Aecon reports full year 2013 results - Increases dividend

TORONTO, March 11, 2014 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported 
results for the fourth quarter and full year 2013, including higher Adjusted 
EBITDA((1)) of $184.0 million for 2013 as compared to $171.9 million in 2012, 
and Adjusted EBITDA of $79.1 million for the fourth quarter of 2013 compared 
to $77.9 million in the comparable period of 2012. Aecon's Board of Directors 
approved an increase in the annual dividend to $0.36 per share from $0.32 per 
share. 
"Aecon's 2013 results represented another year of solid progress. Our focus 
remains on margin growth, operational execution, and financial performance," 
said John M. Beck, Chairman and Chief Executive Officer. "With our balanced 
and diversified strategy within three core target markets - infrastructure, 
energy and mining - and the robust pipeline of bidding opportunities on the 
horizon, we will maintain a disciplined bidding approach and seek out projects 
with a margin profile that will contribute towards meeting our Adjusted EBITDA 
margin target of nine per cent in 2015." 
HIGHLIGHTS 


        --  Revenue grew by $182 million, or 6 per cent, to $3,069 million
            for 2013 as compared to $2,887 million in 2012.
        --  Adjusted EBITDAfor 2013 increased to $184.0 million on revenue
            of $3,069 million as compared to $171.9 million on revenue of
            $2,887 million for 2012.
        --  Adjusted EBITDA was $79.1 million (margin of 8.7 per cent) on
            revenue of $906.2 million for the fourth quarter of 2013 as
            compared to $77.9 million (margin of 8.4 per cent) on revenue
            of $932.1 million for the fourth quarter of 2012.
        --  Backlog was $1.8 billion at December 31, 2013. Included in
            year-end backlog is a $100 million contract to construct Union
            Gas' new compressor facility at its Parkway West site near
            Milton, Ontario.  Work commenced in the first quarter of 2014
            and is expected to be complete in the fourth quarter of 2015.
        --  Subsequent to year end, the following Aecon-led projects were
            announced:
      o An award of the John Hart Generating Station civil construction
        contract in British Columbia, with approximately $225 million in
        revenue expected to Aecon's account; and
      o A recommendation as the preferred proponent for the Region of
        Waterloo Stage 1 Light Rail Transit Project for which Aecon's
        portion of the construction contract is expected to be
        approximately $250 million, subject to closing.
        --  Annual dividend is increased to $0.36 per share ($0.09 per
            quarter) from $0.32 per share ($0.08 per quarter).
        --  Positive outlook heading into 2014, with opportunities to grow
            backlog and continue progress towards the Company's nine per
            cent EBITDA margin target in 2015.

(1) See the Consolidated Financial Highlights section for the definition of 
Adjusted EBITDA. While the definition of EBITDA is unchanged from the previous 
year, in accordance with the requirements of CSA Staff Notice 52-306 (Revised) 
- Non-GAAP Financial Measures and Additional GAAP Measures, the Company has 
renamed the defined term from "EBITDA" to "Adjusted EBITDA".

CONSOLIDATED FINANCIAL HIGHLIGHTS((1) )
                                                                           
                                     Three months      
                                        ended                 Year ended
    $ millions (except per            December 31             December 31
    share amounts)
                                 2013       2012(2)     2013        2012(2)
                                                                           
    Revenue                    $  906.2   $   932.1   $ 3,068.6   $ 2,887.1
    Gross profit                   94.6        93.3       270.5       278.9
    Marketing, general and       (34.3)      (38.6)     (148.0)     (157.7)
    administrative expenses
    Income from projects           11.3        34.3        37.9        55.7
    accounted for using the
    equity method
    Other income (expense)        (0.7)         0.4          -          1.1
    Depreciation and             (16.3)      (17.8)      (63.0)      (60.6)
    amortization
    Operating profit(3)            54.6        71.6        97.3       117.3
    Financing expense, net       (10.6)       (5.1)      (38.3)      (27.2)
    Fair value gain (loss) on     (7.3)         3.9       (9.8)         4.3
    convertible debentures
    Profit before income taxes     36.7        70.4        49.2        94.4
    Income tax expense            (8.4)      (14.1)       (8.6)      (16.8)
    Profit                     $   28.3   $    56.3   $    40.6   $    77.6
                                                                           
    Profit                     $   28.3   $    56.3   $    40.6   $    77.6
    Exclude:                                                               
    Fair value (gain) loss on       7.3       (3.9)         9.8       (4.3)
    convertible debentures
    Income tax on fair value      (1.9)         1.0       (2.6)         1.1
    (gain) loss
    Adjusted profit(4)         $   33.6   $    53.4   $    47.8   $    74.4
                                                                           
    Gross profit margin           10.4%       10.0%        8.8%        9.7%
    MG&A as a percent of           3.8%        4.1%        4.8%        5.5%
    revenue
    Adjusted EBITDA(5)             79.1        77.9       184.0       171.9
    Adjusted EBITDA margin         8.7%        8.4%        6.0%        6.0%
    Operating margin               6.0%        7.7%        3.2%        4.1%
    Earnings per share - basic $   0.54   $    1.06   $    0.77   $    1.46
    Earnings per share -       $   0.48   $    0.71   $    0.72   $    1.18
    diluted
                                                                           
    Adjusted earnings per
    share - basic(6)           $   0.64   $    1.01   $    0.91   $    1.41
    Adjusted earnings per
    share - diluted(6)         $   0.50   $    0.71   $    0.84   $    1.18
                                                                           
    Backlog                                           $   1,773   $   2,428
                                                                           
    (1)      This press release presents certain non-GAAP and additional
             GAAP (GAAP refers to Canadian Generally Accepted Accounting
             Principles) financial measures to assist readers in
             understanding the Company's performance. Non-GAAP financial
             measures are measures that either exclude or include amounts
             that are not excluded or included in the most directly
             comparable measures calculated and presented in accordance
             with GAAP in the consolidated financial statements. Further
             details on non-GAAP and additional GAAP measures are included
             in the Company's Management's Discussion and Analysis and
             available through the System for Electronic Document Analysis
             and Retrieval at
             www.sedar.com.
    (2)      Certain 2012 amounts in this press release have been restated
             due to the adoption of IFRS 11, "Joint Arrangements" and IAS
             19 (2011), "Employee Benefits". See Note 4 "New Accounting
             Standards" in the December 31, 2013 Consolidated Financial
             Statements for further details.
    (3)       "Operating profit (loss)" represents the profit (loss) from
             operations, before net financing expense, income taxes and
             non-controlling interests.
    (4)       "Adjusted profit (loss)" represents the profit (loss)
             adjusted to exclude the after-tax fair value gain (loss) on
             the embedded derivative portion of convertible debentures.
    (5)       "Adjusted EBITDA" represents operating profit (loss) adjusted
             to exclude depreciation and amortization, the gain (loss) on
             sales of assets and investments, and net income (loss) from
             projects accounted for using the equity method, but including
             "JV EBITDA" from projects accounted for using the equity
             method.
    (6)      "Adjusted earnings (loss) per share" represents earnings
             (loss) per share calculated using adjusted profit (loss).
              

OPERATING AND FINANCIAL RESULTS

"Aecon has emerged as the premier construction and infrastructure development 
company for large, complex, multi-disciplinary projects - the result of our 
drive to diligently work in leading joint ventures, on sophisticated 
multi-year projects," said Teri McKibbon, President and Chief Operating 
Officer. "The Eglinton Crosstown LRT tunnel project, John Hart Generating 
Station civil construction contract, and most recently the recommendation of 
Aecon's joint venture for the Waterloo Region LRT project are strong 
indications of what we can expect as we move forward in 2014."

Revenue of $3,069 million for the year ended December 31, 2013 increased by 
$182 million compared to $2,887 million in 2012. The 6 per cent increase in 
revenue resulted primarily from a $377 million increase in the Energy segment.

Adjusted EBITDA increased to $184.0 million (margin of 6.0 per cent) for the 
year ended 2013, versus $171.9 million (margin of 6.0 per cent) for the year 
ended 2012. (The year-over-year increase occurred notwithstanding a specific 
project provision that affected the Infrastructure and Energy segments in 
2013.)

Operating profit decreased to $97 million for the year ended December 31, 
2013, from $117 million in 2012, in part from the specific project provision 
in the Infrastructure and Energy segments noted above, as well as from lower 
operating profit in the Concessions segment following the impact in 2012 from 
both the release of project contingencies and a reduction of income taxes 
related to the Quito airport project that did not repeat in 2013.

Backlog was $1,773 million at December 31, 2013, compared to $2,428 million at 
the end of 2012. New contract awards of $2,413 million were booked in 2013 
compared to $2,985 million in 2012.

Not included in backlog, but important to Aecon's prospects due to the 
increasingly significant volume involved, is the expected recurring revenue 
from Aecon's growing alliances and supplier-of-choice arrangements where the 
amount and/or value of work to be carried out is not specified. This recurring 
revenue currently represents approximately 25 per cent of overall revenue.

REPORTING SEGMENTS

Aecon reports its financial performance on the basis of four segments: 
Infrastructure, Energy, Mining, and Concessions.

INFRASTRUCTURE SEGMENT

The Infrastructure segment includes all aspects of the construction of both 
public and private infrastructure, primarily in Canada, and on a selected 
basis, internationally. The Infrastructure segment focuses primarily on the 
transportation, heavy civil and social infrastructure markets.

Financial Highlights
                                                                        
                              Three months ended           Year ended
    $ millions                     December 31             December 31
                              2013         2012        2013        2012
                                                                        
    Revenue                 $ 277.9   $    341.6   $ 1,000.0   $ 1,195.0
    Gross profit            $  13.9   $     11.4   $    35.4   $    62.7
    Adjusted EBITDA         $   4.6   $      3.1   $   (1.2)   $    21.2
    Operating profit (loss) $   0.2   $    (0.9)   $  (18.2)   $     5.7
                                                                        
    Adjusted EBITDA margin     1.7%         0.9%      (0.1)%        1.8%
    Operating margin           0.1%       (0.3)%      (1.8)%        0.5%
    Backlog                                        $     820   $   1,120
                                                                        
                                                                  

For the year ended December 31, 2013, revenue in the Infrastructure segment of 
$1 billion decreased by $195 million over the prior year. Most of the decrease 
occurred in heavy civil operations following the completion of several large 
projects in the latter part of 2012, including the Quito airport project and 
the Autoroute 30 project in Quebec. In addition, revenue also decreased in 
social infrastructure operations, primarily in the buildings business in 
Quebec and Ontario as Aecon continues to re-focus its operations in this 
sector, as well as in its mechanical operations in Western Canada. These 
decreases were partly offset by an increase in revenue in the transportation 
operations due to a higher volume of road building work in Ontario.

For the fourth quarter, operating profit was $0.2 million compared to an 
operating loss of $0.9 million in the comparable period of 2012. The operating 
loss in the Infrastructure segment for 2013 was $18.2 million compared to an 
operating profit of $5.7 million in 2012. A year-over-year decrease in 
transportation operations occurred primarily as a result of the segment's 50 
per cent share of the previously noted project loss in 2013. There was also a 
reduction in operating profit from social infrastructure operations related to 
the mechanical business in Western Canada as a result of lower volume of work 
and lower margin compared with 2012. A decline in heavy civil operations was 
mostly volume driven.

Infrastructure backlog at December 31, 2013 was $820 million, which is $300 
million lower than the same time last year with most of the decrease occurring 
in social infrastructure and transportation operations, due to lower contract 
awards in comparison to the prior year. New contract awards totaled $700 
million in 2013 compared to $986 million in the prior year. The year-end 
backlog does not include the two projects announced subsequent to year end and 
discussed above totaling nearly $500 million.

ENERGY SEGMENT

The Energy segment encompasses a full suite of service offerings to the energy 
market including industrial construction and manufacturing activities such as 
in-plant construction, site construction and module assembly. The Energy 
segment focuses primarily on the following sectors: oil and gas, power 
generation, pipelines, utilities, and energy support services.

Financial Highlights
                                                                       
                             Three months ended           Year ended
    $ millions                    December 31             December 31
                             2013         2012        2013        2012
                                                                       
    Revenue                $ 466.4   $    368.3   $ 1,396.4   $ 1,018.9
    Gross profit           $  64.6   $     52.0   $   153.1   $   123.6
    Adjusted EBITDA        $  53.3   $     35.7   $    97.4   $    63.2
    Operating profit       $  49.6   $     32.1   $    84.1   $    50.4
                                                                       
    Adjusted EBITDA margin   11.4%         9.7%        7.0%        6.2%
    Operating margin         10.6%         8.7%        6.0%        4.9%
    Backlog                                       $     876   $     997
                                                                       
                                                                 

The Energy segment reported revenue of $1,396 million for the year 2013, an 
increase of $377 million, or 37 per cent, compared to revenue of $1,019 
million in the previous year. Substantially all of the increase was a result 
of higher volume in utilities operations, primarily from pipeline work in 
Western Canada and from gas distribution work in Ontario.

Operating profit for the Energy segment of $84.1 million for the year 
increased by $33.7 million compared to 2012 with improvements in both 
utilities and industrial operations. The increase in operating profit from 
utilities operations of $12 million is primarily attributable to higher volume 
and the increase in industrial operations of $22 million is due to higher 
volume and margin from fabrication projects in Atlantic Canada and IST, as 
well as from higher volume in Central Canada, primarily from power generation 
projects. These increases were partly offset by lower operating profit from 
industrial operations in Western Canada due to lower volume and the segment's 
50 per cent share of the previously noted project loss in 2013.

Energy segment backlog at December 31, 2013 of $876 million was $121 million 
lower than the end of last year primarily due to lower backlog in utilities 
operations as a result of significant work off on pipeline projects in Western 
Canada throughout 2013. This reduction in backlog was partially offset by new 
contract awards for site construction projects in the resources sector in 
Western Canada. New contract awards of $1,275 million in 2013 were $322 
million lower than in 2012. Most of the decrease in new awards occurred in 
utilities operations in Western Canada which obtained significant multi-year 
pipeline project awards in the previous year.

MINING SEGMENT

The Mining segment offers turn-key services consolidating Aecon's mining 
capabilities and services across Canada, including both mine site 
installations and contract mining. This segment offers construction services 
that span the scope of a project's life cycle: from overburden removal and 
resource extraction, to processing, and then to environmental reclamation.

Financial Highlights
                                                                   
                             Three months ended        Year ended
    $ millions                    December 31          December 31
                             2013      2012         2013      2012
                                                                   
    Revenue                $ 169.4   $    223.9   $ 705.8   $ 676.7
    Gross profit           $  20.5   $     34.3   $  86.7   $  97.5
    Adjusted EBITDA        $  22.3   $     32.0   $  74.5   $  85.8
    Operating profit       $  14.8   $     23.7   $  48.0   $  61.3
                                                                   
    Adjusted EBITDA margin   13.2%        14.3%     10.6%     12.7%
    Operating margin          8.7%        10.6%      6.8%      9.1%
    Backlog                                       $    77   $   311
                                                                   
                              

For the year ended December 31, 2013, the Mining segment increased revenue by 
$29 million to $706 million compared to revenue of $677 million in the 
previous year. The majority of the increase was due to higher volume of site 
installation work in the commodity mining sector and from contract mining 
projects in the oilsands. Partially offsetting these increases was lower 
volume of civil construction projects related to mining, primarily in Western 
Canada due to the completion of significant projects in 2012.

In the Mining segment, operating profit of $48 million for the year, decreased 
by $13.3 million compared to last year. The decrease was mainly due to lower 
operating profit from civil construction projects due to lower volume as well 
as lower margin in contract mining operations in Western Canada. Contract 
mining was impacted by adverse weather conditions, a significant change in mix 
versus the prior year, and other productivity factors in 2013, resulting in 
challenging site conditions, lower utilization of larger equipment and reduced 
project efficiencies. Partially offsetting these decreases were volume driven 
improvements from site installation work in the commodity mining sector.

Backlog in the Mining segment at December 31, 2013 of $77 million was $234 
million lower than last year as a result of the completion of work on a number 
of significant projects throughout 2013.  New contract awards of $472 million 
in 2013 were $106 million higher than in 2012.

CONCESSIONS SEGMENT

The Concessions segment includes the development, financing, construction and 
operation of infrastructure projects by way of build-operate-transfer, 
build-own-operate-transfer and other public-private partnership contract 
structures.

Financial Highlights
                                                                           
                                     Three months ended        Year ended
    $ millions                            December 31           December 31
                                     2013       2012         2013      2012
                                                                           
    Revenue                        $   1.0    $     1.1   $   3.0   $   2.9
    Gross profit                   $ (4.4)    $   (4.4)   $ (4.7)   $ (4.9)
    Income from projects accounted $   5.0    $    28.9   $  23.6   $  41.8
    for using the equity method
    Adjusted EBITDA                $   7.5    $    12.3   $  39.8   $  28.1
    Operating profit               $   0.2    $    23.7   $  16.6   $  33.2
                                                                           
                                    

For the year ended December 31, 2013, operating profit of $16.6 million was 
$16.6 million lower than the same period last year. Included in the 2012 
results was an $11 million benefit from the reduction of previously accrued 
income taxes, as well as the release of $7.4 million in contingencies and 
other items, related to the Quito airport project. After accounting for the 
impact of these 2012 specific items, the remaining year-over-year increase in 
Concessions operating profit resulted from higher revenue in Quiport JV 
following the transition of operations from the old Quito airport to the new 
Quito airport in February 2013 and year-over-year passenger growth.

DIVIDEND INCREASE

"The Board decided to increase the annual dividend on the basis of Aecon's 
continued financial progress and positive outlook," said John M. Beck.

The annual dividend will be paid to all shareholders of Aecon Common shares 
and will increase to $0.36 per share (from $0.32 per share) to be paid in four 
quarterly payments of $0.09 per share (from $0.08 per share). The first 
increased quarterly payment will be paid on April 1, 2014 to shareholders of 
record on March 21, 2014.

CONSOLIDATED RESULTS

The consolidated results for the three months and years ended December 31, 
2013 and 2012 are available at the end of this news release.

Balance Sheet Highlights
                                                                         
                                                     Dec. 31     Dec. 31
     $ thousands (unaudited)                           2013        2012
                                                                         
    Cash and cash equivalents and restricted cash $   244,536 $    66,977
    Other current assets                              885,052     996,836
    Property, plant and equipment                     512,257     508,553
    Other long-term assets                            351,741     291,247
    Total Assets                                  $ 1,993,586 $ 1,863,613
                                                                         
    Current liabilities                           $   940,356 $   834,849
    Long-term debt                                    123,128     146,048
    Convertible debentures - long term portion        248,817     253,189
    Other long-term liabilities                        94,677      86,369
    Equity                                            586,608     543,158
    Total Liabilities and Equity                  $ 1,993,586 $ 1,863,613
                                                                 
                                                   

CONFERENCE CALL

A conference call has been scheduled for Wednesday, March 12, 2014 at 10 a.m. 
(ET) to discuss Aecon's 2013 year-end financial results. Participants should 
dial 416-981-9033 or 1-800-941-7616 at least 10 minutes prior to the 
conference time. A replay will be available after 12 p.m. at 1-800-558-5253 or 
416-626-4100 until midnight on March 19, 2014. The reservation number is 
21707142.

ABOUT AECON

Aecon Group Inc. is a Canadian leader in construction and infrastructure 
development providing integrated turnkey services to private and public sector 
clients. Aecon is pleased to be consistently recognized as one of the Best 
Employers in Canada.

STATEMENT ON FORWARD-LOOKING INFORMATION

The information in this press release includes certain forward-looking 
statements. These forward-looking statements are based on currently available 
competitive, financial and economic data and operating plans but are subject 
to risks and uncertainties. In addition to events beyond Aecon's control, 
there are factors which could cause actual or future results, performance or 
achievements to differ materially from those expressed or inferred herein 
including, but not limited to: interest and foreign exchange rates, global 
equity and capital markets, business competition and operational and 
reputational risks, including Large Project Risk and Contractual Factors. 
Readers are referred to the specific risk factors relating to and affecting 
Aecon's business and operations as filed by Aecon pursuant to applicable 
securities laws. Forward-looking statements may include, without limitation, 
statements regarding the operations, business, financial condition, expected 
financial results, performance, prospects, ongoing objectives, strategies and 
outlook for Aecon. Forward-looking statements, may in some cases be identified 
by words such as "will," "plans," "believes," "expects," "anticipates," 
"estimates," "projects," "intends," "should" or the negative of these terms, 
or similar expressions. Except as required by applicable securities laws, 
forward-looking statements speak only as of the date on which they are made 
and Aecon undertakes no obligation to publicly update or revise any 
forward-looking statement, whether as a result of new information, future 
events or otherwise.

CONSOLIDATED STATEMENTS OF INCOME
    (in thousands of Canadian dollars, except per share amounts)
    (unaudited)
                                                                           
                                                                           
                     For the three months ended       For the Year ended
                     December 31    December 31   December 31   December 31
                            2013           2012          2013          2012
                                                                           
    Revenue          $   906,213 $      932,139 $   3,068,608 $   2,887,106
    Direct costs and   (811,655)      (838,883)   (2,798,134)   (2,608,184)
    expenses
    Gross profit          94,558         93,256       270,474       278,922
                                                                           
    Marketing,          (34,286)       (38,591)     (148,004)     (157,707)
    general and
    administrative
    expenses
    Depreciation and    (16,273)       (17,763)      (63,024)      (60,640)
    amortization
    Income from           11,270         34,302        37,852        55,680
    projects
    accounted for
    using the equity
    method
    Other income           (680)            416          (42)         1,079
    (loss)
    Operating profit      54,589         71,620        97,256       117,334
                                                                           
    Finance income           226            486         1,953         2,104
    Finance costs       (10,780)        (5,615)      (40,289)      (29,257)
    Fair value gain      (7,340)          3,944       (9,750)         4,260
    (loss) on
    convertible
    debentures
    Profit before         36,695         70,435        49,170        94,441
    income taxes
    Income tax           (8,442)       (14,095)       (8,572)      (16,845)
    expense
    Profit for the   $    28,253 $       56,340 $      40,598 $      77,596
    period
                                                                           
                                                                           
    Basic earnings   $      0.54 $         1.06 $        0.77 $        1.46
    per share
    Diluted earnings $      0.48 $         0.71 $        0.72 $        1.18
    per share



SOURCE  Aecon Group Inc. 
Vince Borg Senior Vice President, Corporate Affairs Aecon Group Inc. 
416-297-2615 vborg@aecon.com 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2014/11/c4537.html 
CO: Aecon Group Inc.
ST: Ontario
NI: CST ERN CONF DIV  
-0- Mar/11/2014 20:30 GMT
 
 
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