Bird Construction Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 10, 2023

There are 10 speakers on the call.

Operator

Welcome, ladies and gentlemen, to the Bird Construction Second Quarter 2023 Results Conference Call and Webcast. We will begin with Terry McGibbon, President and Chief Executive Officer's presentation, which will be followed by a question and answer session. Analysts who wish to ask a question should have their webcast muted when dialing into the conference number provided. You'll hear tone acknowledging your request. When we're ready for questions, you'll be introduced into the conference in the order that you were received.

Operator

As a reminder, all participants are in a listen only mode And the webcast is being recorded. Before commencing with the conference call, the company reminds those present that certain statements which are made express management's Expectations are estimates of future performance and thereby constitute forward looking information. Forward looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to Significant Business, Economic and Competitive Uncertainties and Contingencies. Management's formal comments and responses to any questions You may ask may include forward looking information. Therefore, the company cautions today's participants that such forward looking information involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the company to be materially different for the company's estimated future results, performance or achievements expressed are implied by the forward looking information.

Operator

Forward looking information does not guarantee future performance. The company expressly disclaims any intention or obligation to update or revise any forward looking information whether as a result of new information, events or otherwise. In addition, our presentation today includes references to a number of financial measures, which do not have standardized meanings under IFRS and may may not be comparable with similar measures presented by other companies and are therefore considered non GAAP measures. I would like to turn the call over to Terry McKibben, President and CEO of Perth Construction.

Speaker 1

Thank you, operator. Good morning, everyone, and welcome to our Q2 2023 conference call. Joining me today is Wayne Gingrich, Chief Financial Officer. Bird's strong second quarter results reflect the work of our teams across the country, safety, delivering our projects and advancing our strategic plan and operational objectives. We've worked hard for the past few years to establish ourselves as a leading collaborative contractor with significant self perform capabilities.

Speaker 1

Our teams have built a well balanced backlog of contracts, strategically minimizing risk, while diversifying into higher margin sectors. Today, our growing backlog comprising a diverse range of industrial, institutional and infrastructure projects brings higher embedded margin profiles. These efforts position us for sustained revenue growth and enhanced margins supporting our future performance expectations. Turning to our Q2 highlights, we delivered 19 percent revenue growth, 95% of which was organic leading to an impressive quarter for revenue of $86,000,000 Adjusted earnings and adjusted EPS were up significantly quarter over quarter And our EBITDA also grew 37% compared to last year. Reflecting Bird's comprehensive services and robust market demand, Bert added almost $1,000,000,000 in securements to his backlog during the quarter, bringing our primarily collaborative combined backlog to record levels.

Speaker 1

Backlog grew to $3,000,000,000 pending backlog totaled $3,100,000,000 including almost $1,100,000,000 of master service agreements and recurring revenue work to be performed over the next 3 to 7 years. Company remains disciplined in its project selection And focused on low to medium risk projects. This is reflected in our well diversified combined backlog and quarterly revenue With approximately 90% of revenue coming from lower risk contract types, our bidding pipeline remains robust and there is significant demand strong project delivery and collaborative style, including in nuclear, agri food processing, water and wastewater treatment, industrial maintenance and repair, Light Industrial, Telecom, Transportation, Healthcare and the Educational sectors. Forage key fundamentals outlined on Slide remain at the forefront of our efforts to drive forward our business. We remain confident in our full year outlook for improved earnings, primarily due to the visibility of our growing combined backlog.

Speaker 1

Following the significant growth delivered in the second quarter, we have revised Trinity representing about 1% of revenue growth. Our strategic positioning in higher margin and high demand sectors combined with disciplined project Selections support our positive outlook. We remain very selective when considering a project type and the appropriate contracting model. Aligned with our strategic plan, we have shifted our historical non institutional building business into the light industrial sector and our results at the end of the second quarter are beginning to reflect that shift. Maintaining a healthy balance sheet with a low net debt position, we are well equipped to pursue our strategic priorities including additional tuck in acquisitions where there is good operational and a cultural fit.

Speaker 1

Our operating cash flows are strong, funding our growth and supporting strategic investments in productivity, capital expenditures and M and A. As we've done in the past, adding to our self perform capabilities through tuck in acquisitions is an essential piece of our strategy. We have taken existing self perform capabilities at Bird and newly acquired self perform capabilities and diversified into new markets leveraging cross selling our one word approach. Fluid's contributions to the energy transition and to lower carbon solutions remain evident Throughout our recent awards in hydroelectric facilities and the delivery of innovative sustainable post secondary and healthcare facilities, Our growing portfolio includes work on wind energy projects, hydroelectric related projects, waste to heat projects, sustainable institutional facilities coast to coast and work with all of Ontario's active nuclear operators. We're also actively pursuing our ESG initiatives, diligently preparing for and upcoming reporting requirements.

Speaker 1

As noted, the company recorded a combined backlog of risk balance contracts and awards consisting of $3,100,000,000 of pending backlog at the end of the quarter. As you can see in the chart, our combined backlog has almost tripled since 2020 through a combination of diversification both organic and acquisitive. We've also improved our trailing 12 month EBITDA, EBITDA margin profile Adjusted earnings, similar over that time. Bird has firmly established itself as a collaborative contractor and the combined backlog maintains over 70% of contracts Being executed through a collaborative delivery model. At quarter end, Bird's recurring revenue, MSAs and pending backlog exceeded 1,000,000,000 providing additional visibility to future revenues.

Speaker 1

In the quarter and subsequent to quarter end, Bert had Several significant project announcements across a range of end markets. I'm pleased to see Bird's track record and reputation as a key partner for Canada's most significant industrial projects Reflected in these recent announcements, the company is delivering its self performing capabilities as an early contractor of the Jensen Potash project, the Blackwater Gold Mine And Boonton Lake Mine and final works on a large industrial project in Northwestern BC. By offering full project life capabilities and maintaining strong client relationships, we are well positioned to meet the long term demand of large scale industrial projects. We continue to execute our strategy in key focus areas such as fostering increased self perform work, expanding cross selling opportunities through M and A and internal partnerships And maintaining disciplined project selection. These contributed to our growth, enhanced fundamentals and the securements of almost $1,000,000,000 in the quarter.

Speaker 1

Both is focused on meeting our clients' sustainable infrastructure needs. There's a tremendous outlook for investment in electrification, Public transportation, energy efficiency projects and building retrofits. Our capabilities, particularly our self perform expertise in earthworks, Concrete fabrication, process mechanical, electrical and instrumentation are transferable and strategically positioned to deliver the necessary skills required for the energy transition and the electrification of our energy systems. Clients in the institutional world are Increasingly seeking ways to build better, achieve more sustainable buildings or retrofit existing properties to reduce their carbon footprint. Bird's experienced teams, sustainable solutions and our Center For Building Performance support the execution of clients' goals in these areas.

Speaker 1

With that, I'll turn it over to Wayne to go through our financial performance in more detail.

Speaker 2

Thank you, Terry. Turning to Slide 11, Construction revenue for the Q2 of $686,400,000 represented a 19% increase compared to the same period in 2022. On a year to date basis, revenues of $1,220,000,000 for the first half of twenty twenty three represented a 17% increase from 2022. The company's margin profile improved in the quarter compared to the prior year with gross profit percentage increasing to 7.9% And adjusted EBITDA margin increasing to 4.3% from 7.5% and 3.7% respectively. This increase was primarily driven by the company's highly collaborative work program, growing backlog with enhanced margin profiles and expanded self perform capabilities.

Speaker 2

General and administrative expenses were $36,200,000 or 5.3 percent of revenue versus $31,000,000 5.4 percent of revenue in the corresponding period a year ago. I will note that the current year includes $2,400,000 in costs related to rationalizing office reflecting the ongoing efforts to improve cost efficiency and gain leverage on overhead. Turning to earnings, net income and earnings per share were $13,700,000 $0.26 respectively compared to $14,100,000 $0.26 in 2022. I would highlight here that during the comparable period in 2022, the company received a one time gain of $7,600,000 and another one point $7,000,000 of interest income related to the settlement of historical construction billings and related interest charges for the customer. Adjusted earnings and adjusted earnings per share increased significantly compared to the prior year, reflecting the higher gross profit to $15,700,000 $0.29 compared to $8,500,000 $0.16 in the prior year.

Speaker 2

Byrd maintains a healthy balance sheet with significant financial We closed the 2nd quarter with $107,000,000 in cash and cash equivalents and an additional $2,000,000 available under our credit facility. This enables us to continuously invest in growth related working capital, Project driven capital expenditures and potential tuck in acquisitions to further enhance our service offerings and self perform capabilities. At the end of the Q2, our working capital stood at $177,000,000 ensuring support for the current and future contractual requirements. As of June 30, our current ratio was 1.22 times. Our adjusted net debt to trailing 12 months adjusted EBITDA ratio stood at 0.08 times And our long term debt to equity ratio is 23.4 percent demonstrating our commitment to maintaining a healthy and sustainable capital structure.

Speaker 2

In the Q2, we maintained our balanced approach to capital allocation. And during the Q2 of 2023, we generated quarter of 2022. Keeping in mind that cash in the comparable period in 2022 was positively impacted by a sizable settlement historical construction billings and related interest charges. The positive cash flow generation in the Q2 of this year was achieved while growing the business 19% and investing $18,700,000 in non cash working capital. Throughout the recent years of business growth, the dividend payout ratio of net income has The company continues to expect significant growth in earnings per share in 2023, sufficient to achieve an expected dividend payout ratio I will now turn the call back over to Terry to comment on the outlook for the company.

Speaker 2

We are

Speaker 1

Earnings per share and adjusted EBITDA growth to outpace our revenue growth. We raised our growth expectations this quarter compared to Q1, where we previously said High double digit growth and now expecting low double digit organic revenue growth For the full year, keeping in mind that Trinity is approximately 1% of additional acquisitive growth. Our markets are fueled by infrastructure investments, the energy transition and the more robust commodities environment. We're confident in delivering expanded margins and revenue growth reaffirming Brit's commitment to increasing value to our stakeholders. With that, I'll turn it back to the operator for questions.

Operator

We will now begin the question and answer session.

Speaker 2

At this time, the

Operator

first question comes from Jacob Bout from CIBC. Please go ahead.

Speaker 3

Hi. Good morning, Terry and Wayne. This is Rahul on for Jacob.

Speaker 2

Good morning. Good morning. Good morning.

Speaker 3

So very strong levels of new awards in the quarter and a couple of big awards after the quarter end So he's curious what you would attribute this to. Is this strength industry wide or a factor of higher win rates on your side or a combination of both?

Speaker 1

I think it's a combination of both, but you're certainly seeing strong demand across the various Sectors that we focus on, we're also seeing a strong demand for the collaborative style of contracting that we've Obviously, a leading entity in our sector delivering that. We're seeing that type of modeling in order to deliver That type of project you will often need a very strong resume to be able to be selected for these things and we're seeing a very big uptake of clients because it's A very efficient way to deliver Canada's infrastructure. So it's a combination of strong markets In the industrial side, in the mining side, in the horizontal infrastructure side and then on the institutional side, again as we transition Our vertical institutional business to light industrial, we're seeing very good performance and growth in anchor food and Those types of areas like manufacturing and things like that. So it's a mix of things, but certainly we have Good sight to a very strong pipeline for the future.

Speaker 3

Great. That's helpful. And And maybe just a question on full year 2023 revenue expectations. So first half revenue growth was very impressive at 17% and you're now guiding for low double digit organic growth for the full year. So would it be fair that your revised Implications imply a high single digit growth for the back half of the year and is there upside to this given all these recent wins and record

Speaker 2

So a couple of things. I think what you're saying Makes sense. So high single digit in the back half. Like in the back half of last year, we had a strong second half. So we're still going Some nice growth this year, but it won't be at the 16.8% we saw in the first half of this year.

Speaker 2

It's certainly possible that we could have even stronger revenues than high single digits. Obviously, it depends on just some of the other factors going on in the country today in terms of where the wildfires are and And whether there is any impact to projects, we've had very minimal impact to date, but certainly something we're monitoring going forward.

Speaker 3

Great. And maybe just last question from me on the labor side. So looks like it's still pretty tight labor market. And just given the increased levels of work, how are you managing on the labor side? Are you finding enough skilled workers?

Speaker 3

And Maybe just comment on how labor utilization levels are trending?

Speaker 1

One of the benefits and we've spoke to this in the past, but one of the benefits of Bird's National presence is we can draw from labor markets Canada wide and you never have A scenario where you've got full utilization Canada's labor, but you've got to have local relationships and local businesses to be able to position those local Employees to move and take advantage of higher opportunities in other markets. So with our collaborative model and we're using divisions to work Jointly on many projects that solves that problem to a certain extent for us, but it's still a very tight labor market. And obviously, the demands continue to be strong, but we're very disciplined around projects that we pursue that we're that we're comfortable with our labor strategy or obviously we'll look to other things that maybe have a different labor Waiting, but overall, we continue to have consistent performance and we don't have a project today in our mix that we're concerned about the labor availability on.

Speaker 3

Very helpful. Thank you. I'll turn it over.

Operator

The next question comes from Chris Murray from ATB Capital Markets. Please go ahead.

Speaker 4

Thanks guys. Just maybe turning back to the margin discussion. As we went through COVID and the Q's came

Speaker 5

in and stuff like that, I think

Speaker 4

margins became a bit muddled. But now that we're kind of on the far side of that, A couple of questions on this. I mean, I guess, first of all, Wayne, you talked about some SG and A costs that you're working on right now. That's part of it, but it's also opportunities for gross margin. So I guess a couple of pieces on this.

Speaker 4

Where do you think you guys can get gross margin to Based on what you're seeing in terms of demand. And Wayne, is there a level Of SG and A that we can settle into that drives higher EBITDA levels On a go forward basis?

Speaker 2

Yes, certainly, I guess, a couple of things there. Chris, Yes. So we think we have certainly upside on our EBITDA margins and that's going to be a factor of higher gross profits and leverage on our cost structure. So in terms of EBITDA in the Q2, we delivered 4.3%. I'd say Our equipment related revenues were probably lower in 2nd quarter than what we'd expect to see in 2nd half, so we expect to see a nice lift in our margins above that 4.3% in the second half.

Speaker 2

So when you kind of Average it out for the year, I think year to date we're something like 3.7%. We certainly are going to expect to see an uplift From that by the end of the year, we're probably mid to high Like 4.6, 7, 8 or even above there. Next year aspirationally The last year of the current strategic plan that we have in place and again margin expansion has A big focus for us through this strategic plan. So I think you'll see further improvement through 2024.

Speaker 4

So is this a type of thing that looking at where you've got to come into the backlog that you think you guys can hold? I mean, if you think you're getting to like kind of high 4s here, like holding something above 5 on a regular basis, it's kind of an achievable target?

Speaker 2

Yes, I think that's a fair assessment of what we're seeing right now.

Speaker 4

Okay. Okay, that's great.

Speaker 5

And then, Terry, I just I don't know who wants

Speaker 4

to take this. Just part of it is looking At the recurring revenue kind of in backlog, I'm trying to understand What kind of additional growth levers are there in terms of recurring revenue?

Speaker 6

At $1,100,000,000 a year, I

Speaker 4

mean, that's a pretty healthy number. Is there more room for that to grow from where it is today? Or is that just going to be a pretty steady Eddie type of business that you've got now that you've got Trinity in there because I'm going to guess that Trinity has got a lot of the telecom I'm tied to it, but any thoughts around the growth opportunities around recurring revenue would be great?

Speaker 1

Yes, certainly, And as you know, some of our clients in the energy side are focusing on a smaller sort of contractor footprint In an effort to make their business more efficient and have a stronger overall safety performance that gives us So as you look across the various entities, the scale with Bird's Focus, it's collaborative reputation. We're seeing we're just seeing a lot of demand there. It's lumpier because you sign these And it's a pretty big mobilization. So it's not as smooth transition from one big assignment to the next. But we're certainly seeing no shortage and we really haven't tapped some of the markets that exist Outside of Alberta to a large extent other than as you referenced with Trinity and the work we do for Canada's primarily Canada's telecoms.

Speaker 1

Lots of opportunity to continue to grow and I think We're seeing a number of those opportunities in that regard.

Speaker 4

All right. That's helpful. Thanks, folks. I'll turn it over.

Operator

The next question comes from Michael Tupholme from TD Securities. Please go ahead.

Speaker 7

Thank you. Good morning.

Speaker 2

Good morning, Michael.

Speaker 7

Maybe just to Start, I just want to go back to the comments you made in response to a couple of Chris' questions there about Margins, so just to be clear, I guess, for Wayne, the suggestion of seeing margins kind of in that 4.6%, 0.7%, 4.8% range. That's you're talking about the full year 2023 EBITDA margin with the benefit Of improvements you expect to see in the second half getting to the hull on a full year basis?

Speaker 2

Yes, that's correct.

Speaker 7

Okay, perfect. And as we look out to next year, you suggested you think there's room for some further improvement. Is the improvement that you could see in 2024, is that more likely to be driven by year over year improvements in the first half Of 2024 and sort of what you'd expect to do in the second half of this year, you can sort of replicate that again next year? Or do you think there's really room

Speaker 4

On a year

Speaker 7

over year basis kind of throughout the year as we look at 2024?

Speaker 2

Probably a bit of both like we're now We've done some pretty significant industrial projects across the country. We would expect those work programs to have opportunity to grow Now that we're on-site and those are typically self perform type work packages that carry higher margins certainly as well. We're seeing nice growth and opportunities for us in the infrastructure space. We're seeing our institutional business make great strides In terms of the margins and profitability, they're driving right now with a combination of Some of the traditional markets and also doing work in some of the light industrial sectors as well. So It's pretty broadly held what's driving the margin improvement.

Speaker 7

Okay. That's helpful. And

Speaker 1

Is it possible to talk

Speaker 7

a little bit about the embedded margins in backlog and how what's in backlog now compares to what you would have In backlog sort of 12 to 18 months ago. And then also just to talk about as you bid new work now, What are the margins looking like on the new work you're bidding versus what you've been seeing, I guess, up until this point?

Speaker 2

So our backlog margin, we don't disclose what that is. But we have been making comments in our MD and A about Improving margin trends that we are seeing in our backlog. So compared to a year ago, it certainly is higher than what it was. We still see runway for that to improve. The margins in our pending backlog which will eventually obviously convert to backlog, Those margins are higher than what we're carrying in our backlog as well.

Speaker 2

So that's what gives us confidence about kind of continued improvement in our margin profile there too. In terms of the pipeline of work, like there is a it's a very active market for us in all of our verticals right now. That means we can be more selective on what we're pursuing. So we're looking for the right opportunities for us and there's probably a little bit less competition for some of these Projects too. So read into that, that going in margins are pretty healthy as well.

Speaker 7

Okay. That's helpful. And then on the revenue growth side of things, obviously, the Given the record level of backlogpending backlog, Can you just speak about sort of how we can potentially think about growth into 2024? I mean, the pending backlog in particular is up Very, very significantly, I guess, harder to understand maybe how that gets converted. So just looking for Any help on how we think about growth opportunities next year, I guess given the backlog plus the demand environment?

Speaker 2

Yes, certainly. So, if you look at our book backlog right now, so just short of $3,000,000,000 We said that 67% of that will be put into place over the next 12 months. So $2,000,000,000 of the $3,000,000,000 comes into place. Already in pending backlog, you kind of have these 2 categories, Roy. You've got the MSAs and The $1,100,000,000 those contract terms kind of span 3 to 7 years.

Speaker 2

So read into that, the $100,000,000 $250,000,000 of that may come into place in the next 12 months. And then of the remaining 2 In pending backlog, we would expect almost all of that to convert to backlog again in the next 12 months. So going into next year, You've kind of got probably $1,500,000,000 of existing backlog. You're converting the $2,000,000 you're getting some of the MSA. So we have pretty good visibility to the work program going into next year.

Speaker 2

So I think in terms of Growth, we do our business plans later in the year, but I think we'd be kind of comfortable in the 6%, 8% growth range for next year.

Speaker 7

Okay. That's very helpful.

Speaker 2

At this point based on what we're seeing,

Speaker 7

Yes. No, that's great. Thanks, Fran. Thanks for the sort of the build up to that with the details. I guess just last question would be Just on M and A, Trinity was completed earlier in the year.

Speaker 7

Are you still looking at opportunities? Is that still A core part of the strategy right now? And if so, can you provide a bit of details around sort of what it is you'd have interest in and sort of what the environment looks like right now in

Speaker 1

There's certainly a lot of opportunities in the marketplace right now. We're continuously evaluating. We have The team on this on a full time basis looking at things that make sense for us and some are Ultimately looking for the right cultural fit where we can acquire a company that It brings a team and aligned with our culture and we tend to find exclusive opportunities. We don't like Typically participating in auctions where the owner doesn't really care who acquires the business. So we tend to be in a narrow band, but there's are a number of opportunities out there that fit that profile.

Speaker 1

So, yes, very active, many opportunities at various stages of Evaluation, so but it continues to be a strong area for us, predominantly in the tuck in side. The larger, more transformed opportunities don't come along very often. So, but we'll obviously Adapt to 1 if it does.

Speaker 7

Okay, that's great. And maybe just one follow on there, Terry. The which sort of sectors or end markets would be of greatest interest to you right now?

Speaker 1

Well, it never lines up perfectly with the area that you're specifically focused on growing. But I would say that if you think about what we're building out, we're building out A new infrastructure vertical, so that's an area we're very interested in and looking for opportunities. We've got continue to enhance. We've had tremendous In our industrial vertical, especially in Eastern Canada, now we're getting a lot of momentum in Western Canada. So areas that can enhance that are our focal point.

Speaker 1

So I'd say those would be the 2 primary areas that we're focused on businesses that can enhance our Industrial performance and continue to grow our infrastructure vertical and most importantly that are accretive To our EBITDA targets.

Operator

The next question comes from Rola Chen from IA Capital Markets. Please go ahead.

Speaker 8

Good morning. This is Rella Fanacci. So most of our questions already got answered. But we're wondering in terms of like project mix, Currently, there is around 90% lower to medium risk and 10% higher risk. And in the backlog there is more than 70% of collaborative deliverance model.

Speaker 8

How does that align with your long term targets as a whole?

Speaker 1

I would say that that's certainly a reasonable performance right now with the business and The market ebbs and flows and opportunities come and go, but I think it's if there's projects that come along that have a risk profile that we are not comfortable with. We just we take an off ramp and don't continue to pursue it or don't even get to 1st base in the 1st place. So I think there's a very high trend of this work right now and it's a great model and I think will be a model that continues to have legs in the long term because it's the most efficient model that you can use to work very With your client and have a high performance delivery. So it's a model that's gained considerable strength in other Jurisdictions like Australia and the UK and I think it will continue. So I think in that regard the demand is very high.

Speaker 1

We don't see that demand softening in the near term, Even the medium term, so I think this mix that we have right now will be a nice balance and we're comfortable with it. The projects that we take on that have higher risk, obviously we refer to them as higher risk, but obviously we approach those With an appropriate mix of contingency and risk and escalation allowances if those Projects enter into our fold. So obviously, we take a very conservative approach if the risk is higher and Ultimately, our clients, general clients are trending towards using These clever models and they're having huge success with them. So it becomes a much more efficient model and a much more cost effective model To work in these delivery models.

Speaker 8

That's helpful to learn. Just following up on the Vison acquisition, how is the integration So far?

Speaker 1

Yes, it's gone really well. We're well underway with some of our system integration right now and launched Some of the system things that we would do, we've got a number of variables or safety programs fully integrated in that regard. So it's a business that is Complimentary to what we do, so it's got some uniqueness with Trinity and working in utilities and communication markets. So It is bolted on to the company quite nicely and the leadership team has fit in really well and Mike Attardo, who is our lead in that business, who founded the business originally with his uncle is doing a great job. We're really pleased with it and really especially with the culture the way it fits with our organization, it's exceeded our expectations.

Operator

The next question comes from Ian Gillies from Stifel. Please go ahead.

Speaker 2

Good morning, everyone. Good morning.

Speaker 3

Terry, could you talk a little bit

Speaker 6

On a risk adjusted basis, would your preference be to pursue one of these large infrastructure projects that are going in Canada Or maybe a larger M and A deal to help augment growth of the business significantly. I ask this in the context because the business has obviously been performing quite well and the balance sheet is in very good shape. So the ability to do either is Looks pretty good right now.

Speaker 1

Yes. I think within our organization, Ian, it really it depends on each It really doesn't distract us to a large extent if we were doing a large M and A You know, deal in comparison to a large infrastructure project, you know, similar to the The more recent Stuart Olson transaction that we did, which was very successful and has worked out really well for us. We have a very small team working on that of about 10 people. So None of which would be involved in a large infrastructure project. So on the infrastructure side, a number of those opportunities are out there.

Speaker 1

They're all in Various stages of evolution, the various clients we work for in Canada are working with a lot of different models currently, some With different levels of risk and we're focused on those that fit our profile and Again, early days on some of the larger ones we're working on with teams. But the good news is we're seeing more and more of those We've evolved and we're able to complement those teams quite strongly with our team and it's exciting because the scale of Investment that's going on in both social infrastructure and horizontal infrastructure by the various governments in Canada is Unprecedented. So and we've had good success. We're building over key projects currently and we've had good success with those In the approach we've taken, which is a collaborative interface with our client who ultimately has A different interface with the owner. So we're very pleased with how we're performing on the scopes that we have and we're developing a very strong resume To complement any project in Canada that evolves.

Speaker 1

So I think a little bit the way we operate, we're a little bit Divided, but we like both if the fit is right and the dynamic is right for us.

Speaker 6

No, that's helpful. I suspect I know the answer to this next question, but the guidance keeps going up. The share price probably isn't following it the way it should in our opinion. Does the NTIB get any more interesting At the sort of share price levels or is that just a continuing conversation with the Board?

Speaker 1

It's a continued conversation with the Board. We look at various use of our capital and Ultimately, it's a quarterly conversation that we talk about balancing the needs of the business, Our forecasted growth, the balance sheet we need for the types of things we're doing, the dividend mix. So it's an ongoing evaluation as we move the business forward.

Speaker 6

Okay. And then last one for me, probably directed at Wayne. I apologize if I missed this earlier. There's been a bit of volatility in the G and A quarter to quarter. Can you maybe just help us map out the rest of the year there and where you think that shakes out on a full year basis and so on and so forth?

Speaker 2

Yes, certainly. So in Q2, our G and A was $36,200,000 So that included impairment charges We have, right. So from an ongoing run rate basis, you can kind of back those charges out and that kind of gives you a new baseline. The increase from Q1, if you think of it this way, the company has a profit sharing program and we accrue profit In proportion to profits earned, right? So Q2 had higher earnings than Q1.

Speaker 2

So proportionately, you're going to accrue more Profit sharing and that's kind of that impact. So when you're modeling that out, just to keep that factor in mind, I guess that's really The one variable nature that we have in there, our largest cost in G and A is people and we're getting leverage On our overhead structure right now, our 2nd largest cost would be office locations and obviously we're getting more efficient on that side. With the impairments that we took or the 2 offices in particular that we're moving out of, you can read into that Maybe $800,000 $850,000 of savings a year under IFRS 16. Those savings are going to be reported in depreciation and interest expense. So Okay.

Speaker 7

I don't know

Speaker 2

if that gives you a bit of guidance or help me? No,

Speaker 6

that's very helpful. I appreciate that. Thanks very much.

Operator

The next question comes from Frederic Bastien from Raymond James. Please go ahead.

Speaker 9

Good morning. Guys, you secured a number of contracts in the energy and mining sectors, which is quite encouraging given the Generally better margin profile that is embedded in that work. Do you see this momentum continuing into the back half of this year and And if so, what gives you that level of confidence? Thanks.

Speaker 1

We certainly do, Fred. And as I I commented earlier, we have strong strengthening pipeline and Work on hand evolving in the West. We've had tremendous growth in the East. And so yes, there's a number of things that are out That we're in early stages, some cases further along into further discussions on, But there seems to be coming off the large industrial work program that we had up in Northwestern BC, The reputation that we've developed from that project and the scale of the work we did there and the performance of that project given that it's A mega project being delivered in Canada basically on budget and ahead of schedule When you're part of something like that, you can you get tremendous uptake across the country because it doesn't take long For other industrial players to find out what was the team there and how did that happen. So we're getting a tremendous lift off that Across the country, which is tremendous and our teams have worked very hard and been very dedicated.

Speaker 1

So, yes, I'd say that We have a very bright pipeline of things across energy, mining, nuclear and horizontal infrastructure.

Speaker 9

That's great to hear. Thanks, Heinz. That's all I have.

Speaker 2

Thanks.

Operator

The next question comes from Max Sinha from National Bank Financial. Please go ahead.

Speaker 5

Hi, good morning, gentlemen.

Speaker 2

Hi, Ben. Hi.

Speaker 5

Just a couple of quick ones for me. I think in the MD and A, Terry, you were talking about some cross selling successes. And I'm just curious if you can maybe talk about some of them. Thanks.

Speaker 1

Sure. So the big one, Max, is we're As I indicated, we're steering our buildings business, vertical buildings, our institutional commercial business into light industrial And part of that comes from the resume that we have in our industrial business which It goes back many, many years of delivering large industrial facilities. So when you can cross sell and partner And obviously take advantage of that resume and you can move your institutional commercial focus into that lighter industrial In cross selling in a partnership, it just dovetails into higher margins, ultimately rising tide rises, all boats sort of thing. So we're doing a lot of that and that all centered around the 1 bird framework and the teams have responded really well to that and that's a direct In correlation to our improving margins of the business to date, so you're starting to see that now in the Q2. But then if you look at a project like A large data center.

Speaker 1

We just delivered a large data center for Microsoft and starting with site development. The site development was done By Dagmar, the mechanical electrical was done by our Kennam Group. Our buildings team in Ontario did a lot of self perform work on that including self perform concrete And our policy team had the overall management of it. And as you know, data is nobody's got enough data storage. There's a lot of data So it's just an example where and that particular initiative came from the acquisition of Dagmar.

Speaker 1

So they had the relationship Doing site development on these things in the underground utilities. Now at Trinity, we could have done all the communications as well. So that platform It's really paying off and that's what we refer to as cross selling. But we're also cross selling Divisions in different regions where we might have a certain business focus in a region, we're cross selling clients to bring in our industrial team or vice versa, In some case, the infrastructure guys, so that's what we kind of refer to as cross selling. It's just being able to Leverage, but the collaboration that's going on is really impressive.

Speaker 5

Yes. No, indeed, yes. Thanks. That's super helpful. And Maybe just kind of following up on the sort of industrial dynamic.

Speaker 5

I'm just curious as you on-site right now with some of the very large industrial jobs, If we should be thinking about kind of the ramp up utilization and sort of the ability to maybe score additional work on the more recent On these recent projects kind of similar to what we've seen kind of like in LNG Canada or kind of the good old days of oil sands. Just Yes, curious if it's kind of saying copy and paste applies here as well.

Speaker 1

Yes, I think so, Max. Like we're seeing it when we get on With an assignment, it's very rare that we don't take on multiple assignments unless there's a we don't like the look of commercial interface And that doesn't happen very often. But in that regard, we're seeing continuous growth on the big assignments we've got and new ones Percolating when we did our large project up in Northwestern BC, we that was the only one in Canada. So we were able to Really build a very large the only one in Canada in industrial. There's many other large infrastructure projects, but we were able to build a very large team of the best of the best now that group is all over the country on new assignments and getting early days because we work collaboratively.

Speaker 1

Oftentimes, We're working in the dark for a while without a firm commitment, but we know that that pipeline is very strong because we're working on early, Early contractor involvement, which is doesn't move the needle very high on the revenue side, but and it's not really announceable, but We're on a lot of those right now. So, yes, that pipeline is very strong.

Speaker 5

Okay, excellent. That's it for me. Thank you so much.

Speaker 1

Thanks.

Operator

This concludes the question and answer session. I will hand the call back over to Mr. McKibben for closing remarks.

Speaker 1

Okay. Thank you everyone for joining our earnings call this morning and thank you to the entire Bird team for their

Operator

Call and Webcast. You may disconnect your lines. Thank you for participating and have a pleasant day.

Powered by Quartr

Key Takeaways

  • Q2 Financial Performance: Delivered 19% organic revenue growth to $686.4 M, a 37% increase in EBITDA, and significant adjusted EPS gains year-over-year.
  • Record Backlog: Secured nearly $1 B in new contracts, bringing combined backlog to $3 B and pending backlog to $3.1 B (including $1.1 B in MSAs and recurring work) with ~90% low-to-medium risk profiles.
  • Raised Full-Year Guidance: Now targeting low-double-digit organic revenue growth and full-year adjusted EBITDA margins of 4.6–4.8%, with further margin expansion expected in 2024.
  • Diversified Project Mix: Maintains a well-balanced portfolio across industrial, infrastructure, and institutional sectors, executing over 70% of contracts via collaborative delivery models to enhance margin resilience.
  • Strong Financial Position: Closed Q2 with $107 M in cash, a 0.08x net debt/EBITDA ratio, and a 1.22x current ratio, enabling continued self-perform investments and tuck-in acquisitions.
AI Generated. May Contain Errors.
Earnings Conference Call
Bird Construction Q2 2023
00:00 / 00:00