Bird Construction Inc.

Thank you for standing by. Welcome to the Bird Construction First Quarter 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. To ask a question during the session, analysts will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded, and at this time all participants are in a listen-only mode. 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 therefore 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, the 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 McKibben, President and CEO of Merck Construction.

Thank you, operator. Good morning, everyone. Thank you for joining our first quarter 2025 conference call. And with me today is Wayne Gingrich, Byrd Street Financial Officer. Before we begin, I'd like to acknowledge our teams across the country who recognized Safety Week last week. At Byrd, prioritizing safety is integral to our operations, ensuring our employees return home safely each day, while also serving as a cornerstone of our operational excellence. This commitment not only enhances our performance but also positions us for sustained growth and long-term success. Thank you to our teams for their continued dedication to safety and excellence. Turning to our first quarter highlights, our team delivered a solid quarter with continued revenue growth and significant gross profit and EBITDA margin expansion compared to last year. Adjusted earnings growth continued to outpace revenue growth and BERT's backlog reached a record level of $4.3 billion at the end of the quarter. BIRD's balance sheet remains strong with sufficient liquidity to allow continued capital investment supporting our organic growth and returns to shareholders while retaining flexibility for BIRD to explore attractive M&A opportunities in today's active environment. Our overall foundation is strong, and we remain well-positioned to navigate macroeconomic uncertainty and evolving trade policies. Our diverse risk balance and highly collaborative combined backlog provides good visibility into full-year revenues and continued margin accretion as we progress toward our strategic targets. An ongoing strategic priority for Byrd is continuing to improve the margin profile of our business. We are achieving this through our focus on margin accretive sectors with long-term demand drivers, disciplined project selection, increasing our self-perform capabilities, and realizing structural cost efficiencies through scalable operational excellence, automation, and technology. As shown on slide three, the company has made great progress over the past few years in this regard, having increased our first quarter adjusted EBITDA margin to 4.8%. On a trailing 12-month basis, our EBITDA margin now stands at 6.5%, putting us 150 basis points of our 2027 adjusted EBITDA margin target of 8%, which we remain confident in achieving, supported by our record combined backlog with favorable embedded margins. Looking ahead, BERT's pipeline of attractive opportunities in today's active bidding environment is expected to drive further revenue growth and margin accretion that are in line with the company's strategic targets. At Q1, Byrd added $1.3 billion to its backlog in the first quarter between conversions of pending backlog and new awards, exceeding work executed in the quarter by 85%. And growing our backlog of contracted work to $4.3 billion, the highest reported in the company's history. Pending backlog of awarded but not yet contracted work increased modestly to $4 billion at quarter end, with new awards more than replacing the significant conversions of backlog in the quarter, and continues to include approximately $950 million of master service agreements and other recurring revenue. Its combined backlog continues to reflect a high proportion of collaborative contract types and higher embedded margins than in the prior year. We expect further significant conversions of pending backlog to backlog in the second quarter of 2025, adding to our record backlog and providing good visibility into revenue growth for the full year and into 2026. The fitting pipeline remains strong, and with the federal election now behind us, BERT is well positioned to benefit from government commitments to position Canada as a global energy superpower across both clean and conventional energy sectors, as well as substantial investment in nation-building infrastructure. These investments present opportunities in technically complex projects across the energy, mining, and transportation sectors. Our significant and highly skilled electrical workforce continues to be a key differentiator enabling BIRD to play a growing role in electrification and other related scopes of work aligned with Canada's energy and infrastructure evolution. BIRD's strong presence in high-demand, economically resilient sectors enhances long-term visibility and allows us to pursue projects aligned with our risk-balance margin-accredited strategy. Recent project awards highlight the sustained demand across our target sectors, reinforcing our ability to to consistently win work in these strategic areas and our confidence in the long-term outlook. In the transportation infrastructure market, Burt secured a highway improvement civil infrastructure project through our recently acquired subsidiary, Jacob Brothers, and finalized the significant project alliance agreement for the East Harvard Transit Hub, which marks a formal start for the execution phase. In buildings, BIRD was awarded a multi-phase expansion and renovation of the Cottonwoods Long-Term Care Facility and the design and construction of 200 new residential housing units for the Canadian Armed Forces. In industrial, BIRD was awarded new contracts as part of Dow's Path to Zero project and a contract extension for early site development works at Woodfiber LNG, both of which are large capital investment projects, which we will discuss further on the next slide. Additionally, we were awarded multiple work packages supporting Ontario Power Generation's nuclear program, with the design and construction of six projects contributing to ongoing operations and refurbishment efforts. Large capital investment projects remain an important part of our strategy, offering multi-year visibility and strong margin potential. Only a selection is highlighted here, but is actively engaged in a broader range of opportunities across the country. These large-scale initiatives, primarily in complex high-demand infrastructure and the industrial sectors, often begin with one or two work packages. Through strong execution, we expand our role over time through additional scopes and grow our presence on site. We continue to see significant activity on these projects, and our involvement continues to expand. We recently announced an extension of our work at Wood Fiber LNG, new work packages at Dow's Path to Zero initiative, and the signing of a project alliance agreement for the East Harbor Transit Hub where construction is now underway. Looking ahead, we see a strong pipeline of opportunities as Canada advances its clean and conventional energy ambitions and decarbonization goals. The potential for more streamlined approvals of major projects could further accelerate momentum and strengthen overall market confidence. I'll now hand the call over to Wayne to cover our first quarter financial performance in more detail.

Thank you, Terry. Construction revenue of $717.6 million was earned in the first quarter, compared to $688.2 million earned in the first quarter of 2024, representing a 4.3% increase year over year. Infrastructure accounted for the majority of revenue growth, largely due to contributions from Jacob Brothers and increased work programs for mining clients. Growth was partially offset by minor declines in buildings and industrial work programs due to less favorable seasonal weather conditions compared to Q1 2024 and the deferral of certain industrial maintenance work until later in the year. The company's margin profiles in the first quarter of 2025 continued to improve compared to the prior year, with gross profit percentage increasing to 9.4% compared to 8%. All business units contributed to the increase in gross profit, with the overall margin increase driven primarily by higher growth in infrastructure through gross profit contributions from Jacob Brothers. The increase in growth profit continues to reflect the improved margin profiles on newer work resulting from disciplined project selection and cost control, growing self-performed capabilities, and cross-selling opportunities across the company. Adjusted EBITDA of $34.1 million, or 4.8% of revenues in the first quarter, compared to $24.2 million, or 3.5% of revenues in Q1 2024, representing an increase of 41%. Net income and earnings per share were $9.4 million and 17 cents in the first quarter, compared to $10 million and 19 cents in the prior year. The marginal decline includes the impact of non-cash amortization of acquisition intangibles related to Jacob Brothers, which was acquired in August of 2024. Adjusted earnings and adjusted EPS, which exclude the impact of these non-operating factors, better show the contribution from ongoing operations, Adjusted earnings increased 14.5% to $12.9 million in the quarter. I would further highlight that both adjusted EBITDA and adjusted earnings growth are outpacing revenue growth, which is a trend that we expect to see throughout the year. ERG's healthy balance sheet and strong operating and free cash flow generation remain a differentiator for the company, supporting our strategic growth initiatives and our balanced capital allocation approach. On a trailing 12-month basis, Byrd's operating cash flow and free cash flow generation remain healthy. Operating cash flow generation for the year was up 14% compared to Q1 2024, and free cash flow generation was up 24% from Q1 2024. Free cash flow conversion of net income was 62.9%, and free cash flow per share was $1.13. The company's current ratio was 1.27, Our adjusted net debt to trailing 12-month adjusted EBITDA ratio was 0.71 times, and our long-term debt-to-equity ratio was 31% at the end of the first quarter. Byrd's liquidity position remains strong, with $137.8 million of cash and cash equivalents and an additional $336.7 million available under the company's syndicated credit facility to support ongoing investments in growth-related working capital. project-driven capital expenditures, and potential acquisitions to further diversify service offerings and self-perform capabilities. ERG's capital allocation strategy remains balanced, supporting both near-term growth and long-term value creation. We continue to invest in the growth of the business and support our growing work programs while maintaining a relatively low capital intensity profile. BIRD's dividend reflects our commitment to delivering direct shareholder returns aligned with our long-term dividend payout ratio target of 33% over a 2025 to 2027 strategic plan period. We remain active in evaluating accretive M&A opportunities. It's a dynamic environment and will continue to take a disciplined, opportunistic approach to pursue acquisitions that enhance our platform and drive shareholder value. With that, I'll turn the call back to Terry for closing remarks.