Bird Construction Inc.

Welcome, ladies and gentlemen, to the Bird Construction third quarter 2023 results conference call and webcast. We will begin with Terry McGivin, 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 while dialing into the conference number provided. At any time during the presentation today, you may press star then one on your telephone keypad to be placed into the question queue. You will hear a tone acknowledging your request. When we're ready for questions, you will be introduced into the conference in the order that you were received. If you wish to remove yourself from the question queue, you may press star, then two. As a reminder, all participants are in listen-only mode and the webcast is being recorded. Should anyone need assistance during the conference call, they may signal an operator by pressing star, then zero. 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 meanings 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 Terry McGibbon, President and CEO of Bird Construction. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our third quarter 2023 conference call. Presenting with me today is Wayne Gingrich, Bird's Chief Financial Officer. Our results in the third quarter continued to demonstrate the outcomes of the strategic shift in the business over the past few years. The momentum from the first half of the year has continued, and we delivered another quarter with significant revenue and adjusted it even at margin growth. Our teams have worked diligently to safely deliver on our clients' expectations, leading the company to another record quarter of revenue and delivering 17% revenue growth year-to-date. We have a significant combined backlog and an active bidding environment supporting a strong finish to 2023 and our positive outlook through 2024. Turning to our third quarter highlights, we delivered 17% revenue growth, closing the quarter with $784 million in revenue. We continued to see considerable growth in earnings and additional leverage on our cost structure. The company's adjusted EBITDA grew an impressive 60% year-over-year to $49 million, representing 6.3% of revenue compared to 4.7% in 2022. Our combined backlog grew by $40 million, up almost 20% year-to-date, closing the quarter with $2.8 billion in backlog and $3.3 billion in pending backlog. Our pending backlog includes almost $1.1 billion of master service agreements and recurring revenue work which will be performed over the next three to seven years. The company's diverse and highly collaborative combined backlog with significant self-performed scopes provides good visibility into 2024 organic revenue growth and further margin improvements. 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 delivery model. Supported by the combination of higher embedded margins in the combined backlog and achieving additional leverage on our cost structure, we expect adjusted EBITDA and earnings per share growth that will outpace revenue growth in 2024. The company's key fundamentals outlined on slide seven remain at the forefront of our efforts to drive forward our business and further improve the company's results in 2024. Bird has experienced significant growth across virtually all markets with both public and private clients, which is reflected in our revenue and earnings growth and our growing combined backlog. Our institutional buildings, enhanced infrastructure platform catalyzed by Dagmar, decade-high mining backlog, and our expanding role in the nuclear sector are key strengths. Recent industry announcements, including the approval of BHP's Janssen-Pottage Project Stage 2, which indicated a desire to leverage existing contractors, the completion of the pipeline connecting LNG's export terminal, which bodes well for subsequent phases, the $3 billion in funding for Ontario's new infrastructure bank aimed at creating opportunities in key sectors for Byrd, such as long-term care, energy infrastructure, affordable housing, and transportation, and the generalization but generational opportunities in the energy transition and infrastructure modernization all contribute to a robust, longer-term outlook for Byrd and the wider industry. While continuing to drive sustained margin accretion and revenue growth, Byrd remains focused on maintaining a healthy balance sheet with a low net debt position. Our disciplined capital allocation aims to drive business growth while enhancing shareholder value with additional tuck-in acquisitions, smart capital investments, and returning capital to shareholders through dividends. Our dividend is well covered and an important part of Byrd's total shareholder return strategy. We're actively pursuing our ESG initiatives, diligently preparing for upcoming reporting requirements. At the end of the third quarter, the company recorded $2.8 billion in backlog and $3.3 billion in pending backlog, representing a 20% increase in combined backlog from year-end 2022. Backlog was bolstered with $2.2 billion in securements year-to-date. This significant combined backlog provides visibility to organic revenue in the coming year and to further margin improvements driven by the higher embedded margins. BERT is well established as a collaborative contractor and the combined backlog includes over 75% of contracts being executed through collaborative delivery models. Within these types of contracts, BERT works collaboratively with the client and other partners to ensure the cost estimates, schedule forecasts, project planning, and design are sufficiently advanced before the construction phases. These collaborative models, which include IPD, Alliance, Progressive Design Build, Construction Management, and MSAs, improve project delivery and outcomes for all parties, especially on complex builds. We've recently completed, or are nearing completion, on a number of projects in the water and wastewater sector that have demonstrated the value of collaborative delivery. Notably, one of the projects was the first project of its kind to be performed using the IPD model in Canada. In the third quarter, BERT added additional recurring revenue through our environmental remediation portfolio for Canadian nuclear laboratories at Port Hope, as well as through a new MSA agreement for civil works on sites in Alberta's heartland region for an important client. At quarter end, BERT's recurring revenue, MSAs, and pending backlog was almost $1.1 billion, providing additional visibility to future revenues at accretive EBITDA margins. BERT had significant project awards across a range of end markets in the quarter and subsequent to quarter end. Last week, we announced a particularly exciting contract valued at over $150 million for an early works at a new LNG export facility in Western Canada. This project further shapes our outlook with the potential to add to our scope as we mobilize on site. Hurd's contract for this large multi-year project site demonstrates our reputation for strong safety and quality programs, our collaborative approach, and the exemplary delivery of our full project lifecycle services. These are also key factors for adding additional work packages in the future. We are committed to building our relationships with the client and other stakeholders, positioning our team as a long-term partner on this major industrial site. Additionally, we announced post-secondary project awards in BC, Alberta, and on the East Coast, all leveraging Byrd's experience building sustainable and smart environments and emphasizing Byrd's lower-carbon building solutions, such as mass timber. Clients are increasingly seeking ways to build better to achieve more sustainable buildings and retrofit existing properties to reduce their carbon footprint, all of which Byrd is well positioned to deliver. Byrd was also awarded considerable work in the mining sector, including work at Blackwater Gold, ArcelorMittal, and BHP's Jensen Project, contributing to a decade-high of mining backlog. Overall, we continue to execute our strategy in key focus areas, including fostering increased self-performed work, expanding cross-selling opportunities through business units, and leveraging strategic internal and external partnerships and collaborative contracting methods. Our teams are also kicking off our 2025 to 2027 strategic planning over the coming months, catalyzed by our solar foundation, our engaged collaborative team, and our inclusive workplace, we are committed to adapting and growing to chart the best path forward in the evolving world. We've shared in the past highlights around Byrd's positioning and current portfolio of projects supporting the energy transition. There's a tremendous outlook for investment in electrification, public transportation, energy efficient projects, and building retrofits. For its capabilities, particularly in our self-perform expertise, it's strategically positioned to deliver the necessary skills required for the significant investment in infrastructure. Our expanding portfolio encompasses wind energy, hydroelectric, waste to heat, and nuclear projects, among others. The nuclear sector plays a critical role in the transition, and we have spotlighted the sector in the presentation today. Over the past five years, Byrd has built up a significant portfolio of projects in the sector, and today our teams are currently working with all of Ontario's active nuclear operators. Our current projects can be thought of in three areas, site buildings and infrastructure, plant process and auxiliary systems, and decommissioning and demolition. Additionally, our teams are pursuing long-term growth and future opportunities in waste storage and decontamination facilities, SMR infrastructure, new large nuclear plants, and other site facilities and infrastructure. With that, I'll turn it over to Wayne to go through our financial performance in more detail.

Thank you, Terry. Turning to slide 11, our first half momentum continued into the third quarter as the company delivered another quarter of double-digit revenue growth and margin accretion. Revenue for the quarter of $783.8 million represented a 17.3% increase compared to the same period in 2022. The company's margin profile improved in the quarter compared to the prior year, with growth profit percentage increasing to 9.3% and adjusted EBITDA margin increasing to 6.3%, from 8.8% and 4.7% respectively. The increase in growth profit was primarily driven by project mix, with the improving margin profiles on newer work and a higher proportion of industrial construction. General and administrative expenses were $34.5 million or 4.4% of revenue compared to $35.5 million or 5.3% of revenue in 2022 revenue. The primary driver of the $1 million decrease was $1.1 million lower acquisition and integration costs in the current year with all other costs being comparable. The third quarter had significant earnings growth as the company continued to show tangible benefits from executing our strategy. Net income and earnings per share were $28.8 million and $0.54 per share compared to $14.5 million and $0.27 per share in 2022. Adjusted earnings and adjusted earnings per share were $29 million and $0.54 per share, respectively, compared to $15.5 million and $0.29 per share in 2022. This reflected the higher growth profit and increased income from equity-accounted investments in the quarter. For the nine months ended September 30, the company saw similar trends with significant year-over-year growth. We reported revenues of just over $2 billion, reflecting a 16.6% increase from the $1.7 billion recorded in the same period of 2022. Growth profit increased 16.5% to $167.3 million, representing 8.3% of revenue. This reflects the company's highly collaborative work program, growing backlog with enhanced margin profiles, and expanding self-performed capabilities. Adjusted EBITDA increased 34.5% to $94.9 million or 4.7% of revenue from $70.5 million or 4.2% in the prior year. General and administrative expenses were $102.3 million or 5.1% of revenue compared to $97.9 million or 5.7% of revenue in 2022. Net income and earnings per share were $47.7 million and $0.89 per share for the first nine months of 2023 compared to $34.9 million and $0.65 per share in 2022. Noting that during the comparable period in 2022, the company received a one-time gain of $7.6 million and another $1.7 million of interest income related to the settlement of historical construction billings and related interest charges with a customer. Adjusted earnings year-to-date increased significantly to $49.9 million and $0.93 per share compared to $30.5 million and $0.57 per share in 2022, where the one-time gain of $7.6 million was excluded from adjusted earnings in the prior year. Turning to our financial position, BERT continues to maintain its healthy balance sheet with significant financial flexibility and liquidity. We closed the third quarter with $104.1 million of cash and cash equivalents and an additional $157 million available under the company's syndicated credit facility. BIRD recorded positive operating cash flows while funding the working capital required to support the significant growth of the work program. We remain well positioned to 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 quarter, working capital stood at $196.9 million, an increase of $12.3 million over December 2022, ensuring support for current and future contractual requirements. Our liquidity and leverage ratios remain aligned with expectations. The company's current ratio was 1.22 times. Our adjusted net debt to trailing 12-month adjusted EBITDA ratio stood at 0.24 times. And our long-term debt to equity ratio was 21.1%. all demonstrating our commitment to maintaining a healthy and sustainable capital structure. In line with our commitment to capital allocation, we continue to uphold a balanced approach. We generated positive cash flows from operating activities while growing the business 17% and investing $52 million in non-cash working capital in the third quarter. Our dividend remains well covered by our earnings and cash flows, and our dividend remains an important component of our total shareholder return. I will now turn the call back over to Terry to comment on the outlook for the company.