Aecon Group Stock

Good day, and thank you for standing by. Welcome to the Q3 2026 Aecon Group Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your speaker for today, Adam Borgatti, Senior Vice President of Corporate Development and Investor Relations. Please go ahead.

Thank you, Lisa. Good morning, everyone, and thanks for participating in our call today. Joining me are Jean-Louis Servranckx, President and CEO; Jerome Julier, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President, Finance.

Our earnings announcement was released yesterday evening, and we posted a slide presentation on our website, which we'll refer to during this call. Following comments, we'll be happy to take questions from analysts, and we ask that you keep to one question, and a follow-up if necessary 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 based on assumptions that are subject to significant risks and uncertainties. Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct.

Turning to Slide 3. I'm pleased to share key highlights and accomplishments from the quarter. Aecon delivered record quarterly revenue of $1.9 billion, increasing 26% over the same period last year. 71% of the revenue growth in the quarter was organic. Adjusted EBITDA improved significantly in the quarter to $130 million compared to $93 million last year, an increase of 40%, driven by strong revenue growth and year-over-year margin improvement in the Construction segment. Aecon was awarded contracts in joint ventures with an aggregate value of $3 billion for the Pickering Nuclear Generating Station refurbishment execution phase. Our $1.75 billion share of the contracts was added to backlog in the quarter and represents the largest nuclear award in Aecon's history. The award, along with continued investments in fabrication capacity, reinforces Aecon's position as Canada's nuclear builder, supported by an established record of delivering complex nuclear projects across the full nuclear value chain.

Backlog at September 30 was $14.6 billion, up 39% over last quarter, representing the highest reported backlog in Aecon's history and underpinned by a diversified mix of long-term projects with appropriate risk balance. Over 80% of Aecon's backlog is tied to non-fixed price or collaborative fixed price contract models. We're extremely proud to achieve Gold Partnership accreditation in indigenous relations status, becoming the first construction company with nationwide operations to achieve the highest level of certification. Building strong respectful relationships with Indigenous peoples and communities has long been part of how Aecon operates. This recognition reflects the history and our commitment to meaningful Indigenous partnerships.

We also continue to advance our strategic priorities in concessions, including the launch of Maple Fibre, a strategic alliance to finance, design, build and own next-generation network infrastructure. Aecon reinforces its positive outlook supported by the expectation for double-digit revenue growth for the full year 2026 based on our strategic positioning in sectors with attractive demand profiles, growing recurring revenue programs and a healthy pipeline of project opportunities.

With that, I'll hand the call over to Jerome.

Thanks, Adam, and good morning, everyone. I'll speak to Aecon's consolidated results, review results by segment and then address Aecon's financial position.

Turning to Slide 4. Revenue for the 3 months ended September 30, 2026, of $1.9 billion was up $390 million or 26% compared to the same period in 2025. Adjusted EBITDA of $130 million increased 40% compared to $93 million last year, while operating profit of $83 million compared to an operating profit of $61 million in the same period last year. The improvement in the period was driven by higher gross profit of $70 million compared to the same period in 2025. Adjusted diluted earnings per share was $0.86 in the quarter, an improvement compared to $0.49 in the third quarter of last year. Financial results in the quarter were impacted by negative gross profit of $9 million from the legacy projects. The final legacy project reached substantial completion in June and commenced operations in July of this year.

Aecon and its joint operations partners continue to pursue commercial resolution on the matter. Backlog of $14.6 billion at the end of the third quarter is the highest reported backlog in history and compares to backlog of $10.8 billion in the same time last year. New contract awards of $6 billion were booked in the quarter and $10.1 billion is booked over the trailing 12 months.

Now looking at results by segment. Turning to Slide 5. Construction revenue of $1.9 billion in the third quarter was $410 million or 27% higher than the same period last year. Construction revenue growth in the quarter was 72% organic and was broad-based with higher revenue in all sectors. The largest increase of $184 million was registered in utilities operations, driven by a higher volume of electrical, gas and telecommunications work, including contributions from acquisitions completed in the first quarter of 2026. Nuclear operations increased $130 million due to a higher volume of core refurbishment, decommissioning and engineering services at nuclear generating stations in Ontario and the United States. Revenue in civil operations increased $45 million, primarily from higher work volume on power and rail projects and in foundations work, partially offset by lower volume of highway, road and bridge construction activity.

In industrial operations, revenue increased $42 million, primarily from a higher volume of field construction work in the United States, with most of the revenue growth attributable to businesses acquired in the third quarter of 2025 as well from an increase in the industrial components of power generation projects. Urban Transportation Solutions increased $9 million, driven by a higher volume of subway and commuter rail system work, partially offset by a lower volume on LRT projects that achieved substantial completion or became operational in 2025.

Turning to Slide 6. Construction segment adjusted EBITDA of $132 million compared to $88 million last year, with an adjusted EBITDA margin of 6.8% compared to 5.8% in 2025. The increase was primarily driven by an improvement in gross profit margin in civil and nuclear operations. More broadly, and as Jean-Louis will further discuss, the improvements reflect the continued shift towards a lower-risk work mix, stronger execution and the gradual normalization of earnings as legacy project exposure winds down.

Turning now to Slide 7. Concessions adjusted EBITDA for the quarter was $12 million compared to $15 million in the same period last year, largely due to the deferral of intercompany construction profit related to network assets under development.

Turning to Slide 8. At September 30, 2026, Aecon held core cash and cash equivalents of $529 million, which is over and above the $537 million of cash, representing Aecon's proportionate share of cash held in joint operations. In addition, at September 30, 2026, Aecon had committed revolving credit facilities of $1 billion, of which $342 million was drawn and $4 million was utilized for letters of credit. Combined with our $960 million EDC performance security guarantee facilities, Aecon can access total committed credit facilities, working capital and letter of credit requirements totaling approximately $2 billion.

Net debt at September 30, 2026, was $338 million. This includes only our core cash balances and also recognizes the $320 million repayment agreement for the preferred shares of Aecon Utilities' debt. The repayment continues to be anticipated to close in the fourth quarter of 2026. Net debt to trailing 12-month adjusted EBITDA was 1x. Aecon generated free cash flow of $645 million in the trailing 12-month period ended September 30, 2026, compared to negative $41 million in free cash flow in the same period last year. Cash performance was driven by a relentless focus on working capital management and contract structure.

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

Thank you, Jerome. Turning to Slide 9. Aecon continues to drive broad-based growth across our nuclear, civil, utilities, industrial and urban transportation sectors. In the third quarter, the Construction segment generated record revenue with increases across all sectors. Power and utility services collectively represent 58% of Aecon's $6.4 billion in trailing 12-month construction revenue. Nuclear is a key part of that position and a genuine differentiator for Aecon, Canada's nuclear builder.

Our capabilities span engineering, in reactor construction, nuclear qualified fabrication and modularization, refurbishment, decommissioning and new build in North America. We are acquiring additional fabrication capacity in Ontario, which will expand Aecon's nuclear fabrication network to 4 facilities in Canada and the United States to support some of the largest nuclear refurbishment and new build projects in North America.

Our concessions portfolio also continues to grow and diversify, leveraging our unique project development, financing and integrated construction capabilities. We recently launched Maple Fibre, a majority controlled strategic alliance with a Tier 1 telecommunication operator to finance, design, build and own next-generation network infrastructure. Aecon Concessions holds a majority interest in the partnership and Aecon Utilities has commenced construction for Maple Fibre in Ontario.

Turning to Slide 10. I want to spend a moment on the strength of our current positioning and the visibility we have into future growth. We ended the quarter with record backlog of $14.6 billion. That backlog tells an important story, but it's really only part of the story. On the right-hand side of the slide, we show 10 major projects where Aecon is currently in development or collaborative delivery phases, but where significant future scope is not yet reflected in backlog.

In nuclear, for example, our backlog includes the recently announced Pickering Unit 5 refurbishment and full turbine generator replacement awards, while future opportunity associated with the refurbishment of Unit 6, 7 and 8 is not yet reflected. Similarly, at Darlington, Unit 1 of the new nuclear SMR project is under construction, while the future 3 units represent additional opportunity under development for work beyond our current backlog. The same dynamic applies across other major projects and programs shown here, including the Cascade Advanced Energy Facility, SMR, the hydroelectric Mactaquac Life Extension project, the Port and Marine construction project at Roberts Bank Terminal 2 in Vancouver, the Defense project for Arctic Over-the-Horizon Radar Phase 1 and the regional rail network Go Expansion program, where additional programs under development are opportunities to convert to new work over time.

And the backlog we do report is long dated. Approximately 2/3 extends beyond the next 12 months and about 40% or $6 billion beyond 24 months. Taken together, our reported backlog represents only the fully-contracted portion of a much broader portfolio of secured and developing work, providing significant visibility into future growth.

Turning to Slide 11. Trailing 12 months recurring revenue was over $1.1 billion at September 30, 2026, with recurring revenue from utility services increasing to $987 million from $695 million last year, an increase of 42%. Importantly, this recurring revenue is also not reflected in our reported backlog. Our MSA programs have a weighted average contract term of approximately 3 years and a near 100% renewal rate, providing significant multiyear visibility beyond the backlog we report today.

Aecon Utilities is generating nearly $1 billion of recurring revenue today with continued growth across Canada and the U.S. It is an integral part of our growth platform with capabilities spanning power, transit electrification, battery storage, data center electrical infrastructure, airports and nuclear development.

Turning now to Slide 12. We have an unwavering focus on risk-adjusted profitability highlighted by the relationship between our contract mix and our margin performance. At September 30, approximately 64% of our backlog was comprised of variable price contracts, which covers cost plus or unit price work. Of the remaining 36% classified as fixed price, close to half of this was booked following collaborative and fully-integrated development phases.

Taken together, approximately 81% of our $14.6 billion backlog is derived from collaborative model or non-fixed price work. On a trailing 12-month revenue basis, approximately 69% of construction revenue was generated from collaborative or non-fixed price contracts. As our backlog converts into revenue over time, we expect the lower risk profile of our backlog to continue to support greater predictability in our results.

This evolution in our risk profile is particularly important when looking at margin. This is the right part of Slide 12. Construction trailing 12-month adjusted EBITDA margin has increased from 3.7% in the third quarter of 2025 to 5.6% today, while we have maintained a consistent lower risk revenue profile throughout that period.

This Slide 12 of our presentation is extremely important, and we'll come back to it probably during the questions. As we have said previously, our focus is on stabilizing and gradually improving margins. We've done it and are focused on driving further improvements in risk-adjusted profitability. Our strategic position in key sectors, lower risk contract mix, stronger execution and the continued wind down of legacy project exposure provide a stronger foundation for more predictable performance.

Turning to Slide 13. Aecon expects double-digit revenue growth in 2026. Our expectation for a broad-based revenue increase in 2026 and further revenue growth in 2027 is underpinned by secured backlog exceeding $14 billion, recurring revenue programs, recent acquisitions and a pipeline of project opportunities tied to nuclear and conventional power, critical resource development, mass transit, water, defense and digital infrastructure. This clearly positions Aecon at the center of many of the infrastructure priorities Canada needs to deliver over the coming years, while our growing U.S. and international presence provides additional diversification and avenues for growth.

In the Concessions segment, there are several opportunities to add to the existing portfolio of Canadian and international concessions in the next 6 to 12 months to support trends in aging infrastructure, mobility, connectivity, energy and population growth. Aecon's deliberate shift toward a greater weighting of improved risk-adjusted work programs in combination with a strong focus on operational excellence is anticipated to support the gradual improvement of adjusted EBITDA margins in the Construction segment in 2026 and '27. Our outlook for 2026 continues to be very positive. We are excited about the momentum we have built so far this year and remain focused on fully executing our strategy to drive long-term shareholder value.

Turning now to Slide 14. I want to congratulate our indigenous relations team for achieving Gold Partnership accreditation in Indigenous relation status. This achievement reflects the dedication of teams across Aecon and the strength of the relationships we have built with indigenous communities, businesses and partners over many years. We are proud of what we have accomplished and invite our partners to join us in advancing sustained action with lasting benefits for generations to come.

In closing, I would like to thank our outstanding team at Aecon. In the quarter, over 14,000 team members across all our operating sectors delivered on our potential with an unwavering Safety Always mindset and commitment.

We will now turn the call over to analysts for questions.

[Operator Instructions] Our first question will be coming from Yuri Lynk of Canaccord Genuity.

Just want to go back to the margin discussion. And if you could -- maybe go through some of the puts and takes on how the Construction segment margin improves from here, particularly if you could address the operating leverage because there has been a notable increase in SG&A. And also if mix has anything to do with it?

Okay. I'm going to begin on a general basis, and then Jerome will probably address the last point of your question. So obviously, I mean, we at Aecon, we have been patiently and steadily preparing for this moment and the path forward from here. I used to give to my team the image of the way the helicopter pilots are being trained in the Army. They have to get the left eye totally focused on the instruments, which is for us executing project by project, the best we can, and the right eye pointing 2 or 3 miles ahead, which is about our strategy. It's exactly the same thing that we have, I mean, at our management team level, I mean, at Aecon. We consider that we have acquired a strategic and unique positioning on the infrastructure market. We have acquired a derisked project mix, which is very important. And that will give us a much better margin predictability.

This Page 12, as I announced it, I mean, a few minutes ago, is extremely important. I mean if you see the 4 pure economic figures of the quarter, I mean $ 1.9 billion of revenue, $ 130 million of EBITDA, a backlog of $ 14.6 billion and creation during the last trailing 12 months of $ 645 million free cash flow, all this is linked together. And this Page 12 is quite important. This 80%, 81% of non-fixed price contract or collaborative fixed price contracts is the global answer to your question, and it's quite important. Jerome, maybe on the 2, 3 additional questions? You can followup, for sure.

Yes. On the margin profile, Yuri, in further to what Jean-Louis just mentioned, margins are increasing when you include the legacy projects, obviously, as the losses increasingly move to the rearview mirror. But if you exclude those losses, what we've seen is a stabilization of the construction margin profile with the overall risk balance of the business improving. So, I would describe that almost like as the best of both worlds situation, and that was the objective across 2026. Your question is focused on 2027, where we continue to see opportunities to enhance the margin profile. That's informed by the work that we have in backlog and the embedded margins that we see there.

But I think one thing that's important is not to get ahead of ourselves. Aecon is executing on a very broad and large long-term portfolio of projects with very strong risk balance. And so we view these things as incremental improvements over time. So just to say the expectation is to do better, get ahead of themselves.

On the operating leverage, I'd make the observation that SG&A growth in the quarter, the quarter [indiscernible] was tied to incentive compensation, M&A costs, and ERP program implementation and then additional SG&A from companies that we've acquired over the last 12 months. So, on that basis, there's a decent level of control there. Some of this has to do with where you want to book costs, whether you pile them back up into gross profit, where we've obviously seen a large expansion in margin or whether you maintain them in the SG&A bucket, which is what we do. At the end of the day, overall, we're seeing an increase in the operating profit margin or adjusted EBITDA profit margin, which I think is the indicator that you want to track against.

And then on the mix front, I mean, look, the overall execution mix that we have in front of us is balanced by client type, by region, by contract model and by sector. That was the case in the last 12 months. That's the case what we see coming in the future in the next 12 months. So I wouldn't see mix as being a determinant factor here.

Okay. And last, just a clarification question. Did I hear you say there was $9 million of legacy costs in the construction EBITDA this quarter?

That's right.

Our next question is coming from the line of Chris Murray of ATB Cormark Capital Markets.

Congratulations on probably a record backlog build, certainly very positive. And as you noted, lots more to come. I know we're talking about a double-digit number, which I think was sort of expressed to me as higher than 11%, less than 98%. But I think that if we think about the level of growth that you're going to see over probably the next, call it, decade, can you talk a little bit about your ability to manage that growth, both in terms of your staffing, both at the construction management level and also at the trade level?

Yes, I think I can handle this. I mean, obviously, we are extremely focused on our capacity to perfectly execute this backlog. We have been investing during the last years a lot on operational excellence, recruiting, training, motivating our workforce at all level, bringing as much loyalty as we can in a rather top market. We have been extremely cautious about the mix of our different activities between our different sectors. I mean you don't have the same people renovating tracks or building industrial facilities or working in the nuclear or laying part of electrical grids or pipeline. Those are different, kind of, people. And our balance of activity helps us on this one. It just means that we do not see so far a danger in being able to perfectly execute our backlog.

Okay. That's helpful. And then the other question is more around nuclear. I guess we're expecting some sort of decision, I would think, towards the end of the year, maybe from Bruce, maybe from OPG. Can you explain or kind of lay out what would be involved depending on how those decisions go. There's also some debate about technology selection. Can you talk about your exposure to both CANDU and if they decide to go Westinghouse, how that would change? And could you maybe elaborate a little bit on what you've acquired in the nuclear business in Ontario for additional support?

So first of all, we are not the one making the decision. I mean, obviously, but what is extremely important for us is the position we have been building in nuclear, where I think we are extremely strong. I mean we are going to refurbish the totality of the 14 CANDU units in Ontario. There is not one single general contractor except Aecon. We are in association with AtkinsRéalis, who has a kind of different scope, but not one single general contractor who has entered into a CANDU reactor for years.

So if the decision is for CANDU, obviously, we are extremely well positioned. This being said, I mean, we are also part of the team to build this small modular reactor #1, which is GE Hitachi’s 300-megawatt boiling water technology. We are one of the only North American contractor who have fabricated already for Westinghouse, the very important ASME III modules. And we are also in full steam ahead in our development phase of the Cascade Energy project, which is under another kind of reactor energy. It means that whatever the decision because we are technology agnostic and because we have an incredible workforce at all level, I mean, this will obviously favor Aecon. And when I read, I mean, Aecon Canada nuclear builder, I tend to say Canada, comment, the nuclear builder is Aecon.

Fabrication is important. It's one of the key success factor of the generation to come. It's about modularization. And SMR, I used to say, okay, it's small modular reactor, but it should be standardized modular reactor. It means this is the key of success. And we are getting stronger and stronger. This is why we have been acquiring an additional facility in Ontario. Maybe, Jerome, you can speak a little about it. This is why we are investing a lot in robotics, and this is why we're extremely focused on tracking all our productivity reports day after day because it's part of the future. Jerome, do you want to speak a little bit about acquisition and fabrication capacity?

Yes. So in the release, we announced that Aecon agreed to acquire additional fabrication capacity for the nuclear sector in Ontario, but I will provide a little bit more detail on that. So it's going to close in the fourth quarter. Expectation is in the rough area of $50 million. We look to own assets that are we view as, kind of, critical and strategic, and this would certainly be one of them. The footprint on the facility is larger than our current Cambridge facility, which is continuing to operate and will continue to produce by roughly 40%. It has additional acreage next to it and expansion capability as well.

These 2 facilities in Ontario, we have an additional leased facility where we're executing work and then an additional facility that we have in the United States. So fabrication capacity is what we view as a differentiator for Aecon's nuclear capability. Candidly, if we're going to meet the needs of what's required here, some of the work absolutely needs to be taken off-site just to manage peaking levels. So, that's 4 facilities on the nuclear side of the house. And then we have an additional 2 facilities on the industrial side, one in Alberta and then one in Texas, where we're also looking to expand.

So, this is all part of a long-term plan. Your first question was just around execution capacity. We're thinking about it from a technology standpoint. We're thinking about it from a system standpoint. We're thinking about it from a real asset standpoint. And as Jean-Louis mentioned, most importantly, we're thinking about it as a people standpoint.

Maybe I can add something on nuclear to close this question. Yes, the new build, I mean, is important, but the real strong market for the years to come is what we call EPU, enhance power uprate or life extension of the reactor. This is the best return for the utilities is to invest in the existing reactor. Just consider that each reactor for each reactor, it represents something like $ 1 billion or less. And we are present, I mean, of course, through this major component refurbishment program in Ontario, but we are now deeper and deeper in the United States on this submarket, which is extremely important. We have more than 1,500 workers in the nuclear industry in the U.S. at the moment. And it's quite important, I mean, to highlight this point.

Our next question is coming from the line of Michael Tupholme of TD Cowen.

The first question is just around the outlook. So you continue to call for further revenue growth in 2027. Just given that we're nearing the end of the year here and given the strength of the backlog that you ended the third quarter with and the visibility that, that gives you, is there any way to provide a little bit more detail around your expectations for top line growth in 2027, how you see those evolving?

I'll tackle that one. So Aecon doesn't provide guidance, but maybe I'll give you some of the underlying factors that can at least help you give a pretty reasonable assumption. So of the $14.6 billion of backlog, our expectation is roughly $5 billion will be executed in the next 12 months. In addition, we have something in the order of $1.1 billion of recurring revenue programs. And then that's obviously in the LTM has been growing. We expect that to continue to grow. So those 2 together gives you a number of $6.1 billion. Aecon has a pretty strong history of, one, growing the work programs on the recurring revenue side and then additionally securing additional work and then additional change orders and additional scopes on work that we have in progress as well.

Historically, there's a broad range on these items, right? But if you kind of try to take somewhere like the P25 to P75, something in the $750 million to $1.2 billion range, and that gives you an idea that there's something that probably crest the $7 billion mark.

That's very helpful. And then just regarding the outlook, I guess, as it relates to new awards. So obviously, very strong backlog, record level. You talked in the prepared remarks about all the various projects that are in the development phase, which give you some further visibility as those will eventually convert. Can you just speak about the demand environment today as far as the conversations you're having for that next group of projects that could go into the development phase or future awards. So I understand the backlog is strong, what you've already been awarded that you're working towards getting to execution, but sort of that next group of projects that's going to kind of feed future years. What are you seeing there as far as activity levels, discussions, pipeline, et cetera?

I will begin. Canada globally has decided to invest, and we have a Prime Minister who has just decided that it is focus for the years to come. So I would tend to say we are optimistic on our capacity to translate those development phase into execution of real projects. We have an extremely strong team dedicated to those development phases. So we think that the rate of translating it is probably going to be quite high. I think it was the first part of your question. The second one was about equity.

Michael, please clarify the second part?

Yes. So the second part was just -- it's really a question around the demand environment as it relates to the conversations you're having now that are going to feed into that next round of awards, whether those are awards that get going right away or other projects that enter a development phase for a period of time. So I'm just trying to compare and contrast sort of what you're seeing now versus maybe what you would have seen 12, 18 months ago. Again, I appreciate what you have secured and what you have in the development pipeline is already very robust. I'm looking at sort of other things that have yet to be awarded to you and how robust that looks?

So I think I've covered the answer. Probably in my life, I have not seen such a dynamic situation for infrastructure construction in the 5 years to come.

Our next question is coming from the line of Sabahat Khan of RBC Capital Markets.

I guess on the sort of the line of questioning around the backlog and the outlook in Canada that management has been commenting on. I guess when you look at the pipeline opportunities we all see in the headlines, are you sort of comfortable with this level of backlog? And do you look at it as a relatively stable range even before some of those nation building projects sort of start to get into the mix here? Just trying to think about the ability to sort of sustain it at these levels. And I think like an optimistic way to look at it is it's at a reasonable level even before we get into the procurement for some of the larger stuff that could come over the next several years. Just curious on how you're thinking about the pipeline of opportunities? And is it fair to assume much of the stuff we've been seeing in the headlines hasn't really even begun to make its way into the system yet.

Yes. I think you're thinking about it the right way, Sabahat. So, current backlog clearly -- it was just an exceptional quarter of conversion with regards to backlog additions. We tend to take kind of the 1,000 yard view on this one, which is backlog on any given period is going to be lumpy, an expectation of kind of like a continuously high kind of book-to-bill ratio exceeding like 3x. And if you look LTM to LTM, 24 to 25, or 25 to 26, we were at, kind of, 2x or 1.6x. These are really astronomical levels.

So, we're not really focused on the actual backlog number per se. I think it's like something that others are quite focused on. It's a helpful indicator of work to come. But I think we can say with a high degree of certainty, like Aecon has got a comfortable level of work to execute in front of it. And so on that basis, it's not, kind of, like a daily thing to be tracked. That being said, could it flex up or down by amounts in any given quarter? Yes, I don't think people should be focused on it. But given what we have in front of us with regards to projects in validation or development, we could see pretty chunky additions that could press the number upwards. That being said, as you can see by the overall productivity of Aecon, we're also a business that can basically deliver a lot of revenue, which drives it down.

So, I think on a quarter-to-quarter basis, it's really hard to tell where that's going to land. But I say just don't focus on it too much, but it's definitely a possibility we can continue to move up.

And then just for my follow-up, just looking at the recurring revenue sort of just above the $1 billion range. Can you talk about sort of the -- is this sort of a number that given the, I guess, the framework agreement, master service agreement nature of this work, this is something we can think about over the medium term? How do that adds to this sort of line item work? Just trying to think of the growth algo over the next few years. Should we just assume recurring revenue back up to over $1 billion, probably a fair amount to think about when we look ahead sort of '27 and '28?

I think you're right. And I think we spoke about it, I mean, when we started, this $1 billion, I mean, mainly is coming from utilities, mainly those MSAs are 3 years duration. And mainly speaking, the rate of renewal is extremely high. I mean it's superior to 90%, 95%. So yes, I mean, it comes back naturally to the top line. Coming back to utilities, I mean, when you just realize the growth in terms of revenue, but also the quality and the predictability of the margin to come in utilities. I mean, you probably understand why in Q2 2026, we decided to buy back Oaktree shares. We negotiated it in Q2, and we are going to execute it in Q4. I mean we have perfectly understood the trend that was coming.

Our next question will be coming from the line of Frederic Bastien of Raymond James.

Guys, your plans to expand fabrication capacity in Ontario builds on a purchase of a facility in South Carolina earlier this summer. Can you put some numbers around these investments, specifically? What was your fabrication capacity entering the year? How much are you hoping to add with these 2 investments? And in aggregate, where does that position you versus your North American peers?

Yes. So the facility in South Carolina is a facility that has nuclear qualifications and supports programs that we're executing in the United States. That facility was being leased. And as I mentioned, the strategic nature of fabrication in the kind of paradigm of what we believe comes next. It's just important to have full ownership over these types of assets. So that facility plus the existing network, plus what we have in Alberta, something in the order of 300,000-plus square feet of fabrication capacity. The new facility adds something in the order of 128 or 100. And so kind of pro forma, we're going to be just over 400,000 square feet of fabrication capacity. That excludes the office space and other items tied to it.

So, money-wise, something in the order on a gross CapEx basis for the new facility, $50 million, including some investments required to support additional cranage. And then the facility that we bought in the United States, it wasn't like a huge dollar amount, right, like kind of like low tens of millions, like $10 million or $15 million, I can't remember the exact amount, but it ended up being effectively a wipe out against what it would be on a lease obligation basis.

Okay. But where does -- I would assume that positions you right at the top in terms of fabrication capacity in North America, but maybe.

So it depends. There's a lot of ways to look at it. right? So one way is we believe in the scopes that we attack. It puts us in a very, very strong position, certainly in the markets where we are in the leading position. That being said, look, there's a lot of very high-quality fabricators out there who do structural steel, piping, additional items, right? That's a relatively broad market. The big differentiation is the ability to do our nuclear quality programs, right? Like that is the barrier to entry. It's not easy. It requires systems, processes, experience, resume that just is not easily replicable. And so from that basis, like a lot of things can be built in a lot of different places. Off-site construction is clearly a long-term trend here. We're seeing it across almost every single sector. It's really the #1 release valve against capacity constraints. And so, from our perspective, getting ahead of this wave rather than trying to play catch-up is the right way to do it given what we see in.

And our next question is coming from the line of Maxim Sytchev of NBCCM.

Jerome, I just had a brief one in relation to working capital. Obviously, you freed up a lot in kind of Q3. How should we think about Q4 seasonality in terms of those moving parts?

Yes. Max, I'm going to turn that one over to Alistair MacCallum, SVP Finance.

Max, thanks for the question. So our teams did an amazing job in Q3 of reducing our unbilled resolution of a number of claims achievement of a number of milestones. And also, we've improved our contract management and advanced billings. So that really helped us in the quarter and also for the full year so far. Q4, as you know, working capital is -- can be lumpy depending on the timing of payments. But I think Q4 will be slightly positive, but it won't be what we saw in Q3. And then I mean, the one big thing, as you know, in construction, you need a really strong balance sheet. So, I think so far this year, we've really strengthened the balance sheet, and that sets us up for good growth going forward.

Yes, for sure. Makes sense. And then just overall sort of thinking from a sort of more structural perspective, given the amount of growth and given the type of projects you're doing, is there anything we should keep in mind in terms of kind of working capital intensity on a prospective basis? Or should it kind of revert back to the sort of pre difficult projects sort of time frame? How should we think about that on a prospective basis?

Yes. I mean I think you're naturally going to see improved cash flow from our operations before working capital, just over the course of time with the improvement of EBITDA. And then I do think that there's still a few opportunities to improve working capital next year, but it won't be on the -- at the size of this year.

Yes. Maybe Max, the way we're thinking about it is the third quarter is really like a shift in the overall level, right? And then now we want to try to operate more at this new level just given the way that we're trying to manage the contracts and [indiscernible].

And one moment, we have a follow-up from Michael Tupholme of TD Cowen.

Just I was hoping to get a bit of an update on the Greenlight Electricity Centre contract you announced in early July, just in terms of -- I know the project is just getting going, but sort of you can talk about where things stand right now, how we see that ramping up as you move forward.

Okay. So, I will begin with a more -- with a broader answer about power. It was part of what we disclosed the share of the power in Aecon activity is now around 58%. And this is quite important because in parallel with the size, the quality of the backlog what I call the Page 12, I mean, of the slide presentation. This power -- this shift toward power is very important. I mean, a few years ago, we are principally, I mean, a road and bridge company. I mean we are now definitely a power company.

And we will factor the Greenlight project after, but you probably have noticed that the issue now around us, it's not anymore who can produce the most but also who can keep energy flowing under stress. And this is why our portfolio of power activities and the balance is extremely important. We are strong in power generation. It may be nuclear, it may be conventional, it may be hydro. But we have also deliberately increased our strength in transmission and distribution. It may be in Canada and the U.S., you probably have noticed that during the last 5 to 6 years, all our acquisitions were about that. It's also about battery storage. I mean, we -- at the end of the year, we'll have installed something like 1,000 megawatts of battery storage capacity in Canada. We are getting extremely strong, I mean, in this.

To come back to power generation, we already tackled nuclear. You know that hydro is very strong, especially in BC for us. Conventional, we decided that we had to be in this gas turbine submarket because there will be still a lot of activity within this market. It was one of the main reasons to acquire United, I mean, 1.5 years ago to get much more engineering strength. We have been partnering on this green light with TRA, Tecnicas Reunidas, which is probably the best engineer in terms of track record for gas turbine. I mean they have more than 35 of these, kind of, animals within their backpack already executed.

We like our client. I mean, Pembina is a client that we know quite well. We are very comfortable because it's near Edmonton, where we are strong, I mean, in industrial. All this just make that the start-up of this project, which is now in terms of execution advanced at a few percent only. And in terms of engineering, reaching 40%, 50% of detailed engineering, the start-up is extremely good, and it's perfectly in line with what we were expecting.

Our next question is coming from the line of Ian Gillies of Stifel.

With the changes in regulatory framework being made in Canada, it feels like the impetus to build things, how are you guys feeling about the risk on project deferrals and the like over the next 12 to 24 months with so many new projects coming online?

You probably have listened to the Prime Minister. I mean, during the summit on Invest in Canada, this 1-year route and one gate to get all approved. So all this goes into the right direction. We can obviously see in terms of authorization to proceed, environmental assessments and all kind of preparatory works. We can obviously see that it's getting better. Infrastructure projects are big animals. They are not all easy, but it's going into the right direction. So we are not that much worried with this issue as we were a few years ago.

Okay. That's helpful. And then labor is tight in certain jurisdictions, Immigration is reasonably low right now. Things are ramping up. So when you look across the scope of services that Aecon provides. Do you feel like there's any areas where you may need to beef up, whether through acquisition or really aggressive hiring? I'm thinking areas like electrical, mechanical, any sorts of specialty services that could get tight based on the types of projects coming forward.

So part of the answer is about the balance of our activity. As I've been saying, you don't require the same kind of people to do mining installation on nuclear near Toronto or some roads, I mean, in Alberta. So, this is a kind of parachute or resiliency insurance that we have. Second point, Aecon is an old company, I would tend to say with an extreme, I mean, I've been working in construction all my life. I've never seen this kind of loyalty from our workforce in front of their company. This is important. I mean we are working a lot on it because, yes, the market is tight.

So, when you speak about aggressive recruitment, it's not exactly this. I mean, usually, the one who begin to work with Aecon try to go on working with Aecon during all their life. And this is what we are trying to promote. Now we know that at the federal level, at the provincial level, they are working a lot at the moment to increase the capacity of attracting and entering new labor, I mean, within Canada. That's good at all level, I mean, project management staff, trades, and we are participating with the different levers and, kind of, governments to this discussion to be sure that we can have the necessary workforce in the years to come.

This does conclude today's Q&A session. I would like to now turn the call back over to Adam for closing remarks. Please go ahead.

Thanks very much, Lisa, and I appreciate everyone's attention today. Welcome any feedback or questions that you may have post call, and have a great rest of the day and into the weekend.

Thank you for joining today's program. You may all now disconnect.

Good day, and thank you for standing by. Welcome to the Q2 2026 Aecon Group, Inc. Earnings Call. [Operator Instructions] 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 of Corporate Development and Investor Relations. Please go ahead.

Thank you, Didi. Good morning, everyone, and thanks for participating in our Q2 2026 results conference call. Joining me are Jean-Louis Servranckx, President and CEO; Jerome Julier, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President, Finance. Our earnings announcement was released yesterday evening, and we posted a slide presentation on our website, which we will refer to during the call. Following our comments, we'll be happy to take questions from analysts, and we ask that you keep to one question and a follow-up if necessary 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 based on assumptions that are subject to significant risks and uncertainties. Although Aecon believes these expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct.

Turning to Slide 3. I'm pleased to share key highlights from the quarter. Aecon delivered an all-time record for revenue in any quarter with second quarter revenue of $1.6 billion, increasing 25% over the same period last year. Adjusted EBITDA improved significantly in the quarter to $82 million compared to $41 million last year, driven by year-over-year margin improvement in the Construction segment.

Aecon entered into an agreement to purchase the convertible preferred equity investment held by Oaktree Capital in Aecon Utilities. The $320 million purchase price implies a $1.2 billion equity value and a $1.5 billion enterprise value for Aecon Utilities. Backlog at June 30 was $10.5 billion, underpinned by a diversified mix of long-term projects with appropriate risk balance and does not yet include Aecon's share of significant awards, including those under collaborative and progressive models within or post quarter that will be added to future backlog. The Gordie Howe International Bridge reached substantial completion in the second quarter and opened to traffic earlier this week on July 27, a remarkable achievement by Aecon and its partners. And an amicable and mutually agreeable settlement was reached in the second quarter on one of the remaining legacy projects to resolve disputes fully and finally.

Aecon reinforces its positive outlook, supported by the expectation for double-digit revenue growth for the full year 2026 based on our strategic positioning in sectors with attractive demand profiles, growing recurring revenue programs and a healthy pipeline of project opportunities.

And with that, I'll hand the call over to Jerome.

Thanks, Adam, and good morning, everyone. I'll speak to Aecon's consolidated results, review results by segment and address Aecon's financial position, then close with a summary of the utilities pref share purchase transaction. Turning to Slide 4. Revenue for the 3 months ended June 30, 2026, of $1.6 billion was up $329 million or 25% compared to the same period in 2025. This represents the highest recorded revenue by Aecon in any quarter in its history and approximately 80% of the revenue growth in the quarter was organically generated.

Adjusted EBITDA of $82 million doubled compared to $41 million last year, and operating profit of $36 million compared to an operating profit of $2 million in the same period last year. The improvement in the period was driven by higher gross profit of $78 million compared to the same period in 2025. Q2 2026 diluted loss per share of $1.58 is driven by a fair value adjustment on the preferred shares of Aecon Utilities of approximately $128 million recorded upon reaching the agreement to purchase the shares. This adjusted the carrying value to the agreed purchase price of $320 million. Adjusted diluted earnings per share in the quarter, excluding this fair value adjustment, was $0.33, an improvement compared to the adjusted diluted loss per share of $0.10 in the second quarter of last year.

Financial results in the quarter were impacted by negative gross profit of $4.5 million from the legacy projects. On an LTM or trailing 12-month basis, the negative impact from legacy projects was $36 million. Backlog of $10.5 billion at the end of the second quarter compares to backlog of $10.7 billion at the same time last year. New contract awards of $1.3 billion were booked in this quarter and $2.7 billion were booked year-to-date.

Now looking at the results by segment. Turning to Slide 5. Construction revenue of $1.6 billion in the second quarter was $335 million or 26% higher than the same period last year. Revenue was higher in all sectors, with the largest increase of $138 million in utility operations, driven by a higher volume of electrical, gas and telecommunication work in Canada and the U.S., including contributions from the acquisitions of KPC and Arc completed in the first quarter of 2026. Urban Transportation Solutions increased $93 million, driven by a higher volume of subway and rail system work as well as closeout activities on Ontario light rail transit projects that achieved substantial completion in 2025 and are now fully operational.

Nuclear operations increased $80 million due to a higher volume of refurbishments, decommissioning, new build and engineering services work at nuclear generating stations across North America. In Civil operations, higher revenue of $22 million was mainly from an increase in the civil component of power and rail projects, foundations work and international major project work.

Turning now to Slide 6. Construction segment adjusted EBITDA of $90 million compared to $40 million last year, with an adjusted EBITDA margin of 5.5% compared to 3.1% in 2025. The increase was primarily driven by an improvement in gross profit margin in Urban Transportation Solutions and Civil and the gross profit impact of higher volumes in utilities. These increases were partially offset by lower gross profit margin in industrial and nuclear operations and higher MG&A to support our ongoing growth in operations.

Turning to Slide 7. Concessions adjusted EBITDA for the quarter was $11 million compared to $16 million in the same period last year, driven by lower management and development fees on concession projects that achieved substantial completion in 2025, partially offset by improved operating results at Skyport in Bermuda. The book value of our concessions portfolio at quarter end was over $0.25 billion.

Turning to Slide 8. At June 30, 2026, Aecon held core cash and cash equivalents of $129 million, which excludes $500 million of cash representing Aecon's proportionate share of cash held in joint operations. In addition, at June 30, 2026, Aecon had committed revolving credit facilities of $1 billion, of which $302 million was drawn and $4 million was utilized for letters of credit. Combined with our $960 million EDC performance security guarantee facilities, our total committed credit facilities for working capital and letters of credit requirement totaled $2 billion.

Net debt at June 30, 2026, was $672 million. Aecon has proactively opted to include the $320 million repayment agreement for the preferred shares of Aecon Utilities in this figure. Net debt to trailing 12-month adjusted EBITDA was 2.2 or 2x, excluding the negative earnings impact from legacy projects. Aecon has no debt or working capital credit facility maturities until 2029, except equipment loans and leases in the normal course. Aecon generated free cash flow of $301 million in the trailing 12-month period ending June 2026 compared to negative $10 million in free cash flow in the same period last year, a significant improvement in cash generation.

In the second quarter, Aecon's Board approved a quarterly dividend of $0.1925 per share or an annualized dividend level of $0.77 per share. The dividend will be paid on October 2, 2026, to shareholders of record on September 22, 2026.

Now before I turn the call over to Jean-Louis, I'd like to briefly comment on the announced buyout of the pref shares in Aecon Utilities on Slide 9. Partnering with Oaktree in the fall of 2023, Aecon Utilities has delivered significant growth through organic expansion and 4 strategic acquisitions, strengthening our capabilities across electrical transmission and distribution, substations, metering, telecommunications and utilities infrastructure. During that time, electrical infrastructure has grown from approximately 1/4 of the revenue to nearly half today. The business has expanded from almost exclusively operating in our core Canadian market to 25% of the revenues now being generated in the United States.

Aecon Utility now generates over $1.2 billion of pro forma annual revenue with over 70% derived from recurring long-term master service agreements and has established a platform positioned to benefit from long-term investments in grid modernization, electrification, digital infrastructure and data center work. The transaction allows Aecon to fully participate in the future growth of Aecon Utilities while significantly simplifying our ownership structure, enhancing financial flexibility and strengthening the integration across our business.

Upon closing, Aecon will have full economic and strategic control of a large and diverse utility infrastructure platform, supporting our comprehensive power and utility services offering across Canada and the United States.

Finally, on a personal note, I'd like to thank the Oaktree Capital team for their partnership and support over the last several years. It's been an absolute pleasure working with you, and together, we've built a stronger, larger and more diversified utility services platform. We're excited to continue that momentum forward.

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

Thank you, Jerome. Turning now to Slide 10. Aecon continues to drive growth through a balanced and diversified work portfolio across the nuclear, civil, utilities, industrial and urban transportation sectors. In the second quarter, the Construction segment saw a broad-based increase in revenue across all sectors. Power and utility services collectively represent over 55% of Aecon's nearly $6 billion in trailing 12 months construction revenue.

Our concessions portfolio also continues to grow and diversify. The Gordie Howe International Bridge now is operational and Aecon holds a 20% interest in its equity and 30-year operations, maintenance and rehabilitation activities. And earlier this week, an Aecon partnership announced it has executed an agreement for the 150-megawatt CIMCO battery energy storage system project in Ontario in which Aecon Concession is an equity partner. Aecon will also serve as the exclusive EPC provider for the balance of plant works. The project complements our ownership position in the Oneida Energy Storage project and demonstrates Aecon's credentials in grid-scale battery delivery with completed and ongoing work represented approximately 1 gigawatt of Ontario's delivered or planned battery energy storage capacity.

Turning to Slide 11. Demand for Aecon services remains strong. With a strong secured backlog, growth in recurring revenue programs in utility services and a healthy bid pipeline, Aecon maintains its focus on improved profitability and margin predictability while continuing to improve the risk profile of our business. Trailing 12 months recurring revenue was over $1 billion at June 30, 2026, with recurring revenue from utility services increasing to $868 million from $668 million last year, an increase of 30%.

Turning to Slide 12. I would like to take a moment to recognize a truly historic achievement for Aecon. The Gordie Howe International Bridge project achieved substantial completion on June 9, marking the successful delivery of one of the most significant infrastructure projects in North America. Just last week, Aecon had the opportunity to participate in the official opening celebrations culminating with the opening of the bridge to traffic earlier this week. Together, the entire project team successfully navigated complexity and overcame challenges, including a global pandemic, always remaining focused on safety, perseverance and world-class execution excellence. It is the first new Canada-U.S. border crossing in more than 60 years, spans 2.5 kilometers, required over 20 million work hours by close to 16,000 workers and showcases Aecon's ability to deliver complex infrastructure projects.

On behalf of our leadership team, I want to thank the thousands of Aecon employees, partners, suppliers and stakeholders who contributed to making this project a success. It is an incredible accomplishment and a significant milestone in Aecon's history.

Turning to Slide 13. We've recently announced several significant project awards and strategic developments that strengthen our multiyear growth profile and reinforce Aecon's position in some of North America's most attractive infrastructure markets, spanning nation building, defense, power generation, transportation and water infrastructure. These include the 932-megawatt Greenlight electricity Center in Alberta, which will support a major data center for Meta. The Roberts Bank Terminal 2 in British Columbia, a priority nation building project that will increase container capacity at the Port of Vancouver, the Winnipeg Biosolids facilities project and the Mactaquac Life Achievement project in New Brunswick. These projects align directly with our strategy of pursuing complex infrastructure programs with appropriate risk allocation, long-term visibility and strong partnership structures.

We continue to advance a broad portfolio of major projects, including the Arctic Over-The-Horizon Radar program, the Pickering nuclear refurbishment, the Darlington new nuclear project, the Cascade Energy facility in Washington State, the GO Expansion civil works program, the Hamilton LRT and urban redevelopment and the U.S. Virgin Island Airports. These are progressing under collaborative and progressive delivery models that support improved risk allocation and execution certainty. This project represents billions of dollars of potential work and when layered with Aecon's $10.5 billion of backlog and recurring revenue program provide long-term growth visibility unmatched in Aecon's over 150-year history.

Turning to Slide 14. Aecon expects double-digit revenue growth in 2026. Our expectation for a broad-based revenue increase in 2026 and further revenue growth in 2027 is underpinned by the major projects in development that I just spoke to, contributions from strategic acquisition in the industrial and utility sectors, ongoing strength from an extensive portfolio of small and midsized work programs and the ramp-up of projects under multiyear lower-risk contract models in new nuclear construction and mass transit and mobility.

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 to support trends in aging infrastructure, mobility, connectivity, energy and population growth. Aecon's deliberate shift toward a greater weighting of improved risk-adjusted work programs in combination with a strong focus on operational excellence is anticipated to support a stabilization and gradual improvement of adjusted EBITDA margins in the Construction segment in 2026.

Our overall outlook for 2026 continue to be very positive. We are excited about the momentum we have built in the first half of the year and remain focused on executing our strategy to drive long-term shareholder value.

In closing, I want to thank our teams across all our operating sectors for their unwavering safety always mindset as we deliver critical infrastructure projects across Canada, the United States and internationally.

Thank you. We will now turn the call over to analysts for questions.

[Operator Instructions] And our first question comes from Sabahat Khan of RBC Capital Markets.

I just wanted to get maybe starting with a high-level one. You noted a lot of larger projects. There have been a lot of headlines around the Canada national building stuff. Can you just talk about maybe as you're having discussions with these customers, are you able to get a bit of a cadence on time line just in terms of how those projects will come along? Will you be able to staff for them, get the right people in the right places? Like are you starting to get some level of visibility on how that work might start to flow? And then maybe just talk about how from a preparation side, getting the right staff in the right regions, et cetera. So maybe just an update on how those bigger projects are building up for Aecon?

Yes, I will take this one. Yes, we can. Most of these projects are progressive design-build, collaborative projects. So they just begin with the development phase that can be I mean, from 12 months to 24 months. And we have -- when we advance those development phase, more and more visibility about the real execution of the work, the time frame, the scope, the budget. So yes, we are just getting, I mean, more and more secured with those projects, what we call the sovereignty projects. We are extremely careful and focused on our capacity to deliver those projects. You probably have noticed that we are very careful on not having all those projects on the same geography, on the same sectors, on the same time frame. It's a balancing tactic. And we think we are quite well about being able to execute those projects perfectly.

Then just for my follow-up, I guess, maybe as you -- it might be a bit one more for Jerome, but just in terms sort of the margin profile as these larger projects are building up, your outlook commentary shared a bit more specifics this time. Just talk about your confidence in sort of the margin progression through H2, what you're seeing and then what you guys are seeing in the backlog that you built around the margin profile? And I know it's early, but any sort of directional commentary you can share on that for '27. I think your commentary notes growth into '27 on the top line, but curious on the margin side as well.

Yes. Tons to unpack there, Sabahat. I'll -- before I start talking about the margin profile, I think it's always critical to reground around the risk associated with the work that's being executed because the 2 go hand in hand. So starting on that point, we are working on much better quality programs from a risk perspective than we've ever had. So if you look at the LTM period, the amount of work that we've done, roughly 7% of the work was on non-fixed price. And then the fixed price work that we're executing is increasingly under more collaborative models. So I think the overall risk in the enterprise is dropping. And what we committed to with regards to margin in our outlook, which started in Q4 of 2025 was a stabilization. And we had an adjusted construction margin, excluding the legacy projects, was roughly 6% at the end of Q4, 6% on a trailing 12-month basis in Q1 and then again, 6% on a trailing 12-month basis in Q2, all while significantly growing revenue and all while shedding risk against the programs that we're working on. So that is like just a clear net positive with regard to risk-adjusted returns for Aecon.

As far as the guidance on gradual improvement, like we really mean that trying to improve things in a very slow and measured way given the bulk of work that we have in front of us and where we stand on the programs that we're executing. We're very early on in programs in nuclear and urban transportation solutions and the traditional construction excess curve means that you will generally see the benefits accrue later on in program life.

I'd also note that gross margins and backlog margins are improving. And one of the areas that's an offset today is MG&A, which we're doing as far as investments to improve our delivery capacity, which Jean-Louis mentioned. So I'll just say margins have been stabilized. We've done a great job with that. Revenue growth is improving. The risk is improving. So it's just a net positive.

With regards to 2027, we're not providing an outlook on that one. So we're not going to front run it. I think the general direction of travel is probably consistent with what we've seen in 2026 as outlook, which is stabilization followed by improvement. Just given the bulk and size of work, we're really focused on maintaining the appropriate risk cadence across the entire portfolio. So not a perfectly direct answer on the last part of the question, but hopefully, a little bit of color on where we're thinking things could go.

And our next question comes from Frederic Bastien of Raymond James.

I have a couple of questions. First one regarding the Evergreen project that you secured. It's a fairly sizable project. Congratulations on winning it. But I was wondering if you could discuss the risk profile associated with that project. I did notice that it was an EPC project, so fixed price projects. And I would love to get your -- some comments on your comfort level around that particular project.

Okay. Frederic, I'm going to check this one. I imagine you're speaking about the green light project with Tina, I mean, the combined cycle gas turbine.

My apologies.

Yes. No problem. Power is a strategic focus at Aecon. You have noticed, I mean, we are now a little more than 55% of our revenue. It's about distribution. It's about transmission. It's about substation. It's about battery storage. You have noticed the CIMCO 150 megawatts that we have just disclosed a few days ago, power generation now. So the power generation market, on one side, you have the nuclear. We are extremely present and strong in nuclear. I may come back to this after. On the other side, you have the renewable projects where we have attacked this through battery storage and some transmission. We are not in solar panels, and we are not in wind machine. We think that this has been commoditized and it was not the right time to enter it.

In between nuclear and renewable, you have a spot, which is gas turbine generation. This is going to be the strong spot during the 10 years to come. And Aecon had to be within this spot. On another hand, we are not speaking about first of a kind when we speak about gas turbine. I mean, there is something like 500 gas turbine projects under construction every year. So the contract model is EPC. So what we decided to do a few years ago when we realized that we needed to be there was to strengthen our capacity to be able to get this kind of projects. Different way of doing it. We have acquired United in United States, specialist in power generation and in EPC delivery. If you go to their track record, it's impressive. We have secured partnership with one of the best engineering company with combined cycle, which is Tecnicas Reunidas. They have built more than 60 of those kind of projects.

In addition, this project is in Edmonton, quite close from our industrial base. The client Pembina is quite well known from us. I mean we have been working with them. We know them perfectly. And the output of this power plant is secured by a power purchase agreement with Meta. Last point, long development phase. We have been working in perfect collaboration with our clients and our engineering partner during more than 12 months. So we -- before we closed this job, we had a very, very good knowledge of the scope, the price and the risk. In addition, most of the long lead equipment have been ordered and are going to be supplied with the corresponding warranty and liability by the owner. So this was the target and the product to catch. We have been patiently building capacity and core competency to be able to execute it securely. And we just consider that it's a very good catch for Aecon. Have I answered your question?

Yes. Thanks for the very detailed answer. Appreciate it. Next question is on labor availability. Obviously, you were quite successful winning several contracts in recent months that provide good visibility into future growth. How are you thinking about scaling your workforce to meet this expected demand? And what risk do you see around labor availability going forward?

I would say there are 2 different issues. I mean, the staff and the management teams and the trade. So far, we have not seen shortages of trades. We have a mid- and long-term agreement with major trade unions. When we are open shop, I mean, we also have a very strong geographical presence. So we do not see at this stage issues so far. As I've said a few minutes ago, we are always extremely focused on the balance of our activity geographically sectors, time for execution so that we don't unduly overload, I mean, one aspect.

Regarding staff and management, I mean, it's a constant fight. You probably remember, we have created Aecon University a few years ago. We have a project management academy. We are training, we are recruiting. We are trying to reward as good as we can all our management. It's a constant fight, but it's one of my most important 5, I mean, on my desk to ensure that we always have the capacity to execute this backlog that is growing.

Our next question comes from Benoit Poirier of Desjardins.

Just on the Concession side, obviously, you've been successful to secure the agreement with CIMCO, so currently in predevelopment. But I was just curious to know maybe a little bit more about the pipeline of opportunities for Concession these days. So obviously, you've been quite successful to grow construction, but I'm just curious whether -- what are the kind of the opportunities you see on the concession side to grow this segment?

Benoit, Jerome here. We really -- the Concession business continues to perform really quite well. So as noted, CIMCO was successfully secured that builds on our expertise with regards to battery ownership, but also execution of battery projects. Jean-Loius mentioned in his prepared notes, under delivery or delivered, Aecon's had roughly a full gigawatt of battery storage systems in Ontario, which I think is probably something akin to a market-leading position. So we have a lot of confidence in that aspect of the execution. The team is continuing to work on the airports in the U.S. Virgin Islands with regards to progressive development. So that's going according to expectations.

Additionally, you would have seen in the notes, Aecon Concessions is developing a network asset for a third-party client. And on that front, the construction side of the house will be building the asset for Concessions ownership, there will be an intercompany elimination. So there'll be a negative drag on Concessions EBITDA. But then Concessions will be able to then onward use that asset to generate long-term income against a strong credit counterparty.

So from our perspective, we're really pleased with the work that Concessions is doing, very much aligned with the long-term vision of that platform, which is to grow, diversify, generate long-term cash-generating assets, be able to get development style returns, all while generating also construction revenue and profitability from Aecon and provide an additional source of capital unlock for our clients. So I think overall, the $0.25 billion of book value of equity is obviously worth more than that, but we'll continue to look to invest in this platform because it generates a normal and unique returns for Aecon and shareholders.

That's great color, Jerome. And maybe on the CapEx side, you mentioned that we should see a slight uptick in terms of CapEx as you grow revenue. What about the kind of CapEx we might see going forward as you further grow the construction revenue?

Yes. So we're very focused with regards to capital deployment. So there's 2 ways to think about it. One is the raw dollar CapEx and then the other one is the finance leases, right? So those are both different forms of capital. Our longer-term objective is to try to maintain good capital intensity and operating leverage with regards to the capital equipment deployed. We're very selective when we deploy CapEx, whether it's equipment, machinery, properties, fabrication facilities that it needs to generate certain minimum return thresholds for shareholders.

And so yes, capital is going up. But when you're growing the business at a north of 20% rate, that shouldn't be unexpected. But we're also really careful about not kind of falling into the trap of just buying equipment to try to generate higher EBITDA because that equipment needs to be maintained and needs to be depreciated. And so we do think about things from a return standpoint. So capital is going up in line with revenue. It's actually a little bit less than revenue. And from that standpoint, I think it shows good operational discipline from our teams.

Okay. And maybe just a quick follow-up. You called out in the MG&A, tariff and fuel also in terms of potential risk, I was curious to see if it's material these days or I suspect not, but any color on the tariff and fuel, maybe whether it's an impact or not?

It certainly creates operating volatility generally speaking, we work pretty closely with our clients to understand where pricing risk exists on commodities like diesel, unleaded fuels, various input costs. We try to manage those risks contractually through purchasing approach or through potentially hedging programs or pricing. And so the type of volatility, I think, is the new normal in our world. It's increasingly been in existence since the COVID pandemic. And it's just something that needs to be thought of carefully managed.

We call it out because there's these kind of special risks associated with momentary spikes and then the pricing mechanisms may not catch up immediately. But right now, the one thing we'll note is a significant portion of our business is tied to construction in place, a very local business. And so when we're operating in our Canadian markets, it is very much focused on Canadian supply chain, Canadian labor, right, utilizing Canadian equipment and resources. In our U.S., it's the same approach.

Our international operations probably have a little bit more exposure to that because things need to move around in order to access the slightly more remote locations in Caribbean areas, but that's all kind of contemplated in the bid structure. So it's a lot to think about. Candidly, the local nature of what we do makes it a little bit easier for us than some of the other companies out there. So we're grateful for that piece, but it doesn't mean we take our eye off the ball.

Our next question comes from Michael Tupholme of TD Cowen.

My question is regarding the nuclear business and opportunity. Wondering if you can provide a bit of an update on not only the opportunities that you've already highlighted that you've become involved with such as X-energy in the U.S., but also some of the new opportunities that you're looking at and specifically focused here on the new build side, so be that SMRs or large-scale reactors.

Yes, I will do it. Our nuclear revenue is around CAD 1.7 billion. I mean between 70% and 75% in Canada. and between 25% and 30% in the United States. In Canada, you know where we are strong, and this is all those program of major component replacement. We are now full steam ahead on the third reactor of Bruce after having delivered on time, on budget the first 2 ones. Pickering is also ramping up. We are finalizing the development phase, and we should come to execution phase quite soon.

We are advanced on the small modular reactor globally, something like 16% of progress on this job. If we -- so this is something that everyone knows, I mean, on this call. U.S. is a little newer, what are we doing and what are we going to do in the future. The real market at the moment, where we are focused on, it's not the new build. I mean it's still early. The only new nuclear under construction in North America is Darlington SMR #1. There's not at the moment, I mean, in the United States. The market is about life extension and what they call in United States EPU, which is extended power upgrade of the 80 to 90 reactors, that exists in the United States. It's about refurbishing a steam generator and major component of all those reactors to operate the power output. We are getting stronger and stronger in this market.

On other end, I mean, we are working more with the Department of Energy. I mean this is a federal work, and we like it. We have a look at the new build. I mean, you know about this Cascade project, which is the first tranche of X-Energy 100 reactor. But it's just ramping up very, I would say, very slowly. The last point about the future, I would like to highlight is about fabrication. We are extremely strong about fabrication in Canada. It may be about the steel composite element for the new build to come. I mean, for example, the SMR #1. It's also about module assembly. I just remind you that we have been building some modules for Westinghouse a few years ago, and we are in discussion to optimize all our processes to modernize, I mean, our workshops, our tools, our robotics. This is probably one of the point of the future.

Okay. Perfect. Second question is regarding the updated outlook commentary specifically for revenues. So now calling for double-digit revenue growth in 2026 and then additional growth in 2027. Obviously, very strong top line growth in the second quarter, an acceleration in terms of the rate of growth relative to what you saw in the first quarter. How should we think about the revenue growth opportunity in terms of rate of growth in the second half of the year? And then in addition to that, as we look a little further out as we think about '27, what's the right way to think about that growth opportunity?

So the change in the outlook, which is rightly noted, went from -- we said '26 was going to exceed '25 and '25 was an exceptional performance, by the way. We thought it prudent to adjust it to note the double-digit level of growth. In particular, just with what we're seeing, the backlog program that we have in place of $10.5 billion, the recurring revenue, what I describe as the book and burn cadence of the business is all quite positive in addition to the recent awards that we've seen.

So with regards to specific guidance, we always shy away from that. We'll note as it stands today in the next 12 months, there's roughly $4 billion of what we describe as secured backlog that's executable. In addition, we know there's been 2 additional projects that have been -- that will be added to backlog in Q3 that have been announced, which is the Greenlight Electricity Center and then the Winnipeg Wastewater Phase 2 biosolids program. So I don't want to give like a specific number. I think one of the items was just we want to note that where we saw Street views on revenue was likely a little bit light. And so we just wanted to encourage people to really get a better understanding of our conservative nature of the backlog reporting and the fact that we have been very successful in organic revenue growth, all tied again around being able to secure projects with really appropriate risk-adjusted returns.

So the one item that's just worth noting is we remain very focused on securing work that has good risk balance to it, work that is executable. And any given level of margin, we are going to drop risk. And at any given level of risk, we're going to take more margin. But overall, we're pretty happy with the work that we've been securing and how that work looks to be burning off over the next, call it, 12 to 18 months.

And our next question comes from Chris Murray of ATB Cormark.

So just maybe following on, on that revenue question. I guess what I'm trying to understand and just to your point about the kind of the risk-adjusted return on some of these projects, I'm just trying to also understand a lot of these are earlier stage. So I'm just -- I'm trying to understand if this is kind of a function as we think about this revenue growth, but also relative to the margin. Is there something going on with, call it, larger procurement? Or is there -- are you just being cautious on early-stage reserves? I'm just trying to understand as these things evolve, if it's just kind of phase of project that plays into what we're seeing with the dynamic or if there's something else to be kind of aware of in terms of the -- in terms of what's in the backlog, that quality of revenue and how it plays out over the next couple of years?

I will begin and maybe, Jerome, if you want to add something. I mean backlog is about quality and quality. If we have this backlog today, it's not by chance. I mean we do not wake up at Aecon on a Friday morning to say, hey, we went from $5 billion to $10 billion and most probably we are going to grow it again. We have a strategy, and we are extremely focused on delivering our strategy. This backlog is highly diversified Again, it's not by chance. It's because we had targets for new businesses. We have targets for U.S. and international. We have targets about our proportion between fixed price and variable price, which makes it probably the best risk balance backlog that we ever had in the life of Aecon. There is more to come, I mean, in 2027. You have understood that we are under development phase on a few projects that will come to execution. I mean, we can speak about Mactaquac.

We can speak about Roberts Bank. We can speak about Arctic on the horizon. All this will, at one moment of time, materialize in in revenue. Most of those jobs, as I was explaining a few minutes ago, have a very thorough development phase before we go to execution. So we have -- in terms of predictability of our future margin, we are in a much better spot today.

Maybe Jerome, do you want to add something regarding profitability and margin level?

Yes. And so on that front, I think the question behind the question, Chris, is given the typical construction S curve on project delivery and how early we are on several major programs, is that potentially influencing the margin cadence that we're seeing today? The answer is yes, but not in a very material way, right? So our general approach is consistent with industry best practices. We are thoughtful about the level of margin recognition that goes through our accounting system, the amount of contingency that we have available on projects with regards to execution uncertainty when it's appropriate.

And obviously, that's that bulk of contingency is larger at the outset of a project than at the end of the project. In an ideal situation, you're really seeing that into profitability. So it's like a small factor, but I wouldn't say it's one that's kind of super material. And then on the -- you asked a question about whether procurement is influencing things or swinging the margin profile. And the answer is not really, right? Like we are a counterparty and delivery partner of choice for very large major capital programs across North America. That's always going to involve procurement of material and subcontract resources. That's always been part of the mix for us, and that's always been part of the approach to our margin. So I'd say there's nothing kind of materially shifting on either of those 2 factors. It really is more around the approach to risk and then the better stability and long-term visibility we have on earnings and cash flow generation at Aecon.

Okay. My next question, just it was interesting in the notes and in the adjusted numbers. We saw some costs associated with the new ERP program, which is something I don't think we've seen in a while from you folks. Can you talk a little bit about what that program is all about, what it brings to you and what you're trying to achieve? And is this some sort of new way to cost? Or does it give you a different tool set? So any color would be appreciated.

Yes. I was wondering if it's going to come up. So maybe I'll want off with saying that general perspective is the systems, technology infrastructure that we have at Aecon is top tier. It enables us to deliver the vast multitude of projects that we have on the books. It allows us to work in the secure environments required for defense and nuclear. This additional callout is really around the deployment of additional best-in-suite systems within an Aecon ecosystem to allow us to continue to not only kind of maintain that leading position but effectively try to be actually at the top of systems with regards to project management, integration, data governance, AI and all the various items that we view as candidly, like it's going to be largely table stakes probably at some point, but it's definitely one where you have to be part of it when you think about digital twins, integrated design delivery, scheduling, the engineering work that we're doing with regards to United and how that all ties into eventual project delivery on the programs that we're on and the programs that are coming, right?

So I think one of the things that we're very mindful at Aecon is, this is a unique time in the construction market with regards to really strong demand. We understand resourcing is going to be constrained. We want to make sure that we are in front of that. One of the ways to make sure that you get best efficiency and productivity out of your teams is to have the best tools available for them. That's what this is tied to. I think I'd also note that this was something that we started last year as far as the assessment and early implementation.

Now the specific reason why it's being called out as an adjustment factor in our financials is, we try to improve comparability with our results and our peers, which are largely U.S. traded. And in the United States, GAAP accounting effectively allows all of these costs to be capitalized. And so here, if we were taking that approach, this would have all folded into the CapEx program and no one would have seen it. However, I think, number one, it's important to give people good line of sight into where this money is being spent because it hits the MG&A line. And then number two, probably also helps to give confidence to our investors and our teams that we are investing in the future to ensure long-term stability, execution capacity so that we can deliver on what is a very meaningful amount of work that's ahead of us over and above the secured backlog.

Okay. Great. And then just maybe just for modeling purposes then. So I guess Q2 was about just a hair over $4.2 million. So should we just be expecting that's kind of a normalized run rate? What's the duration that we should be expecting these costs? And I assume that just will be over and above on your MG&A spend.

I mean, it's -- the number is included in the MG&A number, and that's why it's added back to get to the adjusted EBITDA figure, right? And so from my standpoint, like we're not going to provide guidance on the total program size. It's very reasonable, right? Like we're builders and we're constructors, and we're always mindful from a cost standpoint. So we're not looking to make a meal of this whole thing. So we're not going to provide guidance on timing or quantum. That being said, like we're -- the amount that we've spent in the quarter is not kind of like capital and material to Aecon, and I'd say we'd probably stay in that area.

I'm showing no further questions at this time. I'd like to turn it back to Adam Borgatti for closing remarks.

Thanks, Didi, and thanks, everyone, for joining us today. As always, welcome any follow-up questions or comments, feel free to reach out to the IR team, and have a wonderful rest of your summer.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Well, good morning, ladies and gentlemen. Welcome to Aecon's 55th Annual General Meeting. Given that the #5 is my favorite number, I think this is a very special occasion for a whole bunch of reasons. [Foreign Language] My name is Scott Thon, and I am the Lead Director of Aecon Group Inc. Joining me this morning is Jean-Louis Servranckx, our President and Chief Executive Officer of Aecon; Jerome Julier, Executive Vice President and Chief Financial Officer; Martina Doyle, our General Counsel, Public Company and Corporate Secretary; and Gordana Terkalas, our Senior Vice President and Chief People Officer.

All right here. I think they were waving as I was talking. In addition to our company officers at the head table, a number of Aecon's officers and senior leaders are here today as well as many of our team members. Also attending this morning's meeting are all of our director nominees. We also have Sal Bianco -- there he is. Thank you, Sal, and our Chair of Moreno. He is not here, but Sal is here on behalf of PricewaterhouseCoopers, LLP, the corporation's auditors are in attendance.

All of us here today are shareholders and collectively, we can be proud to support and contribute to Aecon's role as an innovative partner in delivering critical infrastructure. These are projects that we call Building What Matters, and they are enabling future generations to thrive. Driven by a focus on delivering long-term shareholder value, this past year has been very transformative for Aecon. And later in the meeting, Jean-Louis will present some of the key highlights of an exceptional year during his presentation after the formal agenda.

This meeting offers registered shareholders and duly appointed proxyholders, including those joining us online via the live webcast, an equal opportunity to participate, ask questions and vote at the meeting. For shareholders attending the meeting here in person, if you have a question or a comment related to an item of business, please raise your hand when you're prompted. For those that are attending online, questions may be submitted through the webcast portal by any registered shareholder or duly appointed proxyholder.

When you're asking a question, please indicate your name, which entity you represent, if any, and confirm that you're a registered shareholder or a duly appointed proxyholder. To help us address items proposed for a vote efficiently, we encourage online participants with questions about a formal item of business, including procedural matters to submit them in writing now and clearly identify the relevant item. During the course of this meeting, at the appropriate time, such questions will be addressed prior to voting on the applicable motions.

Questions which do not relate to any formal item of the business will be addressed during a Q&A, question-and-answer period session at the end. Now just to be clear on Q&A, I'm going to say that a few times. We're going to have a Q&A at the end about the business meeting, any procedure questions that have come up. After we close the formal business meeting, then I will turn it over to Jean-Louis, and he'll talk about our business operations. So if you have business operational questions, just save them for Jean-Louis.

Now as in past years, we expect that the vast majority of all of our votes have been cast in advance of this meeting and typically by proxy. That said, registered shareholders and duly appointed proxyholders can vote at this meeting in accordance with the instructions given during the course of this meeting. Those joining online will be able to vote through the webcast portal. Once the formal business of the meeting has been completed, as I said, we'll have a Q&A, and then we'll have management available.

We'll also have our Chair of our Corporate Governance, Nominating and Compensation Committee, who is also here available to help answer questions about anything procedurally or about the business documents. Now to keep things mostly very efficient, we ask that if you do have a question, please limit it to a maximum of 2 minutes. I was going to strike that for 1 minute, but we'll give you 2.

Okay. I would first like to acknowledge the land that we are on in this traditional territory of many nations, including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples. And it's now home to many diverse First Nations, Inuit and Metis peoples. We also acknowledge that Toronto is covered by Treaty 13 with the Mississaugas of the Credit.

The acknowledgment that I just made and the awareness of the lands that we gather on extends to how Aecon approaches all of our work as we work to build infrastructure in collaboration with local communities that provide the lasting benefits for generations to come. Finally, before we head into today's agenda and in alignment with our Safety Always culture, let's go over a quick safety moment. Whether we're on-site or in an office location like we are today, nothing is more important in our work than safety.

So today, in the unlikely event that there is a fire or any other kind of emergency here at Carlson Court, please exit through your closest doors, whether that's back through the hallway door in the luxury or whether it's out the patio doors right here. And once you're outside, then we will gather and assemble in the parking lot that's behind us. So outside and then gather in the parking lot.

All right. Let me briefly explain the format for today's meeting. We'll first deal with administrative items and then continue our meeting with the formal business, which is to receive the financial statements to elect the directors, to hold an advisory vote on Aecon's approach to executive compensation and to reappoint the auditors. Once the formal portion of the meeting is complete, we will hold the first Q&A session that I mentioned earlier with respect to the business conducted at this meeting.

Following which Jean-Louis, our CEO, will share some remarks, and we'll open it up to questions about the company and operations more generally. So if there are questions, I'll want to steer them depending on what they're focused on. I now call the Annual Meeting of Shareholders to order. I will act as the Chair of the meeting, and Martina Doyle will act as the Secretary of this meeting. To expedite the formal portion of the meeting, Mr. Jean-Louis Servranckx and will second all of the motions.

Unless there is an objection, Arlene Agnew of Odyssey Trust Company, Aecon's registrar transfer agent, will act as the scrutineer for this meeting. Arlene, you welcome, there -- thank you. All right. Let's get going. I would ask Martina Doyle to briefly address certain administrative and legal aspects of the meeting. Martina?

Mr. Chair, I would like to report that proper notice of this meeting, together with a form of proxy and the management information circular dated April 29, 2026, have been sent to each registered shareholder of record as of April 9, 2026, the record date for this meeting, and have also been sent to all other persons entitled thereto. The mailing of materials has been certified by Odyssey Trust Company. Additional copies of these materials are also available on our website and under our profile on SEDAR+.

Accordingly, unless there's an objection, I will dispense with the reading of the notice of meeting. A copy of the notice of meeting and proof of service shall be annexed to the minutes of the meeting. The scrutineer has provided a report on attendance, and it shows that there are 418 shareholders or proxyholders presently holding 39,987,703 common shares or 58.4% of the issued and outstanding shares eligible to vote represented at this meeting.

And accordingly, I declare that the requisite quorum of shareholders is present in person and through live webcast or represented by proxy, and therefore, the meeting is properly constituted for the transaction of business. Scrutineers' report on attendance will be annexed to the minutes of the meeting.

Before moving forward with the transaction of business and any subsequent discussion of Aecon's future, and in light of the regulatory environment that all Canadian public companies currently face, as General Counsel, Public Company and Corporate Secretary of the Corporation, I would like to remind everyone that certain information discussed here today, whether as part of remarks or in response to questions, may constitute forward-looking information and is, therefore, subject to important risks, assumptions, and uncertainties.

Actual results could differ materially from the conclusions, forecasts and projections discussed during this meeting, as certain material factors and assumptions were applied in drawing conclusions, forecasts and projections set out in the forward-looking information. Additional information about these and other important risks and uncertainties and material factors and assumptions that could cause results to materially differ from any forward-looking information can be found in the management information circular for this meeting and in Aecon's public disclosure record, particularly in our annual and quarterly MD&A filed under our profile on SEDAR+ at www.sedarplus.ca.

Except as required by applicable securities laws, forward-looking information discussed at the meeting today speaks only as of today, and Aecon undertakes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise. For the purposes of this meeting, voting on all items of business will be conducted by ballot, both online and in person.

If you have already submitted a completed proxy, it is not necessary to also vote online or cast a separate ballot since your vote will be recorded in accordance with your proxy instructions. Registered shareholders and duly appointed proxyholders who have not already voted or would like to change their vote may vote on each business item at any time when the polls are open for voting. The polls will be open until the end of the formal portion of this meeting.

For those joining us through live webcast, when you are asked to vote, the business items will be voted and your available voting options will be visible on the voting panel. To submit a vote, please click on one of the voting choices displayed on your screen. You will only have a certain amount of time to vote once the polls are open.

In order to keep this meeting moving efficiently, we have arranged for certain shareholders to move the resolutions to be considered at this meeting and to be seconded. Of course, any registered shareholder or duly appointed proxy holder may comment on any resolution prior to the vote, but should hold any comments on general matters until following the formal portion of the meeting. I have the minutes of the last meeting of shareholders of the Corporation. Unless there is an objection, I will dispense with the reading of the minutes of such meeting. Scott Thon will now transact the business of this meeting.

All right. Thank you, Martina. Well done. First item of business is the presentation of the consolidated financial statements of the Corporation and the report of PricewaterhouseCoopers, the auditors of the Corporation. These include the Consolidated Balance Sheet, Consolidated Statement of Income, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, and the Consolidated Statement of Cash Flows, all for the year ended December 31, 2025, and the report of the auditors thereon.

These financial statements were publicly available and are publicly available and were mailed up to shareholders earlier this year. Our financial statements are available on our website or under our profile on SEDAR+ for anyone who did not receive a copy. I would ask the Secretary to formally place the financial statements, including the report of the auditors before the meeting. The next item of business is the election of directors.

Before we move on with the election process, though, I want to pause and recognize a very defining moment in Aecon's history. Aecon's Chairman, Founder, former CEO and Executive Chairman, John M. Beck will not stand for reelection to the Board of Directors. John has overseen Aecon's strategic direction and operations for over 6 decades, in fact, 63 years. His vision has delivered some of the most remarkable landmark projects of this generation.

Through his award-winning career, John has established Aecon as a world-class company, and John's legacy will forever be linked to Aecon's success. Both personally and on behalf of the entire Board of Directors and our management team, I want to thank John for his vast contributions to our customers, to our employees, and to our shareholders. Now, in recognition of this dedicated service and his contribution to Aecon's success over the 63 years, the Board will confer upon John, the title of Chairman Emeritus.

And John, I was thinking this morning actually at breakfast about great team captains, which you have been. And in my lifetime, I've seen Jean Beliveau, Montreal, strong skilled but graceful. I've seen my favorite on the Leafs is from Saskatchewan -- Wendel Clark, I grew up like an hour from there -- A man of big heart, being tough. And then Wayne Gretzky, a man who could see where the puck was going.

And all of those, I think you have been our captain, and you have done it well. And John, let's have a little fun. In recognition of being our captain and continuing to be connected, I'd love to make a presentation to you, John, right now. Let's just see if we can bring it up. There John, say a few words to your shareholders.

Well, an emotional moment. Everybody has been talking about the 55 years. It feels like just a moment in time. And remember that all of you, things really moved quickly. Yes, this is my 55th AGM. My first one was in 1971. As I reflect on these annual meetings with my fellow shareholders, what has touched me the most during all this time has been the patience and the loyalty of all of you, my dear shareholders. Thank you for sharing what has been a wonderful run and now for the future. With this amazing executive team and this powerful Board, the best is yet to come onwards and upwards, my dear Aecon.

John, you Aecon is a little bit like Hotel California, you can check out, but you'll never leave.

So thank you for your commitment and service. Now formally, as part of the transition after serving as the Lead Director since 2024, I have been put forward by the Board of Directors to step into the role of Independent Chair of the Board, assuming my re-election to the Board by the shareholders. And John, I can say that this is a big step for me because I can never fill your shoes. But what I will commit to you is that we, as the Board, will live by the principles and the values that you have so established as the cornerstone of Aecon's success.

So thank you for that. Jean-Louis will have more to say about John a little bit later, so I'll leave the rest. So let's now proceed to completing the voting on the items of business of the meeting. As we mentioned, voting today will be conducted by ballot, both in person and online. Please open the online balloting to registered holders and duly appointed proxy holders. All right. If you have already submitted a proxy, it's not necessary to complete and submit a ballot.

If you are a registered shareholder or proxyholder joining in person, you should have been provided a ballot when you arrived at the meeting. If you did not and you would like a ballot, please raise your hand now and the scrutineer will provide you one. The scrutineer will collect the ballots after all our matters to be conducted by ballot have been dealt with. Now for those joining online, the polls are now open. And at this point, all the registered shareholders and duly appointed proxy holders who have properly logged into this meeting with their control number or username and wish to vote will be able to see all of the business items to be voted on at the meeting on the voting panel of your screen.

Okay. The number of directors to be elected at this meeting has been fixed by a resolution of the Board at 10. The corporation's nominees, namely myself, Susan Wolburgh Jenah, Leslie Kass, Stuart Lee, Jeffrey Lyash, Rod Phillips, Eric Rosenfeld, Jean-Louis Servranckx, Deborah Stein and Scott Stewart are each to be elected to hold office until the close of the 2027 Annual Meeting of Shareholders of the Corporation or until their successors are duly elected or appointed in accordance with the articles and the bylaws of the corporation.

I would ask Gordana Terkalas to nominate each of the previously named individuals. For your information, proxies submitted prior to this meeting, representing approximately 58.35% of the shares of the Corporation were voted with each of the nominees receiving votes in favor, ranging from approximately 87% to 99%. Thank you.

Mr. Chair, my name is Gordana. I'm a shareholder of Aecon, and I'm pleased to nominate each of the aforementioned 10 individuals as directors of the Corporation for the term previously stated.

Thank you, Gordana. And as the Corporation did not previously receive timely notice of any further nominations of persons for election as directors of the Corporation as required by By-Law 2 of the Corporation. I now declare the nominations closed. May I have a motion that each of the 10 persons nominated as directors of the Corporation be so elected?

Mr. Chair, I so move.

I second the motion. Thank you.

Martina, are there any questions on the motion from the registered shareholders or proxyholders present?

Mr. Chair, we have not received any questions on this motion. If any questions on this motion are subsequently received, they will be addressed at the end of the meeting.

Okay. On the online. Thank you. Thank you, Martina. Are there no questions? We will continue with the next item of business. The next item of business is the approval on an advisory basis, of the resolution relating to Aecon's approach to executive compensation disclosed in the Management Information Circular dated April 29, 2026. I believe that Gordana has a motion in this regard.

Mr. Chair, I move that the Corporation's shareholders approve, on an advisory basis and not to diminish the role and responsibilities of the Board, the approach to executive compensation disclosed in the Management Information Circular dated April 29, 2026.

I second the motion.

Martina, are there any questions on this motion from the registered shareholders or proxyholders present.

Mr. Chair, we have not received any questions on this motion. If any questions on this motion are subsequently received, they will be addressed at the end of the meeting.

It looks like we're put online as well. Thank you, Martina. As there are no further questions, we'll now continue with the next item of business. Next item of business is the reappointment of PricewaterhouseCoopers LLP as the auditors of the Corporation, and I believe that Gordana has a motion regarding this item.

I do. Mr. Chair, I move that PricewaterhouseCoopers LLP, Chartered Accountants of the City of Toronto, and Ontario, be reappointed as auditors of the corporation until close of the 2027 Annual General Meeting of Shareholders of the corporation or until a successor is appointed, at a remuneration to be fixed by the Board and that the Board be authorized to fix such remuneration.

I second the motion.

Martina, any questions on this motion from the registered shareholders or proxyholders?

Mr. Chair, we have not received any questions on this motion. If any questions are subsequently received, they will be addressed at the end of the meeting.

Okay. If you've not already done so, we invite you to submit your vote on all the items on the agenda. We will provide registered shareholders and duly appointed proxyholders approximately 1 more minute to complete their ballots. For those that are with us here today in person, please provide your completed ballots to the scrutineer now if you've not already done so. For those joining online, once the online voting closes, the voting page will disappear on your screen, and your votes will automatically be submitted.

[Voting]

The scrutineer will now proceed to collect any ballots from the registered shareholders and duly appointed proxies present in the room. Polls are now closed, and that concludes voting at today's meeting. I call on Martina to report on the proxies deposited prior to the meeting and the preliminary results based on the ballots cast at the meeting.

Based on the preliminary report from the scrutineer, based on proxies received in advance of the meeting and the preliminary results of the ballots cast at the meeting, all director nominees have been elected and the reappointment of PricewaterhouseCoopers as the auditors of the corporation has been approved, and the Board has been authorized to fix their remuneration. The final report of voting will be included in the minutes of the meeting and filed on SEDAR+.

Accordingly, I declare that each of the 10 nominees have been elected as directors of the Corporation to serve until the 2027 Annual Meeting of Shareholders of the corporation or until their successors are appointed. I declare that the reappointment of PricewaterhouseCoopers as the auditors of the Corporation has been approved, and the Board has been authorized to fix their remuneration. The advisory vote resolution on the Corporation's approach to executive compensation received the majority of votes cast in support of the resolution based on proxies received in advance of this meeting.

While the resolution is an advisory resolution, the Board of Directors of Aecon will nevertheless take the results of the vote into account as appropriate when considering future compensation policies, procedures and decisions and in determining whether there is a need to increase Aecon's engagement with shareholders on compensation and related matters. The final results of individual votes for each director, the advisory resolution on executive compensation and reappointment of the auditors will be reported in a press release and as part of the voting results filed in accordance with applicable securities legislation.

Thank you. Is there any further business that may be properly brought before this meeting? Martina? On behalf of the Board, I would like to express our appreciation for our shareholders' partnership, your support and involvement. Thank you and encourage your continued participation in your AGM. As there is no further business, that concludes the formal business brought before this meeting, and I now declare the formal portion of the meeting terminated.

Now before we provide a brief opportunity for the registered shareholders and proxyholders to ask questions, and then I'll turn it over to our CEO, Jean-Louis. I'd like to take an opportunity following the election of directors to welcome Jeff Lyash to the Board. Jeff, can you stand up, please? Jeff's extensive experience in nuclear and power sectors in both Canada right here in Ontario and across the United States directly aligns with Aecon's growth strategy and will augment the Board's collective expertise as we continue to deliver shareholder value.

Thank you, Jeff. Okay. Now if you do have any questions on the actual formal part of the meeting, feel free to put up your hand and we'll have a brief Q&A. Okay. Well, I think we'll call it there. And as the question period, we'll wrap it up. I'll now pass it over to Jean-Louis, and you can take the podium and tell us a little bit about the company and its operations of the last year. Jean-Louis, over to you.

I've been trying for the last 8 years to have a quite a rock-and-roll style setup, and at this place, I could see 80% of the audience. Good morning, everyone. Thank you, Scott, for leading the first portion of today's meeting. Congratulations on your election to the Board of Directors and your appointment as Independent Chair of the Board. I'm personally extremely happy for this appointment.

We have been working extremely well and efficiently during the last few years, especially when you were the Chair of the Risk Committee. I'm looking forward for the next moment to come together. Thank you. I'm pleased to be here this morning with all of you, my fellow shareholders, members of the Board of Directors, executive management team and employees. [Foreign Language]

What's the year has been 2025? What's the year? We've seen Aecon's transformative roster of projects spanning all our operating sectors across North America and beyond, underscores Aecon's strength, diversity, and high resiliency. Reflecting on where today, a diverse North American infrastructure leader with global expertise. I truly believe that Aecon is stronger than ever before. Every strong company has a story. And for Aecon, our story is rooted in the dedication and vision of John Beck.

Building on what Scott Thon said earlier, John is a true trailblazer in our industry. From growing his family's precast concrete business to all the mergers, acquisition, and organic growth along the way to evolve Aecon and its predecessor companies, John ensured Aecon was built to last. John didn't just build pivotal landmarks. He led project teams with integrity, nurtured career, pioneered innovative project models, formed successful joint venture, championed safety, and helped people and community flourish. John's mentorship, counsel, and deep expertise have been valuable to me.

After growing Aecon together for nearly a decade, continuing to lead this exceptional company is an honor. John, moving forward with you as Chairman Emeritus, our experienced Board and leadership team are focused on continuing to execute our growth strategy to advance Aecon's evolution and make all of you Aecon proud. On behalf of Aecon's executive management team, thank you, and congratulations on your story career. John has been at every AGM for Aecon, and today marks his 55th AGM. I'm pleased to introduce this tribute to you, John.

[Presentation]

I'd just say one thing. Everything that had to do with all of you as employees, as executives, as the Board, and our shareholders, all of you. So it's a team effort.

We move forward delivering for our clients, driven by our purpose, building what matters to our future generations -- the most important pillar of our growth remains our safety performance. During the first week of May, we marked our 22nd annual safety week in support of Aegon's #1 Core Value, Safety Always. As I used to say, in addition to be a human duty, safety is a precursor of performance. We cannot speak about performance of our company.

We are not able to handle safety properly and better than anybody else. Guided by the theme of Safety Starts with Me. This Safety Week was the time to reflect and reaffirm personal ownership of safety across the company. Here are a few words from Thomas Clochard, Executive Vice President and now from September 2025, Chief Operating Officer.

[Presentation]

Thanks, Thomas. Great. In 2025, we were pleased to see again a decrease in our incident frequency, 4.50 Total Recordable Injury Frequency through an increased focus on further integrating safety into our work plans, continually improving our safety program and building our people's capacity and day-to-day diligence. Supporting this, we also launched the Aecon Project Execution Framework known as [indiscernible] the safety excellence program to standardize and improve our work, ensuring safety is always built with constant evaluation for improvement. On an industry scale, we advanced key initiatives as a founding company of the Canadian Construction Safety Council to elevate safety performance.

In April, we joined CCSC members in following through on our commitment of adopting Type 2 helmets. You probably remember last year, I gave you one that was with integrated team for all subcontract subcontractors, not only Aecon, effective July 1, 2026. One pattern that we are very proud. This transition represents a collective step forward to protect workers, reduce serious injuries, and establish innovative new industry benchmark. At Aecon, safety is not just a process, a program or a requirement. It's a commitment we make to ourselves and one another every day. No success is more important at Aecon than ensuring every person goes back home safe every day.

With an unwavering focus on delivering long-term shareholder value this past year, Aecon continued to grow as a power company with the completion of key strategic acquisitions, steady growth into U.S. and international markets, record new contract awards. Aecon's activity are now intentionally comprised of more than 70% collaborative on variable contract arrangement.

With the revenue that went during the last year from $3 billion to $5.4 billion, we now have 55% of this revenue tied to power projects. This is extremely important. It is our strategy, and it is also extremely important, the shift between Labs and collaborative as collaborative models provide benefits for all parties to optimize projects for Aecon, our clients and our community. Turning to our 2025 year-end financial results. The year was highlighted by record full-year revenue of $5.4 billion. It's a growth of 28% from last year, 85% being organic. Robust year-end backlog of $10.7 billion diversified across all our operating sectors.

Growth in our U.S. and international operation of 87% over 2024, significant new contract awards executed under more collaborative models, strong, record revenue programs in new geographies and new markets. And just over a month ago, Aecon reported results for the first quarter of 2026 with a backlog of $10.9 billion, another record level. In 2025 and early 2026, Aecon completed 4 strategic acquisitions with a focus on expanding core industrial and utilities capability and capacity across North America.

Aecon acquired Bodell Construction Company, an industrial construction contractor headquartered in Utah, augmenting our presence across the Western and Southern U.S. Aecon acquired Trinity Industrial Services, an industrial services company headquartered in Texas, expanding our footprint in the U.S. Gulf Coast region, one of the most significant industrial hubs in the U.S. Aecon Utilities acquired KPC Power Electrical Limited and KPC Energy Metering Solutions Limited, collectively known as KPC, the high-voltage testing, commissioning, and metering solutions contractor in Ontario.

Aecon Utilities also acquired Arc American and CA Advanced, under Duna Services, and a 49% interest in KNX Utility Services, strengthening our underground and overhead electrical distribution, transmission, substation maintenance, and emergency restoration construction services across the Midwest and Eastern United States. Those strategic acquisitions strengthened our self-performed solutions across diverse sectors, creating opportunities for collaboration and cross-selling the famous One Aecon strategy.

We were pleased to welcome these teams to Aecon, enhancing Aecon's position to harvest significant opportunities across North America in alignment with our Forward Together 2024-2027 Strategic Plan. Now project. Over the past year, Aecon has successfully secured new contract awards directly in line with our strategic plan and has celebrated remarkable project achievements across all our sectors, demonstrating the strength of Aecon and our multidisciplinary team.

Let's begin with the Darlington Nuclear Refurbishment project. Our expert teams completed all 4 units, delivering the world's largest nuclear refurbishment under budget and 4 months ahead of schedule. This is an incredible success for the nuclear industry and for Aecon. Over 23 million hours of work during the past decade was completed without a single lost-time incident. Remember, safety is the best precursor for performance -- we also celebrated the delivery of the first 2 modern light rail transit system in Toronto.

The Finch West LRT reached substantial completion and opened to the public in the fourth quarter. And the Eglinton Crossstown LRT reached substantial completion before the end of the year and opened to the public in February. After years of talking about this project, [indiscernible] operation is just and we are part of the operation and maintenance. Those LRT lines will connect communities for generations to come.

Our world-class project team maintained steadfast commitment and tenacity to deliver this project, and we are pleased to be playing a critical role in the respective 3-year maintenance. As we also continue our work advancing the Eglinton Crosstown West Extension Elevated Guideway project, we proudly reached completion on the ECWE Advanced Tunnel project in Eglinton West again, delivering the two 6.3 kilometer tunnel long on time and on budget for the future expansion of the Eglinton Crosstown Network.

The Reseau Express Metropolitain or REM, Montreal's Automated Metro opened 2 key segments in 2025, the [indiscernible] Deux-Montagnes branch in the North and just 2 weeks ago, Anse-a-l'Orme branch in Montreal's West Island. These 2 segments combined have delivered 18 new stations and over 60 kilometers of new metro connecting Greater Montreal. Commercial operations commenced on the Oneida Energy Storage project in Ontario, one of the largest battery energy-storage projects in Canada, 250 megawatts.

This was a success story for Aecon with our Utilities and Industrial teams working in collaboration to deliver the project once again on-time and on-budget alongside our Aecon-Six Nation indigenous-led joint venture. The new Stalewasem or revenue bridge opened to the public on the Pattullo Bridge Replacement Project in British Columbia, providing a modernized connection between Surrey and New Westminster, finishing activities are ongoing, including the removal of the existing Pattullo Bridge.

On the Gordie Howe International Bridge project, we look forward to celebrating the delivery of the first Canada-U.S. land border crossing in 4 years with the bridge historic opening in the near future. Aecon also completed key international projects and achieved key milestones. The Kingstown Port Modernisation Project in Saint Vincent and the Grenadines reached completion in October 2025. The new world-class terminal at the Clayton Lloyd International Airport in Anguilla opened to the public in December, delivering a gateway for Anguilla and the Caribbean.

The main runway was resurfaced and reopened to its full length on the VC Bird International Airport project in Antigua and Barbuda. Substantial completion is expected in the third quarter of this year 2026. The last piece of structural steel was placed also known as topping-off on the Pendry Hotel and Residences project in Barbados with completion on track for 2027.

We further diversified our portfolio of work in growing international regions with the commencement of the Santa Rosa Bridge project in Lima, Peru. This project will connect the city of Lima and Callao with the new Jorge Chavez International Airport terminal. I just want to take some time here to thank our resilient and talented team for their commitment and perseverance on this project going back to international was extremely important for us, and they are doing it quite well.

Building on the momentum of key achievements, Aecon partnerships continue to advance ongoing projects across North America with a strategic focus on projects delivered under a collaborative model. In Canada, an Aecon partnership executed a collaborative agreement to deliver the Arctic Over-the-Horizon Radar Program Stage 1 project in Ontario. This is an essential Canadian defense project with national importance, and Aecon is trying to play a key role in delivering defense infrastructure moving forward.

It was very important for Aecon to come back to this market. We wanted it, and we did it. The Aecon-Lake Partnership was awarded an alliance construction contract for the execution of the Darlington New Nuclear Project in Ontario. The team just hit a major milestone in May on this nation-building project with a successful basemat lift for the first Small Modular Reactor unit. This 37-meter diameter, 2 million pound basemat is the foundation of the reactor building.

Aecon was awarded a contract for the definition phase work for 4 units at the Pickering Nuclear Generating Station [indiscernible] in Ontario, with the execution phase expected to commence later in this year 2026. After completing the development phase, financial close was achieved on the Port of Montreal expansion in water-works project in Contrecoeur, Quebec. Once complete, it will be the largest container port in Eastern Canada, another nation-building project for Aecon that's building a stronger economy.

An Aecon Alliance executed an agreement as a development partner for the Hamilton LRT Civil and Utilities Works project in Ontario. Aecon is a construction partner responsible for project delivery. This is the first phase of the Hamilton LRT project, which will bring 14 kilometers LRT service across Hamilton's downtown core. The collaborative development phase that reached completion, and commercial flow was successfully achieved on the Scarborough Subway Extension Station, Rail, and System progressive design-build project in Ontario.

This was the first transit project to reach commercial flow under this new PDP model in Ontario. On the GO Expansion civil work project in Ontario, work is underway across key sites in the Greater Golden Horseshoe area. Important track works has been advanced to transform transit across those growing regions. Aecon also reached financial close on the Yonge North subway extension advanced tunnel project in Ontario. The project will deliver 6.3 kilometers of tunnel to the north of Toronto's existing Line 1 subway line.

On the Winnipeg North End Sewage Treatment Plant facilities upgrade project in Manitoba, the team continues to work towards the commissioning of the Headworks Pumping Station, progressing towards substantial completion later in the year 2026. Now in the U.S. with the conclusion of the development phase, the construction contract was finalized on the Howard Hanson Dam facility project in Washington. This project leverages Aecon extensive civil and dam infrastructure capabilities while advancing Aecon's steady growth across the United States.

An Aecon joint venture was selected to deliver the first 4 of 12Xe-100 SMR at Energy Northwest's Cascade Advanced Energy Facility in Washington State under a progressive design-build model. We are pleased to continue finalizing negotiation as we expand our role in delivering the next generation of nuclear energy plants, one of the first SMR projects in the United States. Significant project has been made to advance the transition phase on the U.S. Virgin Island Port Authority Airport P3 project.

The team continues work to advance to the next stage of the project, which will deliver critical upgrades to the Cyril King Airport in St. Thomas and the Henry Rohlsen Airport in St. Croix. As we deliver these critical projects across North America and abroad, our dedicated teams are proving the positive difference that infrastructure can make for people and community. We remain steadfast in our commitment to safely, profitably, and sustainably deliver integrated services, products and solutions to meet the needs of clients and future generations.

This past year, guided by our Reconciliation Action Plan, we built on our progress in deepening relationships with indigenous community, expanding cultural awareness across our organization, and taking tangible steps to embed Truth and Reconciliation into our business practices. Anchored by our commitment to advancing meaningful Indigenous engagement and reconciliation, working in partnership with community. Aecon procured more than $240 million of goods and services from the Indigenous community in 2025.

Turning now to Aecon's outlook. We expect 2026 revenue to exceed 2025 levels on the strength of our record backlog, strategic positioning in sectors with attractive demand profiles, robust recurring revenue program, and a strong -- very strong pipeline of project opportunities tied to power generation, critical resource development, mass transit infrastructure, water, and defense.

With our legacy projects reaching substantial completion, this is anticipated to lead to improved profitability and margin predictability going forward. In the Construction segment, demand for Aecon services continue to be strong, with opportunities across all sectors. And in the Concession segment, there are several opportunities to grow our portfolio and create opportunities across our diverse business.

Beyond the project, we are focused on delivering shareholder value through a disciplined capital allocation approach, strategic investments in our operations designed to support growth in new markets, an ongoing shift towards projects with appropriate risk-adjusted returns, and a continued emphasis on operational excellence. Looking ahead, our people, processes, and capabilities will continue to support our growth at Aecon. Backed by 11,000 strong employees across North America and around the world, our teams are at the heart of everything we do.

Driven by our dedicated leadership team, we are focused on investing in our people to position Aecon to harness growth opportunities and prosper in the years ahead. This year, we were pleased to welcome experienced team to Aecon through acquisitions while supporting organic growth and the development of all our people. We truly have some of the most talented people and teams in the industry and around the world here at Aecon.

Through our work on small and medium-sized projects as well as complex megaprojects, Aecon's diversity and resiliency is purpose-built to not only deliver for communities and clients, but also to provide progressive opportunities to grow rewarding, long-term career for everybody within the company. I want to thank all of our employees for the hard work they do every day to drive our success.

Together, anchored by our Safety Always culture, we are focused on meeting the expectation of our valued clients while continuing to execute some of the most formidable projects of this generation with cost and schedule performance. On behalf of Scott, Jean-Louis, the Board of Directors and management. Thank you to all our shareholders for your continued support. We now open the floor to questions.

I think you touched on this a little bit earlier, but maybe you could speak to a little bit more about how Aecon achieved record revenue and backlog in 2025 and what you see as the biggest drivers behind this performance and how it positions Aecon for continued growth.

Obviously, power is a trend of the market. You have realized that Aecon revenue in addition to grow has dramatically changed. We were a few years ago, a road and bridges company, a pure civil company. We have now become a power company, more than 55%. That being said, we are with the executive team extremely careful about staying that balance within our activity. We want to be strong in power. I mean nuclear power, we want to be strong in transmission, distribution, utility. But we also want to stay strong in industrial.

We want to stay strong, although not overwhelmed by civil, but we cannot be a great infrastructure company if we are not able to proceeding and urban transportation system because what is arriving, what is coming in the world is quite important. So those are the drivers. And the balance between our activities is extremely important to ensure our resiliency.

Construction is about cycles, goes up and down. But those sectors very strong, very well positioned where we have a leadership on each of the different sectors will help us to be more resilient. On the other side, what I commented about the fact that we went within those few years from 75% of fixed-price job to 70% of collaborative profit will give us much more margin predictability, and this is what is important for all of us.

Thank you very much.

Good day, and thank you for standing by. Welcome to the Q1 2026 Aecon Group, Inc. Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Adam Borgatti, Senior Vice President of Corporate Development and IR. Please go ahead.

Thank you, Shannon. Good morning, everyone, and thanks for participating in our Q1 2026 results conference call. Joining me are Jean-Louis Servranckx, President and CEO; Jerome Julier, Executive Vice President and CFO, and Alistair MacCallum, Senior Vice President, Finance.

Our earnings announcement was released yesterday evening, and we have posted a slide presentation on our website, which we will refer to during this call. Following our comments, we'll be glad to take questions from analysts, and we ask that you keep to one question and a follow-up if necessary before getting back into the queue.

As noted on Slide 2 of the presentation, listeners are reminded that the information we are sharing with you today includes forward-looking statements based on assumptions that are subject to significant risks and uncertainties. Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that these expectations will prove to be correct.

Turning to Slide 3. Aecon continued to advance its growth initiatives in the first quarter of 2026 and achieved significant milestones across our operations. Record backlog of $10.9 billion was recorded at March 31, 2026, and is underpinned by a diversified mix of long-term projects with appropriate risk balance. The quarter featured the addition of the Howard Hanson Dam facility project to backlog following an 18-month integrated design phase. Record first quarter revenue of $1.3 billion increased 18% over the same period last year, with revenue increasing across all of Aecon's operating sectors. Adjusted EBITDA improved significantly in the quarter to $32 million on a reported basis versus $4 million last year, driven by improved year-over-year margin performance in the Construction segment.

We expanded strategically through the acquisitions of KPC Power Electrical and Energy Metering Solutions in Ontario and ARC American and C.A. Advanced under Duna Services in Indiana. These acquisitions strengthen our Utility Services capabilities in Canada and the U.S. in markets supported by required investments in power and critical infrastructure delivery. We ended the quarter with a strong liquidity position and capacity to invest in additional growth following the successful offering of common shares for gross proceeds to Aecon of $172.5 million. Aecon maintains a positive outlook supported by expectation for further growth based on our strategic positioning in sectors with attractive demand profile, consistent with our prior disclosure.

And with that, I'll hand the call over to Jerome.

Thanks, Adam, and good morning, everyone. I'll speak to Aecon's consolidated results, review results by segment and address Aecon's financial position.

Turning to Slide 4. Revenue for the 3 months ended March 31, 2026, of $1.3 billion was up $195 million or 18% compared to the same period in 2025. Adjusted EBITDA of $32 million compared to $4 million last year and operating loss of $8 million compared to an operating loss of $41 million in the same period last year. The improvement in the period was driven by higher gross profit of $59 million. Adjusted diluted loss per share in the quarter was $0.21 compared to an adjusted diluted loss per share of $0.55 in the first quarter of last year. Financial results in this quarter were impacted by negative gross profit of $4 million from the legacy projects. Reported backlog of $10.9 billion at the end of the first quarter was the highest reported backlog in Aecon's history, surpassing the previous record of $10.8 billion set in the third quarter of 2025. New contract awards of $1.4 billion were booked in the quarter compared to $4.1 billion in the prior period.

Now looking at results by segment. Turning to Slide 5. Construction revenue of $1.3 billion in the first quarter was $197 million or 19% higher than the same period last year. Revenue was higher in all sectors, the largest increase in nuclear operations, driven by higher volume of refurbishment, new build and engineering services work in Ontario and the United States. Higher revenue in the utilities sector was primarily driven by an increase in electrical transmission and distribution work in Canada and the United States, contributions from acquisitions in the first quarter of 2026 and from higher telecom and gas distribution work.

In Civil operations, higher revenue was mainly from an increase in the civil component of power and rail projects and from work performed internationally, partially offset by a lower volume of foundations work and highway, road and bridge building activity. Higher revenue in Industrial was driven by an increase in field construction work at industrial, manufacturing and wastewater treatment facilities, driven by operations in the United States, with most of the revenue growth from the Bodell Construction and Trinity Industrial Services businesses acquired in the third quarter of 2025 and from an increase in power generation projects. Revenue was also higher in Urban Transportation Solutions, largely from an increase in subway and commuter rail system projects, partially offset by a lower volume of work from LRT projects in Ontario and Quebec that achieved substantial completion in 2025 or are approaching substantial completion.

Turning to Slide 6. Adjusted EBITDA of $42 million was compared to a loss of $1 million last year. The increase was primarily driven by a volume-driven increase in gross profit in nuclear operations and from an improvement in gross profit margin in civil operations and Urban Transportation Solutions.

Turning to Slide 7. Concessions adjusted EBITDA for the quarter was $6 million compared to $13 million in the same period last year, driven by lower management and development fees on LRT projects that achieved substantial completion in 2025, partially offset by improved operating results at Skyport and Bermuda. The book value of our equity -- the book value of equity of our Concessions portfolio at quarter end was over $0.25 billion.

Turning to Slide 8. At March 31, 2026, Aecon held core cash and cash equivalents of $81 million, which excludes additional $425 million of cash representing Aecon's proportionate share of cash held in joint operations. In addition, at March 31, 2026, 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 [indiscernible]. Aecon generated free cash flow of $212 million in the trailing 12-month period ended March 31, 2026, compared to $2 million in free cash flow in the same period in the prior year.

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

Thank you, Jerome. Turning to Slide 9. Aecon continues to build resiliency and drive growth through a balanced and diversified work portfolio. Over the trailing 12-month period, approximately 55% of construction revenue was related to Power and Utility Services across the nuclear, civil, utilities and industrial sectors with nuclear representing the largest share.

During the first quarter of 2026, the Eglinton Crosstown LRT project in Toronto opened to the public, bringing an additional project into the maintenance and concession phase within Aecon's diverse and growing portfolio of Concession assets. Aecon holds a 25% interest in the project's equity, development, construction and 30-year maintenance term.

Turning to Slide 10. Demand for Aecon Services remains strong. With record backlog of $10.9 billion, growth in recurring revenue programs in Utility Services and a strong bid pipeline, Aecon is focused on achieving improved profitability and margin predictability while continuing to improve the risk profile of our business. Trailing 12-month recurring revenue was $944 million at March 31, 2026. Recurring revenue from Utility Services increased to $763 million from $620 million, an increase of 23% over 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. Aecon expects 2026 revenue to exceed 2025 levels on the strength of its record backlog, strategic positioning in sectors with attractive demand profiles, robust recurring revenue programs and a healthy pipeline of project opportunities tied to power generation, critical resource development, mass transit infrastructure, water and defense. In the quarter, an Aecon partnership executed an agreement with Defense Construction Canada to deliver the Arctic Over-the-Horizon Radar Program Stage 1 project in Ontario under a collaborative integrated project delivery model. Aecon holds a 50% interest and is a lead partner in the JV responsible for project delivery. The validation phase commenced in the first quarter of 2026, with construction expected to begin upon completion of this validation phase.

An Aecon joint venture also finalized a USD 691 million contract with the U.S. Army Corps of Engineers for the Howard Hanson Dam Facility project in Washington State. Commencement of construction is expected shortly. Demand for Aecon services in the Construction segment across Canada and in select U.S. and international markets continues to be strong with opportunities across all sectors. We have a clear line of sight on some very significant and well-balanced work programs ahead.

In the Concessions segment, there are several opportunities to add to the existing portfolio of Canadian and International Concessions in the next 6 to 12 months to support trends in aging infrastructure, mobility, connectivity, energy and population growth. Beyond the legacy projects, Aecon's ongoing shift towards a greater weighting of improved risk-adjusted programs in combination with a strong focus on operational excellence is anticipated to support a stabilization and gradual improvement of adjusted EBITDA margin in the Construction segment in 2026. Aecon maintains a disciplined capital allocation approach focused on long-term shareholder value through acquisitions and divestitures, organic growth, dividends, capital and operational investments and share repurchases on an opportunistic basis. We are focused on making strategic investments in our operations and systems to provide greater access to attractive markets, increase operational effectiveness and support the growth of our Concession portfolio.

Our overall outlook for 2026 continues to be very positive. We are extremely excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value.

Finally, turning to Slide 12. I would like to welcome our new team members from the 2 acquisitions completed by Aecon in the first quarter of 2026. On January 6, Aecon Utilities completed the acquisition of KPC Power Electrical and KPC Energy Metering Solutions, enhancing our presence in Ontario across high-voltage testing and commissioning services, including substation technical services and energy metering solutions capabilities. And on March 9, Aecon Utilities acquired ARC American and C.A. Advanced under Duna Services and a 49% interest in KNX Utility Services, strengthening our underground and overhead electrical distribution, transmission, substation maintenance and emergency restoration construction services across the Midwest and Eastern United States.

In closing, I want to thank our growing team across all our operating sectors for their safety-always mindset. Next week, teams across Aecon's platform will proudly reinforce our safety culture through our 22nd Annual Safety Week. Thank you. We will now turn the call over to analysts for questions.

[Operator Instructions] Our first question comes from Michael Tupholme from TD Cowen.

First question, just wanted to ask you a couple of questions about the defense sector. So last month, Aecon announced an agreement to deliver Stage 1 of the Government of Canada Arctic Over-The-Horizon Radar project. I know that's in the validation phase right now. I guess I'm just looking for a little bit of detail on how long you expect that validation phase to run? And any indication as to when we could see that added to backlog? And if possible, any sense for what the value of that opportunity looks like?

Yes, I will take this one. We are extremely happy having been awarded this job. I mean for Aecon, it's very important. We come back to the defense business in terms of infrastructure. And this job is extremely interesting. We have a first validation period, which will last up to the end of 2026. Today, in our secured offices for this project, we have more than 60 persons working around the table collaboratively between our client, our engineer and our construction teams. Once this validation phase is over, in parallel, there will be further development phase for further part of the works and most probably early works commencement on some of the places of construction. So I would tend to say that we will see the first element of construction in our activity and revenue around mid-2027.

That's helpful. And then maybe to build on that, obviously, with this award and then there's a lot of other discussion occurring about opportunities in the defense sector in Canada, which has not historically in recent years, been as certainly as prolific as it is now. The question is, can you just comment on what sort of other opportunities you're seeing, the landscape, the opportunity set? And should we be expecting news on other opportunities in the near term? Or is this more of a medium- to longer-term opportunity in the defense sector in Canada?

Yes. So what we have called sovereignty projects, you probably remember sometime like 1 year ago, we refined our strategic plan for the year 2025 to 2027. Being a sovereignty project champion was very important for Aecon. So this Arctic Over-The-Horizon is the first part of the implementation of this strategy. But there are a lot of other sovereignty projects. [indiscernible], we consider that the activity to come may be of the order of $125 billion during the next 10 years, among which more than half should be related with defense. What can come in the next defense project?

I mean, there's a lot coming with the [indiscernible] rehabilitation in the north, 4 to 8 projects on those ones. There's a lot also coming with the submarine program on the East of Canada at Halifax and on the West Vancouver Island we are also having a look at those projects. I mean what is important is obviously the trend and the federal strategy on those projects. I imagine you have all gone quickly to the spring budget that was delivered yesterday. I mean it's very interesting news for Aecon. I mean we now know where are the priorities. We now know the real will to fast track this project. I mean, when we hear about one project, one review, I mean, it's extremely good for us. We have been suffering during years of too much hurdles. I mean, from the moment a project appears on the table and the moment the first cubic of concrete, I mean, is just on site. You have also noticed yesterday that -- and during the last few days that financing is getting organized now and everything is converging rather quickly.

So it's about defense, but it's also about mining, it's about ports and other infrastructure projects. In addition, you probably have noticed the investment in the trade, not only to attract but to educate our young apprentice so that there should not be a problem of execution on those projects. All this goes into the right direction, and we have teams at Aecon truly focused on those sovereignty projects.

Our next question comes from Sabahat Khan from RBC Capital Markets.

Just maybe starting with the nuclear side. I just wanted to get a little bit of perspective on the outlook in that business. Looking at the results here, a good contributor to revenue, but understanding backlog builds can be lumpy there. So not much there. So just trying to understand, as you look ahead over the next 12, 24 months or 2 to 3 years out, maybe just frame the nuclear opportunity and maybe some of the backlog dollars that could maybe get added to the projects you're keeping an eye on? And maybe even just beyond that, over the next sort of 3 to 5 years, what are some of the opportunities that Aecon could participate in?

I will take the first part of the answer. I mean Aecon is exceptionally well positioned on the short term, midterm and long term, I mean, for nuclear. And I will remind you more or less where we are working and maybe Jerome can add a few figures on this.

I mean, we in Canada, we are working on all major component replacement programs for nuclear power plant. I mean we have just finalized Darlington. And next week, OPG will celebrate, I mean, the success of Darlington, a project that has finalized in advance in terms of time and within budget in terms of money. It had been decades all over the world without a real success in those big nuclear projects. We are extremely happy to have been the leader on this Darlington refurbishment. But we are also working at Bruce, I mean, on the second and third reactor of the program of 6. And we have begun to work at Pickering at the same time on definition and early procurement, and we should begin execution in the course of the year 2026.

In parallel, we are progressing the construction of the first SMR in Darlington. In United States, we work on nuclear on different -- on different activities. I mean major component replacement, of course. There is a little [indiscernible] in front of Canada, but now it's coming and it's going to be powerful. We work also with the Department of Energy on the National Laboratory. And we also work on development phase, on budget setting for new build. I mean the Cascade with Energy Northwest is part of it. You have to note that our activity, I mean, our nuclear activity in the U.S. that was around CAD 300 million equivalent last year is going to grow to something like CAD 600 million equivalent during the year 2026.

In addition, you probably remember that we acquired United in terms of engineering. We are also extremely active in that nuclear. And for example, United is engineer of record for a few of the main utilities in United States with a nuclear fleet. So in addition to this, for the new build, we are technology agnostic. I mean we perfectly know the CANDU system, but we have also worked for Westinghouse on the AP1000. We have produced a few modules in our Cambridge facility. We are building the BWR- 300 from GE Hitachi and the Cascade, it's an X-energy new generation reactor. All this just make that short term, midterm and long term is perfectly covered at Aecon. Maybe, Jerome, do you want to add a few figures?

Yes. I mean so that's helpful to put a little bit of context around it. And if you look over the last 2 years, so from '23 to the end of '25, our Nuclear segment added roughly $800 million of revenue and call it, 35% of that was in the United States. So it's a broad platform. It's diversified across customers. And when we think about the overall backlog opportunity associated with the nuclear, it's one of the top one or two sectors within our $10.9 billion backlog bidder today. That number moving up or down by a few million dollars causes exactly zero concern from an Aecon perspective. The amount of work ahead of us is very meaningful. And as you mentioned, additions can be quite lumpy, but we feel very, very good about the positioning of that business within Aecon's overall portfolio.

Great. And then maybe just back to the construction business and sort of the U.S. side. We're hearing more and more about the opportunities you're pursuing there. Can you maybe just frame sort of the U.S. opportunity? One, just on the -- how big can that business get over the coming years? And secondly, how do you go about developing a workforce to be able to sort of deliver on the projects south of the border, you have the infrastructure? And sort of what are the ambitions there on the construction side in terms of mix over the next years, especially given sort of an $11 billion overall backlog that you already have to deliver on?

Okay. We are working in the United States with determination, but prudency. It means that I have not set up in terms of revenue or activity an absolute figure for Aecon. But what is sure is that we are going to activities that can be reliable in terms of profitability and safe, I mean, for Aecon. We are -- we can select our client. We can select the part of the business where we have the best team. We can select our partners. Our issue in the United States is not a market share, first of all, because every state is a different story. But it's much more to be positioned at the best places at the best moment. And this is what we have been doing, I mean, for the last 2 to 3 years.

You have to imagine how agile has been Aecon in terms of its U.S. activity. I mean in 3 to 4 years ago, we only had these works, small welding, specialized welding activities. Last year, we were doing 12% of our activity in the United States. And obviously, we are growing. I mean, in nuclear, today, we have something like 1,500 people working. And when you add to those nuclear teams, I mean, all the team working for activities, either alone on some fiber or telecommunication work or through the subsidiaries that we have been acquiring during the last 3 years, we are summing up something like 2,000 people in United States with those transmission, distribution, storm activities and engineering activity.

In addition, because the budget coming from the Federal Government is important and fits perfectly well with our core competency, we have created a dedicated structure for our federal works in United States. So we have been extremely agile. And more broadly, I mean, I just want to say sometimes when I'm walking in the streets of Toronto or other city where there is a lot of work, I mean, with utility, rehabilitation and stuff like this. You can see some signs on the wall in front of some shops, let's say, during the works, we are still open. So what I just wanted to tell you and you have noticed it is that we had our issue during the last years with our legacy project. But never ever we have stopped thinking every day about where are we going to be within 5 years from now? Where are we going to be within 10 years from now? How are we going to beat our competition? How are we going to win? Where are we going to play? And the result today is the Aecon that you have in front of you.

Our next question comes from Chris Murray from ATB Cormark Capital Markets.

Maybe turning back just to some of the guidance on '26. You made the comment that you expect revenue to be higher in '26 than '25. But if we look at Q1 revenue growth, certainly pretty impressive just at the magnitude of it. But I just wanted to kind of frame or try to think about how that cadence is going to play out through the year. You would think that from the guide, it's like above, you wouldn't think it would be 20% above for the rest of the year. So just any color if you can help us kind of shape the opinions on how we should think about the balance of the year in terms of the revenue stack?

Yes. Q1 is a little bit of an exceptional quarter because candidly, we're lapping pretty easy comps. So last year, Q1 was roughly $1 billion of revenue. The year before that in '24, it was $844 million. So I mean, look, obviously, the stack of growth here is pretty meaningful. One of the big contributors is in 2025 in Q1, we secured the Scarborough Subway Expansion project as well as the Darlington New Nuclear Small Modular Reactor project. So those weren't in the comparative period last year. They're now in full swing and full production. So I would say if you're thinking about the overall shape of revenue growth, our expectation is not to be able to put that type of high-teen number on the board because the comps, so to speak, get a little bit more challenging as we progress through the year.

That being said, the way we set up the outlook is remind our investor base is, roughly $11 billion of backlog. We provide detail on how much of that is executable within the next 12 months. Our recurring revenue program, particularly in the Utilities business is roughly $0.75 billion. That effectively doesn't touch anything in our backlog at all. So that's over and above. And then we have additional work that we usually kind of book and bill within the year. So we feel pretty confident that our outlook of revenue growth is valid. And we put it in the overall context of a relatively difficult environment with regards to construction overall, right? When you think about where construction put in place is across North America, the figures that we're putting up as far as growth is really a function of the strategic perspective and lens that Aecon has taken and the sectors that we address.

So we feel happy about the position as Jean-Louis mentioned, right? The team wasn't asleep at the switch while they were dealing with the legacy projects, we feel like we're really driving forward.

Okay. That's great. The other kind of question for you is you've raised some capital, some additional capital through the equity raise. You also seem to be pretty active in acquisitions. Appreciating the fact that when you did the raise, it was for kind of labeled as general corporate purposes and debt reduction. But kind of moving forward and thinking about that, does this -- does that raise and sort of your posture towards acquisitions, should we be thinking about a change in kind of capital strategy in terms of being more growth focused? And if so, is it still going to be tuck-ins? Or do we start looking at kind of larger organizations that will give you some additional capacity to kind of work through some of this growing backlog that you've got?

Yes. So very consistent approach to capital allocation. Operations-first mindset at Aecon, very focused on supporting our operation teams for the growth that they have in front of them. So that means investments in systems and resiliency in people, so that kind of general support for the organic side of the business. And again, in the quarter, roughly 85% of the growth that we had was organic. So really important to note that we need to support that with investment.

Our CapEx program has actually been quite measured. If you look at the comparative period, like trailing 12-months from March 31 to trailing 12 months, March 31, 2025, our CapEx number has effectively been the same and whether or not you include the finance lease, which is obviously another form of CapEx. So we've been pretty measured. So we think we need to make more investments from that standpoint. And then to your specific question around M&A, over the last 2 years, Aecon has executed 7 acquisitions. Those teams have been welcomed into the fold. They've been integrated. They're all performing at or above expectation. 5 of those acquisitions were in the United States to expand our platform. Total dollars represent something in the order of $300 million. And so when you say what do we use the money for, it was to pay down debt, right, which is why we ended up in the strong position we had at quarter end. But that does afford us capacity to support further growth.

So we're not going to kind of tilt whether we're going to go after something bigger or smaller. We've got a very specified buy box with regards to capability, accretion. It's a very disciplined approach. And one thing we'll say is there are certain areas that we really like and businesses that we understand and that we think have undeniable growth trends. And where we see opportunities to increase Aecon's exposure to those end markets, we won't be shy about taking it because we think we've got a pretty good growth algorithm associated with that.

Our next question comes from Maxim Sytchev from NBCM.

The first question is around M&A multiples. When we look at the disclosure on kind of the purchase price and backlog contribution, et cetera, I'm just wondering if we're seeing a bit of an uplift there? Or how should we think about sort of the seller's expectations in this market, especially like in the utility space?

[indiscernible] you want to start Alistair?

Yes, happy to. Yes, Max, we've been fortunate enough over the last number of years to be able to really select the deals that we've been pursuing, which helps to keep a little more rational approach and valuation in the mix for the companies that we've been buying. That's been helpful. We've also been able to try and align the entrepreneurs that we are acquiring and bringing into Aecon through mechanisms that have earnouts and everything to try and continue the opportunity to maximize value through their growth plan.

So while we have seen a little bit of multiples coming up over the last number of years, similar to what you're seeing in the sector overall, it's been pretty much measured for within what we can manage and within our cost of capital. So we've been pretty diligent on trying to make sure we're being reasonable valuation, and I think that's been successful. So if they come up, but still quite within our parameters.

Okay. That's great to hear. And Jerome, maybe a follow-up question for you in terms of how should we be thinking about the cadence for Concessions EBITDA this year and maybe sort of the expected inflection point there? Is that sort of, I guess, a 2027 event? Just trying to get the timing right there.

Yes. Our -- the EBITDA contribution for the Concessions business is going to be down year-over-year as we saw in the first quarter. The inflection point is going to be likely tied to advancing new projects, whether some of the items we have in the hopper today or the U.S. Virgin Islands, the airport projects that we've been talking about for a while, like those are pretty advanced development phase. So yes, here, it's probably a Q4 event or a next year event. The teams are working pretty feverishly on it.

And we think about it internally more as an equity value business. So it's the book value of equity associated with the Concessions portfolio. You've got the roughly $0.25 billion on balance sheet. And then additionally, the United investment that we carry in long-term investments. So the total is, call it, $255 million, $260 million. And so clearly, it's more valuable than that. And so EBITDA is -- yes, it's an accounting term for that business. But for that business overall, the daily flow of up and down on EBITDA, we're a little bit less concerned with. We're more focused on the value creation. And we think we've got a really good team, really good opportunities in front of us. And it's clearly a business that we want to allocate more capital to because we see opportunity.

Our next question comes from Ian Gillies from Stifel.

Over the last 5 or 6 years, I mean, even through COVID, you've done a great job in and around staffing. It appears we're getting close to another demand inflection for construction in Canada in particular. Can you just talk about where you think you're at with staffing, some of the staffing strategies and whether it's a perceived risk at this point or not?

Construction is about people. It's about people and processes, but the relative weight of people capacity is probably higher in Construction than in other industries. So if we go bottom up, first of all, the trade, and I spoke about it at the beginning, I mean, of this meeting, the whole country has understood that it's an important issue. This being said, we have excellent relation with all our partners, and we have always been able to forecast the needs and the capacity for the next 5 years with our trade partners.

When we go higher, we have the middle staff and the top staff. So this is important. And we have created at Aecon, what we call our Project Management Academy. We have a few other programs for coordinators, for technical manager just to train and on the quality of our staff. This being said, when you see the projects coming, I mean, the war is still going to be on the top executive of the company and on the top executive for Construction, Project Director, Technical Director, Construction Manager on our job also project control. So we are extremely focused on attracting, training and keeping the best people in the market. I mean it's not a real bottleneck or a red flag. It's just that it's our work, and we have always done this, I mean, to be able to look ahead and to define exactly what we are going to need and to create this capacity.

Maybe I'll add just an additional perspective just because I joined this business roughly 2 years ago. Other things are, one is like the amount of care and attention put towards the safety culture is just critical to ensure we can maintain our skilled trade and skilled labor pools because everyone knows who's good at it and who's not good at it. And so we've got our safety week next week across all of our sites in North America. Our safety record in 2025 was one of the best ones despite -- not despite reflecting also that we had some of the most hours worked in the company's history.

Additionally, the team environment is really important. Like I can say it's a great place to work, and we're excited about that. Obviously, there's a big demand and we're hiring. And one of the things that I kind of think about what's a unique aspect of Aecon is this ability to attract and deploy that level of skilled labor is relatively unique. There's not a lot of folks who can marshal these types of forces. And give a little bit of context, in 2025, Aecon issued roughly 17,000 T4 and W-2 forms, right? So that obviously doesn't reflect a peak labor number. That's kind of throughout the entire year, but just shows that that's the labor pool that we had access to, in 2025, and we expect that number to go up in 2026. So it's a unique attribute. It's human capacity and it's something we're really proud of.

Understood. That's helpful context. Jerome, on the recurring revenue side, there was a little bit of a downdraft year-over-year. Utilities was really good, but the other bucket was probably what I would define as weak. Can you maybe just talk a little bit about what's happening there and kind of how you're thinking about how that trends through the remainder of the year?

Yes. I see where you're coming from. The background on the kind of light blue bar on that page is really a function of -- in the comparative period, we had what I'd just call a progressive or development work, particularly associated with a project that was -- that didn't move forward. And so that was largely in the UTS side of the business. And so the reality is that component has dropped off the recurring revenue side, but a much bigger component has shown up in the true revenue side, so to speak, as those projects are in execution, particularly the Scarborough Subway. So we're not particularly fussed about the shape of like that block coming down because the revenue really just flipped over into more normal backlog-based revenue, and we don't double report.

And then look, the utility side, like that's a positive development, right? There's a big focus on securing additional MSA work across all the different areas where we execute. The electrical side of the business is performing relatively well. There's been a lot of headwind on the telecom and the natural gas distribution side due to the regulatory environment. And so like we just think the teams on the utility side have just been performing just exceptionally well given a pretty tough dynamic there.

Our next question comes from Sean Jack from Raymond James.

So just thinking about these new defense projects on the horizon in Canada, I think there was mention of submarines and Arctic bases, other forms of work earlier. Do you see any opportunities for strategic adds through M&A that you'd be willing to make that could bring it closer to this growing pipeline? Or do you feel like you're well positioned as it is?

On a first basis, we think we are well positioned, and we can always partner that most probably will be the way to see forward rather than acquiring company for this. I mean all these are core competencies that we have within the company at this moment. It doesn't mean that we would not do something a little different when we have a better understanding of all those programs. But so far, this is the way we are envisaging our strategy for those projects.

Our next question comes from Krista Friesen from CIBC.

Maybe just a follow-up on the defense topic there. It seems like from the outside, a pretty seamless pivot to reentering this defense work. Were there any investments that you needed to do on your end in maybe putting up secure facilities or anything like that to be able to bid on the defense work? Or were you able to just use what you already have?

I mean we have not been working with defense for the last 10 years because, first of all, there was very little work, and it was a lot of rehabilitation of Hangar of workshops of some administrative buildings and -- so I mean, that is the reason. But earlier, I mean, we have been working with defense. So as I've answered, I mean, the question just before you, we have those core competencies within the company. We have this capacity to develop and also to project our strength rather far from our bases. So we consider we have within our company the capacities to deal perfectly with those projects.

And maybe just put one small point on it, Krista. Yes, there were investments involved around facility, cyber infrastructure, et cetera. That being said, the work programs that we carry on outside of that particular sector also have pretty stringent requirements. And so I'd say the transition, it requires a lift, but not a huge one because I think we were probably already at the 85% mark given the other work that we do within the business.

Okay. Perfect. And then maybe just more of a housekeeping question. On the MG&A expense this quarter, a little bit higher as a percentage of revenue. How should we think about that moving forward?

So a little bit higher in the quarter in the context of obviously big revenue growth. Current levels are probably appropriate, right. And so most of it is tied to compensation, staffing costs, supporting resiliency and supporting growth. And so given just the amount of additional dollars that we're putting to work as far as revenue recognition and how lean the organization has been through what described as the rearview mirror legacy era, it's just kind of probably appropriate catch-up and some level of normalization from here.

This concludes the question-and-answer session. I would now like to turn it back to Adam Borgatti for closing remarks.

Thank you very much, Shannon, and we appreciate everyone's interest and attention. Happy to take any follow-up questions, and have a great rest of your day.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the Q4 2025 Aecon Group, Inc. Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Adam Borgatti, Senior Vice President of Corporate Development and Investor Relations. Please go ahead.

Thank you, Deani. Good morning, everyone, and thanks for participating in our year-end 2025 results conference call. Joining me today are Jean-Louis Servranckx, President and CEO; Jerome Julier, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President, Finance.

Our earnings announcement was released yesterday evening, and we posted a slide presentation on our website, which we'll refer to during this call. Following our call, we'll be glad to take questions from the analysts.

[Operator Instructions].

As noted on Slide 2 of the presentation, listeners are reminded that the information we're sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties. Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that the expectations will prove to be correct.

Before moving to our financial results, I'll first turn the call over to Jean-Louis to highlight a few of Aecon's important accomplishments in 2025.

Thanks, Adam. As noted on Slide 3, 2025 was a transformative year of growth and significant milestones for Aecon with record revenue of $5.4 billion and backlog additions of $9.5 billion, supported by a balanced and derisked backlog profile. Revenue grew 28% over 2024 with 84% of the $1.2 billion increase in revenue through organic growth. Revenue from U.S. and international markets also increased by $386 million or 87% in 2025 over 2024.

We delivered our strongest safety performance in over 5 years while maintaining disciplined risk management across major projects and programs. We further advanced our nuclear leadership in North America with our partnership selection to deliver the G7 first grid-scale Small Modular Reactor or SMR at the Darlington Nuclear Generating Station. We also commenced the definition phase of the Pickering Refurbishment Program and an Aecon partnership was awarded a development phase contract at Energy Northwest's Cascade SMR project in the U.S.

Backlog growth was also highlighted by Aecon's largest contract award to date, the Scarborough Subway Extension progressive design-build project, adding approximately $2.8 billion under a collaborative target price model. We expanded strategically through the acquisitions of Bodell Construction, Trinity Industrial Services, and KPC Power and Electrical Services. We strengthened our leadership team with the appointment of Thomas Clochard as Chief Operating Officer and received industrial recognition with gold stages on Renew Canada's Top 100 Infrastructure Projects list, reflecting our involvement in 17 ranked projects, including four of the top five.

And as noted on slide four, we achieved significant operational milestones, including completing the world's largest nuclear refurbishment program at the Darlington Nuclear Site ahead of schedule and below budget in early 2026, providing a model for major nuclear projects on a global scale. Substantial completion was achieved on the Finch West and Eglinton Crosstown LRTs, which were two of the three remaining legacy projects. And we delivered Canada's largest battery energy storage facility, the Oneida Energy Storage Project.

I will now turn the call over to Jerome for our financial results, and we'll return to address our outlook at the end of the call.

Thanks, Jean-Louis, and good morning, everyone. I'll speak to Aecon's consolidated results, review results by segment, and address Aecon's financial position. Additional information has been provided to help clarify the underlying results, excluding impacts from the legacy projects and divestitures. Detailed reconciliation tables are included on slides 15 through 17 in the conference call presentation.

Turning now to slide 5. On a reported basis, record revenue for the year of $5.4 billion was $1.2 billion, or 28% higher compared to 2024. Adjusted EBITDA of $235 million compared to $83 million last year. An operating profit of $87 million compared to an operating loss of $60 million in 2024.

Adjusted EBITDA and operating profit in 2025 were negatively impacted by $94 million in legacy project losses, compared to legacy project losses of $273 million in 2024. Adjusted diluted earnings per share for the year was $0.40, compared to adjusted diluted loss per share of $0.99 in 2024. As only noted, reported backlog of $10.7 billion at the end of 2025 was a record year-end level and compared to backlog of $6.7 billion a year ago. New contract awards of $9.5 billion were booked in the year compared to $4.7 billion in the previous year.

Now looking at results by segment. Turning to slide 6. Construction revenue of $5.4 billion in 2025 was $1.2 billion or 28% higher than the previous year. Revenue was higher in all sectors, with the largest increase in nuclear operations, driven by a higher volume of refurbishment, new build and engineering services work in Ontario and the United States. Higher revenue in industrial was driven by an increase in field construction work on critical mineral facilities in Western Canada and incremental revenue in the U.S. from the Bodell and Trinity acquisitions completed in the third quarter of 2025.

Revenue was also higher in urban transportation solutions, primarily from an increase in subway and commuter rail system projects. In civil operations, higher revenue was mainly due to an increase in power and rail projects and from major project work performed internationally, partially offset by a lower volume of highway, road, and bridge building activity.

In utility operations, higher revenue was due to a higher volume of gas distribution work in Canada and electrical work in the U.S., partially offset by a lower volume of telecommunications work and battery energy storage systems work as our team successfully delivered 3 grid-scale projects in the year. On an as adjusted basis, construction revenue was $5.3 billion in 2025 compared to $4.1 billion last year.

Turning to slide 7. Adjusted EBITDA of $220 million compared to $34 million last year. The primary driver of the increase was lower losses from fixed-price legacy projects in the year. On an as adjusted basis, the Adjusted EBITDA was $315 million in 2025.

Turning to slide 8. Concessions Adjusted EBITDA for the year was $57 million compared to $87 million last year, driven by lower income from O&M activities and a decrease in management and development fees related to concession projects nearing or achieving substantial completion of construction activity in 2025. The book value of equity of our concessions portfolio at year-end was $251 million, up 7% versus the end of 2024.

On slide 9, we brought together the as-adjusted information to exclude impacts of the legacy projects and divestitures to provide insight into the underlying performance of the business. For the construction segment, on an as-adjusted basis, Adjusted EBITDA was $315 million in 2025, representing a 6% margin and $8 million increase over 2024.

On slide 10, at the end of 2025, Aecon held core cash and cash equivalents of $94 million, which excludes $393 million of cash, representing Aecon's proportionate share held in joint operations. In addition, at December 31, 2025, Aecon had committed revolving credit facilities of $1 billion, of which $257 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's board of directors approved an annualized increase to the dividend of $0.01 per share, resulting in a quarterly dividend of $0.1925 per share. The dividend will be paid on April 2, 2026 to shareholders of record on March 23, 2026.

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

Thank you, Jerome. Turning now to slide 11, Aecon continues to build resiliency through a balanced and diversified work portfolio. In 2025, roughly 55% of Aecon's construction revenue was related to power and utility services across the nuclear, civil, utilities, and industrial sectors, with nuclear representing the largest share. This represents a purposeful transition in our business, with the percentage of power activity increasing significantly over the past five years. Approximately 30% of Aecon's construction revenue was derived from power and utility services in 2020. Through our growth and diversification, Aecon is a profoundly different company now than we were several years ago.

Turning to slide 12. Demand for Aecon services continues to be strong. With backlog of $10.7 billion at the end of 2025, recurring revenue programs seeing robust demand and a strong bid pipeline, Aecon believes it's positioned to achieve further revenue growth in 2026 and is focused on achieving improved profitability and margin predictability, all while improving the risk profile of our business. Recurring revenue was $926 million in 2025. The proportion of recurring revenue from utility services increased from $610 million to $728 million, an increase of 19% over 2024. 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 13, Aecon expects 2026 revenue to exceed 2025 levels based on Aecon strategic positioning in sectors with attractive demand profiles and a healthy pipeline of project opportunities tied to power generation, critical resource development, mass transit infrastructure, water, and defense. In the concessions segment, Aecon continues to focus on opportunities to add to the existing portfolio of Canadian and international concessions to support trends in aging infrastructure, mobility, connectivity, energy, and population growth.

Beyond the fixed price legacy projects, we believe that the deliberate shift towards a greater weighting of improved risk-adjusted programs in combination with a strong focus on operational excellence, is anticipated to support a stabilization and gradual improvement of Adjusted EBITDA margins in the construction segment in 2026.

Aecon plans to maintain a disciplined capital allocation approach focused on long-term shareholder value through acquisitions and divestitures, organic growth, dividends, capital investments, and share repurchases on an opportunistic basis. We are focused on making strategic investments to support our strong growth, whether through the concessions portfolio to provide access and entry into new markets or to increase operational effectiveness. Our overall look for 2026 is very positive. We are extremely excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value.

I want to express my sincere thanks to our growing team for their resilience, high professionalism, and safety always mindset that has positioned Aecon for what comes next.

Thank you. We'll now turn the call over to analysts for questions.

[Operator Instructions]. And our first question comes from Sabahat Khan of RBC Capital Markets.

Great. Just you provided a bit of color on the sort of the opportunities ahead. I was hoping you could dig a little bit into some of the announcements we've been seeing from the Canadian government on the infrastructure side. Just hoping you could provide a bit of color on behind all these headlines, where are we in maybe some of these projects hitting the bidding process? Are you bidding on some of these already? Maybe if you could just tie in the announcement from the other day related to NORAD as well. Just curious to get some more color on that project.

Yes. I will take this one. First of all, as an introduction, where we are today is a result of being extremely serious and focused about our strategy. We are extremely disciplined with this. We are now following our plan 2024 to 2027. We had an update mid-2025. Basically, where we are today belongs to 4 vectors. The first one was Aecon has to become a powerhouse. As I've noted during my speech, we are now a little more than 55% related with power. It's an incredibly important shift for our company that was before much more road and bridges.

Point number 2, Aecon has to become what we call a sovereignty champion. We are coming to your questions. You probably have noticed that we were among the first five project of nationally important that were defined with the Contrecoeur port in Montreal and the SMR construction, I mean, in Darlington. We also announced a few days ago that we had been awarded this Arctic Over-the-Horizon project. This project was a target for Aecon. I mean, we wanted to come back to Defence Construction Canada. We have not been there for quite a number of years because the jobs were much more refurbishments of buildings, hangars, and not that much infrastructure. We decided that we had to be back. We have been awarded the first two pieces of this job. Ultimately, there will be several others for what has been announced as a total size that could be $3 billion to $5 billion. It's a complex project. We are leader.

We want it with an outstanding scoring result. It's a purely collaborative job. It means that we first have a validation phase, then we have a development or a detailed definition phase, then we have construction that should begin in 2027. It was very important for us, and we got it. Third point of our strategy, we'll come back to this. Aecon has to be a national and a local strong player in the US. We'll come back to it. Number four, Aecon has to become more international, what we also have been doing. I hope I've answered your question.

Yes. Just, maybe a bit more, if I could follow up there on just behind some of these initial projects, have you seen an uptick in bidding activity, or are these projects still initial phases? Just wondering sort of when some of the other larger projects or some of this investment might hit the ground?

When you discuss with Defence Construction Canada, or you also can go to their website, I mean, obviously, the number of project that are now on the list and that will be put on the market, I mean, during the few years to come has been multiplied by quite an interesting factor. We are tracking this. Of course, you have also, for example, learned about Alto, I mean, the high speed train with the first phase between Montreal and Ottawa. I mean, this is a pure kind of project for which Aecon is excellently positioned now.

Great. And then just my last question. Obviously, you're talking a bit about the power opportunity and the business here. Can you maybe just rehash sort of the utility strategy? Is that something that is it more growing it via some of these power project opportunities? How big of a role would M&A play in that? Maybe just a little bit of color there, and I'll pass along.

I mean, obviously, the power part of utilities is growing and is growing well. Our utility sector is also about gas. It's also about telecom. It's also about fiber to the home and those kind of activities. Power is what is growing. At the same time, in United States and in Canada, I mean, basically, the main topic of today is about electricity addition.

This is the wave, and we were not wrong 3 years ago when we just called this and decided to focus our efforts on this part of the link. This being said, as I've always told you, Aecon has to stay balanced. It has to stay balanced between the different core competencies that we have.

It's about urban transportation, it's about industrial, it's about nuclear, it's about utilities, and it's about civil. We have to keep balanced, but we know that the wave is about power.

Jerome, you want to add something?

Sure. Just to close the loop on it, on the utility services side of the business, the capability that we have both in Canada and the United States centers around grid-scale, battery storage, substations, distribution, transmission. Now increasingly, electrical testing, verification, meter replacement with the new team that's joined us. Our perspective is we want to continue to build capacity to serve these end markets. There's an undeniable growth trend, even in the more bearish case for power demand. We just see an enormous opportunity for us to continue to build out that area. We'll do it organically. We'll do that through M&A to the extent the opportunities fit our buy box, our culture, and our safety record. We continue to view it as an area of opportunity for capital deployment for sure.

And our next question comes from Yuri Lynk of Canaccord Genuity.

Just want to dig in a little bit on the outlook for construction segment Adjusted EBITDA margin. Calling for some stabilization here, after a number of quarters of decline, and then maybe some improvement in the back half of the year. Maybe just what are the puts and takes that get us stable here, and then what could possibly drive some upside in the back half of the year on the margin?

For sure. The message is simply that the direction of travel for like the construction margin, whether you look at it on a reported or Adjusted basis, that the message is very much consistent, is stabilization on the direction of travel with the potential for improvement. That's largely a function of through 2025, the business has moved the type of execution that's flowing through and being recognized into revenue away from some of the progressive elements and fixed price contracts, which generally carry higher margins. You know, in some ways on fixed price, certainly higher risk to a much more stable risk-adjusted return that we view as very attractive from an Aecon perspective. We've now reached that point where we've stabilized that transition.

You know, the vast majority of our work is done under more appropriate contract structures. The risk-adjusted margin profile that we're recognizing is strong, given the contract structures that we're in front of. The improvement is going to stem largely from operational efficiency gains, improved cost and schedule performance on our jobs. As well as the drop off of legacy and then the Western Civil area that's added a dilutive impact to the overall margin profile in '25 and late '24. I think from that perspective, it's a mix of factors, but I think all of this is in the context of a business that's continues to grow quite well. We think there's good torque in that message.

Are those Western Civil contracts still dragging or they're finished or stable?

Our view is we have a handle on their completion and finalization, we're going to continue to just to close them out, right? They're effectively I think backlog wise, we're probably talking kind of sub $100 million here. Same thing on the legacy side, sub $100 million in the context of $5.4 billion of overall rev. We're feeling better about it.

Last one for me, just on the bookings, I mean, a huge bookings year, 2025. Safe assumption that we're not going to get to that level of bookings in '26. Can you just remind us of any progressive contracts that might be suitable to be booked in '26? Like I'm thinking Pickering is probably one, but any help on just how we think about the new awards outlook this year.

I will take this one. Yes, you're right. I mean, the increase in our backlog, I mean, in 2025 is mainly due to big chunk, I mean, of job. I mean, we told you about Scarborough. What is coming now, I mean, obviously Pickering is an important one. We are also on Winnipeg on a very interesting wastewater treatment plant where we are finishing the development phase. We are also working, you probably remember on a fish passage and a civil job in the United States, I mean, over Hanson Dam, that should most probably come to our construction backlog. We are waiting, I mean, for a few results, or eventual awards on some UDS projects on which we have been bidding during the last months.

Our next question comes from Chris Murray of ATB Cormark Capital Markets.

Maybe kind of following on, kind of what to expect in 2026, especially on the revenue line. Certainly really strong revenue growth through this year. You know, there's a few projects that we've been in. Actually, I was thinking of the Ontario GO Electrification project as well. You gave the indication that you expect revenues to be higher in '26 and '25, which given where the backlog is, that's I guess probably what we should have been expecting. But I'm just trying to gauge how you think the magnitude's going to show up.

I can't believe that this 20% clip on year-over-year growth is going to continue, but maybe if you can characterize it a little bit better, that would help us kind of shape our view.

Sure thing, Chris. The growth in '25, I mean, we'd likely describe as exceptional, rather than just very good. 8-plus percent of that was organic, which is roughly $1 billion. You know, just the growth that Aecon produced in 2025, if that was its own business, would've been a top 20 construction company in Canada, that was formed out of Aecon. We are not anticipating that level next year. Our commentary in the outlook is formed on the basis of, number one, the backlog, number two, really strong recurring revenue programs across the business, but you know, in particular the Utilities group.

Number 3, all sectors are really well positioned for where demand trends exist today. If we look, 2025 was effectively a flat or down year in construction in North America, except for a select few sectors, and those sectors were the 5 sectors in which we're involved. 2026, we continue to see good outlook. You know, overall general industry trends, people are calling for something in the order of low mid-single digit growth. Again, we think we can, we can handily beat that, but we're not going to get to the level we got in 2025. I don't anticipate that absent some significant M&A. We're expecting another good year after an excellent year, but not we have to temper expectations, right?

We can't expand our human capacity and deliver the amount of skill trades, that we use as the basis for business, at that clip on a continual basis, right? We need to be smart about it.

Okay. Maybe if I ask the question a different way. If I think if I look at your backlog kind of characteristics today, you've got about $3.6 billion that looks like delivered or planned for the next 12 months. $1 billion of probably recurring revenue that's in the pipeline. How should we think about at least even with the project demand in here, is it fair to think, like what would be about the right number to think about stuff that you can actually book and execute in the same year, kind of on a normal run rate? Maybe that's a different way to think about this.

Yes. If I gave you that, we'd be plugging to the revenue number that we have in our business plan, which we're not going to disclose. The opportunity set is strong at both procurement, go get change orders, ability to expand in existing projects and secure additional work packages. If you go back historically, it's a relatively broad range that we've been able to pull together across the years. You know, 2025, if you look at where we were in 2024, obviously that kind of go get element was quite strong. I don't think it'll be as strong in '26, if you want to try to track back against that.

Okay. Next question really quick. You know, just we're starting to see another one of these, kind of legacy issues, getting solved, I guess, in the quarter. Can you just give us any color around the solution and if it had any material impact on the numbers in the quarter?

Maybe I just begin with where are we physically on those job, and then Jerome will add a few figures that are all in our report. As you have noticed, we are now substantially completed on Finch and Eglinton LRT, following what we call the revenue service demonstration, which is an extremely complex demonstration of the capabilities of all the systems we have been building. This is done on those two LRT.

Our maintenance and TTC operation is going quite well. We are very happy about it. Gordie Howe, we are nearing substantial completion. It's about finalizing operational readiness of all our systems and finalizing the onboarding of all border agencies and installation in their office. I've read a few comments.

Just to be clear, substantial completion is totally separated from opening of the bridge. It means that we are now in the last centimeters to go to substantial completion. The opening of the bridge is a different topic. We are on those three job finalizing our commercial discussion with all our clients. I mean, we have no disputes. We are under discussion, and we think that within the next few months we will be over with that.

A few figures?

Financially, the legacy projects had a negative impact of $6 million in the quarter, Chris. Total for the year was $94 million. It's obviously substantially less than what we had last year. The big focus in 2026, as Jean mentioned, is the successful delivery of the final project and then the closeout of the commercial terms associated with all three. Given where we stand today, I'm not sure it's actually additive or constructive for the overall Aecon discussion to zoom in too much on these items. Like, we're getting basically narrowing down the level of outcomes, so not immaterial, but like less material levels. What we might likely do in '26 is just report everything all together and then close out this chapter.

Like, we're in the twilight phase of the legacy. We're focused on what comes next, around some pretty stellar opportunities that we're in execution and procurement on. I think we're going to want to talk a lot about that in '26 and a lot less about this very difficult phase that I think the team's done an extraordinary job managing through.

Okay. Great. I probably asked the question a little bit wrong. I was actually more curious about the Rio Tinto agreement and just if that had any material impact on the quarter.

If it was material, we would have disclosed it. No. That's just another successful completion by our operational legal team to settle a dispute or claim situation with a client and it's closed off. I think from a macro level, if you kind of take it out a little bit, the real message here is that Aecon does a really good job at managing risk exposures and reducing the overall enterprise level risk that we're putting forward.

In '24 to '25, the business has been in a better position in '25 to '26. Again, we think we're in a better risk-adjusted position. The idea is creating a more boring, more stable, more predictable Aecon from a financial perspective, and then a more exciting, more thrilling Aecon from a perspective of the people who work and you know, a very dependable Aecon from the perspective of our clients. I think we're advancing along all three of those.

And our next question comes from Michael Tupholme of TD Cowen.

My first question is just about the nuclear, the nuclear business. Obviously a key growth area for Aecon in 2025, and it was your most important growth area in the year. I guess as we look to 2026, the question is, beyond executing on the substantial volume of nuclear work that you already have in hand, what should we be watching for and expecting as far as nuclear developments and progression in terms of new nuclear opportunities, in 2026?

Okay. As an introduction, I just want to come back to this incredible news about Darlington refurbishment. I mean, in February of 2026, we just finalized the refurbishment of the 4 reactor under budget and 4 months ahead of schedule. I mean, it's extraordinary. You cannot imagine the number of calls and questions that we are receiving. I mean, something like this is the first time we have good news on a big nuclear project for the last 20 years. How did you do it? We are extremely proud because Aecon, during the last 8 years on this project, was on the critical path of its execution. It's a very good news for the nuclear industry to have been able to demonstrate that when it is well organized, it works.

Obviously, I mean, on refurbishment, we are still on two major programs. I mean, Bruce, with 4 reactors to complete up to 2032, and Pickering, I mean, 4 reactors, we have just begun the development phase and turbine up to 2035. Regarding new construction in Canada, we are working on the first unit of the small modular reactor, the 300 megawatts from GE Hitachi. A completion forecasted around 2030. It's going well. We have, at this stage, something like 1,100 people, I mean, between staff and workers on site. Nothing has yet been decided regarding new big nuclear in Canada in terms of technology from OPG or from Bruce.

We are working with those two utilities on the development phase with various options. In United States, I mean, we are working on three different topics. Major component replacement, mainly with Dominion, but also now with Energy Northwest. Second vector is the Department of Energy on their national lab in Savannah River. The third one you have noticed we have been awarded for Energy Northwest. I mean, the collaborative de-development to complete the planning, the design, and the construction of a 12x 80-megawatt X-energy reactor with Kiewit and Black & Veatch. It's just beginning. We are at planning and then pure definition phase, but it's a new build. What's important with this is to say that Aecon is technology agnostic.

I mean, we work for CANDU and we're extremely strong, I mean, with CANDU. We work with GE Hitachi. We are beginning with X-energy. We have been working in the past, and we are working today with Westinghouse. It just means that we are ideally positioned for what is coming.

That's helpful. Maybe just one quick follow-up on that response. As far as the Energy Northwest Cascade Advanced Energy Facility opportunity, is that something that as you move through this next phase, you could get to the point you're at where you are booking more meaningful amounts into backlog in 2026, or is that a beyond 2026 opportunity?

So it's going to be beyond. I mean, at the moment, we are at pure definition phase. I mean, it's a new kind of reactor. This will require, I mean, some time just to get it well in the box between the next phases will be launched.

Got it. Thank you. Then maybe for Jerome, you have a few questions about 2026 revenue outlook. I think you provided us some good information. The question is really about as we look beyond 2026, obviously, all of the transformation that's occurred at the company and the focus on different vectors has been done with a longer-term view. Can you talk about what sort of visibility you have into revenue growth and beyond 2026 as you look to 2027 and future years? You talked a moment ago about sort of 2026 being able to hopefully do better than industry-level growth. How do we think about sort of that period beyond '26?

There's a few things. One, we've done a good job building out the stable recurring revenue side of the business on the utilities front. We see opportunities to build out there. The next component is if you look at our backlog, something in the order of $5 billion of the backlog is executable effectively kind of beyond the two-year period. The way we define backlog, Mike, as you know, is it needs to be a project that has been awarded with costs and scope and schedule. It's really kind of a air quotes hard backlog definition. We have visibility for financials that extend beyond based on the projects that we're in procurement on, right?

For instance, Arctic Over-the-Horizon, that will not enter backlog until we exit the validation phase. But we have a pretty good handle given the work that's been done by the big construction teams as to what that could look like. Where we sit today, we one, items that have been we've effectively secured but not entered into backlog, recurring revenue, pipeline of work, just overall trends in the sectors where we're present, the inbounds that we're receiving from a demand perspective gives us a strong degree of confidence that the business is positioned where it ought to be positioned.

And so you're probably looking for something a little bit more than that other than to say that, like, we feel, we feel pretty good about the trajectory that Aecon's on today, and an ability certainly in the medium term to outpace the overall industry.

And our next question comes from Frederic Bastien of Raymond James.

Guys, it's been almost 2.5 years since Oaktree made its strategic investment in Aecon Utilities. How would you grade yourself or Aecon on a report card with respect to that investment, and what can we be looking forward to in the future?

So the utilities business has been performing well in the context of a very difficult regulatory environment in Canada. When Oaktree entered into the equity of Aecon Utilities, we were facing some pretty good demand tailwinds not shortly thereafter, telecom regulations, OEB regulations. A lot of the core markets where Aecon Utilities has historically been focused, were just faced with customer profile, reducing CapEx to redeploy to other jurisdictions based on regulatory challenges in those markets. The team did a very good job reimagining where they could put their resources.

In the context of a business that was very heavily focused on pipeline and telecom, what we saw in 2025 was the addition of the Xtreme group in Michigan provided very strong growth in the United States. Our execution on 3 major grid-scale battery projects, which is an internal partnership between industrial and utilities, all those got done with just extraordinary schedule and cost performance. Then we also had KPC and then Ainsworth added to the mix as well. Overall, though, the performance in a very tough environment where we operate wasn't bad. Wasn't bad at all. Like the team is. We're very proud of what they've been able to produce. Oaktree's a constructive partner.

They've got a very good read on aspects of the market in the United States, which when combined with our own intel and perspectives gives us a very good growth algorithm for that market. I mean, we're not going to give ourselves a letter grade, but we're happy with how it's worked out.

Great. I think one of the options that you would be contemplating further down the pipe is potentially turning this Aecon Utilities into an IPO. What are your thoughts there?

Our focus with the business is to continue to grow and build out the recurring revenue programs and expand its diversification from a market client and geographic perspective. First things first.

Okay. We saw obviously the recurring revenues types of utilities go up nicely year over year. What's behind the? There was a drop if you look at the other side of the recurring revenue pie. There's been a drop from about 50%. What's in that? What's in there as well?

So that would capture a variety of items ranging from aggregate sales, but most of the change that we've seen on that level relates primarily to some of the progressive design phases that were more active in 2024 that have effectively flipped into construction now. When we think about some of these collaborative projects that we're on and we're expanding kind of design and pre-construction resources where it's not tied to backlog, but it's kind of like an ongoing recognition of revenue, it falls into this bucket from a kind of disclosure perspective. Then as those projects have flipped into construction, it's now just moved into another part of the business. You know, it's less here, but more elsewhere.

And our next question comes from Krista Friesen of CIBC.

Congrats on the quarter. Obviously, a number of opportunities in front of you guys, whether it's utilities, nuclear, defense, build Canada. How are you feeling about your capacity? Maybe that's the labor force. To ask it a different way, what do you feel is your limiting factor when you're looking at all of these opportunities?

Obviously, construction, I mean, as I used to say, is about people and processes. Here, we have to be careful about people availability. At this stage, we have no issue. I remind you that we have extremely strong relation with the trades community and the trade unions. We have been able because it was part of our strategy and we had quite a good view about what was coming to discuss with them and to be ready. We do not have at this stage issue. For example, our workforce in the nuclear to finish Bruce and Pickering is extremely strong.

I mean, not only in Canada, I mean, in United States we have something like 1,500 workers in our nuclear sector, very much loyal to the company. I would tend to say, so far, so good. The battle on the staff and the executive, I mean, has always existed between company. It's an open market. The fact that Aecon, I mean, has a bright future, is helping us a lot to be able to attract, to train, to retain, a lot of new and former executives. At this stage, I will say I'm not that worried. We are extremely focused on the contract mode of our new project, of our backlog, and I think we have done quite a good exercise to de-risk.

You remember that we have inverted, I mean, our proportion of fixed lump sum costs and collaborative progressive variable costs. This is what I can say to you at this stage.

And maybe just thinking about defense specifically, do you feel that you have all the capabilities that you would like to have to execute on these defense projects? Or are there M&A opportunities to build out your expertise in that space?

I mean, for what we have at the moment, I mean, specifically Arctic Over-the-Horizon Radar Program, I mean, we are ready. We are ready. I mean, It was a target, and we have been preparing this extremely carefully. Obviously, you have heard that there is going to be 4 new bases, I mean, for aircraft in the northern territories. We're not going to take and win those 4 job. We don't want to. I mean, we are extremely careful. We are not looking at M&A to be able to execute those jobs.

And our next question comes from Maxim Sytchev of NBCM.

Jean-Louis, maybe, first question for you. I mean, nuclear right now is 30% of the business, and given the visibility of all the new build stuff that's coming up, and I mean, obviously the construction revenue sort of attached to it, is it conceivable we could be driving like maybe close to half of revenue in 5 to 7 years from nuclear for Aecon? Is that too aggressive of a potential assumption?

I think it's too aggressive, Maxim we just have to realize when we speak about new build and new technology, for example, or upgraded reactors, I mean, it takes quite a lot of time to take them from definition or planning phase toward construction where the bulk of the revenue is. This will take time, and that's good. That's good for us. I think that the 50% is too much aggressive. This being said, I come back to the fact that we want to be balanced. We want to be balanced because, I mean, we don't have in hand the control of all the parameters. We think we have a good mix at the moment. We worked a lot to modify it. It may grow, I mean, on the nuclear side, but not at up to the level you have been citing.

And then just to layer on top of it, all other sectors are also growing, right? And so if we were in a dynamic where we only had one shining star in the constellation, it probably wouldn't be a crazy assumption. The fact that all five of our sectors in the construction segment are very well-positioned, I think reduces that impact quite materially.

Yes. Okay. That's fair. And then quickly just in terms of potential M&A in the U.S., I mean, I presume anything in the utilities power space still commands pretty lofty multiples. I'm just wondering what are your thoughts there and what are you seeing on the ground while obviously benefiting from your own multiple expansion? Any comments would be great.

Sure. Multiples are strong and it's a reflection of the dynamic in that market. It's very clear the people who have the ability to service utilities are doing quite well now in the context of the CapEx budgets that the utilities need in order to keep pace with the demand profile. You know, part of that is clearly tied to compute consumption, whether it's for AI or kind of Bitcoin mining or whatever it is that is running through those server farms. Part of it's also reindustrialization, which I think we shouldn't lose track of. You know, the administration's policies are focused on onshoring a lot of that productive capacity, and that just consumes a ton of energy as well. Yes, the multiples are expanding.

Yes, it's creating a acquisition. We need to be very specific with what we want to target. We have very particular parameters and ways that we approach it. You know, we generally don't want to find ourselves in a situation where we're bidding for businesses that are mercenary or private equity rollovers. Like, it just. This is a challenging dynamic. We need to have businesses that will be additive to Aecon, from a not just revenue and EBITDA and earnings perspective, but they need to be additive from a capability standpoint, safety standpoint, and team standpoint. Like, our job is to find the way.

If you look at the average multiples that we've, we pay for M&A, over the last dozen acquisitions that the company's done, they tend to be appropriate for what we trade at the Aecon level. Our job is to thread the needle and finesse that. Like, that's why, if people want to go pay whatever the multiple that Quant is trading at, they can easily go do that. If they want to find a better way of doing it, that's our job.

I'm showing no further questions at this time. I'd like to turn it back to Adam Borgatti for closing remarks.

Thanks very much, and I appreciate everyone's attention and interest. We're available for follow-up calls at any time. I wish you a great rest of you speak with you soon.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

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" Stifel Nicolaus Canada Inc., Research Division

" Canaccord Genuity Corp., Research Division

" Raymond James Ltd., Research Division

" RBC Capital Markets, Research Division

" Desjardins Securities Inc., Research Division

" CIBC Capital Markets, Research Division

" TD Cowen, Research Division

" National Bank Financial, Inc., Research Division

Good day, and thank you for standing by. Welcome to the Q3 2025 Aecon Group, Inc. Earnings Conference Call. [Operator Instructions] 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, SVP, Corporate Development and Investor Relations.

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; Jerome Julier, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President of Finance. 

Our earnings announcement was released yesterday evening, and we 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 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 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 Jerome.

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 Slides 16 through 18 in the conference call presentation. Turning to Slide 3. 

On a reported basis, revenue for the 3 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, and 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, as adjusted revenue for the 3 months ended September 30, 2025, of $1.5 billion compared to $1.2 billion in the same period in 2024, and 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 of $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 lag 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 U.S. associated with the Bodell 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 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 in 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 and 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, and 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 3 months ended September 30, 2025, of $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 Concessions segment of $15 million in the quarter, compared to $22 million last year, and 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 projects and divestitures to provide insight into the underlying performance of the business. On an as-adjusted basis, revenue for the trailing 12-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 12-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 12-month period, representing a 6.3% margin. As adjusted EBITDA margin was impacted by lower gross profit in the civil sector, driven by weaker performance on projects in the Western region and Urban Transportation Solutions, from lower gross profit on mass transit projects that are nearing completion, had 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 and equivalents of $21 million, which excludes the $370 million of cash representing Aecon's proportionate share held in joint operations. In addition, on September 30, 2025, 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 to normal course issuer bid or NCIB in the quarter, and the Toronto Stock Exchange approved a renewal of Aecon's NCIB for an additional year.

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

Thank you, Jerome. Turning to Slide 9. Aecon continues to build resiliency through a balanced and diversified work portfolio. Over the trailing 12-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 and 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 4 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 4 reactors modules and will be located adjacent to Energy Northwest 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.

3/4 of Aecon's record backlog at September 30 is on 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 12-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 12 months 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 Clochard 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 structure.

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 '25, 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 RFD 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 towards 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. The Eglinton Crosstown LRT officially began its RLD phase in October, and we are continuing to work towards project completion in 2025 alongside our client and the operator. With that, on the remaining 3 legacy projects, 2 are currently expected to be substantially complete by the end of 2025, and the final project is expected to be construction complete before the end [indiscernible], 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 3 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 3 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 10.

Aecon recently completed 2 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 2 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 transaction 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.

[Operator Instructions]. Our first question comes from Ian Gillies of Stifel.

I was hoping you guys could perhaps 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?

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 6 Unit 3. And we have begun work in Pickering, I mean, the 4 units 5, 6, 7, 8.

In addition, in Canada, we are part of the small modular reactor alliance with OPG. Interesting to know all the refurbishment of CANDU reactors. This SMR is GE Hitachi reactor. In 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 reactor, high-temperature gas cool with pebbles. It's for the first set of 80-megawatt reaction with ex-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 U.S. related with our nuclear sector. It's not new. You remember that in -- at the end of 2018, I mean, we acquired a small company named Wachs, now Aecon-Wachs. And we have been working in the past to fabricate modules for the AP1000 reactor.

And another proves that, as you say, Ian, we are technology-agnostic Westinghouse. So you have heard the recent announcements in U.S. about the Westinghouse, the U.S. government, and we are very familiar with the AP1000 due to the model we have been fabricating in the past. We have a cooperation agreement with Westinghouse covering all countries about cost estimation, planning, development, fabrication support. So we are very much plugged in to with Westinghouse. So this is where we are at the moment. It's a very dynamic market. As usually, we go prudently, but steadily.

Your next question comes from Yuri Lynk of Canaccord Genuity Corp.

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?

Yes. It's Jerome here. So the Western Civil, 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, but we still have elements of fixed price in our business. And when those work well, they work well. And then when those work poorly, they can have a declining presence on our margin profile.

And so these -- 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. And we've deployed teams to support and improve schedule safety and financial performance, like we're ending the near -- we're near the end of the completion on these things, right? So our hope is we'll be able to stop talking about the impact that's having on the overall margin profile and then hopefully kind of the rest of the decline that we've seen in the construction as adjusted EBITDA margin on a go-forward basis, like we're almost there.

But until they're done, they're not fully done. But these ones would not be part of that set. This is like just more traditional work that is just not being executed to the level that we're happy with.

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

Yes, Yuri, you're right. I mean those are rather ancient projects, almost all completed now. And the bidding structure was under a lump sum. So this is where we are with those projects. As Jerome said, I mean, we're not very happy or not happy at all with some phases of the execution, but it's just getting done. As I've noticed during a few times, I mean, there's not such a word that everything lump sum is bad and everything progressive is good. 

We have other lump sum jobs that give regular ramp-ups that are progressing. So just have to be more and more careful about any project, and we have the organization now to do it.

Okay. And 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 '26, 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 kind of the puts and takes on the underlying profitability of the Construction segment?

Tricky one, because as you know, we don't provide guidance. Maybe I'll position it like this. Part of the change that we've seen in the margin profile stems from 3 specific factors. So 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 that will 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. And then now we're in the execution phase. And so we're booking a ton more revenue, right? Like we don't want to lose the story here, which is when you have 20% or 25% revenue growth, like that's not a bad thing for us, like we're quite proud of what the teams have done here, especially in the context of effectively flat construction market in Canada overall. But the key thing here is that what we're executing today is just going to be different type of work we're executing in the prior period. 

And also, what we're executing today in general is lower risk. And so we're 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. So that doesn't answer your question at all, but that gives context to this, which is also not going to answer your question. But the view is we'd like to arrest the decline in the margin profile and then start bending the curve upwards in 2026. Like that's obviously a key objective for us. 

We think we have the programs to execute against that, but we got to get through the back half of the year here, and we got to close out these projects can be more definitive on it. But 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? 

Yes. I mean look, this quarter was the toughest of all comps, right? Last year was a stellar quarter, and we hope we can get back to these levels. Last year was, I think, like an okay quarter. So I think we'll just have to work at it.

Our next question comes from Frederic Bastien of Raymond James.

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 COO?

So I'm very happy to have Thomas as a COO, Chief Operating Officer. I've been knowing Thomas for the last 20 years. I've been working with him at VINCI. I've been working with him at Eiffage and now at Aecon; he has always delivered above the target at 50. 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 the time to have a Chief Operating Officer at Aecon. And because I'm working with most of my peers and sometimes competitors' teams, I can tell you that I really think we have one of the strongest executive teams in the market at the moment. Reciate.

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 a little bit of just construction accounting, we're in the opening phases of several large projects that were executed on collaborative models. So I'm thinking the Drington new nuclear project, I'm thinking of the Scarborough project, and other large projects, things like Surging stations. 

And on that basis, when you're opening up a project, you tend to book with full contingency baked into your cost profile. And so the natural cadence, the way it should work in the 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 and then the margin profile ought to improve as you execute well through the back half of it.

So I think part of it is Western Civil, part of the type of work we're doing. Part of it is just the phase that we're in today, and all those combined have resulted in what you've identified as a lack of operating leverage. But I think if you kind of unpack it, you see there's different components to it, some of which are -- some will all resolve as time passes and some will be there in a more permanent mixture. Your next question is what's the various weighting of each component, and I'm not going to give you that.

No, I didn't ask that. But 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.

No. I mean they are not nuclear. Nuclear is a very special word, sorry, Frederic, and 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 companies. As I said, I mean, very complementary. Bodell may be a little more on project management organization, and Trinity with a 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, but they will not be mixed with our nuclear group, which is based in Charlotte.

Our next question comes from Sabahat Khan of RBC.

Just a bigger picture question around kind of 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 number 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?

I'll take this one. Yes, nuclear is growing, and it is getting stronger. The figures you are putting in your question are the right one. It's strong, but remember that part of our core strategy is to have our sectors balanced. I mean we all know that construction is about cycle. And so we are balanced. What issue is that Aecon has dramatically changed, I mean, during the last seven years because I arrived in 2018. I mean we're a company something like EUR 3 billion revenue, more than 70% in civil and pipeline with a backlog around EUR 4.5 billion. This backlog being more than 70% on fixed price. We are now a company that is getting around the EUR 5 billion of revenue, more than 50% related with power and more than 70% on non-fixed price. So this has changed. The wave, I would say, the major trend in construction in the market is related with power. And Aecon has perfectly with agility being able to adapt to serve this market. So the demand, the future demand is huge in power. In generation and in transmission and distribution.

So, and generation, everybody is speaking about AI data center, but it's not only AI data centers. I mean you have also a lot of conventional data centers, but it's also growing in transportation. I mean, public transportation, private transportation. It's growing, I mean, in buildings. I mean, 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. So you have probably noticed that the [indiscernible] change from sustainability to energy transition and then to electricity addition. I mean 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 and the age.

I mean they are at the end of life or have already passed. So there's a huge work to do there, and we are perfectly positioned for that.

And then 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?

It's Adam here. Yes, for sure, the U.S. Virgin Islands Airport redevelopment projects are squarely in that camp. 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. So 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. So there's always a few things on the go there.

And then 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.

Yes. It's just a slide down in some of the progressive design phases where that's more of like a service model and then now we've just moved that moved into construction in kind of like the more traditional contracted sets. So 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. So we're feeling good about the recurring revenue programs. Just as a reminder, none of that -- almost none of that stuff touches our backlog, right? So it's book and burn as we go, and underpinned by MSA.

So it's like it's a good business. It's a growing business. And as Jean-Louis 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.

Our next question comes from Benoit Poirier of Desjardins.

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 the sovereignty projects.

I mean it's a little more than 100 billion during the next 5 years. So we cannot dream. I mean, it's not going to be 5 years. It may be 10 years or 15 years. But even with this, I mean, those are very big amount and infrastructure, I mean, where Aecon is strong.

As I told you before, I mean, the power sector is also going very strong. Are we ready for this? I mean, yes, we are because this is part of our job at the executive level to recruit train, to certify, I mean, internally our people, or to make acquisition. I mean it's not -- I hope it was not a surprise for you when we invested last year in United. I mean, because with United, we now have a grip on a group of highly professional engineers related with power.

The point that could have been of concern was the nuclear in Canada. and OPG has been extremely smart, I mean, to [indiscernible] not too early, not too late. I would say 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, on budget.

So I would say those major refurbishment will require a lot of people. It's going to be a smooth translation of our skilled people from Darlington to [indiscernible] for the rest, I mean, 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 evolving in the next few years? And 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 2 going forward?

It was a decision and a commitment, I mean, to our shareholders. I mean, in 2019, to really shift the profile of Aecon in terms of fixed, non-fixed. So we inverse more or less, I mean, where we were 35% non-fixed to 65% non-fixed.

This being said, I repeat, there's not such a word where everything fixed is bad and everything progresses is good. I mean -- so it will probably stay around this. But in some occasions, I mean, 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.

So 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. I mean we still have quite a number of progressive design-build, I mean, either in development phase or in execution.

There are 2 we don't speak that much about, which is the Red River wastewater plant in Winnipeg, or in the Buffalo, I mean near Saskatoon. Those are progressive job, I mean, under development and construction phase. So it's more or less the trend for us

Our next question comes from Krista Friesen of CIBC.

Maybe just a 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?

Yes. I mean, look, we should be considering it --- both of those businesses have margin profiles that reflect the competitive position that we hold in the market, the investment that's required.

I remember, utilities tends to have a higher margin profile because there's a fairly significant investment in equipment required, think bucket trucks, directional drill, like 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 so the margin profile needs to reflect it. So 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. So the industrial team does extraordinary work, the 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.

So I wouldn't say like this is one side of the house will do kind of like an exceptionally high number, another side does something much more poorly. I think it's just more variance around the mean that we're thinking about here. But on balance, the sectors that are growing most rapidly in our view are ones that also come with strong margins.

And we have a return on capital employed model where we allocate capital to the groups that perform best. And so I think it's on us to make sure that we continue to feed the beast where it's performing best.

And then just on the nuclear business, specifically in the U.S., as you think out the next couple of 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.?

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 and teams that we have been able to attract at Aecon that we were used to work together, that are perfectly known by the big utilities. So 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 trends of the Group, I mean, say, Kiewit, and 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.

Your next question comes from Michael Tupholme of  TD Cowen.

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.

Basically, Mike, as I used to say to my team, there's no 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 team. And for example, if we speak about the major component refurbishment, you will probably remember that everything was stopped in the U.S. during COVID, and it's just starting now. But we have a lot of lessons learned, a lot of capacity from Canada that we can also push there. So this gives us definitely a kind of competitive advantage because we have been doing this refurbishment, I mean, for the last 7 years now, and with a lot of success. 

In new build, as I've already said, I mean, there's no way we're going to go alone in new build in U.S., and this is why this partnership, this cas partnership, I mean, is quite good for us. So yes, it is competitive. But there is a high demand, I mean, from the utilities for new work and refurbishment work. So we are happy to have grown during the last years and now to be ready for the pattern.

And then, Jean, 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?

No. I mean, there are Aecon employees. I mean, Energy Northwest, I mean, has been disclosed last week. We are just beginning to ramp up there. And 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. 

Part of it is going to be engineers with United, part of it is going to be full-time staff, part of it is going to be craft labor, right? The bigger part being obviously the craft labor and specialized component.

Just -- and I guess what I was hoping to understand in addition to clarifying that was, how does that compare to the similar number of people or comparable number of people you'd have in Canada right now?

It's about 1/3. 1/3 of the headcount is based in the United States.

And then just 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. And 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 you expect? Any sort of additional detail you can provide for us on that front?

Yes, I'll tackle that one. That's it's based on the backlog that we have in front of us, right? -- We provide a breakdown of the overall backlog in our materials. And just on the kind of rough facts of $3.7 billion in the next 12 months of hard secured backlog, roughly $1 billion a year in addition on recurring revenue. And there's obviously significant opportunities over and above that. And so I think just our perspective, just backlog secure addition, if we have change orders under negotiation, or [Indiscernible]. We have we won't people understand are we basically cresting and then going to slide back down or we built enough resiliency in the enterprise and invested to try to continue. And I think it's really the latter.

[Operator Instructions] Our next question comes from Maxim Sytchev of NBCCM.

Jean-Louis, 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 sort of the upside/downside handicap on the execution stage of these very large projects?

You are speaking about construction in general, not nuclear.

Nuclear, specifically, that'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. So 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 2 years. At the end of the development phase, you agree with your client on a target, then you have a system of dead band, but then you have pain share and gain share. We limit the pain share. I mean we don't want this to be open-ended. I mean, obviously, so that the margin, I mean, has a floor in case there is a pain. 

So all this makes it more, I would say, a more predictable and obviously much less risky market. But as I tend to say, too, I mean, no free lunch. I mean we are not the only one trying to offer our capacity. What issue is that we have begun to run probably earlier than anybody else in North America.

And sorry, and the floor would still imply a positive EBITDA margin? Or does it crest kind of below 0?

No. I mean it's not going to be below 0. I mean the floor is positive. I mean it's positive. I mean this is the end of the paint share. What I say is that we have usually the paint share, we don't accept paint shares that are opening just in case.

Of course. Makes sense. And then just a couple of quick ones for Jerome, if I may. So I mean, on legacy fixed price projects, so we already booked kind of $125 million based on sort of the envelope you telegraphed. So does it mean that we're sort of done in terms of taking kind of the mark-to-market? Or is there still, based on your prepared remarks, some potential spillover effect depending on how these projects land? I just want to clarify the language exactly.

Yes, there's still risk, there is the short answer. But I'll also note that it took a question before we got to the legacy project. So it feels like we're starting to turn the page. We're -- so look, Finch, as mentioned, Finch successfully completed RSD, Edmintons being worked on, another one -- the other project we have construction completion this year, like 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. And so I think what we're trying to effectively do is really starting to narrow the outcomes. 

But you're right to note that we've effectively -- we're at 124, 125 now, and there's still additional risk associated with it. So -- we don't want to say we're done because I don't think that's a fair representation, right? If we knew we had more now, we just take it, but things can change. So we just got to work through it, and we are working through it.

And then 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 like Q4 and maybe 2026, if you can provide any, I guess, parameters there, that would be super helpful.

Yes. So on the concessions front, a couple of things. One is the business in prior periods was supported by some revenue programs associated with the actual construction and management fees being on the legacy projects. As that falls away, I think we'll enter into a more normalized environment. So we're now kind of trending down to that level. There's probably more to go, and then there'll be a view to trying to stabilize that out. And so we're basically replacing these management fees that are being charged with which is more normal O&M style programs. So that stabilizes out. The way the future airport additions could work, that would obviously be, at some point, EBITDA additive to the program, but we likely need to get to the finalization of commercial terms on that USC&F project to understand the quantum and when that would realize. 

And then as Adam mentioned, part of our capital allocation model is we do look at additional opportunities within the concessions platform. We take kind of this -- the way our Head of Concessions describe it economics view. And so we try to understand the impact from concessions on a pure returns basis, and it needs to meet our hurdle rates. And then 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. So it's a broad picture. But as you noted, the downturn is likely to continue just as these legacy projects roll off.

This concludes the question. [Indiscernible] SVP of Corporate Development and Investor Relations for closing remarks.

Thanks very much, Corinne, and I 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.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.