AECOM (ACM) Joint Venture Clinches FCFR Contract In Canada
Zacks Investment Research | Jun 14, 2018 10:38PM ET
AECOM (NYSE:ACM) recently announced that its joint venture with Aecon and SNC-Lavalin secured a Fuel Channel and Feeder Replacement (FCFR) contract from Bruce Power at the Bruce Nuclear Generating Station, located in Kincardine, Ontario. Valued at CAD 475 million, the joint venture will perform its work under Shoreline Power Group. Notably, AECOM’s interest in the deal will be booked in its backlog in third-quarter fiscal 2018.
This project falls under Bruce Power’s Major Component Replacement (MCR) program - Unit 6, a part of its Life-Extension Program, which will enable Bruce Power’s units to operate safely through to 2064. Notably, under the MCR program, Unit 6 is the first of six reactors to be refurbished by Bruce Power.
Work related to the deal will include removal and replacement of calandria tubes, pressure tubes and feeders, construction management as well as trade labor. The project is scheduled to start in June 2020 and expected to be completed in 2022.
Separately, the joint venture also entered into a Preferred Supplier Agreement with Bruce Power. Per the terms of the agreement, Bruce Power will be able to award similar contracts to this joint venture for the remaining five units under the MCR Program.
Our Take
AECOM has a diversified portfolio that comprises both designing and construction services. In addition, the company’s business is spread across a number of key markets that mitigates operating risks. It is also efficient in dealing with cyclical market volatility, which helps AECOM capitalize on upside of the company’s business during downturns. Currently, over 70% of AECOM’s profits are generated from infrastructure and defense markets that are poised to benefit from the favorable political climate both in the United States and abroad.
In a year’s time, shares of AECOM have returned 3.3% compared with the Zacks Investment Research
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