Aecon Group Inc.

Good day, and thank you for standing by. Welcome to the Q4 2024 ACON Group, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message, Advice Your Hands Up is raised. To answer your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Adam Bugatti. Please go ahead.

Thank you, Lisa. Good morning, everyone, and thanks for participating in our year-end 2024 results conference call. This is Adam Bugatti speaking. Joining me today are Jean-Louis Servronks, 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 posted a slide presentation on our website, which we'll refer to during the call. Following our call, we'll be glad to take questions from the analysts and ask that the analysts keep to one question and a follow-up before getting back into the queue. As noted on slide two, listeners are reminded that the information we're sharing with you today includes forward-looking statements, and 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 the expectations will prove to be correct. And with that, I'll hand the call over to Jerome.

Thanks, Adam. Good morning, everyone. Before we move into the financial discussion, I'll briefly touch on recent actions on the trade front. ACON is carefully monitoring the developments and assessing the potential effects on our procurement and purchasing. We're taking a cautious stance here, given the impact these measures and countermeasures may have on the cost of materials, the financial picture of our clients, and their decisions to advance projects. and I'll speak to our consolidated results, review the results by segment, and address ACON's financial position before turning the call over to Jean-Louis. Consistent with prior quarters, we provided additional information to help clarify the underlying results, excluding impacts from fixed price legacy projects and divestitures. We have detailed reconciliation tables included on slides 15, 16, and 17 in the conference call presentation. Turning now to slide three. On a reported basis, revenue for the year of 4.2 billion was 401 million or 9% lower compared to 2023. Adjusted EBITDA of 83 million compared to 143 million last year. Consolidated adjusted EBITDA in 2024 was negatively impacted by 273 million in legacy project losses compared to 215 million in 2023. Operating loss of 60 million compared to an operating profit of 241 million in 2023. In addition to the items just noted, lower year-over-year operating profit was driven by a decrease in other income of $186 million, primarily due to a lower year-over-year gain related to the sale of 49.9% interest in Skyport of $133 million and the lower gain on the sale of Akon Transportation East, or ATE, of $28 million. Excluding the impact on the legacy projects and divestitures on an as-adjusted basis, revenue for the year was $4.2 billion compared to $3.8 billion in 2023, and adjusted EBITDA of $349 million compared to $355 million last year. Dilute loss per share for the year was $0.95 compared to dilute earnings per share of $2.10 in 2023. Reported backlog of $6.7 billion at the end of 2024 compared to backlog of $6.2 billion a year ago. New contract awards of $4.7 billion were booked in the year compared to $4.5 billion in the previous year. The reported 2024 awards include $275 million of backlog acquired at the time of acquisitions of United, Ainsworth Power Construction, and Extreme Closed. Now looking at results by segment. In turning to slide four, construction, revenue of $4.2 billion in 2024 was $352 million or 8% lower than the previous year. The largest decrease in revenue occurred in industrial operations driven by a decreased activity on mainline pipeline work Following the achievement of substantial completion on a large project in the third quarter of 2023 partially offset by a higher volume of field construction work at wastewater treatment and industrial facilities in 24. Revenue also decreased in urban transportation solutions as three LRT projects near completion and civil operations largely from a decrease in road building construction work after the sale of ATE in the second quarter of 2023. Partially offsetting these decreases were higher revenue in nuclear, driven by an increased volume of refurbishment work in Ontario and the United States, and utility operations, primarily from an increased volume of electrical transmission work in the U.S., and an increase in battery energy storage system work, partially offset by a decreased volume of telecommunication and gas distribution work. On an as-adjusted basis, construction revenue was $4.1 billion in 2024, compared to $3.8 billion last year. New contract awards of $4.7 billion in 2024 compared to $4.4 billion in the previous year. Backlog at the end of 2024 was $6.6 billion compared to $6.1 billion at the end of 2023. Turning to slide five, adjusted EBITDA of $34 million compared to $99 million last year. The largest driver of the decrease was negative gross profit on the four fixed price legacy projects of $273 million in 2024 compared to negative gross profit of $215 in 2023. Other than the impact of fixed price legacy projects in 2024, lower operating profit in the balance of the construction segment was largely driven by lower gross profit margin in civil operations and urban transportation solutions, and partially offset by higher operating profit in nuclear operations from higher volume and gross profit margin and industrial due to higher gross profit margin. Other items contributing to the reduction in operating profit include an increase in acquisition-related transaction costs that were expensed in the year, an increase in amortization expense related to acquisition-related intangible assets from the extreme aimed-worth power construction and United Transactions in 2024, and a decrease in other income driven by lower gains on the sale of property, buildings, and equipment, primarily utility operations. On an as-adjusted basis, adjusted EBITDA was $307 million in 2024 compared to $326 in 2023. Turning now to slide six. Concessions adjusted EBITDA for the year was 87 million compared to 90 million last year, an operating profit of 24 compared to 174 last year. 2024 adjusted EBITDA in the concession segment benefited from greater activity on certain progressive and collaborative projects, as well as higher fees on major transit and transportation projects nearing construction completion. Adjusted EBITDA is anticipated to be impacted in 2025 as these projects begin to shift to early stages of the respective operations and maintenance and concession phases, as new projects start to ramp up. Lower operating profit in the quarter was primarily due to the Skyport transaction that was previously mentioned, which resulted in gains on sale of $133 million. On slide seven, we've brought together the as-adjusted information to exclude the impact of legacy projects and divestitures to provide insight into this underlying performance we've been discussing. As previously mentioned, on a NAS adjusted basis, revenue in 2024 was $4.2 billion compared to $3.8 billion in 2023. Adjusted EBITDA was $249 million in 2024 compared to $355 million in the previous year. For the construction segment on a NAS adjusted basis, adjusted EBITDA was $307 million in 2024, representing a 7.4% margin. Turning to slide 8, at the end of 2024, ACON held cash and cash equivalents of $123 million, excluding the cash held in joint operations. In addition, at December 31, 2024, ACON had committed revolving credit facilities of $850 million, of which $153 million was drawn and $4 million was utilized for letters of credit. Drawn credit is entirely at the ACON utilities level. ACON has no debt or working capital credit facility maturities until 2027, except for equipment loans and leases in the normal course. ACON's next quarterly dividend of $0.19 per share will be paid on April 2, 2025, to shareholders of record on March 21, 2025. At this point, I'll turn the call over to Jean-Louis to address our business performance and outlook.