Ladies and gentlemen, thank you for standing by, and welcome to the Aecon Q3 2020 earnings 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'll need to press star then one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to our speaker today, Adam Borgatti. Please go ahead, sir.
Thank you, Ian. Good morning, everyone, and thanks for participating in our third quarter 2020 results conference call. This is Adam Borgatti, Senior Vice President of Corporate Development and Investor Relations speaking. Presenting to you this morning are Jean-Louis Servranckx, President and CEO, and David Smales, Executive Vice President and CFO. Our earnings announcement was released yesterday evening, and we have posted a slide presentation on the investing section of our website, which we will refer to during this call. Following our comments, we will be glad to take questions from analysts. As noted on slide two of the presentation, listeners are reminded that the information we are sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties.
Although 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 now turn the call over to David.
Thanks, Adam, and good morning, everyone. I'll touch briefly on 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 three, disruption to Aecon's operations as a result of COVID-19 continued to impact results in the third quarter, muting what would otherwise have been a strong quarter of revenue growth. Overall revenue for the three months ending September 30, 2020 of CAD 1 billion was CAD 14 million or 1% higher compared to the same period last year. Adjusted EBITDA in the third quarter of CAD 137 million, a margin of 13.2%, increased by CAD 46 million or 51% compared to adjusted EBITDA of CAD 91 million, a margin of 8.9% in Q3 last year. Operating profit of CAD 107 million was CAD 48 million higher than Q3 last year.
Diluted earnings per share of CAD 0.99 in the quarter, compared to diluted earnings per share of CAD 0.60 in the same period last year. Aecon's results included a net positive impact to adjusted EBITDA and operating profit from the Canada Emergency Wage Subsidy, or CEWS program, of CAD 69 million in the third quarter, which reflected the net benefit from the program for the period from March 15th to September 26th, 2020. This subsidy offset the impacts of COVID-19 on Aecon's business since March 2020, while assisting Aecon to maintain normal employment levels through this period.
Management estimates that the impact of COVID-19 on Aecon's business was a reduction in revenue, operating profit, and adjusted EBITDA of CAD 141 million, CAD 29 million, and CAD 31 million respectively in the three-month period ending September 30, and CAD 309 million, CAD 57 million, and CAD 68 million respectively in the nine months year to date.
Reported backlog of CAD 6.7 billion compares to backlog of CAD 6.6 billion a year ago. Now looking at results by segment. Turning to slide four. Construction revenue of CAD 1 billion in the third quarter was CAD 34 million or 3% higher than the same period last year. Revenue was higher in industrial operations, primarily due to increased activity on mainline pipeline projects in Western Canada and in civil operations and urban transportation systems, driven by increases in major projects and road building operations in both Eastern and Western Canada. Revenue was also higher in utilities due in large part to the acquisition of Voltage Power in February 2020. Partially offsetting these increases was lower revenue from nuclear operations, driven primarily by a decrease in work at the Darlington Nuclear Facility in Ontario, as work on the next unit of the main reactor refurbishment was delayed due to COVID-19.
Adjusted EBITDA in the construction segment of CAD 131 million, a margin of 12.7%, increased by CAD 58 million compared to CAD 73 million, a margin of 7.3%, in Q3 2019. The construction segment included the net positive impact of CAD 69 million in the third quarter from the CEWS program, covering the period from March 15th to September 26th. After excluding this amount, adjusted EBITDA in the third quarter decreased by CAD 11 million compared to the same period in 2019 due to lower gross profit margin in civil operations and urban transportation systems and from a volume-driven decrease in nuclear work. This was partially offset by higher operating profit in industrial operations, primarily from increased volume, and in utilities driven by higher volume and gross profit margin in the current quarter.
New contract awards of CAD 439 million in the third quarter of 2020, were CAD 359 million lower than the same period last year, driven primarily by lower awards in industrial, nuclear, and utilities. Construction backlog at the end of the quarter was CAD 6.6 billion, CAD 89 million higher than at the same time in 2019. Turning to slide five, concessions revenue for the third quarter was CAD 9 million, a decrease of CAD 52 million or 85% compared to the same period last year.
Upon reopening of the L.F. Wade International Airport on July 1st, following COVID-19 related closure in March, commercial flight operations have been at a significantly reduced volume compared to the prior year due to the pandemic. Adjusted EBITDA in the concessions segment of CAD 8 million was CAD 17 million lower compared to the same period last year due to the COVID-19 impact on L.F. Wade International Airport operations.
Turning to slide six, Aecon's financial position, liquidity, and capital resources remain strong and are expected to be sufficient to finance operations and working capital requirements for the foreseeable future. As at September 30, 2020, Aecon had CAD 56 million of cash on hand, excluding cash in joint operations and restricted cash, and a committed revolving credit facility of CAD 600 million, of which nothing was drawn, and CAD 7 million was utilized for letters of credit. When combined with an additional CAD 700 million performance security guarantee facility to support letters of credit provided by EDC, Aecon's committed credit facilities for working capital and letter of credit requirements total CAD 1.3 billion. Aecon has no debt or working capital credit facility maturities until the H2 of 2023, except equipment loans and leases in the normal course. At this point, I'll turn the call over to Jean-Louis.
Thank you, Dave. Turning to slide seven, despite the impact of COVID-19 on Aecon's third quarter results, our ability to respond with agility to these challenging times to deliver our services effectively while ensuring the health and safety of our dedicated employees demonstrates the resilience of our business. We remain confident that Aecon's balanced and diversified portfolio, strong financial position, and safety-first culture will be of great benefit as we continue to navigate evolving market conditions. Specifically, 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, and the concessions segment is pursuing a number of large-scale infrastructure projects that require private finance solutions as well as participating as a concessionaire on the five P3 projects identified on this slide.
Turning to slide eight, the current backlog and level of new awards year to date have remained strong, with a backlog of CAD 6.7 billion at the end of the third quarter of 2020, which was CAD 107 million higher than the same time last year. The company expects that demand for its services will remain strong following the COVID-19 pandemic, as the federal government and provincial governments across Canada have identified investment in infrastructure as a key source of economic stimulus as part of the recovery plan. Trailing 12 months recurring revenue was down 15% compared to last year, primarily as a result of the suspension of commercial flight operation on March 20th, 2020, at the Bermuda International Airport, followed by a lower volume of commercial flights compared to the prior year after reopening of the airport on July 1st, 2020, due to the pandemic.
As noted on slide nine, in the third quarter, Aecon released its first sustainability report entitled Building the Infrastructure of a Better Tomorrow. This report highlights the progress, initiative, and commitment of Aecon's environmental, social, and governance, or ESG, processes and strategies. This report also demonstrates Aecon's evolving initiative to embed sustainability in our operations and relationship with our clients, communities, investors, and all stakeholders. The infrastructure Aecon builds is critical in enabling society to adapt to a changing climate by transitioning to a lower carbon circular economy. Moving forward, Aecon will look to continuously improve in establishing and measuring key metrics, setting meaningful goals and targets, and leading the industry in sustainable infrastructure construction and development. We invite all of you to review the report on our website and welcome your comments and feedback. Turning to our outlook on slide 10.
Aecon's operations continue to be impacted by the COVID-19 pandemic, either by client decisions related to schedules or operating policy, or due to broader government directives to modify work practices to meet relevant health and safety standards. In particular, during the fourth quarter, nuclear operations are expected to only be in the ramp-up phase rather than full run rates for the next phase of work on a number of projects that were originally scheduled to start earlier in the year, but were delayed due to COVID-19. In the concession segment, commercial operation at the Bermuda International Airport continue to recover slowly due to COVID-19 related travel restrictions, which have significantly impacted the whole aviation industry. The new airport terminal is expected to be open for operation on December 9th, 2020, which will mark a significant milestone for Aecon.
Aecon continues to monitor developments and mitigate risks related to the COVID-19 pandemic and the impact on Aecon's projects, operations, supply chain, and most importantly, the health and safety of its employees. As this situation may continue to evolve for some time, shifting directives and policies from clients and governments are expected to continue. The overall outlook for 2020 remains solid, and 2021 is expected to be a strong year as construction continues on a number of projects that have ramped up in 2019 and 2020. The strong level of new awards in 2020 and the strong demand environment for Aecon services, all subject to the unknown impacts of COVID-19 going forward. In closing, I want to personally thank all of our Aecon employees, in particular our frontline workers, for the dedication, strong commitment, and professionalism during this challenging time. Thank you.
Be all safe, we will now turn the call over to analysts for questions.
At this time, if you'd like to ask a question over the phone lines, please press star then one on your telephone keypad. We'll now pause for a moment to compile the Q&A roster. Your first question comes from the line of Yuri Lynk of Canaccord Genuity. Your line is open.
Hey, guys. It sounds like the number of delays you've encountered since your last update back in August has intensified a little bit because of COVID. Is that a fair characterization, and can you put any more meat on the bone in terms of exactly what you're seeing on the ground?
Yeah. Hi, Yuri. I wouldn't say intensified. The ones that we flagged coming into Q3 are the ones that we experienced. We knew, for example, that Site C was going to be in a ramp-up phase, as we got back to work on that site. We knew nuclear was going to be suspended through Q3 and just starting to get into ramp-up again at the end of the quarter and through Q4. They're obviously the two major projects. There's lots of smaller projects that have impacts, but nothing outside of what we were expecting. I think it pretty much played out the way we thought. Back in Q2, we had a number of other projects that were impacted, for example, REM and things like that. A bit of a mixed bag, but nothing really that we weren't expecting.
Maybe, Yuri, I can add a few words about COVID impact, if you want.
Sure.
Because it's complex, but I think it's rather interesting. From the beginning of this pandemic, let's say March 15th, among all our employees, 15 employees only from Aecon tested positive. When some of our employees test positive, we immediately self-isolate through a tracing program, the one that could have been in contact with him. In October, for example, we have self-isolated 150 people. What is important is that as of today, none of those 150 people that have been isolated is positive. It just means that with all the measures we have taken at Aecon, stringent social distancing and wearing of mask, washing hand, not sharing tools, not sharing containers for lunch or food. If you follow those rules with discipline, it's most probable that you don't get COVID at Aecon.
This is very important because this discipline that we have experienced and the lessons learned will help us to navigate through this second wave probably much better because we are not caught by surprise, and we know what works now, and we are confident about this. Evidently, we cannot let our guard down. I think nothing is granted. We are still in this fight for a few months from now, but this is where we are and what is the situation.
Okay. That's helpful. Maybe just switching gears to the margin side. You called out in the slide deck that civil and the transportation margins were lower within the construction business. Just wondering what's behind that and if that's related to some of the headlines we've seen in regards to the Eglinton project and the lawsuit there.
Yeah, I think you'll be able to see from the numbers that there wasn't any kind of material shift in margins. A little lower than a year ago, part of that is obviously the impact of COVID and lower revenue versus the overhead base. There's an element of that across each of the sectors. Obviously, we look at all our projects every quarter in terms of where they're at and the margin profile of each of those projects, and adjust them as we need to quarter- to- quarter. Nothing of a nature that we felt we needed to call out, but nothing particularly unusual in the numbers this quarter. A lot of it is often timing or mix. It was no material change. It was just the normal kind of timing and mix issues and looking at the margins across all our jobs.
Yuri, I can add a few words on Eglinton, because you asked about it. Eglinton is a major project, and as all major projects, has its own complexity. We have a very strong team working at Eglinton and Crosslinx. What has happened during the last few weeks, everybody knows that this COVID-19 is a global pandemic that is ravaging domestic and global economy. What we have been doing is trying on call to get Metrolinx and Infrastructure Ontario declare an emergency on this job, because it has not been done despite the fact that the province and the city both declared emergency more than seven months ago. This declaration of emergency through our contract gives us much more capacity to be compensated and to get relief for time and cost. Construction companies are vastly court-adverse.
We usually try to find resolution of our conflicts through our contracts. We just need fair and reasonable resolution of our problem. I remind you that in P3, and Eglinton is a P3, the third P is partnership. We also have done this to defend all our subcontractors and partners and supply chains who are suffering. This being said, we work extremely hard on Eglinton. Each of you can go through along the 20 km line, and you just can see that the work is progressing well. It's hard. We work under very stringent safety conditions. We are suffering from a supply chain issue. I imagine everybody is aware of the concrete supply problem in the GTA areas at this moment. We are a strong company. We are expert in delivering large, complex projects, and we are fighting every day.
Every night, we have proposed to our client a stage opening for Eglinton, and this is where we are at the moment. I would say business as usual, but major projects have their own difficulties.
Okay, that's fair. I'll turn it over, guys. Thanks.
Thanks, Yuri.
Your next question comes from the line of Jacob Bout of CIBC. Your line is open.
Good morning.
Morning.
Morning, Jacob.
I wanted to pick up on the margin question. Maybe talk a bit about the impact of nuclear on margins in the quarter, and what kind of improvement are you expecting in the fourth quarter and into spring next year?
I think, obviously we had a big drop in our nuclear revenue in Q3 versus a year ago, which impacts the mix. I think it won't be back at full run rate in Q4. It will take us a quarter or so to get back to the kind of volumes we saw through 2019 when we were working full out on the first unit to be refurbished. It will start to move back in the right direction through Q4, and we'll be pretty much full pace in 2021. There's always margin mix impacts, not just nuclear, but that clearly is one of the areas that will generally have a positive impact. With that not being in Q3, had the opposite impact this quarter.
We never talk about specific margins in our operations, but I think everybody knows that's one that normally has a positive impact that was missing in Q3.
Maybe I can add a few operational look at our jobs. In Darlington, with OPG, the operation have now started on the second unit number three. We are well advanced in our defueling activities, more than 1,000 people on site. It has been delayed, but it's ramping up well. We also work on the turbine generator elements. In Bruce, we have begun on the first reactor that was shut down with delay, but we enter into the vault of Unit 6 early October. We have more than 900 people working, and we are also working in the steam generator of this reactor. Yes, it's ramping up with some delay, but we are well on rail for those big projects.
Okay. Thank you for that. Just a question around the backlog. There was a sizable decline in the Civil and Urban Transportation Systems. Is this just a timing thing or how should we be thinking about that?
Okay. I'm comfortable with our backlog. I've always said that I'm comfortable between CAD 6.5 and CAD 7. It can even go up to CAD 7.5 billion. I think the raw figure as itself is not an issue. What is extremely important is to see that this backlog is very well balanced. It's very important for us to win projects where we are confident that our best team can be posted. It's also good to see that the proportion to be executed within the next two months, it's quite strong, which gives a sort of future outlook for 2021, which is interesting. The quality of the backlog is also of utmost importance. As I've already told you, we are extremely disciplined on our pursuits, on the way we bid.
We review all conditions, and when we target a job, we know perfectly why we target it and what can we do, how can we put in place the best design? How can we integrate perfectly the design with our construction teams? This is where we are. We are not starving. We have three major jobs of Urban Transportation System at the moment on the go, which are Eglinton, Finch, and the REM in Montreal. You've probably noticed that CDPQ has announced that there will be follow-up projects after the REM in Montreal. We are quiet, focused on executing our jobs, and targeting perfectly the jobs of the future.
Okay. Thank you for that.
Your next question comes from the line of Frederic Bastien of Raymond James. Your line is open.
Thanks. Good morning. Jean-Louis, I was wondering if you could provide an update. You did a great job providing updates on Eglinton and REM. I'm wondering if you could switch and move out west and discuss how Site C is progressing.
Site C is also a massive job. I remind you that our job is about the spillway and the generating station. It's about building 700,000 cubic meter of concrete. We have ramped up extremely rapidly from the moment BC Hydro shifted the partial suspension. We reached a very important milestone during the last week because we have now executed 200,000 cubic from this 700,000 cubic. We are still aiming to deliver this job during the year 2023. We had very fruitful discussions and negotiation with BC Hydro about the consequences, direct and indirect, following the suspension for the COVID-19. I remind you that this is a camped job, and BC Hydro have been extremely prudent in managing this pandemic. We are also discussing with them all the means that we can put in place to recover this partial suspension. So far, so good on this job.
There have been some technical issues. You have read all the articles. They are all related with foundations and geotechnical, which are totally outside our scope of work. What I would say that for us on Site C is business as usual. We are almost at 100% of our capacity, and this is where we are.
Thanks, Jean-Louis. I just want to go back and make sure that I'm not misinterpreting the information you provided in respect to Darlington and the ramp-up of work on the next unit. Delays that are highlighted in the press release and MD&A really go back to the decision taken by your client in the spring, and I just want to make sure that's correct and that's not newer or more recent delays that are impacting the job.
No, it's exactly this. I remind you that the production of energy is an essential service. It's even a super essential service. Both OPG and Bruce, when the pandemic reached Ontario decided to give the highest priority to the operation of the power plant. I remind you that when we enter into a reactor, it's more than 1,000 people entering this reactor with a risk of infection at a moment where we did not know exactly how the COVID could be disseminated, what were the right ways of doing. They decided to postpone the beginning of either the second unit of Darlington, Unit 3, or the first unit of Bruce, to focus on safe operation of the existing power plant. Once everything was stabilized, we had the authorization to begin, and all these are decisions from the owners.
On our way, we are mobilized on both job sites and we are very happy about the way we are running this job at the moment.
Thanks. My last question is on potential M&A and how you're looking at the markets right now. Obviously, a good financial position. Things seem to be going in the right direction. I was wondering if there's opportunity for you to continue adding sort of this or expanding that service line that you have. We've seen a few acquisitions in the past year. How are you thinking about M&A right now?
Okay. You can imagine that during the last months, the focus of the management of this company was on protecting our people, communicating efficiently with them under, I would say, global uncertainty about ensuring the continuity of work, and this is what we have done, and I'm very happy about the way Aecon has reacted. Of course, M&A is an important topic for us. We have the capacity, as you have seen with our financial strengths. We are looking every day at new possibilities of checking acquisitions. We are active on this, but so far, there is nothing we can specifically disclose at this stage.
Thanks. That's all I have. Very good results.
Thanks, Frederic.
Your next question comes from the line of Benoit Poirier of Desjardins Capital. Your line is open.
Yes, thank you very much. Congratulations for the results. Just looking at Bermuda Airport, would it be possible to provide some color about the transition to the new terminal in December, whether it will bring incremental costs? How should we be looking at the EBITDA contribution of Bermuda as we look through Q4 and 2021?
Hi, Benoit. No significant change in cost base from one terminal to the other. Personnel numbers and those kind of things don't really change. Obviously, as we look forward in terms of the profitability of the airport, it's all going to be driven by air traffic and recovery. We are seeing steady improvement month-to-month since the airport reopened in July. It looks like, based on October, that's continuing, albeit still at low levels compared to what we would see as normal traffic. Very hard to predict how that's going to unfold as we go through the winter and into next year. I would say that the one positive is the winter is normally the slowest period anyway for traffic in and out of Bermuda.
We'll have to see how it ramps up again in the spring when it starts to get more into the busier time of the year. Hopefully with developments on the vaccine side and things like that, hopefully we see a good recovery in 2021. Until we get through the winter and how the pandemic evolves and vaccines and things like that, very hard to predict what 2021 will look like at this point, other than to say things are gradually improving. Bermuda's reputation, I would say, is second to none in terms of the safety of the island. It's effectively a COVID-free island today. They have very stringent protocols in terms of all people coming into the island, in terms of testing and things like that. So far so good. There's still uncertainty out there around what next year looks like.
Okay. That's great. With respect to bidding pipeline, obviously project pursuits over CAD 40 billion, very robust. We saw also the three-year infrastructure plan that was given by or updated by the Canada Infrastructure Bank not too long ago. Are there any projects that we should be watching in the near term? In terms of awards, is the COVID-19 creating some delays in terms of awarding those big pursuits?
First of all, Benoit, what is worth to be noted is that none of our projects in our backlog has been canceled for COVID reasons. Life goes on. We are essential services. 500,000 of newcomers arrive into Canada every year. They need infrastructure. We are a builder of infrastructure. Second point, yes, the pipeline is strong. I'm not anxious about our future activity. I'm very much focused on targeting the right projects and winning them with the right margin. We have been pre-qualified on a few projects, for example, Eglinton West Tunnel, Scarborough Tunnel prolongation, both in Toronto. We have issued pre-qualification documents for Ontario Line, two main job, which are the stations and the tunnel within Toronto downtown, very similar to Eglinton. Also rolling stock and signaling for the Ontario Line.
If we want to speak about Quebec, because Quebec is going to be very active in terms of new projects. We have been pre-qualified on the Quebec LRT scheme. We have issued two pre-qualification documents for the two harbors, the Laurentia Harbour in Quebec and the second one in Montreal, Contrecoeur. We are also preparing ourselves for the Viaduc de l'Île-d'Orléans, for Pont l'Île-aux-Tourtes, for the third link. In Quebec, it's for VIA Rail projects, where we have been pre-qualified both for their facilities in Montreal and in Toronto. In the west, a few LRT are coming. We are pre-qualified on Calgary Green Line. We will follow very focusing the Surrey prolongation in Vancouver, maybe the Roberts Bank when it's coming out, plus a few other projects. Not that much of issues.
We just have to select the best project for us, where our teams can perform the best. We have to select the best engineering company, the best partners, and just proceed forward.
That's great color, Jean-Louis. David, just looking at accounts receivable and accounts payable, there was a sequential jump on your balance sheet, but anything to point it out, or it's mostly related to typical seasonality and driven by higher revenues?
Yeah. That's exactly right. It really is the seasonal high point at the end of Q3 for working capital starts to unwind through Q4, and through Q1. Expect that to be the same pattern this year. So far, it's very much in line with what we would normally expect to see from a seasonality perspective.
Okay. Thank you very much for the time.
Your next question comes from Sabahat Khan of RBC Capital Markets. Your line is open.
Okay, thanks. Good morning. Just on the planned opening of the new terminal at Bermuda. I guess there isn't a way to really partially open an airport, is there any way you're thinking about maybe opening with maybe lower fixed cost, lower personnel, just given the current activity levels? Is that an option maybe not on the table given it is an airport?
We basically do not work with a plan B that would be a soft opening. We got substantial completion on all our construction activities, both civil and all systems, on the 26th of September. We are aiming to open the airport on the 9th of December. An airport terminal is either open or closed, so it will be open with all its facilities. I just remind you, it is a state-of-the-art airport terminal. I would say very much advanced in all touch-free systems and subsystems about eGate. It's a very modern terminal. It's with pre-clearance to the United States. We will open it with its capacity. We can see that the traffic is ramping up. From the month of June, that was at zero. In October, we should be around 23% in front of last year, and this is ramping up. We are ready to go.
Okay. Given that it is, I guess, a newer terminal, how would you compare the fixed cost base to operate this terminal versus the older one?
It's very similar, Sabahat. It's essentially dealing with when it's at full capacity, the same number of flights, same number of passengers, same processes. It's the same mix of our staff versus the staff of the airlines and the functions that they perform. It's very similar. You're talking about essentially just moving from one building to another, primarily. Obviously, a lot more to this terminal in terms of sub-concessions and retail and food and beverage and those kind of things, but they're all staffed by the sub-concessionaires, the retailers, and the franchisees of the restaurants, not our staff. It's very comparable.
Okay, thanks. Then you provided some good color on the projects that you're in the process for. I guess, are you noticing a different change in pace with some of the recent infrastructure announcements? We're seeing headlines around at least the government of Ontario trying to accelerate projects through the pipeline. Do you think some of those dollars start to show up in your backlog through 2021? I'm just wondering if there's a more accelerated pace of projects moving through the pipeline given the need for economic stimulus across Canada.
Yeah, definitely there has not been a halt or a decrease in the announcement. We can see in Ontario, for example, or in Quebec, even a sort of acceleration of new projects coming and time for RFQ and expected time for RFP have been reduced, which just means that all our clients are eager to proceed with those works. Evidently, as the recent provincial election in B.C. have a little slowed down the announcement. A lot of future projects are ready to go. We are not that much worried about it.
Okay, great. Thank you.
Your next question comes from the line of Mona Nazir of Laurentian Bank. Your line is open.
Good morning, and thank you for taking my questions. Just to follow up on the last line of questioning in regard to government infrastructure stimulus and the recent announcements from the Infrastructure Bank and the various provinces that you did touch on. I know you don't give guidance, but how do you think that that may flow into the growth for next year? Do you think that it would be similar to current construction growth, or it could be ahead?
Okay. Mainly the year 2021 will be done with what we have in our backlog at the moment. Evidently, we just can see that infrastructure is part of the stimulus plan. As we have always said, declaring stimulus on Friday and having shovel-ready projects on Saturday and big start of the work on Monday is not feasible in infrastructure. There is a long lead of pre-activities before beginning. The will is definitely here. You probably have noticed that the new CEO of CIB has been nominated officially yesterday. We just feel that in addition to what we have in our backlog, and which is strong for 2021, other projects will come and will supplement our CAD 6.7 billion that we have at the moment in our backpack.
Just to point to a couple of metrics as well over and above that. If you look at our current backlog and the duration of that backlog, if you look at work to be performed over the next 12 months, we're currently sitting at CAD 2.9 billion of backlog versus a year ago, where work over the next 12 months was just under CAD 2.5 billion. It's about a 17% increase in that next 12-month backlog versus where we were a year ago. You layer on top of that 2.9, roughly CAD 500 million+ of recurring revenue every year that's not in that backlog.
The work that we win through the course of a year that we also perform in the year. That would be a lot of our kind of seasonal transportation, road-building type businesses which, as we noted in Q3, saw good revenue growth this year versus a year ago. We expect those transportation and road-building businesses to be strong next year based on the fact that that's the quickest way for governments to put dollars to work in terms of infrastructure stimulus. There's a lot less design and engineering involved, and it's really a question of funding the budgets of the various provincial transportation authorities, which is what each of the provinces have been announcing in the last couple of months.
When you put all that together, we feel pretty good about the revenue profile for next year and how we sit today going into 2021.
Perfect. That's really appreciated. Secondly, just in regard to the COVID-related cost that you've incurred so far, we've seen the largest impacts in Q2 of just under CAD 35 million, and Q3 had about CAD 31 million. I'm just wondering how should we kind of think about these costs going forward for Q4, even into next year? Do you think there will be a more kind of drastic fall off, or would it be kind of similar?
Yeah. Evidently, from some of the projects we talked about today, we expect that COVID-19 impact to moderate somewhat in the fourth quarter. As Jean-Louis talked to, the nuclear operations are now ramping up rapidly. Site C is back at full run rate as opposed to where those two were at in the third quarter. Barring any unforeseen developments at this point, we do expect that COVID impact to be moderating in Q4 and during 2021. The only area that will continue to be more significantly impacted from COVID is Bermuda. As I mentioned earlier, that's also moving in the right direction in terms of traffic. As long as that continues, the impact on concessions should also be moderating as we move forward.
Okay. Just lastly from me, turning to the Bermuda Airport, I understand that the airport was open as of July. The new terminal is targeted for early December. Just looking at the aviation end market, the IATA outlook for 2020 is quite dismal, I'm sure you've seen. Traffic's supposed to be down 65% year-over-year, even 2021 recently was released, revenues are supposed to be half of 2019. I'm just wondering, given your comments surrounding Bermuda and the uniqueness that it offers, do you think that performance can ultimately vary from the overall industry outlook? Then just as a follow-up, if the rebound is lower than you expect, is there any further thought to bringing on a partner? Thank you.
Yeah, I think, obviously Bermuda will be not dissimilar to what other airports around the world experience. I expect there will be some impacted more than others, depending on where they are. We actually think Bermuda will outperform the average. How much variation there is from the average remains to be seen. We are certainly not, I think, being overly bullish in terms of Bermuda, in terms of how it will fare relative to anywhere else. There are certain features of being an island airport that are definitely positive. As I mentioned earlier, the fact that there is no COVID on the island of Bermuda and the protocols they have going in and out. Relative to other Caribbean islands, for example, it is nowhere near as tourism-driven as some of those other islands. We think Bermuda should perform well relatively.
We look at all the forecasts that are coming out. We don't disagree that the numbers you quote are probably fairly realistic for the overall airline industry in 2021. It's going to depend a lot on vaccines and things like that.
Perfect. That's very helpful. Thank you.
Your next question comes from the line of Chris Murray of ATB Capital. Your line is open.
Thanks, guys. Good morning.
Hello.
Dave, just maybe a couple more questions around Bermuda. Fair to think that now that you've hit substantial completion, construction revenues are basically done at this point. Is that fair to think?
Yes, that's right.
Okay, great. If we think about the concessions business as a whole, especially as we go into 2021, certainly the puts and takes will be how Bermuda moves around. When I think about the rest of your concessions, is there anything that we should be thinking about in terms of either earnings or revenue, with stage of completion or even some asset recycling into 2021?
Yeah. Good question. The Canadian concessions should be very stable in 2021 relative to 2020. If you think about the stage of those concessions, they're still pretty much in the construction phase and will be throughout 2021. We don't expect to see really any change in the profile from the Canadian concessions.
Okay, great.
In terms of asset recycling, again, that wouldn't happen during construction. With respect to Bermuda, this also answers the second part of Mona's question, there is no plan to do anything different with Bermuda right now. The focus is really around opening the new airport, and navigating through the pandemic, and making sure that air traffic gets back to normal and that airport is a smooth and efficient running operation.
Okay. Fair enough. Just thinking about Q4 and the CEWS payments. I think you've mentioned in some of your commentary that you've applied for the program. I think it's fair that the payments. Is it fair to think that they'll tail off as you expected the COVID impact might also tail off into Q4? How do we think about the impact on cash flow in Q4, and any additional payments as we go forward with at least the way you guys are seeing the program now?
Yeah. You're right, we do expect to see it tail off somewhat in Q4. Obviously the program's being extended out to the summer of next year. The details around what the program will look like next year haven't been 100% defined at this point. We do expect the run rate certainly to tail off.
As we go forward. In terms of the cash flow, we expect Q4 to receive another approximately CAD 40 million from the applications we've already made through to the end of September. Any further applications will likely be Q1 cash flow, based on timing of when we would expect to file those.
Okay, fair enough. All right. Thanks, folks.
Thanks, Chris.
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Thanks very much. Good morning.
Morning.
Morning. My first question is just regarding nuclear, and I apologize if you've covered this already, but I was just hoping you could comment on how we should be thinking about the nuclear business in 2021 with projects now ramping back up here in the fourth quarter on a year-over-year basis, 2021 versus 2020, because you were impacted in 2020 by the fact that there were some delays. Just trying to get some sense for the way we should think about that ramp up and year-over-year comparisons.
2021 will be a strong year for our nuclear business. We have, for the first time, two units under construction. One unit at Darlington and one unit at Bruce. We are not only working on the reactor itself, but we also work on the turbine in Darlington and on the steam generator at Bruce. It's definitely going to be stronger. 2020 was a sort of transition year, plus the COVID impact. This being said, we are preparing, beyond the refurbishment of these units, what can be the future of nuclear. It's about waste treatment. You can imagine that all those refurbishment are creating a lot of metal waste, and this need to be treated and need to be stored. It's about beginning to prepare the dismantling of Pickering, for example, and it's about SMR, the small modular reactor.
You have seen that Canada and Ontario have taken quite a proactive stance for this new line of business. We are well ahead in our partnerships and in our preparation for those, although they will not, of course, materialize during the year 2021.
Okay, thanks for that. My second question is really about the bid pipeline and the outlook. You provided a lot of good commentary and detail there already, Jean-Louis, in terms of some of the large projects you're pursuing. I guess just a couple-part question here. First off, can you just talk about how you feel about the bid pipeline today relative to the way you would have felt a quarter ago when you did your August call at the time of the Q2 results? I don't know if there's much difference there. Secondly, I'm just wondering if there are any parts of the business that are important to Aecon in terms of sectors that you are seeing any notable weakness in right now due to COVID. If there's anything there that's at all concerning to you in terms of the project opportunity set.
There is no big difference between today and our last call, end of July of this year. We were not anxious. We are not anxious. In addition to the major projects I have been telling you about, we are pursuing a lot of projects, medium size or even small size. For example, our utilities business is going quite well. We work a lot in telecommunication. We are strong there with Bell and TELUS. You know that all this social distancing and the new normal just imposed to have much more capacity for all those internets and data. We are on it. We are working a lot for Enbridge. I remind you, for example, that the CIB have announced in October something like CAD 2 billion for broadband in unserved communities. We are following this job, district energy, geothermal, renewable power.
Even for those jobs which are not the mega projects, which are small or medium jobs, I think we are very much positioned. We are organized under construction with six sectors. They are very well balanced, it's very important for us, for our resilience. We just cannot see any real issue with our different business lines. They are all looking to the future with optimism.
Perfect. Thank you. Just one last one. Just a question, I guess, about the competitive landscape and whether or not you've seen any changes there in the last quarter. I realize in some of the large infrastructure projects, there are only so many firms capable of pursuing those kinds of projects, maybe those are a little more insulated. Just generally speaking, have you seen any changes in the competitive landscape in terms of heightened competitive pressures?
Not that much. I remind you that most of the big projects go through a prequalification phase, where our owners usually prequalify three groups. What is very important for us is that progressing our strengths and our professionalism, we can, in advance to those bidding process, assemble the best group, the best foreign partner when it is necessary, the best engineering companies, and this is what is important. I think we are progressing quite well. Our professionalism and the professionalism of all the layers in Aecon is one of my most important point of focus. This is much more important for me, in terms of knowing how is going to be the future, than a real change in the competitiveness of the market. Things remain more or less equal.
The difference is that we are, and we have to be better and better every day in the act of building. We are builders. We have to build better than any other company, and this is why we are working hard.
Thank you for that, Jean-Louis.
There are no further questions at this time. I turn the call back over to speakers.
Thanks very much, Jean, and appreciate everyone's time today. If you have any questions, always feel free to follow up. If we don't speak, we will be back online after our Q4 results in the new year. Have a great and safe day, and we'll speak with you all soon. Thanks.
This concludes today's conference call. You may now disconnect.