Aecon Group Inc. · TSX:ARE
Aecon — Investor Presentation (September 2012)
27 slides from Aecon's investor presentation, September 2012
Slide 1: Aecon Group Inc. Investor Presentation
AECON GROUP INC. (TSX: ARE) Investor Presentation September 2012
Slide 2: Forward-Looking Information
FORWARD-LOOKING FORWARD LOOKING INFORMATION The information in this presentation includes certain forward-looking statements. These forward- lookingg statements are based on currentlyy available competitive, p , financial and economic data and operating plans but are subject to risks and uncertainti
Slide 3: A Canadian Leader in Construction and Infrastructure Development
A Canadian Leader in Construction and Infrastructure Development Offering Integrated Turnkey Solutions 3
Slide 4: Aecon Overview
AECON OVERVIEW Focused on execution and performance Expanding margins and on a clear path to deliver stronger results Balanced and diversified Well positioned for strong growth in key markets 4
Slide 5: Aecon Today
AECON TODAY One Aecon approach Larger, more comprehensive projects Greater visibility and quality in our backlog Growing importance of ‘soft backlog’ – service se ce aandd maintenance a te a ce work o Improved results instilled confidence 40% increase in annual dividend ~86% growth in
Slide 6: Second Quarter Results
SECOND Q QUARTER RESULTS $ millions Three months ended June 30 Six months ended June 30 2012 2011 2012 2011 Revenues $$661.7 $$758.4 $$1,163.8 , $$1,270.5 , Gross profit 62.4 48.9 99.2 65.1 EBITDA 25.9 29.0 26.2 14.9 EBITDA margin 3.9% 3.8% 2.3% 1.2% Operating profit (loss) 12.1 13.9 (4.0) (14.8) Pr
Slide 7: National Reach
NATIONAL REACH REGIONAL OFFICES Brantford Fort McMurrayy Saskatoon Calgary Medicine Hat Seattle Cambridge Montreal Timmins Halifax Ottawa Toronto Edmonton Pictou Vancouver Head Offices Toronto T t Calgary 7
Slide 8: Top 12 Projects
TOP 12 PROJECTS 12 Henday Ring Road 4 Capilano Tunnels 7 Rocanville Mine Picadilly Mine 8 9 2 Port Mann Waneta Dam 3 Lower Mattagami 6 Autoroute 30 11 1 Darlington 5 Union Station 1 Quito Airport TTC Sheppard Subway 10 8
Slide 9: National Fabrication Capability
NATIONAL FABRICATION CAPABILITY FABRICATION FACILITIES Brantford, ON 60,000 sq. ft. Cambridge, ON 120,000 sq. ft. Kitchener, ON 15,000 sq. ft. Dartmouth, NS 47,000 sq. ft. Edmonton 1, AB 80,000 sq. ft. Edmonton 2, AB 85,000 sq. ft. Pi t Pictou, NS 50 000 sq. ft. 50,000 ft Vancouver, BC 40,000 sq. ft
Slide 10: Key Business Drivers
KEY BUSINESS DRIVERS 1 Improving margins through a 1. relentless focus on execution 2. Leadingg national pplayer y in the three fastest growing construction market sectors: Transportation T t ti Energy Resources R 10
Slide 11: Track Record of Profitable Growth
TRACK RECORD OF PROFITABLE GROWTH EBITDA Margin 3.1% 5.2% 6.2% 5.5% 3.9% 5.6% 6.3% 3,500 200 Compound Annual Growth Rates (CAGR) 2006 – 2011 180 3,000 Revenue 21% 160 Revenue (excl. acquisitions) 11% 2,500 140 EBITDA 37% VENUES EBITDA 2,000 120 100 REV E 1,500 80 1,000 60 40 500 20 0 0 2006 2007 200
Slide 12: Improved Returns for Shareholders
IMPROVED RETURNS FOR SHAREHOLDERS Adjusted Profit Dividends Declared Attributable to Shareholders(1) (cents per share) ($Millions) 80 64.0 70 59.3 54.5 60 48.3 50 44.4 40 31.0 30 20 11.5 10 0 2006 2007 2008 2009 2010 2011 2012 Q2 TTM (1) Adj Adjusted t d tto exclude l d th the ffair i value l gain/l
Slide 13: Balanced and Diversified Portfolio (TTM)
BALANCED AND DIVERSIFIED PORTFOLIO (TTM) Revenue By Segment Revenue By Geography US & Int'l Social 8% 19% Alberta Transportation Other East 24% 31% 13% Urban 12% BC 7% Power Sask 9% 7% Ontario Resources 41% 29% Revenue By Contract Type Revenue By Sector Indirect Public & utilities Cost Plus & 17% Fi
Slide 14: Growing Backlog
GROWING BACKLOG REVENUE $ Millions Industrial Infrastructure $3,000 $2,500 Total Backlog (As at June 30, 2012) $912 Million $ 2.67 Billion $2,000 $1,500 $1,000 $500 $1,761 Million $0 2006 2007 2008 2009 2010 2011 June 2012 Note: Excludes ‘soft backlog’ of ~$500-$600 Million per year. 14
Slide 15: Greater Future Visibility Than Ever Before
GREATER FUTURE VISIBILITY THAN EVER BEFORE Backlog Duration ($Millions) $3,000 $1,359 $2,379 $2,673 $2,500 $467 $279 $2,000 $459 $600 $1 500 $1,500 $72 $281 $1,000 $1,747 $1,500 $500 $1,006 $0 Q1 2009 Q1 2012 June 2012 < 12 MTHS 12 ‐ 24 MTHS > 24 MTHS 15
Slide 16: Growing Volume from 'Soft' Backlog
GROWING VOLUME FROM ‘SOFT’ BACKLOG 600 500 400 $ Millions 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 Q2 TTM Utilities Mining Utilities & Aecon Mining are primary drivers of revenue that doesn’t go through hard backlog. Additional work in 2011, other than Utilities and Aecon Mining, that didn’t
Slide 17: Ongoing EBITDA Margin Expansion
ONGOING EBITDA MARGIN EXPANSION Infrastructure Industrial 7.0% 14.0% 6.0% 12.0% 5.0% 10.0% 4.0% 8.0% 3.0% 6.0% 2.0% 4 0% 4.0% 1.0% 2.0% 0.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 ‐2.0% 2005 2006 2007 2008 2009 2010 2011 2012 Q2 Q2 TTM ‐4.0% TTM 7.0% Consolidated 6.0% 5.0% 4.0% 3.0% 2.0% 1.0%
Slide 18: Growth in Backlog Contract Margin
GROWTH IN BACKLOG CONTRACT MARGIN Backlog Margin 20.00% Backlog g Margin g 15.00% 10.00% 5.00% 0.00% 2005 2006 2007 2008 2009 2010 2011 2012 18
Slide 19: Supported by Internal and External Factors
SUPPORTED BY INTERNAL AND EXTERNAL FACTORS 1. Ongoing Margin Expansion in Backlog Larger, Larger more complex / turnkey projects Aecon Mining growth Less traditional general contracting work Increased demand for Aecon’s core construction services Recovery in Industrial market Increasing
Slide 20: EBITDA Margin Target of 9%
EBITDA MARGIN TARGET OF 9% Infrastructure Industrial 9‐10% 6.1% 12.7% ‐2.5% 4.7% 10‐11% 4.1% 6.6% 2.7% 6.6% Avg. EBITDA Peak EBITDA Trough 2012 Q2 TTM Target Avg. EBITDA Peak EBITDA Trough 2012 Q2 TTM Target Margin (2005 Margin EBITDA EBITDA EBITDA Margin (2005 Margin EBITDA EBITDA EBITDA ‐ 2012 Q1
Slide 21: Key Balance Sheet Objectives
KEY BALANCE SHEET OBJECTIVES 1. Efficient financing of equipment fleet Capex actual/forecast (millions): 2011: $ 111 2012: $ 90 2013: $ 90-95 Equipment related debt expected at end of: 2011: $ 201 2012: $ 205-210 2013: $ 210-215 2 Balance Sheet strength to support bonding / LCs / working capital
Slide 22: Key Balance Sheet Objectives
KEY BALANCE SHEET OBJECTIVES 3. Maintain prudent leverage – at or below 1.0x through end 2015 after Convertible Debenture maturities maturities, driven by: EBITDA growth Recourse debt reduced to primarily equipment financing through cash generation M&A growth Internal cash Potential Quito Sale a
Slide 23: Key Statistics
KEY STATISTICS ‣ Revenue ((TTM)) $$2.8 billion ‣ Backlog (as at June 30, 2012) $2.67 billion ‣ Market Capitalization ~ $700 million ‣ 52 Week Range $6.62 - $13.76 ‣ Shares Outstanding 55.8 million ‣ Avg Daily Volume Avg. ~ 220,000 220 000 ‣ Quarterly Dividend 2012 $0.07/ share ‣ Mgmt & Board Ownersh
Slide 24: Market Opportunities
MARKET OPPORTUNITIES Canada s construction industry has been Canada’s described as in a “super-cycle”, with forecasts that Canada will be one of the world’s five largest construction markets by 2020 Unprecedented opportunities in key sectors 8 Transportation projects worth over $1B each in the
Slide 25: Project Opportunities
PROJECT OPPORTUNITIES Ottawa LRT Turcot Interchange in Montreal 407 E Eastt E Extension t i Evergreen LRT in Vancouver Metrolinx Eglinton/Scarborough Rapid Transit LRT Detroit River International Crossing 25
Slide 26: Summary
SUMMARY Industry leader with scale and scope Positioned in growth sectors: Transportation, Energy, Resources Growing backlog with strong visibility Ongoing EBITDA margin expansion Solid capital structure Focused on execution and performance 26
Slide 27: Aecon Group Inc. (TSX: ARE)
AECON GROUP INC. (TSX: ARE) Investor Presentation