Aecon Group Q2 Earnings Call Highlights

Aecon Group TSE: ARE reported record quarterly revenue and a sharp increase in adjusted EBITDA for the second quarter of 2026, while reaffirming its expectation for double-digit revenue growth this year. Revenue rose 25% from a year earlier to a company-record CAD 1.6 billion, with approximately 80% of the increase generated organically, Senior Vice President of Corporate Development and Investor Relations Adam Borgatti said. Adjusted EBITDA doubled to CAD 82 million from CAD 41 million in the prior-year period, while operating profit increased to CAD 36 million from CAD 2 million.

The company said improved construction margins, particularly in urban transportation solutions and civil operations, helped drive the earnings improvement. Construction segment adjusted EBITDA reached CAD 90 million, up from CAD 40 million a year earlier, and the segment’s adjusted EBITDA margin increased to 5.5% from 3.1%. Utilities generated the largest gain, with revenue rising CAD 138 million on higher volumes of electrical, gas and telecommunications work in Canada and the United States. The increase also reflected contributions from KPC and ARC, acquisitions completed during the first quarter. Urban transportation solutions revenue increased CAD 93 million, supported by subway and rail work as well as closeout activity on Ontario light rail transit projects that entered service in 2025. Nuclear operations revenue rose CAD 80 million as refurbishment, decommissioning, new-build and engineering-services activity expanded at North American generating stations. Civil revenue increased CAD 22 million, primarily due to work on the civil components of power and rail projects, foundations work and international major projects. Concessions adjusted EBITDA declined to CAD 11 million from CAD 16 million in the prior-year quarter, reflecting lower management and development fees from concession projects that reached substantial completion in 2025. Improved operating results at Skyport in Bermuda partly offset the decrease. Aecon said the book value of its concessions portfolio exceeded CAD 250 million at quarter-end.

Aecon reported a diluted loss per share of CAD 1.58 for the quarter, primarily due to a CAD 128 million fair-value adjustment related to its agreement to purchase Oaktree Capital’s convertible preferred equity investment in Aecon Utilities. The adjustment increased the carrying value of the preferred shares to the agreed purchase price of CAD 320 million. Excluding that adjustment, adjusted diluted earnings per share were CAD 0.33, compared with an adjusted loss per share of CAD 0.10 in the second quarter of 2025. The CAD 320 million purchase price implies a CAD 1.2 billion equity value and CAD 1.5 billion enterprise value for Aecon Utilities, according to the company. Julier said the transaction will give Aecon full economic and strategic control of the utilities platform while simplifying its ownership structure. Aecon Utilities generates more than CAD 1.2 billion in pro forma annual revenue, with more than 70% of revenue coming from recurring long-term master service agreements, Julier said. Electrical infrastructure has grown from about one-quarter of the business’s revenue to nearly half, while U.S. operations now account for 25% of revenue. The company also said legacy projects reduced gross profit by CAD 4.5 million in the quarter. Over the trailing 12 months, the negative impact from those projects was CAD 36 million.

Aecon ended the quarter with CAD 10.5 billion in backlog, compared with CAD 10.7 billion a year ea...