Aecon Group Inc.

Good day and thank you for standing by. Welcome to the Q1 2024 ACON Group Incorporated earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand this over to our first speaker today, Adam Borgatti. Adam, please go ahead.

Thank you, Mark. Good morning, everyone, and thanks for participating in our first quarter results conference call. With me today are Jean-Louis Servanques, President and CEO, Jerome Julliet, Executive Vice President and CFO, and Alistair McCallum, Senior Vice President, Finance. Our earnings announcement was released yesterday evening, and we've posted a slide presentation on the investing section of our website, which we'll refer to during the call. Following our comments, we'll be glad to take questions from analysts, and we ask that analysts keep to one question and a follow-up before getting back into the queue to ensure others have a chance to contribute. As noted on slide two of the presentation, listeners are reminded that the information we're sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties. Although ACON believes the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct. Now, before I turn over the call, I'm pleased to welcome Jerome Julliet as ACON's Executive Vice President and Chief Financial Officer, effective April 8, 2024. With nearly 20 years of finance, strategy, and capital markets experience, particularly in construction, engineering, and utility services, Jerome has been a trusted advisor to us and many of our clients and partners. Notably, he played key advisory roles in some of ACON's most transformative transactions, including the divestiture of ACON Transportation East and the strategic investment by Oak Tree Capital Management in ACON Utilities last year. With that, I'll hand the call over to Jerome.

Thanks, Adam, and good morning, everyone. I'm excited to have joined ACON. This is day 14 for me, and I've already found the passion, dedication, and innovative spirit that defines this business. A huge thank you to the team for their warm welcome and strong support during my onboarding. It's been critical for me. I'm eager to collaborate with the leadership team and the balance of the business to develop and execute our strategies that are going to optimize our financial performance and create value for shareholders. With that, I'll now touch briefly on ACON's consolidated results, review results by segments, and then address ACON's financial position before turning the call over to Jean-Louis. Turning to slide four, revenue for the three months ended March 31st, 2024 of $847 million was $261 million or 24% lower compared to the same period in 2023. A table has been included on slide 16 of the conference call presentation to help contextualize our Q1 revenue performance. Adjusted EBITDA of $33 million, a margin of 3.9%, compared to $25 million, a margin of 2.2% last year, An operating loss of $4 million in the quarter compared to an operating profit of $6 million last year. Lower operating profit was attributed primarily to gain-on-sale property plan equipment of $11 million recognized in the same period, 2023. Duluth loss per share in the quarter of $0.10 compared to Duluth loss per share of $0.15 in the same period last year. Reported backlog of $6.3 billion at the end of our quarter compared to backlog of $6 billion at the end of the first quarter in 2023. New contract awards of $963 million were booked in the quarter compared to $812 million in the prior period. When I look at the results by segment, turning to slide five, construction revenue of $844 million in the first quarter was $247 million or 23% lower than the same period last year. Revenue was lower in industrial operations, primarily due to decreased activity on mainline pipeline work following the achievement of substantial completion on a project in the third quarter of 2023. And urban transportation solutions from a lower volume of white rail transit work civil operations from a lower volume of road building construction work as a result of the sale of ACON Transportation East in the second quarter of 2023, and in utilities operations from a decreased volume of telecommunications and oil gas distribution work, partially offset by an increased volume of high voltage electrical transmission and battery storage system work. Partially offsetting these decreases was higher revenue in our nuclear operations, driven by more volume of refurbishment work at nuclear generating stations in Ontario and the United States. New contract awards of $960 million in the first quarter of 2024 compared to $795 million in the same period last year. Backlog at the end of the first quarter was $6.2 billion compared to $5.9 billion at the end of the first quarter of 2023. Turning out slide six, adjusted EBITDA of $28 million, a margin of 3.3% compared to $22 million, a margin of 2% last year. Adjusted EBITDA increased by $6 million due to higher volume and gross profit margin in nuclear operations and higher gross profit margin in urban transportation solutions and utilities. These increases were offset by a decrease in gross profit in industrial operations. Higher operating profit in civil operations was primarily due to a lower seasonal operating loss contribution from a road building construction work following the sale of a contra-exportation east in the second quarter of last year, and partially offset by a lower gross profit margin from major projects in western Canada. Now over to slide seven. Concessions revenue for the first quarter was $3 million compared to $17 million in the same period last year. Decrease in revenue was largely driven by the sale of 49.9% interest in Skyport, the Bermuda International Airport concessionaire, and use of equity method of accounting on a prospective basis for ACONs retained 50.1% interest in Skyport. Adjusted EBITDA in the concession segment of $18 million compared to $15 million last year, primarily due to improved results from the Bermuda Airport and an increase in management and development fees. Passenger traffic in Bermuda continues to improve, with an average of 81% in the first quarter of 2024, pandemic level. Turning now to slide eight, at the end of the first quarter, ACON held cash and cash equivalents of $123 million, excluding cash and joint operations. In addition, at March 31st, 2024, ACON had committed revolving credit facilities of $850 million, of which $76 million was drawn and $7 million was utilized for letters of credit. ACON has no debt or working capital credit facility maturities until 2027, except equipment loans and leases in the normal. At this point, I'll turn the call over to Jean-Louis.