Aecon Group Inc. ((TSE:ARE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Aecon Group Inc.’s latest earnings call presented a mixed sentiment, reflecting both remarkable achievements and ongoing challenges. The company reported record revenue and backlog, signaling robust growth and strategic expansion. However, issues with legacy projects and a decline in profitability highlighted areas of concern that need addressing.
Record Quarterly Revenue
Aecon reported its highest quarterly revenue in history for Q3 2025, totaling $1.5 billion. This impressive figure represents a 20% increase from the same period in 2024, showcasing the company’s strong performance and growth trajectory.
Record Backlog
The company achieved a record backlog of $10.8 billion at the end of the third quarter, surpassing the previous record of $10.7 billion set last quarter. This milestone underscores Aecon’s ability to secure future work and maintain a steady pipeline of projects.
New Contract Awards
Aecon secured $1.6 billion in new contract awards during the quarter, compared to $1.1 billion in the same period last year. This increase highlights the company’s success in winning new business and expanding its project portfolio.
Strategic U.S. Acquisitions
Aecon completed two strategic U.S. acquisitions: Bodell Construction and Trinity Industrial Services. These acquisitions are expected to expand Aecon’s presence in high-growth sectors and enhance its competitive position in the U.S. market.
Decrease in Adjusted EBITDA and Operating Profit
Despite the revenue growth, Aecon experienced a decrease in adjusted EBITDA to $93 million from $127 million last year, and operating profit fell to $61 million from $81 million. These declines were primarily due to $21 million in legacy project losses.
Legacy Project Challenges
Legacy projects negatively impacted Aecon’s results, contributing to $21 million in losses. The company acknowledged the risks associated with these projects, which will persist until they are fully completed.
Decline in Concessions Segment
The Concessions segment reported a decrease in adjusted EBITDA, dropping from $22 million last year to $15 million this quarter. This decline reflects challenges within this segment that need to be addressed.
Lower Profitability in Construction
The Construction segment’s adjusted EBITDA margin was impacted by lower gross profit in the civil sector and urban transportation solutions, indicating areas where profitability needs improvement.
Forward-Looking Guidance
Looking ahead, Aecon remains optimistic about its growth prospects. The company highlighted a 25% revenue increase in its construction segment, driven by growth in nuclear, industrial, and urban transportation projects. Aecon’s strategic focus on collaborative procurement models has led to a significant shift towards non-fixed price contracts, now constituting 75% of the backlog. Additionally, ongoing projects in the nuclear sector and strategic acquisitions in the U.S. are expected to bolster growth in key sectors.
In conclusion, Aecon Group Inc.’s earnings call reflected a blend of achievements and challenges. While record revenue and backlog demonstrate the company’s growth and strategic direction, issues with legacy projects and profitability need attention. The forward-looking guidance suggests a positive outlook, with strategic initiatives poised to drive future success.