Bird Construction Inc.

Good day and thank you for standing by. Welcome to the Bird Construction third 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 this session, analysts will need to press star 11 on your telephone. You will then hear an automated message advising that 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 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, 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 like to turn the call over to Terry McKibbin, President and CEO of Byrd Construction. You may begin.

Thank you, Operator. Good morning, everyone. Thank you for joining our third quarter 2025 conference call. With me today is Wayne Gingrich, Byrd's Chief Financial Officer. Before we begin, I'm proud to note that in the third quarter, Byrd was once again recognized by the Toronto Stock Exchange, ranking 17th on the 2025 TSX-30. This fall is our seventh place ranking in 2024, and we are among only 10 companies that earned a place on the list year over year. Being recognized among the top 30 performing companies on the TSX underscores the success of our strategic focus, strong execution, and disciplined, balanced approach to capital allocation that positions Bird for continued profitable growth in today's active market. It continues to be an exceptional time for our industry, with strong demand across key strategic sectors. Burr's comprehensive self-performed capabilities further expanded through the recent FRPD acquisition and strong cross-selling opportunities from prior acquisitions continue to differentiate Burr. Combined with our long track record of delivering complex industrial buildings and infrastructure projects, these strengths have positioned Burr to bid on and secure significant new awards, including the recently announced Peel Memorial Hospital Phase II redevelopment. With record securements driving our historic combined backlog, our outlook is further strengthened by the federal government's focus on infrastructure investment and nation-building across the country, setting the stage for sustained growth and long-term value creation. Revenue in the quarter was $951 million, representing a 5.8% increase from 2024, with organic growth representing over 60% of the growth. We saw continuous strength in our work programs from our mining clients and the ongoing ramp-up of the East Harbor Transit Hub driving infrastructure growth along with higher institutional construction activity, supporting buildings growth, and a full quarter contribution from Jacob Brothers. Margins remained strong relative to historic levels through slightly lower year-over-year. Gross profit percentage for the third quarter was 10.7%, and the adjusted EBITDA margin was 7%. The margin profile this quarter was influenced by the higher relative proportion of buildings work, which typically has lower self-performed content than industrial and infrastructure work, and by project start delays, Robert continued to carry personnel and equipment costs in anticipation of mobilization. Our trailing 12-month adjusted EBITDA margin was 90 basis points higher year-over-year and within 140 basis points of our 2027 strategic plan targets. For its record combined backlog of over 10 billion with favorable margins to a year ago, continues to provide solid visibility in the 2026 and 2027 revenue and margins, and supports our path to achieving the objectives set out in our 2027 strategic plan. Year-to-date securements exceeded 3.8 billion, surpassing both full-year 2024 securements and revenue. Our backlog remains diversified, risk-balanced, and heavily weighted towards collaborative delivery models providing a clear path to growth and margin accretion as market conditions stabilize. Finally, BERT's healthy balance sheet continues to provide flexibility to navigate near-term uncertainty while supporting a disciplined balance capital allegation strategy. As we turn to backlog, our record $10 billion combined backlog with stronger embedded margins than a year ago clearly demonstrates the underlying momentum of the business and why we remain confident of our long-term trajectory despite recent bumps in the road due to market uncertainty. Our strong line of sight to record levels of future work is supported by contracted backlog, surpassing $5 billion for the first time in the company's history. Additionally, significant collaborative awards grew our pending backlog by over $1.2 billion in the quarter to $5 billion. During the quarter, we added more than $1.3 billion in new securements to our backlog, bringing year-to-date securements to $3.8 billion. This figure already surpasses both total securements and revenue achieved in the full year of 2024. Bird's combined backlog continues to reflect a high proportion of collaborative contract types and favorable embedded margins compared to a year ago. Combined backlog growth reflects the active bidding environment and continues to run demand across Bird's core markets. We see meaningful new opportunities emerging for our MRO team, supported by cross-selling, geographic expansion, and continued strength across our nuclear defense, power generation, large capital investment projects, transportation, and institutional buildings markets. Byrd is exceptionally well-positioned to capitalize on the growing wave of nation-building initiatives across Canada and the significant infrastructure investments outlined in the budget 2025. Looking ahead, the opportunity set for our business in the next strategic plan period is even stronger than we had anticipated. The work is there, and it's a matter of discipline, execution, and patience to fully capture it. While quarterly margins were down year over year, reflecting the higher relative proportion of buildings work, and the carrying costs associated with personnel and equipment in anticipation of project mobilization, we remain in a very solid position and confident in our continued margin progression through 2027. Our trailing 12-month adjusted EBITDA margin of 6.6% continues to demonstrate the progress we've made, supported by discipline, project execution, strong self-reform capabilities, and highly collaborative lower-risk delivery models. Margin accretion, like revenue in our industry, Rarely linear and recent client decisions to delay certain projects along with a slower-to-develop industrial maintenance program may moderate the pace of improvement in the fourth quarter. As with revenue impacts, we expect margins to build momentum during the second half of 2026 as the company's record backlog with higher embedded margins converts to revenue. Large capital investment projects, or LCIPs, continue to be a key pillar of BERT's strategy, offering long-term visibility and scalable growth. These complex, multi-phased initiatives often begin with targeted scopes, allowing to demonstrate the value early and expand our role over time. While timelines for some projects have shifted, their strategic importance remains unchanged. We continue to win work, and they represent meaningful opportunities for margin accretion and business growth. In industrial, we're seeing continued strength in large capital investment programs across nuclear, LNG, petrochemicals, and potash. demonstrating resilient demand despite near-term project delays. Our industrial maintenance portfolio provides a strong recurring revenue base and meaningful upside supported by cross-selling and geographic expansion. The nuclear sector remains particularly active both in Canada and globally, currently representing roughly 10% of revenue. We remain focused on growth and we've recently achieved new credentials enabling broader participation across the sector. In buildings, our backlog remains robust across healthcare, defense, education, and long-term care. We recently reached the development phase agreement for the Peel Memorial Hospital Phase II redevelopment, a significant achievement for the team, and continue to expand our defense backlog, which is at historic levels. Our experience is strongly aligned with a $19 billion defense and security infrastructure program and ongoing commitments to healthcare, education, and community facilities outlined in the federal budget. In infrastructure, the acquisition of FRPD has expanded birds' self-performing capabilities in marine construction, dredging, and land foundations, creating new cross-selling opportunities with Jacob Brothers and across our business. Secular tailwinds are powerful, with nation-building and federal infrastructure focused set to drive sustained demand for transportation, trade infrastructure, and critical minerals development. Across all sectors, the combination of current demand, strong federal and nation-building investments, and birds' proven execution capabilities, positions of company for sustained long-term growth and value creation. Turning to the broader macro environment, the federal government's 2025 budget provides a powerful backdrop for long-term growth across our core markets, as well as encouragement for the overall economy. The level of commitment to infrastructure and the nation-building programs is significant, reinforcing longer-term visibility across both key strategic sectors. Investment outlined in Outlines span critical areas in transportation, defense, mining, power generation, and institutional buildings, all strongly aligned with their capabilities and growth strategy. The programs designed to streamline regulatory process and accelerate project delivery are positive for PERC, as those that strengthen Canada's supply chain resilience and attracts business investment. When combined with a record backlog, strong client relationships, meaningful Indigenous partnerships, and balanced exposure across sectors, BERT is exceptionally well positioned to capture this next wave of opportunity and continue driving disciplined profitable growth through 2027 and beyond. BERT's acquisition of FRPD closed in the third quarter, representing a highly strategic addition to our operations and capabilities. Headquartered in BC, FRPD is Canada's largest privately owned marine construction, land foundation, and dredging contractor. with a strong safety culture and a team of over 300 experienced employees. The company's versatile fleet, technical expertise, and longstanding indigenous partnerships have earned it a leading position in complex marine and infrastructure projects. Notably, FRPD has maintained an exclusive multi-year contract for dredging the Fraser River for over 35 years and recently renewed for an additional 12 years with an option for eight more, providing a stable recurring work program aligned with BIRD's disciplined, low-risk approach. This highly strategic and complementary acquisition advances BIRD's long-term strategic plan and aligns directly with our discipline M&A criteria. The acquisition expands BIRD's national infrastructure presence, adding marine construction, dredging, and land foundation capabilities to our full-service civil platform. It also creates meaningful cross-selling opportunities across our businesses, including with Jacob Brothers, and our industrial and building divisions, positioning BIRD to pursue new scopes of work across the country and broaden our self-reform strength in high demand markets. BIRD supports margin expansion through improved infrastructure mix with a focus of complex, specialized self-reform work while introducing new recurring work programs through FRPD strategy contract. The acquisition maintains BIRD's strong balance sheet and financial flexibility, allowing us to continue to invest in both organic and inter-organic growth initiatives. And I'll turn the call over to Wayne to cover our third quarter financial performance in more detail.

Thank you, Terry.

Construction revenue for the third quarter of $951.4 million represented a 5.8% increase compared to the same period in 2024. Over 60% of the growth was organic, with continued strength in work programs for mining clients and the East Harbor Transit Hub driving infrastructure growth and higher institutional construction in eastern Canada driving buildings growth. Jacob Brothers also contributed to the overall revenue growth with a full quarter of revenue included in 2025 compared to two months post-acquisition in 2024. Industrial revenue was lower in the third quarter compared to the prior year. Revenue in all the company's businesses was impacted by delays in the start of certain contracted projects resulting from ongoing economic uncertainty. Growth profit of $101.9 million for the third quarter of 2025 representing a growth profit percentage of 10.7 percent was 0.4 million lower than the 102.3 million growth profit and 11.4 percent growth profit percentage recorded in 2024. The reduction in margin was partially driven by higher relative proportions of buildings work in the current quarter which typically has lower proportions of self-performed work relative to industrial and infrastructure work programs as well as ongoing delays in certain project starts due to economic uncertainty where the company incurs certain personnel and equipment costs in anticipation of the commencement of the project. Berger remains disciplined in project selection and cost control and continues to leverage cross-selling opportunities across the company to increase the proportion of self-performed work, thereby retaining more margin within the company. Adjusted EBITDA in the third quarter was $66.9 million compared to $70.1 million in 2024. The adjusted EBITDA margin for the quarter was 7%. This is consistent with the lower gross profit. Net income and earnings per share was $31.7 million and $0.57 per share compared to $36.2 million and $0.66 in 2024. This decline includes the impact of additional non-cash amortization of acquired intangible assets and other expenses related to Jacob Brothers, which was only included for two months of Q3 in 2024. Adjusted earnings and adjusted earnings per share were $35.4 million and $0.64 compared to $39.3 million and $0.72 in 2024. In addition to changes in net income and adjusted earnings, the weighted average shares outstanding for the third quarter of 2025 were higher by approximately 502,000 shares related to the Jacob Brothers acquisition in August 2024. On a year-to-date basis, revenue increased 2.4% to $2.52 billion Gross profit grew 11.7% to $259.5 million, representing 10.3% of revenue, while adjusted EBITDA rose 10.7% to $155.9 million, or 6.2% of revenue, reflecting continued margin strength. Net income was $61.4 million. Down year-over-year, while adjusted earnings was $40.5 million, we're up slightly. Overall, the third quarter reflects resilient performance despite ongoing macroeconomic uncertainty supported by a record backlog with higher embedded margins and strong underlying business fundamentals that continue to provide stability and visibility. While we continue to see sustained strength across the business, we do note in our financial statements in MDMA that subsequent to quarter end, The company became aware of circumstances that arose after the end of the quarter that led us to be concerned about the credit worthiness of one of our customers. BERT has substantially completed its sole project with this customer, and no further project costs are expected to be incurred. Based on amends outstanding at the end of the third quarter, we expect the maximum exposure to be approximately $62 million. The company is in active discussions with the client to determine to what extent, if any, an impairment of these amounts may be required in the fourth quarter of 2025. We believe this is a unique and isolated situation and that the credit worthiness of the rest of our clients remains strong. Turning to cash flow, on a trailing 12-month basis, operating cash flow was $61 million and free cash flow was $25.7 million, reflecting continued solid performance. Seasonal investments in non-cash working capital driven by the ramp up of the company's work programs and increasing self-performed work are expected to unwind over the fourth quarter 2025 as experienced in prior years. Our free cash flow conversion of net income was 27.4% and free cash flow per share was 46 cents for the period. At quarter end, Byrd's current ratio was 1.28 times Adjusted net debt to trailing 12-month adjusted EBITDA was 1.05 times, and long-term debt to equity stood at 28%. Liquidity and balance sheet strength remain key differentiators. With $113.9 million of cash and cash equivalents and an additional $281.7 million available under the company's syndicated credit facility, Byrd has flexibility to support ongoing investments in growth-related working capital, project-driven capital expenditures, and accretive acquisitions to further diversify service offerings and self-performed capabilities. Together, these results highlight BERT's solid financial foundation and flexibility to continue investing in organic growth, accretive M&A, and shareholder returns while maintaining a conservative balance sheet profile. BERT continues to apply a disciplined and balanced approach to capital allocation, supporting both growth and shareholder returns. Our priorities remain consistent, investing in our business through targeted capital expenditures and equipment and technology, returning capital to shareholders through a monthly dividend, and pursuing strategic acquisitions that enhance our capabilities and expand our presence in key markets. We maintain a low capital intensity, and we continue to target a long-term dividend payout ratio of GAAP net income of 33%, recognizing that the ratio may fluctuate from year to year. Overall, our disciplined approach continues to drive long-term value creation through clear priorities and prudent deployment of capital. With that, I will turn the call back to Terry.

Thanks, Wayne. Our combined backlog now exceeds $10 billion, a historic level for the company, providing strong visibility to our future work program. The high proportion of collaborative contracting and the higher average embedded margins within this backlog further reinforces confidence in our long-term growth and margin expansion outlook. We are encouraged by the 2025 federal budget, which supports significant opportunities for 2027 and beyond. With the addition of FRPD, Bird is even better positioned to capitalize on trade, port infrastructure, marine and land foundation opportunities, expanding our self-performed capabilities, introducing cross-selling opportunities, and supporting long-term growth. As we look forward to the close of the year and head into 2026, we continue to work closely with clients as they navigate near-term macroeconomic uncertainty. As noted, 2025 and early 2026 will be impacted by certain industrial projects shifting into 2026, resulting in lower fourth quarter revenue compared to last year. We expect this to be temporary with momentum building through the back half of 2026 as our record backlog converts to revenue. Near-term margins are expected to be more measured, reflecting project timing and mix as our industrial business was fully utilized last year at this time. That said, the underlying margin profile of our backlog remains strong and continues to support our 2027 targets. Our healthy balance sheet and consistent cash generation remains key strengths, providing flexibility to manage near-term uncertainty while continuing to invest in future growth. We remain confident in the trajectory towards our 2027 strategic plan targets, reinforcing Bird's position as a trusted partner in delivering Canada's critical infrastructure. With that, I'll turn the call over to the operator.

Certainly. We will now begin the question and answer session. As a reminder, analysts who wish to ask a question may press star 11 on your telephone. If you wish to remove yourself from the queue, please press star 11 again. Our first question will be coming from Krista Friesen of CIBC. Your line is open, Krista.

Hi. Thank you for taking my question. Just thinking about the 2027 guidance and the margin there, how much of that margin improvement is within your control or internal levers you can pull versus maybe relying on the margin that's in the backlog and increasing your exposure to end markets with higher margins?

I can take that one. I think, you know, Chris, it's a couple of things that close that gap, right? And if you think about it, you know, if we've got 140 basis points to close between now and the end of 27, when we think we're going to get to 8%, you know, part of it is, you know, volumes are obviously down this year. So we are going to get leverage on our cost structure, you know, going forward. So certainly that's going to help. But we do have to put work in place to get the leverage on that. But then you look at our combined backlog, both $5 billion in booked and $5 billion in pending, which we'll convert to backlog. That gives us good visibility on where that work program is going to come from. If you look at the margins year-to-date today, Our industrial work program is a little bit lighter because we've seen some of the MRO work shift to the right into next year, and that will come back. We've seen some of the work at some of the other industrial programs, like Dow, for example, push to the right, but that is going to come back. We're confident certainly in that. So in the mix of our industrial business increases, we're also going to see a proportionate increase there. And then the other thing, especially with an example of Jacob Brothers or FRTD, we are going to get growth in our infrastructure side as well, and that's a very high-margin business for us. So if that becomes a larger proportion of the total, we're also going to see an upward lift there. And I also want to say our buildings business has done a nice job improving their margin profile. There's less self-performed work, certainly, in buildings than you have in the other two businesses. They've done a really nice job improving the margins and being disciplined in project selection. So with all three businesses improving, higher embedded margins in our backlog, a pretty good backdrop, you know, especially with the federal budget announced and just the opportunities and the sectors we're pursuing. Leverage on the cost structure, yeah, we feel pretty confident in getting to 8%.

Okay, great. Thank you. And just one more on the comments about a few of the – a few projects slipping into 2026. Can you share a little bit more color just on what sort of projects these are or where they're located?

I think it's a mix, Krista, and certainly in some different sectors. I'd say majority would be in the industrial side with a few that are in our building business as well that are just getting delayed and going through various stages of approvals and and whatnot, but it's a mix, I'd say, but we're highly confident now that they'll be getting underway in first quarter and ramping up in second quarter.

Okay, perfect. Thank you. I'll leave it there.

Thank you.

And our next question will be coming from the line of Chris Murray of ATB Capital Markets. Your line is open, Chris.

Yeah, thanks, folks. So just maybe continuing on trying to understand the guidance update. I guess a couple of pieces of this. So basically, I think you said to us Q4 should be lower than Q4 last year, but I'm assuming that's inclusive of Fraser River. So I just want to clarify that. So it's not on an organic basis, it's on an absolute basis. And then the second part of this question, I guess we've been struggling for the last couple of quarters just with the, you know, just the shift to the right on some of these projects and the delays. What gives you confidence that, you know, it's Q2 next year and not like moving everything into 27? So any thoughts around kind of the confidence level that you have on the guidance that's out there today would be helpful?

Well, I'll give you an example. Like we had a big shift in our maintenance business. And those plants, nobody's shut down one of those plants since they first got underway in the 70s. So you have to maintain them. So there's an example of one where we would have a high degree of confidence that maintenance will be a very robust area for us in 2026. That's an example. I think we're... seeing signs on some of our industrial program projects that have had delays that they're getting underway in 2026 with levels of activities and the work that's underway gives us certain confidence that those are going to get underway. And as I mentioned earlier, some of our other sectors that we're in have had delays in getting underway. I think the other thing that is affecting us to a certain extent is we've got a number of of large programs that we've contracted over the last few years. And they're quite a bit larger than our historic size. And the ramp up is taking longer because of that. And it sometimes can be difficult to predict as you're going through. And a lot of that is on the government side. So you're going through different levels of government and reaching FID. moving forward. So I think there's a few variables, but, you know, there certainly is the real, you know, so we can see the light at the end of the tunnel and getting them underway because we're getting to FID on these things. But, you know, and I think the other higher level of confidence is just the scale of this backlog and the activity that we're involved in. is daunting actually, so there's going to be an inflection point at some point where this really starts to accelerate next year.

And Chris, just back to the first part of your question, I'm confirming, yes, that's inclusive of FRPD.

Thanks, that's helpful. The other item that was in your outlook was about the credit worthiness of a customer. I appreciate lots of sensitivities around this. But I was wondering if you could give us some more color about, you know, what particularly may have triggered this. And, you know, it's probably, you know, call it $60 million of receivables and contract assets. How should we be thinking about the process and how this may unfold in terms of what this could mean kind of going into the end of the year?

Yeah, so a couple of things. This is an event that came up subsequent to quarter end. It's difficult for us to provide specifics about what led to this and those types of things at this point. We do have concerns about this particular client's credit worthiness. We disclosed the full a potential risk that's out there. That's the $62 million combined in contract assets and accounts receivable. I think process going forward, we're going to go through fourth quarter. We're in discussions with the clients. We're going to make an assessment as to what's recoverable. And we are going to take a provision in fourth quarter on this, you know, based on what we think we can recover you know, we're going to pursue all channels going forward, you know, to maximize our recovery. But, you know, depending what form or what route that takes, that could take four or five years. So, we're going to make our assessment in Q4, and we're going to pursue recovery, but it could take a while before that plays out.

Okay. And then, you know, going into... Sorry, go ahead.

Go ahead. I was just going to say, going into 2020... Sorry, Chris.

I was just going to say, going into 2026, I was just going to say, going into 2026, you know, if we put this by just in Q4, then we've got a clean year, you know, going ahead. You know, from a data comparison standpoint, you know, we will adjust this out of adjusted EBITDA and adjusted earnings so that, you know, there's kind of clean comparisons. This is a unique and isolated situation. You know, we feel confident this is not a widespread issue in our portfolio of clients. Our clients have very strong creditworthiness. This is just very unique. So, sorry, go ahead, Chris.

Yeah, no, I was just going to ask, like, I'm just assuming, like, do some of the new lien holder protection rules help you in this? Sure. I guess the other question I had is, like, is there actually an identifiable asset that this is tied to, or is this something kind of a broader work program that is more maybe maintenance related or something like that?

Yeah, at this time, Chris, we're not going to get into those level of details, if that's okay.

Okay. I'll leave it there, then. Thank you. Thank you.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Our next question will be coming from Maxim Sychev of NBCM. Your line is open.

Hi. Good morning, gentlemen. The first question for you, if I may, in terms of some of the MRO slippage, is it the function of the commodity environment, which I guess would be surprising as it's in a pretty decent space right now, or is it more sort of sequencing of projects and how the mine plans are working and how that all kind of goes to kind of the upgrades, et cetera? Do you mind just providing a bit more color just to have more comfort around the resumption of that work?

Yeah, on the maintenance side, Certainly, the bulk of the pressure on our maintenance business was centered in oil and gas, and I think those clients just decided to delay their large maintenance turnarounds, which is a big chunk of our business for one year. It's rare that you see them line up the way they did, but they lined up in unison. and the larger clients that we have and push those out a year or so. But obviously, they're not able to do that very often and they made that decision and we expect that scope will come back in 26 and then some. And we've also opened up new fronts with new clients and we're expecting some exciting opportunities to evolve with companies like Irving Oil, things like that. So I think our maintenance business will be... in a really good place in 26. Okay.

And so just to reiterate, I guess you see or you have full confidence that it's highly unlikely that these types of activities would be pushed by two years, right?

No, I don't think anyone would. Yeah, I really am highly confident that won't happen.

Okay. Okay. No, no, just double checking.

Yeah, that's not what we were having before, so I just can't imagine that could happen. Even this one-year delay is unique. Two years would be unheard of.

Okay. Okay, no, that's a good call. Thank you. And then in terms of the, obviously you've been quite successful in replenishing the healthcare-related work, and it's all on negotiated, sort of new structure with the clients. But do you mind maybe talking a little bit about sort of, you know, control processes there just to make sure that we don't see any repeat of, you know, previous issues that we've seen in buildings? I mean, that goes back a number of years ago, but maybe any color and comfort there that would be helpful. Thank you.

So I think, you know, the The big difference, we wouldn't be in these contracts if they weren't highly collaborative. In any of the healthcare that we've got, we essentially have our cost guaranteed. Whereas if you go back into the 16 to 18, 19 Euro, those were full risk transfer, whether they were P3s or design bills, the risk transfer was very high at that time. Obviously, that put a lot of pressure in that sector. And I think the other difference today that we, in that timeframe, we purely relied upon our subcontractors. And today, we have our own electrical mechanical contracting business. We have our own site development capability to develop these projects, these sites. We have our own communication, you know, services for underground communication and in building communications as well, which is a big part of a hospital. So we have a lot of the pieces that we'll get, you know, obviously a creative margins out of these projects. So we're really excited about this. I think it's taken time for the clients to realize this is a much better model, but the big areas where Most of this activity is today in Canada, is Ontario and BC, and they're both feed into collaborative models, and you're seeing that to be a tremendous value, and they're now becoming champions of those models and whatnot. And we've been at this a while now, so we have a deep resume to be able to deliver this kind of thing. And we're also seeing this kind of model being used extensively with the federal government with defense. So this same kind of model is being used in the defense industry space as well. So, yeah, it's a different world today than the full risk transfer that we had back in the previous year.

Okay. That's super helpful. Thank you so much. And then just one last question. I was wondering if you had some initial reactions to the federal budget. How are you thinking about your potential addressable opportunities there? I mean, it certainly feels like more capital is coming, but wondering if you can maybe quantifying, you know, the timing, et cetera, of anything that could be coming your way. Thank you.

Yeah, we're really excited about the budget. I think the, you know, the scale, you know, for example, in defense at 19 billion, like that group is moving very, very aggressively forward with a very large program and you see it coming out of the federal budget. You can see that, you know, there's a full support behind it. So we're That's just one example, but you go across some of the nation-building projects that the federal government are engaging in to try to enable, to accelerate. We haven't seen the full list yet, but some of the new ones that you see coming through in mining and LNG and obviously nuclear, all the areas that we have a large presence in. I don't think you could wish for a stronger budget and create one if you tried. Seeing this budget was really, really encouraging. We're going to have a nice run as long as we can see out on the horizon with this scale of what's coming through. It's a very exciting time to be in our industry. We're excited about, you know, the next couple of years and highly confident that we're going to meet our strategic client targets.

Okay. That's great, Carl. Thank you so much.

Thanks, Mike.

Okay. And one moment for our next question. Our next question will be coming from Michael Topholm of TD Cohen. Your line is open, Michael.

Thank you. Good morning. Good morning. Terry, earlier in the call you talked about, you pointed to the backlog and the significant size of the backlog as part of the reason for your confidence in a resumption of activity going forward. I think you described it as daunting, just the size of the current opportunity set here. I guess my question is, Can you talk a little bit about your capacity to tackle all of this work as well as the industry's capacity more broadly and what steps you're having to take to ensure you've got the right talent to meet all of this opportunity that's in front of you both with what you've already secured but also all these opportunities that are getting talked about in terms of future opportunities, nation-building projects, etc.? ?

Thanks, Mike. So I think, you know, first and foremost, we're extremely careful when we're pursuing something that we've got, you know, a team assembled for it. And that's putting pressure on our earnings in 2025 because we're, you know, we've got these teams assembled, ready to go. And some of these really large initiatives that we're involved in, we could be working for 18 months with a team of 30 people. and, you know, before you can even get to, you know, break ground kind of thing. So that's, you know, that is part of the, I would say, some of the pressure that we're seeing in 2025 with our overall organization. But, yeah, we have a very, very mature team that's highly talented. When we don't have the capacity, we'll partner with other organizations Other companies, obviously, our acquisitions are adding tremendous strength to give us, you know, that self-reform capability. And I just think overall, if you think about, you know, the type of company we built with high engagement and, you know, the fact we're public, we're able to talk about things like DSX-30. And I think we've become a company that, you know, Individuals in our industry want to work for. So we've got our business in a good spot. And I think we're also very attractive from outside companies to partner with. So that's kind of how we're balancing it. But I'd say that we don't get engaged in something unless we have a solution for a tier one team.

No, that makes sense. And just with respect to sort of the broader industry, like, I mean, are, you know, are there challenges within the broader industry to sort of to meet all of this demand? I mean, clearly you're being mindful of the talent you need and selective in what you pursue. But just generally speaking, given all of the opportunity, like, how do you see the industry being able to, you know, to manage this and cope with it?

So I think if you're, you know, roll the clock back a couple of years when there was, you know, such a high demand in housing and condos and, you know, that type retail to a certain extent. But if you go back in, you know, when you saw that type of demand, that's gone now. So there's a lot of really talented construction workers that the transition from building a condo or an apartment building, it's pretty easy transition to come and work for us to build the kinds of things we've built. Um, so we're seeing, you know, a lot of movement, horizontal movement of the trades. And, and, and I think, you know, we don't, we don't seem to feel the pressure on it. Like we would have, you know, a couple of years ago, that's just, that's just where we're at with bird. Um, doesn't mean that everyone's like that. I think there's a lot of softness in the smaller companies and the demand for the smaller companies that, you know, smaller, the former guys, guys that work in, in horizontal housing. vertical housing and apartment buildings and condos, things like that. I think that's a pretty tough sector. Retail, those are tough. There's a pretty big army of talent that would typically go to work every day in that sector. We're obviously able to just transition into what we're doing. It's pretty similar.

That's helpful. Thank you. I don't think it's come up much on this call today, but wondering if you can spend a minute talking about opportunities for yourselves in the nuclear sector and

how you're positioned and and what your capabilities look like there so we we've had a heavy focus on remediation on the nuclear side and that seems to be continuing to accelerate so that's exciting so we'll go in and you know do nuclear remediation on various sites and that's on a national scale now with different um different uh you know areas that the federal government is looking at obviously we're very involved building the new campus up at at Shock River, indirectly for Atomic Energy, but through CNL. And then on the new build side, obviously we're supporting the existing facilities with their infrastructure that they need. As you know, we're not on the refurbishment side of the reactors. We weren't in the nuclear business when that was procured. um but we also have been developing our our licensing and our you know our accreditations and capabilities and facility you know certifications and and we've we've got that in hand now so we're in a good spot in terms of um the opportunities that evolve um you know we're excited about the the new builds on you know that sort of some of the full scale opportunities that are evolving in the planning stages. And I think contractors like us will be in high demand for those projects as they evolve because of their scale. And I think those have a high likelihood of moving forward over the next two years for both OPG and Bruce. And that's kind of the highlights. I think it's an exciting business for us There's always a lot of activity. There's always a lot of maintenance that goes on. We now have those types of agreements and interfaces where we're able to do that.

That's great. Thank you, Terry. And sorry, thanks for all the time. Just one more quick one here, if possible. On the data center opportunity, can you speak a little bit about what you're seeing right now? It seems to me that maybe, you know, notwithstanding all of the headlines about all the activity, like in your own case, it seems like there's been sort of some ebbing and flowing just based on, you know, project activity and how it's kind of come along. But anyway, if you can just maybe provide an update on what you're seeing right now and what the opportunity is.

Yeah, we seem to be. consistently involved in data centers that are smaller in scale, you know, that are, you know, I'd say, you know, below 100 megawatt kind of thing. I'd say the larger ones right now really are, you know, we've spent a lot of time, you know, planning, modeling, and working with some of our partners on these, but I'd say there's still clarity that's needed on power sources, power allocation, especially in Ontario. In Alberta, there's sort of a philosophy that Alberta's open for business, but bring your own power. That seems to be a bit of a headline. And I think there's some opportunities that are getting underway there. But to bring your own power is probably highly centered around gas-fired cogens, and you have to be at the front of the line in terms of those turbines to generate that power or to be able to procure those turbines. So you have to be in a scenario where you've had long lead times and you're out front of that. So there's some uncertainty there, and I think that's how we're approaching it, and we'll see. There's some variables, but I'd say most of the variables lead to power. And, yeah, we'll see. Again, the smaller ones seem to be active, and we're busy with those. The bigger ones I think feels like it's taking a little longer unless you've got a power source that's been solidified.

Okay. Thank you very much.

Thank you. And this concludes our question and answer session. I would now like to hand the call back to Mr. McKibbin for closing remarks.

I just want to thank everyone for joining today's call. BERT delivered solid performance in the third quarter supported by a record backlog and continuous strength across our key sectors. Importantly, we remain focused on long-term value creation While revenue growth and margin progression can fluctuate from quarter to quarter, our trajectory remains clear, and we are firmly on track to achieve our 8% adjusted EBITDA target by 2027. Thank you all for joining us this morning on our earnings call.

And this concludes today's conference call and webcast. You may disconnect your lines. Thank you for participating, and have a pleasant day.