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 one one on your telephone. You will then hear an automated message, advice your hand is raised. To start a question, please press star one one 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 Bragati. Please go ahead.

Thank you, Lisa. Good morning, everyone, and thanks for participating in our Year in 2024 Results Conference Call. This is Adam Bragati speaking. Joining me today are Jean-Louis Servranc, President and CEO, Jerome Juillet, 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 Jerome Lee. Consistent with prior quarters, we provide additional information to help clarify the underlying results, excluding impacts from fixed-price legacy projects into vestitures. 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 -over-year operating profit was driven by a decrease in other income of 186 million, primarily due to a lower -over-year gain related to the sale of .9% interest in Skyport of 133 million, and the lower gain on the sale of Acon Transportation East, or ATE, of 28 million. Excluding the impact of the legacy projects into vestitures 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. Delude loss per share for the year was 95 cents 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, angelic power construction, and extreme closed. Now looking at results by segment. And 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 achievements of central 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 2024. Revenue also decreased in urban transportation solutions as three LRT projects near completion and in 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 US. And an increase in battery storage energy, battery energy storage system work, partially offset by a decreased volume of telecommunication and gas distribution work. On an adjusted basis, construction revenue is 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. During 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, any growth power construction and United Transactions in 2024. And a decrease in other income driven by lower gains on the jail property, buildings and equipment, primarily in 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, and 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 does anticipate 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 as previously mentioned, which resulted in gains on sale of 133 million. On slide seven, we brought together the as adjusted information to exclude the impact of legacy projects and investors to provide insight into this underlying performance we've been discussing. As previously mentioned, on an as adjusted basis, revenue in 2024 was 4.2 billion compared to 3.8 billion in 2023. Adjusted EBITDA was 349 million in 2024 compared to 355 in the previous year. For the construction segment on an as adjusted basis, adjusted EBITDA was 307 million in 2024, representing a .4% margin. During slide eight, at the end of 2024, ACON held cash and cash equivalents of 123 million, excluding the cash held into an operation. In addition, at December 31, 2024, ACON had committed revolving credit facilities of 850 million, of which 153 million was drawn, and four million was utilized for letters of credit. Drawn credit is entirely at the ACON utilities level. ACON has no debt or working capital required to suit the maturity of 2027, except for equipment loans and leases in the normal course. ACON's next quarterly dividend of 19 cents per share will be paid on April 2nd, 2025, to shareholders of record on March 21st, 2025. At this point, I'll turn the call over to Jean-Louis to address our business performance and outlook.

Thank you, Vero. Turning to slide nine, ACON continues to build resilience through a balanced and diversified work portfolio while enhancing execution capabilities and project selection to play to our strengths. In 2024, roughly 45% of ACON's construction revenue was generated from the utilities and nuclear sectors, compared to 39% in 2023. Our self-performed capabilities and one ACON approach help to maximize value for clients through improved cost certainty and schedule, while offering a broad range of services from development, engineering, investment, and construction to longer term operations and maintenance to cover the full infrastructure value chain. We are embracing new opportunities to grow in areas linked to the energy sector and in US and international markets. These opportunities are intended to diversify ACON's geographic presence, provide new growth vectors, and deliver more consistent earnings through economic cycles. Turning now to slide 10, demand for ACON services across our markets continues to be strong. With backlog of 6.7 billion at the end of 2024, recurring revenue programs continuing to see robust demand and a strong bid pipeline, ACON believes it is positioned to achieve further revenue growth in 2025 and over the next few years, and is focused on achieving improved profitability and margin predictability. Of note, year-end backlog excludes the recently announced award for the Scarborough Subway Extension Transit Project and the design phase for the refurbishment of four units at the Pecrin Nuclear Generating Station, comprising 3.3 billion in total, which will be added to our backlog in the first quarter of 2025. Remaining backlog to be worked off of the three remaining legacy project was 121 million, or 2% of total backlog at December 31st, 2024. We remain focused on driving this project to substantial completion. We still currently expect it to be substantially complete in mid-year 2025 and the final project by the end of the third quarter of 2025. Trailing 12 months recurring revenue was 1 billion in 2024, comparable to the previous year, and up over 30% versus two years ago, taking into account the diversities of ATE and the .9% interest in Skyport in prior periods on a -for-like basis. Recurring revenues are typically executed on a non-fixed price basis, with the majority being over and above our reported backlog figures. Turning to slide 11, development phase work is underway on a number of major projects in which ACON is a participant, including the GO expansion on Corridor Works project, the Darlington U Nuclear project, the Contra-Curr terminal expansion, the US Virgin Island Airport redevelopment project, the Winnipeg North End Treatment Land project, and the Overdansen Dam project. These projects are being delivered using collaborative progressive design-build models with the majority expected to move into construction phase in 2025. As a reminder, none of the anticipated work from this progressive design-build project is yet reflected in backlog. Turning to slide 12, ACON is focused on achieving solid execution on its projects and selectively adding to 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 an opening backlog of $6.7 billion, combined with the $1.5 billion with recent new awards in the first quarter. 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 as progressive design-build projects move into the construction phase in 2025 and 2026. In addition, capital expenditure in 2025 are expected to be modestly higher than in 2024. In the concession segment, there are a number of opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months. Results in recent years were negatively impacted by the four legacy projects. However, the recent coastal gasoline pipeline settlement, along with the additional write-down of the Sixth Prize legacy project in 2024, are anticipated to lead to improved profitability and margin predictability, especially as the remaining three projects move closer to substantial completion. Until the remaining three projects are complete and the related claims have been resolved, there is a risk that this could also occur in future periods. As such, the completion and satisfactory resolution of claims on the remaining three legacy projects with the respective clients remains a critical focus for ACON and its partners. Finally, turning to slide 13, the year 2024 was a period of significant progress for ACON, marked by several positive developments. As previously mentioned, we successfully reached a settlement for coastal gasoline pipeline project while continuing to make steady progress in completing and satisfactorily resolving claims on the three remaining legacy projects. At the same time, we further de-risked our business by adding new collaborative projects into our development pipeline while transitioning the Scarborough Subway Extension Project from the development phase into the implementation phase under a target price contract. We also strengthened our operation through three key strategic acquisitions, Extreme Power Line, Ainsworth Power Construction, and United Engineers and Constructors, allowing us to capitalize on significant opportunities in the utilities, nuclear, and conventional power sectors across North America. With that, we are pleased to once again welcome the teams from Extreme, Ainsworth Power Construction, and United, as we work together to safely drive future growth. We are excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value. Thank you. We will now turn the call over to analysts for questions.

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. If you would like to withdraw your question, please press star one one again. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we take the first question. And our first question will be coming from the line of Kyle Brock of ATB Capital Markets. Your line is open.

Morning, guys. It's Kyle on for Chris. Your email from concession came in a bit lighter than we had been expecting. As we look into 2025, how should we be thinking about the expected EBITDA contribution from the segment, particularly as the portfolio evolves in the second half?

Hey, Kyle, it's Strum here. Thanks for the question. I think we previously talked about that 2024 had a lot of benefit in the concession segment with regards to development and construction fees earned as projects were in flight on the construction side. As those projects move into completion, there'll be a natural headwind against that. So our perspective remains consistent, which is going into 2025, we won't see that pick up on the concession side. I think it's gonna help offset it, but not to a significant degree. We can continue to work on the USVI projects, which we're targeting to hopefully kind of move into the second half of 2025. Beyond that, it is clearly a headwind on the concession front from 2025, but as expected, just given the amount of revenue that was generated with the development fees and then the concession revenue associated with the construction projects.

Thanks, that's very helpful. And then shifting to the legacy projects, with the 36 million reforecast in the quarter and the completion of the LRTs moving a bit to the right, you still feel good about the $125 million loss bucket? Any color there would be appreciated. Thanks.

Yes, I will take this one. Yes, we do, is the answer. I mean, we are in line with the information we gave at the end of Q2 2024. Mainly speaking, I mean, on our three remaining legacy projects, Gordi Hau International Bridge is perfectly on schedule and perfectly under control for a substantial completion, but we are still forecasted for September 2025. Egington and Finch, our two LRTs in Toronto, we are now very happy to see that all stakeholders are working towards the same direction and we are getting ready to have revenue service demonstration around May and June and to get Zoom's project substantially completed around mid-year 2025. So, so far in front of the information that we gave you, we are in line.

Thank you. One moment for the next question.

And our next question will be coming from the line of Christa Friesen of CIBC. Your line is open.

All right, thanks for taking my question. I was just wondering if you can speak to how we should be thinking about margins in the construction segment in 2025 and if there's any puts and takes there that we should be considering.

Hey, Christa, good question. So, from a margin perspective on the construction side, given the seasonality of the business, we do try to think of things on effectively a rolling basis. So 2024 overall margins, adjusting out legacy projects and adjusting out divestiture impacts, roughly 7.5%. This is a kind of good margin profile, not an exceptional one. So it's one that we're gonna try to continue to work on from an overall perspective. But that being said, I think we just need to be cognizant. That is a pretty good result to put up. And so I think for us, it's about maintaining it in this range and trying to really push the teams to operate efficiently, to try to kind of inch that upwards. But I think right now, in 2023, we have really good results supported by some very strong project closeouts. 2024, we're in flight and transitioning. 2025, we're just gonna try to push that number up a little bit more.

Great, thank you. And then maybe just a higher level question. How you're thinking about capital allocation and M&A this year and any kind of difference between the Canadian market and US market and kind of just what you're seeing there?

Sure. So capital allocation perspective remains consistent. First priority is the strength of the balance sheet. We think about it in two ways. One is at the ACON group level, where we've got the effectively undrawn revolver at the top of the house. And then one's at the ACON utilities level, where the small tickets for cyclometers will work. And it's own credit facility, where we have the majority of our drawings to support the M&A program. So we maintain a strong balance sheet. And then the next flow is to ensure that operationally, that the business has what it needs to execute the work programs that we have in front of it. Our outlook noted that our capital expenditures are just going to be slightly higher in 2025 versus 2024. This is largely around building resiliency for the overall business across the various sectors where we operate and spread across all operating regions where we execute programs. The dividend program, we've held the dividend flat this quarter and this year. And the perspective there being we've got a pretty robust dividend as it stands today. We have our NCIB to execute tactically as we see appropriate. And then finally, from an M&A standpoint, we continue to have a lot of active discussions across both the utility side of the house and then the balance of the ACON business. Within Canada, we have very strong operations. We have the market relatively well covered. We continue to tactically look to infill. I think the APC transaction in December was a great example of that. Again, just strengthening an area where we already had a good presence. But like looking 24, the teams were quite active both on the utility side and on the balance of the ACON side with Xtream and United. And I think building out our capability and filling in our geographies will continue to be a priority from that perspective.

Great, thank you. I'll jump back in the queue.

Thanks,

Lisa.

Thank you. One moment for the next question, please. And our next question is gonna be coming from the line of Michael Cyprius of Desjardins. Your line is open.

Yes, thanks for taking my question. Good morning. Maybe going back to CapEx, you mentioned that it's expected to be modestly higher versus last year. Can you maybe explain some of the ongoing dynamics with equipment now that the loonie has fallen so much versus the US dollar? And if you're facing any increased costs on that front?

Yeah, lots to unpack there. Potential for impact there exists. I'd say that we manage our programs pretty thoughtfully. We already have a base, and so part of this is effectively parts and repairs, and some of the equipment that we're purchasing comes from geographies where it's not tied to USD as well. So I think overall, I'd say the volume of equipment that we're expected to be onboarding is likely a little bit higher. And also, we do have a refresh program, and so as we onboard new equipment, we offboard all older equipment, and that shares in the same dynamic. So on a net basis, maybe a marginal headwind, but overall, not something that we're overly concerned about. And John, will you go ahead?

Yeah, maybe I can jump in a little more generally. I mean, your question was about Forex, and what we can say now is that we have a natural way of edging because we have more and more revenue in US dollar, so it helps us. And on a broader view, I mean, I imagine your question is also linked with tariff. So to be clear about it, don't expect Acorn to react every day due to the flow of information left and right and up and down. But basically, Acorn is not a manufacturer. Acorn is not an exporter of goods. Acorn is a builder. So most probably, the consequence of all these tariff issues is going to be quite limited for us and maybe reduced to what we call the changing loan, for which we are protected in our contract. You remember that following COVID, we have been extremely careful on this kind of clause on our contract. I mean, the protection of our revenue. Following changing laws. So I'm not particularly worried, but as I said in my introduction to this answer, I mean, we are much more American today. I mean, we are in the United States. Acorn works. You probably remember it's a company that we acquired in early 2019. The revenue was four or five million US dollar. It's now going to deliver between 150 and 200 million Canadian dollar. Extreme is behaving extremely well. We are extremely happy with this acquisition. United, the last one, is also a very important acquisition for us. All this just means that we are in the United States. We are producing. We have our workshop. We have our engineer. We have our people. And this is important in front of what is happening at the moment between the two countries. So my instruction to the team is very clear. No politic, no emotion. Do your work and everything is going to be fine.

That's very helpful, Jean-Louis. I appreciate it.

Thank you. As a reminder, if you would like to ask a question, please press star 1 1 on your telephone.

One moment for the next

question. And our next question will be coming from the line of Michael Tupome of TV Cowan. Your line is open.

Thank you. Good morning.

Mike.

You have several collaborative projects that have been moving through the development phase. You've talked about some more of these hitting the construction phase in 2025, 2026. Are you able to provide a little bit more detail about how we think about those moving into the construction phase and begin to contribute to revenues?

Yeah, I mean, those collaborative contracts and what we call progressive design, I mean, it's a very interesting developing part of our business. Very interesting because it's straight on to our strategy of giving more predictability about our margin. You probably remember when I arrived at AECON, the share of six price contract was something like 72 percent within our activity. And in line with our strategy, it has now decreased. We are between 35 and 38 percent. We have a totally inverse trend between variable price and six price. PDD and collaborative contracts, I mean, is part of this strategy. So what happened with Scarborough is very important because it's a major one. That is now closed commercially. We finalize the development phase and we reach an agreement toward a target price with our client. It's a big one for AECON. It's probably a little over 2.8 billion in terms of activity. So the model works. And this is why it's so important. But it's not the only one. I mean, Pick Ring and we have disperse information about it is a collaborative contract. I mean, we have in our backlog something like one billion for the development phase of Pick Ring. We are working on other progressive design bill. I mean, DNNP, the SMR is a collaborative contract. It's a six year alliance. And we expect during the first part of the year 2025 to also go from development phase to construction phase, go to an expansion. Although it's a phased progressive design bill due to the fact that it's a ground fill environment. I mean, we are working and operation of the rail network. So it's going to be phased. But we have also closed the development phase and are progressively going to implementation and construction. We have others. I mean, the Winnipeg wastewater treatment plant is also a collaborative one. Or what Hanson, I mean, with the US Corp of Engineers in the United States, that is something like 250 million for Acorn, ultimately in construction, is a collaborative one. Contre-Coeur in Quebec is a collaborative one. So very important, very good and perfectly in line with our strategy. As I used to say, there's not a universal contractual mode for every project. Each kind of project at its own favored and optimal way of contracting. We can see, for example, now that our clients from time to time are ready to come back to lump sum job, but taking out from the lump sum everything that depends on stakeholders that is not under our control and putting it on the time and materials or targets. So those are hybrid models that are also very, very interesting. All this is developing quite well and perfectly in line with what we have announced.

Perfect. Thank you. I apologize if I missed this earlier, if there was any discussion about this, but just on the subject of tariffs, doesn't seem as though there's any real direct exposure, but obviously people are concerned about potential indirect impact. Can you just talk a little bit about whether or not you've seen any impact so far as it relates to work you're pursuing? And I'm thinking more specifically about sort of any customers' comments they may have made or sentiment from the customer side. Just trying to get a sense if they're from an indirect impact perspective, what may come from this?

Yeah, I'll tackle that one. It's a good question. I think the best way we can answer is that we're monitoring the situation pretty closely. I've noted that the measures and the countermeasures of non-tariff impacts, changes in procurement, changes in policies of national, sub-national, regional governments, all of this is playing out in real time. And we're just watching where it's going to land. In general, the uncertainty that this is causing potential inflationary impacts could have impacts on our labour force. So the way that this impacts operations is kind of multifaceted. And so we're being kind of cautious from that perspective. And you know, client behaviour, you may or may not change in association with this. And I just say that it's something that we're very live to. That's probably all we can really share at this point.

Well, fair enough. It's obviously early days and very complex. So appreciate that. And then just lastly, in terms of nuclear-related work, obviously there's some part of the Pickering Award and the latest refurbishment awards got added in the fourth quarter and more to come in the first quarter. But can you just speak a little bit about nuclear in general? Obviously, there was a lot of excitement and I think continues to be around the opportunities in that area. But just wondering what you're seeing now in terms of sort of future opportunities, if the level of discussion and opportunity set continues to expand. And I'm thinking specifically both about US and Canada. You know, if you can comment on sort of new build as well, which may be a little further out, but just what the thinking there is.

Yeah, I will take this one. A lot of excitement and enthusiasm. Although at AECON, we are extremely happy with our nuclear activity and the way it's growing. So as you say, let's split into Canada and US. So Canada, basically we have two vectors of growth. The first one is what we call the major component replacement. We are at the moment working on the fourth and last unit of Darlington that should be ready for 2026. I just remind you that the third unit, we completed it five months ahead of schedule, perfectly within the budget. And Bruce, you probably saw that we have added the four last reactors. We are at the moment working on the second one that should be ready next year. Bruce will go up to 2032 now in terms of major component refurbishment. Pickering is a very nice add-up because it comes exactly at the right moment that we were needing after Darlington. It means that all our teams coming from Darlington, all the lessons learned, I mean, will be directly applicable to Pickering. And we are very happy about it. We are also working on preparing our offers on a collaborative model for the turbine refurbishment. This is for the refurbishment programs. In addition to this, you have the new build. And the main one at the moment, the one on the table is a small modular reactor at Darlington, unit one. We are expecting that OPG will get licensing authorization from the regulators around mid 2025. We are ready to shift from development phase to construction phase. I remind you that it's a four unit program of 300 megawatts where ACON is in charge of all the construction services. After this, we are also getting ready for the new build of 1000 megawatts that will arrive for OPG and for Bruce getting ready for those big jobs. In the US, it's also quite interesting. As I said a few minutes earlier, we acquired a works early 2019, very small company, with a very specialized welder that we used on our Canadian refurbishment program. Now this company that has been restructured, that has been nurtured with a lot of processes from ACON, a lot of knowledge from our nuclear project is growing and is growing quite well. We are expecting that our activity in the US for nuclear will be between 150 and 200 million in 2025. We are working for the federal government, Department of Energy on the Savannah River. We are working for Dominion. We have added a few days ago a very interesting purchase order for Energy Northwest. So this is going quite well. In conclusion, always remember that the resiliency and the strength of ACON is due to the balance of its activity. I mean, I don't want to become an 80% nuclear company. All this has to be balanced, but we are perfectly on our way and very happy with the nuclear activity. Thank you very much for all that.

Thank you. And there is a follow-up question from Frederick Besson, from Raymond James. Your line is open.

Hey Frederick.

Good morning everybody. I don't know if this question has been asked before. I suppose it has, but it might have not come from me. But I'm just wondering if data center is an opportunity for you guys from maybe a power transmission perspective?

No, Frederick. I mean, this question has not yet come on the table. Basically, in the data centers, there are two parts. One is a sort of huge workshop where the clients just insert all their equipment that are directly procured by them, plus a lot of AC, air conditioning. We are not going to this. We are late in this market and ACON is not really a building or commercial building company. As you say, what is quite interesting is the power that is related with those data centers and two kinds of powers. The first one is to get autonomy of power generation. So we are looking at this. And the second one is to have a backup. So to be perfectly connected to the grid, to the existing grid. And it just means that there is a full sub market linked with what we call balance of plan and energy. And yes, we are looking at it. It's a little similar to battery storage, you probably remember. I mean, we didn't want to go in the pure battery aspect of it, but we are usually extremely interested and we are getting very strong in what we call the balance of plan, everything related with energy.

OK. And are you seeing, I mean, the market's really vibrant in the US. Are you seeing the potential for Canada to become a major player in data centers?

Not

sure. I mean, the US is very much in advance, but there are needs in Canada and we are getting stronger and stronger in the US, as I was explaining through our acquisition. United is a very interesting acquisition. So first of all, you have noticed it's engineers and constructors. Constructors is because United has a joint venture with Chromatome, who is a worldwide leader in steam generation. And it's quite important because most of the major component refurbishment of existing nuclear power plant will have to deal with steam generation. But United is also an engineering company, pre-construction, feasibility, detailed engineering, everything related with power. And of course, we want to leverage their capacity with the Canadian capacity that we have to be stronger in United States.

OK, thanks. That's helpful. I have a question regarding the construction segments result. There was it was highlighted that the gross margins on the civil side were part of responsible for some of the pressure you experiences. Are you able to comment further on that, provide additional color?

Yeah, hey, Fred, Jerome here. So John Lee previously mentioned one of the benefit of AECON's platform is the diversification across the various sectors. And so on occasion, we have a broad portfolio of civil projects spanning the continent, constructions and outdoor sport. And in some instances, some of these projects don't perform at the same level as others. And this would just been a quarter where some of the project performance on some of the civil works that we're doing, I think, partly in kind of the western part of the continent, just didn't perform to the same level as our aspirations. Balanced out by other high performance in other areas of the business, right? As John Lee mentioned, nuclear did very, very well with strong margin profile out of our industrial business. But effectively, this is core civil works, just managing through challenging and the projects we execute on are not simplistic things, right? Like they are meaningful, critical infrastructure projects that are absolutely required, but it's not easy stuff, right? And at times, some of these projects get tough. And that was what we saw manifest in the margin profile in Q4.

OK, thanks for your answers.

Thanks, Roger. Thank you. And that does conclude today's Q&A session. I would like to turn the call back over to Adam Bogari for closing remarks. Please go ahead.

Thanks Lisa and thanks everyone for joining us today. As always, feel free to reach out with comments and questions to us after happy to reengage as you continue to work through the models and things like that. But we've concluded the call today and look forward to chatting next quarter.

Thank you all for joining today's conference call. This concludes today's program. You may disconnect.