viewAecon Group

Aecon revises order backlog to $2.66 bln


Aecon Group (TSE:ARE) said Monday as of May 31 its backlog stood at $2.66 billion versus the $2.37 billion it initially reported at the end of first quarter.

The company said it will outline its strategy and strengths it expects will make growing sales and profits, at its investor day meeting later today.

"Aecon stands not only poised to deliver but is generating stronger results," Aecon chief executive John M. Beck said in a statement.

The company noted the restated backlog "embeds improved margins" than previously achieved due to its disciplined bidding approach and comprehensive construction services across Canada.

"Our focus on execution – including cost control, risk management and synergy opportunities within business units – is expected to lead us on a path of sustainable growth in earnings."

The company’s infrastructure segment – which constructs everything from roads to highways, power projects and hospitals – had a backlog of $1.76 billion up from the $1.40 billion.

At the industrial business unit – which builds alternative fossil fuel and co-generation power plants as well as waste water facilities – now has a backlog of $897 million slightly down from the $976 million.

Aecon chief financial officer David Smales added: "We expect steady margin growth over the next few years."

"This is linked to ongoing growth in backlog contract margin and supported by internal and external factors, including improved operational efficiency, mix of work, growth in mining and less traditional general construction work, and increased demand for construction services in areas of Aecon's core capabilities and the strong recovery in industrial markets across Canada."

Not included in backlog, are revenues expected from its alliances and supplier of choice arrangements which are important to Aecon’s business and prospects because of the "significant" volumes.

The additional work is now expected to be about $500 to $600 million on an annual basis, representing between 15 and 20 percent of Aecon’s business today.

Quick facts: Aecon Group

Price: 14.78 CAD

Market: TSX
Market Cap: $884.83 m

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