Aecon reports first quarter 2014 results

 TORONTO, May 7, 2014 /CNW/ - Aecon Group Inc. (TSX: ARE) today reported  results for the first quarter 2014 including higher Adjusted EBITDA( )of $3.1  million as compared to an Adjusted EBITDA loss of $11.3 million in the first  quarter of 2013, and backlog of $2.2 billion at March 31, 2014, as compared to  $1.8 billion at December 31, 2013.  "Our focus on execution is yielding results and Aecon's first quarter  represents a solid start to the year. We anticipate that revenue and therefore  profits will be even more weighted to the second half of 2014 than is usually  the case due to the ramp up of significant new projects currently underway,"  said John M. Beck, Chairman and Chief Executive Officer, Aecon Group Inc.  "With Aecon's balanced and diversified portfolio of work in three core market  sectors of infrastructure, energy and mining, and our strong backlog of higher  margin work, we maintain a positive outlook and anticipate making continued  progress through 2014 to our Adjusted EBITDA margin target of 9 per cent in  2015."  HIGHLIGHTS            --  Adjusted EBITDAfor the first quarter of 2014 increased to $3.1             million (margin of 0.7 per cent) on revenue of $462 million as             compared to an Adjusted EBITDA loss of $11.3 million (margin             loss of 2.0 per cent) on revenue of $567 million for the first             quarter of 2013.         --  Backlog of $2.2 billion at March 31, 2014 was approximately             $400 million higher than at year end 2013.         --  New contracts in the first quarter of 2014 totaled $867 million             compared to $212 million in the first quarter of 2013.         --  Subsequent to quarter end, Aecon and its joint venture partner             announced that they were selected for the York Viva Bus Rapid             Transit project in Ontario, with an expected $130 million in             revenue to Aecon's account.  Aecon was also awarded a $94             million contract for the reconstruction and widening of Second             Concession Road for York Region.         --  Increased annual dividend took effect with the first quarterly             payment of $0.09 per share (increased from $0.08 per share)             paid on April 1, 2014 to shareholders of record on March 21,             2014.       CONSOLIDATED FINANCIAL HIGHLIGHTS(1)                                                                                                                                                                     Three months ended         $ millions (except per share amounts)                   March 31                                                              2014        2013                                                                                      Revenue                                        $  461.9   $   567.4         Gross profit                                       29.4        22.5         Marketing, general and administrative                                       expenses                                         (41.0)      (44.8)       Income from projects accounted for using the                                equity method                                       7.3         8.4       Foreign exchange gains                              0.4         0.1         Gain on sale of assets                               -          0.2         Loss on disposal of a subsidiary                  (2.6)          -          Depreciation and amortization                    (16.8)      (17.5)         Operating loss(2)                                (23.2)      (31.1)         Financing costs, net                             (11.1)       (8.7)         Fair value loss on convertible debentures         (1.7)       (2.2)         Loss before income taxes                         (36.0)      (42.0)         Income tax recovery                                10.1        12.1         Loss                                           $ (25.9)   $  (29.9)                                                                                     Loss                                           $ (25.9)   $  (29.9)         Exclude:                                                                    Fair value loss on convertible debentures           1.7         2.2         Income tax on fair value loss                     (0.5)       (0.6)         Adjusted loss(3)                               $ (24.7)   $  (28.3)                                                                                     Gross profit margin                                6.4%        4.0%         MG&A as a percent of revenue                       8.9%        7.9%         Adjusted EBITDA(4)                                  3.1      (11.3)         Adjusted EBITDA Margin                             0.7%      (2.0)%         Operating margin                                 (5.0)%      (5.5)%         Loss per share - basic                         $ (0.49)   $  (0.56)         Loss per share - diluted                       $ (0.49)   $  (0.56)                                                                                     Adjusted loss per share - basic(5)             $ (0.47)   $  (0.53)         Adjusted loss per share - diluted(5)           $ (0.47)   $  (0.53)                                                                                     Backlog                                        $  2,178   $   2,073                                                                                   (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)      "Operating profit (loss)" represents the profit (loss) from              operations, before net financing              expense, income taxes and non-controlling interests.     (3)      "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.     (4)      "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.     (5)      "Adjusted earnings (loss) per share" represents earnings              (loss) per share calculated              using adjusted profit (loss).  OPERATING AND FINANCIAL RESULTS  "With an improved mix of work in our Infrastructure segment, a strong market  environment for our Energy segment, and targeted opportunities in Mining, we  move forward in 2014 with a focused, disciplined approach to a robust pipeline  of opportunities," said Teri McKibbon, Aecon's President and Chief Operating  Officer.  "The scope of opportunities suited to Aecon's capabilities covers  the breadth of Canada."  Revenue of $462 million in the first quarter of 2014 compared to revenue of  $567 million in the same period of 2013. Lower revenue resulted primarily from  decreases in the Mining segment, primarily from site installation work, and in  the Infrastructure segment mostly in buildings operations.  Adjusted EBITDA( )for the first quarter of 2014 increased to $3.1 million  (margin of 0.7 per cent) compared to an Adjusted EBITDA loss of $11.3 million  (margin loss of 2.0 per cent) for the first quarter of 2013.  Operating loss for the period of $23.2 million improved by $7.9 million  compared to the same period in 2013. Included in the quarter-over-quarter  improvement is the impact of a $19 million provision on a specific project  reported in the first quarter of 2013, offset to some extent by the impact of  lower volume in the Mining segment in the first quarter of 2014.  Backlog was $2,178 million at March 31, 2014, compared to $2,073 million at  March 31, 2013. New contract awards of $867 million were booked in the first  quarter of 2014 compared to $212 million in the first quarter of 2013. Among  other contracts, the following major projects were booked in the first quarter:         --  John Hart Generating Station in British Columbia: a joint             venture of Aecon (60%) and SNC-Lavalin Constructors Pacific             Inc. (40%) for the civil construction scope, with Aecon's             portion of the contract representing $225 million; and         --  Waterloo Region Light Rapid Transit: a joint venture             partnership of Aecon (51%) and Kiewit (49%), with a backlog             value to Aecon's account of approximately $250 million.  Subsequent to quarter end, Aecon and its joint venture partner (Dufferin  Construction) announced that they were selected for the York Viva Bus Rapid  Transit project in Ontario, with an expected $130 million in revenue to  Aecon's account.  Aecon was also awarded a $94 million contract for the  reconstruction and widening of Second Concession Road for York Region. Work on  this project will commence in the second quarter and is expected to be  complete in the third quarter of 2016.  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 annual  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          $ millions                       March 31                                       2014        2013                                                               Revenue                $   106.5   $   149.7         Gross profit           $   (6.3)   $  (15.1)         Adjusted EBITDA        $  (16.7)   $  (29.7)         Operating loss         $  (23.3)   $  (33.6)                                                              Adjusted EBITDA margin   (15.7)%     (19.8)%         Operating margin         (21.8)%     (22.5)%         Backlog                $   1,277   $   1,021                                                         In the first quarter of 2014, revenue in the Infrastructure segment of $107  million was $42 million lower, or 29 per cent, over the same period last year.   Approximately half of the decrease in revenue occurred in social  infrastructure operations, primarily from less ongoing work in buildings  operations in Ontario compared to the prior year and from the closure of the  Seattle operations during the first quarter of 2014.  In addition, heavy civil  and transportation operations also experienced a decrease in revenue during  the first quarter of 2014 as many large heavy civil projects were nearing  completion, and a severe winter in Ontario and other timing issues affected  road building work.  Operating loss in the Infrastructure segment of $23.3 million improved by  $10.3 million over the same period in the prior year.  The largest improvement  occurred in transportation operations primarily from the impact in the first  quarter of 2013 of the segment's $9.7 million share of a specific project  provision.  Infrastructure backlog at March 31, 2014 was $1,277 million, $256 million  higher than the same time last year with most of the increase occurring in  heavy civil operations.  New contract awards totaled $563 million in the first  quarter of 2014 compared to $49 million in the same period in the prior year,  with significant project awards received in 2014 for the John Hart Generating  Station and Waterloo Region Light Rail Transit Project.  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         $ millions                       March 31                                      2014         2013                                                               Revenue                 $ 248.2   $    248.0         Gross profit            $  18.6   $      6.3         Adjusted EBITDA         $   3.9   $   (10.1)         Operating profit (loss) $   0.2   $   (13.4)                                                              Adjusted EBITDA margin     1.6%       (4.1)%         Operating margin           0.1%       (5.4)%         Backlog                 $   821   $      801                                                         Revenue in the first quarter of 2014 of $248 million in the Energy segment was  in line with the same period of 2013, as increases from utilities operations  were offset by lower revenue from industrial operations.  Operating profit in the Energy segment of $0.2 million was $13.6 million  higher than the same period last year.  The quarter-over-quarter improvement  is partially due to the Energy segment's $9.7 million share of a specific  project provision in the first quarter of 2013. The remaining increase is  mainly due to increased volume and margin from power generation projects in  Central Canada and from higher volume in Atlantic Canada.  Backlog at March 31, 2014 of $821 million for the segment was $20 million  higher than the same time last year with most of the increase occurring in  industrial operations in Western Canada, primarily as a result of project  awards for site construction projects in the oil sands during the past year,  offset by lower backlog in utilities operations due to the work-off of  pipeline projects. New contract awards of $193 million in the first quarter of  2014 were $142 million higher than in the same period in 2013.  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 environmental reclamation.       Financial Highlights                                                         Three months ended         $ millions                      March 31                                     2014         2013                                                              Revenue                $ 107.5   $    171.5         Gross profit           $  17.4   $     31.4         Adjusted EBITDA        $  11.9   $     27.0         Operating profit       $   4.3   $     18.7                                                             Adjusted EBITDA margin   11.1%        15.7%         Operating margin          4.0%        10.9%         Backlog                $    80   $      251                                                        Revenue in the first quarter of 2014 of $108 million in the Mining segment was  $64 million lower than in the same period of 2013.  Substantially all of the  revenue decrease was from a lower volume of site installation work in the  commodity mining sector following the completion of a substantial project  during 2013.  For the three months ended March 31, 2014, operating profit of $4.3 million  was $14.4 million lower than the same period last year.  The majority of the  period-over-period decrease in operating profit resulted from the above noted  lower volume of site installation work in the commodity mining sector.  Backlog at March 31, 2014 of $80 million was $171 million lower than the same  time last year.  New contract awards of $111 million in the first quarter of  2014 were $1 million lower than in the same period in 2013.  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         $ millions                                            March 31                                                           2014         2013                                                                                    Revenue                                      $   0.6   $      0.6         Gross profit                                 $ (0.2)   $    (0.1)         Income from projects accounted for using the                              equity       method                                       $   5.5   $      7.0       Adjusted EBITDA                              $  11.7   $      8.7         Operating profit                             $   4.5   $      6.2                                                                              Revenue reported in the Concessions segment for the three months ended March  31, 2014 and 2013, was $0.6 million.  For the three months ended March 31, 2014, operating profit of $4.5 million  was $1.7 million lower than the same period last year as increases in revenue  and Adjusted EBITDA from the new Quito airport concessionaire were offset by  higher interest and amortization charges related to Quito operations. With the  opening of the new Quito airport on February 20, 2013, the project commenced  expensing interest (whereas prior to the opening of the new airport, interest  was being capitalized) and began amortizing airport assets that were put into  service.  From an operating profit perspective, the first quarter of 2013  included approximately one month of interest and amortization expense related  to the new airport, whereas the first quarter of 2014 includes a full three  months of interest and amortization charges.  DIVIDEND  As previously announced, the annual dividend to be paid to all shareholders of  Aecon Common shares is $0.36 per share (up from $0.32 per share) to be paid in  four quarterly payments of $0.09 per share (up from $0.08 per share).  The  first increased quarterly payment was paid on April 1, 2014 to shareholders of  record on March 21, 2014.  CONSOLIDATED RESULTS  The consolidated results for the three months ended March 31, 2014 and 2013  are available at the end of this news release.     Balance Sheet Highlights                                                                                                   March 31     Dec. 31       $ thousands (unaudited)                            2014        2013                                                                               Cash and cash equivalents and restricted cash $   150,585 $   244,536     Other current assets                              836,334     885,052     Property, plant and equipment                     501,809     512,257     Other long-term assets                            380,705     351,741     Total Assets                                  $ 1,869,433 $ 1,993,586                                                                               Current liabilities                           $   840,935 $   940,356     Long-term debt                                    114,970     123,128     Convertible debentures (long term portion)        250,855     248,817     Other long-term liabilities                        94,629      94,677                                                                               Equity                                            568,044     586,608     Total Liabilities and Equity                  $ 1,869,433 $ 1,993,586  CONFERENCE CALL  A conference call has been scheduled for Thursday, May 8, 2014 at 9:30 a.m.  (ET) to discuss Aecon's 2014 first quarter financial results. Participants  should dial 416-981-9011 or 1-800-734-8507 at least 10 minutes prior to the  conference time.  A replay will be available after 11:30 a.m. at  1-800-558-5253 or 416-626-4100 until midnight on May 15, 2014. The reservation  number is 21713584.  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                                                     March 31       March 31                                                         2014           2013                     Revenue                                      $   461,873 $      567,439     Direct costs and expenses                      (432,424)      (544,934)     Gross profit                                      29,449         22,505                                                                                 Marketing, general and administrative           (40,996)       (44,814)     expenses     Depreciation and amortization                   (16,828)       (17,511)     Income from projects accounted for using the       7,321          8,422     equity method     Other income (loss)                              (2,139)            297     Operating loss                                  (23,193)       (31,101)                                                                                 Finance income                                       604            532     Finance costs                                   (11,747)        (9,277)     Fair value gain on convertible debentures        (1,705)        (2,156)     Loss before income taxes                        (36,041)       (42,002)     Income tax recovery                               10,140         12,090     Loss for the period                          $  (25,901) $     (29,912)                                                                                 Basic loss per share                         $    (0.49) $       (0.56)     Diluted loss per share                       $    (0.49) $       (0.56)    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/May2014/07/c7179.html  CO: Aecon Group Inc. ST: Ontario NI: CST ERN DIV CONF  
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