Aecon Group Inc.

Good day and thank you for standing by. Welcome to the Q3 2026 AECON Group Inc. Earnings Conference 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 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 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 Borgatti, Senior Vice President of Corporate Development and Investor Relations. Please go ahead.

Thank you, Lisa. Good morning, everyone, and thanks for participating in our call today. Joining me are Jean-Louis Servranckx, President and CEO, Jerome Julier, Executive Vice President and CFO, and Alfred 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 comments, we'll be happy 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 the information we're 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 3, I'm pleased to share key highlights and accomplishments from the quarter. ACON delivered record quarterly revenue of $1.9 billion, increasing 26% over the same period last year. 71% of the revenue growth in the quarter was organic. Adjusted EBITDA improved significantly in the quarter to $130 million. compared to $93 million last year, an increase of 40%, driven by strong revenue growth and year-over-year margin improvement in the construction segment. AECON was awarded contracts in joint ventures with an aggregate value of $3 billion for the Pickering Nuclear Generating Station refurbishment execution phase. Our $1.75 billion share of the contracts was added to backlog in the quarter and represents the largest nuclear award in AECON's history The award, along with continued investments in fabrication capacity, reinforces ACON's position as Canada's nuclear builder, supported by an established record of delivering complex nuclear projects across the full nuclear value chain. Backlog at September 30th was $14.6 billion, up 39% over last quarter, representing the highest reported backlog in ACON's history, and underpinned by a diversified mix of long-term projects with appropriate risk balance. Over 80% of ACON's backlog is tied to non-fixed price or collaborative fixed price contract models. We're extremely proud to achieve Gold Partnership accreditation in Indigenous Relations status, becoming the first construction company with nationwide operations to achieve the highest level of certification. Building strong, respectful relationships with Indigenous peoples and communities has long been part of how ACON operates. This recognition reflects the history, and our commitment to meaningful Indigenous partnerships. We also continue to advance our strategic priorities and concessions, including the launch of Maple Fibre, a strategic alliance to finance, design, build and own next-generation network infrastructure. ACON reinforces its positive outlook, supported by the expectation for double-digit revenue growth for the full year 2026, based on our strategic positioning in sectors with attractive demand profiles, growing referring revenue programs and a healthy pipeline of project opportunities. With that, I'll hand the call over to Jerome.

Jerome Julier Thanks, Adam, and good morning, everyone. I'll speak to ACON's consolidated results, review results by segment, and then address ACON's financial position. Referring to slide four, revenue for the three months ended September 30, 2026 of $1.9 billion was up $390 million, or 26%, compared to the same period in 2025. Adjusted EBITDA of $130 million increased to 40% compared to $93 million last year, while operating profit of $83 million compared to an operating profit of $61 million in the same period last year. The improvement in the period was driven by higher gross profit of $70 million compared to the same period in 2025. Adjusted diluted earnings per share was $0.86 in the quarter, an improvement compared to $0.49 in the third quarter of last year. Financial results in the quarter were impacted by negative gross profit of $9 million from the legacy projects. The final legacy project reached substantial completion in June and commenced operations in July of this year. ACON and its joint operations partners continue to pursue commercial resolution on the matter. Backlog of $14.6 billion at the end of the third quarter is the highest reported backlog in its history and compares to backlog of $10.8 billion in the same time last year. New contract awards of $6 billion were booked in the quarter and $10.1 billion was booked over the trailing months. Now looking at results by segment, turning to slide 5, construction revenue of $1.9 billion in the third quarter was $410 million or 27% higher than last year. Construction revenue growth in the quarter was 72% organic and was broad-based with higher revenue in all sectors. Jr., and John Borgatti. In the first quarter of 2020, nuclear operations increased $130 million due to a higher volume of core refurbishment, decommissioning, and engineering services at nuclear generating stations in Ontario and the United States. Revenue in civil operations increased $45 million primarily from higher work volume on power and rail projects and in foundations work, partially offset by lower volume highway, road, and bridge construction activity. In industrial operations, revenue increased $42 million primarily from a higher volume of field construction work in the United States, with most of the revenue growth attributable to businesses acquired in the third quarter of 2025, as well from an increase in the industrial components of power generation projects. Urban Transportation Solutions increased $9 million driven by a higher volume of subway and commuter rail system work, partially offset by a lower volume on LRT projects that achieved substantial completion or became operational in 2025. Turning to slide 6, construction segment adjusted EBITDA of $132 million compared to $88 million last year, with an adjusted EBITDA margin of 6.8% compared to 5.8% in 2025. The increase was primarily driven by an improvement in gross profit margin in civil and nuclear operations. More broadly, and as Jean-Louis will further discuss, the improvements reflect the continued shift towards a lower risk work mix, stronger execution, and the gradual normalization of earnings as legacy project exposure winds down.