit of $3 million compared to $17 million last year.

On a nice adjusted basis, adjusted IBA for the 3 months ended in June 2025 was $79 million, compared to $64 million in the same period in 2024.

With improved performance driven by higher volume and gross profit margin in nuclear and utility operations.

And higher volume of industrial operations.

Offset in part by lower operating profit in civil from Western operations.

And urban Transportation solutions from lower gross profit on mass transit projects that are now in your in completion turning to slide 6, concessions. Revenue for the second quarter was 2 million compared to 2 million in the same period last year.

Jerome Julier: Lower adjusted EBITDA and operating profit in the quarter were primarily driven by last year's gain on sale related to incremental proceeds from the partial sale of Skyport and last year's one-time recovery in Skyport. Otherwise, the adjusted EBITDA of the concession segment was aligned with expectations. On slide seven, we brought together the adjusted information to exclude impacts of the legacy projects and divestitures to provide insight into the underlying performance of the business. On an adjusted basis, revenue for the 12-month period ending June 30, 2025, was $4.7 billion compared to $3.8 billion for the same period last year. Adjusted EBITDA was $351 million in the trailing 12-month period compared to $337 million in the prior period. For the construction segment, on an adjusted basis, adjusted EBITDA was $321 million for the trailing 12-month period, representing a 6.8% margin.

Adjusted even in the concession segment of $16 million in the quarter compared to $30 million last year, and operating profit of $3 million compared to $17 million last year.

Lower adjusted e but done operating profit in the quarter were primarily driven by last year's gain on sale related to incremental proceeds from the partial sale of skyport.

Is a one-time recovery in Skype for.

Otherwise, yeah, it's just to be with the of the concession segment was aligned with expectations.

On flight 7, we've brought together the as adjusted information to exclude, the impacts of the Legacy projects and destructors to provide insight into the underlying performance of the business.

And that is adjusted basis revenue for the 12-month period ending June 30 2025 was 4.7 billion compared to 3.8 billion for the same period last year.

Adjusted EA was $351 million in the trailing 12-month period compared to $337 million in the prior period.

For the construction segment on an as adjusted basis.

Jerome Julier: Adjusted EBITDA margin was impacted by weaker gross profit in Western civil projects and in urban transportation solutions from lower gross profit on mass transit projects that are nearing completion. Over three quarters of Aecon's record backlog at June 30 is non-fixed price. This compares to 50% non-fixed price last year and just 30% non-fixed price in the second quarter back in 2021. Aecon has continued to shift the nature of our backlog and our business over time, including through more collaborative and progressive procurement models while seeking to reduce risk in our performance and target greater profitability and margin predictability. Turning to slide eight, at the end of the second quarter, Aecon held core cash equivalents of $123 million, which excludes $339 million of cash, representing Aecon's proportioned share held in joint operations.

Adjusted EVAa was $321 million for the trailing 12-month period, representing a 6.8% margin.

As adjusted Eva, margin was impacted by weaker gross profit and Western civil projects and in urban Transportation solutions from lower gross profit on mass transit projects that are nearing completion.

Over 3/4 of a con's record, backlog at June 30th is non-fixed price.

This compares to 50% of non-fixed, price last year and just 30% non-fixed price in the second quarter back in 2021.

Akon has continued to shift the nature of our backlog, and our business over time, including some more collaborative and Progressive, procurement models, while seeking to reduce risk in our performance and Target greater profitability and margin predictability.

Turning to slide 8.

at the end of the second quarter, Aon Health Corps cash and equivalents

of 123 million.

Jerome Julier: In the second quarter of 2025, Aecon renewed both its committed revolving credit and performance security guarantee facilities. At June 30, 2025, Aecon had a committed revolving credit facility of $600 million, an increase of $150 million from its previous credit facility, and a separate committed credit facility for Aecon Utilities of $400 million. $336 million was drawn across both facilities, and $8 million was utilized for letters of credit. Both revolving facilities now mature in June of 2029. Aecon has no debt or working capital credit facility maturities until 2029, except equipment loans and leases in the normal course. At this point, I will turn the call over to Jean-Louis Servranckx to address our business performance and outlook.

Which excludes 339 million of cash. Representing? Aoins proportion. Share held in joint operations.

And the second quarter of 2025 aeon renewed, both its committed revolving credit and performance security guarantee facilities.

At June 3025, take on had committed revolving credit, facility of 600 million and increase of 150 million from its previous credit facility and a separate committed credit facility for Aon utilities of 400 million.

336 million was drawn across both facilities, and 8 million was utilized for letters of credit.

Both regarding facilities. Now, make sure in June of 2029.

Akon is no debt or working Capital Credit facility maturities until 2029, except equipment loans and leases in the normal course.

At this point, I'll turn the call over to John Lewis. To address our business performance and Outlook.

Jean-Louis Servranckx: Thank you, Jerome. Turning to slide 9, Aecon continues to build resiliency through a balanced and diversified work portfolio. Over the trailing 12-month period, 46% of Aecon's construction revenue was generated from the utility operations and nuclear operations sectors compared to 41% of the comparative period in 2024. In the second quarter, the Oneida Energy Storage Project officially commenced commercial operations, becoming the largest grid-scale battery energy storage facility in operation in Canada and one of the largest globally. Balancing growth and opportunity with proper risk management is key to Aecon's future success. We continue to maintain balance in our construction and concessions segments as we embrace new opportunities to grow in areas linked to the energy and power sectors and in the U.S. and international markets. Turning to slide 10, demand for Aecon services across our markets continues to be strong.

Thank you, Daryl.

Turning to slide 9.

8, on continues to build resiliency.

Through a balanced and diversified work portfolio.

Over the trading 12 months period 46% of acorns construction Revenue was generated from the utilities and nuclear sectors compared to 41% for the comparative period in 2024.

In the second quarter, the Onida energy storage project, officially commenced commercial operations, becoming the largest Greek scale, battery, energy storage facility in operation in Canada and 1 of the largest globally.

Balancing growth and opportunity. With proper risk management is key to a cons future success.

We continue to maintain balance in our construction and Concession segments as we Embrace new opportunities to grow in areas linked to the energy and power sectors. And in us and international market,

Turning to slide 10.

Jean-Louis Servranckx: With a record backlog of $10.7 billion at June 30, 2025, recurring revenue programs continue 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 predictability. 76% of our backlog was non-fixed price at June 30, 2025, compared to 50% at the same time last year. Additionally, our trailing 12-month revenue at June 30, 2025, was 65% non-fixed price, up from 58% in the same period last year. Trailing 12 months recurring revenue of $1 billion was comparable to the previous period. Recurring revenues are typically executed on a non-fixed price basis, with the majority being over and above our reported backlog figures.

Demand for Aon Services across our markets continues to be stronger.

with record backlog of

And a strong beat pipeline.

Aeon believe its position to achieve further Revenue growth in 2025 and over the next few years and he focused on achieving improved profitability and margin predictability.

76% of our backlog was non-fixed price at June 30th 2025 compared to 50% at the same time last year.

Additionally, our training 12 months Revenue at June 30th. 2025 was 65% non-fixed, price up from 58% in the same period last year.

Failing. 12 months, recurring revenue of 1 billion was comparable to the previous period.

Recurring revenues are typically executed on the non-fixed price basis with a majority being over and above our reported backlog figures.

Jean-Louis Servranckx: Turning to outlook on slide 11, development phase work is ongoing in consortiums in which Aecon is a participant to deliver several significant long-term progressive design build projects of various sizes. These projects are being delivered using collaborative progressive design build models, with the majority expected to move into the construction phase in 2025 and 2026. Aecon is focused on achieving solid execution on its projects and selectively adding to its record backlog through a disciplined bidding approach that supports long-term margin improvement in the construction segment. Revenue in 2025 is expected to be stronger than 2024 due to a record backlog of $10.7 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 sectors.

Turning to Outlook on slide, 11 development phase work is ongoing in consortiums.

In which aeon is a participant to deliver? Several significant long-term Progressive design, build projects of various sizes.

These projects are being delivered. Using collaborative, Progressive design build models with a majority expected to move into the construction, phase in 2025 and 2026.

Akon is focused on achieving solid execution on its projects and selectively adding to its record backlog through a disciplined building approach that supports long-term margin Improvement in the construction segment.

Revenue in 2025 is expected to be stronger than 2024 due to a record backlog of 10.7 billion.

The impact of business Acquisitions completed in the second half of 20124.

Solid recording revenue and a strong lead pipeline.

Jean-Louis Servranckx: In the concessions segment, there are several opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months. The three remaining legacy projects are expected to reach substantial completion by the end of 2025. This is anticipated to lead to improved profitability and margin predictability. The remaining backlog to be worked off on the three remaining legacy projects was $76 million, or less than 1% of total backlog at June 30, 2025. We are now very close and are dedicating all necessary resources to drive the remaining legacy projects to completion while 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.

Revenue growth is expected in most of the construction, sectors.

In the concessions segment.

There are several opportunities to add to the existing portfolio of Canadian and international concessions, in the next 12.

To 24 months.

The 3 remaining Legacy projects are expected to reach substantial completion by the end of 2025.

And this is anticipated to lead to improved, profitability and margin predictability.

The remaining backlog to be worked off on the 3 remaining Legacy, problems was 76 million.

Or less than 1% of total backlog at June 30th 2025.

We are now very close and our dedicating all necessary resources to drive the remaining Legacy project to completion.

While pursuing fair and reasonable settlement agreements with a respective clients in each case,

And until the 3 remaining projects are complete and the related claims have been resolved.

Jean-Louis Servranckx: As such, the completion and satisfactory resolution of claims on these projects with the respective clients remains a critical focus for Aecon and its partners. We are excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value. We thank our dedicated team members for their contributions and for reflecting our safety always culture. Thank you. We now turn the call over to analysts for questions.

There is a risk that preferably could also be negatively impacted in future periods.

Search.

It's a completion and satisfactory resolution of claims on this project with a respective clients,

Remains a critical Focus for Aon and its partners.

We are excited about the momentum. We have built and remain focused on executing our strategy to drive long-term shareholder value.

We thank our dedicated team members for their contributions and for reflecting our safety always culture

Adam Borgatti: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yuri Lynk from Canaccord Genuity.

Thank you. We now turn the call over to analysts for questions.

Thank you as a reminder, to ask a question. Please press star, 1, 1 1 on your telephone and wait for your name, to be announced to withdraw your question. Please press star, 1 1 1 again.

Please stand by while we compile the Q&A roster.

Our first question comes from the line of Yuri link from kenakore, genuity Inc.

Adam Borgatti: Hey, good morning, guys.

Jerome Julier: Hi, Yuri.

Alistair MacCallum: Morning.

Hey, good morning, guys.

Adam Borgatti: Morning. When we think about next year with respect to the legacy projects, are there any lingering costs associated with these projects? Like I am thinking associated overhead, not so much asking if there is going to be any cost reforecast in 2026 because we do not know that, but any overhead costs that we should be including in our model as we think about how these things finally roll off?

Are you ready morning?

This morning, um, when we think about uh, next year, uh, with respect to the, to the Legacy projects. Um,

There any lingering, um, costs associated with these projects? Like I'm thinking Associated overhead.

and not so much, uh,

You know, asking if there's going to be any cost reforced in 26 because we don't know that. But um you know any any overhead costs that we should be including in our model?

Jean-Louis Servranckx: Okay. I am going to take this one, Yuri, and describe where we are with our three legacy projects. As you know, Eglinton, Finch, and Gordie Howe are P3 projects, and the way they are structured is that construction has its life that finishes with substantial completion. From this moment, we go to another phase, which is maintenance of the assets that we have been building. So the issue for us at the moment is getting to substantial completion. As you have noticed, 76 million of backlog on those three jobs, which is less than 0.7% of our cumulative backlog, is of the essence.

About how these things finally roll off.

Okay, I'm I'm going to take this 1, you read and um the swag where we are with our 3 Legacy project, as you know, uh eggington Finch and body how P3 project. And the way they are structure is that construction as it's live. That finish with substantial completion. From this moment, we go to another phase which is maintenance of the assets that we have been building.

So the issue for us at the moment is getting to substantial completion.

Jean-Louis Servranckx: If I want to be a little more specific, on Eglinton and Finch, we are now working hand in hand with Metrolinx, TTT, and all our partners to begin what we call revenue survey demonstration, which is the last phase before substantial completion. It is a period contractually fixed at 30 days with a high number of trains running 21 hours per day, seven days a week. We have been training, testing, and commissioning all our systems for the last two to three years to go there. This should begin between August and September and last for one month. Once this is achieved, which is a final exam, the owner has a few weeks to declare substantial completion for Gordie Howe. The Canadian point of entry is over. The main bridge is over. I-75 is practically over. There is just a pedestrian bridge that remains to be finished. The U.S.

As you have noticed, I mean 76 million of backlog on those 3 job, which is less than 0.7% of our accumulative. Backlog is of the essence, uh, if I want to be a little more specific,

On Eglington and finish. We are now working hand in hand.

with Metro Links TTC and all our partners to begin what we call Revenue Service de demonstration, which is the last

Phase before substantial completion. It's a period contractually fixed at 30 days, with a high number of trains uh, running

21 hours per day. 7 days a week. We have been uh,

Training.

Testing and commissioning all our system for the last 2, to 3 years to go there. This should begin between August and September and lasts for 1 month. Once this is achieved, which is a final exam.

The owner has a few weeks to declare substantial competition.

For gory how the Canadian point of entry is over.

Jean-Louis Servranckx: point of entry is a little more complex. We are putting all our efforts on it, and we are also expecting to have substantial completion before the end of the year. What does it mean? It means that from the moment we are at substantial completion, the construction part of those schemes is over. The consequence for us is that an eventual variance on cost of completion is now extremely limited on those projects. This being said, as you have noticed from what I have been saying a few minutes ago, the way we are going to settle our disputes, our claims, the way we are going to negotiate with our client is our critical focus for the five to six months to come. This is a problem of revenue.

The main bridge is over. I 75. I mean, is practically over the just a pedestrian bridge that remain to be finished. The US point of entry is a little more complex. We are putting all our efforts on it, and we are also expecting to have substantial completion before the end of the year. Yeah.

What does it mean?

It means that from the moment we are at substantial completion, the construction part of zooms is over.

And the consequence.

For us, is that?

And eventual variance on cough that completion.

Is now extremely Limited.

On those projects.

this being said that you have noticed from what I've been saying a few minutes ago, the way we are going to settle our disputes, our claims, the way we are going to negotiate with our client, is our

critical.

Focus.

For the 5 to 6 months to come. This is a problem of

Jean-Louis Servranckx: What I can also add is that those three projects really represent an astonishing technical performance for Aecon, and our clients know it perfectly. I hope I have answered your question, Yuri.

Revenue.

what I can also add is that those 3 project,

Really represent an astonishing technical performance.

For Aon.

And our clients.

Know it.

Perfectly.

Adam Borgatti: Yeah, maybe just a quick follow-up. In terms of pursuing the claims and stuff like that, is that going to be a noticeable overhead cost next year?

I hope our answer to your question, you read. Yeah, maybe just a quick follow-up. I mean in terms of pursuing the claims and, um,

Jean-Louis Servranckx: Not that much. Not that much. Most of our claims are on the table now. There is just a few adjustments because of the few weeks remaining. The idea is to find a fair and reasonable resolution and not to go to lengthy procedures. There is no real overhead affected by this resolution. After substantial completion, we go to maintenance. You probably remember that none of those P3s has a risk of traffic. It is just a pure maintenance and availability issue on which we have been working now for the last two to three years on all projects.

Stuff like that. Like it it is is is that um is that going to be a noticeable overhead cost next year?

Or not that much, not that much. I mean, most of our claims are on the table. Now, there is just a few adjustment because of the few weeks remaining,

The ID is to find.

Vulnerable resolution and not to go to lensy procedures. So there's no real overhead.

Adam Borgatti: Okay. So that's my last one. Not to belabor the point, but the underlying margins that you've been reporting the last couple of quarters, excluding the legacy charges, would you say that's a good proxy for what your margins might look like in construction in 2026?

4 projects.

Okay, so that's my last 1. Um not to be labor the point but um the the underlying margins that, that you've been reporting the last couple of quarters, you know, excluding the Legacy charges. Um,

Jerome Julier: Hey, Yuri. It's Jerome speaking. Look, there's a couple of things that are informing the evolution of the margin profile. I'll touch on those briefly because I'm sure it's a question that others probably are in the queue that I'm going to ask as well. Number one, I'm on page seven of the conference call presentation. We note there the trailing 12-month June 30 EBITDA margin for the, and I'm focused on the construction business, was 8% last year, and this year, it's 6.8%. Informing that shift is a number of items. One was last year, the teams were furiously at work on progressive elements of some of our PDB projects, working on design implementations, and we had several other relatively strong margin projects that were being executed and closed out at that point, which were positive. The absence of those has an impact on the margins today.

That's a. Would you say that's a good proxy for what your margins might look like in construction in 2026?

Hey, your age uh, drum speaking? Yeah, look, um

Jerome Julier: Number two is we've called out that the performance in some of the western areas of our civil practice are just not up to standards today. That's being addressed. Our expectation is that we'll close out roughly by the end of the year. This isn't kind of like a massive piece, but it's just an explanatory factor that ties into it. The final piece is a lot of the work that we're executing today has a much more appropriate risk balance in terms of conditions that are more aligned with Aecon's risk appetite. I remind everyone that the counterparties that we procure from us are very sophisticated, very capable, and very intelligent. There's no free lunch in the world where we operate in kind of massive project delivery landscape, right? We're talking about OPG, Metrolinx, major global mining corporations. They're smart partners.

There's a couple things that are informing the evolution of the margin profile. Um, so I'll touch on those briefly because I'm sure it's uh, question that others probably are in the qap gonna ask as well. So, number 1, um, I'm on page 7 of the conference call presentation. We we note there the trillion 12 months June 30th and I'm focused on the construction. Business, uh, was 8% last year and this year it's 6.8% and so informing that that shift is is a number of items 1 was last year. The teams were furiously at work on um you know, Progressive elements of some of our pdb projects um working on design implementations and we had several other, you know, relatively strong margin projects that were being executed and closed out at that point, which were positive. So the, the absence of those, um, has an impact on the margins today, number 2 is we we've called out that, you know, the performance and uh, some of the western areas of our civil practice

Our standards today are just not up to par, and that's being addressed. Our expectation is that we'll close out, you know, roughly by the end of the year. This isn't kind of like a massive piece, but it's just an explanatory factor that ties into it. And then the final piece is that a lot of the work we're executing today has a much more appropriate risk balance in terms of conditions that are more aligned with an 800 risk appetite.

Jerome Julier: They know how this works, and they also understand that there needs to be an appropriate balance between profitability and risk. That's also informing an element of the decline in that margin profile. We always want to see more, but for instance, the 6.2% that we posted in this quarter specifically is acceptable, but nothing to kind of be excited about. That being said, it just helps inform where the margin profile is going. We're very happy at Aecon to trade a little bit of margin, right? I think in the quarter, we're down 46 basis points in order to take off the table some of the risks that we've historically seen with regards to the legacy projects. Hopefully, that gives a little bit of context.

And, you know, I, I remind you everyone that, you know, the the counterparties that we procure from, you know, that that procure from us, our very sophisticated, very capable and very intelligent. So there's, there's no free lunch in the world where we operate and kind of massive project delivery landscape, right? Like we're talking about OPG Metro Links, um, you know, major Global mining corporations, um, they're smart Partners. They they know how this works and they also understand that there needs to be an appropriate balance, um, between profitability and risk. And that's also informing me an element of the decline in that margin profile. So we're, we always want to see more, um, but you know the like for instance, the 6.2% that we posted in this quarter specifically um is

Adam Borgatti: Yeah, very helpful. I'll turn it over. Thanks.

You know, acceptable but nothing to to kind of be excited about. Um, but that being said, just helps inform where, where the margin profile is going. We're, we're very happy at Akon to trade a little bit of margin, right? Like, I think in the quarter we're down 46 basis points. Um, in order to, to take off the table, some of the risks that we've historically seen with regards to the Legacy projects. Hopefully, that

That gives a little bit of context.

Adam Borgatti: Thank you. One moment for our next question. Our next question comes from the line of Chris Murray from ATB Capital Markets.

Yeah, very helpful. I'll turn it over. Thanks.

Thank you. One moment for our next question.

Alistair MacCallum: Yeah. Thanks, folks. Along those lines, I was wondering if you could talk a little bit about the concessions business and maybe, you know, some of the expectations that we should think of over the next little while. Jerome, I know you alluded to the fact that there are some interesting project pursuits, but also just trying to, you know, maybe, you know, have an idea on how some of those pursuits might flow through, either increase pursuit costs or anything like that as we go through the next year.

Our next question comes from the line of Chris Murray from ATB Capital markets.

Yes, thanks folks. Um, along the line, I was wondering if you can talk a little bit about the concessions business and maybe, you know, some of the expectations that we should think of over the next little while. Um, you know, John, I know you alluded to the fact that there's some, um, some interesting projects but also just trying to, you know, maybe, you know, have an idea on how, um, some of those Pursuits might flow through, uh, either in suit costs or anything like that. Um, as we go through the next year,

Jerome Julier: I will tackle that one. On the concessions business, look, we are very much focused on the value that that portfolio represents. So in broad numbers, there is a quarter billion dollars of equity invested in that portfolio today. These are high-value, long-term cash-flowing assets that are generally untied to certain economic profiles, and we see a lot of benefit from that perspective. In the comparative periods and in the historical periods, one of the things that has benefited the accounting EBITDA associated with our concessions business is really just the management fees and some of the kind of success fees tied to certain projects that have strengthened those results. As we close out the legacy projects, those management fees will fall off. I promise you, economically for Aecon, this is a good thing.

Yeah, I'll tackle that.

Uh, on on the concessions business. I mean, look, we're very much focused on the the value, um, that that portfolio represents, right? So and and Broad numbers, there's a quarter billion dollars of equity. Invested in that portfolio today, these are high value, um, you know, long term, cash flowing assets that are generally untied to to certain economic profiles and we see a lot of benefit from that perspective. Um, you know, it in in a comparative periods, um, and then the historical periods 1 of the things that's benefited is the accounting, ibida associate with our concessions business is really just, uh, you know, management fees. And some of the, the kind of

Jerome Julier: When that falls away, I think we will see a more normalized, leveled performance from an accounting EBITDA standpoint. Our perspective is economic value is certainly maintained and preserved and probably augmented as Jean-Louis mentioned, these legacy projects will move from the construction phase, where they are paying a management fee into the concessions business to effectively a maintenance phase where it is a little bit more solidly performing. The next part is, we have mentioned in the past a number of pursuits that are quite interesting and uniquely aligned to our capability set, one of them being the USVI airports, the two airports that we are currently in negotiations with to finalize that output. The thing that is interesting on that one, we are trying to caution people not to assume that the accounting EBITDA will have an uplift when those deals close. The economic value is preserved.

augmented as, as John, we mentioned these Legacy projects will move from, you know, the the construction phase where they're paying a management fee into the concessions, business to, you know, effectively a maintenance phase where it's uh you know, a little bit more solidly, you know, performing

Jerome Julier: The DCF is unchanged, but the way that the airport concessions practice works in different markets, whether it is a Caribbean state or a U.S. territory or a different region, the way that the concession fees kick in vary depending on when the project is delivered. So in some instances, it might be a project signing. In some instances, it would be during construction. In some instances, it would be when the airports are actually delivered. On that basis, we are just taking a little bit more of a cautious stance on the accounting EBITDA. The economic output of the business remains consistent and strong.

The the next part is, you know, we, we, we, we have mentioned in the past, uh, a number of Pursuits that are, you know, quite interesting and, you know, uniquely aligned to our capability set 1 of them being the USVI, uh, airports. Um, the the 2 airports that were currently negotiations with to, to finalize that that output. Um, the thing that's interesting on that 1. Um, and like, you know, I I we're trying to caution people not to kind of assume that the accounting I will have, you know, an uplift when those deals closed. The economic value is preserved. Like the DCF is unchanged but the way that the, you know, airport concessions, practice Works in different markets whether it's Caribbean state or a US Territory or, you know, a different region. The the way that the concession fees kick in vary depending on when the Project's delivered. So in some instances, it might be a project signing some instances, it would be during construction, some instances would be when the airports are actually delivered and so

Alistair MacCallum: Okay. That is helpful. My other question was just sort of thinking about, you know, the revenue stack all in as we go into next year. Certainly, your bookings have been remarkable on whether or not they can maintain at this pace. We are now at backlog levels. Even when I think, when I start looking at the next 12 months of revenue, you think about recurring revenue and everything there. Any thoughts on, and I want to be careful about, making sure that we get the written backlog duration in the right place. Is there anything to believe that you would not see some pretty substantial revenue growth as we go into next year? Or is there something that maybe is longer duration in the mix? Any color you can give us on how to think about next year's revenue stack would probably be appreciated.

We're just taking a little bit more of a cautious stance on the accounting. EA, the economic output of the business, remains consistent and strong.

Jean-Louis Servranckx: Yes, Chris. As you can see, there is a math calculation on all this. Our backlog is around $11 billion. Our recurring revenues are stable. Our bid pipeline, and we may come back to this after, we think that the turbulence that we can see between U.S. and Canada will create quite a number of opportunities, quite interesting for Aecon. This means that we are on a growing path, evidently, which is more important for us. What is totally in line with our strategy, and this is why we are very happy about it, is that 76% of this backlog is under collaborative contracting mode. It is variable pricing. You probably remember that five to six years ago, we were a little below 30%. We have totally inversed the situation. This gives us obviously a much better margin predictability.

Okay, that's that's helpful. Um, my other question was just sort of thinking about, you know, kind of the revenue stack, um, all in as we go into, um, as we go into next year, I mean, certainly you're the bookings have been, you know, remarkable and whether or not they can, you know, maintain that this page. I mean, we're now we're now a backlog levels and even when I think, you know, I start looking at the, uh, you know, the next 12 months of Revenue, you think about recurring revenue and everything you're there? Um, any thoughts on on? You know I want to be careful about, you know, making sure that we get to backlog duration kind of kind of the right place. But you know, is there anything um to believe that you wouldn't see some pretty substantial Revenue growth as we go into next year or is there something that maybe is is longer duration in the mix? So so many colors you can give us on how to think about next year's Revenue stack would be probably appreciated.

Yes, please. So as you can see there is a um, a m

Um, calculation on all these we our back below is around 11 billion. Um

Our recurring Revenue.

Stable, our big Pipeline, and we may come back to this. After we think that the turbulence is that we can see between US and Canada, will create quite a number of opportunities. Quite interesting for Aon. Uh, just make that we are on a growing path. Evidently what is more important for us and what is totally in line with our strategy. And this is why we are very happy about it. Is that 76% of these backlog is under collaborative. Uh,

Contracting mode. It's it's variable pricing. You probably remember that.

5 to 6 years ago, we were a little below 30%. We have totally inversed the situation, so this give us

Jean-Louis Servranckx: I know some questions that have been asked for the last few months is, yes, those jobs give probably less capacity of write-ups, but evidently, there is much less capacity of write-downs. This is what our strategy was about. In this $11 billion, we still do not have until a few other progressive design builds, quite nice, like the Port of Contrecoeur or all the elements of the gold transit area project that is going to be phased, but that will happen. You probably have seen that one month and a half ago, it was inaugurated by the government of Ontario, the Woodbine first bundle of work under on-core. Yes, it is a path for growth, and it is perfectly aligned with our strategy. For us, it is a path toward much better margin predictability.

Obviously, a much better margin, predictability, and I know some questions that have been asked for the last few months is, yes, whose job gives probably less capacity of write-ups but evidently.

There's much less capacity of write downs, and this is what was our strategy about in this 11 billion. We still do not have enter a few other Progressive design, build quite nice. Like uh the port of contractor or all the element of of the Go Transit area project that is going to be saved, but that will happen. I mean, you probably

I've seen that uh 1 month and a half ago, was inaugurated by the government of Ontario. He would bind first bundle of work under and their encore

so yes, it's a path for growth.

And it's perfectly aligned with our strategy, and for it, it's a path toward much better margin predictability.

Alistair MacCallum: Okay. I'll leave it there. Thanks, folks.

Adam Borgatti: Thank you. One moment for our next question. Our next question comes from the line of Sabahat Khan from RBC Capital Markets.

Okay. Um, I'll leave it there. Thanks folks.

Thank you. 1 moment for our next question.

Sabahat Khan: Hi. Good morning. Thanks for taking my question. My first question is around your margins. You have talked about your Western Canada operations have weighed on your margins. You have also talked about some of your urban transportation solutions from mass transit projects that have also impacted the margins. Can you please talk about what these mass transit projects are?

Our next question comes from the line of Ash Agarwal from CIBC Capital markets.

About uh some of your Urban Transport Solutions from Mass Transit projects that is also impacted the margins. Can you please talk about this what these mass transit projects are

Jerome Julier: Sure. Yeah. Hey, Jerome. The western civil projects, I mean, they're civil projects. We do not call out at Aecon specific projects for a variety of commercial reasons. What I will say is the projects in question have similar themes to them. They are ones that were entered into several years ago. They are fixed price in nature. The execution associated with them just is not up to the standards to which we want to hold ourselves to. So it has a negative impact on the overall margin pool associated with our civil practice, which is a strong practice. We just think it is prudent to call it out. The projects in question, we anticipate to be finalized by the end of the year.

Sure, yeah. Hey, um, issues drums. Um

Jerome Julier: Again, we do not think it is particularly constructive to put too much of a spotlight on it. It is just one of a couple of factors that inform the overall profitability of the business. For everything that we want to talk about western civil, we can talk about strong performance of nuclear across markets, not just in Ontario. We can talk about the utility operations practice continuing to grow. So we try to be balanced with that. Finally, on the urban transportation solutions side, look, we are executing projects in a couple of jurisdictions. Today, the big ones on the roadmap are the two LRTs in Ontario. We are working on the REM project in Montreal. Scarborough is the other one, which was signed in February, and we have already begun operations on it. That is a pretty significant one.

The Western civil projects. I mean there's several projects we we don't call out at Aon um, specific projects um, for for a variety of commercial reasons. But what I'll say is the the projects in question, um, have have similar themes to them. Um, they're ones that were entered into several years ago. Uh, their fixed price in nature and then the execution associated with them, just isn't up to the standards to, which we want to hold ourselves to. So, um, it has a negative impact on the overall margin pool, uh, associated with our civil practice, which is a strong practice, um, and so, you know, we, we just think it's prudent to to call it out the projects in question. Uh, we anticipate to be finalized by the end of the year, again. We don't think it's like particularly constructive to put too much of a spotlight on it. It's just, you know, 1 of the couple of factors that that inform the overall profitability of the business. Um, you know, for everything that we want to talk about Western civil, we need to talk about strong performance of of nuclear across markets, not just in Ontario, we can talk.

Talk about the utilities practice, continuing to grow. We try to be balanced with that.

Jerome Julier: The nature of those projects just has a more attenuated margin profile. Also, it is probably worth noting we actually have one in Western Canada as well that we were out visiting not long ago, which was the Surrey Langley Stations project, which is an extension of the Skytrain in Vancouver. So a long way of saying we are really proud of our urban transportation solutions practice area. I think the teams are doing a really good job. The projects that are closer to the very end or very start tend to have a slightly different margin profile than those who are in kind of the middle of the belly.

And then finally, on on the UTS side, um, look, we're, we're executing projects in, uh, a couple of jurisdictions. Um, today, the, the big ones on the road map are the the 2 arties in Ontario. We're doing, we're working on the rme project in Montreal. Um, and you know, there's a scar bro is the other 1, which was signed in February, and we've already begun operations on it. That's a pretty significant 1. And so just the the nature of of those projects just have a, a more attenuated margin profile. Um, and then also, it's probably worth noting. We actually have 1 in western Canada as well that we were, um, out visiting not long ago, which was, uh, 30 Langley stations, um, project, uh, which is an expain extension of the sky, Train in Vancouver. So

Long way of saying, um we're really proud of our Urban Transportation Solutions practice area, like the teams are doing really good job. Um the projects that are closer to the very end are very start tend to have, you know, a slightly different margin, profile than those who are in kind of the the middle of the belly.

Adam Borgatti: Thank you.

Sabahat Khan: Thanks for clarifying that. I have another question on your capital allocation priorities. You did three acquisitions last year, and we are yet to hear any acquisitions for this year. Do you have any plans to get active on the M&A market again? Also, your NCIB is expiring at the end of this month. Do you have any plans to renew your NCIB?

Thank you.

Jerome Julier: Yeah. Maybe I will take a step back and answer that question, maybe with a first-principles approach, which is in the normal course, our business is quite cash generative. Where we stand today is when you are taking project losses, like what we are taking on the legacy projects, that actually involves us cash financing the projects to completion. So that is a drain on capital resources as it stands today. Normalizing for that, i.e., when the projects close out, we will not have that drain. We will probably think about it in this way. So number one is our business is growing. If you think about LTM revenue last year on an as-adjusted basis, so excluding legacy and divestitures, we did about $3.8 billion of revenue, and we are currently sitting at around $4.7 billion. So there has been significant growth, roughly 25% growth in the business.

Thanks for uh clarifying that uh I have another question on your Capital allocation priorities so you get 3 Acquisitions last year and we are yet to hear any Acquisitions for this year. So are you do you have any plans to get active on the amended Market again? And also your ncib is expiring at the end of this month. So do you have any plans to renew your ncib?

Jerome Julier: That growth involves investment in working capital, people, processes, efficiencies, systems, all tied towards increasing the resiliency of how we do our work. The next thing we look at is making sure that we have a really strong balance sheet. In this case, I put the plural on it. So we have a balance sheet for Aecon, and then we have the balance sheet for Aecon Utilities. Part of that focus was evidenced in the quarter where we increased the Aecon side of the house from a $450 million credit facility to a $600 million credit facility just to reflect the overall increase in the size of the enterprise and work programs that we have in front of us. So feed the machine, keep the balance sheet strong, support the dividend program. Clearly, that is an important part of our capital allocation process. Then we actually have effectively a competition.

Yeah, um, maybe uh, yeah, I'll take a step back and answer that question. Um, maybe with kind of a first principles approach, which is, uh, in the normal course, our business is is quite cash generative where where we stand today is when you're taking project losses, like what we're taking on the Legacy projects that actually involved us cash financing the, the projects to completion. So it's um, that's a drain on capital resources, stands today, normalizing for that. IE, when when the Project's closed out we we won't have that train. Um, we we probably think about it in this way. So number 1 is uh our our business is growing. So if you think about LTM Revenue last year uh on a, you know, as adjusted basis. So excluding Legacy investors, we did about 3.8 billion of Revenue um and we're currently sitting at around 4.7. So there's been significant growth. Roughly 25% growth in the business that growth involves investment in working. Capital people processes, efficiency systems, All Tied, towards increasing the result.

And see if of, you know, how we do our work. Uh, the the next thing we look at is making sure that we have a really strong balance sheet. Um, and in this case, I have to put the portal on it. So we have balance sheet for Aon and then we have the balance sheet for Aon utilities, um, part of that, you know, part of that Focus. Um, was it the evidence in the quarter where we increase the Aeon side of the house from 450 million credit facility to 600 million dollar credit facility, just to reflect the overall increase, um, and you know, the the size of the Enterprise and and work programs. So we have in front of us.

So, you know, feed the machine.

Jerome Julier: Capital

Adam Borgatti: between three growth streams. One of them are just general growth capital investments in equipment, opening up new regions. The next one will be growth capital with regards to M&A, which was your question. The third one is growth capital, which is really kind of like value per share growth from the NCIB program. I will say the NCIB program expires back half of the month here in August. Our expectation is that we would look for a renewal through the TSX, and we will look to kind of continue to tactically approach that program based on capital availability. From an M&A front, we remain active, but we are also very particular. We are fussy purchasers. We really care about the teams that we are onboarding into the Aecon ecosystem. There needs to be an appropriate value for the businesses that we are looking to.

Example, with regards to m&a which was your question and then the third 1's, um, you know growth Capital which is really kind of like value per share growth um, from the ncib program. So I'll say, um, ncfb program expires, you know, back half of the month here in August. Uh, our expectation is that we would look for a renewal through the TSX, um, and we'll look to kind of continue to tactically approach that program based on Capital availability and then from an m&a front, um,

Adam Borgatti: We need to have the right type of operating ethos for those teams. They need to have the same focus on safety. They need to care for their clients. They need to be additive to our overall profile. It ends up being quite tactical. You have got to kiss a lot of frogs before you find a prince. That is a bit of the reason why we have not seen a ton of activity from an M&A perspective. The other part of the ritual is M&A can be, there is integration that is required afterwards. You have to be thoughtful about how these teams are onboarded and brought on to kind of like the Aecon systems and how their approach and processes are Aeconized. That just takes a little bit of time.

We remain active, but we're also, we're very particular like, we're we're I see purchasers. We really care about the teams that we're on boarding into the Aeon ecosystem. There needs to be an appropriate value for, uh, the businesses that we're looking to, we need to have the right type of operating, ethos, for those teams and you have the same focus on safety and easy care for their clients. Um, they need to be additive to our overall profile and so it ends up being quite tactical. Um, and so that, you know, you got to kiss a lot of frauds before you find a prince. And so that's, that's a bit of the reason why we haven't seen a ton of activity from 118 perspective. And then the other part of this rule is, um,

Adam Borgatti: You do not want to kind of rush and swamp the entire environment and then find yourself not extracting the value and benefits from the onboarding of these teams that you thought you were going to get. Hopefully, that gives you a little bit more context.

M&a can be uh, you know, there's there's integration that's required afterwards. You have to be thoughtful about how these teams are on boarded and brought on to kind of like the Aeon systems and you know, how their approach and processes are awonde. And and that just takes a little bit of time. And we, you know, you don't want to kind of Rush and swamp the entire environment. Uh and then find yourself not extracting, the the value and benefits from, you know, the onboarding of these teams that you thought you were going to get. Hopefully that gives you a little bit more context.

Adam Borgatti: Thank you. I'll get back in the queue.

Thank you. I'll get back in the queue.

Jerome Julier: Thank you. One moment for our next question. Our next question comes from the line of Benoit Poirier from Desjardins Securities.

Thank you. 1 moment for our next question.

Adam Borgatti: Good morning, Jens. First question. Obviously, when we look on the nuclear side, strong expertise with lots of excitement around the globe. Could you maybe provide an update on the discussion you're having and what you're seeing in terms of bidding pipeline for nuclear work?

Our next question comes from the line of Benoit from dejaren securities.

Jean-Louis Servranckx: Yes, Benoit. I am going to do it on nuclear. We are very happy with our nuclear sector. As you have noticed, I mean, we are now refurbishing 100% of the Canadian fleet. Maybe at Darlington was the last unit, at Bruce, and we have begun now at Pickering. In addition, at Pickering, we have entered into the turbine rehabilitation, which is very interesting for us. It is going to be an add in our competency, and we are here in partnership with Siemens. Regarding new build, you have noticed we have added a little more than $1 billion. It was $1.3 billion for our share of the small modular reactor in Darlington. This is the first of a series of four. We just have to be good with the first one, and we are extremely focused with these jobs that fit perfectly with our capacity.

Yeah, good morning, Jensen. Um, yeah, first question. Obviously, when we look on the nuclear side, there is strong expertise with a lot of excitement around the globe. Could you maybe provide an update on the discussions you're having and what you're seeing in terms of the bidding pipeline for nuclear work?

Yes, but well uh I'm going to do it on, on nuclear. We we are very happy with our nuclear sector. Uh, as you have noticed, I mean we are now with fishing 100% of the Canadian feet.

Maybe at D with the last unit at Bruce and, uh, we have begin now, at Pickering in addition at Pickering, we have interned in, in, in, to the, the turbine, uh, Rehabilitation which, uh, which is very interesting for us. It's a, it's going to be an add in our competency. And we are here in partnership with, uh, with seems, um, regarding, uh, new build. You have noticed, we have added a little more than 1 billion. It was 1.3 billion for, uh, our share of the small modular.

Reactor uh in Darlington. This is the first of a series of 4. We just have to be good.

Jean-Louis Servranckx: Obviously, for OPG, for the province of Ontario, and for us, what we want to do is just for SMRs. There is also a lot of movement and preparation on the 1,000-size reactor in Ontario. It is going to be with Bruce Power, and it is going to be with OPG. At this stage, we are working with both our clients in predefinition, pre-constructability, very close. As I tend to say, we are totally technology-agnostic, and we can work with any technology. SMR is a GI-Touchy technology. The actual reactors in Canada are CanDo technology. It is not a problem. It is not a problem for us. In the U.S., we are growing extremely nicely.

With the first one, we are extremely focused on these jobs that fit perfectly with our capacity. But obviously, for OPG, for the province of Ontario, and for us.

What we want to do is, is is just for smrs.

There's also a lot of movement and preparation on the 1,000 size reactor uh, in Ontario. Uh it it it's going to be with, with Bruce Power. It's going to be with, with OPG. So, at at this stage, we are working with both our clients in predefined constructibility very close. As I tend to say, we are totally technology agnostic and we can work with any technology SMR is a GI touchy technology. Uh, the actual reactors in Canada are can do technology. It's not a problem. It's not a problem for us.

Jean-Louis Servranckx: You probably remember a few years ago, we had quite a very small specialized welding company, which name was WOX, which is now ramping up in terms of activity, profitability, knowledge, quality of the team, quite nicely. We work for the Federal Department of Energy. We work for Dominion on a major component replacement. We have now opened and strengthened our offices in Charlotte. The future of nuclear in the United States, you have probably followed during the last two months everything that has happened on the other side of the border. The future of nuclear in the United States is extremely interesting, and we are ideally positioned with Aecon at this stage.

Adam Borgatti: That is a great question, Jean-Louis. Maybe quickly on the financial front, obviously, with a strong backlog, upcoming growth, how should we be looking at 2026 in terms of working capital movement?

At this stage.

That's a great call, Zanui. And maybe quickly, um, on the financial front, uh, obviously with a strong backlog and upcoming growth, um, how should we be looking at 2026 in terms of, uh, working capital movement?

Alistair MacCallum: So, Benoit, it's Alistair. You see through the first half of the year, we've increased our working capital because of higher revenue. The expectation for the back half of the year is that we will continue with the back half of working capital being up slightly. Then 2026, it's hard to view it at this stage. I mean, you know in construction that working capital can be kind of lumpy. I would say, it tends to follow our typical path where we build working capital in the first half of the year and then unwind working capital in Q4. I think the expectation now is kind of hard to predict because it will also depend on how some of these settlements go. At this stage, I think we will hold off on giving any guidance on it, and we can talk about it later in the year as things unfold.

so,

That why it's Alistair? Um,

You see, uh, through the first half of the year, we've, we've

we've increased our working capital because of higher Revenue, the expectation for the back half of the year is is that will continue

with the back half of working capital being up slightly.

Adam Borgatti: Thank you very much, Alistair.

And then 2026. It's hard. Hard to view it at this stage. I mean, you know, in construction the working capital can be be kind of lumpy. I, I would say, you know, uh, it it tends to follow our typical path where we build working capital in the, in the first half of the year and then unwind working capital in Q4. I think the expectation now um, is is, is kind of hard to predict, because it'll also depend on how some of these settlements go. So, at at this stage, um, you know, I think we'll, we'll hold off on giving any any guidance on it and, and we can talk about it later in the year as things unfold.

Alistair MacCallum: You're welcome.

thank you very much, uh, Lister

Jerome Julier: Thank you. One moment for our next question. Our next question comes from the line of Maxim Saichez from National Bank Financial.

You're welcome.

Thank you. One moment for our next question.

Sabahat Khan: Hi. Good morning, gentlemen. I was wondering if it's possible to get a bit of an update around the power business in the U.S. and the transmission opportunity. Anything you can provide color on, that would be great. Thanks.

Our next question concerns the line of Maxim site Chev from National Bank Financial.

Jean-Louis Servranckx: Yeah. What is happening in power is extremely interesting. In Canada, but also in the U.S., it is now obvious that the electricity demand is expected to double by 2050. There are a lot of parameters there, but it is about population growth. It is about electrification of systems. More electrical vehicles, more mass transit and transportation going to electricity, heat pumps, and also industry growth. This is one of the biggest parts in Ontario. Energy intensive, I would say, industrial activity and data centers, but also a lot of advanced manufacturing that requires more and more electricity. So new generation capacity that is important, new transmission capacity, not only within a province in Canada, but also between provinces. It is evident that at the national level, we need more consistency in our grid. It is also about storage.

Hi, good morning, gentlemen. I was wondering if it's possible to get a bit of an update around uh, the power and business in the US and the transmission opportunity. Um, so anything you can you can provide color on that to create a great thanks.

Yeah, I mean the what's happening in power is extremely interesting uh in Canada but also in US.

Is now, obviously the electricity demand is, is expected to to double by 20150. I mean, it's a, it's there's a lot of parameters there but it's about population growth. It's about electrification of systems. I mean more electrical vehicle, more mass transit and transportation going to electricity heat pumps and also industry growth. I mean, this is 1 of The Biggest Part in in, in Ontario, energy in Kentfield, I would say, um,

Industrial activity IA and, and data centers. But but also a lot of advanced manufacturing that requires more and more electricity. So

New generation capacity that is important. New transmission capacity, not only within a province in Canada, but also between provinces. Uh, it's evident that at the national level. We need more consistency uh in uh in our in our grid.

Jean-Louis Servranckx: We told you about ANEIDA, 250 megawatts, but we have also finalized during the quarter two other battery storage, each one around 100 megawatts. Aecon is ideally positioned. When we speak more specifically about the United States, energy, we are growing nicely with our nuclear operations activity. You remember that utilities two years ago began to work in the United States. It is a mix of acquisition and of organic growth with partners. There is a lot to do. To finish with the United States, you can hear some noises about what is going to happen. But at the end of the day, the vocabulary can change. We speak less about climate change and more about extreme weather events. We speak less about renewable energy, but more about energy security and resiliency. But at the end of the day, the works remain, and it is a very high load.

It's also about storage. We we told you about on Ada uh 250 megawatt but we have also finalized during the quarter 2 of battery storage. Uh each 1 around 100 megawatt, Akon is ideally positioned. When we speak more specifically about United States

Uh, energy. I mean, we are growing nicely with our nuclear activity. You remember that utilities two years ago, uh, began to work in the United States. It's a mix of acquisition.

And uh, of organic growth with, uh, with Partners. There's a lot a lot to do. Uh,

Jean-Louis Servranckx: Once again, we have been preparing Aecon during the last three years about it. It is coming, and we are ideally positioned.

To finish with the United States. You, you can. I mean, here's some noises and about what what is going to happen, but but but at the end of the day, the vocabulary can change. I mean we we speak less about climate change and more about extreme weather and events. We speak less about renewable energy, but more about energy security and resiliency, but at the end of the day, the works remain and it's, it's a very high load once again, I mean, we have been

Sabahat Khan: Okay. That's a caller. You're not seeing any slippage in terms of contract allocations as there is some pushback around, you know, the ability to pass on rate-based increases to sort of the ultimate consumers. What is your, I guess, sense around how quickly these projects actually do ramp up in the U.S.?

Preparing the acorn during the last 3 years about it, it's coming, and we are ideally positioned.

Jean-Louis Servranckx: What we can see, obviously, the last decisions of the presidential level in the U.S. have created some uncertainty, but there is not one single week where you do not have a deal or an agreement that is getting signed. It means that I think it is coming, I would say, surely back to a kind of new normal. Yes, we have seen during last year some of our projects that were under pursuit being pushed to the right. My opinion is that it is going to quieten down. In front of a question about our eventual vulnerability in front of all this, I just remind you that our backlog is 76% flexible price, so we are covered about tariffs and all this kind of stuff. Aecon is more and more American.

On a rate based increases to sort of the the ultimate consumers, like, what what is your, I guess sense, uh, around how quickly these projects actually do run properly us.

I mean, what, what we can see obviously, um, the last decision of the presidential level in us, have created some uncertainty, but there's not 1 single week where you don't have a deal or an agreement that is getting signed. It means that I think it's coming uh,

I would say surely uh, back to

To a kind of new normal. Yes, we had seen during last year. Some

some of, uh,

Jean-Louis Servranckx: We are extremely prudent, but we have more boots on the ground, more capacity to produce, more capacity to execute. Our works are essential in nature. So I just think that it is going to settle down and come back to the reality, which is that there is a huge need for power infrastructure in the U.S. and in Canada.

Our projects that were under per se being pushed to the right. My opinion is that it's going to quieten down and and in front of I mean a question about our eventual vulnerability in front of all this. I mean I I just remind you that our backlog is 76% flexible price so we are covered about tariffs and all those kind of stuff. Uh aeon is more and more American we are extremely prudent but we have more boots on the ground. More capacity to produce more capacity to to execute. Our works are essential in uh in nature. So I just think that it's going to settle down and come back to the reality which

she said there is a huge need

Sabahat Khan: Yeah. Yeah, that's a good call. One quick follow-up for Jerome Julier, if I may. I realize, obviously, you're going to talk about the commercial terms, etc. Can you remind us of the contract structure or the risk profile on the new kind of nuclear builds, etc., that you're underwriting right now? Thank you.

for power infrastructure in the U.S. and in Canada.

Adam Borgatti: Yeah. Generally speaking, variable target price style contracts with incentives associated with them, right? We have been working with the clients on these for quite a while. So we have a pretty good handle on scheduled performance required. These things are huge, right, Max? It is not just like a couple of men and women who are just kind of punching around in Darlington. It is a full mobilization effort. There is a lot of white-collar work that is happening, design, offsite fabrication happening at Aecon facilities that are in southwestern Ontario. So overall, yeah, target price contract style, not fixed price.

Yeah, that that's the color. And then, 1 quick follow up for, for Jerome of. If I may, I, I realize. Obviously, we cannot talk about, you know, the commercial terms Etc. But, um, can you remind us, um, the uh, contract structure or the risk profile on the, on the new kind of nuclear bills Etc that that you aren't running right now? Thank you.

Yeah, uh, generally speaking, variable, uh, target prices, stock contracts with incentives associated with them, right? Um, and we've been working with the clients on these for quite a while.

Um, and so we have a, you know, pretty good handle on.

Sabahat Khan: Okay. Wonderful. Thank you so much.

You know, schedule performance required, these things are huge, right. Max like it's not, it's not just like a, you know, a couple of what men and women who are just kind of punching around and and Darlington like it's a full mobilization effort. Um, there's there's a lot of White Collar work that's happening design of, you know, offsite fabrication happening at Aon facilities that are, you know, it's South Western Ontario. Um, so oh overall yeah, Target price contract style, not fixed price.

Jerome Julier: Thank you. One moment for our next question. Our next question comes from the line of Michael Tupholme from TD Securities.

Okay. Wonderful. Thank you so much.

Thank you. 1 moment for our next question.

Adam Borgatti: Thank you. Good morning.

Our next question comes from the line of Michael top home from TD securities.

Jean-Louis Servranckx: Morning.

Thank you. Good morning.

Adam Borgatti: Jean-Louis, you gave a lot of very good detail earlier in the call about the status of your three legacy projects in terms of the stage you are at with those three. I guess the question I have is, with your having pushed out the expected date for substantial completion for all three of these to year-end from September 30th, can you just speak to your level of confidence that all of these projects will, in fact, be done by year-end? It sounds the way you laid it out as though there is a very sort of organized fashion here in which this work will be completed. It frankly did not sound like there is much risk of further slippage, but just trying to get a sense from you as to how we should think about that risk.

Good morning.

Um, Jean Louie. You gave a lot of uh, very good detail earlier in the call about the, uh, status of your 3 Legacy projects in terms of, um, you know, the stage you're at with, with those 3. I guess the, the question I have is

Um, with your having pushed out, the expected date for substantial completion, for all 3, uh, of these to year-end from September 30th.

Um,

can you just speak to your your level of confidence that that all of these projects will in fact be done by year end? I mean, it sounds the way you laid it out as though, there's a very

Sort of organized fashion here in which this work will be completed. Frankly, it didn't sound like there is much risk of further slippage, but I'm just trying to get a sense from you as to how we should think about that risk.

Jean-Louis Servranckx: What is important to know is that we are not the only party in this story, especially on Eglinton and Finch. You probably remember we build and then we maintain, but we do not operate. TTC is operating. The fleet, for example, has been bought directly by Metrolinx, the train. We are not alone, but there is, and there has been for the last few months, an absolute alignment between all parties to get it done now and to have the parameters of substantial completion being much clearer. The way we are going to bed in all the operation periods, the way we are going to transition between construction, testing, and commissioning, and operation and maintenance is much, much clearer. I would tend to say, yes, it may fluctuate by a few weeks.

Okay. Uh, what is important to know is that we are not the only party in this story, especially on Eglinton and Sage. I mean, you probably remember we built it.

And then, we maintain, but we don't operate. I mean, TTC is operating and and the fleet for example, has been brought directly by by Metro links. I mean, the trains. So we are, we are not alone but there is an

Jean-Louis Servranckx: What you have seen on our write-down on those two projects, Eglinton and Finch, is just a consequence of this fluctuation. I really think we are now at the end of the game on this one. Gordiao is a little different. We are not yet, I would say, completed on the U.S. point of entry. The relation with the U.S. border agency, as you may imagine, is not extremely easy. It is also a wonderful tool for trade between the U.S. and Canada, but it is probably not the best moment for this bridge to be open. There may be some fluctuation during the weeks to come. This being said, I do not see any reason for Aecon and for the construction and capacity to maintain this infrastructure tool. I do not see any reason that this may be pushed after the end of the year.

Brought down, I mean on those 2 projects at Lincoln and Fitch is just a consequence of this, I mean, of this situation, but I, I really think we are now. Uh, we are now at the

on this 1 GA is a little different. We we are not yet. Uh,

I would say, uh, completed on the U.S. point of entry. The relation with the U.S. border agency, as you may imagine, is not extremely easy. Uh,

And it's, it's also, I mean, it's a wonderful tool, uh, for trade between the U.S. and Canada, but it's probably not the best moment.

Uh, for this bridge to be open, there may be some fluctuation, I mean, during the weeks to come.

Uh, this being said, I do not see any reason. I mean, uh,

For Acorn and for the construction and capacity to maintain this infrastructure tool, I do not see any reasons that this may be pushed.

After the end of the year.

Adam Borgatti: That is a very good question. Thank you for all of that. The second question is around some opportunities specifically in the defense area. You have an incredibly strong backlog, a lot of strength in a variety of end markets you are targeting, but we have heard a lot about increased defense spending. I just wanted to get your sense as to how you see Aecon as potentially positioned for any work in that particular area.

That's very good caller. Thank you for, for all of that. Uh, Second question is um,

There are some opportunities specifically in the defense area. I mean, you have an incredibly strong backlog, a lot of strength in a variety of markets you're targeting. But we've heard a lot about increased defense spending.

Jean-Louis Servranckx: Yeah. This is what we call sovereignty and defense future business. We think it is not going to come from Friday night to Monday morning. But what is going to come, I mean, probably very quickly, is a lot of rehabilitation of existing bases and a lot of additional allocation for people and education of people, preparation of people. This being said, we are getting ready for the step further. The step further are new bases in the north, a new way of interception. I mean, it may be the Golden Dome part for Canada or some different system, but they will be, we are convinced, in terms of defense. Also in terms of sovereignty with special metals, special minerals, capacity to trade better horizontally than vertically, we can see quite a number of interesting work to come.

Just wanted to get your senses to, um, you know, how you see Akon is potentially positioned for, for any work in that particular area.

Yeah, this is what we call summering and and, and defense.

Um, future business. We think it's not going to come from Friday night to Monday morning. That what is going to come? I mean, probably very quickly is a lot of Rehabilitation of existing bases and uh, a lot of additional allocation for people.

And the education of people preparation of people. These being said, we are getting ready for the step further, the step further, our new bases, in the north and new way of interception. Uh, I mean, it may be the golden dome of part for Canada or some different system, but they will be, we are convinced in terms of, of Defense,

Jean-Louis Servranckx: It will be in a few years, but that is not a problem. I mean, as I have said, we have prepared ourselves for the power wave that we are seeing at the moment three years ago. We are just preparing Aecon for what is going to happen in defense in two, three, four years ago. With the backlog that we have at the moment on the table, I am not worried at all about the top line for Aecon.

And also, in terms of sovereignty with special metals, special minerals, and our capacity to trade, we are better horizontally than vertically. We can expect quite a number of interesting developments to come. It will be in a few years.

Adam Borgatti: Thank you. I will leave it there.

But that's not a problem. I mean as as I said, we have prepared ourselves for the power wave that we are seeing at the moment 3 years ago, we are just preparing a con for what is going to happen in defense, in 2 3, 4 years ago and with the backlog that we have at the moment on the table, I'm not worried at all about the top line for Aon

Thank you. I'll leave it there.

Jerome Julier: Thank you. One moment for our next question. Our next question comes from the line of Frederic Bastien from Raymond James Limited.

Thank you. 1 moment for our next question.

Our next question comes from the line of Frederick Bastion from Raymond James Limited.

Frederic Bastien: Good Friday, everyone.

Adam Borgatti: Good Friday, everyone.

Adam Borgatti: Hello.

Good Friday, everyone.

Frederic Bastien: Yes. Would you mind sharing, maybe presenting somewhat of a report card on the extreme and united deals? Just wondering whether these acquisitions are meeting your expectations.

Hello.

Um, yes, would you mind sharing, uh, maybe presenting, uh, somewhat of a report card on the Extreme and United deals? I'm just wondering whether these acquisitions are meeting your expectations?

Adam Borgatti: I will take that one, Fred. I have been told I have really long answers, so I will try to keep it short. The answer is yes. We are really pleased with the operational performance of Extreme. The team there, the level of integration that we have pursued is appropriate for the structure. We have mixed teams. We have kind of cross-deployed resources for things like storm response. They continue to have a very strong position with their primary client, DTE, who has expanded capital budgets. We are really happy with what that team has done. We are really happy with what the utilities team has done on our side, on any side of the border, to support them as well. It has worked quite cohesively. United, we are kind of in month seven of the partnership, and it is going well.

Yeah, I'll, I'll I'll take that. I'll take that 1 Brad. Um,

I've been told that I have really long answers, so I'll try to keep it short. So the answer is yes.

Um we're really pleased uh with the operational performance uh of Extreme as the the team there. Uh the, you know, the the level of integration that we've pursued is, is appropriate for the structure. We have

Adam Borgatti: It is clear that that was a carve-out of a carve-out. That team now being part of a focused enterprise, then being core to the execution that we undertake. Obviously, the privileged position that we have within the nuclear space just affords the entire nuclear envelope that we have within Aecon to leverage revenue and capability synergies. Overall, we are really happy. Again, all of these things were thoughtfully sought out. They are both part of non-competitive processes where we spend a lot of time really getting to understand their teams. So far, it has kind of worked really well. Overall, we are pleased with it. Like with anything, we hold ourselves to account. There are certain areas where we could probably refine some of the approaches that we have from an integration standpoint and continue to make sure that we are cross-selling and maximizing our revenue opportunity.

Days just afford. The entire, you know, nuclear envelope that we have, within aeon to leverage, you know, revenue and capability synergies. So overall, like we're really happy. Um, again, all of these things were, you know, softly sought out. Um, they were all part of, you know, non-competitive processes where we spend a lot of time really getting to understand their teams, and so far, it's kind of worked really well. So, you know,

Adam Borgatti: That is kind of like at the margin, I would say overall, we grade ourselves relatively well from that standpoint. We also had the Anchor Power Constructor acquisition that was folded in very quickly. I think the teams are very happy to be part of a business that is uniquely focused on that outdoor electrical. I will try to stop there. I could talk for hours about this stuff.

At least with it. Um, you know, like with anything, uh, we hold ourselves to account those certain areas where we could probably, you know, refine some of the approaches that we have from a, an integration standpoint and, you know, continue to make sure that we're, you know, cross-selling and and and, you know, maximizing, our Revenue opportunities. But that's kind of like at the margin. I say, overall, um, you know, we we create ourselves relatively well, from that standpoint. Um, we, we also had the, a power contractor, um, acquisition, um, that, that was folded in very quickly. And I think the teams are very happy to be part of

General business. That's, you know, uniquely focused on that outdoor electrical.

And so, yeah.

Frederic Bastien: Okay. I appreciate it. Building on this, are you actively pursuing other deals right now, or just pausing and trying to really focus on the legacy projects and get them past completion? Just wondering where your mindset is on M&A.

Adam Borgatti: Yeah. I mean, look, the focus on the legacy projects is a critical A1 priority for the entire Aecon team. That doesn't excuse us from being able to operate the business in the normal course, right? If the focus was uniquely on trying to close out the legacy projects, we wouldn't have expanded our backlog by a billion dollars on that basis, right? I think we're, this is one where we're walking and chewing gum, no problem. Adam Borgatti, who's here and the Head of IR, also the Head of Corporate Development, remains very active. We've got pretty particular parameters when it comes to acquisitions. It needs to tie into our overall strategy. They need to be aligned from a whole bunch of operational safety, cultural factors. Valuation is a huge focus for us.

I'll try to stop there. I could talk for hours about this stuff. Okay, I appreciate it. Um, and then just to building on this are you actively pursuing other deals right now or or or um, just pausing and just trying to really get to focus on the Legacy projects and get them past completion. Just wondering where your mindset is on that, on m&a.

Yeah, I mean, look.

That the focus on the Legacy projects, um, is, is a critical A1 priority for for the entire AECOM team. Um, but that's that doesn't excuse us from being able to operate the business in the normal course. Right? So, um, if, if the focus was uniquely on trying to close out the Legacy projects, um, we wouldn't have expanded our backlog by, you know, 5 billion dollars, um, on that basis. Right? So I think we're, um, we can, this is 1 where we're walking into income, no problem. Um,

Adam Borgatti, who's here ahead of our IR team, also has a corporate development role and remains very active. We've got pretty particular parameters when it comes to acquisitions. It needs to tie into our own strategy.

Adam Borgatti: What we've seen is, in some areas, we've had to wave off just because the level of froth in the market and private equity involvement has just made it kind of uneconomic to pursue transactions in those spaces. Then in other spots, people see maybe a little bit of a longer-term partnership with Aecon and our teams and the ability to really expand their business, usually private companies. That's where we're currently focused. When we think about that, we think about things that are aligned with our expertise. We think about businesses that allow us to expand services within existing markets. We think about businesses that allow us to expand existing services in new markets, which is our land and expand approach. From that front, we're spending time across North America on exactly those two vertices. Not big stuff, right?

strategy, they need to be aligned from, you know, a whole bunch of operational. Safety, cultural factors and then valuation, um, is is a huge Focus for us. Um, what we've seen is, in some areas, we've had to wave off, just because the level of froth in the market, um, and private Equity involvement, um, has just made it, um, kind of uneconomic to, to pursue transactions in those spaces. And then another spots people see, maybe a little bit of a longer term, uh, partnership with, with Akon and our teams and the ability to really expand, you know, their their business usually private companies. Um, and that's where we're we're currently focused. So, when we think about that, we think about things that are aligned to their expertise. We think about businesses that allow us to expand services within existing markets and we think about businesses that allow us to expand existing services in New Markets, which is Our Land and expand approach. Um, so from that front, we're spending time.

And you know, cross North America on on exactly those 2. Those 2 vertices

Adam Borgatti: Again, we can get more kind of appropriately sized acquisitions and then expand them afterwards, right? We don't need to pay big multiples to buy businesses that we're already quite good at.

And, and not big stuff, right? Like just, like again.

We're.

we, we can get, we can get more, kind of like a

Frederic Bastien: Great. Thanks, Jerome. That's all I have.

Size acquisitions and then expand them afterwards, right? We don't need to pay big multiples to buy businesses that were already quite good at.

Great. Thanks John. That's all I have.

Jerome Julier: Thank you. One moment for our next question. Our next question comes from the line of Ian Gillies from Stifel GMP.

Thank you. One moment for our next question.

Adam Borgatti: Morning, everyone. I just wanted to sneak in here quickly at the end and fully acknowledge revenue growth is going to be pretty robust given the backlog. Are you seeing any signs of slippage with your private customers on the industrial side or in any other facets, just given some of the tariff-related headaches they're probably having to interact with project costing?

Our next question comes from the line of e and gelly's from Steveo GMP.

Everyone.

Jean-Louis Servranckx: I will take this one. As I have told you, we think that the tariffs, it is not a distraction. The tariff turbulence will just settle down in the weeks or months to come. The reality of the strength of the power business and the need for new infrastructure is going to be a main driver. In terms of industrial projects, yes, you probably have heard, for example, that Dow Chemical is just pushing to the right part of its investment. This may happen when there is uncertainty about the market price and the quantity for those products that can be sold in the near future. On another hand, you have also heard that LNG Canada phase two is now coming into a much more active phase. You have seen that the LNG, Bruce Power is going full speed ahead to be able to generate more power.

I just wanted to sneak in here quickly at the end and um fully acknowledge Revenue growth is going to be pretty robust um given the backlog. But are you seeing any signs of slippage with your private customers on the industrial side or in the in in any other facets? Just given some of the Tariff related headaches. They're probably having it in around project costing

Yeah, I will check this. As I told you, we think that the tariffs.

It's not a distraction. I mean is there is a tar turbulence is it will just settle down in uh in the weeks or or months to come and the reality of uh the strength of the power business and the need for new infrastructure is is going to be uh a main driver in terms of the industrial project. Yes.

Probably have heard. For example, that Dell chemical is is is just pushing to the right part of of its investment.

So,

This may happen when there is uncertainty about, uh, the market price and the quantity, uh, for those products that can be sold in the near future. On another hand, you have also heard that LG Canada says to, uh,

Jean-Louis Servranckx: All in all, I am not that much worried about the top line in terms of civil works. You probably have imagined that, and you can see the trend for the last year. We are decreasing our exposure to civil works and increasing the one to pure power, as I have explained. All in all, I would say the balance of activity of Aecon Group Inc., the balance of our kind of clients, the balance of the type of contract we can take with our different business centers just makes that we are extremely resilient and the global trend is good.

Power is going uh is going full speed ahead to be able to generate more power. So all in all uh I'm not I'm not that much.

Worried, uh, about about the Top Line in terms of Civil Works, you probably have imagined that and you can see the trends for the last year. Uh, we are decreasing our, our exposure to civil work.

And, and increasing the 1 to to cure power.

As I've explained, so all in all, uh,

I would say the balance of activity of Akon, the balance of our kind of clients, the balance of the type of contract we can take with our different, uh, Business Center. Just make that we are extremely resilient.

Adam Borgatti: Understood. Thanks very much. I'll turn the call back over.

And so Global trend is good.

I understand. Thanks very much. I'll turn the call back over.

Jerome Julier: Thank you. One moment for our next question. Our next question comes from the line of Sabahat Khan from RBC Dominion Securities.

Thank you. 1 moment for our next question.

Frederic Bastien: Great. Thanks. Good morning. Just positive as it was discussed earlier, but I just wanted to get a bit of perspective on with the backlog being materially higher than it's been over the last few years. Can you just walk us through the cadence of the burndown versus what we may have seen historically? Obviously, there are some very large projects in there, but I just want to understand, should the burn rate call it, not just 2026, but just call it 2026, 2027, would that differ? Do these larger projects change the quarterly cadence at all versus what we may have seen in the past years? Thanks.

Our next question comes from the line of suharto.

Jean-Louis Servranckx: I would tend to say not really. The rhythm at which you develop those progressive design, build, and collaborative models is slower at the beginning. But at the end of the day, those are big amounts, and you just have to execute and to build them. So rather than having an ultra-sophisticated model, I think what has happened in the past is still valid. We have $11 billion of backlogs, more or less the maturity. With this, you can have quite an interesting view of what our activity is going to be in the next two years.

It's great, thanks and good morning. Um, just, you know, apologize if if it was discussed earlier but just want to get a bit of perspective on would backlog being a materially higher than it's been over the last few years. Can you just walk us through? You know, the kind of the Cadence of the burndown versus what we may have seen. Historically obviously there's some very large projects in there, but just want to understand, you know, should the burn rate, call it not just 26, but just call 26, 27, would that differ? And then do these larger projects, change? The quarterly, Cadence at all versus what we may have seen in the past year. Thanks.

at which you you developed, these Progressive design build and collaborative model, is slower at the beginning, but at the end of the day, uh, those are big amounts and you just have to execute

Frederic Bastien: How are you thinking about, I guess, both on this side? I mean, just given the scale of this backlog, the nuclear commentary you shared earlier, how are you just thinking about staffing on both fronts? You know, nuclear, I think it sounds like one of the refurbishments ends and the next one begins. Just walk us through how you are staffing to ensure that you are meeting some of this demand that is in the backlog. Thanks.

And, uh, and to build them. So, rather than having a, a, a an ultra sophisticated model, I think what what is happening is in in the past is is still valid. We have 11 billion of of backlog, you know, more or less the maturity and and with this you you you can have quite an interesting view of what our activities is going to be in in in the next few years.

Jean-Louis Servranckx: Obviously, there is a competition for talents at every level. I have to say that as a trade and team leader supervisor, we have, I would tend to say, an extremely loyal group of people very happy to work with Aecon. Aecon is a Canadian company. It's strong. It has been living for the last 100 years, and we all think that it will be better and better and grow during the next 100 years. Yes, there is competition. We are extremely careful. I also remind you that what I was telling a few minutes ago about our balance of activity, you don't use the same people to build a concrete wall and to weld pipeline on a steam generator in nuclear operations or to lay power overhead lines. Those are not the same kind of people. We don't have $11 billion of backlog in the same activity.

And how are you thinking about? I guess both on this side I'm just giving the scale of this backlog. The nuclear commentary shared earlier. I was just thinking about Staffing on both fronts you know on nuclear. I think it sounds like 1 of the refurbishments ends in the next 1 begins. But just just walk us through how you're stabbing to ensure that you know you're meeting some of this demand that's in the backlog. Thanks.

Obviously.

there is a competition for

Every level but uh I I have to say that at at the trade uh and team leader supervisor. I mean we have uh um

I would 10 to see, we have an extremely loyal group of people very happy to work with Aon Aon is a Canadian company. Uh, it's strong, it, it has been living for the last 100 years and we all think that it will be better and better and grow during the next 100 years. Uh, so yes, there is competition. We are extremely careful.

Jean-Louis Servranckx: It's quite balanced, and this is the way we can go through this increase of backlog.

I also remind you that what I was telling a few minutes ago about our balance of activity. I mean, you don't use the same people to uh, to build a a concrete wall and uh, to well Pipeline on a steam generator in in nuclear or too late power of a headlines. I mean, those are not the same kind of people, we don't have 11 billion of backlog in the same activity. It's

Frederic Bastien: Maybe just as you were talking, kind of just thinking through this out loud, there isn't a right answer to this, but with the macro backdrop being as uncertain as it is, you've got the big backlog. Is it possible to get a bit of labor arbitrage, maybe get staff in at lower rates than you might have thought maybe 6, 12 months ago, or are the wages more structured among the workforce, or there might be some element of unionization? Just curious if there is an ability to maybe get a bit of arbitrage on labor in this environment. Thanks.

It's quite balanced and this is the way we can go. We can go through this increase uh, of backlog.

Jean-Louis Servranckx: Yes. First of all, remember that 72% of the backlog is flexible price. It means we are covered if there are high fluctuances. On another hand, most of our agreement with the trade unions is our multiple years agreement. We have a very interesting discussion and negotiation with our trade union partners, not only about the cost, but about the quantity and about the quality depending on our backlog. We do not go on every job, I would say, with the same appetite taking care of this issue of labor availability. We are extremely careful with this. For the moment, I do not see any real complicated issue, I would say, for the moment.

And then, maybe it's just as you were talking, kind of just thinking through this out loud, you know, maybe there isn't a right answer to this, but with the macro backdrop being as uncertain as it as it is, you know, you got the big backlog, is it possible to get a bit of Labor Arbitrage? Maybe get staph in at lower rates than you might have thought, maybe 6, 12 months ago or are the wages more structured among the the work force or the might be some element of unionization just curious. If there is an ability to maybe get a bit Arbitrage on labor in this environment, thanks.

Agreement. So we we have uh, very interesting discussion and negotiation with our Trade union Partners. Not only about uh, the cost, but about the quality and about the quality depending on, on our backlog. And uh, we don't go on every job. I would say, with the same appetite, uh, taking care of this issue, uh, of Labor viduta we are extremely careful with this.

For the moment. Uh, I do not see any real complicated issue, I say for the moment.

Adam Borgatti: Thanks very much.

Thanks very much.

Jerome Julier: Thank you. At this time, I would now like to turn the conference back over to Adam Borgatti for closing remarks.

Adam Borgatti: Thank you, Jean, and thank you all for participating. Enjoy the rest of the summer. As always, feel free to reach out with further questions to the investor relations team here. Thanks.

Thank you at this time. I would now like to turn the conference back over to Adam Brigette for closing remarks.

Jerome Julier: This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you G and thank you all for participating. Uh enjoy the rest of the summer. And as always, feel free to reach out with further questions to the investor relations team here. Thanks,

This concludes today's conference call, thank you for participating. You may now disconnect