Earnings call transcript: Aecon Group’s Q3 2025 earnings beat forecasts, stock surges

Aecon Group Inc. reported stronger-than-expected earnings for Q3 2025, with earnings per share (EPS) of $0.53, surpassing the forecasted $0.458, marking a 15.72% surprise. Revenue reached $1.53 billion, exceeding the anticipated $1.39 billion by 10.07%. Following the announcement, Aecon’s stock rose by 8.35%, closing at $32.56, up from the previous close of $30.05.

Key Takeaways

• Aecon Group’s Q3 2025 EPS and revenue exceeded forecasts.
• The company recorded a 20% year-over-year revenue increase.
• Aecon’s stock surged 8.35% post-earnings announcement.
• The company secured a record backlog of $10.8 billion.
• Strategic acquisitions in the U.S. bolster future growth prospects.

Company Performance

Aecon Group demonstrated robust performance in Q3 2025, with a 20% increase in revenue compared to the same quarter last year. The company continues to expand its footprint in the construction and nuclear sectors, highlighted by strategic acquisitions and significant project wins, such as the Cascade Nuclear Partners project in Washington State.

Financial Highlights

• Revenue: $1.53 billion, up 20% year-over-year
• Adjusted EBITDA: $93 million, down from $127 million in Q3 2024
• EPS: $0.53, compared to $0.86 in Q3 2024
• Record backlog: $10.8 billion
• Trailing twelve-month revenue: $5 billion, up from $4 billion

Earnings vs. Forecast

Aecon’s Q3 2025 EPS of $0.53 exceeded the forecast of $0.458, resulting in a 15.72% surprise. Revenue also surpassed expectations, reaching $1.53 billion against a forecast of $1.39 billion, marking a 10.07% surprise. This performance reflects Aecon’s strategic focus on high-growth sectors and effective risk management.

Market Reaction

In response to the earnings beat, Aecon’s stock price increased by 8.35%, closing at $32.56. This movement positions the stock close to its 52-week high of $35.1, indicating strong investor confidence. The stock’s performance contrasts with broader market trends, highlighting Aecon’s positive outlook.

Outlook & Guidance

Looking forward, Aecon anticipates continued revenue growth in 2026, supported by a secured backlog of $3.7 billion for the next 12 months and an additional $1 billion in recurring revenue. The company remains focused on collaborative contract models and margin improvement in its construction segment.

Executive Commentary

Jean-Louis Servranckx, President and CEO, emphasized Aecon’s transformation: "We are now a company that is getting around $5 billion of revenue, more than 50% related with power and more than 70% on non-fixed price." He highlighted the balance between growth and risk management as key to Aecon’s success.

Risks and Challenges

• Margin compression due to legacy projects
• Potential delays in project execution
• Macroeconomic pressures impacting construction costs
• Competition in the U.S. nuclear sector
• Regulatory changes affecting infrastructure projects

Q&A

During the earnings call, analysts inquired about Aecon’s nuclear sector growth strategies and the impact of legacy projects on margins. The company clarified its U.S. expansion strategy and detailed its contract risk management approaches, reinforcing its commitment to sustainable growth.

Full transcript - Aecon Group Inc. (ARE) Q3 2025:

Corinne, Conference Operator: Good day and thank you for standing by. Welcome to the Q3 2025 Aecon Group Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Thank you, Corinne.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Good morning everyone and thanks for participating in our third quarter results conference call. This is Adam Borgatti speaking and joining me are Jean-Louis Servranckx, President and CEO, Jérôme Julier, Executive Vice President and CFO, and Alistair MacCallum, Senior Vice President of Finance. Our earnings announcement was released yesterday evening and we’ve posted a slide presentation on our website which we’ll refer to during the call. Following comments, we’ll be glad to ask and take questions from analysts and we do ask that analysts keep to one question and a follow up before getting back into the queue. As noted on Slide 2 of the presentation, listeners are reminded that the information we’re sharing with you today includes forward-looking statements and these statements are based on assumptions that are subject to significant risks and uncertainties. Although Aecon Group Inc.

believes 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 hand it over to Jérôme. Thanks Adam and good morning everyone. I’ll now speak to Aecon’s consolidated results, review results by segment, and address Aecon’s financial position before turning the call over to Jean-Louis. Additional information has been provided to help clarify the underlying results excluding impacts from the fixed-price legacy projects and divestitures. Detailed reconciliation tables are included on Slide 16 through 18 in the conference call presentation. Turning to Slide 3, on a reported basis, revenue for the three months ended September 30, 2025, of $1.5 billion, the highest quarterly revenue in Aecon’s history, was up $255 million or 20% compared to the same period in 2024.

Revenue grew across all our operating sectors with strong performance in nuclear, industrial, and urban transportation solutions. Adjusted EBITDA of $93 million compared to $127 million last year. An operating profit of $61 million in the quarter compared to an operating profit of $81 million in the same period last year. Adjusted EBITDA and operating profit in the third quarter of 2025 were negatively impacted by $21 million in legacy project losses. There were no reported losses on legacy projects in the comparative period last year. Excluding the impacts from the legacy projects and divestitures, adjusted revenue for the three months ended September 30, 2025, of $1.5 billion compared to $1.2 billion in the same period in 2024. Adjusted EBITDA as adjusted of $114 million compared to $127 million last year.

Adjusted diluted earnings per share in the quarter of $0.53 compared to adjusted diluted earnings per share $0.86 last year. Reported backlog of $10.8 billion at the end of the third quarter was the highest reported backlog in Aecon’s history, surpassing the previous record of $10.7 billion set last quarter. This level and diversification of backlog is a result of significant efforts through progressive and collaborative procurement models and Aecon anticipates a moderation in backlog growth in the near term given the current lagged levels. New contract awards of $1.6 billion were booked in the quarter compared to $1.1 billion in the prior period. Looking now at the results by segment, turning to Slide 4, construction revenue of $1.5 billion in the third quarter was $255 million, or 20% higher than the same period last year.

Revenue was higher in nuclear operations from an increased volume of refurbishment, new build and engineering services work at nuclear generating stations in Ontario and the United States. In industrial operations, primarily from an increased volume of field construction work in Western Canada as well as revenue growth in the United States associated with the Bodell Construction acquisition and in urban transportation solutions, primarily from an increase in mass transit project work driven by a progressive design build transit project moving from the development phase in 2024 to the implementation phase in 2025, partially offset by a lower volume of LRT work in Ontario and Quebec as several projects near completion.

Revenue was also higher in our utility operations from a higher volume of gas distribution work in Canada and electrical transmission work in the United States, partially offset by a lower volume of battery energy storage and telecommunications work, and civil operations, primarily from a higher volume of major project work internationally, partially offset by lower weather-related volumes of road building work in Western Canada. On an as adjusted basis, construction revenue was $1.5 billion compared to $1.2 billion in the same period last year, representing a 25% increase. New contract awards of $1.6 billion in the third quarter in construction compared to $1.1 billion in the same period last year. Turning now to Slide 5, adjusted EBITDA of $88 million compared to $114 million last year. Operating profit of $70 million compared to an operating profit of $90 million last year.

On an as adjusted basis, the adjusted EBITDA for the three months ended September 30, 2025, was $109 million compared to $114 million in the same period in 2024. Moving on to concessions on Slide 6, revenue for the third quarter was $2 million compared to $3 million in the same period last year. Adjusted EBITDA in the Concession segment is $15 million in the quarter compared to $22 million last year, an operating profit of $1 million compared to $5 million last year. Lower adjusted EBITDA and operating profit in the quarter were driven by lower operating results from Skyport and from lower management and development fees in the balance of the segment. On Slide 7, we’ve brought together the as adjusted information to exclude the impacts of legacy project losses and divestitures to provide insight into the underlying performance of the business.

On an as adjusted basis, revenue for the trailing twelve-month period ended September 30, 2025, was $5 billion compared to $4 billion in the same period last year. Adjusted EBITDA was $338 million for the trailing twelve-month period compared to $348 million in the prior period for our Construction segment. On an as adjusted basis, adjusted EBITDA was $316 million for the trailing twelve-month period representing a 6.3% margin. As adjusted EBITDA margin was impacted by lower gross profit in the civil sector.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Driven by weaker performance on projects.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: The Western region and urban transportation solutions from lower gross profit on mass transit projects that are nearing completion, have been completed in the prior period or have moved into the execution phase. Turning to Slide 8, at the end of the third quarter, Aecon held core cash equivalent of $21 million, which excludes the $370 million of cash representing Aecon’s proportionate share held in joint operations. In addition, at September 30, 2023, Aecon had committed revolving credit facilities of $1 billion, of which $294 million was drawn and $4 million was utilized for letters of credit. Aecon has no debt or working capital credit facility maturities until 2029 except equipment loans and leases in the normal course. Aecon repurchased approximately 341,000 shares with the NCIB share repurchase program in the quarter and the Toronto Stock Exchange approved a renewal of Aecon’s NCIB share repurchase program for an additional year.

At this point, I’ll turn the call over to Jean-Louis to address our business performance and outlook.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Thank you, Jérôme. Turning to Slide 9, Aecon continues to build resiliency through a balanced and diversified work portfolio. Over the trailing twelve-month period, 47% of Aecon’s construction revenue was generated from the utilities and nuclear sectors, and over 50% of construction revenue was derived from power-related work programs, which encompasses utilities, nuclear, and also includes power-related activities in Aecon, civil, and industrial sectors. Last week, Cascade Nuclear Partners, an equal joint venture comprised of Aecon, Kiewit, and Black & Veatch, was selected by Energy Northwest to collaboratively complete the design, planning, and construction of the first four of the 12 XE-100 small modular reactors, or SMRs, under a progressive design-build model. The first phase of the project will generate up to 320 megawatts through the delivery of four reactor modules and will be located adjacent to Energy Northwest’s Columbia Generating Station near Richland, Washington State.

This is one of the first SMR projects to be developed in the United States, and we are excited to contribute to its ultimate delivery while also executing on the construction phase of the Darlington New Nuclear SMR project in Ontario. We are confident that these efforts position us well to further expand our nuclear business and capitalize on long-term growth opportunities in the sector. In addition, this month, Contrecoeur Terminal contractors comprised of Aecon and Pomerleau completed the collaborative development phase and reached financial close on a design-build contract with the Montreal Port Authority for the Port of Montreal Expansion in Water Work project in Contrecoeur, Quebec. Overall, balancing growth and opportunity with proper risk management is key to Aecon’s future success.

We continue to maintain balance in our construction and concession segments as we embrace new opportunities to grow in areas linked to the energy and power sectors and in U.S. and international markets. Turning to Slide 10, demand for Aecon services across our markets continues to be strong, with record backlog of $10.8 billion at September 30, 2025, recurring revenue programs continuing to see robust demand, and a strong bid pipeline. Aecon believes it’s positioned to achieve further revenue growth in 2025 and over the next few years and is focused on achieving improved profitability and margin predictability. Three-quarters of Aecon’s record backlog at September 30 is non-fixed price. This compares to just over 50% non-fixed price last year and roughly 1/3 non-fixed price in the third quarter of 2021.

Additionally, our trailing twelve-month revenue at September 30, 2025 was 66% non-fixed price, up from 59% in the same period last year. We have continued to shift the nature of our backlog and our business over time, including through more collaborative and progressive procurement models, while seeking to reduce risk in our performance and target greater profitability and margin predictability. Trailing twelve-month recurring revenue of $900 million at September 30, 2025 compared to $1 billion at the same time last year. Recurring revenues are typically executed on a non-fixed price basis, with the majority being over and above our reported backlog figures. Turning to slide 11, on September 2, Thomas Closhart was appointed to the Chief Operating Officer role at Aecon.

In this role, Thomas will work closely with Aecon’s operational leadership teams across North America and internationally to drive enhanced operational and financial performance in the context of Aecon’s safety always culture. Turning to outlook on slide 12, revenue in 2025 is expected to be stronger than 2024 due to a record backlog of $10.8 billion, the impact of business acquisitions completed in 2024 and 2025, solid recurring revenue, and a strong bid pipeline. Aecon believes it’s positioned to achieve further revenue growth in 2026. In the construction segment, demand for Aecon services across Canada and in select U.S. and international markets continues to be strong, with opportunities across all sectors, and in the concession segment, there are several opportunities to add to the existing portfolio of Canadian and international concessions in the next 6 to 12 months.

The Ontario government recently announced the completion of the Revenue Service Demonstration, or RSD, phase for the Finch West LRT project, a crucial step indicating the system’s readiness for operational launch. The Toronto Transit Commission, TTC, is set to assume full control of the line shortly. This represents a significant accomplishment for Aecon and our joint venture partners, underscoring significant progress toward completion. We want to take this opportunity to sincerely thank our teams for their outstanding dedication and hard work in reaching this very important milestone for the project. The Eglinton Crosstown LRT officially began its RSD phase in October, and we are continuing to work towards project completion in 2025 alongside our client and the operator.

With that, of the remaining three legacy projects, two are currently expected to be substantially complete by end of 2025, and the final project is expected to be construction complete before the end of 2025, substantially complete as soon as early 2026. The finalization of this project is anticipated to lead to improved profitability and margin predictability. The remaining backlog to be worked off on the three remaining legacy projects was $53 million, or less than 1% of total backlog at September 30, 2025. We are very close and are dedicating all necessary resources to drive the remaining legacy projects to completion while pursuing fair and reasonable settlement agreements with the respective clients in each case. Until the three remaining projects are complete and the related claims have been resolved, there is a risk that profitability could be impacted in future periods.

Turning to Slide 13, Aecon recently completed two strategic U.S. acquisitions, Bodell Construction and Trinity Industrial Services. Bodell specializes in capital expenditure projects across the oil and gas, mining, water and wastewater, and power generation sectors throughout the western and southern U.S. Trinity focuses on fabrication and O&M projects for industrial clients, primarily in Texas and surrounding regions. These two strategic acquisitions position Aecon with a strong growth platform in the U.S., targeting high momentum sectors such as energy, power, mining, and water in key geographic markets. Together, the transactions are highly complementary, broadening Aecon’s U.S. presence, deepening local client relationships, and unlocking additional cross-selling opportunities. We are very pleased to welcome the employees of Trinity and Bodell to the Aecon family. Thank you. We will now turn the call over to analysts for questions.

Corinne, Conference Operator: Thank you. As a reminder to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11 again. Stand by while we compile the Q and A roster. Our first question comes from Ian Brooks Gillies of Stifel. Your line is now open.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Morning everyone.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: I was hoping you guys could perhaps.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Spend a bit of time talking about your capabilities in the U.S. as it pertains to nuclear, your abilities as an agnostic service provider, and how you’re thinking about capturing work whether as a prime contractor or sub.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Okay, I will check this one. I mean broadly speaking, let’s speak about our nuclear sector. I mean it’s very strong. We are very happy with the performance of this sector. You know our Canadian activity, basically we have a 100% market share in the rehabilitation market. I mean the major component replacement. In Canada we are finalizing the last unit at Darlington, Unit 4. We are finalizing the second unit at Bruce out of six, Unit 3, and we have begun work in Pickering, the four units 5, 6, 7, 8. In addition, in Canada we are part of the Small Modular Reactor alliance team with OPG. Interesting to know all the refurbishments are CANDU reactors. This SMR is a GE Hitachi reactor. In the U.S. we are also progressing in major component replacement with a few clients.

We are working with the Federal Department of Energy, and you have noticed the announcement about Cascade for Energy Northwest. I mean new class, I mean class 4 of reactor, high temperature gas cooled with pebbles. It’s for the first set of four 80 megawatt reactors with X-energy patent. It’s very interesting. You have also noticed the team, I think this is one of the strongest teams we could dream of: Kiewit, Black & Veatch, and Aecon. We at the moment have something like 1,300 persons working for us in the U.S. related with our nuclear sector. It’s not new. You remember that in 2018, I mean we acquired a small company named Vox, now Aecon Vox. We have been working in the past to fabricate modules for the AP1000 reactor. Another proof that, as you say, we are technology agnostic: And GE, Westinghouse.

You have heard the recent announcements in the U.S. about Westinghouse, the U.S. government, and we are very familiar with the AP1000 due to the modules we have been fabricating in the past. We have a cooperation agreement with Westinghouse covering all countries about cost estimation, planning, development, fabrication support. We are very much plugged in too with Westinghouse. This is where we are at the moment. It’s a very dynamic market. As usual, we go prudently but steadily. I suppose.

Corinne, Conference Operator: Your next question comes from Yuri Lynk of Canaccord Genuity Inc. Your line is now open.

Hey, good morning, guys.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Hey, good morning.

Can we just talk a little bit about the Western Civil contracts? Curious if those are collaborative in nature, and if so, can you talk about how the pain and gain sharing mechanism in those contracts is kind of working for you as you work through those difficulties?

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Yeah, hey, it’s Jérôme here.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: The Western Civil.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: I mean, we’re specifically zooming in on a handful of projects across a pretty broad portfolio across Aecon. As Jean-Louis noted in his prepared remarks, the majority of the revenue that we’re accruing today is based on non-fixed price. We still have elements of fixed price in our business, and when those work well, they work well. When those work poorly, they can have a declining presence on our margin profile. These, you know, the Western Civil items under subject here are not part of this progressive or collaborative approach. They’d be kind of like more traditional or older type projects. We’ve deployed teams to support and improve schedule, safety, and financial performance. We’re near the end of the completion on these things.

Our hope is we’ll be able to stop talking about the impact that’s having on the overall margin profile and hopefully kind of arrest the decline that we’ve seen in the construction adjusted EBITDA margin on a go-forward basis. We’re almost there, but until they’re done, they’re not fully done. These ones would not be part of that set era. This is just more traditional work that is just not being executed to the level that we’re happy with.

Does that contract structure reflect the fact that they were just not put out to bid under a collaborative framework, or is that more timing related before that kind of became the prevalent contracting structure?

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Yes, you’re right. I mean those are rather ancient projects, almost all completed now, and the bidding structure was under lump sum. This is where we are with this project. As Jérôme says, I mean we’re not very happy or not happy at all with some phases of the execution, but it’s just getting done.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: And.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: As I’ve noticed a few times, I mean there’s not such a world as everything lump sum is bad and everything progressive is good. We have other lump sum jobs that give regular roundups that are progressing perfectly. We just have to be more and more careful about any project, and we have the organization now to do it.

Okay. I guess it kind of ties in with that. My next question, your construction segment trailing normalized EBITDA margin 6.3% TTM, down about 50 bps sequentially from Q2. Understand what’s weighing on it. I get that. I’m just trying as we look to 2026.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: And.

Does that number start with a 6? Does that TTM number slide a bit more before it gets better? Just how do we think about the puts and takes on the underlying profitability of the construction segment?

Tricky one, Yuri, because as you know, we don’t provide guidance. Maybe I’ll position it like this.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Part of the change that we’ve seen.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: The margin profile stems from three specific factors. One is Western civil. We’ve talked about it. That is transitionary, so to speak. As that completes and as we burn off the quarters where that’s impacted us, we’ll hope to see a return to that’ll help accrete up the margins. Another aspect is in the prior periods we were in the collaborative design phase on a lot of projects where the margin profile was more supportive. Now we’re in the execution phase and so we’re booking a ton more revenue.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Right.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: We don’t want to lose the story here, which is when you have 20% or 25% revenue growth, that’s not a bad thing for us. We’re quite proud of what the teams have done here, especially in the context of an effectively flat construction market in Canada overall. The key thing here is what we’re executing today is just.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Going to be different type of work.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: In the prior period, what we’re actually today in general is lower risk. We are taking a much more portfolio-driven approach to the way that we assess our projects with a risk-reward balance that I think is a lot more appropriate. That doesn’t answer your question at all, but that gives context to this, which is also not going to answer your question. The view is we’d like to see, we’d like to arrest the decline in the margin profile and then start bending the curve upwards in 2026. That’s obviously a key objective for us. We think we have the programs to execute against that. We have to get through the back half of the year here and we’ve got to close out these projects before we can be more definitive on it. The hope here is we’ll be able to bend the curve upward next year.

Okay, can you recall if Q4 of last year had better margins in civil? Like, is it a tough comp?

Yeah, this quarter was the toughest of all comps. Last year was just a stellar quarter, and we hope we can get.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Back to these levels.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Last year was, I think, like an okay quarter. I think we’ll have to work at it.

Okay, thanks guys. I’ll turn it over.

Corinne, Conference Operator: Thank you. One moment for your next question. Our next question comes from Frederic Bastien of Raymond James Ltd. Your line is now open.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Good morning, guys. I don’t recall you ever turning to a CEO in my time covering the stock. What made you decide to first establish that position today, and second, to select Thomas as your CEO?

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: I’m very happy to have Thomas as a Chief Operating Officer. I’ve been knowing Thomas for the last 20 years. I’ve been working with him at Vinci. I’ve been then working with him at EFHASH and now at Aecon. He has always delivered above the target at Fixed It. I arrived in 2018 and very quickly discovered that those legacy projects would be a major concern and that we also had to pivot and push our client towards those progressive models, more collaborative model. I had to be myself, the CEO of the company during the first years. We are arriving now at a stage where it is natural for the size of the company. We have now become a much bigger company than in 2018.

For the complexity of the market trends and rapid changes it was now and it is a time to have a Chief Operating Officer at Aecon. Because I’m working with most of my peers and sometimes competitors team, I can tell you that I really think we have one of the strongest executive team in the market at the moment.

Thanks for that caller.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Jean-Louis, I really appreciate it. Now just piggybacking on Yuri’s question about margin profile, recognizing that that will inch a bit lower as you favor less.

Volatile and higher-quality collaborative work.

I would have expected to see slightly more operating leverage in the quarter considering the big top line growth you enjoyed. Was that entirely related to the lower margin in Western Civil or is there more to it? It’s a component of it. It’s an important component of it. The other part that I think is maybe it’s a little bit of just construction accounting. We’re in the opening phases of several large projects that were executed under collaborative procurement models. I’m thinking the Darlington New Nuclear project. I’m thinking of the Scarborough project and other large projects, things like structure or landing stations. On that basis, when you’re opening up a project, you tend to book with full contingency baked into your cost profile.

The natural cadence, the way it should work in a perfect world, is as you move through the percentage completion, you look at how much contingency you have in the project and say to yourself, okay, we’ll hopefully be able to release this. The margin profile ought to improve as you execute well through the.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Back half of the year, so I think.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Part of it is Western Civil, part of the type of work we’re doing, part of it’s just the phase that we’re in today. All those combined have resulted in what you’ve identified as a lack of operating leverage. I think if you kind of unpack it, you see there’s different components to it, some of which will auto resolve as time passes and some will be there in a more permanent fixture. Your next question is what’s the various weighting of each component? I’m not going to give you that. No, I didn’t ask that. Last for me, just wondering if those Bodell and Trinity acquisitions, can they be used as conduits for your nuclear activities in the U.S. or will these be conducted strictly through United Engineers? Just curious.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: No, I mean they are not nuclear. Nuclear is a very special work world. Sorry, Frederic. It’s our nuclear sector. I mean this nuclear sector in the U.S. now has boots on the ground in 15 states of the United States. Those are purely industrial. They are different company, as I said. I mean very complementary. Bodell may be a little more on project management organization and Trinity with very efficient workshop. I mean in Texas they are complementary. They will serve, I mean obviously the petrochemical industry, the water industry, the conventional power industry. They will not be mixed with our nuclear group which is based in Charlotte.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Thank you for that.

Pass it on.

Corinne, Conference Operator: Thank you. One moment for our next question. Our next question comes from Sabahat Khan of RBC Capital Markets. Your line is now open.

Great, thanks and good morning. Just a bigger picture question around the outlook. You talked about the outlook for nuclear and construction. Can you maybe just talk about nuclear as a percentage of revenue? Based on your current visibility, it looks like the numbers sort of ticked higher from the low 20% to the high 20%. The backlog is very significant. Just overall, maybe what does that mix look like over the next two to three years given your visibility to the pipeline? Thank you.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: I take this one. Yes, nuclear is growing and is getting stronger. The figures you are putting in your question are the right ones. It’s strong. Remember that part of our core strategy is to have our sectors balanced. I mean we all know that construction is about cycle and we are balanced. What is sure is that Aecon has dramatically changed, I mean during the last, let’s say, seven years because I arrived in 2018. I mean we were a company with something like $3 billion revenue, more than 70% in civil pipelines with a backlog around $4.4 to $4.5 billion. This backlog being more than 70% on fixed price. We are now a company that is getting around $5 billion of revenue, more than 50% related with power and more than 70% on non-fixed price. This has changed the wave.

I would say the major trend in construction in the market is related with power. Aecon has perfectly, with agility, been able to adapt to serve this market. The demand, the future demand, is huge in power in generation and in transmission and distribution. In generation, everybody’s speaking about AI data centers, but it’s not only AI data centers. You have also a lot of conventional data centers. It’s also growing in transportation, I mean public transportation, private transportation. It’s growing in buildings, more and more heat pumps are getting installed. It’s growing in factories; you have more and more digital factories that are requiring more and more electricity. You have probably noticed that the vocabulary changed from sustainability to energy transition and then to electricity addition. Even if it’s only half of the projected figures between 2025 and 2035, it’s still huge.

This is for the generation and for the grid, it’s even more important. We know that more than 40% of the grid infrastructure, I mean, have gone there the age, I mean, they are at the end of life or already past the end of life. There’s a huge work to do there and we are perfectly positioned for that.

Great, thanks very much for that. Just looking over to the concession side, there’s some commentary in the material here that you are looking at options to maybe add to that portfolio. Is that just referring to the project that you’re sort of working on, or are there other opportunities to get involved with concessions outside of what we know already?

Thanks.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Adam. Here.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Yeah, for sure.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: The U.S. Virgin Islands Airport redevelopment projects are squarely in that camp, and we’re hoping to get those done as soon as we can. Still in the collaborative phase, which again, as you know, is helpful because we’re working collaboratively with both the clients, the airlines, the authorities to make sure we’ve got the right structure and plan in place. That’s taking the time it needs to get to hopefully a good outcome soon. We’ve also got, obviously, an excellent concessions development team that’s working in a number of sectors, both in power and other assets, not just the typical B3s, but are now advancing that program into new opportunities. There’s always a few things on the go there. Great.

Just last one for me on the recurring revenues, it’s been a side of the business that’s been growing for some time just on an LTM basis. Looks to have moderated. Are you just sort of between projects? Maybe just talk about the opportunity set on the recurring revenue side. That’s it for me. Thank you.

Yeah, it’s just a slide down in some of the progressive design phases where that’s more of like a service model. Now we’re just moved into construction in kind of like the more traditional contracted sense. We’re happy with the level and the growth profile that underpins it. Almost everything we see there today is going to be in utilities. We strengthened also MSA-based work across nuclear and industrial. We’re feeling good about the recurring revenue programs. Just as a reminder, almost none of that stuff touches our backlog, so it’s book and burn as we go and underpinned by MSA. It’s a good business, it’s a growing business, and mentioned some of the grid issues that we’re seeing across the markets where we operate and help support us as that business continues to grow.

Thanks so much.

Corinne, Conference Operator: Thank you. One moment for our next question. Our next question comes from Benoit Poirier of Desjardins Securities Inc. Your line is now open.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Yes, thank you very much and good morning everyone. Jean-Louis, when we look at the backlog, it’s now a record level with still many opportunities ahead. Could you talk maybe about the bidding pipeline and maybe the ability to flex up resources in order to sustain upcoming growth? Yes, as you say, I mean our backlog is record at $10.8 billion plus the $1 billion of recurring revenue. I mean that we don’t enter in those figures. How is the pipeline looking like? Strong. In Canada you heard about all what we call those sovereignty projects. I mean it’s a little more than $100 billion during the next five years. We cannot dream. It’s not going to be five years. It may be 10 years or 15 years.

Even with this, those are very big amounts and infrastructure, where Aecon is strong, as I told you before, the power sector is also going very strong. Are we ready for this? Yes, we are because this is part of our job at the executive level to recruit, to train, to certify internally our people or to make acquisition. It’s not, I hope it was not a surprise for you when we invested last year in United. With United we now have a grip on a group of highly professional engineers related with power. A point that could have been of concern was nuclear in Canada. OPG has been extremely smart to phase Pickering. Not too early, not too late. Not too early because most of our people were in Darlington.

Not too late because those people could go in United States or in other places to work because they have a very good track record of refurbishment on time and budget. Those major refurbishments require a lot of people. It’s going to be a smooth translation of our skilled people from Darlington to Pickering. For the rest, we are ready. We are ready for what is coming. Okay, and my follow up question, when we look, you’ve been quite successful to diversify away from fixed-price. Now if we look at non-fixed price contract, 60% of revenue, 75% of backlog, how do you see the mix.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Evolving in the next few years.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Now that the business has been reshaped nicely, do you see an opportunity to maybe go back smoothly and more fixed price? How do you see the mix evolving between the two going forward? It was a decision and a commitment, I mean to our shareholders in 2019 to really shift the profile of Aecon in terms of fixed, non-fixed. We inverse more or less. I mean, where we were 35% on fixed to 65% non-fixed. This being said, I repeat, there’s not such a word where everything fixed is bad and everything progressive is good. It will probably stay around this, but in some occasions where we can find some lump sum job with the right size, the right client, and where we have excellent core competency in working on lump sum is not bad.

I would tend to say we want it to be where we are now and we are happy about it. It may fluctuate a little and this is the way we can see the future. We still have quite a number of progressive design build, either in development phase or in execution. For example, there are two we don’t speak that much about, which is the Red River Wastewater Plant in Winnipeg or in the Buffalo Pound near Saskatoon. Those are progressive job and development and construction. It’s more or less the trend for us.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Thank you very much.

Corinne, Conference Operator: Thank you. One moment for our next question. Our next question comes from Krista Friesen of CIBC. Your line is now open. Hi, thanks for taking my question.

Maybe just to follow up on margins, just as we think about 2026 and beyond, how much should we be considering your overall mix and how that’s evolving with the utilities business and nuclear, for example?

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: I mean, we should be considering it. Both of those businesses.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Have margin profiles that reflect the competitive position that we hold in the market. The investment that’s required, remember utilities tends to have a higher margin profile because there’s a fairly significant investment in equipment required. Think bucket trucks, directional drills. When you see storm response and see the pictures of dozens of vehicles lined up with crews working through the night to get power back on, those trucks need to be paid for on the CapEx line, and the margin profile needs to reflect it. I would say that that’s likely going to be a factor. However, on the same side of the consideration box, we have work that we’re doing where we’re being a lot more thoughtful in the margin that’s required and the balance that we place in the other sectors. The industrial team does extraordinary work. Their work is in demand, civil.

A lot more things in the nature of tunneling or foundations work that comes with a strong margin profile as well. I wouldn’t say this is one side of the house will do kind of an exceptionally high number, another side does something much more poorly. I think it’s just more variances around a mean that we’re thinking about here. On balance, the sectors that are growing most rapidly in our view are ones that also come with strong margins. We have a return on capital employed model where we allocate capital to the groups that perform, and I think it’s on us to make sure that we continue to feed the beast where it’s performing best. Okay, great.

On the nuclear business, specifically in the U.S., as you think out the next couple years, how do you feel about your capacity, and how much of a priority is it for you to grow your capacity in the U.S.? Thank you.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: We are growing our capacity every month. I mean in the U.S., as I say, we are now working in 15 states. We have more than 1,300 people. I think we have very good teams, teams that we have been able to.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Attract.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: At Aecon that we are used to work together that are perfectly known by the big utilities. I would tend to say so far so good. I’m happy with the team and the performance of the team. I’m also very happy about the strength of the Cascade group. I mean, as I say, Kiewit, Black & Veatch, and Aecon, our partnership with Kiewit that we initiated in Canada is just growing nicely and that’s good for us in terms of predictability of our successes in the future.

Thank you. I’ll jump back in the queue.

Corinne, Conference Operator: Thank you. Your next question comes from Michael Tupholme of TD Cowen. Your line is now open.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Thank you.

Good morning. As a follow on to some of the earlier discussion about nuclear, evidently Aecon has been very active in the sector for many years, has a very strong resume. I’m wondering if you can speak to the competitive landscape in the U.S., including specifically to what the nuclear skill set among your other contracting competitors in the U.S. looks like in nuclear.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Basically, Mike, as I used to say to my team, there’s no free lunch anywhere in the world. What is sure is that we have grown very seriously and steadily our works acquisition. We have been able to attract the right teams. For example, if we speak about the major component refurbishment, you will probably remember that everything stopped in the U.S. during COVID and it’s just starting now. We have a lot of lessons learned, a lot of capacity from Canada that we can also push there. This gives us definitely a kind of competitive advantage because we have been doing those refurbishments, I mean, for the last seven years now and with a lot of success in new build, as I’ve already said. There’s no way we’re going to go alone in new build in the U.S.

This is why this partnership, this Cascade Nuclear Partners partnership, is quite good for us. Yes, it is competitive, but there is a high demand from the utilities for new work and refurbishment work. We are happy to have grown during the last years and now to be ready for the battles.

That’s helpful, thank you. Jean-Louis, just to clarify, the 1,300 employees working in nuclear in the U.S., these are Aecon employees, as opposed to employees that are sort of spread across a joint venture that would involve other contractors. These are specifically your employees.

They are Aecon employees. Energy Northwest has been disclosed last week. We are just beginning to ramp up there. On the other job, we are working alone at the moment. Those are major component refurbishment or working for the Department of Energy and the Federal. I think part of it’s going.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: To be engineers united, part of it’s going to be full-time staff, part of it’s going to be craft labor.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Right.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: The bigger part being, obviously, the craft labor and specialized component.

No, that’s perfect. I guess what I was hoping to understand in addition to clarifying that was how does that compare to the number or the similar number of people or comparable number of people you’d have in Canada right now?

It’s about a third. Okay, like a third of the overall profile of the headcount is based in the United States.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Gotcha.

Okay. One last one. In the outlook commentary, you provided commentary around your expectations for further revenue growth in 2026, which I don’t think should come as a surprise to anybody, but nevertheless, that’s new commentary. I guess I’m just wondering if you can talk a little bit about how you’re thinking about 2026, what you see as the key drivers to the revenue growth, and if you expect any sort of additional detail you can provide for us on that front?

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Yeah, I’ll tackle that one as that’s informed.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: I look, it’s based on the backlog.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: That we have in front of us.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Right.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: We provide a breakdown of the overall backlog in our materials and, you know, just on the kind of raw facts of, you know, $3.7 billion in the next 12 months of, you know, hard secured backlog, roughly $1 billion a year in addition on recurring revenue, and, you know, there’s obviously significant opportunities over and above that. I think just our perspective is just impaired by that.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: You know our approach to backlog is, you know, it’s kind of hard.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: To secure, you know, we need to be patient.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: If we have, you know.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Change orders under negotiation or.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: If we have select you.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Until it’s signed, we won’t.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Won’t put that in there, and obviously we have enough.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: I think it’s probably just people understanding, you know, are we basically cresting and then going to slide down, or we built enough resiliency in the enterprise and invested to try to continue. I think it’s really the latter.

Okay, thank you very much.

Corinne, Conference Operator: Thank you. As a reminder, to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. Our next question comes from Maxim Sytchev of National Bank Financial. Your line is now open.

Hi, good morning, gentlemen.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Morning Max.

Jean. We just wanted to go back to nuclear for one second. I mean, given the fact that all the new builds are on a collaborative basis, do you mind maybe providing a bit of a range of potential outcomes just in terms of how we should be thinking about the upside/downside handicap on the execution stage of these very large projects.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Thanks. You are speaking about construction in general, not nuclear.

Nuclear specifically, if it’s possible.

Nuclear specifically, yes. I mean it seems obvious now from the past experience that every new build in nuclear is going to be on a progressive basis. Nobody really wants to come back to new build and lump sum. This gives, I mean, obviously more predictability. All those contracts usually are structured the same. There is a development phase that can be something like two years. At the end of the development phase, you agree with your client on the target. Then you have a system of dead band. You have pain share and gain share. We limit the pain share. We don’t want this to be open ended, obviously, so that the margin has a floor in case there is pain. All this makes it more, I would say, more predictable and obviously a much less risky market. As I tend to say too, there is no free lunch.

We are not the only one trying to offer our capacity. What you say is that we have begun to run probably earlier than anybody else in North America.

Sorry, would the floor still imply a positive EBITDA margin, or does it crest kind of below zero?

No, I mean it’s not going to be below zero. The floor is positive. Maximum, this is the end of the pain share. What I say that we have usually is a pain share. We don’t accept pain share that are opening just in case.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Of course.

Makes sense. Thanks so much for clarifying. Just a couple of quick ones for Jérôme, if I may. On Levis fixed-price project, we already booked kind of $125 million based on sort of the envelope you telegraphed. Does it mean that we’re sort of done in terms of taking kind of the mark to market, or is this still, based on your prepared remarks, some potential spillover effect depending on how these projects land? I just want to clarify the language. Exactly, thank you.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Yeah, there’s still risk.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: There is a short answer, but I’ll also note that it took a question before we got to the legacy project. It feels like we are.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Starting to turn the page.

Absolutely.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Yeah.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: We’re so like Finch.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: As already mentioned, Finch successfully completed RSD. Eglinton’s being worked on, the other project we have, construction completion this year. We’re getting there, but until they’re done, there’s still risk associated with these. Schedules can slip, things can happen. We also need to reach commercial and dispute resolution with our clients with regards to claims. I think what we’re trying to effectively do is really starting to narrow the outcomes. You’re right to note that we’ve effectively, we’re at $124 million, $125 million now and there’s still additional risk associated with it. We don’t want to say we’re done because I don’t think that’s a fair representation. If we knew we had more now, we’d just take it.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Things can change, so we just gotta work through it.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: We are working through it.

Okay, makes sense. Do you mind just in relation to concessions, because again, you are in the development stage of a number of things and I think the contribution in Q3 was a bit stronger than we expected. How should we think, I guess, about Q4 and maybe 2026? If you can provide any, I guess, parameters there, that would be super helpful.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: Thanks.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: On the concessions front, a couple things. One is the business in prior periods was supported by some revenue programs associated with the actual construction and management fees being earned on the legacy projects. As that falls away, I think we’ll enter to a more normalized environment. We’re now kind of trending down to that level. There’s probably more to go and then.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: There’ll be a view as to trying.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: To stabilize that out. We’re basically replacing these management fees that are being charged with what is more normal O&M style programs. That stabilizes out the way the future airport additions could work. That would obviously be at some point EBITDA additive to the program. We likely need to get finalization of commercial terms on that USCIF project to understand the quantum and when that would realize. As Adam mentioned, part of our capital allocation model is we do look at additional opportunities within the concessions platform. We take kind of the way our Head of Concessions describes its economics view. We try to understand the impact from concessions on a pure returns basis and it needs to meet our hurdle rates. In association with that, we also have benefits on the construction side of the house where we can basically provide effectively a full constructability package to clients.

It’s a broad picture, but as you noted, the downtrend is likely to continue just as these legacy projects roll off.

Yeah, absolutely.

Okay, that’s great.

Thank you.

Jean-Louis Servranckx, President and CEO, Aecon Group Inc.: That’s.

Corinne, Conference Operator: Thank you. This concludes the question. Senior Vice President of Corporate Development and Investor Relations for closing remarks.

Adam Borgatti, Senior Vice President, Corporate Development and Investor Relations, Aecon Group Inc.: Thanks very much, Corinne, and appreciate everyone’s attention and participation today. We’re happy to take any follow-up questions that you have. Just feel free to reach out. Have a great rest of your day, and go Blue Jays.

Corinne, Conference Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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