Aecon reports year-end 2022 results

Toronto, Ontario – February 28, 2023: Aecon Group Inc. (TSX: ARE) (“Aecon” or the “Company”) today reported results for the fourth quarter and year-end 2022 including record full year revenue of $4.7 billion and backlog of $6.3 billion as at December 31, 2022.

“Aecon achieved record revenue in 2022 and is confident in further revenue growth over the next few years supported by growing recurring revenue programs, the current level of backlog, the volume of new awards during 2022 and into early 2023, and ongoing demand for its services,” said Jean-Louis Servranckx, President and Chief Executive Officer, Aecon Group Inc. “With a strategic focus on clean energy and other projects linked to sustainability, Aecon believes it is positioned to harness the opportunities that are expected to come with the transition to a net zero economy through decarbonization.”

HIGHLIGHTS

All quarterly financial information contained in this news release is unaudited.

• Revenue for the year ended December 31, 2022 of $4,696 million was $719 million, or 18%, higher compared to 2021.
• Adjusted EBITDA(1)(2) of $219.2 million for the year ended December 31, 2022 (Adjusted EBITDA margin(3) of 4.7%) compared to Adjusted EBITDA of $238.9 million (Adjusted EBITDA margin of 6.0%) in 2021 and operating profit of $97.2 million (operating margin(4) of 2.1%) compared to operating profit of $118.8 million in 2021 (operating margin of 3.0%).
• Operating profit and Adjusted EBITDA in 2021 included a net positive impact related to the Canada Emergency Wage Subsidy (“CEWS”) of $31.9 million.
• Net profit of $30.4 million (diluted earnings per share of $0.47) for the year ended December 31, 2022 compared to net profit of $49.7 million (diluted earnings per share of $0.78) in 2021.
• Four large fixed price legacy projects being performed by joint ventures in which Aecon is a participant (see Section 5 “Recent Developments”, Section 10.2 “Contingencies” and Section 13 “Risk Factors” of the Company’s December 31, 2022 Management’s Discussion and Analysis (“MD&A”) which is available on the Company’s profile on SEDAR (www.sedar.com), are being negatively impacted due to additional costs for which the joint ventures assert that the owners are contractually responsible, including for, among other things, unforeseeable site conditions, third party delays, COVID-19, supply chain disruptions, and inflation related to labour and materials. In 2022, due to the factors discussed above that impacted these four fixed price legacy projects during the year, Aecon recognized an operating loss of $120.0 million related to these four projects.
• Reported backlog as at December 31, 2022 of $6,296 million compared to backlog of $6,198 million as at December 31, 2021. New contract awards of $4,795 million were booked in 2022 compared to $3,721 million in 2021, a 29% year-over-year increase.
• Aecon-EBC General Partnership, a consortium in which Aecon holds a 60% interest and is the lead partner, was awarded the first phase of a $245 million two-phase civil construction contract by BC Hydro for the John Hart Dam Seismic Upgrade project in British Columbia. Aecon’s share of the contract was added to its Construction segment backlog in the fourth quarter of 2022.
• Oneida Energy Storage Limited Partnership (“Oneida LP”), a consortium in which Aecon Concessions will be an approximately 10% equity partner upon financial close, executed an agreement with the Independent Electricity System Operator (IESO) for the Oneida Energy Storage Project to deliver a 250 megawatt / 1,000 megawatt-hour energy storage facility in Ontario, which would currently represent the largest battery storage project in Canada. Under the agreement, Aecon was awarded a $141 million Engineering, Procurement and Construction contract by Oneida LP.
• Also in the fourth quarter, Scarborough Transit Connect, a consortium in which Aecon holds a 50% interest and is the lead partner, executed an agreement with Metrolinx and Infrastructure Ontario to deliver the Scarborough Subway Extension Stations, Rail and Systems project in Ontario using a progressive design-build model. The contract begins with a collaborative development phase to finalize the scope, cost and schedule of various elements of the project over an 18-month period, with certain early works activities commencing during this phase. Assuming successful completion of the development phase, an implementation phase will commence under a target price contract. The full value of the contract will not be reflected in backlog until completion of the development phase.
• Subsequent to year-end a partnership in which Aecon is a participant executed a six-year alliance agreement with Ontario Power Generation to deliver North America’s first grid-scale Small Modular Reactor through the Darlington New Nuclear Project in Ontario.

CONSOLIDATED FINANCIAL HIGHLIGHTS⁽¹⁾

(1) This press release presents certain non-GAAP and supplementary financial measures, as well as non-GAAP ratios to assist readers in understanding the Company's performance (GAAP refers to Canadian Generally Accepted Accounting Principles). Further details on these measures and ratios are included in the “Non-GAAP and Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release.

(2) This is a non-GAAP financial measure. Refer to the “Non-GAAP and Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release for more information on each non-GAAP financial measure.

(3) This is a non-GAAP ratio. Refer to the “Non-GAAP and Supplementary Financial Measures” section of this press release for more information on each non-GAAP ratio.

(4) This is a supplementary financial measure. Refer to the “Non-GAAP and Supplementary Financial Measures” section of this press release for more information on each supplementary financial measure.

Revenue for the year ended December 31, 2022 of $4,696 million was $719 million, or 18%, higher compared to 2021. Revenue was higher in the Construction segment ($706 million) driven by higher revenue in civil ($412 million), utilities ($111 million), nuclear ($96 million), industrial ($78 million), and urban transportation solutions ($9 million). In the Concessions segment, revenue was $7 million higher in the year ended December 31, 2022 compared to the prior year primarily due to an increase in commercial flight operations at the Bermuda International Airport. Inter-segment revenue eliminations decreased by $6 million in the year ended December 31, 2022 compared to the prior year, due to lower revenue between the Concessions and Construction segments.

Operating profit of $97.2 million for the year ended December 31, 2022 decreased by $21.6 million compared to operating profit of $118.8 million in 2021. Operating profit in 2021 included net positive impacts from amounts related to CEWS of $31.9 million, recorded as cost recovery within gross profit in the Construction segment of $38.7 million and as an increase in marketing, general and administrative expense (“MG&A”) of $6.8 million.

Within operating profit, gross profit year-over-year was lower by $10.8 million. Excluding the year-over-year impact of CEWS on gross profit of $38.7 million, the favourable gross profit variance of $27.9 million occurred largely in the Construction segment, where gross profit increased by $22.5 million. This was primarily from higher volume in civil operations, and from higher volume and gross profit margin in utilities and nuclear operations partially offset by lower gross profit margin in industrial operations and lower gross profit in urban transportation solutions. Lower gross profit in urban transportation solutions was driven by negative gross profit on two light rail transit (“LRT”) projects in the year of $117.7 million compared to a negative gross profit on these two projects of $66.8 million in 2021. These two LRT projects are included in the four fixed price legacy projects discussed in Section 5 “Recent Developments”, Section 10.2 “Contingencies” and Section 13 “Risk Factors” in the Company’s December 31, 2022 MD&A. In the Concessions segment, gross profit in 2022 increased by $5.4 million primarily due to the Bermuda International Airport where airport operations continued to recover from the impacts of the COVID-19 pandemic on travel.

MG&A increased in 2022 by $14.1 million compared to 2021. The increase in MG&A was primarily due to higher personnel, consulting, and other discretionary costs driven by higher volume, partially offset by lower project pursuit and bid costs, as well as the year-over-year impact on MG&A from CEWS of $6.8 million noted in the preceding paragraphs. MG&A as a percentage of revenue decreased from 4.6% in 2021 to 4.2% in 2022.

Reported backlog as at December 31, 2022 of $6,296 million compares to backlog of $6,198 million as at December 31, 2021. New contract awards of $4,795 million were booked in 2022 compared to $3,721 million in 2021.

REPORTING SEGMENTS

Aecon reports its financial performance on the basis of two segments: Construction and Concessions, which are described in the Company’s December 31, 2022 MD&A.

CONSTRUCTION SEGMENT

(1) This is a non-GAAP financial measure. Refer to the “Non-GAAP And Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release for more information on each non-GAAP financial measure.

(2) This is a non-GAAP ratio. Refer to the “Non-GAAP And Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release for more information on each non-GAAP ratio.

(3) This is a supplementary financial measure. Refer to the “Non-GAAP And Supplementary Financial Measures” section of this press release for more information on each supplementary financial measure.

For the year ended December 31, 2022, revenue in the Construction segment of $4,621 million was $706 million, or 18%, higher than in 2021. The largest increase in revenue occurred in civil operations ($412 million) driven by an increase in major projects, roadbuilding construction, and foundations work. Revenue was also higher in utilities operations ($111 million) from an increase in telecommunications and high-voltage electrical transmission work, in nuclear operations ($96 million) driven by a higher volume of refurbishment work at nuclear generating stations located in both Ontario and the U.S., and in industrial operations ($78 million) driven by increased activity on mainline pipeline work in western Canada and an increased scope of work at mining and water treatment facilities. In addition, higher revenue in urban transportation solutions ($9 million) was primarily due to commencement of the development phase of a rail electrification project in Ontario.

Operating profit in the Construction segment of $120.9 million in 2022 decreased by $22.5 million compared to 2021. Construction segment operating profit in 2021 included a favourable operating profit impact related to the CEWS of $31.9 million. Excluding the impact of CEWS amounts reported in 2021, the remaining year-over-year operating profit variance was favourable by $9.4 million, resulting primarily from a volume driven increase in gross profit in civil operations, and from higher volume and gross profit margin in utilities and nuclear operations. These increases were also partially offset by lower gross profit margin in industrial operations, due to lower margin from pipeline projects, including Coastal GasLink (“CGL”), and an adverse year-over-year mix of conventional industrial projects in eastern Canada, and lower gross profit in urban transportation solutions. Lower gross profit in urban transportation solutions was driven by negative gross profit on two LRT projects in the year of $117.7 million compared to a negative gross profit on these two projects of $66.8 million in 2021. These two LRT projects are included in the four fixed price legacy projects discussed in Section 5 “Recent Developments”, Section 10.2 “Contingencies” and Section 13 “Risk Factors” in the Company’s December 31, 2022 MD&A.

Construction backlog as at December 31, 2022 was $6,197 million, which was $81 million higher than the same time last year. Backlog increased year-over-year in civil ($413 million), utilities ($149 million) and industrial operations ($108 million) but decreased in urban transportation solutions ($320 million) and nuclear operations ($269 million). New contract awards in 2022 totaled $4,702 million compared to $3,649 million in 2021. In 2022, Aecon was awarded a number of projects including the Kingstown Port Modernisation Project Works, Lot 1: Primary Cargo Port in Saint Vincent and the Grenadines, the Interstate-90 / State Road-18 to Deep Creek Interchange Improvements and Widening project near Snoqualmie, Washington, and two contracts for the Savannah River Nuclear Solutions (“SRNS”) Demolition and Removal and the SRNS Temporary HVAC projects in Aiken, South Carolina. In addition, a joint venture in which Aecon is a participant was awarded the contract for the Buffalo Pound Water Treatment Plant Renewal Project in Saskatchewan, and awards were also made to various partnerships in which Aecon is a participant including the contract for the Montréal-Trudeau International Airport REM Station project in Québec, as well as the Annacis Water Supply Tunnel project and the first phase of the John Hart Dam Seismic Upgrade project, both located in British Columbia.

CONCESSIONS SEGMENT

(1) This is a non-GAAP financial measure. Refer to the “Non-GAAP And Supplementary Financial Measures” and “Reconciliations and Calculations” sections of this press release for more information on each non-GAAP financial measure.

Aecon holds a 100% interest in Bermuda Skyport Corporation Limited (“Skyport”), the concessionaire responsible for the Bermuda airport’s operations, maintenance and commercial functions, and the entity that is managing and coordinating the overall delivery of the Bermuda International Airport Redevelopment Project over a 30-year concession term that commenced in 2017. On December 9, 2020, Skyport opened the new passenger terminal building at the L.F. Wade International Airport. Aecon’s participation in Skyport is consolidated and, as such, is accounted for in the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 by reflecting, line by line, the assets, liabilities, revenue and expenses of Skyport. However, Aecon’s concession participation in the Eglinton Crosstown LRT, Finch West LRT, Gordie Howe International Bridge, Waterloo LRT, and GO Expansion On-Corridor Works projects are joint ventures that are accounted for using the equity method.

For the year ended December 31, 2022, revenue in the Concessions segment of $76 million was $7 million higher than in 2021. Higher year-over-year revenue was primarily due to an increase in commercial flight operations at the Bermuda International Airport. Commercial flight operations in Bermuda continue to operate at a reduced volume due to COVID-19 compared to pre-pandemic levels but continued to recover in 2022 from the more severe impacts experienced in 2020 and 2021. In 2022, passenger traffic levels in Bermuda averaged 58% of 2019 pre-pandemic traffic compared to 33% in 2021.

Operating profit in the Concessions segment of $22.1 million for the year ended December 31, 2022 improved by $8.1 million compared to an operating profit of $14.0 million in 2021. The higher operating profit resulted primarily from an improvement in commercial flight operations at the Bermuda International Airport.

Except for Operations and Maintenance (“O&M”) activities under contract for the next five years and that can be readily quantified, Aecon does not include in its reported backlog expected revenue from concession agreements. As such, while Aecon expects future revenue from its concession assets, no concession backlog, other than from such O&M activities for the next five years, is reported.

DIVIDEND

Aecon’s next quarterly dividend of 18.5 cents per share will be paid on April 4, 2023 to shareholders of record at the close of business on March 24, 2023. Unless indicated otherwise, all common share dividends paid by Aecon to shareholders are designated as “eligible” dividends for the purpose of the Income Tax Act (Canada) and any similar provincial legislation.

OUTLOOK

Demand for Aecon’s services across Canada continues to be strong, particularly in smaller and medium sized projects, as evidenced by year-over-year revenue growth of 18% and higher new project awards of 31% in 2022. Revenue of $4.7 billion in 2022 represented a record level for Aecon. In addition, during 2022, a consortium in which Aecon is a participant was selected to deliver the long-term GO Expansion On-Corridor Works project in Ontario under a progressive design, build, operate and maintain contract model which begins with a two-year development phase leading into the main construction scope and a 25-year operations and maintenance component, while another consortium in which Aecon is a participant was selected as the development partner for the Scarborough Subway Extension Stations, Rail and Systems project in Ontario to be delivered using a progressive design-build model. None of the anticipated work from these two significant long-term projects is yet reflected in backlog. Aecon (including joint ventures in which Aecon is a participant) is also prequalified on a number of project bids due to be awarded during the next twelve months and has a pipeline of opportunities to further add to backlog over time. With backlog of $6.3 billion as at December 31, 2022 and recurring revenue programs continuing to see robust demand, driven by the utilities sector and ongoing recovery in airport traffic in Bermuda, Aecon believes it is positioned to achieve further revenue growth over the next few years.

While volatile global and Canadian economic conditions are impacting inflation, interest rates, and overall supply chain efficiency, these factors have stabilized to some extent and have largely been and will continue to be reflected in the pricing and commercial terms of the Company’s recent and prospective project awards and bids. However, certain ongoing joint venture projects that were bid some years ago have experienced impacts related, in part, to those factors, that will require satisfactory resolution of claims with the respective clients – see Section 5 “Recent Developments”, Section 10.2 “Contingencies” and Section 13 “Risk Factors” in the Company’s December 31, 2022 MD&A regarding the risk on four large fixed-price legacy projects entered into in 2018 or earlier by joint ventures in which Aecon is a participant.

In the Construction segment, with strong demand, growing recurring revenue programs, and diverse backlog in hand, Aecon is focused on achieving solid execution on its projects and selectively adding to backlog through a disciplined bidding approach that supports long-term margin improvement in this segment. In addition to the selection of consortiums in which Aecon is a participant for two large transit related projects in 2022 noted above, in early 2023, a partnership in which Aecon is a participant announced that it had executed a six-year alliance agreement with Ontario Power Generation to deliver North America’s first grid-scale Small Modular Reactor through the Darlington New Nuclear Project in Clarington, Ontario. In addition, Oneida LP, a consortium in which Aecon Concessions will be an approximately 10% equity partner upon financial close, executed an agreement with the Independent Electricity System Operator for the Oneida Energy Storage Project to deliver a 250 megawatt / 1,000 megawatt-hour energy storage facility near Nanticoke Ontario, with Aecon awarded a $141 million Engineering, Procurement and Construction contract by Oneida LP. All of these projects further demonstrate Aecon’s strategic focus in the industry with respect to projects linked to decarbonization, energy transition, and sustainability and represent more collaborative procurement models than have traditionally been used.

In the Concessions segment, in addition to expecting an ongoing recovery in travel through the Bermuda International Airport through 2023, there are a number of opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months, including projects with private sector clients that support a collective focus on sustainability and the transition to a net-zero economy. The GO Expansion On-Corridor Works project and the Oneida Energy Storage project noted above are examples of the role Aecon’s Concessions segment is playing in developing, operating and maintaining assets related to this transition.

As of December 31, 2022, Aecon had a committed revolving credit facility of $600 million, of which $121 million was drawn, and $3 million was utilized for letters of credit. On December 31, 2023, convertible debentures with a face value of $184 million will mature and the Company expects to repay these debentures at maturity or before. The Company has no other debt or working capital credit facility maturities in 2023, except equipment loans and leases in the normal course.

CONSOLIDATED RESULTS

The consolidated results for the three months and years ended December 31, 2022 and 2021 are available at the end of this news release.

BALANCE SHEET

CONFERENCE CALL

A conference call and live webcast has been scheduled for 10 a.m. (Eastern Time) on Wednesday, March 1, 2023. Participants should dial 1-833-950-0062 or 1-226-828-7575 at least 10 minutes prior to the conference time. The conference ID is 630945. An accompanying presentation of the fourth quarter and year-end 2022 financial results will be available after market close on February 28th, 2023 at www.aecon.com/investing.

A live webcast of the conference call will also be available at www.aecon.com/InvestorCalendar.

Participants should join the webcast at least 15 minutes prior to the conference time to register and install any necessary software. For those unable to attend the call, a replay will be available after 2 p.m. (Eastern Time) on March 1, 2023 at 1-866-813-9403 or 1-929-458-6194, or online until midnight on March 29, 2023. The access code is 542156. A replay of the webcast will also be available within 24 hours following the call.

AECON 2023 ANNUAL MEETING OF SHAREHOLDERS

Aecon’s Annual Meeting of Shareholders will be held on Tuesday, June 6, 2023. Additional details will be set out in the Notice of Annual Meeting of Shareholders and Management Information Circular which will be filed on SEDAR prior to the meeting.

ABOUT AECON

Aecon Group Inc. (TSX: ARE) is a national Canadian construction and infrastructure development company with global experience and is proud to be recognized as one of the Best 50 Corporate Citizens in Canada. Aecon delivers integrated solutions to private and public-sector clients through its Construction segment in the Civil, Urban Transportation, Nuclear, Utility and Industrial sectors, and provides project development, financing, investment and management services through its Concessions segment. Join our online community on Twitter, LinkedIn, Facebook, Instagram and TikTok @AeconGroupInc.

For further information:

Adam Borgatti
SVP, Corporate Development and Investor Relations
(416) 297-2600
ir@aecon.com

Nicole Court
Vice President, Corporate Affairs
(416) 297-2600
corpaffairs@aecon.com

NON-GAAP AND SUPPLEMENTARY FINANCIAL MEASURES

The press release presents certain non-GAAP and supplementary financial measures, as well as non-GAAP ratios to assist readers in understanding the Company’s performance (“GAAP” refers to Generally Accepted Accounting Principles under IFRS). These measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Throughout this press release, the following terms are used, which do not have a standardized meaning under GAAP.

Non-GAAP Financial Measures

A non-GAAP financial measure: (a) depicts the historical or expected future financial performance, financial position or cash flow of the Company; (b) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most comparable financial measure presented in the primary consolidated financial statements; (c) is not presented in the financial statements of the Company; and (d) is not a ratio.

Non-GAAP financial measures presented and discussed in this press release are as follows:

• “Adjusted EBITDA” represents operating profit (loss) adjusted to exclude depreciation and amortization, the gain (loss) on sale of assets and investments, and net income (loss) from projects accounted for using the equity method, but including “Equity Project EBITDA” from projects accounted for using the equity method (Refer to the “Reconciliations and Calculations” section of this press release for a quantitative reconciliation to the most comparable financial measure).
• “Equity Project EBITDA” represents Aecon’s proportionate share of the earnings or losses from projects accounted for using the equity method before depreciation and amortization, finance income, finance cost and income tax expense (recovery) (Refer to the “Reconciliations and Calculations” section of this press release for a quantitative reconciliation to the most comparable financial measure).

Management uses the above non-GAAP financial measures to analyze and evaluate operating performance. Aecon also believes the above financial measures are commonly used by the investment community for valuation purposes, and are useful complementary measures of profitability, and provide metrics useful in the construction industry. The most directly comparable measures calculated in accordance with GAAP are operating profit and profit (loss) attributable to shareholders.

Primary Financial Statements

Primary financial statement means any of the following: the consolidated balance sheets, the consolidated statements of income, the consolidated statements of comprehensive income, the consolidated statements of changes in equity, and the consolidated statements of cash flows.

Key financial measures presented in the primary financial statements of the Company and discussed in this press release are as follows:

• “Gross profit” represents revenue less direct costs and expenses. Not included in the calculation of gross profit are marketing, general and administrative expense (“MG&A”), depreciation and amortization, income (loss) from projects accounted for using the equity method, other income (loss), finance income, finance cost, income tax expense (recovery), and non-controlling interests.
• “Operating profit (loss)” represents the profit (loss) from operations, before finance income, finance cost, income tax expense (recovery), and non-controlling interests.

The above measures are presented in the Company’s consolidated statements of income and are not meant to be a substitute for other subtotals or totals presented in accordance with GAAP, but rather should be evaluated in conjunction with such GAAP measures.

• “Backlog” (Remaining Performance Obligations) means the total value of work that has not yet been completed that: (a) has a high certainty of being performed as a result of the existence of an executed contract or work order specifying job scope, value and timing; or (b) has been awarded to Aecon, as evidenced by an executed binding letter of intent or agreement, describing the general job scope, value and timing of such work, and where the finalization of a formal contract in respect of such work is reasonably assured. Operations and maintenance (“O&M”) activities are provided under contracts that can cover a period of up to 30 years. In order to provide information that is comparable to the backlog of other categories of activity, Aecon limits backlog for O&M activities to the earlier of the contract term and the next five years.

Remaining Performance Obligations, i.e. Backlog, is presented in the notes to the Company’s annual consolidated financial statements and is not meant to be a substitute for other amounts presented in accordance with IFRS, but rather should be evaluated in conjunction with such GAAP measures.

Non-GAAP Ratios

A non-GAAP ratio is a financial measure presented in the form of a ratio, fraction, percentage or similar representation, and that has a non-GAAP financial measure as one of its components and is not disclosed in the financial statements of the Company.

A non-GAAP ratio presented and discussed in this press release is as follows:

• “Adjusted EBITDA margin” represents Adjusted EBITDA as a percentage of revenue.

Management uses the above non-GAAP ratio to analyze and evaluate operating performance. The most directly comparable measures calculated in accordance with GAAP are gross profit margin and operating margin.

Supplementary Financial Measures

A supplementary financial measure: (a) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of the Company; (b) is not presented in the financial statements of the Company; (c) is not a non-GAAP financial measure; and (d) is not a non-GAAP ratio.

Key supplementary financial measures presented in this press release are as follows:

• “Gross profit margin” represents gross profit as a percentage of revenue.
• “Operating margin” represents operating profit (loss) as a percentage of revenue.
• “MG&A as a percent of revenue” represents marketing, general and administrative expense as a percentage of revenue.

RECONCILIATIONS AND CALCULATIONS

Set out below is the calculation of Adjusted EBITDA by segment for the three months and years ended December 31, 2022 and 2021:

(1) This is a non-GAAP financial measure. Refer to the “Non-GAAP and Supplementary Financial Measures” section in this press release for more information on each non-GAAP financial measure.

Set out below is the calculation of Equity Project EBITDA by segment for the three months and years ended December 31, 2022 and 2021:

(1) Refer to Note 12 “Projects Accounted for Using the Equity Method” in the Company’s audited consolidated financial statements for the year ended December 31, 2022.

(2) This is a non-GAAP financial measure. Refer to the “Non-GAAP and Supplementary Financial Measures” section in this press release for more information on each non-GAAP financial measure.

STATEMENT ON FORWARD-LOOKING INFORMATION

The information in this press release includes certain forward-looking statements which may constitute forward-looking information under applicable securities laws. These forward-looking statements are based on currently available competitive, financial and economic data and operating plans but are subject to risks and uncertainties. Forward-looking statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, ongoing objectives, strategies and outlook for Aecon, including statements regarding its strategic focus on clean energy and other projects linked to sustainability and the opportunities arising therefrom, expectations regarding ongoing recovery in travel through Bermuda International Airport in 2023, opportunities to add to the existing portfolio of Canadian and international concessions in the next 12 to 24 months, expectations regarding the repayment of the outstanding convertible debentures at or before maturity, expectations regarding the pipeline of opportunities available to Aecon, expectations regarding future revenue growth and expectations regarding the impact of the four fixed price legacy projects. Forward-looking statements may in some cases be identified by words such as "will," "plans," "believes," "expects," "anticipates," "estimates," "projects," "intends," “schedule,” “outlook,” “can,” "should" or the negative of these terms, or similar expressions.

In addition to events beyond Aecon's control, there are factors which could cause actual or future results, performance or achievements to differ materially from those expressed or inferred herein including, but not limited to: the risk of not being able to drive a higher margin mix of business by participating in more complex projects, achieving operational efficiencies and synergies, and improving margins; the risk of not being able to meet contractual schedules and other performance requirements on large, fixed priced contracts; the risk of not being able to meet its labour needs at reasonable costs; the risk of not being able to address any supply chain issues which may arise and pass on costs of supply increases to customers; the risk of not being able, through its joint ventures, to enter into implementation phases of certain projects following the successful completion of the relevant development phase; the risk of not being able to execute its strategy of building strong partnerships and alliances; the risk of not being able to execute its risk management strategy; the risk of not being able to grow backlog across the organization by winning major projects; the risk of not being able to maintain a number of open, recurring and repeat contracts; the risk of not being able to accurately assess the risks and opportunities related to its industry’s transition to a lower-carbon economy; the risk of not being able to oversee, and where appropriate, respond to known and unknown environmental and climate change-related risks, including the ability to recognize and adequately respond to climate change concerns or public, governmental and other stakeholders’ expectations on climate matters; the risk of not being able to meet its commitment to meeting its greenhouse gas emissions reduction targets; the risks associated with the strategy of differentiating its service offerings in key end markets; the risks associated with undertaking initiatives to train employees; the risks associated with the seasonal nature of its business; the risks associated with being able to participate in large projects; the risks associated with legal proceedings to which it is a party; the ability to successfully respond to shareholder activism; and risks associated with the COVID-19 pandemic and future pandemics and Aecon’s ability to respond to and implement measures to mitigate the impact of COVID-19 and future pandemics.

These forward-looking statements are based on a variety of factors and assumptions including, but not limited to that: none of the risks identified above materialize, there are no unforeseen changes to economic and market conditions and no significant events occur outside the ordinary course of business. These assumptions are based on information currently available to Aecon, including information obtained from third-party sources. While the Company believes that such third-party sources are reliable sources of information, the Company has not independently verified the information. The Company has not ascertained the validity or accuracy of the underlying economic assumptions contained in such information from third-party sources and hereby disclaims any responsibility or liability whatsoever in respect of any information obtained from third-party sources.

Risk factors are discussed in greater detail in the Section 13 - “Risk Factors” in the Company’s December 31, 2022 Management’s Discussion and Analysis filed on SEDAR (www.sedar.com) on February 28, 2023. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Aecon undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.