This article first appeared on GuruFocus .
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Revenue:Record second-quarter revenue of $1.6 billion, up 25% year-over-year, with approximately 80% of growth organically generated.
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Adjusted EBITDA:$82 million, doubled from $41 million in the same period last year.
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Operating Profit:$36 million, compared to $2 million in Q2 2025.
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Gross Profit:$78 million, higher than the same period in 2025.
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Diluted Loss Per Share:$1.58, driven by a $128 million fair value adjustment on Aecon Utilities preferred shares.
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Adjusted Diluted EPS:$0.33, improved from an adjusted diluted loss per share of $0.10 in Q2 2025.
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Backlog:$10.5 billion at June 30, 2026, compared to $10.7 billion at the same time last year.
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New Contract Awards:$1.3 billion booked in the quarter and $2.7 billion year-to-date.
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Construction Segment Revenue:$1.6 billion, up 26% year-over-year, with increases across all sectors.
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Construction Segment Adjusted EBITDA:$90 million, with a margin of 5.5% compared to 3.1% in 2025.
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Concessions Adjusted EBITDA:$11 million, down from $16 million in the prior year.
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Core Cash and Cash Equivalents:$129 million at June 30, 2026, excluding $500 million of cash held in joint operations.
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Net Debt:$672 million at June 30, 2026, including the $320 million preferred share repayment agreement.
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Free Cash Flow:$301 million in the trailing 12-month period ending June 2026, compared to negative $10 million in the prior year period.
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Dividend:Quarterly dividend of $19.25 per share approved, annualized at $0.77 per share.
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Legacy Projects Impact:Negative gross profit of $4.5 million in the quarter and $36 million on a trailing 12-month basis.
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Recurring Revenue:Trailing 12-month recurring revenue over $1 billion, with utility services recurring revenue increasing 30% to $868 million.
Release Date: July 31, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record Q2 revenue of $1.6 billion, up 25% year-over-year, with 80% organic growth.
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Adjusted EBITDA doubled to $82 million, driven by improved Construction segment margins.
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Backlog remains strong at $10.5 billion, with a diversified mix of long-term projects and a healthy pipeline.
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Successful completion and opening of the Gordie Howe International Bridge, a major milestone.
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Strategic acquisition of Oaktree's preferred equity in Aecon Utilities, simplifying ownership and enhancing financial flexibility.
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Strong free cash flow generation of $301 million in the trailing twelve months, a significant improvement.
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Positive outlook with expectations for double-digit revenue growth in 2026 and further growth in 2027.
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Growing recurring revenue from utility services, up 30% year-over-year to $868 million.
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Secured major new projects like the Greenlight Electricity Center and Roberts Bank Terminal 2, aligning with strategic focus areas.
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Improved risk profile with a shift towards collaborative and progressive delivery models.
Negative Points
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Diluted loss per share of $1.58 due to a $128 million fair value adjustment on preferred shares.
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Negative gross profit of $4.5 million from legacy projects in the quarter, with a trailing twelve-month impact of $36 million.
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Concessions adjusted EBITDA declined to $11 million from $16 million, due to lower management fees.
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Net debt increased to $672 million, including the $320 million preferred share repayment agreement.
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Higher MG&A costs to support growth and investments in new ERP systems.
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Lower gross profit margin in industrial and nuclear operations.
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Potential risks from tariffs and fuel price volatility, which could impact operating costs.
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Labor availability for management and staff remains a constant challenge, requiring ongoing investment in training and recruitment.
Q & A Highlights
Q: Can you provide an update on the timeline and preparation for the larger "nation-building" projects, including staffing and regional readiness? A: Jean Servranckx (President and CEO) explained that most of these projects are progressive design-build or collaborative models, beginning with a development phase of 12 to 24 months. This provides increasing visibility into execution timelines, scope, and budgets. He emphasized a deliberate balancing tactic to avoid concentrating projects in the same geography, sector, or timeframe, ensuring Aecon has the capacity to execute them perfectly.
Q: What is your confidence in the margin progression through H2 2026, and can you provide directional commentary on margins for 2027? A: Jerome Julier (CFO) stated that the risk profile of the work is improving, with only 7% of trailing 12-month work on non-fixed price contracts. The adjusted Construction margin, excluding legacy projects, has stabilized at 6% on a trailing 12-month basis for three consecutive quarters. He noted that margins are expected to improve gradually, as the benefits of early-stage nuclear and urban transportation programs will accrue later in their lifecycles. For 2027, he declined to provide specific guidance but indicated the direction of travel is consistent with 2026: stabilization followed by improvement.
Q: Regarding the Greenlight Electricity Center project, can you discuss the risk profile and your comfort level with this EPC (fixed-price) contract? A: Jean Servranckx (CEO) detailed that power generation is a strategic focus, and this project fills a gap between nuclear and renewable energy. He highlighted that Aecon acquired United, a US specialist in power generation EPC, and partnered with Tecnicas Reunidas, which has built over 60 similar projects. The project is located in Edmonton, close to Aecon's industrial base, and the client, Pembina, is well-known to them. The output is secured by a power purchase agreement with Meta, and most long-lead equipment has been ordered with warranties supplied by the owner. He concluded that Aecon has patiently built the capacity to execute this project securely.
Q: How are you thinking about scaling your workforce to meet expected demand, and what risks do you see around labor availability? A: Jean Servranckx (CEO) distinguished between trades and management staff. He noted no current shortages of trades, citing long-term agreements with major unions and strong geographical presence. For staff and management, he acknowledged it is a "constant fight," mitigated through initiatives like Aecon University and a project management academy. He emphasized that ensuring capacity to execute the growing backlog is one of his most important priorities.
Q: Can you provide more color on the pipeline of opportunities for the Concessions segment? A: Jerome Julier (CFO) highlighted the successful securing of the Simcoe Battery Energy Storage project, building on Aecon's market-leading position in battery storage in Ontario. He mentioned ongoing work on the US Virgin Islands airports and the development of a network asset for a third-party client, where Concessions will own the asset and generate long-term income. He stated the Concessions platform is aligned with the long-term vision of growing and diversifying cash-generating assets, with the $0.25 billion book value of equity being worth more than that.
Q: What is the expected CapEx going forward as you grow Construction revenue? A: Jerome Julier (CFO) explained that capital is increasing in line with revenue growth, but at a slightly lower rate, demonstrating operational discipline. He emphasized that Aecon is selective with CapEx deployment, requiring minimum return thresholds for equipment, machinery, and facilities. He cautioned against buying equipment just to boost EBITDA, as it needs maintenance and depreciation.
Q: Are tariffs and fuel costs material risks currently? A: Jerome Julier (CFO) acknowledged that tariffs and fuel create operating volatility, but Aecon manages this through contractual pricing, purchasing approaches, and hedging programs. He noted that a significant portion of the business is local, using Canadian supply chains and labor in Canada and US resources in the US, which reduces exposure. International operations have slightly more exposure, but this is contemplated in bid structures.
Q: Can you provide an update on the nuclear business, specifically new build opportunities like SMRs and large-scale reactors? A: Jean Servranckx (CEO) stated that nuclear revenue is around CAD1.7 billion, with 70-75% in Canada and 25-30% in the US. In Canada, they are executing major component replacements at Bruce and ramping up Pickering, with the Darlington SMR at 16% progress. In the US, the market is focused on life extension and extended power uprates for existing reactors, where Aecon is strengthening. He mentioned the Cascade project with X-energy is ramping up slowly, and highlighted Aecon's strength in fabrication and module assembly as a key future opportunity.
Q: How should we think about the revenue growth rate in H2 2026 and into 2027? A: Jerome Julier (CFO) explained the outlook was upgraded to double-digit growth due to the strong backlog of $10.5 billion, recurring revenue, and recent awards. He noted that roughly $4 billion of secured backlog is executable in the next 12 months, with two additional projects (Greenlight and Winnipeg Biosolids) to be added to backlog in Q3. He declined to give a specific number but suggested Street views on revenue were likely light, emphasizing Aecon's conservative approach to backlog reporting.
Q: Is the early-stage nature of major projects influencing the margin cadence, and what is the impact of the new ERP program on costs? A: Jerome Julier (CFO) confirmed that the Construction S-curve and early-stage programs have a small, not material, impact on margins. He clarified that procurement is not swinging the margin profile. Regarding the ERP program, he explained it is an investment in best-in-suite systems for project management, data governance, and AI to maintain a leading position. The costs are being adjusted out of EBITDA for comparability with US peers, who capitalize these costs under GAAP. He declined to provide guidance on the total program size but noted the quarterly spend is not material to Aecon.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
