Aecon Report Strong Q2 2014 Energy Sector Results

Canada-based Aecon Group Inc. has reported its financial results for the second quarter of 2014, excerpted as follows:

Highlights

• Revenue was $590 million for the second quarter of 2014 compared to $698 million for the same period of 2013, largely due to lower revenue in Mining (as a result of lower volume of site installation work following the substantial completion of a significant project in 2013, and lower demand for contract mining services largely driven by temporary client production shutdowns in the oil sands during the second quarter).
• Adjusted EBITDA for the second quarter of 2014 was $13.8 million compared to $36.7 million for the second quarter of 2013 driven by the slower quarter in the Mining segment. For the first half of 2014, Adjusted EBITDA was $16.9 million compared to $25.4 million in the prior year.
• Backlog increased to $2.690 billion at June 30, 2014 from $1.773 billion at the end of 2013. This level is just $87 million below Aecon's record high backlog.
• New contract awards of $1.969 billion were booked in the first six months of 2014 compared to $1.052 billion in the same period of 2013. At the end of the second quarter of 2014 compared to the end of 2013, Infrastructure backlog increased to $1,486 million from $820 million, Energy backlog rose to $937 million as compared to $876 million, and Mining backlog grew to $267 million compared to $77 million.
• Subsequent to quarter end, Aecon was awarded approximately $280 million for three large contracts - one award in each operating segment

Energy segment
The Energy segment encompasses a full suite of service offerings to the energy market including industrial construction and manufacturing activities such as in-plant construction, site construction and module assembly. The Energy segment focuses primarily on the following sectors: oil and gas, power generation, pipelines, utilities, and energy support services.

Revenue for the three months ended June 30, 2014 of $294 million in the Energy segment was $19 million, or 7%, higher than the same period of 2013. Revenue from utilities operations increased by $15 million, primarily from a higher volume of pipeline work in Western Canada and from local utility work in Ontario.

Revenue also increased in industrial operations by $4 million, primarily from fabrication projects in Atlantic Canada and increased heat recovery steam generator sales in IST, but partly offset by lower fabrication revenue in Western Canada following the completion of certain projects in the second half of 2013.

Teri McKibbon, President and Chief Executive Officer, Aecon Group Inc., said: "With our backlog growing in Infrastructure and recovering in Mining, and our Energy segment consistently delivering strong results, we maintain a positive outlook and anticipate making progress during the second half of 2014 towards our Adjusted EBITDA margin target of 9 per cent in 2015."

Mr. McKibbon added: "As previously outlined, we anticipated results to be even stronger and more weighted to the second half of 2014 than is usually the case, and despite a softer second quarter in our Mining segment, our expectations for the second half remain positive. With the ramping up of substantial new projects - particularly in Infrastructure and Mining - the second half of 2014 has the potential to be the strongest half year that Aecon has ever achieved."