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We are
Aecon

ARE: The ticker symbol of Aecon, yes, but also an affirmative and confident proclamation of a company ready for the next big challenge. We ARE essential, innovative, diverse and resilient. We ARE a team of experts building projects, building communities and building partnerships.

Letter To
Shareholders

ceo and chairman
ceo signature

John M. Beck

President & Ceo
chairman signature

Brian Tobin

Executive Chairman

Dear Fellow
Shareholders

We take pride in the strength and resiliency embedded in the layers of Aecon’s foundation.

ceo and chairman
ceo signature

John M. Beck

Chief Executive Officer
chairman signature

Brian Tobin

Chairman

This past year was yet another year of success for Aecon,and we are incredibly proud of all that was accomplished with your support. How do we define who we ARE? A nod to our ticker symbol, of course, but those three letters – ARE – encompass so much more. We are safe. We are profitable. And, we are a partner-of-choice.

Over the course of the year, we reached numerous milestones including record revenue of $3.2 billion and record new contract awards of $4.2 billion, largely reflecting the significant nuclear project awards during 2016 in the Energy segment. Year-end backlog of $4.2 billion, representing a 29 per cent increase over 2015, is diversified across our operating segments and duration, illustrating the soundness of our strategy. To top off the year, the Board of Directors approved a nine per cent increase in the annual dividend to 50 cents per share.

Although we experienced, and to some extent continue to experience, certain headwinds in oil and commodity markets across Canada and competition in the infrastructure market, we take pride in the strength and resiliency embedded in the layers of Aecon’s foundation. This foundation embodies our industry-leading safety culture with record-setting performance, Aecon’s diversification strategy, our skillful execution capabilities and our efforts to enhance the productivity of our business through innovation.

Our focus continues to be on the successful execution of the projects in our backlog and on growing our recurring revenue work with key clients. Following 10 per cent revenue growth in 2016, we expect 2017 to be a year of significant bidding activity that will build backlog for 2018 and beyond. Overall revenue expectations for 2017 are for flat to modestly lower volume, offset by an expectation that Adjusted EBITDA margin improvement will result in an overall improvement in Adjusted EBITDA in the year. There are four core elements that comprise our strategic path to success:

Our People and their Safety: We are committed to the further development of our 12,000-strong employees and industry-leading safety programs.

Superior Shareholder Value: Leveraging our vertical and horizontal integration capabilities and ensuring collaboration across our diverse businesses to create synergies and cost savings for both Aecon and our clients to deliver superior shareholder value.

Partnerships and Alliances: Building strong partnerships and alliances, including joint venture arrangements, Public-Private Partnerships (P3), and long-term relationships with trusted clients across Canada.

Prudent Risk Management: Monitoring projects at all stages of development through a newly formed project controls team to ensure complex projects are provided with state-of-the-art management controls.

With increased infrastructure investment being a key area of focus for all levels of government, Aecon is well positioned to successfully bid on, secure and deliver these projects in 2017 and beyond. In the Energy segment, we are focused on further expanding revenue from our nuclear business and we expect increased backlog and ongoing demand for gas distribution facilities, utilities work, as well as power and nuclear refurbishment programs in 2017 to help offset lower oil related volume. In the Mining segment, contract mining is expected to improve in 2017, with a new operating site coming on line during the second half of the year. Our Concessions segment continues to focus on the significant number of large-scale infrastructure projects and P3 opportunities available both domestically and internationally, including the Bermuda International Airport Redevelopment Project, which recently reached financial and commercial close.

As we near the celebration of Canada’s 150th anniversary, we reflect on the fact that some of our predecessor companies were founded only 10 years after our country’s beginning, and we’ve been connecting communities and laying the foundation ever since. To say the least, we at Aecon are equally excited for the future and what’s to come. Aecon’s strong balance sheet, financial liquidity and diversified approach continue to provide the resources required to capitalize on the opportunities ahead of us to enhance backlog and improve Adjusted EBITDA and Adjusted EBITDA margin.

Aecon is comprised of a highly-skilled team of specialists ready to collaborate with our clients and partners to deliver results in jurisdictions across Canada and globally.

We are invested. We are poised for future growth. We ARE Aecon.

TSX:ARE
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Our Segment
Successes

We Are
Experts

We Are
Aecon

Infrastructure

Recognized for our expertise and capability to deliver large, complex, multi-disciplinary infrastructure projects, Aecon expects continued success in these pursuits with our partners. Our expertise ranges from roads, highways, tunnels, airports and transit systems, to water and wastewater infrastructure. From the transit networks that get you to work, and the roads that take you where you need to go, to the sophisticated systems that deliver clean water – we ARE there.

We Are
Partners

We Are
Aecon

Concessions

We develop, finance, build, operate and maintain vital public infrastructure by way of Public-Private Partnerships. In collaboration with Aecon’s three construction segments, we provide our public and private sector partners with the integrated knowledge and expertise required to execute large-scale infrastructure projects that require private finance and long-term operation and maintenance solutions. Our roster of projects includes the Eglinton Crosstown Light Rail Transit (LRT) project in Toronto, the Region of Waterloo’s ION Stage 1 LRT, as well as the Bermuda International Airport Redevelopment Project.

We Are
Innovators

We Are
Aecon

Energy

From the utilities and telecommunications networks that connect homes and businesses, to the oil and gas distribution networks needed to heat and cool those structures, Aecon proudly manages and delivers critical energy projects for our clients. As entrepreneurial teams, we continue to be innovative and are poised to meet the need for renewable energy solutions. As a leading nuclear supplier, we play an integral role in Ontario’s clean nuclear energy program, as well as global fabrication and nuclear new-builds.

We Are
Pathfinders

We Are
Aecon

Mining

Extracting and processing Canada’s natural resources, including oil and gas, potash, and base and precious metals, helps fuel economies around the world. Aecon is a partner-of-choice assisting our clients through a diverse set of capabilities and we are primed to grow our contract mining operations.

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Financial
Highlights

2016 Revenue

By segment

Five-Year
Financial
Performance

As Reported
Like-for-like(2)

Revenue
($ Millions)

Adjusted
Ebitda(1)
($ Millions)

Adjusted
Ebitda Margin(1)
(per cent)

Year-End
Backlog
($ Millions)

New
contract
awards
($ Millions)

Book Value
Per Share(3)
(diluted) ($ per share)

Annual
Dividends
Per Share
($ per share)

Financial
Highlights

For the year ended December 31
(in millions of Canadian Dollars, except per share amounts) 2016 2015
$ $
Revenue 3,213.1 2,918.1
Adjusted EBITDA* 158.3 169.8
Operating profit* 87.1 142.6
Profit 46.8 68.7
Backlog 4,204 3,261
Results on a like-for-like basis(2)
Revenue 3,213.1 2,910.1
Adjusted EBITDA* 158.3 146.8
Adjusted EBITDA Margin* 4.9% 5.0%
Earnings per share
Basic 0.82 1.22
Diluted 0.77 1.03
Adjusted earnings per share*
Basic 0.82 1.22
Diluted 0.77 1.03
Dividends per share 0.46 0.40
Weighted average number of shares outstanding (in millions)
Basic 57.4 56.4
Diluted 72.3 80.7
  1. Adjusted EBITDA represents operating profit (loss) adjusted to exclude depreciation and amortization, the gain (loss) on sale of assets and investments, restructuring costs, gain (loss) on mark-to-market adjustments related to the Company’s long-term incentive plan (“LTIP”) program, and net income (loss) from projects accounted for using the equity method, but including “Equity Project EBITDA” from projects accounted for using the equity method. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenue.
  2. The sale of Innovative Steam Technologies Inc. (“IST”) in April 2015 and Aecon’s investment in the Quito airport concession in December 2015, including the classification of the Quito airport concession as “held for sale” from June 8, 2015, impacted Aecon’s results for the year ended December 31, 2015 and December 31, 2014 when compared to the current year. Revenue, Adjusted EBITDA and Adjusted EBITDA margin presented on a like-for-like basis adjusts amount as originally reported to exclude Revenue, Adjusted EBITDA, and Adjusted EBITDA Margin from IST and the Quito airport concession for the years ended December 31, 2014 and December 31, 2015.
  3. Book Value Per Share (diluted) is calculated as shareholders’ equity plus the increase in shareholders’ equity if options and convertible debentures in the money are exercised and/or converted, all divided by shares outstanding at year end (diluted). Shares outstanding at year end (diluted) represent the number of shares issued at the end of the year plus the number of shares issuable if options and convertible debentures in the money were exercised and/or converted.
  4. As approved by Aecon’s Board of Directors on March 7, 2017.

* The financial highlights and five-year financial performance section of the annual report present certain non-GAAP and additional GAAP financial measures to assist readers in understanding the Company’s performance. Non-GAAP financial measures are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with GAAP. Additional GAAP financial measures are presented on the face of the Company’s consolidated statements of income and are not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. These measures are defined in the notes to the five-year performance section.

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Corporate
Social
Responsibility

We ARE
Building Things
That Matter

socialresponsibility.aecon.com
Connecting Communities
We are proud to work on projects that connect communities, homes and people while protecting the ecosystems in which we operate through end-to-end sustainability. Across the country, Aecon works collaboratively with Indigenous Peoples through our defined principles of partnership.
AON Best Employer, Platinum, Canada, 2017
Best Employer Status for Over a Decade
As a platinum employer, Aecon is proud to attract and retain the best and brightest employees. We build teams. We build careers. See aecon.com/careers.

Safety Forms the Backbone for How We Do Business Every Day
Over the past decade, we have reduced our non lost-time injuries by 77 per cent through a focus on leading indicators – getting ahead of potential issues. Each year during Safety Week, approximately 15,000 people gather at 110 project sites to celebrate our number one core value of SAFETY FIRST.

2016 Health and Safety Awards

  • Safety Excellence Award
    Recognized by the National Capital Heavy Construction Association (NCHCA) for outstanding performance and the success of the Aecon Safety Opportunity program.
  • Client Recognition
    Recognized by Suncor / Fort Hills for achieving one million hours without a recordable injury.
  • Outstanding Achievement in Safety
    Recognized by the Ontario General Contractors Association (OGCA) / Ministry of Labour (MOL) for three years without a Lost Time Injury (LTI).
  • Health and Safety Achievement Award
    Recognized by the Hamilton Halton Construction Association (HHCA) for an excellent injury frequency through 2013-2014 (companies performing between 250,000 to 499,000 hours worked).
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