Dear Shareholders,
This past year was transformational for Aecon. Year-end 2023 results were underscored by revenue of $4.6 billion, backlog of $6.2 billion diversified across operating sectors, and robust recurring revenue programs. While overall profitability was impacted by four legacy projects,1 the year was marked by positive profitability trends in the balance of Aecon’s business, the successful completion of key strategic transactions, and contract awards linked to the energy transition.
Three strategic transactions allowed Aecon to capture unlocked value, de-risk its portfolio, partner with respected institutions with significant experience to help Aecon grow, and strengthen Aecon’s balance sheet and capital position:
- A strategic investment by Oaktree Capital Management, L.P. in 27.5% of Aecon Utilities Group Inc., through a net $150 million convertible preferred equity investment;
- The sale of a 49.9% interest in the L.F. Wade Bermuda International Airport concessionaire, Bermuda Skyport Corporation Limited, to Connor, Clark & Lunn Infrastructure for US$120 million; and
- The sale of Aecon Transportation East, a roadbuilding, aggregates and materials business in Ontario, to Green Infrastructure Partners for $235 million.
Aecon repaid in full the $184 million principal amount owed under its 5.0% unsecured convertible debentures at year-end, which were due on December 31, 2023.
Aecon was pleased to be awarded contracts for projects delivered under more collaborative models and which are also linked to decarbonization and the energy transition, including the Fuel Channel and Feeder Replacement contract for four units at the Bruce Nuclear Generating Station, Aecon’s partnership to deliver North America’s first grid-scale Small Modular Reactor at the Darlington nuclear site, and the Oneida Energy Storage project in Ontario. Aecon was also awarded a contract by Dominion Energy for the replacement of Condensers and Feedwater Heaters at the North Anna Power Station in Virginia.
Subsequent to year-end, Aecon executed a contract for the Contrecœur Terminal Expansion project in-water works under a progressive design-build approach in Québec and was awarded a contract for the Clayton J. Lloyd International Airport Redevelopment project in Anguilla. An Aecon-led consortium was also selected to redevelop the Cyril E. King Airport and the Henry E. Rohlsen Airport in the U.S. Virgin Islands under a collaborative design, build, finance, operate and maintain Public-Private Partnership model. Aecon Concessions is the development lead and will hold an equity interest in the project’s 40-year concession, and Aecon is the design-build lead. Financial close is expected following a nine-month transition period.
Building on these positive developments, Aecon was pleased to launch its renewed Forward Together 2024–2027 Strategic Plan, focusing on Building What Matters to Enable Future Generations to Thrive. The plan outlines:
- Where to play: Aecon has identified where it will focus and how it will engage in priority markets to ensure a de-risked portfolio while pursuing significant growth. While Aecon’s growth within Canada remains its primary focus, the U.S. and international infrastructure development and construction markets provide an opportunity to continue to diversify the business over time.
- How we win: Aecon is dedicated to three key focus areas – outstanding teams, execution excellence, and balancing between risk and opportunity – which will continue to be developed to secure a leading position, and more predictable and increased profitability in priority markets.
Aecon remains committed to achieving its greenhouse gas emissions reduction goals, including achieving a 30% reduction in Scope 1 and 2 CO2 emissions by 2030 as compared to 2020 and net-zero by 2050. Aecon looks forward to publishing its 2023 Sustainability Report in April 2024, celebrating ongoing progress in Environmental, Social and Governance (ESG) practices.
Engaging with communities while supporting economic and community prosperity is an important part of Aecon’s ESG strategy. Building on Aecon’s inaugural Reconciliation Action Plan, Aecon was proud to achieve Silver Certification in Progressive Aboriginal Relations from the Canadian Council for Aboriginal Business, demonstrating progress in continuously working collaboratively with Indigenous Peoples to advance reconciliation. Aecon was also pleased to establish three key Indigenous-led joint ventures including Aecon Makhos Power Seven Generations (AMP7G), Aecon Cambium Indigenous Professional Services Seven Generations (AC7G) and Wicehtowak Aecon Industrial LP.
Moving forward, Aecon is dedicated to a Safety Always culture and the disciplined pursuit of operational excellence and profitable growth. Aecon’s goal is to build a resilient company through a balanced and diversified work portfolio across operating sectors, markets, geographies, project types, sizes and delivery models while enhancing critical execution capabilities and project selection to play to its strengths. Aecon is steadfast in leveraging self-perform capabilities and a One Aecon approach with a goal to maximize value for clients across its broad range of infrastructure services with improved schedule and cost certainty.
The completion and satisfactory resolution of claims on the four legacy projects remains a critical focus, while the remainder of the business continues to perform as expected, supported by the strong level of backlog and new awards during 2023, and the strong demand environment for Aecon’s services, including recurring revenue programs.
Thank you for your continued support.
Sincerely,