Aecon Group Inc.

Good day, and thank you for standing by. Welcome to the second quarter 2025 ACON Group, Inc. earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-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 your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Adam Breghetti, Senior Vice President of Corporate Development and Investor Relations. Please go ahead.

Thank you, Gigi. Good morning, everyone, and thanks for participating in our second quarter results conference call. This is Adam Breghetti speaking. Joining me today are Jean-Louis Servronx, 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 this call. Following our comments, we'll be glad to take questions from analysts, and we ask that the analysts keep to one question and a follow-up before getting back into the queue. As noted on slide two of the presentation, listeners are reminded that the information we're sharing with you today includes forward-looking statements. and that these statements are based on assumptions 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.

And good morning, everyone. I'll now speak to ACON's consolidated results, review results by segment, and address ACON's financial position before turning the call over to Jean-Louis. Additional information has been provided to help clarify Detailed reconciliation tables are included on slides 13 through 15 in the conference call presentation. Turning to slide three, on a reported basis, revenue for the three months into June 30, 2025 of $1.3 billion was $448 million or 52% higher compared to the same period in 2024. Revenue grew across all operating sectors with strong performances in industrial, nuclear, and civil operations. Revenue growth also benefited from the impact of the acquisitions of Extreme Power Line Construction, Gainsworth Power Construction, and United Engineers and Constructors that occurred in the second half of 2024. Adjusted EBITDA of $41 million compared to a negative $154 million last year, an operating profit of $2 million in the quarter compared to an operating loss of $166 million last year. Adjusted EBITDA and operating profit in the second quarter of 2024 were negatively impacted by $237 million in legacy project losses versus $39 million in losses on legacy projects in the second quarter of 2025. Excluding the impacts from legacy projects and divestitures, as adjusted revenue for the three months ended June 30, 2025 of $1.3 billion compared to $975 million in the same period in 2024. Adjusted EBITDA is adjusted of $80 million compared to $78 million last year, driven by stronger contribution from core construction activities, which more than offset the anticipated normalization in concessions EBITDA, which benefited from incremental proceeds from the partial sale of Skyport and additional management and development fees in the prior period. Adjusted diluted loss per share in the order of $0.09 compared to a loss of $2.03 last year. ACON's reported backlog of $10.7 billion at the end of the second quarter was the highest reported backlog in its history, surpassing the previous record of $9.7 billion set in the last quarter. The increase in backlog is a result of significant efforts through collaborative models with our clients, and ACON anticipates a moderation in backlog growth given current levels. New contract rewards of $2.4 billion were booked in the quarter, primarily from the alliance contract awarded Ontario, where ACON is leading the construction of North America's first commercial grid-scale small modular reactor, or SMR, for Ontario power generation. Now looking at results by segment. Turning to slide 4, construction revenue of $1.3 billion in the second quarter was $447 million or 52% higher than in the same period last year. Revenue was higher in industrial operations driven primarily by an increased volume of field construction work in Western Canada and the impact on revenue of the Coastal Gas and Pipeline Project Settlement Agreement in 2024, and in nuclear operations from an increased volume of refurbishment and engineering services work at nuclear generating stations in Ontario and the United States. Revenue is also higher in civil operations from a higher volume of major projects, road building construction, and foundation work, and urban transportation solutions primarily from an increase in mass transit project work in Ontario and utility operations from a higher volume of gas distribution work in Canada and electrical transmission work in the U.S. following the acquisition of Xtreme in the second half of 2024, partially offset by a lower volume of telecommunication work. On an as-adjusted basis, construction revenue was $1.3 billion compared to $973 million in the same period last year, representing a 31% increase. Due contract rewards of $2.3 billion in the second quarter of 2025 more than doubled $64 million in new awards booked in the same period last year. Turning now to slide 5, adjusted EBITDA of $40 million compared to a negative $173 million last year, an operating profit of $15 million compared to an operating loss of $185 million last year. On an as-adjusted basis, adjusted EBITDA for the three months into June 30, 2025, of $79 million compared to $64 million in the same period in 2024, with improved performance driven by higher volume and gross profit margin in nuclear and utility operations, and higher volume in industrial operations, offset in part by lower operating profit in civil from Western operations, and urban transportation solutions from lower gross profit on mass transit projects that are now nearing completion. Turning to slide 6, concessions revenue for the second quarter was $2 million compared to $2 million in the same period last year. Adjusted EBITDA in the concession segment of $16 million in the quarter compared to $30 million last year and operating profit of $3 million compared to $17 million last year. Lower adjusted EBITDA and operating profit in the quarter were primarily driven by last year's gain on sale related to incremental proceeds from the partial sale of Skyport and last year's one-time recovery in Skyport. Otherwise, the adjusted EBITDA of the concession segment was aligned with expectations. On slide seven, we brought together the as-adjusted information to exclude impacts of the legacy projects and divestitures to provide insight into the underlying performance of the business. On an as-adjusted basis, revenue for the 12-month period ending June 30, 2025 was $4.7 billion, compared to $3.8 billion for the same period last year. Adjusted EBITDA was $351 million in the trillion-12-month period, compared to $337 million in the prior period. For the construction segment, on an as-adjusted basis, adjusted EBITDA was $321 million for the trillion-12-month period, representing a 6.8% margin. As-adjusted EBITDA margin was impacted by weaker gross profit in Western civil projects, transportation solutions from lower gross profit on mass transit projects that are nearing completion. Over three quarters of AECON's record backlog at June 30th is non-fixed price. This compares to 50% non-fixed price last year and just 30% non-fixed price in the second quarter back in 2021. ACON has continued to shift the nature of our backlog and our business over time, including to more collaborative and progressive procurement models, while seeking to reduce risk in our performance and target greater profitability and margin predictability. Turning to slide 8, at the end of the second quarter, ACON held core cash equivalents of $123 million, which excludes $339 million of cash representing ACON's proportionate share held in joint operations. In the second quarter of 2025, ACON renewed both its committed revolving credit and performance security guarantee facilities. At June 3, 2025, ACON had a committed revolving credit facility of $600 million, an increase of $150 million from its previous credit facility, and a separate committed credit facility for ACON utilities of $400 million. $336 million was drawn across both facilities, and $8 million was utilized for letters of credit. Both revolving facilities now mature in June of 2029. ACON has no debt or working capital credit facility maturities until 2029, except equipment loans and leases in the normal course. At this point, I'll turn the call over to Jean-Louis to address our business performance and outlook.