Bird Construction Inc.

Welcome, ladies and gentlemen, to the Byrd Construction Third Quarter 2024 Results Conference Call and Webcast. We will begin with Terry McKibben, 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. At any time during the presentation today, you may press the star then 1 on your telephone keypad to be placed in the question queue. You will hear a tone acknowledging your request. When we are 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 that 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 like to turn the call over to Terry McKibben, President and CEO of Byrd Construction. Please go ahead.

Thank you, Operator. Good morning, everyone. Thank you for joining our third quarter 2024 conference call. With me today is Wayne Gingrich, Byrd's Chief Financial Officer. Turning to today's presentation, Byrd continues to build off its track record of sustainable growth, margin accretion, and delivering strong shareholder returns. In the third quarter, Byrd was honored as a 2024 TSX 30 winner by the Toronto Stock Exchange, ranking seventh of the 30 top performing companies on the TSX. This recognition, along with the announcement that Byrd's common shares were added to the TSX Composite Index in September, highlight the success of our strategic focus on being a leading collaborative construction company and the strength of our balance sheet, which positions us to invest in profitable organic growth and pursue attractive acquisitions in today's active market. Turning to our third quarter financial highlights, Bird had another great quarter of strong revenue growth and margin accretion. Revenue grew 15% compared to last year, supported by two months of Jacob Brothers revenues included in the quarter. Bird's adjusted EBITDA margin of 7.8% was 1.5% higher than a year ago and drove 42% growth in adjusted EBITDA and 27% growth in adjusted EPS for the quarter, fueled by higher embedded margins in the company's combined backlog and discipline execution. Operational cash flow generation remains strong, and the company's diverse and well-balanced combined backlog of work continue to grow, reflecting the robust demand environment and healthy pipeline of opportunities with agreed margins. With significant traction from our strategic focus on key sectors, as outlined in the company's 2025 to 2027 strategic plan that was presented at our investor day in October, BERT is poised for continued revenue and profitability growth in 2025 and beyond. BERT's combined backlog continued to grow in the third quarter, reaching a record $7.9 billion at September 30th. The company's backlog of contracted work remains highly collaborative in nature and continues to reflect higher embedded margins and grew to $3.8 billion at quarter end. The acquisition of Jacob Brothers added approximately $360 million to backlog in the quarter, bringing total securements in addition to almost $1.3 billion. Pending backlog of awarded but not yet contracted work grew to $4.1 billion, a 36% increase year-to-date, and continues to include over $900 million of MSA and other recurring revenue contracts to be earned over the next six years. Profitability, discipline, diversification, and growth. These foundations of BIRD strategy have delivered substantial growth and margin accretion, throughout the company's 2022 to 2024 strategic plan cycle and created considerable momentum as we head into our next three-year strategic plan. BERT has built a reputation for operational excellence as a partner of choice on complex projects. Our expanding capabilities to participate in greater scopes of work on large capital investment projects have driven profitable and sustainable growth, and we expect this trend to accelerate in the future as the number of these types of projects grow in our portfolio. We are clear in our strategic direction, focusing on growth, key markets and sectors that present robust opportunities over the long term, including nuclear, mechanical and electrical, civil infrastructure and utilities, with an emphasis on energy transition and data-related infrastructure. During the third quarter of 2024, Byrd announced the award of five projects with a combined total value exceeding $575 million. These projects include civil site works and foundations at two industrial projects in Alberta and Saskatchewan, a multi-year MSA in a strategic growth structure, expansion and scope of an existing multi-year task order in the nuclear sector in Ontario, and a long-term care project in British Columbia. BIRD also announced the completion of the Jacob Brothers acquisition in August, which added approximately $360 million of contracted work with accretive margins to BIRD's extensive backlog. We continue to be intentional in our project selection as we increase our self-reform capabilities and cross-signing opportunities throughout our organization and remain focused on long-term value creation. Several key trends continue to fuel significant growth within the energy transition market. This market is expansive, presenting substantial growth opportunities for Byrd. There are a limited number of large, sophisticated companies that can successfully take on these complex projects, and we believe Byrd is uniquely suited to participate in these large projects with significant capital investment. The company has already established a successful track record within key markets such as wind, hydroelectric, nuclear, critical mining, critical mineral mining, battery manufacturing, and EV supply chain support infrastructure. These sectors all contribute to Canada's clean energy system and 2050 net zero goals. As we continue to support Tier 1 clients in their energy transition projects for its outlook Future opportunities across all divisions remain bright as we expand our work programs, attain additional nuclear certifications, and continue to develop our deep electrical expertise. We continue to prioritize sectors that have longer cycle demand trends and substantial capital investment commitments for both public and private sectors across infrastructure, buildings, and industrial markets supporting future growth for years to come. The infrastructure market in Canada is attractive to BIRD for several reasons. Current market research indicates that Canada's infrastructure demand will remain strong due to government commitments to address significant infrastructure deficits estimated to be between 110 and 270 billion. Demand in our building markets is substantial with macro pressures driving extensive demand for healthcare facilities due to population growth and aging population and a growing demand for data centers to respond to the growth of digital services and generative AI. All of these present major growth opportunities for BERT. BERT's proven expertise and collaborative innovative solutions make us uniquely positioned to respond not only to this level of demand, but to the complexity and sophistication of these types of projects. In our industrial business, the total addressable market is significant and being driven by the growth of electrification, emissions reductions, and decarbonization efforts. BERT is already a highly sought after partner of choice in all scopes of work, throughout the entire project lifecycle, and it is positioned to win within our strategic markets due to our consistent execution and operational excellence. Wayne will now cover the financial highlights for the quarter.

Thank you, Terry. Excuse me. BIRD's third quarter continued to deliver revenue growth and margin accretion, building upon the strong performance of the first half of the year. Construction revenue for the third quarter of $898.9 million represented a 15% increase compared to the same period in 2023. On a year-to-date basis, revenues of $2.46 billion for the first nine months of 2024 were $454 million, or 23% higher than 2023. The growth for the quarter was approximately 60% organic. In year-to-date, the growth was over 80% organic. The company's gross profit margin improved to 11.4% in the quarter compared to 9.3% in 2023. The improvement continues to be driven by the company's highly collaborative work program with higher embedded margins and backlog and pending backlog resulting from BIRD's strategic focus on higher margin sectors, disciplined project selection, and the benefits of leveraging BIRD's self-perform capabilities and cross-selling opportunities across our business units. On a year-to-date basis, growth profit margin was 9.4% of 110 basis points from the 8.3% margin in 2023. General and administrative expenses were 51.6 million or 5.7% of revenue for the quarter compared to 34.5 million or 4.4% of revenue in the third quarter of 2023. G&A for the quarter includes an additional $1.9 million of acquisition costs related to Jacob Brothers, as well as two months of Jacob Brothers G&A costs. Adjusted EBITDA in the third quarter was $70.1 million, compared to $49.3 million reported a year ago, representing a 42% increase. Adjusted EBITDA margins continued to increase on a year-over-year basis, increasing 1.5% to 7.8% in the third quarter, compared to 6.3% in the same period last year. Turning to earnings, net income and earnings per share were $36.2 million and 66 cents compared to $28.8 million and 54 cents in 2023. Adjusted earnings and adjusted earnings per share were $37.7 million and 69 cents compared to the $29 million and 54 cents in 2023. The weighted average shares outstanding for the third quarter of 2024 was 1.1 million shares higher than 2023 due to the acquisitions of Jacob Brothers and Norcam in the current year. Burt's healthy balance sheet and strong operating cash flow generation remain a differentiator for the company, supporting our strategic growth initiatives and balanced capital allocation approach. The company's liquidity position remains strong at the end of the third quarter with $117 million in cash and cash equivalents and an additional $232 million available under a revolving credit facility. BIRD's operating cash flow generation is expected to remain strong for the remainder of the year, commensurate with the significant revenue and profitability growth being delivered. Excluding seasonal and growth-related investments in non-cash working capital, Operating cash flow generation for the quarter was up 44% compared to last year and up 56% year-to-date. We continue to expect operating cash flows inclusive of growth-related investments and non-cash working capital to be positive for the full year. At the end of the third quarter, the company had working capital of $269.8 million compared with $234 million at December 31, 2023. The company's acquisition of Jacob Brothers reduced working capital by approximately $7.1 million in the quarter, as Byrd used cash on hand to partially fund the transaction. That being said, the company's overall working capital, along with liquidity available under a syndicated credit facility, remain more than sufficient to allow the company to execute its backlog and support the expected growth in its diversified work program. The company's current ratio is 1.25 times, And our adjusted net debt to trailing 12-month adjusted EBITDA ratio stands at 1.12 times. BIRD's long-term debt to equity ratio is 34%. As we noted in prior presentations, BIRD's revenue, adjusted EBITDA, and adjusted EBITDA margins have experienced a period of sustained growth over the past several years. The third quarter of 2024 continued the trend. bringing our trailing 12-month adjusted EBITDA margin to 5.7% on TTM revenue of almost $3.3 billion, reflecting management's ongoing strategic focus on margin accretion with further opportunity to expand through 2024 and beyond. The company's margins continue to improve in our backlog and pending backlog, driven by efforts over the past several years to diversify into higher margin sectors, our disciplined project selection, and our appropriately risk-balanced work program and greater use of collaborative contracting, which Byrd believes delivers better outcomes for all stakeholders. Byrd's expanding self-perform capabilities and increased cross-selling opportunities between our business units also contribute to the company's margin accretion. Byrd's capital allocation strategy remains balanced, supporting the company's business growth, profitability, and enhanced long-term shareholder value through a combination of M&A, smart capital investments, and returning capital to shareholders through dividends. In the current year, this balance is evident in the company's investment in equipment to support our growing work programs, our acquisitions of Norcan and Jacob Brothers so far this year, and our expectation to return approximately $30 million to shareholders through our monthly dividends in 2024, including the 50% dividend increase announced in October and effective for the November and December dividends. I will now turn the call back to Terry to comment on the outlook for the company.