Steel fabricator Canam rides U.S. demand wave

MONTREAL • Excitement is building over speculation Canam Group will be awarded the steel contract for the multi-billion-dollar replacement of Montreal’s Champlain Bridge, the busiest bridge in Canada.

But chief executive Marc Dutil said excitement is not what the Saint-George, Que.-based company is looking for right now.

“The job we lost the most amount of money on was the most exciting, too,” said Dutil, referring to Vancouver’s BC Place, on which Canam reported a $25-million loss constructing the stadium’s retractable roof in 2009. “If and when we’re awarded a large job, the ultimate judge of whether it was successful and whether it is something we were glad to have done years later will be when the final tally is done,” he said.

For the Champlain Bridge, the consortium led by SNC-Lavalin Group Inc. has not selected a company to provide steel for the structure that spans the St. Lawrence River.

The federally funded project is forecast to cost between $3 billion and $5 billion, and is expected to open in December 2018.

Dutil estimates the bridge will use between 10,000 and 45,000 tonnes of steel, and said Canam is the type of company the consortium would consider. More details about the bridge’s design will likely be announced in the coming weeks.

Canam has a long list of other high-profile projects to its credit, including a building for NASA, and a new arena for the NHL’s Edmonton Oilers.

But analysts say the company’s real strength comes from the more than 10,000 smaller- scale projects it works on every year.

“You’ll never hear about the small ones. They are the source of most of the profits and revenue,” said Frederic Bastien at Raymond James Ltd., who has been following Canam for the past 10 years.

He said the outlook for the company is positive as strong demand for non-residential construction grows in the U.S.

The company announced its first-quarter earnings last week, reporting that revenue jumped 29 per cent to $309.1 million from $239.3 million in the same period a year ago.

Bastien said the first quarter is typically the weakest for the company because of the equipment challenges created by harsh winter weather.

He said he’s expecting the stock to appreciate and outperform the S&P/TSX composite over the next year. Canam has risen 20.9 per cent in 2015, compared to the composite’s 4.5-per-cent gain.

Dutil said Canam has only grown through acquisitions, but it won’t be looking for big mergers and acquisitions while the construction market is favourable.

“The results are good, the sales are growing and we appear to be in control,” he said.

He said any big moves will wait for a downturn in the industry, comparing his business today to a squirrel gathering food in the summer.

“When times are good, you just go around, do your thing, put a little aside and prepare for winter,” he said. “We are literally in the mode of preparing what we are going to do three or four years from now.”