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Aecon’s legacy projects drag down its second quarter, stock prices

TORONTO, Ont. — Aecon’s earnings are up, but its stock is down, thanks to two legacy projects weighing on the company’s operating budget.

The company released its second-quarter earnings report this week, with a reported net income of $28.2 million, finally moving them into the black after reporting losses in the first quarter of 2023 and in the same reporting period last year.

The company’s operating budget, however, showed a loss of $81.3 million, with two of their four fix-price legacy projects causing the loss. According to a report from The Canadian Press, RBC Dominion Securities analyst Sabahat Khan said the likely projects weighing on Aecon’s bottom line are the Gordie Howe Bridge project and Toronto’s Finch light-rail transit build.

The report affected investor confidence Thursday, causing the company’s stock to tumble 16 per cent, to close at $10.44 on the TSX, down $2.01.

“We are focused on closing out four challenging legacy projects while achieving solid execution on our other projects and selectively adding to backlog through a disciplined bidding approach,” said Jean-Louis Servranckx, Aecon’s President and Chief Executive Officer.

Adding to Aecon’s backlog helping its earnings, with a 15 per cent increase including $615 million linked to the Deerfoot Trail segment of Calgary’s Highway 2, and a piece of the contract to refurbish the reactors at the Bruce Nuclear Generating System worth $1 billion.

The company also sold off assets — its Ontario roadbuilding segment and two buildings — for a total of about $70 million, helping to bring its total revenue for the quarter to $1.17 billion, up from $1.12 billion in the same period last year.

Aecon’s next quarterly dividend of 18.5 cents per share will be paid on October 3 to shareholders of record as of September 22.