Earnings call: Bird Construction Reports Strong Growth and Optimism for 2024

 

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Bird Construction Inc. (BDT.TO) has announced its fourth quarter and full-year results for 2023, showcasing significant organic revenue growth and continued improvement in both gross profit and EBITDA margins. The company reported an 18% increase in full-year revenue, reaching $2.8 billion, and a 37% improvement in adjusted EBITDA, amounting to $139 million. Net income for the year stood at $72 million, translating to earnings per share of $1.33. Bird Construction also reported a 26% increase in its backlog, now totaling $3.4 billion, with an additional $3 billion in pending backlog. Looking ahead, the company is positioned for continued success with a strategic focus on profitability, diversification, and growth into 2024 and beyond.

Key Takeaways

• Bird Construction achieved 18% revenue growth in 2023, with a full-year revenue of $2.8 billion.
• The company’s adjusted EBITDA improved by 37% year-over-year to $139 million.
• Net income was reported at $72 million, with earnings per share of $1.33.
• Backlog increased by 26% to $3.4 billion, with an additional $3 billion in pending backlog.
• Significant project awards were announced across various sectors.
• Bird Construction aims for high-single-digit revenue growth in 2024, with a focus on EBITDA margin accretion.

Company Outlook

• Bird Construction anticipates high-single-digit revenue growth in 2024.
• The company’s strategic plan is set to continue margin expansion and organic growth until 2027.
• A focus on infrastructure and mechanical solutions expansion, as well as large infrastructure project pursuits, is expected to drive growth.

Bearish Highlights

• The exact growth rate for 2024 is uncertain due to the unpredictability of project approvals and redesigns.

Bullish Highlights

• The company has a balanced risk profile with 75% of the backlog consisting of collaborative framework projects.
• Bird Construction is investing in technology to improve labor efficiency and sees potential for margin expansion.

Misses

• There were no specific misses mentioned in the earnings call summary.

Q&A Highlights

• CEO Teri McKibbon discussed opportunities in energy and indigenous project markets following the acquisition of NorCan.
• McKibbon highlighted the demand for critical minerals and metals in Canada’s north as a significant growth opportunity.
• Bird Construction is focused on Canada for its data center projects due to the favorable environment and abundant opportunities.

Bird Construction’s CEO Teri McKibbon expressed contentment with the company’s current position and optimism for future growth. The acquisition of NorCan opens doors to new markets, particularly in energy and indigenous projects. McKibbon emphasized the growing demand for critical minerals and metals in Canada’s north and the company’s readiness to capitalize on these opportunities. The strategic plan aims for consistent margin expansion and organic growth leading up to 2027. Despite the unpredictability of project approvals affecting revenue growth rates, Bird Construction is confident in its ability to deliver value and is well-positioned for growth in the coming years.

Full transcript – None (BIRDF) Q4 2023:

Operator: Welcome, ladies and gentlemen, to the Bird Construction Fourth Quarter 2023 Results Conference Call and Webcast. We will begin with Teri McKibbon, President and Chief Executive Officer’s presentation, which will be followed by a question-and-answer session. [Operator Instructions]. As a reminder, all participants are in listen-only mode and the webcast is being recorded. [Operator Instructions]. Before commencing with the conference call, the company reminds those present that certain statements which are made express management’s expectations or 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 might ask may include forward-looking information. Therefore, the company cautions today’s participants that such forward-looking information involves 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 from the company’s estimated future results, performance or achievements expressed or implied by the forward-looking information. 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 meaning under IFRS and may not be comparable with similar measures presented by other companies and are therefore considered non-GAAP measures. I would now like to turn the call over to Teri McKibbon, President and CEO of Bird Construction. Please go ahead.

Teri McKibbon: Thank you operator. Good morning, everyone. Thank you for joining our fourth quarter and full year 2023 conference call. With me today is Wayne Gingrich Bird’s Chief Financial Officer. Before we begin, I’d like to take a moment to acknowledge that this week we celebrate Women and Construction and International Women’s Day on Friday. It’s an opportunity for us to recognize the remarkable women at Bird who inspire us daily. Today, we also reflect on the ongoing journey toward gender equity path that we are committing – committed to pursuing. At Bird, we understand the value of diversity and allyship, which we actively foster through initiatives like our Women at Bird Employee Resource Group and meaningful external partnerships. While we have made progress, there’s still more work to do and we are dedicated to fostering a more inclusive industry. Turning to today’s presentation. This past year has been a period of significant achievement for Bird underscored by a robust revenue growth, further margin improvement, reflecting the strength of our strategic plan, the strong reputation we have built with our clients and the dedication of our teams across the country. Our diverse capabilities to deliver sophisticated work and had positioned as a leading collaborative construction and maintenance company remain competitive advantages which we intend to leverage in 2024 and beyond as we continue to focus on growth and margin expansion. Bird’s fourth quarter and full year results delivered substantial organic revenue growth and continued gross profit and EBITDA margin accretion, aligned with our core priorities. Our 2023 results provide good momentum for the company as we enter 2024 and the final year of our current strategic plan. In 2023, we delivered 18% revenue growth with full year revenue of $2.8 billion. Adjusted EBITDA improved 37% year-over-year to $139 million or 5% of revenue. The company reported $72 million of net income and earnings per share of $1.33. We grew our cash flow from operations and significantly grew our backlog reflected in the 1.29 times book-to-bill ratio; continued to see considerable opportunities for profitable improvements including additional leverage on our cost structure in the coming years. Bird was awarded over $3.6 billion in securements for the year and at year end our combined backlog was up 26% over last year closing the quarter with $3.4 billion in backlog and $3 billion in pending backlog. Our pending backlog included almost $1.1 billion of master service agreements and recurring revenue work which will be performed over the next seven years. Our portfolio of master service agreements spans the energy, mining and nuclear sectors, which further bolstered through the acquisition of NorCan subsequent to the yearend, which was one of Alberta’s leading electrical service providers. The robust foundation of contracted and awarded work provides significant visibility into 2024, both for revenue growth and further margin improvements. It underscores our confidence in the continued demand for our services, particularly in sectors critical to the energy transition, population growth and infrastructure modernization. Our backlog is highly collaborative and diversified across many sectors and Bird is a leader in collaborative contracting in Canada. In collaborative contracts, we work closely with clients and partners to advance the design before determining the project’s price. Giving the increasing complexity of program projects, a key area of expertise for Bird, a collaborative approach is a better way to build. There are significant benefits for all parties involved including decreased risk, increased stakeholder engagement, added value for the client and the delivery of an enhanced final product. Bird’s growth and profitability improvements to-date are a testament to our team’s ability to leverage self-performed capabilities and effectively cross-sell our services and solutions. With a very active bidding environment and robust demand for our comprehensive services we remain disciplined with our project selection ensuring strategic alignment between capabilities, project type and the delivery model. Our emphasis on collaborative project delivery and strategic investments in technology continue to enhance safety, productivity, and partnerships across all projects. Over the past few years, Bird has strategically diversified its revenue sources through organic growth and strategic M&A. Throughout this transition, Bird has significantly enhanced profitability. As part of our 2023 reporting, we have realigned the annual revenue breakdown to better align with Bird’s focus areas and position in the industry. Previously, Bird referred to its revenue breakdown as institutional, commercial, and industrial. Today, Bird is known for delivering sophisticated projects in the industrial buildings and infrastructure markets. Due to this shift and aligned with our messaging over the past few years, the figures have been restated for 2021, 2022 and 2023. More information on what each segment includes can be found in the Nature of Business section of our MD&A. With – while great progress has been made to-date advancing Bird’s strategy there’s still a significant runway of expansion and diversification opportunities that will continue to support margin accretion and drive forward Bird’s growth strategy over the coming years, especially in the underweighted infrastructure market. In 2023, Bird announced many significant project awards that underscore our expanding presence across key sectors including energy, power, education, modular construction, as well as infrastructure projects across Canada. These Awards not only reflect our strategic positioning but also the enhanced capabilities we’ve gained through strategic acquisitions establishing us as a sought-after partner for sophisticated projects. Throughout the year, we were awarded several projects in the post-secondary education sector across BC, Alberta, Ontario on East Coast. These projects capitalize on Bird’s expertise in creating sustainable smart environments while highlighting our strength in lower carbon building Solutions like mass timber. Our clients are increasingly committed to sustainable construction and retrofits to minimize their carbon footprint and space where Bird’s offering align with market needs. We were pleased to be awarded early works at a new LNG facility in BC, as well as multiple mining contracts showing the strength – current strength of the commodities market, but also the strong leadership and dedication of our heavy soul team. Bird was awarded multiple hydroelectric-related projects that aim to enhance the longevity and efficiency of existing facilities and a central component of Canada’s clean energy future. We’ve previously highlighted Bird’s role and current project portfolio in supporting the energy transition and shift to a lower carbon future. The industry’s overall strong demand is complemented by this exceptional outlook for investments in clean power generation, power distribution and preparations for further electrification including battery and EV infrastructure. There is also a considerable focus on enhancing the energy efficiency of existing infrastructure and expanding public transportation. Bird’s capabilities especially are self-performed electrical expertise uniquely position us to meet this significant long-term demand. Currently projects underway range from hydroelectric infrastructure and large-scale utility scale renewables to work on, on Ontario’s nuclear sites, waste to heat recovery in Toronto Western Hospital and various wastewater and organic waste processing facilities across the country. Our commercial systems and utilities team and our industrial maintenance repair and operations team, along with their specialized mechanical, electrical, telecommunication and data systems expertise make up over 2500 electrical personnel. These teams are and will continue to be critical to meet the demand for electric infrastructure across Canada. With our buildings expertise, Bird employs sustainable building solutions such as mass timber, modular construction, deep energy retrofits, net zero buildings, innovative special projects, smart building – smart building technology, just to name a few. A growing civil infrastructure team recently secured the East Harbor Transit Hub Alliance development agreement in partnership with AtkinsRéalis. With Bird’s strong reputation developed by supporting many of Canada’s leading energy and power plants over the years we are well positioned as a partner of choice throughout the energy ecosystem. There’s currently strong demand for Bird’s services across the industry and a significant backlog of projects required for the longer cycle investment horizons in both public and private sectors. Government programs are supporting investments in transportation, energy, water and telecommunications. This includes funding through the investing in Canada plan, Canadian Infrastructure Bank, Canada Growth Fund and other federal initiatives aiming to modernize critical aspects of our daily lives and enhance economic growth. Specifically, the shift towards a greener economy requires substantial investment with an estimated $125 billion to $140 billion required to achieve the federal goal of net zero emissions by 2050. This is a significant opportunity for our industry. Canada’s energy sector is facing an estimate of doubling our energy electrical – electricity supply to keep up with an increasing demand, as well as achieving net zero in 2050. Projected investments range from $110 billion to $270 billion to expand clean energy and improve power distribution and transmission systems. Public transportation continues to be a significant area of growth with over $70 billion of funding recently committed in Ontario, as well as additional demands across the balance of provinces reflecting the commitment to enhance our public infrastructure. Lastly, the nuclear sector holds over $40 billion in new potential projects not including general annual spending, high-profile initiatives like the Bruce Nuclear expansion, the Pickering refurbishment and the Small Modular Reactor Infrastructure program highlight the sector’s positive outlook. Together, these Investments reflect our robust long-term demand for our services positioning us at the forefront of this transformative era in Canadian infrastructure development. Looking ahead to 2024 and beyond, our optimism is fueled by our strong backlog, diversified service offerings and strong commitment to our strategic priorities. As we head into the last year of Bird’s current strategic plan, we remain firmly focused on profitability discipline, diversification and growth. We expect to retain in excess of two-thirds of net income to support our growth in 2024 and beyond, while continuing to provide healthy returns to shareholders. With that I’ll hand it over to Wayne who will provide more detailed insights into our financial performance.

Wayne Gingrich: Thank you, Teri. We’re very pleased with our strong performance in 2023. The company has safely advanced our strategic priorities and we delivered significant organic growth, continued accretion of adjusted EBITDA margins and strong operational cash flows. In the fourth quarter, the company delivered 22% year-over-year revenue growth with revenue for the quarter of $792.1 million. The company’s margin profile improved in the quarter, compared to the prior year with gross profit percentage increasing to 9.2% from 8.8%. The increase in gross profit margins continued to be driven by improved margin profiles on newer work resulting from disciplined project selection and cost control, growing self-perform capabilities and cross-selling opportunities across the company and a higher proportion of industrial construction, compared to Q4 2022. General and administrative expenses were $40.5 million or 5.1% of revenue, compared to $34.5 million or 5.3% of revenue in 2022. One of the primary drivers of the $6 million increase in the quarter was $3.2 million in higher compensation costs, which includes the impact of increased accrued compensation costs, share-based compensation costs in related derivatives. Compensation costs in the quarter were higher, compared to the prior year due in part to the significantly higher volume of work and profitability, as well as the 44% increase in the company’s share price for the quarter. Net income and earnings per share were $23.9 million or $0.44, compared to $14.9 million or $0.28 in 2022. Adjusted earnings and adjusted earnings per share were $24.3 million or $0.45, compared to $15.5 million or $0.29 in 2022. Adjusted EBITDA in the fourth quarter was $43.9 million, compared to $30.6 million earned in the fourth quarter of 2022, increasing to 5.5% of revenue from 4.7% last year. The increase was consistent with higher gross profit and an increase in income from equity accounted investments, as well as leverage gained in our cost structure. Results for the full year reflect our team’s strong project execution with significant revenue growth and profitability improvements. We reported revenues of almost $2.8 billion reflecting an 18.1% or $429 million increase, compared to $2.37 billion of construction revenue recorded in 2022. Revenue growth was predominantly organic with additional contributions from Trinity acquired on February 1st 2023. Gross profit for full year 2023 was $240.5 million, reflecting an 8.6% margin, up from 8.5% in 2022. The company’s highly collaborative work program, growing backlog with enhanced margin profiles and expanded self-perform capabilities continued to drive strong gross profits and significant revenue growth. General and administrative expenses were $142.8 million or 5.1% of revenue for the year, compared to $132.4 million or 5.6% of revenue in 2022. The primary drivers for the $10.4 million year-over-year increase were acquisition and integration costs and asset impairments from the rationalization of some leased office space during the second quarter. Other drivers included higher compensation costs and higher aggregate growth related increase to other costs such as travel, business development, recruitment and pursuit costs. Full year net income and earnings per share were $71.5 million or $1.33 per share, compared to $49.9 million or $0.93 per share in 2022. Adjusted earnings in 2023 also increased significantly to $74.2 million or $1.38 per share compared to $46 million or $0.86 per share in 2022. Adjusted EBITDA increased 37% to $138.7 million or 5% of revenue from $101.2 million or 4.3% in the prior year. The increase was consistent with increases in gross profit and income from equity accounted investments. We continue to focus on profitability drivers including our disciplined project selection and risk balanced mix of work. We’re growing in higher margin sectors with more complex work, increasing self-perform work and expanding cross-selling initiatives, all of which contribute to higher margin potential on projects. We’re also focused on growing our portfolio of recurring revenue MSAs. To support our continued growth, Bird’s highly valued team grew in 2023 to meet the needs of Bird’s expanding work programs with Bird being successful in attracting, retaining, and developing talent throughout the year. Our financial position remains robust with a strong balance sheet characterized by significant liquidity and a net cash position when considering just our accessible cash. This financial strength provides the flexibility to invest in growth opportunities, both organic and through strategic acquisitions. We ended the year with $178 million in total cash and cash equivalents and an additional $215 million available under the company’s syndicated credit facility. When including total cash, our net debt position is negative $104.6 million. Bird recorded positive cash flows from operations, while funding the working capital required to support the significant growth of our work program. At the end of the year, working capital stood at $234 million, an increase of $49.4 million over December 31st, 2022. The primary driver of the increase was net income of $71.5 million exceeding dividends paid. Bird’s working capital ensures support for current and future contractual requirements. Our liquidity and leverage ratios and very positive return metrics remain aligned with expectations. The company’s current ratio is 1.26. Our adjusted net debt-to-trailing 12-month adjusted EBITDA ratio stood at negative 0.05 times and our long-term debt-to-equity ratio was 20%. The company’s return on equity for the year was 27%, together demonstrating our commitment to maintaining a healthy and sustainable capital structure. Bird’s capital allocation strategy remains focused on balancing growth with healthy dividend returns with the company investing in excess of two-thirds of net income to support growth. Throughout 2023, we invested $31 million in capital expenditures to support our operational needs and growth initiatives. Our dividend policy reflects our strong financial performance and confidence in the business’s future with over $22 million returned to shareholders as dividends in 2023. Our dividend remains well covered by our earnings and cash flows and remains an important component of our total shareholder return strategy. In December 2023, based on the strong outlook for 2024, we announced a 30% increase to the dividend, bringing it to 4.67 cents per share per month or $0.56 per share on an annualized basis. Bird continued to pursue accretive tuck-in acquisitions with high growth potential notably with the acquisition of Trinity in February 2023 and NorCan which was announced subsequent to year end. The company has continued to experience robust performance from earlier acquisitions upholding our reputation as a strong integrator in delivering accretive transactions for shareholders. M&A remains a key element of Bird’s capital allocation and growth strategy. Our M&A strategy is targeted seeking to integrate firms with specialized offerings that complement our existing services, focusing on strategic sectors like civil infrastructure, process mechanical, electrical MRO services, utilities and renewables. The strength of the company’s balance sheet and access to financing supports our disciplined approach to investing in Bird’s future growth, both organically and through opportunistic tuck-in acquisitions. We are well positioned to pursue accretive tuck-ins key sectors and remain open to larger opportunities where it makes sense. I will now turn the call back over to Teri to comment on the outlook for the company.

Teri McKibbon: Thanks, Wayne. We’re pleased with the company’s performance in 2023 as we move into 2024, Bird remains positioned to capitalize on the opportunities presented by a robust construction market and the ongoing need for sustainable infrastructure development. Our strategic focus areas including growing recurring revenue streams, enhancing our self-perform capabilities and expanding our service offerings through strategic acquisitions will continue to drive our growth. We were excited to welcome NorCan to our team in January. Now our focus is working together on future growth potential through cross-selling and new services for our client base and working in collaboration with our indigenous partner Infinity Métis Corporation. Topline organic growth is expected to continue in 2024 with seasonal patterns favoring the second half of the year as usual. The company remains focused on EBITDA margin accretion and expects adjusted EBITDA and earnings per share growth to outpace organic revenue in 2024 with the company continuing to drive strong and improving operational cash flow. We’re excited about the future, and confident in our ability to deliver on our strategic priorities creating value for our clients, our employees and our shareholders. With that, I’ll turn the call back to the operator for questions.

Operator: [Operator Instructions] The first question comes from Jacob Bout with CIBC. Please go ahead.

Rahul Malhotra: Hi, good morning, Teri and Wayne. This is Rahul on for Jacob.

Teri McKibbon: Morning.

Wayne Gingrich: Good morning.

Rahul Malhotra: Morning. So very strong revenue growth in 2023. High double-digit. Given you are sitting on record backlog and the visibility you have today, what sort of revenue growth do you see coming in 2024? I believe on the last Q3 call, you had said that that a high-single-digit growth rate was reasonable.

Wayne Gingrich: Yeah, I think that continues to be our view and that would be edging towards low-double-digit growth. And again early days yet as we’re early in the year, couple of months behind us. But I think the demand certainly is unrelenting. So I think that pressure is going to continue to move that that top-line revenue up.

Rahul Malhotra: Right. Okay. And maybe just the question on the overall risk profile of your business today. So, collaborative framework type projects are now about 75% of combined backlog. Are you are you happy with this level? And are you happy with the risk profile for the remaining 25% or so outlook?

Teri McKibbon: Yeah, anytime you can get to a level like that in our industry is a pretty – we targeted to try to get to a level like this and we’ve achieved it and we continue to balance that the remaining 25% that we have are all projects that are well within our level of risk tolerance and our risk adjusted. But and I think it’s a good spot that we’re in. I don’t think you could ever get to 100%. I think it’s good to have this framework we have and it seems to be optimal right now. So I’m quite content with the balance that we have today and if it continues to ebb and flow between 70 and 80, that’s a good spot.

Rahul Malhotra: Great. Very helpful. Thank you. We’ll leave it there.

Teri McKibbon: Thank you.

Wayne Gingrich: Thank you.

Operator: The next question comes from Jonathan Lamers with Laurentian Bank. Please go ahead.

Jonathan Lamers: Good morning. Thanks for taking my question.

Teri McKibbon: Morning.

Jonathan Lamers: Under the progressive design build model, as you acquire tuck-ins like NorCan, do you see opportunities to increase the scope of work for projects that you are already in discussions with on the – in discussions with the customer on?

Teri McKibbon: Definitely. I think, whether those projects evolve in a progressive design build model or not, there’s certainly a lot of traction with our combined MRO team which NorCan fits into. A good example of that is, NorCan has an existing customer and has forces on the ground in the US in Denver. And that’s a very strategic position for us to leverage on the energy side in those markets and grow as a well-established client there. So it’s a good example of some of the benefits of NorCan. Also think there the Infinity partnership that we’ve inherited with the NorCan acquisition has got room to grow. We see tremendous traction in Canada on indigenous related projects, investments. It’s just tremendous, a tremendous pace of growth in that area and obviously having this existing partnership as well as many other partnerships we have, but this one specifically gives us a nice foundation to grow. But NorCan is – it’s a very well – well run company. It’s had an excellent safety record and it’s really fitting in nicely in the first month or so of its existence or month and a half with us at Bird and integration has gone very smoothly.

Jonathan Lamers: Thank you. And it’s interesting to see the major award packages to the mining sector. There seems to be increased awareness with the importance of developing some of the sources of critical metal – minerals and metals in Canada’s north. When was the last time that you would have seen work packages with multi-year commitments of this type of size for bird? And what are you seeing in this market looking forward? How significant could it be?

Teri McKibbon: Yeah, this is, this is pretty exciting. I don’t even know if 10 years ago when we were in a better, commodity cycle whether there was this kind of demand. There’s certainly I haven’t seen this before with the demand that we’ve currently seeing coming in many different areas throughout the country. And these are long-term – long-term commitments that these potential clients are looking for. And there’s not a long list of companies that are set up for this type of thing with the kinds of assets that you need equipment assets, and experience forces to be able to move into these sites which are often quite remote. So, that’s a really exciting area for us.

Jonathan Lamers: And if I could ask one more just on the operating margin. A number of positive comments in your outlook regarding margins continuing to trend upward and margins in the backlog and pending backlog being higher than the existing business. I know that you’re still working on your next leg of your strategic plan. But are you able to provide us with any comments on targets that we should be thinking of for the organic business over the next couple of years or just the – an appropriate cadence of margin expansion from here?

Teri McKibbon: Yeah, I think you’re going to see consistent cadence moving forward. Certainly, we’re still a few months away from finalizing our strategic plan. We’ve been meeting monthly with our Board of Directors. Our Board was very involved in this initiative and we’ve been going through the various pieces that we assembled and that’s gone very smoothly. I’d say, we’re pretty excited about this next iteration of the plan and what it’ll mean for the company and – but I think you’ll see consistent accretion with the opportunities that we’re targeting.

Jonathan Lamers: Okay, I’ll pass the line. Thank you.

Teri McKibbon: Thanks, Jon.

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

Michael Tupholme: Thank you. Good morning.

Teri McKibbon: Good morning.

Michael Tupholme: In the outlook commentary you talked about celebration again in revenue growth here. Just trying to understand I guess as we look at the revenue growth opportunity for 2024, I understand there’s sort of the regular seasonality, but is the idea that you’d expect the rate of growth to accelerate as the year moves on or you simply commenting on the fact that typically the second half is stronger than the first half?

Teri McKibbon: Yeah, I think it’s more that, it’s typically the second half is stronger in the quantum of revenue as opposed to the percentage will be obviously a significant factor in 2024.

Michael Tupholme: Okay. Perfect. Just to clarify. And then, you’ve talked about strategic project selection and I think that’s part of the story for a while now. I guess, with the backlog as strong as it is, strategic projects selection has always been important, but how does that evolve or change as you kind of go forward given the strength the backlog? Are you more focused on certain kinds of projects given where things stand right now as far as the business and are you trying to look at projects that will add work that that extends further out in time because you do have such a large backlog at the moment? Just any comments on how…

Teri McKibbon: Yeah, I think you’ve hit some of the highlights of what we’re – certainly, as you’ve – as we’ve grown become more diversified. We became – we’ve become more attractive for companies to engage on a longer term solution and longer term framework. So, certainly longer term opportunities are important to us. But I think we continued to build out the foundation of the business into these three verticals that we’ve talked about today kind of for the first time. And there is lots of room for those to continue to expand with the foundation we built. We’ve been investing significantly in our team and whether we’re in developing training and whatnot the existing team, but also we’ve been adding. When you have momentum like we have it’s certainly a bit easier to recruit, because some really talented folks out there that that are looking for a company with a lot of momentum with the kind of profile that we have. So that’s exciting. We get, we get a lot of interest that’s unsolicited and we continue to build out the organization on that basis.

Michael Tupholme: Sounds helpful. And maybe just picking up on that last point that you mentioned, the ability to recruit. But if you think about labor availability and the backlog is so strong. How are you finding it in terms of the ability to find the labor you need for the work program you have kind of across the board and not – not just simply recruiting but more generally speaking on the labor pool?

Teri McKibbon: Yeah, I think certainly it’s a question we see a lot. And I think it’s no question in Canada the labor is tight. But I’ll say this, we don’t very rarely if any ever have a project that we’re concerned about staffing and I think that comes from we’ve really driven into the DNA of the organization, the importance of collaboration. So we move very large teams of people around the country and if we’ve got a project that’s got a higher labor content in certain region, we’ll move labor in from other regions to help offset that. And obviously the opportunities that we’re focused on allow that and are in a position to accommodate the additional cost for that. I think that’s been a real key to our overall framework of how we’ve been moving forward. We also acquired labor through these larger acquisitions. NorCan peaks out at 500 people. So when you acquire a company like NorCan you add a considerable number of long term employees to the company and gives us more flexibility to steer in different directions in that regard. So, I think it’s a combination of things, but I think, again it’s earlier the momentum we have. The – I think the other really important part of all this is, we’re getting to a point where we’re 50% of our revenue is self-performed. So we control a lot of the projects that we’re entering and that’s a huge advantage when you’re talking about some of the opportunities that are evolving in things like data centers and things like mining, – long-term mining assignments and things like that, so.

Michael Tupholme: Thank you. That’s helpful. I’ll get back in the queue.

Teri McKibbon: Thanks, Michael.

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

Ian Gillies: Morning, everyone.

Teri McKibbon: Morning, Ian.

Wayne Gingrich: Morning, Ian.

Ian Gillies: Just going back to the revenue growth in 2024, maybe coming at it from a bit of a different angle, if we think about low-double-digit growth for ’24, that will be round numbers call it 330-ish million. You grew revenue by $420 million in ‘23 on a year-over-year basis. I guess, what’s precluding you or why wouldn’t revenue be growing at the same absolute level in ‘24 given the strength of the backlog?

Teri McKibbon: Yeah, I think we have a – sometimes what’s difficult to predict is we are working – when you’re working in a collaborative framework you’re doing a lot of advanced design and developments and then you’re heading into FID with the company’s Board of Directors for approval to proceed with the project. And that’s sometimes difficult to predict in terms of the timing of that and we’ve had projects where we’ve been at FID and the client comes back to us and says, our Board has decided to double the size of this project and we’ve got to go and redevelop design and whatnot. So things like that happens and sometimes difficult to predict. We’ve got a lot of – a lot of really exciting opportunities across the platform and because there’s so much that’s in advanced development. It’s harder to put your finger because you don’t completely control that. So it’s harder to put your finger on that. So there are times where things move to the right of it. But it’s more to do with the unpredictability of getting to FID with some of our larger clients that are building some of these large private and then also public, as well. Governments obviously are very focused on budgets and then we are doing collaborative work on the front end and we get to a reevaluation of a project and look at where we’re at. There are times where it’s crusting above their budgets and we got to go back and work on redesign which, extends the time frame of before you’re in the ground.

Ian Gillies: No, that’s helpful. I appreciate that that color, Teri. With respect to some of these specialty services that you’ve added in prior years such as electrical collars is there anything out there today that you don’t have that you find yourself interested in adding to your suite of services?

Teri McKibbon: There is anything that really rings the bell. I think we’d like to build out the capabilities of our existing offering. We’ve got certainly new growth in infrastructure, which is an emerging area for us. It’s new for Bird. We’d like to continue to build that out – we do – we do a considerable amount of electrical. We also offer mechanical solutions both in industrial and commercial. So we’d like to continue to see that growth on the mechanical side whether that’s organic or through M&A. So, some areas like that. But there isn’t anything that’s ringing the bell necessarily that we’re just missing. I think we’ve done a nice job to have the platform that’s exciting and giving us a nice base. The recent utility acquisition we did positions us extremely well, especially in the case of I think it’s so much growth evolving in North America in data centers. It’s a huge component of a data center. Just utilities and communications let alone all the electrical, mechanical that’s inside these data warehouses. So, those have all been very timely and they’ve worked out well for us.

Ian Gillies: And last one for me. You mentioned in your prior comment, but you’ve obviously been involved in some large project pursuits on the infrastructure side. Is there still other projects out there that are worth pursuing that you think would be of interest to Bird? Or are they still been awarded at this juncture?

Teri McKibbon: Oh, no. There’s just a pipeline that’s massive that’s evolving and the good thing is they’re all evolving in a collaborative framework almost extensively, especially in the provinces that have a lot of experience like Ontario and BC. Some of the other provinces are still dabbling with using P3s. But I think that’s going to eventually fade that interest for – again depending on the project, if it’s a clean Greenfield, everything’s controlled, it works. But if it’s Brownfield, it’s going to have to be collaborative or they won’t get anybody bidding ii. It’s just the way it is. So, yeah, I know lots of growth there. Lots of demands. I think we’re we’re increasing our resume with a portfolio of work we’re doing in healthcare for example. A lot of demand there where previously we wouldn’t have looked at that that closely because the risk transfer was too high, but now that’s changing. So, yeah, there’s just some really exciting areas we’ve developed a strong resume in horizontal rail, whether that’s heavy rail or light rail. So that’s lot of opportunities there, there are daunting almost.

Ian Gillies: Got it. Okay. I will turn the call back over. Thanks very much. That was helpful.

Teri McKibbon: Thank you.

Operator: The next question comes from Maxim Sytchev with National Bank Financial. Please go ahead.

Maxim Sytchev: Hi. Good morning, gentlemen.

Teri McKibbon: Hi, Max.

Maxim Sytchev: When I look at some of the data that you published in the MD&A that that deals with hours worked overall. And it feels like overall it’s up 6% in 2023 whereas revenue is up 18%. I’m just wondering if you don’t mind maybe commenting around whether it’s the efficiency on kind of per employee basis, which is driving up greater revenue cadence or a different sort of project scopes. Maybe if you can comment on that would be helpful. Thanks.

Teri McKibbon: Yeah, I think difference in project scopes would be part of it, Max, for example, a large mining assignment where you got a heavy equipment component, your hours would be lower relative to a building site where you’ve got a lot of labor on the site combined our internal – our hours plus our subcontractors. So I think it’s a mix. It’s driving a lot of it. We are though investing heavily in improving technology and we’re seeing considerable gains already in the investment we’re making in terms of our labor efficiencies and we’re really excited about that. We’ve spending a lot of time on that and that’s going to be transformational for the company as we continue to move forward, we we’ve made very good selections of the solutions that we’re using and the proven solutions. And yeah, we’re excited to see that evolved because we’re seeing some really good signs. So it’s a mix of both, but I’d say, the project mix would be a big contributor there.

Maxim Sytchev: Right. And how I guess would that trickle down to the margin line from your perspective do you think?

Teri McKibbon: Well, certainly the mining side margins obviously with the equipment investment is certainly a higher profile, higher returns in terms of EBITDA percentages. So I’d say that, again, it’s a tricky question because of the mix and it depends on the sector. Sometimes we’ll have a sector that’s got a very high margin profile that also has a high labor component. We have to employ a lot of labor in our maintenance services, which obviously we’re quite impressed with the margin profile there, but that margin profile would not be the same as margin profile on a large mining assignment that also will go 7 days a week, 24 hours a day and the other thing we’re finding now with these larger mining assignments, those are 12 months assignments where they just run around the clock, which is not what we’ve experienced in past years, because, they were shorter smaller assignments that had a different framework.

Maxim Sytchev: That’s helpful. Thank you. And last question. Do you mind providing a bit of color in terms of the margin differential between your recurring and more sort of at home construction work? If there’s any or have those buckets fully converged? Thanks.

Teri McKibbon: It’s pretty similar in terms of some of our core business areas it’s become quite similar. It was higher. Some of the recurring side was higher than some of our base business, but our base business has really improved in the way we strategically moved it in new areas. And those are kind of converging to be similar. But in that recurring you’ve got nuclear work. So it’s not just some of the energy or the oil and gas maintenance work we’re doing. So, that’s helping and that’s changing things. It’s very specialized obviously. So that’s improving it, so.

Maxim Sytchev: Okay. That’s helpful. Thank you so much.

Teri McKibbon: Thanks, Max.

Operator: The next question comes from Sean Jack with Raymond James. Please go ahead.

Sean Jack: Hey, good morning, guys.

Teri McKibbon: Good morning.

Sean Jack: I wanted to touch quickly, margin expansion has been seen over these past couple quarters along with a pretty substantial increase in growth obviously. Just wondering where do you believe margins can stretch to? And then also if you could give us any color on timing around that would be great.

Teri McKibbon: So, it’s difficult to pin that with the revenue and the mix of revenue that we have. But obviously we’re very focused on consistent accretion on an annual basis. We’d like to see accretion year-over-year be similar to what it’s been between 2022 and 2023. But we – and that’s just our ultimate goal. Long term obviously, there’ll be a settling at some point, but that’s a number of years down the road with the types of things we’re doing and the way we’re moving the business forward. So, it’s always a balancing act. But we’re really pleased with the profile of the backlog and that gives us a really good, certainly forward-looking guidance of where we’re going to be. And yeah, we’re pleased with the overall balance we’ve got today.

Sean Jack: Okay, perfect. That’s helpful. And one more from me. We touched a couple times on data centers and the opportunity around there in the call. There’s a lot of information pertaining to the opportunity in the states. I just wanted to see if you guys had any sort of numbers or colors or figures around the opportunity in Canada and sort of how you guys are seeing that layout and how that’s going to merge into your revenue outlook here for the next couple of years?

Teri McKibbon: Well, certainly Canada’s got so much green power. It’s a very attractive location. It’s also got a climate that is very conducive to cooling and things that you need for data centers that kind of thing. So I think we will be exhaust our capacity in Canada. But we have had requests to look at projects in the US. But at this point, we are focused on Canada. There’s just the opportunities are well beyond our capacity. So if that changes, I think the US growth for us would be centered on acquisitional growth to be able to launch that in local markets. But we have been like we’re increasing our position there. It’s just – it’s not a big focus for us right now.

Sean Jack: Right. Okay fair enough. All right. Thanks guys.

Teri McKibbon: Thank you.

Operator: [Operator Instructions] The next question comes from Michael Tupholme with TD Securities. Please go ahead.

Michael Tupholme: Yeah. Thank you. Two follow-ups on the margins. I guess, first question is, as we think about margin improvement in 2024 and potentially beyond, are the drivers to that improvement largely the same as they’ve been in recent years or do you see certain factors playing a greater role in the potential improvement going forward?

Teri McKibbon: I think a lot of it’s similar, but, we’re also seeing an acceleration of opportunities in mining. The energy side is got a lot of growth, but a lot of it is building off the platform that we’ve built. And like I said, it’s centered in the backlog that we’ve got and – but there’s no shortage of new opportunities that will change our footprint for sure.

Michael Tupholme: Okay. And then, I guess the second one, it ties into something that was asked earlier. Just you were asked about timing and margin improvement and I guess maybe magnitude, as well, but it sounds like you see certainly an opportunity in 2024 and it sounds like potentially beyond that you said maybe at some point it levels off, which is a reasonable expectation, but I mean, do you have a view that there is room for continued improvements in 2025 beyond 2024 or is that potentially one that’s leveling off it could happen?

Teri McKibbon: No, so I see Improvement well through this next iteration of our strategic plan, which will crest in ‘27. So, that’s what we’re focused on and we’re highly confident that we’ll achieve that.

Michael Tupholme: Got it. Thank you.

Operator: This concludes the question and answer session. I would like to hand the call back over to Mr. McKibbon for any closing remarks. Please go ahead.

Teri McKibbon: Thank you all for joining us this morning on our earnings call and a special thanks to the Bird team for their unwavering commitment to safety and excellence. We look forward to the opportunities that 2024 presents with a solid foundation that position as a trusted partner with clients, our dedicated and collaborative team and culture of inclusivity, a well-prepared to navigate and grow in this dynamic landscape. Thank you for joining us.

Operator: This concludes today’s conference call and webcast. You may disconnect your lines. Thank you for participating and have a pleasant day.

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