Ladies and gentlemen, thank you for standing by, and welcome to the Aecon Q1 twenty twenty Earnings 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 be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr.
Adam Borgatti, SVP of Corporate Development and Investor Relations. You may begin.
Thank you, Amy. Good morning, everyone, and thanks for participating in our first quarter twenty twenty results conference call. We hope that you are all keeping safe and well in this extraordinary time. This is Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations speaking. Presenting to you this morning are Jean Louis Servranckx, President and CEO and David Smails, Executive Vice President and CFO.
Respecting current best practices, we are presenting to you from separate locations, so please bear with us if there are any technical issues along the way. 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 Dave.
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. Revenue for the three months ended March 31 was $7,145,000,000 or 15% higher compared to 2019. Adjusted EBITDA for the first quarter of $19,200,000 a margin of 2.6% improved by $7,300,000 or 61% compared to adjusted EBITDA of $11,900,000 a margin of 1.8% in Q1 last year.
First quarter operating loss of 9,700,000 improved by 1,100,000.0 compared to an operating loss of $10,800,000 in the same period in 2019. Diluted loss per share of $0.19 in the quarter compared to a diluted loss per share of zero one six dollars in the same period last year. Reported backlog of $7,000,000,000 compared to backlog of $6,700,000,000 a year earlier, representing an increase of 3%. Now turning to results by segment. As noted on Slide four, construction revenue of $735,000,000 in the first quarter was $97,000,000 or 15% higher than the same period last year.
This increase was driven by higher revenue in civil operations and urban transportation systems in both Eastern And Western Canada. Revenue was also higher in utilities operations due in large part to the acquisition of Voltage Power in February and in industrial operations, primarily due to increased activity on mainline pipeline projects in Western Canada. Partially offsetting these increases was lower revenue from nuclear operations, driven by a reduction of the Darrington nuclear facility in Ontario, where work is winding down on the first unit of the main reactor refurbishment projects ahead of ramping up in future quarters on the next units. Adjusted EBITDA in the Construction segment of $16,500,000 a margin of 2.2% increased by $9,200,000 compared to $7,300,000 a margin of 1.1% in Q1 twenty nineteen. This was primarily due to increased revenue in industrial and civil operations and urban transportation systems and higher gross profit margin from nuclear operations.
These increases were partially offset by lower gross profit margin in utilities. New contract awards of $896,000,000 in the 2020 to $334,000,000 higher than the same period last year, driven primarily by the award for the Pitullo Bridge replacement project in BC. Construction backlog at the end of the quarter was 6,900,000,000.0 which is $187,000,000 higher than at the same time in 2019. Turning to Slide five. Concessions revenue for the first quarter was $27,000,000 a decrease of 31,000,000 or 53% compared to the same period last year, primarily as a result of lower construction activity as the new airport terminal in Bermuda gets closer to completion.
Adjusted EBITDA in the Concessions segment of $14,300,000 was $500,000 lower compared to $14,800,000 in the same period last year. This was primarily related to operations in Bermuda, resulting from a slowdown and then temporary suspension on March 20 of all commercial flights in and out of Bermuda due to COVID-nineteen. 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. At March 31, Aecon had $105,000,000 of cash on hand, excluding cash in joint ventures and restricted cash and a committed revolving credit facility of $600,000,000 of which $30,000,000 was drawn and $75,000,000 utilized for letters of credit.
When combined with an additional $700,000,000 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 totaled $1,300,000,000 Aecon has no debt or working capital credit facility maturities until the second half of twenty twenty three. In the current environment, however, Aecon believes it's prudent to conserve cash and eliminate nonessential spend and reduce discretionary capital investments as previously disclosed. At this point, I'll turn the call over to Jean Louis.
Thank you,
Dave. Turning to Slide seven. We are confident that Aecon's diversified portfolio, strong financial position and safety first culture will be of great benefit as we navigate evolving market conditions and focus on the health and well-being of our employees while successfully serving our clients. 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. The Concessions segment is pursuing a number of large scale infrastructure projects that require private finance solutions and participating as a concessionaire on the five P3 projects identified on this slide.
Aecon expects that demand for its services will remain strong following the COVID-nineteen pandemic as the federal government and provincial governments across Canada have identified investment in infrastructure as a key source of economic stimulus once the country reaches the recovery phase. Turning now to Slide eight. As Dave mentioned earlier, backlog at the end of the quarter was €7,000,000,000 The timing of work to be performed for projects in backlog as of March 31 is subject to some uncertainty due to the impact of COVID-nineteen and related slowdowns, rescheduling and in some cases, suspension of work for an in the terminate period. As such, we have not provided detail on estimated timing of backlog work off at this time, but we'll endeavor to do so as visibility improves. In addition, certain projects that were expected to be available to Aecon to bid and to secure new revenue have been delayed.
Any such delays are currently expected to be temporary, and the current backlog and level of new awards year to date have remained robust. To date, no projects that were previously recorded in Aecon's backlog have been canceled. Trailing twelve months recurring revenue was down 17% compared to last year as certain projects typically performed through the recurring revenue model in our utilities operations were undertaken as defined scope backlog contracts in the period. Total revenue in utilities was higher versus the same period last year and demonstrates the flexibility Aecon has in our contracting model to meet our clients' needs. Turning now to Slide nine.
I would like to address the significant impacts from and corresponding measures we have put in place in response to the unprecedented events arising from the COVID-nineteen pandemic. In terms of operational impacts, with the majority of governments across the jurisdictions in which Aecon operates declaring a state of emergency in response to the COVID-nineteen pandemic. Aecon's operations have been impacted by work suspension of certain of our projects, either by its clients or due to a broader government directive, by disruption to the progress of projects due to the need to modify work practices to meet appropriate health and safety standards or by other COVID-nineteen related impacts on the availability of labor or to the supply chain. The main impacts to date relate to the Bermuda International Airport redevelopment project, where both commercial operations and construction of the new terminal have been suspended. The Montreal REM LRT and partially Site C projects that construction has been temporarily suspended and nuclear operations, where ramp up on the next phase of refurbishment work, has been delayed.
While the impact of to these projects as well as others will be to reduce revenue under normal operation review, there is no guarantee that all related costs will be recovered, and therefore, it is possible that future project margins could be impacted. Aecon has activated continuity plans and a rigorous COVID-nineteen health and safety assurance process, which meets or exceeds guidance by applicable government health authorities to minimize disruptions with business and adapt to evolving market conditions and safety standards. These plans include stringent site prescreening processes, heightened hygienic and disinfection practices, physical distancing, provision of additional personal protective equipment to frontline workers, team separation and staggered work hours where possible as well as extensive technology enabled remote work initiatives. As Dave mentioned earlier, Aecon's financial position remains strong and is expected to be sufficient to finance its operations and working capital requirements for the foreseeable future. Turning now to Slide 10.
Much of AECOM's outlook has been covered in our earlier comments. However, I want to stress several key areas before turning the call over to analysts for questions. While certain projects that were expected to be available to Aecon to bid on to secure new revenue has been delayed, any such delays are currently expected to be temporary, and the current backlog and level of new awards year to date have remained robust. To date, no projects that were previously recorded in Aecon's backlog have been canceled. Aecon expects that demand for its services will remain strong following the COVID-nineteen pandemic as the federal government and provincial governments across Canada have identified investment in infrastructure as a key source of economic stimulus when the country reaches a recovery phase.
Aecon continues to monitor developments and mitigate risks related to the COVID-nineteen pandemic and the impact on Aecon's projects, operations, supply chain and most importantly, the health and safety of its employees. At this time, the majority of governments across the jurisdictions in which Aecon operates have deemed the types of construction projects that constitute the majority of Aecon's contract to be essential services. And therefore, operations are broadly continuing, although in many cases, on a modified basis, as noted. As this is still an evolving situation, shifting directives and policies are expected to continue. I want now to personally thank all of Aecon's employees, in particular, our frontline workers, for their dedication, commitment and professionalism during this challenging time.
Thank you. Be safe, and we will now turn the call over to analysts for questions.
Your first question today comes from the line of Yuri Lynk of Canaccord Genuity. Your line is open.
Hi, good morning, guys. Good morning, Luke. So obviously, a lot of moving parts. I understand that margins in Q2 likely to be impacted as I think you'll probably be carrying some overhead costs associated with the projects that are shut down. I get that.
But are your clients trying to download the costs associated with delayed projects by not recognizing COVID-nineteen as a force majeure event?
Yes, Yuri. I mean, it's an interesting question. I mean, none of our contracts are similar. Mainly speaking, when we receive an instruction by government or an authority or a client to suspend, we are covered for time and financial compensation. When works being declared as essential services are going on, the impacts on productivities are negotiable with our clients.
Most of the time, the delay is not an issue. And so far, most of our clients have just gone through a very positive attitude in order to help us to navigate through this challenging time.
So the clients are, by and large, going to be eating the the the resulting cost overruns, and and you don't expect to see a material amount of that down downloaded to to you?
No. I mean, as I say, I mean, most of our time are very positive. The work is extremely collaborative to try to find the good response to this pandemic. So what we can say is that most of our work are on as essential services works continue and stringent procedures. As I told you that MIDO has seen applicable government requirements.
And what we have just realized during the last five to six weeks now is that it works. It means that when our team followed the rules about screening, about hygiene, about disinfection, about physical distancing, about taking care of our shared tools, about masks, and about staggered work hours and team separation. When our teams follow the rule, it works. I mean, we have very few positive case. On another hand, what we have been proving during the last week is that when a team doesn't follow the rules, it can become a problem and rather quickly.
So that after a certain discovery phase, everybody now is well acquainted with what has to be done. And we just have to be extremely focused on ramping our productivity and the new methodology of works. We are working very hard on it.
Okay. Thanks. Last question for me and I guess related to that, Is there any way you can quantify or qualify the pace of backlog burn on the projects that are continuing at this point versus pre shutdown?
Yes. I mean, I mean, the projects that are continuing, I don't I mean, really, there's, you know, from a revenue perspective, not huge impact. Jean Louis said, You know, there's a period of time where we went through a little bit of disruption kind of right around quarter end where we were kinda working out what the appropriate work practices would be going forward. But but now we've got all the protocols in place. Work is progressing pretty much as normal on all those projects.
So it's only really the projects that have been kind of formally put on hold where we're seeing any kind of gap in revenue burn.
Okay. I'll turn it over, guys. Thanks.
Your next question comes from the line of Maxim Sytchev of National Bank Financial. Maybe
I'll start with a question to David, if I may. When we look at the concession rights in cash flow from investment of $20,700,000 so that's down versus last year. And I'm just trying to see because you're not actually doing construction right now in Bermuda. Should we expect, I guess, a much smaller contribution on that concession rights in the cash flow from investing on a, let's call it, for the next kind of two quarters? Is that the way we should be thinking about this?
Yeah. That number was was coming down anyway because we're getting near to the end of construction of the new terminal. Obviously, you know, we're a period of time here where construction has ceased. We're we're hopeful construction will start up again in Bermuda in short order, hopefully early in May. But the but the number was coming down anyway because we, you
know, we're through the bulk of the
the main construction period where we had a lot more workers on-site, a lot more activity. We're really now into just finishing the interior of the terminal and starting to get to the phase where we're commissioning all the systems and equipment and baggage handling and all that kind of stuff. So the construction piece in Bermuda has really ramped down anyway in terms of volume.
Okay. Fair enough. And then in terms of once you start amortizing the new concession, once you're done construction of the new terminal, Is there a different pace of the amortizing concession assets on the cash flow statement vis a vis the income statement?
Well, In the cash flow statement, the amortization, I mean, it's noncash. I'm not quite sure I follow your question. I mean, obviously, once we go into the new terminal, the amortization number comes down in the P and L because up until now, we've been amortizing the existing terminal over the life of construction. And going forward, we'll be amortizing the new terminal over the remaining twenty seven years of the concession. So the absolute number in terms of amortization is coming down in the p and l, but I'm not sure what you're getting at in terms of cash flow side.
Sorry. No. Because when I look at last year, for example, 2019, the concession rights on the cash flow statement is like $160,000,000 I'm just trying to get a better sense in terms of how we should be thinking about this on a going forward basis. What one Yeah.
So that that that in concession rights is effectively the cost of construction building up. And then when obviously, as I said, that's slowing down now as we reach the end of construction. Once we reach the end of construction, that balance will start to be amortized down. So you've got the amortization going through the P and L, and that's effectively reducing the balance sheet concession right investment every
period.
Right. Okay. No, that's And really helpful. Thank then just in terms of you mentioned you're hoping for the Bermuda restart in May. Can you maybe provide and I mean, maybe that's a question to Jean Louis based on kind of your conversations with clients in terms of some opening up.
Is that kind of what you guys are expecting that in May at some point most of these projects will get going again? How should I guess how are you internally thinking about managing capacity and so forth to be able to ramp up on RAM, Bermuda and so forth?
What is important to note is that on most of the projects that have not been suspended, it's not a zero one activity. It means that we just know now that before the vaccine or adequate treatment will be on the market, it will be a continuous ramp up, but with different methodology of work. So, yes, we we just consider that it's not even May. I mean, we we have begun to ramp up in productivity after a sort of discovery phase by all our workers about this new method of working. We are we see that we have the situation internally under control.
In terms of absenteeism, we have probably benefited from a lot of our construction projects that were not essential. So the workers from whose side have just come to our site. And what we have to be careful about is about supply chain to be sure that while we will ramp up progressively, what we have already begun, We don't have default of our supply chain that can answer this ramping up, but this is where we are at the moment. Bermuda may be a little different, as David said. I mean, most probably what we are hearing at the moment is that we may be able to resume construction during the May on all our finishing trades, The rest being commissioning and integrating systems that may take a little more time because we have to wait for experts being able to monitor the commissioning and coming from abroad Bermuda.
This is where we are at the moment.
Right. And again, going back to to David, so the I believe you were capitalizing the the interest on on on Bermuda. So that will start to get expensed once you physically finish the construction, right? Is that how we should be thinking about this?
Yes. So I think we flagged in outlooks in our year end release that we
expected the
U new terminal to open kind of midyear, and that would mean we would start expensing the interest at that point in time as opposed to capitalizing it. Now it's more likely the airport will or the new terminal will open at the end of the year or early early next year. So we'll continue to capitalize any interest now through that construction period and start to expense it once the new terminal opens. So that will delay the expensing of that interest. Just want to come back to your earlier question, Max.
By the way, I think Max was also asking specifically about the other projects that are suspended like REM and Site C and what our expectations are for a restart on those projects.
Okay. Maybe I can comment on this. Ren has been suspended first by the province of Quebec then by CDP two, our client. We are now working for trying to reopen it during the first fifteen days of May, but of course, under the decision of the government. We are working extremely closely with CDP2 and will be ready to come back to work as soon as the authorities allow it.
Site C has been partially suspended on all activities that are not on the critical path of the global project. Probably
the trigger of
this decision was about the camp. You know that it's a remote place, so we have a a camp where most of our workers and workers of other companies or other joint ventures are are living. And to be careful, to be sure that there could not be an outburst of of cases, the decision was taken by ISOBC. So far, there have not been any positive cases in the camp of five c. It means that we are expecting probably a relaxing of the suspension within the two to three weeks to come on this job of 5C.
Okay. That's very helpful. Thank you very much. That's it for me.
Your next question comes from the line of Denis Poirier of Desjardins Capital Markets. Your line is open.
Yes. Good morning, everyone. With respect to Bermuda, could you comment a little bit about when the traffic will come back? And if you could talk about the traffic these days? And also what are the mechanism that protects you against the significant reduction in activity at the airport?
Benoit. Thanks. So different to our comments about the construction site in Bermuda and the hope that we're getting going again in May, the expectation is that the commercial traffic at the airport will will take a little longer to open up again. So certainly not before June. And we'll see see whether it's June or later, but that's there's been no decision made around that by the government.
You know, our expectation is once the airport reopens for operations, it will take a period of time for traffic volumes to start to build up again. You know, I I don't think anybody expects this to be a quick return to normal in terms of air traffic. We'll, you know, we'll, see what happens with other airports and airlines generally, but it's gonna take a period of time for things to get back to normal for sure. So we're kind of envisaging a slow ramp up once operations begin again at the airport. In terms of any kind of backstop, that's really that really kicks in over a longer period of time.
The real intent of that backstop, which is the minimum revenue guarantee provided by by the government is to protect the cash flow of the airport to the extent that there's any shortfall required to repay the debt on the airport. So that's why the the debt financing on the airport is normally caused to Ecom because it's all either generally specific specific by the project or back stocks by the government. We're not into that scenario yet where that would kick in. But obviously, in a worst case scenario, whether it's this was extended over a longer period of time, the debt repayments and the cash flow needed for those debt repayments is protected.
Okay. Okay. That's great color, David. And with respect to some of your concession opportunities that you were looking, I was wondering if the pandemic will slow your ability to secure a new project to replace Bermuda, or would it be the opposite where some government might take the opportunity to renovate their airport during the downturn as a stimulus package?
I will answer this. I mean, we are constructive and we are optimists always. So of course, I mean, we just feel that from this crisis situation, we can emerge better and better position on some of these markets. And we just feel that it will create new opportunities. We are ready for them.
So evidently, the fact that we are not able to travel and to have a one to one face to face discussions and meetings may not help. But this being said, I mean, we just see this as being an opportunity to develop these sort of projects in the future, and we are ready for this.
Okay. And with respect to the government stimulus, Jean, if we go back to Slide seven, where you show the six business segment, which segment would benefit the most from the government stimulus? And would it be fair to say that some projects may be fast tracked thereafter as a form of stimulus?
Yes. We have to be a little careful about fast track because, evidently, the major projects are long lead project with environmental assessments, with engineering that has to be fully developed before we can build them. What is sure is that roads and highways will benefit from the stimulus package. I mean, you've probably heard that Alberta has already announced that they will put in place a 2,000,000,000 plan for the new job. They don't require a lot of engineering.
They may be resurfacing of the highway. There may be a maintenance or rehabilitation of special structures. So we really think that this can go very quick. On on another hand, utilities also should rebound very quickly. The commercial operators, I mean, are extremely pushy to try to expand their networks and and the situation created by the COVID with more people working from home just requires more power to all the utilities.
It seems that this also will most probably benefit from a stimulus package. All other sectors are also well positioned. Also, may be probably better a a mid term stimulus than a short term one.
Okay. That's great color. And could you talk maybe a little bit about the potential opportunities with Voltage Power since you completed the acquisition, Charlie?
Yes. I mean, we are very happy about this acquisition. It was a it was a strategic target. We are happy with the team. I mean, the team is now with us from the month of February.
They are integrating very well. We want to develop in the markets of the power distribution. They are extremely competitive in this field, and they are known all over Canada, also based in in in Manitoba and also some power substation. So we just follow this with a lot of care. We are very happy to see that the integration is going well, and we are looking forward for a lot of very interesting projects between Voltage and H1.
Okay. And last one for me. Could you maybe talk a little bit about whether there's been a shift in your capital allocation priority, more specifically about CapEx expectation for 2020 and also the desire to revisit your share buyback program with the first quarter results?
Yes, Benoit. So certainly on the CapEx side, we're pushing back anything that's kind of non essential in terms of capital spend. Obviously, with most of our projects continuing on, they they have their equipment needs and the capital needs. So we'll continue to fund those. But anything that isn't required to be pushed off to next year or a later period.
We're certainly doing that. So we expect CapEx to be lower than last year, but not, you know, we don't have the ability to completely freeze it because most of our operations carry on. In terms of NCIB, obviously, we paused that while we were in the blackout period and now coming out of that period back into period where we have the optionality and flexibility to be opportunistic and we'll continue to monitor what's happening in the market and make decisions as of when, but no fixed plans either way at this point. We'll just continue to monitor how things unfold.
Okay. And maybe just a quick one. Could you talk about the the timing for ramping up the stick in reactor on the nuclear side given now the first one is winding down?
Yes. I can check this one. We are mechanically complete on the first unit at OPG Darlington from mid March. It's a great success. You probably remember that the former units a few years ago have been extremely difficult.
This one has been finalized for us on time and on budget. So now we have handed over the units to OPG operation team. They are just going to ramp up to be able to switch on this unit to the grid. That should happen around the end of Q2. From this moment, OBG could be in a position to disconnect the second reactor and allow us to enter in
the vault and to begin
with our preparatory works. I mean, under these times of COVID-nineteen pandemic, OPG is favoring the operation of the reactors to produce and is very cautious about mixing teams of construction with operation. So this disconnection of the second unit to be able to begin the refurbishment work will probably happen during Q4, but the decision on the exact date has not yet been taken. And we know that OPG is now thinking about eventually bringing back a little earlier the beginning of the work. So most probably before the end of the year and maybe earlier in q four or end of q three.
I mean, it's it's a decision under OPG management.
Okay. Regarding regarding Bruce regarding Bruce, so Bruce,
we are beginning with the first reactor. Everything is going as planned, and it seems to be that we will be able to enter the first reactor at Bruce Power between the July and August.
Your next question comes from the line of Frederic Bastien of Raymond James. Your line is open.
Hi, good morning. Appreciate you're dealing with a bunch appreciate you're dealing with a bunch of disruptions that impact your ability to work at a normal pace. But as you limit or spread the number of trades on-site, are you seeing a positive offsetting impact on employee productivity?
That's a very, very interesting question. I mean, we we are just discovering or figuring out that in some cases, we can do more with less. And this is why this crisis, at the end of the day, I I think will will allow us to be to be better. Just the physical distancing, just the fact that speaking may be an issue even if you have mask. So we we have extremely focused employees on their own task, And we just realized that it's balancing effect.
I mean, of course, wearing masks, being extremely careful about not sharing tools is an issue and has impact on productivity. But on another hand, now that people have realized that this really protects them, there is a very strong focus on executing and it is evident that we will have lessons learned from this crisis and that they will be very, very interesting for the company.
Can you I know it's maybe early days, but could you provide some of those positive lessons that you may be able to take away from this?
We we have also realized that, I mean, most of our administrative staff can work perfectly and very efficiently from home. So it may be a little difficult to bring them back to the office, but sure, I mean, we will have to think about it. We'll have to think about it. Our systems are functioning very well. Everybody is connected.
All our supporting teams are perfectly supporting our operations from home. So it's probably a different way of of looking at our offices, probably, I mean, in terms of supporting team that is is is going to be very, very interesting. In terms of what I call the operational excellence, I I told you about productivity, about focusing on the task. It it's evident that this will this crisis will probably push for more prefabrication, more preassembling, and adding on-site only the strictly necessary acts of the building.
Great. I appreciate your answers. Thank you.
Your next question comes from the line of Jacob Bout of CIBC. Your line is open.
Good morning.
Good morning, Jacob.
I had a question on your backlog. What percent could be at risk of termination? Or what percent could be at risk of being pushed out or delayed in your mind right now?
So as I mentioned earlier, none of the projects that we have put in backlog have been either canceled or postponed. I mean, there may be some issue about our productivity when we are under essential services. So we don't see a real impact on the volume of our backlog so far. On another hand, there is an extremely robust pipeline of perfect and very diverse that perfectly fits with our different operating sectors. So I would tend to say that we are not that much worried about the future.
Evidently, as you can notice from what we have been telling you, I mean, from the beginning of this conference, I mean, Q2 is going to be challenging. We are extremely focused on our productivity. We are focused on our jobs, and we will take care of them. But not that much of worried about the backlog even without talking about additional short term shovel ready projects that both federal and provincial government are getting ready.
So this Rio Tinto termination you view as a one off?
Yes. I mean, it's a very special case. As you know, I mean, we are very joint venture with from second tier as with a share of 40%. Works are fairly well advanced. It's not our problem of performance.
It's much more a problem of safety and commercial. We don't think the termination is appropriate, and and we are still studying all alternative. It's it's a unique case, and we are dealing with this unique case that we have to do it.
Okay. And then just on the concessions. So you talked a bit about Bermuda revenue being tied to traffic volumes. Is there is it similar for the Canadian concessions? Or how should we think about that?
Yes. So the Canadian concessions, I guess, two things. They're still primarily in the construction phase. So we're not in the concession phase yet other than Waterloo where we're a very small piece of that concession. But the the model in in the Canadian PCs is very different in that they're they're essentially availability payment models.
They're they're not tied to traffic or overall ridership or revenue from those transportation systems. No impact at this stage because they're not really in the concession phase yet, but they would be a very different model. There's no traffic risk on the Canadian P3s.
That's it from me. Thank you.
Your next question comes from the line of Michael Tupholme of TD Securities. Your line is open.
Thank you. Good morning.
Good morning.
Good morning.
First question just relates perhaps for Dave relates to whether or not you've seen any changes in collectability of receivables or receivables being extended at all? And as a follow on to that, just your views or thoughts around how we should think about changes in noncash working capital this year. Last quarter, you had talked about the full year looking, I think, sort of relatively flat, like not materially higher or lower. So just wondering if you can provide an update on those fronts.
Yes. So no, I mean, haven't really seen any issues around collectability of receivables. I mean, you look at kind of project profile and client profile, we work with primarily with governments or government agencies. I would say if anything, they're motivated to keep all their contractors well funded right now as as part of the broader government push to support the drivers of the economy in the current situation we're in. From that perspective, no concerns.
And then even on the private client side, you know, we we only work with kind of blue chip private clients where we have very strong confidence in their funding and and their ability to pay
for
the work that is done. So whether it's utility clients or major manufacturing or processing clients, we have no concerns over the financial viability of any of the customer base. So no, we don't expect haven't seen any impacts on the receivability. And then just in terms of the overall outlook for the year, nothing really has changed in terms of our view of overall working capital. I think, obviously, we expect with some lower volume in Q2 for the projects that have been impacted That won't I don't think large enough in the grand scheme of things to really impact the overall working capital profile.
Most of those projects are kind of milestone based or funded in advance because they're either p threes or very large civil projects. And so our views haven't really changed in terms of the full year working capital outlook.
Okay. And then I realize this is somewhat early days just in terms of how long the impacts of the COVID-nineteen pandemic have been affecting the situation in Canada. But as far as your bidding activity, have you seen any changes in competitive behavior? And or do you expect there to be any changes in competitive behavior coming out of this situation?
I will take this question. I mean in terms of our bidding activities, all small and medium projects are just going on at the normal pace. Bigger projects have been postponed, not indefinitely. Most of them have been postponed between six weeks and two point months in terms of either delivering an RFQ proposal from our joint ventures or delivering an RFP, I mean, a bid. It means that we are not that much worried about activity.
In terms of the competitiveness, I mean it's very early. What is sure is that this sort of crisis will probably make our competitors more prudent. I just take an example. Usually, these clauses on force majeure were not a big part of the negotiation of the contract. Evidently it's going to become a very important point.
And the way you can have relief on time and on money is going to be a very interesting development. So this is what I can answer as of today.
Okay. That's helpful. Thank you. And then just lastly, just back on Bermuda as far as the operations of the existing airport, You provided some commentary around how we could possibly think about the airport reopening and taking some time for traffic volumes to normalize. While the airport is closed, can you just talk about the downside risk as far as your Concessions segment from an EBITDA and cash flow perspective?
I'm just trying to understand if is this simply a situation where you may not receive what you would have otherwise expected in an ordinary environment? Or is there actually a situation where you're incurring costs here and there's actually material downside to the negative side?
Yes. So Mike, in terms of while the airport is essentially closed, I mean, there's some there's a very small volume of cargo traffic going in and out of the airport and a couple of other flights associated with just logistics. But while the airport is essentially closed to all commercial traffic, we we have a a fixed cost base there of, give or take, a million dollars a month. So it's it's not huge from that perspective. Obviously, though, the from an EBITDA perspective, you know, Bermuda, I think it's it's kind of known as roughly two thirds of our concessions EBITDA.
And so to the extent it's not operating and not generating revenue for a period of time, depending on how long that period of time is, I think people can kind of estimate the impact that might have from an EBITDA perspective. And cash flow isn't really impacted in the short term because all the cash being generated by those operations effectively kind of sits in Bermuda as restricted cash and ends up being part of the cash that eventually goes to repay the debt and distributions and those distributions aren't due to start for a period of time anyway. So there's no short term cash impact from the suspension.
Okay. That's helpful. Thank you, Dave.
Your next question comes from the line of Chris Murray of AltaCorp. Your line is open.
Thanks, folks. Good morning. Hi, Chris. So just maybe turning back to the pipeline a little bit and some of the delays. I guess just trying to understand a couple of different things here.
One, how much of the delays are, call it, mechanical, just difficulties in accessing processes and getting together with folks to move the paperwork along? And how much of this is clients sort of saying, let's just hold off on maybe committing to funding or spending at this point?
We have not seen any client trying to pull off from funding or from putting on the market their projects. And this is very important. I mean, it may even be the contrary. On another hand, I mean, we you have probably seen the changes at the head of the Canadian Infrastructure Bank. I mean, Michael Sadia from CDPQ is just stepping in.
I mean, of course, we like this because we have been dealing with CDPQ to acquire the rent projects and we know that Michael knows how to get things done. So I would not be worried about the future of the pipeline. The projects are there. Clients are just when there is a delay, just take a sort of prudential attitude to say we don't know exactly how it's going to end up this COVID crisis. So let's have a little more weeks of understanding how it can work, so that we can deal with the eventual impact and we launch our project.
So this is the way they are reacting. We do not see any projects, I mean, stopped because of this crisis.
Okay. And you're not seeing any differences in behavior between public sector and private sector clients?
Not that much. Mean, you know, a very significant part of our activities is from public sectors and infrastructure. I mean, in those moments following the shock of this COVID, I mean, is going to be a major part of their action. We have much less than before exposure to private clients. It may be industrial and as you know, we don't do any more high rise building or commercial building going with the real estate developers.
It's not that much an issue for us.
Okay. My other question is just maybe a little more theoretical. I mean even coming into this, you were still working from pretty healthy backlogs. You've seen some good growth over the last couple of years. But part of the discussion was also around people and your capacity to even absorb more work.
So the question is, if there actually is stimulus dollars that come into the system, how do you think Aecon is going to perform? How is the industry going to be able to absorb, which is probably adding on to almost already record levels of work?
It's a very interesting point. What I've just said during the last month, since you probably remember is that we are comfortable with the backlog between 6 and €8,000,000,000 I mean the aim of our company is not to grow extremely quickly. I mean it's to be more profitable, it's to be better organized on our side, it's to be in terms of operational excellence, it's to be the top company in Canada in terms of infrastructure. So we are comfortable with our size. What is also sure is that we are not a holding company.
I mean, have boots on the ground. We have superintendents. We have team leaders. We have construction manager. We have field engineer working with us.
And we are in a constant process of educating, of bettering the skills and the capacity of our people. So I'm not seeing at this stage any real issue with being able to take the good part of the stimulus package that will come in in Golden Highway. I'm not worried about it. As usually, we will be disciplined in bidding, but we will have to take those opportunities and our organization makes us able to do it. As you have seen, I mean between our organization, our own people, our financial strength, I think that Aecon is really very well equipped to navigate through the strong but temporary crisis and what will follow this crisis.
Okay. Thank you very much.
And there are no further questions in queue at this time. I turn the call back to the presenters for any closing remarks.
Thanks very much, Amy, and thank you all for joining us today. Obviously, these are interesting times, so we're always available to speak afterwards. Feel free to try and meet your convenience. Stay safe, and we look forward to speaking to you all soon. Thank you.
And this concludes today's conference call. You may now disconnect.