Aecon Group Inc.

Good day and thank you for standing by. Welcome to the Q1 2026 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 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 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 first speaker today, Mr. Adam Borgatti, Senior Vice President of Corporate Development and IR. Please go ahead.

Thank you, Shannon. Good morning, everyone, and thanks for participating in our Q1 2026 Results Conference Call. Joining me are Jean-Louis Servrance, 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 have posted a slide presentation on our website, which we will refer to during this call. Following our comments, we'll be glad to take questions from analysts, and we ask that you keep to one question and a follow-up, if necessary, before getting back into the queue. As noted on slide two of the presentation, listeners are reminded that the information we are sharing with you today includes forward-looking statements 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. Turning to slide three, ACON continued to advance its growth initiatives in the first quarter of 2026 and achieved significant milestones across our operations. Record backlog of $10.9 billion was recorded at March 31, 2026, and is underpinned by a diversified mix of long-term projects with appropriate risk balance. The quarter featured the addition of the Howard Hansen Dam Facility project to backlog following an 18-month integrated design phase. Record first quarter revenue of $1.3 billion increased 18% over the same period last year, with revenue increasing across all of ACON's operating sectors. adjusted EBITDA improved significantly in the quarter to $32 million on a reported basis versus $4 million last year, driven by improved year-over-year margin performance in the construction segment. We expanded strategically through the acquisitions of KPC Power Electrical and Energy Measuring Solutions in Ontario, and ARC American and CA Advance on Regina Services in Indiana. These acquisitions critical infrastructure delivery. We ended the quarter with a strong liquidity position and capacity to invest in additional growth following the successful offering of common shares for gross proceeds to ACON of $172.5 million. ACON maintains a positive outlook supported by expectation for further growth based on our strategic positioning in sectors with attractive demand profiles consistent with our prior disclosure. And with that, I'll hand the call over to Jerome. Thanks, Adam, and good morning, everyone.

I'll speak to ACON's consolidated results, review results by segment, and address ACON's financial position. Turning to slide four, revenue for the three months ended March 31, 2026 of $1.3 billion was up $195 million or 18% compared to the same period in 2025. Adjusted EBITDA of $32 million compared to $4 million last year. an operating loss of $8 million compared to an operating loss of $41 million in the same period last year. The improvement in the period was driven by higher gross profit of $59 million. Adjusted diluted loss per share in the quarter was $0.21 compared to an adjusted diluted loss per share of $0.55 in the first quarter of last year. Financial results in this quarter were impacted by negative gross profit of $4 million from the legacy projects. Reported backlog of $10.9 billion at the end of the first quarter was the highest reported backlog in ACON's history, surpassing the previous record of $10.8 billion set in the third quarter of 2025. New contract awards of $1.4 billion were booked in the quarter compared to $4.1 billion in the prior period. Now looking at results by segment. Turning to slide 5, construction revenue of $1.5 same period last year. Revenue was higher in all sectors, the largest increase in nuclear operations driven by higher volume of refurbishment, new build, and engineering services work in Ontario and the United States. Higher revenue in the utilities sector was primarily driven by an increase in electrical transmission and distribution work in Canada and the United States, contributions from acquisitions in the first quarter of 2026, and from higher telecom and gas distribution In civil operations, higher revenue was mainly from an increase in the civil component of power and rail projects, and from work performed internationally, partially offset by a lower volume of foundations work and highway, road, and bridge building activity. Higher revenue in industrial was driven by an increase in field construction work and industrial manufacturing and wastewater treatment facilities, driven by operations in the United States, with most of the revenue growth from the Bodell Construction and Trinity Industrial and from an increase in power generation projects. Revenue was also higher in urban transportation solutions, largely from an increase in subway and commuter rail system projects, partially offset by a lower volume of work from LRT projects in Ontario and Quebec that achieved substantial completion in 2025 or are approaching substantial completion. Turning to slide six, adjusted EBITDA of $42 million was compared to a loss of $1 million last year. The increase was primarily driven by a volume-driven increase in gross profit in nuclear operations and from an improvement in gross profit margin in civil operations and urban transportation solutions. Turning to slide seven, concessions adjusted EBITDA for the quarter was $6 million compared to $13 million in the same period last year, driven by lower management and development fees on LRT projects that achieved substantial completion in 2025. partially offset by improved operating results at Skyport and Bermuda. The book value of equity of our concessions portfolio at quarter end was over a quarter billion dollars. Turning to slide eight, at March 31, 2026, ACON held core cash and cash equivalents of $81 million, which excludes an additional $425 million of cash representing ACON's proportionate share of cash held in joint operations. In addition, At March 31, 2026, ACON had committed revolving credit facilities of $1 billion, of which $294 million was drawn and $4 million was utilized for letters of credit. ACON has no debt or working capital credit facility maturities until 2029, except equipment loans and leases and loans. ACON generated free cash flow of $212 million in the trailing 12-month period ended March 31, 2026.