Alexandria Real Estate Equities, Inc. Price & Performance (ARE)

Good morning, everyone, and thanks for participating in our year end twenty twenty four results conference call. This is Adam Berghadi speaking. Joining me today are Jean Louis Servrancs, President and CEO Jerome Jullier, Executive Vice President and CFO Alister McCallum, 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 the call. Following our call, we'll be glad to take questions from the analysts ask that the analysts keep to one question and a follow-up before getting back into the queue. As noted on Slide two, 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 the expectations will prove to be correct. And with that, I'll hand the call over to Jerome. Thanks, Adam. Good morning, everyone. Before we move into the financial discussion, I'll briefly touch on recent actions on the trade front Aecon is carefully monitoring the developments and assessing the potential effects on our procurement and purchasing. We're taking a cautious stance here given the impact these measures and countermeasures may have on the cost of the financial picture of our clients, and their decisions advanced projects. And I'll speak to our consolidated results, review the results by segment and address Aecon's financial position before turning the call over to John O'Wee.

Consistent with prior quarters, we provided additional information to help clarify the underlying results excluding impacts from fixed price legacy projects and divestitures, We have detailed reconciliation tables included on slides fifteen, sixteen and seventeen the conference call presentation. Turning now to Slide three, On a reported basis, revenue for the year of $4200000000.0.04 $01,000,000 or 9% lower compared to 2020 Adjusted EBITDA of $83,000,000 compared to $143,000,000 last year Consolidated adjusted EBITDA in 2024 was negatively impacted by $273,000,000 in legacy project losses, compared to $215,000,000 in 2023. Operating loss of $60,000,000 compared to an operating profit of $41,000,000 in 2023, In addition to the items just noted, lower year over year operating profit was driven by a decrease in other income of $186,000,000 primarily due to a lower year over year gain related to the sale of 49.9% interest in Skyport of $133,000,000 and the lower gain on the sale of Aecon Transportation East or ATE. $28,000,000 Excluding the impact of the legacy projects and divestitures, on an as adjusted basis, Revenue for the year was $4,200,000,000 compared to $3,800,000,000 in 2023. And adjusted EBITDA of $349,000,000 compared to $355,000,000 last year. Diluted loss per share for the year was $0.95 compared to diluted earnings per share of $2.1 in 2023.

Reported backlog of $6,700,000,000 at the end of twenty twenty four compared to backlog of $6,200,000,000 a year ago. New contract awards of $4,700,000,000 were booked in the year. Compared to $4,500,000,000 in the previous year The reported 2024 awards include $275,000,000 of backlog acquired at the time of acquisitions of United, Angelwood Power Construction and Extreme Closed. Now looking at results by segment, And turning to Slide four, construction, Revenue of $4,200,000,000 in 2024 was $352,000,000 or 8% lower than the previous year. The largest decrease in revenue occurred in industrial operations driven by a decreased activity on mainline pipeline work following the achievement of substantial completion on a large project in the third quarter of twenty twenty three partially offset by higher volume of field construction work at wastewater treatment and industrial facilities in 2024. Revenue also decreased in urban transportation solutions as three LRT projects near completion and a civil operations largely from a decrease in road building construction work after the sale of ATE in the second quarter of twenty twenty three. Partially offsetting these decreases were higher revenue in nuclear, driven by an increased volume of refurbishment work in Ontario and in The United States.

And utility operations primarily from an increased volume of electrical transmission work in The U. S. And an increase in battery storage energy partially offset by decreased volume of telecommunication and gas distribution work. On an as adjusted basis, construction revenue is $4,100,000,000 in 2024, compared to $3,800,000,000 last year.

New contract awards of $4,700,000,000 in 2024 compared to $4,400,000,000 in the previous year.

Backlog at the end of twenty twenty four was $6,600,000,000 compared to $6,100,000,000 at the end of 2023. Turning to Slide five, adjusted EBITDA of 34,000,000 compared $99,000,000 last year.

The largest driver of the decrease was negative gross profit on the four fixed price legacy projects $273,000,000 in 2024 compared to negative gross profit of $215,000,000 in 2023. Other than the impact of fixed price legacy projects in 2024, [indiscernible] the balance of the Construction segment was already driven by lower gross profit margin in Civil Operations, and Urban Transportation Solutions, and partially offset by higher operating profit in nuclear operations from higher volume and gross margin and industrial to the higher gross profit margin. Other items contributing to the reduction in operating profit include an increase in acquisition related transaction costs that were expensed in the year and increase in amortization expense related to acquisition related intangible assets from the extreme Aimed Growth Power Construction and United transactions in 2024. And a decrease in other income driven by lower gains on the sale of property, buildings and equipment primarily in the utility operations. On an as adjusted basis, adjusted EBITDA was $3.00 $7,000,000 in 2024, compared to $326,000,000 in 2023. Turning now to Slide six. Concession's adjusted EBITDA for the year was $87,000,000 compared to $90,000,000 last year and operating profit of $24,000,000 compared to $174,000,000 last 2024 adjusted EBITDA in the Concession segment benefited from greater activity on certain progressive and collaborative projects as well as higher fees on major transit and transportation projects nearing construction completion.

Adjusted EBITDA is anticipated to be impacted in 2025 as these projects begin to shift to early stages of the respective operations and maintenance concession phases and as new projects start to ramp up. Lower operating profit in the quarter was primarily due to the Skyboard transaction as previously mentioned, which resulted and gains on sale of $133,000,000 On Slide seven, we've brought together the as adjusted information to exclude the impact of legacy projects and divestitures. Provide insight into this underlying discussing As previously mentioned, on an adjusted basis, revenue in 2024 was $4,200,000,000 compared to $3,800,000,000 in 2023. Adjusted EBITDA was $349,000,000 in 2024 compared to $355,000,000 in the previous year. For the Construction segment, on an as adjusted basis, adjusted EBITDA was $3.00 $7,000,000 in 2024, representing a 7.4% margin. Turning to Slide eight. At the end of 2024, Aecon held cash and cash equivalents of $123,000,000 excluding the cash held in joint operations. In addition, at 12/31/2024, Aecon had committed revolving credit facilities of $850,000,000 which $153,000,000 was drawn $4,000,000 was utilized for letters of credit.

Drawing credit is entirely at the Aecon Aecon Bubble. Aecon has no debt or working capital credit facility maturities until 2027, except for equipment loans and leases in the normal course. Aecon's next quarterly dividend of $19.09 per share will be paid on 04/02/2025 to shareholders of record on 03/21/2025. 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 nine, Aecon continues to build resiliency through a balanced and diversified work portfolio while enhancing execution capabilities and project selection to play to our strengths. In 2024, Roughly, 45% of Aecon's construction revenue was generated from the utilities and nuclear sectors compared to 39% in 2023. Our self performed capabilities and one Aecon approach help to maximize value for clients through improved cost certainty and schedule, while offering a broad range of services from development engineering, investment, and construction to longer term operations and maintenance to cover the full infrastructure value chain. We are embracing new opportunities to grow in areas linked to the energy sector and in U. S. And international markets. These opportunities are intended to diversify Aecon's geographic presence provide new growth sectors and deliver more consistent earnings through economic cycles. Turning now to Slide 10, Demand for Aecon Aecon across our markets continues to be strong. With backlog of $6,700,000,000 at the end of twenty twenty Paul? Recurring revenue programs continuing to see robust demand. And a strong bid pipeline, Aecon believes it is positioned to achieve further revenue growth in 2025, and over the next few words, and is focused on achieving improved profitability and margin predictability.

Of note, year end backlog excludes the recently announced award for the Scarborough Extension transit project and the design phase for the refurbishment of four units [indiscernible] comprising €3,300,000,000 in total which will be added to our backlog in the first quarter of twenty twenty five. Remaining backlog to be worked off of the three remaining legacy projects was $121,000,000 or 2% of total backlog at 12/31/2024. We remain focused on driving this project to substantial completion with two currently expected to be substantially complete in mid year twenty twenty five and the final project by the end of the third quarter of twenty twenty five. Twelve months recurring revenue was $1,000,000,000 in 2024, comparable to the previous year, and up over 30% versus two years ago. Taking into account the divestiture of ATE, and the 49.9% interest in Skyport in prior periods, on a like for like basis. Recurring revenues are typically executed on a non fixed price basis with the majority being over and above our reported backlog [indiscernible] Turning to Slide 11, development phase work is underway on a number of major projects in which Aecon is a participant including the GO expansion on Corridor Works project The Darlington Unuclear project the Controcar terminal expansion, The U. S. Virgin Island Airport redevelopment project, [indiscernible] [indiscernible] These projects are being delivered using collaborative progressive design build models with the majority expected to move into construction phase in 2025.

As a reminder, none of the anticipated work from this progressive design build project is yet reflected in backlog. Turning to Slide 12, 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 the Construction segment. Revenue in 2025 is expected to be stronger than 2024, due to an operating backlog of $6,700,000,000 combined with recent new awards in the first quarter. The impact of business acquisitions completed in the second half of twenty twenty four Soli's recurring revenue and a strong beat pipeline. Revenue growth is expected in most of the construction sectors as progressive design build projects move into the construction phase in 2025 and 2026. In addition, capital expenditure in 2025 are expected to be modestly higher than in 2024. In the Concessions segment, there are a number of opportunities to add to the existing portfolio of Canadian and international concessions in the next twelve to twenty four months Results in recent years were negatively impacted by the four legacy projects However, the recent coastal gasoline pipeline settlement along with the additional write down of the fixed price legacy project in 02/2024, are anticipated to lead to improve profitability and margin predictability.

Especially as the remaining three projects move closer to substantial completion. Until the remaining three projects are complete, and the related claims have been resolved, there is a risk that this could also occur in future periods. As such, the completion and satisfactory resolution of claims on the remaining three legacy projects with the respective clients remained a critical focus for Akorn and its partners. Finally, turning to Slide [indiscernible] the year 2024 was a period of significant progress for Aecon Aecon. Marked by several positive developments. As previously mentioned, we successfully reached a settlement for coastal gasoline pipeline project, which while continuing to make steady progress in completing and satisfactory resolving claim on the three remaining legacy projects. At the same time, we further derisked our business By adding new collaborative projects into our development pipeline, while transitioning the Scarborough subway extension project from the development phase into the implementation phase under a target price contract. We also strengthened our operation through three key strategic acquisitions, Extreme PowerLine, Ainsworth Power Construction and United Engineers and Constructors allowing us to capitalize on significant opportunities in The U. And conventional power sectors across North America. With that, we are pleased to once again welcome the teams from Extreme Ensworth Power Construction and United as we work together to safely drive future growth.

We are excited about the momentum we have built and remain focused on executing our strategy to drive Long term, shareholder value Thank you. We will now turn the call over to analysts for questions.

And our first question will come from the line of Kyle Roch of ATB Capital Markets. Your line is open. Good morning, guys. It's Kyle on for Chris.

Your EBITDA from concession came in a bit lighter than we had been expecting. You look into 2025, how should we be thinking about the expected EBITDA contribution from the segment?

Particularly as the portfolio evolves in the second half? Hey, Kyle, it's Strom here.

Thanks for the question. I think we previously talked about 2024 had a lot of benefit in the concessions segment with regards to development and construction fees earned as projects were in flight on the construction side. As those projects move into completion, there'll be a natural headwind against that, right? So our perspective remains consistent, which is going into 2025, we won't see that pickup on the concession side. The counter that's going to help offset it, but not to a significant degree We'll be continuing to work on the USVI projects, which we're targeting to hopefully kind of move into into the second half of twenty twenty five. But beyond that, it is clearly a headwind on the concessions front from 2025, but as expected, just given the amount of revenue that was generated development fees and then the concession revenue associated with that construction projects. Thanks. That's very helpful. And then shifting to the legacy projects, with the $36,000,000 reforecast in the quarter and completion of the LRTs moving a bit to the right, do you still feel good about the 125,000,000 loss bucket? Any color there would be appreciated. Thanks.

Yes, I will take this one. Yes, we do. Is the answer. I mean, we are in line with the information we gave at the end of Q2 twenty twenty four, Mainly speaking, I mean, on our three remaining legacy projects, Goldie Howe International Bridge is perfectly on schedule. And perfectly under control for a substantial completion still forecasted for September 2025. Eglinton and Finch, our two LRPs in Toronto, We are now very happy to see that all stakeholders are working is towards the same direction and we are getting ready to have revenue service demonstration around May and June and to get Zoom's [indiscernible] substantially completed around mid year twenty twenty five. So far, in full of the information that we gave you, we are in line. [indiscernible] And our next question will be coming from the line of Christopher Eisen of CIBC. Your line is open.

Hi.

Thanks for taking my question. I was just wondering if you can speak to how we should be thinking about margins in the Construction segment in 2025 and if there's any puts and takes there that we should be considering?

Hey, Christa. Good question. So from a margin perspective on the construction side, given the seasonality [indiscernible] 2024 overall margins adjusting our legacy projects and adjusting our divestiture impacts, roughly 87.5% This is good margin profile, not an exceptional one. So it's one that we're going to try to continue to work on from an overall perspective. But that being said, I think we just need to be cognizant That is a pretty good result to put up.

And so I think for us, it's about maintaining it in this range and trying to really push the teams to operate efficiently try to kind of inch that upwards, right? But I think right now, in 2023, we had really good results supported by some very strong project closeouts. 2024, we're in flight and transitioning 2025, but we're just going to try to try to put that number up a little bit more.

Great. Thank you. And then maybe just a higher level question. How you're thinking about capital allocation and M and A this year and any Kind of difference between the Canadian market and U. S. Market and kind of just what you're seeing there?

Sure. So capital allocation perspective remains Consistent First priority is the strength of the balance sheet. We think about in two ways. One is at the Aecon Group level, where we've got the effectively undrawn revolver at the top of the house And then one's at the Aecon Utilities level the small ticket short cycle nature of the work and its own credit facility where we have the majority of our drawings to support the M and A program. [indiscernible] maintain strong balance sheet And then the next flow is to ensure that operationally, that the business has what it needs to execute the work programs that we have in front of it. Our outlook noted that our capital expenditures are anticipated to be slightly higher in 2025 versus 2024. Is largely just around building resiliency for the overall business across the various sectors where we operate. And spread across all operating regions where we execute programs. The dividend program, we've held the dividend flat this this quarter and this year. And the perspective there being we've got a pretty robust dividend as And today, We have our NCIB to execute tactically as we see appropriate And then finally, from an M and A standpoint, we continue to have a lot of active discussions across both utility side of the house and then the the balance of the Aecon business.

Within Canada, we have very strong operations. We have the market relative well covered. We get transaction in December was a great example of that.

Again, just strengthening an area where we already had a good presence But like looking '24, the team for quite active both on the utility side and on the balance of the Aecon side.

With Extreme and United. And I think will continue to be a priority from that perspective.

Great. Thank you. I'll jump back in the queue. Thanks, Krista. Thank you. One moment for the next question please. And our next question is going to be coming from the line of Michael Prius of Desjardins. Your your line is open.

Yes. Thanks for taking my question. Maybe going back to CapEx, you mentioned that it's expected to be modestly higher versus last year. Can you maybe explain some of the ongoing dynamics with equipment now that the LUNI has fallen much versus the U. S. Dollar? And if you're facing any increased costs on that front? Yes. Lots to unpack there. Potential for impact there exists. I'd say that we manage our programs pretty thoughtfully. We already have a base and so part of this is Effectively parts and repairs and of the equipment that we're purchasing comes from geographies where it's not tied to USD as well.

Think overall, I'd say the volume of of equipment that we're expected to be Aecon boarding is likely a little bit higher. And also, we do have a refresh program. And so as we onboard you new equipment, we offport all older equipment and that shares in the same dynamic. So on a net basis, maybe a marginal headwind But overall, not something that we're overly concerned about. John Lee, go ahead.

Yes. Maybe I can jump in a little more generally. I mean, your question was about ForEx. And what we can say now is that we have a natural way of hedging because we have more and more revenue in U. S. Dollar. So it helps us. And on a broader view, I mean, imagine your question is also a little linked with tariffs. So to be clear about it, don't expect Aecon to react every day due to the flow of information left and right and up and down, but basically Aecon is not a manufacturer Aecon is not an exporter of goods. Aecon is a builder. So most probably, as a consequence of all this tariffs issues is going to be quite limited for us. And maybe reduce to what we call the change in loan for which we are protected in our contract. You remember that following COVID, we have been extremely careful on those kind of close on our contract. I mean, the protection of our revenues following change in laws. So I'm not particularly worried But as I said in my introduction to this answer, I mean, we are much more American today. I mean, we are in The United States.

Aecon Aecon you probably remember it's a company that we acquired, I mean, early twenty nineteen. The revenue was US4 million dollars or US5 million dollars is now going to deliver between CNY150 million and CNY200 million. Extreme is behaving extremely well. We are extremely happy with this acquisition. United, the last one, is also a very important acquisition for us. All this just means that we are in The United States. We are producing we have our work [indiscernible] And this is important in front of what is happening at the moment between the two countries. So my instruction to the team is very clear. No politic, no emotion, Do your work. And everything is going to be fine.

That's very helpful, Giando. We appreciate it. And our next question will be coming from the line of Michael Tupholme of TD Cowen. Your line is open.

Thank you. Good morning.

You have several collaborative projects that have been moving through the development phase. You've talked about some more of these hitting construction phase in 2025, 2026. Are you able to provide a little bit more detail about how we think about those moving into the construction phase and begin to contribute to revenues. [indiscernible] and what we call progressive design build, I mean, it's a very interesting developing part of our business. Very interesting because it's straight on to our strategy of giving more predictability about our margin. You probably remember when I arrived at Aecon, the share of fixed price contract was something like 72%. Within our activity and in line with our strategy, it has now We have [indiscernible] between variable price and fixed price.

PDBs and collaborative contract, I mean, is part of this strategy. So what happened risk capital is very important because it's a major one that is now closed commercially. We finalized the development phase. And we reached an agreement toward a target price with our client. It's a big one for Aecon. It's probably a little over SEK 2,800,000,000.0 in terms of of activity. So the model works, and this is why it's so important. But it's not the only one. I mean, Pickering and we have disclosed information about it is a collaborative contract. I mean, we have in our backlog something like €1,000,000,000 for the development phase of Pickering. We are working on other progressive design build. I mean, DNNP, the SMR, is a collaborative contract. It's a six year alliance. And we expect during the first part of the year 2025 to also go from development phase to construction phase go to an expansion although it's a failed progressive design build due to the fact that it's a brownfield environment, I mean, we [indiscernible] under operation of the rail network. So it's going to be phased but we have also closed the development phase and are progressively going to implementation and construction.

We have others. I mean, the Winnipeg wastewater treatment plant is also a collaborative one. Albert Hansen, I mean, with the U. S. Corp of Engineer in The United States, that is something like €250,000,000 for Aecon ultimately in construction. Is a collaborative one. Contractor in Quebec is a collaborative one. So very important, very good and perfectly in line with our strategy. As I used to say, there's not a universal contractual mode for every project. Each kind of project has its own favored and optimal way of contracting We can see, for example, now that our clients from time to time are ready to come back to lump sum job, but taking out from the lump sum Everything that depends on stakeholders that is not under our control and putting it on the time and materials or targets. So those are hybrid models that are also very, very interesting. All this is developing quite well and perfectly in line with what have announced Perfect. Thank you.

I apologize if I missed this earlier if there was any discussion about this, but just on the subject of tariffs, doesn't seem as though there's any real direct exposure, but obviously people are concerned about potential indirect impacts. Can you just talk a little bit about whether or not you've seen any impact so far As it relates to work you're pursuing and I'm thinking more specifically about sort of any customers comments they may have made or sentiment from the customer side. Just trying to get a sense if there from an indirect impact perspective, may come from this.

Yes. I'll tackle that one, Mike. It's Look, it's a good question.

I think the best way we can answer is that we're just monitoring the situation pretty closely.

As noted, it's the measures and the countermeasures, non tariff impacts, changes in procurement, changes in policies of national, subnational, regional, regional, regional, [indiscernible] All of this is playing out in real time and we're just watching where it's going to land. In general, the uncertainty that this is causing, potential inflationary impact could have impacts on our labor force.

So way that this impacts operations is kind of multifaceted. So we're being kind of cautious from that perspective. And client behavior you may or may not change in association with this. And say that it's something that we're very live to. That's probably all we can really share at this point.

Fair enough. It's obviously early days and very complex. So appreciate that. And then just lastly, in terms of nuclear related work, obviously, there's some part of the Pickering award on the latest refurbishment awards got added in the fourth quarter. More to come in the first quarter. But can you just speak a little bit about nuclear in general? Obviously, there was a lot of excitement and I think continues to be around the opportunities in that area. Just wondering what you're seeing now in terms of sort of future opportunities, if the level of discussion and opportunity set continues to expand and I'm thinking specifically both about U. S. And Canada If you can comment on sort of newbuild as well, which maybe a little further out, which is what the thinking there is? Yes, I will take this one.

Lot of excitement and enthusiasm, although at Aecon, we are extremely happy with our nuclear activity and the way it's growing. So as you say, let's split into Canada and U. S. So Canada basically we have two vectors of growth. The first one is what we call the major component replacement. We are at the moment working on the fourth and last unit of Darlington that should be ready for 2026 I just remind you that the third unit we completed it five months ahead of schedule, perfectly within the budget. And Bruce, you probably saw that we have the four last reactors. We are at the moment working on the second one that should be ready next year. Bruce will go up to 02/1932 now in terms of major component refurbishment. Pickering is a very nice add up. Because it comes exactly at the right moment that we were needing after Darlington. It means that all our teams coming from Darlington all the lessons learned mean, will be directly applicable to Pickering and we are very Happy about it. We are also working on on preparing our offers on a collaborative model for the turbine refurbishment. This is for the refurbishment programs.

In addition to this, you have the new build. And the main one at the moment, the one on the table is a small modular reactor at Darlington, Unit 1. We are expecting that OPG will get licensing of authorization from the regulators around mid-twenty twenty five. We are ready to ship from development phase to construction phase. I remind you that it's a four unit program of 300 megawatt where Aecon is in charge of all the construction services. After this, we are also getting ready for the new build of 1,000 megawatts that will arrive for OPG and for Bruce getting ready, I mean, for those big jobs. In U. S, it's also quite interesting. As I said a few minutes earlier, I mean, we acquired a walk early twenty nineteen, very small company, with a very specialized welder that we used on our Canadian refurbishment program. Now this company that has been restructured that has been nurtured with a lot of processes from Aecon a lot of knowledge from our nuclear project is growing and is growing quite well. I mean, we are expecting that our activity in U. S. For nuclear will be between €150,000,000 and €200,000,000 in 02/2025.

We are working for the federal government, Department of Energy on Sabine River, We are working for Dominion. We have added a few days ago a very interesting purchase order for Energy North West. So this is going quite well. In conclusion, always remember that the resiliency in the strength of Aecon is due to the balance of its activity. I mean, I don't want to become an 80% nuclear company all this has to be balanced but we are perfectly on our way and very happy with the nuclear activities.

Thank you very much for all that.

Thank you. And there is a follow-up question from Fredrik Bastian from Lake Warm Raymond James. Your line is open.

Hey, Frederic. Good morning, everybody.

I don't know if this question has been asked before. I suppose it has, but it might have not come from me. But just wondering if data center is an opportunity for you guys from from maybe a power transmission No, Frederic. I mean, these questions have not yet come. On the table. Basically, in the data centers, there are two parts. One is a sort of huge workshop where the clients just insert all their equipments that are directly procured by them plus a lot of AC air conditioning. We are not going to this. We are late in this market and Aecon is not really a building or commercial building company. As you say, what is quite interesting is the power that is related with those data centers. And two kinds of powers. The first one is to get autonomy of power generation. We are looking at this And the second one is to have a backup So to be perfectly connected to the grid, to the existing grid, And it just means that there is a full submarket linked with what we call balance of plant and energy And yes, we are looking at it. It's a little similar to battery storage.

You probably remember I mean, we didn't want to go in the pure battery aspect of it, but we are usually extremely, I mean, extremely interested and we are getting very strong in what we call the balance of plan, everything related with energy. Okay.

And are you seeing, I mean, the market's really vibrant in The U. S. Are you seeing the potential for Canada to become a major player in data centers?

Not sure. I mean U. S. Is very much in advance, but there are needs in Canada and we are getting stronger and stronger in U. S. As I was explaining, I mean, through our acquisition. United is a very interesting acquisition. So first of all, you have noticed it's engineered and constructors. Constructors is because United has a joint venture with Framatome with a worldwide leader in steam generation. And it's quite important because most of the major component refurbishment of existing nuclear power plant we'll have to deal with steam generation. [indiscernible] United is also an engineering company. Preconstruction, feasibility detailed engineering, everything related with power. And of course, we want to leverage their capacities with the Canadian capacity that we have to be stronger in United States.

Okay. Thanks. That's helpful. I have a question regarding the Construction segment's result There was it was highlighted that gross margins on the civil side were responsible for some of the pressure you experienced Are you able to comment further on that, provide additional color? Yes. Hey, Fred, it's Jerome here. So John, we previously mentioned one of the benefit of Aecon's Aecon platform is the diversification across the various sectors. And so on occasion, we have a broad portfolio of civil projects spanning the continent Construction is an outdoor sport. And in some instances, some of these projects just don't perform at the same level as others. And this would just been a quarter where some of the project performance on some of the civil works that we're doing I think partly in kind of the western part of the continent just didn't perform to the same level as our aspirations. Balanced out by other high performance in other areas of the business. Right? As Jean Louis mentioned, nuclear did very, very well. With strong margin profile out of our industrial business. But effectively, this is core civil works, just managing through And the projects we execute on are not simplistic things, right?

Like they are meaningful critical infrastructure projects that are absolutely required but there is there it's not easy stuff, right? And at times, some of these projects get tough and that was what we saw manifest in the margin profile in Q4.

Okay. Thanks for your answers. [indiscernible] Thank you. And that does conclude today's Q and A session. I would like to turn the call back over to Adam Bagheri for closing remarks. Please go ahead.

Thanks, Lisa, and thanks everyone for joining us today. As always, feel free to reach out with comments and questions to us after happy to reengage as you continue to work through the models and things like that. But we've concluded the call today and look forward to chatting next quarter.

Thank you all for joining today's conference call. This concludes today's program. You may disconnect.