Welcome to
the Aecon Group Q2 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr.
Adam Borgatti. Please go ahead.
Thank you, Rain. Good morning, everyone, and thanks for participating in our Q2 2021 results conference call. This is Adam Borghari speaking. Presenting to you this morning are Jean Louis Savronx, President and CEO and David Smales, Executive Vice President and CFO. Our earnings announcement was released yesterday evening and we posted a slide presentation on the Investing section of 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 analysts keep to one question and a follow-up before getting back into the queue. As noted on Slide 2 of the presentation, listeners are reminded that the information we're sharing with you today includes forward looking statements. These statements are based on assumptions that are subject to Significant risks and uncertainties. Although the Halo Aecon believes that the expectations reflected in these statements are reasonable, We can give no assurance that these expectations will prove to be correct.
With that, I'll turn the call over to Dave.
Thanks, Adam, and good morning, everyone. I'll start by summarizing Aecon's consolidated results, Review results by segment and then address Aecon's financial position before turning the call over to Jean Louis. Turning to Slide 3, Revenue for the Q2 of $971,000,000 was $192,000,000 or 25 percent higher compared to Q2 last year. Adjusted EBITDA for the Q1 of $61,000,000 a margin of 6.3 percent Improved by $37,000,000 compared to adjusted EBITDA of $24,000,000 a margin of 3.1% in Q2 last year. Diluted earnings per share of $0.27 in the quarter improved by 0 point €500,000,000 compares to backlog of €7,300,000,000 a year earlier and €5,900,000,000 at the end of the first quarter.
Now turning to results by segment. As noted on Slide 4, construction revenue of 955,000,000 In the second quarter, it was 177,000,000 or 23% higher than the same period last year Due to nuclear refurbishment work in Ontario, major projects in civil operations in urban transportation systems And cash distribution and telecommunications work in the utilities sector. Adjusted EBITDA from construction of 51,000,000 A margin of 5.3 percent increased by $23,000,000 compared to $28,000,000 a margin of 3.6% In Q2 last year, driven by higher volume and gross profit margin in nuclear, civil and urban transportation systems and utilities. These increases were partially offset by lower volume gross profit margin from industrial operations. New contract awards of $1,600,000,000 in the 2nd quarter compared to $1,100,000,000 in the same period last year.
This was driven by strong demand across Canada in smaller and medium sized projects, as well as a number of multi year project awards in the quarter, West Extension tunnel in Toronto and the North End wastewater plant upgrade project in Winnipeg. Turning to Slide 5, Concessions revenue for the Q2 of $17,000,000 was $8,000,000 higher compared to the same period last year, Primarily due to increased activity at Bermuda Airport, where all commercial flight operations were suspended during the Q2 last year due to COVID. Although the year over year revenue increase and gradually improving traffic levels are positive, commercial flight operations in Bermuda We're still operating at significantly reduced volume compared to pre pandemic levels. Adjusted EBITDA in the Concessions segment of $16,000,000 was $11,000,000 higher than last year, driven by improving air traffic in Bermuda. Turning to Slide 6, Aecon's financial position, liquidity and free cash flow remains strong.
At the end of Q2, Aecon had a committed revolving credit facility of $600,000,000 of which $10,000,000 was drawn and $10,000,000 utilized for letters of credit. On June 30, Aecon completed a 2 year extension of the credit facility, which now matures on June 30, 2025. As part of the extension, Aecon Incorporated sustainability linked metrics tied to a number of the company's ESG objectives, The first Canadian construction company to incorporate such a feature. Also on June 30, the $900,000,000 Foreman's security guarantee facility provided by EDC to support letters of credit was extended by 2 years to June 30, 2023. Aecon's committed facilities for working capital and retro credit requirements totaled $1,500,000,000 Aecon has no debt or credit facility maturities until the second half of twenty twenty three, except equipment and property loans and leases in the normal course.
At this point, I'll turn
the call over to Jean Louis.
Thank you, Dane. Turning to Slide 7. Despite the ongoing impact of COVID-nineteen on Aecon's operations, We continued to deliver solid results in the quarter. We remain confident that balanced and diversified portfolio, strong financial position and agile culture We'll enable us to continue to execute going forward. The construction segment is aligned to the significant infrastructure investment commitments by all levels of government across Canada as well as by the private sector Across the market sectors in which we participate.
The Concessions segment He is pursuing a number of large scale infrastructure projects and targeting innovative development and private finance opportunities in industrial, power, cleantech and other related markets as well as participating as a concessionaire on the 5P3 project Turning to Slide 8. Backlog recurring revenue program and the pipeline of bidding opportunities for new work remain at strong levels across Canada. During the quarter, new awards of almost €1,600,000,000 demonstrated Aecon's Aecon's diversity across geographies, size and duration of projects and end market sectors. Aecon is also prequalified on a number of large project deals due to be awarded over the next 12 to 18 months, and demand for our core capabilities continues to be extremely robust. And we expect demand for our services to remain healthy for the foreseeable future as the federal government and provincial governments across Canada I've identified investment in infrastructure as a key source of stimulus as part of economic recovery plans.
Trailing 12 months recurring revenue was up 23% versus the prior period, primarily from growth in utilities operations. Recurring revenue is expected to continue to grow based on the capital investment plans of a number of key clients, Particularly, the Telecommunications and Power sectors as well as from the recovery of aviation traffic at the Bermuda Turning to Slide 9. In addition to the sustainability linked credit facility As David mentioned, we are continuing our drive to be an industry leader in sustainability An ongoing focus of our sustainability program is to pilot new technologies to reduce emissions on our construction site in our facilities. We are currently undergoing trials to utilize solar energy to replace We are also contributing to a partnership between the Government of Canada and the Cement Association of Canada to advance global leadership in low carbon concrete production with a goal to provide a road map to help the cement sector reach net 0 carbon concrete by 2,050. Turning to Slide 10.
Aecon's overall outlook for 2021 remains positive, supported by strong backlog, recurring revenue programs and pipeline of bidding opportunities for new work. Although the pandemic is expected to continue to have some impact in moderating overall revenue and profitability growth expectations in 2021. We are encouraged by the generally positive trend The lifting of social and economic restrictions in recent months is in Canada and the impact on revenue is expected to lessen going forward if this Trend continues. In the Concession segment, an increase in vaccination rates and the easing of Passenger traffic for the aviation industry. This is expected to lead to a corresponding gradual improvement in travel through the Bermuda Airport 2021 remains positive as construction continues on a number of projects that ramped up in 2019 2020.
We are encouraged by the level of backlog and new awards during 2021 and the strong demand Thank you. We will now turn the call over to analysts for questions.
Thank Your first question comes from Yuri Lynk from Canaccord Genuity. Your line is open.
Hey, good morning, guys.
Good morning. Good morning, Yuri. Good morning.
Another nice quarter. Jean Louis, wanted to dig in
a little bit on the new awards. They bounced back nicely. Just wondering what you expect for the back half of the year In terms of new awards, wondering if the projects that you shortlisted on Would allow you to end the year with maybe a higher backlog than where you stand today? And Secondly, in relation to that, if you could just comment on some of the new projects that are entering your bid pipeline and the nature of that work and
Okay. Thank you for this question. So you probably remember the kind of anxiety 3 months ago at the end of Q1 when our backlog was something like €5,900,000,000 I had a Two questions about are you worried? Are you anxious? And I say no, I'm not because the quality And the balanced profile of our backlog is what is important, not an absolute value on a Friday evening.
So effectively, I'm very happy today with a €6,500,000,000 backlog plus recurring revenues that are up 23 At more than €500,000,000 All the parameters within this backlog are very interesting. So new awards, As you said, €1,600,000,000 We have something like €250,000,000 for the 2 steam generator, €250,000,000 for Eglinton West Tunnel, €200,000,000 for Winnipeg Water Treatment Plant, €50,000,000 for Exxon Pipeline. As you can see, it's also very diverse in terms of sectors, But also in terms of geography, this being said, We consider, Aegon, that we build with discipline a backlog. It means that I'm not discovering with my team On Monday morning, what is the backlog? We drive the backlog to shape as we want as per our strategic plan The future of Aecon activity, and this is what is important.
So yes, there are projects In the pipeline on which we have either already submitted a proposal or we have been prequalified and we are working to Deliver proposal during Q3 or Q4, I will not go further in details, but This is about civil. This is about industrial. This is about nuclear too. And I'm not worried about the development of our backlog for the months to come.
Okay. Got it. And second and last question maybe for Dave. Just talk about The
leaders when
you think about the construction EBITDA margin, as we look ahead and assume revenue can continue To grow over the next few years, is the opportunity more on gross margin or operating leverage? What kind of revenue can your current overhead support?
Yes. I think it's a little bit both, Yuri, in terms of margin development, obviously, drive in such a strong Endmark environment is to ensure that we maximize our Bid margin, reflecting the fact that there's fewer and fewer Bidders for some of these projects, but it's also about project selection and making sure that, As Jean Louis has already said, we're very strategic about projects that relate to the backlog and that they meet our margin Expectations and profile. So certainly that would both feed into the gross margin piece. But as we see top line growth, we don't expect the kind of overhead structure to I think there's 2 positive dynamics going forward, both based on the strength of the end markets that we're in right now.
Okay. That's 2 for me. I'll turn it over. Thanks, guys.
Your next question comes from Benoit Poirier from Desjardins Capital. Your line is open.
Yes. Good morning, everyone.
I just wanted
to come back on the 2 project Pursuits in the U. S, so you disclosed a project in the Washington State and Louisiana. Could you talk about your strategy to Organically enter the U. S. Market, the targeted states and also the sectors that you're looking at?
Yes, Benoit. United States is becoming more stable. This is evident. And there's a great chance that a bill of around €1000,000,000,000 for infrastructure within the within the next 15 years may be achieved. Not everything is about our infrastructure, But I would say quite a good share will be.
So we have to Take care about this market because it's going to be most probably a very quickly growing market. This being said, it's a foreign country, so I have always the same principle. Organically, we will Only go where it is our core competencies. And we will try Canada has been quite advanced in the P3 industry. We have our own technical knowledge.
The language is the same between United States We need local partners, and we also need peers of our size just to help us In front of the structures of the deal, geographically, we are not that selective. Evidently, You have noticed that one of the first, which is in Washington State, we are extremely strong with our major project component in Western Canada. So it's quite easy to shift teams To the northwest states of United States, but we will go on a case by case basis, Trying to create a team for different projects that's not going to change too much to take advantage of a learning curve in working in this country.
Okay, okay. That's great. And just with respect to your M and A strategy, Jean Louis, you previously mentioned your interest to do something maybe a little bit More larger than usual in Eastern Canada. So could you talk about the pipeline of opportunities and Why to the intention to bolster your position in these regions?
Yes. I mean, There are two kinds of opportunities for external growth. I mean, the tuck in activity that we do on a regular basis Just to complement the geography or some specialty, and we are quite used. And there may be some more structuring Acquisition, and we are having a look at it. And yes, we are looking at The East of Canada, but not only the East of Canada.
I mean, when we have the capacity through our balance sheet to make very interesting operation, And we are always alert and focused to be sure we can find The right company and we will be ready to go.
Okay. Thank you very much, gentlemen.
Your next question comes from Jacob Bout from CIBC. Your line is open.
Good morning. And listen.
Good morning,
Jacob. I wanted to go back to the margins. And specifically, are you seeing any evidence Cost inflation, maybe comment on the availability of labor?
Construction is about cycles, Jacob. It means that there is nothing new what we are seeing at the moment. Yes, there is some inflation in the price of commodities. It has gone down in certain aspects. But This is a trend at the moment.
We are used to live recycle either by protecting us when we sign contracts with All through our, I would say, operational agility. I mean, for example, when the price is going up, You just try not to procure in bulk too much. You just procure, I mean, The best way you can and for example, when you think the price is going down, You try to renegotiate. As an example, we are negotiating quite a number of subcontract That we have to sign during the COVID time and because of the risk, because of the unknown, the level of price Was higher than it is now with the vaccine, with the rapid test. And we are renegotiating Some of our subcontracts.
So I would say, so far, we know how to deal with this, and I'm not Not much worry. In terms of labor, as I used to say, The fact that oil and gas is decreasing has just shifted quite a number of people into infrastructure construction. We also took advantage of the closing down of quite a few of the building jobs during the 1st months The management, I would say, is The market of the management is tense, but so far, we can handle Top executives, top project directors have always been, I would say, Fighting sport, and we are on it. So we can manage it, and it's not a Point of great concern at the moment.
Okay. And my second question is just on Bermuda. The utilization that you saw in the Q2, what are you seeing so far in the Q3 and how is that expected to ramp in your
Yes. So, we did see improvement through the second quarter from When we came into the quarter, we were kind of in the low to mid teens in terms of percentage Traffic versus kind of the base year, which we view as 2019, you can't really compare 2020 because the airport was shut for much of that period. So when we compare it to 2019, we saw a ramp up from kind of low to mid teens at the The quarter, food took kind of 25%, 30% by the end of the quarter. And Based on it's still obviously early in Q3, but based on what we see right now, we expect that kind of ramp To continue through Q3 and through the end of the year, so that by the end of the year, all else being equal, No, you know, sudden, reversion back to Restrictions and lockdowns and further travel restrictions, we see getting to something in the range of 50% And then obviously, if all goes well, 2022 should see that continue to improve. So that's kind of how we see things right now.
And yes, it's definitely on an improving track right
And in 2019, what was that split between U. S, U. K. And Canada or rest of the world as far as Origination of traffic? Yes.
So U. S. Typically represents 2 thirds To 75% of all traffic in and out of Bermuda.
That's helpful. Thank you.
Maybe I can add to give some colors. Last Friday, in our Bermuda All the gateways were full. I mean, we had a plane on each gateway on Friday afternoon, and we had not Efficient food and drink to cater, so much crowded with the airport. So from time to time, I mean, after 5 quarters of COVID, we can just begin to smile again.
Your next question comes from Maxim Sytchev from National Bank Financial. Your line is open.
Hi, good morning gentlemen.
Good morning.
I was wondering if you don't mind providing a bit more color on the reason for the jump in recurring revenue. I think you mentioned it's up 23% year on year. Yes, so that's the first question.
Obviously, telecommunication is a big driver. This is one of the consequences of COVID. People need more connectivity. Even in quite remote place, they need more volume of data. So there is a very strong movement of new CapEx from our usual clients.
Gas distribution, for example, with Enbridge is also very, very active. Electrical transmission, I mean, it's becoming obvious that we will use more and more electricity in the years to come. And this electricity, I mean, in addition to be produced, has to be transmitted and distributed. So there's also quite an improvement of new CapEx on this. This is what creates this 23% increase, and this is why we think It's not going to stop here.
What is also very interesting is the I mean, I'm astonished With the real robustness of our utility sectors, it's a sector that has learned, I mean, to do a lot with little, Agile to take new jobs, to find new way of agreement with its clients. I'm extremely happy with the way the utility sector at Aecon is evolving.
Yes, agreed. And then, Jean Louis, just maybe as a follow-up on this. How does the M and A strategy fit into this Utilities recurring revenue component, if it's possible. Thank you.
Evidently, we are extremely keen On being able to attract and to make acquisition in this sector, as I've already Say, I mean, I'm working a lot on the balance activity of Aecon, on our balanced portfolio, and we have working hard during the last 3 years. And we're extremely happy after this pandemic To see how robust this utility sector, yes. So yes, we are always chasing for new company That can bring us to the recurrent revenue.
Right. Okay. That's super helpful. And then maybe just one small cleanup. In terms of the ESG objectives that are part of your credit facility, do you mind talking about what exactly What are the triggers for these things on the SG side?
What are the
drivers For or I guess the benchmarks that you have to meet in order to respect the agreement.
Yes. So, there's 4 metrics, Max, built into that structure. The first is on greenhouse gas emissions. The second is around safety metrics. The third is Spend with indigenous suppliers and subcontractors.
And the 4th is in terms of Use of preferred suppliers and their conformance with ESG and diversity and inclusion practices. So those are the 4 areas we focus on. There's obviously targets built in for each of those that differ by Great. And ultimately, the impact in terms of upside potential on pricing It's up to 5 basis points either way. Okay.
Okay, wonderful. That's it
for me. Thank you so much.
Thanks, Max.
Your next question comes from Chris Murray from ATB Capital Markets. Your line is open.
Yes, thanks folks. Good morning. Just maybe turning to the going back to the concessions business and looking at the EBITDA margin in the quarter, Certainly, 95% is a pretty high margin. But just wanting to maybe understand, is that Kind of a normalized number, and I appreciate there's a lot of changes going on. But is that how we should be thinking about the margin profile of the O and M business In Bermuda, or was there something else that kind of skews that number this quarter?
Yeah. No, certainly skews given The current level of traffic in Bermuda, don't forget we have other concessions where there's also small levels of income coming in, In terms of management fees and things like that. So when revenue is particularly low in Bermuda, those have the impact of increasing that margin. But really, if you look at 2019, that will give you a much better benchmark in terms of margins for that sector. Obviously, we've transitioned to the new terminal, but it's not that much different in terms of Current expectations of traffic once we get back to normal, so the margin profile Would be more in line with what we saw in 2019.
Okay. And then you mentioned earlier in the call that Your expectations would be to maybe about 50% of prior levels. I'll make the comment that this morning Canada came out and we've talked about the fact that they're starting to see bookings in kind of the winter season. So January At above 2019 levels now in certain weeks into the Caribbean. So just wondering how quickly you can ramp up Capacity, is that a Jean Louis kind of alluded to the fact you guys were in our food and beverage.
But is it a Thing of people or is there more development left to do, additional gates to finish? And like, are there any restrictions on you guys getting back to Full capacity, if all of a sudden it materializes maybe quicker than you're expecting?
Yes. No restrictions at all. Jean Louis was kind of touching and chewing about what happened last week, which was really just a function of Been set for a certain level and things ramping up quickly that particular day. But No, I mean, everything is finished at the airport. The capacity is in place to be at or above.
In fact, more than 2019 levels of So passenger flow increases, we can ramp up pretty comfortable alongside that. So no, there's no restrictions that will take any time to implement.
Okay, great. That's helpful. Thank you.
Your next question comes from Sabahat Khan from RBC Capital Markets. Your line is open.
Thanks and good morning. Just on the commentary earlier on the U. S. Side, how far along is that process in terms of U. S.
S. In that market? Are you looking at Specific projects already? Or is it still in sort of due diligence phase to see if the market makes sense?
No. We are looking Specific project, we have just been prequalified for a bridge with Plenary and Axiona in Louisiana. We have a few projects in our pursuit list. So we are just ramping up In front of U. S.
Okay. I guess as you look at those projects, are
you looking
at Look, we need to make the exact same return on the Canadian side, whatever benchmarks used internally or is it look, the size of the opportunity
is much bigger, so the absolute dollars maybe matter
love it, Boris. So how are you expecting the opportunities on the U. S. Side versus the Canadian?
So far, we don't know exactly what is going to happen. We don't know exactly what kind of project will come first. So the decision at Aecon is to focus on our core competency And focus on the right partners. And if in addition to our partners, we have been already working with in Canada. It's a case for Axiona, for Because we are building the Petullo bridge in Vancouver together, I mean, better for us.
And then we shall see how all these develop and all these rampsets, and we'll probably be able to refine our approach.
But just to add to that Saba, there's no philosophy where we're saying we're going to go into the U. S. Market, a lower margin expectation. I mean, obviously, we'll partner with other big international Companies, as we qualify and bid these projects, and they have their own Margin expectations as well, and we'll make sure we're aligned. And we wouldn't go into the U.
S. Market if we didn't think the margin In that market, it was strong. We think now is the right time, A, because there's going to be a lot of demand in that market, but B, because we think it supports Our margin expectations. So, there's no concept of the U. S.
Buying our way into that market. I mean, That's not a philosophy in any way, shape or form.
And I guess, if I could just follow-up quickly, I guess, was that part of sort of deciding on those Specific regions in the U. S. Or the Northwest or was it the type of opportunities available? What kind of guided your decision to that region?
Yes. I mean, the region I was talking about, it's just because it's closed from our base in Columbia. We also know that some states are easier to work with. So I would say It's a project per project decision. And we just try to follow our guidelines About scope of work and about partnering, in addition, as you say, I mean, it's also about which State and under which circumstances.
Great. Thank you.
Your next question comes from Troy Sun from Laurentian Bank. Your line is open.
Good morning, gentlemen. Good morning, sir. Good morning. Maybe I'll just start with Jianlouei, if I may.
Just have
a question on the business development side, especially for concession.
I think at some point, you had
a team sourcing prospects in the international market. Obviously, I presume that's been made pretty challenging by COVID. So I'm just wondering if there's any update on that front Now that travel is becoming easier.
Yes, you're right. I mean, we have a team at Focusing on future international activity. It may be under a G2G scheme like Bermuda. It may be under Private initiative or a tender on a P3 basis or a design and build job. Evidently, and you're right, I mean, COVID has disturbed a lot this activity.
Most of the territory have been totally locked down, no capacity to enter or when you enter, I mean, high level of quarantine. So this has gone rather down, but we are back on the road. And I can tell you, for example, today, we have
Great. That's helpful. And I just have another question for Dave. Just on the free cash flow, I think you guys have had a few years of Very strong robust conversion from adjusted EBITDA to free cash flow. Should we be expecting A similar run rate for 2021?
Or is there anything unusual potentially in working capital that we should be aware of?
Not specifically, I mean, obviously, we always call out the usual seasonality. But over the 2020 had a number of other things going on in terms of timing of projects Being suspended or ramping up again, that kind of disturbs some of the normal seasonality. But when you look at A big share like 2019, for example, we don't expect anything particularly unusual.
Okay, great. That's it for me.
Thank you very much.
Your next question comes from Michael Tupholme from TD Securities.
And I guess I'm looking at the outlook commentary that you provided in the second quarter's MD and A. If I compare what you've said to some of the commentary in the Q1, there's a lot of similarity. But one thing That does seem to differ. There was reference in the Q1 to seeing some delays on projects and commenting on how that may impact the business. That type of commentary is absent from this quarter's MD and A.
I guess I'm just wondering if you can speak to Is that simply an evolution of the economy reopening and things sort of getting back to normal? Or if you can just speak to what you've seen in terms of those delayed
My answer would be the following. None of our projects that were in backlog Has been canceled due to COVID, but there have been some of them have been pushed down the line. What you noticed is just that business is coming back. It's just coming back to normal. And we have more visibility.
The pipeline is extremely strong. And we Cannot hear from our clients wish to decrease the amount of projects that they would like Put on the market. I mean, it is a contrary. So it may explain, I mean, what you have noticed in the wording. Okay.
That's helpful. Thank you.
Your next question comes from Najee Baidu from IA Capital. Your line is open.
Hi, good morning.
Just wanted to go back to a previous question on additional opportunities in project pursuits that are outside of Canada. Are you expecting the focus going forward in the pipeline to be more towards U. S. And international opportunities? And if that's the case, How do you think about the both the risk and the return trade offs of pursuing projects, call it in noncore markets versus maybe in Canada?
So the answer to your first question is no. I mean, we are going to stay focused on Canada. Evidently, as I used to say, Canada is 500,000 of newcomers every year. Those newcomers need fresh water, Treated water, transportation systems, bridges, power, And the market for infrastructure is going to stay strong. We at Aecon, we are stronger and stronger in Canada in terms Geography in terms of capacity.
So Canada will remain the point number 1 in terms of activity and then first. This being said, we cannot refuse to look at the U. S. Market and there may be quite interesting opportunity. We are not starving.
It means that I will manage, this I will manage to only try to go on specific project in the U. S. Where I'm convinced that we can have a very good trajectory because, I mean, thanks to our references, thanks to our capacity, Thanks to our history, to our partnering. Internationally, it is more the same kind Of answer, we will pick the projects where we think we can add value to our client, not at any price, Not under any contractual condition and always with the right partner.
Okay. Got it. Got it. So it just sounds like
Selectivity is the right word, I mean, for international activity outside Canada.
Okay. So just you have a bit of extra capacity and you're looking selectively at opportunities. Okay, that's helpful. Yes.
Maybe I can come back, I mean, from your question to the last question of Yuri at the beginning of the session about our overhead and our support services capacity. What has been extremely interesting in this COVID crisis is that we just discovered that we can work better. We can work better. We can do more with the same or we can do the same thing with less. It's not only about being flexible, but We have suppressed a lot of transit time.
It means that with the same capacity, with the same size of our support centers, I mean, we can tackle new opportunities. And this is what is quite interesting. I mean, we have to get out from this COVID better Then we enter and then we try to capitalize on everything we think have emerged as good ideas to organize ourselves.
Okay. That's helpful. I don't know how much you can say About these 2 specific projects, but I'm just wondering if you had any comments on follow-up work at Boost Power or for the sewage treatment plant in Winnipeg. Any color on either the timing or the scale of the additional contracts that you could win for this project?
Yes. At Bruce Power, there are 6 reactors to be refurbished. The conditions are changing. We have already secured for the steam generator, which is quite an Job Unit number 3 and 4, which are the second and the third one. We are negotiating at the moment with Bruce Power for the 2nd reactor, under which condition we Taking into account the learning curve that we have in Clear.
I remind you, we had a first unit in Darlington in 2018 2019. Then we just Started up in 2022 units, which are the second and the third one. Operationally, we are doing extremely well. We are in advance of the In front of the schedule, more than 30 days in OPG, around 20 days in Bruce. So I'm extremely happy Getting all the units coming down the line on Bruce, OPG, it's done.
I mean, we have a contract for the We need to take, I mean, what we have won It's just the first part of a much bigger scheme. And we just think that the fact to be here for the first contract, On which I can say that mobilization is going quite well, will help us to be very well positioned for the rest of the job.
Okay, great. And just one last question for me on Lake Erie Connector, if there's any Any discussions around that project or maybe your expectations surrounding the potential time lines and work related to that situation.
No discussion at Aecon for the moment with eventual clients. So nothing special to say on this one.
Okay. Thank you. That's all for
me. Your next question comes from Ian Gillies from Stifel. Your line is open.
Good morning, everyone. Good morning.
Would you be willing
to put another project similar in size to Bermuda Airport on the balance sheet at this point in time given the improved outlook? Would you need to divest that project first before doing another project in similar size?
Sorry. Usually, it's either David or myself to give an answer. But okay, I will give this to David, but I think we have exactly the same answer. Andres, go on, David.
Well, yes, absolutely, we'd be open to that. It's already been a question about international BD. And this is one of the areas we're focused on. We think The solution we bring to some of these smaller island airports It's fairly unique and we think we've got a good model that we can replicate elsewhere and that's part of what our Our PG team is focused on. Obviously, as we've already said, COVID put some of those conversations on ice for a while, but There are a few of those that are definitely ramping up again, and there's definitely interest in that model.
So We would absolutely look to do that again. In terms of Bermuda itself, at this So I'm getting the airport back to full operations and being a long term partner with
That's very helpful. If Jean Louis doesn't have anything else to add, the other question I wanted to ask was around higher expectations in the M and A world. With
It's a funny market right now because you've obviously got People who are coming through a period that's been impacted by COVID, as you say, there's also expectations around A stronger market going forward. But I think a lot of the things we're looking at are opportunities similar to ones we've already And that's certainly what we're looking for when we look at these opportunities where we can bring some synergy And some size and scale and our client relationships and everything else to help those companies grow quickly. So they're looking at end markets growing, but they're also looking at their own ability to Continue to keep pace with that from a balance sheet perspective. And so they view Aecon as a good long term home for their business. So we think it plays into our strengths as a buyer of strategic assets and there's some short Term, I think, dislocation in terms of expectations, but nothing that I think would be lasting and we can't overcome.
That's helpful. Thank you very much. I'll turn it back over. Hopefully, my audio work for the first time in a while.
Thanks, Ethan.
Your next question comes from Benoit Poirier from Desjardins Capital.
Yes. Welcome back. Just related to the port modernization project in Saint Vincent, Could it be turned like a concession project over time?
No, I don't think so. Benoit, this project It has been taken by the Caribbean Development Bank, and they have a plan about it. I don't think there Could be an evolution. And we are still in the frame of Design and build a pure construction job in San Venza at the moment.
Okay. And last one for me, just with respect to the opportunities in the U. S, you talk about the
proximity versus BC. Could you talk a little bit
With those U. S. Opportunities, Chano?
This is exactly why
we don't want to go
alone To build a project in the United States, and we want to go with stronger American peers and local Because the rules are different, the trade unions are different, the regulation are different. In terms of management, there's not that much of an issue. I would say a great proportion of our managers in Western Canada are Americans, so they can perfectly cross the border. In terms of trade, this is why we need partnering and this is what we
Your next question comes from Frederic Bastien from Raymond James. Your line is open.
Good morning, guys. You bought a small specialty nuclear business a couple of years back. Just wondering If you could comment firstly on how their expertise is helping your refurbishment activities in Canada? And secondly, whether you can leverage their relationships
Yes. We are extremely happy with the expertise of WOCCS In nuclear and especially nuclear welding, we have been using From the moment we acquired them, I mean, on Darlington, the first unit, and we had excellent results. These results have been shared with our teams at Bruce. And we have decided in cooperation with our Client, I mean, OPG and Bruce to create in Cambridge where the APACON nuclear is launched, Well-being center of excellence, and I can say that most of the teachers are coming from work. So we are extremely Happy.
And we think it will help us to be even more productive And economically, even better on the Major component refurbishment for Bruce and OPG. This being said, I mean, United States is a huge market for nuclear. Everybody now has realized that in front of the issues related with climate change And the greenhouse gas emission, I mean, you cannot get rid of nuclear. You need to use nuclear To cope with the increase in the demand of electricity, so they have a huge program. This program has been put on Quite a severe hold time in March 2020 due to COVID, but it's just coming back now.
So we are bidding through works on their normal kind of job, which is A few dozen million, but we will now try to internally joint venture our Teams from the much bigger contract in Canada with works to try to go in United States Toward projects above $100,000,000 So we are on our way to deploy this strategy.
All right. That's good to hear,
Jean Louis. Okay. Thanks a lot and great results.
Thanks, Richard.
There is no further question at this time. You may continue.
Very good. Thank you very much, Rain, and thank you all for your attendance. As always, feel free to reach
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