Earnings call transcript: Bird Construction Q4 2024 sees strong revenue growth

Bird Construction reported robust financial results for Q4 2024, highlighted by a significant increase in revenue and net income. The company’s revenue for the full year reached $3.4 billion, marking a 21% increase from 2023. Currently trading at a Price/Book ratio of 0.66, InvestingPro analysis suggests the stock may be undervalued. Despite the lack of immediate market reaction, Bird Construction’s strategic expansions and sector focus suggest a positive outlook for the future. For deeper insights into Bird Construction’s valuation metrics and growth potential, access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Key Takeaways

• Full-year revenue grew to $3.4 billion, a 21% increase from 2023.
• Q4 revenue was $936.7 million, up 18% from the previous quarter.
• The company expanded its capabilities with the acquisition of Jacob Brothers.
• Bird Construction’s backlog stands at $7.6 billion, indicating strong future demand.
• The company is focusing on sectors with long-term growth potential, such as defense and infrastructure.

Company Performance

Bird Construction has demonstrated strong performance in the fourth quarter of 2024, with substantial revenue growth and profitability. The company reported a full-year revenue of $3.4 billion, a 21% rise compared to the previous year. This growth is attributed to strategic acquisitions and an increased focus on high-demand sectors like infrastructure and defense.

Financial Highlights

• Revenue: $3.4 billion for 2024, a 21% increase YoY.
• Q4 Revenue: $936.7 million, up 18% from Q3 2023.
• Adjusted EBITDA: $218.8 million, representing 6.3% of revenues, a 53% increase YoY.
• Net Income: $100.1 million, or $1.84 per share.
• Gross Profit Margin: 9.7%, an increase of 110 basis points from 2023.

Outlook & Guidance

Bird Construction has set ambitious targets for the coming years, including a 10% organic revenue growth with a margin of plus or minus 2%, and an 8% EBITDA margin by 2027. The company plans to return 33% of net income to shareholders via dividends. According to InvestingPro analysis, analysts anticipate continued sales growth in the current year, supporting these targets. Significant backlog conversion is expected in the first half of 2025, with most revenue growth projected for the second half of the year. Access the full Pro Research Report for detailed growth projections and expert analysis of Bird Construction’s strategic initiatives.

Executive Commentary

CEO Terry McKibben expressed confidence in the company’s positioning, stating, "We’re highly confident that we’re positioned as well as we could be." CFO Wayne Gingrich reiterated the company’s commitment to its capital allocation priorities. McKibben also highlighted Bird’s strategic advantage in benefiting from long-term demand in key sectors across Canada.

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact project timelines and costs.
• Geopolitical Tensions: While currently managed well, these could pose risks to future projects.
• Market Competition: Increased competition in infrastructure and defense sectors could affect margins.
• Economic Fluctuations: Changes in economic conditions could influence capital spending in key sectors.
• Regulatory Changes: New regulations in construction and defense sectors could impact operations.

Q&A

During the earnings call, analysts inquired about the company’s ability to manage trade tensions and geopolitical uncertainties. Executives assured that there have been no project delays due to these factors. The company also highlighted its strong M&A pipeline and positive outlook on the defense and nuclear sectors, emphasizing the success of collaborative contract models.

Full transcript - Birddog Australia Pty Ltd (BDT) Q4 2024:

Conference Operator: Welcome, ladies and gentlemen, to the Berg Construction Fourth Quarter and Full Year twenty twenty four 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. As a reminder, all participants are in listen only mode and the webcast is being recorded. 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 involve 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 like to turn the conference over to Terry McKibben, President and CEO of Byrd Construction.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Thank you, operator. Good morning, everyone. Thank you for joining our fourth quarter and full year twenty twenty four conference call. With me today is Wayne Gingrich, Byrd’s Chief Financial Officer. Before we get started, I’d like to take a moment to commend our teams who came together to celebrate Women in Construction Week and International Women’s Day.

Ford is proud to recognize and participate in these celebrations that remind us of the invaluable contributions that women make to our industry and the importance of driving progress towards greater equity and inclusion. While these moments of recognition are important, our commitment extends beyond a single day or week. We remain dedicated to ensuring all voices are heard, valued and empowered. Reflecting on the past year, Burt delivered strong financial results as we passed our internal 2022 to 2024 strategic plan targets and set a solid foundation as we enter 2025. Bridge revenue grew by almost $600,000,000 to $3,400,000,000 our EBITDA margins improved by 1.3 to 6.3% and our adjusted earnings and EBITDA grew at double the pace of revenue.

The significant growth in margin expansion was driven by strategic choices made over the past three years to diversify our business, expand our self perform capabilities and risk balance our work programs with more collaborative contracting structures. These choices include the acquisition of businesses with strong performance and high growth potential such as Daymar, Trinity, Norkan and most recently, Jacob Brothers, which have significantly expanded Bird’s national infrastructure presence, underground utility, overhead telecom along with additional electrical, mechanical and instrumentation capabilities. As we cover in greater detail in today’s presentation, our combined backlog and pipeline of potential opportunities remain strong and risk balance, our balance sheet is healthy and has flexibility to support Bird’s future growth and we continue to deliver value to our shareholders. Bird’s seven point six billion dollars of combined backlog remains strong, diversified and risk balance. Our backlog of contracted work was $3,700,000,000 while pending backlog representing awarded work that has not yet been contracted was $3,900,000,000 and continues to include almost $900,000,000 of master’s service agreement and other recurring revenue.

Similar to the company’s revenue profile, first combined backlog is primarily comprised of collaborative flow to medium risk contract decks. With collaborative contracts, we have the ability to negotiate items such as tariffs as flow through costs ensuring they are treated as contractual adjustments. Other contracts which represent less than a quarter of our work program are typically smaller in scope, shorter in duration and have a high proportion of some contracted work mitigating the impact of cost increases. Having key lessons learned from the pandemic and as tariffs have been a common narrative throughout the U. S.

Election, our teams have taken a proactive approach to de risk our contracts. We’ve ensured that risk is either passed down to subcontractors or retained by our clients further mitigating exposure for Berger. So in summary, we are comfortable with the associated potential tariff risk in our $7,600,000,000 combined backlog. We continue to focus on key strategic sectors with long term demand drivers on winning additional work packages on large capital investment projects and on growing our recurring revenue base. Recent project wins highlight this focus including project awards in nuclear, cilantro, industrial maintenance and transportation.

Looking ahead to 2025, Ford expects significant conversions pending backlog to backlog, particularly in the first half of the year as several large collaborative projects advance to the construction phase. As these projects transition into execution, the remainder of the work program will be fully contracted and give us good visibility into revenue growth and margin improvements for 2025 and beyond. At the company’s Investor Day this past October, we outlined Burt’s twenty twenty five to twenty twenty seven strategic plan. Plan builds on our foundation of operational excellence and safe execution demonstrated during the twenty twenty two to twenty twenty four strategic plan further enhancing our industry leading talent and capabilities and expanding in the strategic market sectors and targeted large capital investment projects. We highlighted each of our infrastructure buildings and industrial operations in the key market sectors that we expect to focus on including those that we believe are more economically resilient and supported by long term drivers.

At our October Investor Day, we introduced the company’s twenty twenty five to twenty twenty seven financial targets. These targets include 10% plus or minus 2% organic revenue with compounded annual growth through 2027 with 2025 benefiting from an additional 5% from the inclusion of a full year at Jacob Brothers. This growth is expected to be driven by above market growth in infrastructure and industrial and in line market growth for buildings resulted in a relatively balanced revenue across our business by 2027. ’8 percent EBITDA margin is our target for the full year 2027. The added lift from the inclusion of full year of Jacob Brothers in 2025, the remaining 170 basis point increase from our 2024 full year margin of 6.3% seems well within reach.

Finally, in line with our disciplined balance capital allocation strategy, we remain committed to returning 33% of that income to shareholders through our dividend retaining two thirds to support organic growth and strategic M and A as well as capital investments in technology and equipment to support further productivity and growth. To achieve these 2025 to 2027 goals, we’ll continue to expand in distributed market sectors and participate in targeted large capital investment projects demonstrating our operational excellence and continued commitment to a balanced capital allocation strategy. Transformation of our business over the past few years has created an economically resilient foundation and today Bert is extremely well positioned to benefit from significant long term demand in strategic sectors across Canada. These sectors include defense spending, transportation infrastructure, power infrastructure including nuclear and hydro generation and refurbishment, regeneration, healthcare, long term care, industrial maintenance and oil and gas including major investments in LNG. These sectors are expected to continue to require substantial investment from the private and public sectors over the coming years and are less susceptible to short term volatility resulting from economic and geopolitical uncertainties.

As outlined here, the annual addressable markets for our teams across infrastructure, buildings and industrial is significant and the demand environment remains robust. On Slide seven, we highlight two key sectors, rail and defense, each of which presents significant opportunities for Burt. Burt is a key player in delivering critical transit infrastructure and this is an important growth area. Just last week, we announced Rail Connect Partners, are fiftyfifty JV with Atkins Realis finalized and signed the project alliance agreement with Metrolinx to deliver the East Harbour Transit Hub in Toronto. This marks the commencement of the execution phase of the project Beyond our joint venture with Atkins Realis’ project creates one bird’s contracting opportunities for teams like EDGAR and our commercial systems group.

With the significant addressable market in this sector, there continues to be opportunities for growth. Defense, the current geopolitical environment including Canada’s commitment to meeting its 2% of GDP NATO defense spending obligation is driving substantial investment in this sector and this translates to a significant demand for bird. Example of this is a recent announcement of the Arctic security strategy consisting of 2,700,000,000 over twenty years for three northern military hubs. Also a significant focus on energy security and border security making Canada more self reliant and resilient all of which would create additional opportunities. These helps our target to be built in Yellowknife, Nunavut and in Catalent.

In recent years we’ve built a full service hall of hospital in Yellowknife and 75 room hotel in the Catawood. We have currently we have current activity underway in Nunavut in Oil and Gas and social infrastructure as well as other areas in the remote North for social infrastructure currently at the Creek Con level. Ford has deep experience in the North and Will Canada positions us well for these emerging opportunities through a long history of working with Defense Construction Canada having completed $1,300,000,000 in activity over the past ten years. Current levels of activity across all major bases in Canada as well as the new hubs creates great opportunities that dwarf previous investments. So we’re excited about the sector and we have a long standing partnership with indigenous communities to position us as a strategic contractor of choice.

Another key element of our growth strategy is our participation in large capital investment projects. Refer to these client driven investments as projects that exceed $1,000,000,000 they’re typically divided into multiple scopes creating opportunities for expansion on-site. Ford is recognized as a Tier one contractor trusted by blue chip clients to deliver construction services for these highly complex high value projects often through collaborative contract models. Our teams are in high demand for their focus on safety and operational excellence and self perform capabilities. Additionally, Bird has built strong partnerships and joint ventures which are important to support sustainable positive community impacts that benefit local communities.

Key advantage of these large capital project investments is the ability to expand our role over time. FERC often begins with one or two work packages and through strong performance we continue securing additional scopes significantly growing our total portfolio on-site. A great example of this is our experience in LNG Canada where our teams ultimately completed over $1,300,000,000 in contracts. These successive wins contribute directly to achieving our overall business targets. These projects are highly complex often in remote regions and are largely self performed aligning well with our capabilities and commitment to operational excellence.

We’ve highlighted a selection of large capital investment projects. We’re currently executing work on this slide. This is not an exhaustive list, but it showcases the scale and diversity of zone projects that are driving our continued growth. I now hand it over to Wayne to cover our fourth quarter and full year 2024 financial performance in more detail.

Wayne Gingrich, Chief Financial Officer, Bird Construction: Thank you, Terry. Bert’s fourth quarter was a continuation of the strong performance we saw throughout 2024, marked by significant revenue growth, margin accretion and earnings and operating cash flow improvements that significantly outpaced revenue growth. Production revenue for the fourth quarter of $936,700,000 represented an 18% increase compared to the same period in 2023. On a full year basis, revenues of $3,400,000,000 were 21% higher than 2023. Almost half of the 18% growth in the quarter was driven by organic sources.

The remainder of the revenue growth was driven by Jacob Brothers acquired in August 2024 and Norcan acquired earlier in the year. The company’s gross margin profile in the fourth quarter of twenty twenty four continued to improve compared to the prior year with gross profit percentage increasing to 10.3% compared to 9.2%. Full year basis, gross profit percentage was 9.7%, one hundred and ten basis points higher than in 2023. All groups contributed to the increase in gross profit margins with the majority of the margin increase driven by higher growth in industrial and infrastructure, which had favorable margin profiles and higher proportions of self performed work. The increase in gross profit continues to reflect the improved margin profiles on newer work resulting from disciplined project selection, strong project execution, growing self performed capabilities and cross selling opportunities across the company.

Adjusted EBITDA in the fourth quarter was $71,900,000 compared to $43,900,000 reported a year ago, representing a 64 increase. Adjusted EBITDA margins continued to increase on a year over year basis, increasing from 5.5% to 7.7% in the fourth quarter. Adjusted EBITDA for the full year was $218,800,000 to $212,800,000 or 6.3% of revenues compared to $138,700,000 or 5% of revenues in 2023, representing an increase of 53%. Turning to earnings, net income and earnings per share were $100,100,000 and $1.84 compared to $71,500,000 and $1.33 in 2023, representing increases of 4038% respectively. Adjusted earnings and adjusted earnings per share were $37,300,000 and $0.67 compared to $24,900,000 and $0.46 in 2023.

The weighted average shares outstanding for the fourth quarter of twenty twenty four was 1,600,000.0 shares higher than 2023 due to the acquisitions of Jacob Brothers and Norcan in the current year. And before we move on, we wanted to call out that with the increased number and size of recent acquisitions, the company’s definition of adjusted earnings was revised in the quarter to exclude the non cash amortization of acquisition intangible assets such as customer relationships, brand names and backlog, our revised definition is now more aligned with our peers in the E and C sector who already make this adjustment. As we noted in the prior presentations, burn’s revenue, adjusted EBITDA and adjusted EBITDA margins have experienced a period of sustained growth over the past several years, resulting in revenue growing to $3,400,000,000 and adjusted EBITDA growing to $213,000,000 at the end of twenty twenty four, representing 6.3% adjusted EBITDA margin. Over the past few years alone, we have seen revenue grow by over $1,000,000,000 and our adjusted EBITDA margin improved by 200 basis points. As we look to build on this economically resilient foundation towards the company’s twenty twenty five to twenty twenty seven growth and profitability targets, our 10% plus or minus 2% organic revenue CAGR target would see Bird at approximately $1,400,000,000 of additional revenue over the next three years and continue to improve our EBITDA margin by an additional 170 basis points to 8%.

Terry McKibben, President and Chief Executive Officer, Bird Construction: This growth is supported by

Wayne Gingrich, Chief Financial Officer, Bird Construction: our focus on key Canadian market sectors that have long term demand drivers and accretive margins. Our existing near term record combined near record combined backlog of lower risk contract profiles with accretive margins, gaining additional leverage on our cost structure and our focus on driving proportionately higher growth in our industrial and infrastructure businesses through 2027. Bert’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. New for this quarter, we are presenting a calculation of free cash flow. Free cash flow conversion as a percentage of net income and free cash flow per share.

We’re calculating free cash flow with cash flow from operating activities, which includes the impact of changes in non cash working capital less capital expenditures. Cird’s operating cash flow and free cash flow generation were strong in 2024 as expected in line with the significant revenue and profitability growth that the company delivered in the year. Operating cash flow generation for the year was up 50% compared to last year and free cash flow generation was up almost 80%. Free cash flow conversion of net income was just over 80% and free cash flow per share was $1.48 The company’s return and capital efficiency metrics remain strong with return on equity over 30%. The adjusted net debt to trailing twelve month adjusted EBITDA ratio stands at 0.51x and long term debt to equity ratio is 32%.

Company ends 2024 with record total liquidity bolstered by strong cash generation in the quarter and a $100,000,000 increase in credit capacity in our three year committed revolver. Throughout our previous twenty twenty two to twenty twenty four strategic plan period, we emphasized a disciplined and balanced approach to capital allocation, one that fuels growth while delivering strong returns to shareholders. From 2022 to 2024, we committed $300,000,000 across capital investments, acquisitions and dividends. Of that, 34% supported capital investments, including project related equipment and initiatives to enhance efficiency and productivity through technology. Another 39% was allocated to acquisitions, strengthening our market position and future growth and the remaining 27% was returned to shareholders in the form of dividends.

Since 2022, we have more than doubled our monthly dividend from $0.0325 to $0.07 per share, representing a 215% increase over our 2022 to 2024 strategic plan period. Looking ahead, we remain committed to maintaining a payout ratio of 33% of net income each year, ensuring sustainable and attractive returns for our shareholders. This balanced approach remains a core principle of our strategy and is expected to continue through 2027. With that, I’ll turn the call back to Gerry for our outlook and closing remarks.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Thank you, Wink. Verdes built a strong and economically resilient business as well diversified by market and geography. We have a near record combined backlog of margin accretive projects with lower risk contract profiles and healthy balance sheet that has the financial flexibility for the company to execute its growth plans as well as pursue accretive acquisitions if and when they arise. We finished 2024 with a quarter of significant revenue growth and margin accretion, a trend we expect to continue throughout 2025. Majority of the 2025 revenue growth is expected to be realized in the second half of the year with significant conversions pending backlog to backlog occurring in the first half as a number of large collaborative projects reach our construction phase.

We believe the company is well positioned to manage the uncertainty created by recent trade tensions across North America and remain committed to the longer term and profitability targets announced as part of the 2025 to 2027 strategic plan. With that, I’ll turn the call over to the operator for questions.

Conference Operator: Thank you. We will now begin the question and answer session. Our first question today will come from Chris Murray of ATB Capital Markets Inc. Please go ahead.

Chris Murray, Analyst, ATB Capital Markets Inc.: Good morning. Maybe just turning to the guidance very quickly, just sort of just trying to gauge kind of the drivers in the first half versus second half split. Can you maybe walk us through why you’re seeing what you’re seeing in terms of delays? I know you mentioned the permitting is less of a problem than it was in Q3, but I was wondering if that’s playing into it and how we think about kind of margin progression through the year on top of the revenue progression?

Wayne Gingrich, Chief Financial Officer, Bird Construction: Yes, I can feel that, Chris. So a couple of things. So we stated that for Q4, the impact of the permitting issues that we saw in Q3, the impact was less in Q4 than it was. So it’s starting to unwind actually. So it’s not really a driver for us.

That’s kind of impacting where we said we’re going to back end shift some of the growth. The drivers really there are a couple of things we called out in our outlook is in the first half of the year, we’re going to see significant conversions of pending backlog to backlog, meaning we’re contracting these projects. And order of magnitude like it could be $1,500,000,000 moving into backlog. So that sets up the second half really, really well. And on top of those conversions, we’re still going to have our normal kind of wins that we get that don’t flow through pending backlog and go straight to securities into backlog.

So we still feel very confident in our total year outlook. It’s just part of it because of the timing of those conversions, pushing it to the second half. And the second thing that we called out was in the first half of twenty twenty four, we had a really strong first half. We had very favorable weather conditions. We got to do something that we don’t often get to do in the first half, which is accelerate process on a number of projects and we had called this out last year.

Terry McKibben, President and Chief Executive Officer, Bird Construction: So we just wanted to kind of

Wayne Gingrich, Chief Financial Officer, Bird Construction: highlight that when we say 10% organic growth plus 5% for Tinker Brothers in the year, it’s not linear. Like we don’t apply 15% every single quarter. There’s still project mix factors and those types of things that impact the quarter. But really wanted to make sure that we’re confirming the total year outlook.

Chris Murray, Analyst, ATB Capital Markets Inc.: All right. That’s helpful. Thank you. And then I’m not sure if you want to take this one, but Terry, just some interesting comments about Bird’s history in Northern Canada. And there’s lots of discussion about, as you said, military, minerals, that kind of development.

Can you talk a little bit about your capabilities to be able to work in the North? And does this lend itself to very much like Jacobs Brothers was a way to move to East or to move into different verticals? Are there other opportunities around M and A to maybe bulk up for Northern Canada?

Terry McKibben, President and Chief Executive Officer, Bird Construction: I think, quick, to be perfectly honest, I think we’ve got all the pieces and the tools we need for Northern Canada. We have a rich history of working in the North. We often think of our markets as coast to coast to coast. And we think about building a modern hospital in Yellowknife with weather conditions that can be -forty or 50 for many months at a time, but we’re just used to that. And if you think of the work we’ve done with employing 1,500 to 2,000 people on a job like LNG Canada, We’re used to mobilizing large workforce providers to work in remote locations.

So the history is there. We’ve worked. We’ve built a hotel in the Callaway with 75 rooms we’ve done and we’re working right now in Nunavut on precon on a number of things. So, historically, we have the resume, we have their indigenous partnerships established and we have teams that are set up for that. Our business, our mining business, we refer to as pretty heavy civil, has worked extensively through Northeastern Canada and remote North as far as North American Mary River, which is about as north as you can be.

So, yes, I think the depth is there and the history is there and the teams. So, it’s an exciting market and not discounting that, yes, there’s a lot of Northern base work that’s evolving, but there’s a lot of existing base expenditures going on across the major defense bases in Canada, which we continuously service, which would have been part of that 1,300,000,000 over the last ten years.

Chris Murray, Analyst, ATB Capital Markets Inc.: Okay. Just maybe following on to that, we haven’t talked about STACK in a while, but does STACK kind of fit well into kind of that Northern construction model?

Terry McKibben, President and Chief Executive Officer, Bird Construction: Yes. Yes. And some of the social infrastructure that we’re modeling right now in pre KONAN would include modules that would be supplied by STACK. Okay. Thanks.

That’s helpful. Thank you. The hotel, for example, the hotel, for example, that we built in Lake Callaway, we erected that hotel in eight days, seventy five rooms, obviously, on top of a platform that we still built. But those units came in and, yes, it’s impressive hotel, in the remote North that we constructed. So, yes, I’m really confident in our resume.

Sure, if there’s something comes along that enhances us that we like from an M and A perspective, we do that, but it’s certainly not needed with the resources we have today.

Chris Murray, Analyst, ATB Capital Markets Inc.: Okay. I’ll leave it there. Thank you.

Wayne Gingrich, Chief Financial Officer, Bird Construction: Thank you.

Conference Operator: And our next question today will come from Christa Freyja of CIBC. Please go ahead.

Christa Freyja, Analyst, CIBC: Hi. Thanks for taking my question. I was just wondering if you could maybe give us a little bit more color on what you’re seeing in terms of M and A right now and what the pipeline looks like for you?

Terry McKibben, President and Chief Executive Officer, Bird Construction: It’s been busy. I don’t think our pipeline has softened at all. We do put we have a team full time that works in the space and we are continuously entertaining opportunities and looking at things that we think would be important for us to consider. I’m really proud of our track record of integrating companies over the last number of years. And I think that in itself creates new opportunities because someone thinking about divesting their businesses looks at what’s been happening and make some phone calls and they find out that we’ve done a nice job with a number of companies and our record is impeccable.

So I’d say that the activity levels is high, continues to be high and it’s been high for probably eighteen to twenty four months and we’re excited about some of the opportunities that we’re considering.

Christa Freyja, Analyst, CIBC: Great. Thanks. And then maybe just one more on the tariff front and all the uncertainty there. I appreciate you had some verbiage in your MD and A about that. But have you had any conversations with

Conference Operator: some of your

Christa Freyja, Analyst, CIBC: customers who are they are now delaying their projects just as it relates to uncertainty? Or is this all still kind of just up in the air at this point?

Terry McKibben, President and Chief Executive Officer, Bird Construction: No, and that’s the beauty of the types of programs, types of projects that we target. It’s across a multitude of sectors that have long term horizons. They know that things are going to ebb and flow within the economy. But that’s the beauty of the focus we have. And we’ve also in the past month have had projects that we’re closing some of them with very definitive procurement rules that we’ve had to intervene as they look, we need relief from tariffs in this regime or we just are not prepared to take that risk and the clients have adjusted those, and those are primarily government, where there’s been very rigid procurement sort of framework and usually not easy to make adjustments, but we’ve made that very clear that we wouldn’t proceed unless there was a relief for that and they’ve been accommodating.

So, but no, our core program of what we’ve outlined in today’s presentation is solid and we’re highly confident we won’t see macroeconomic pressures on that program.

Christa Freyja, Analyst, CIBC: Okay, great. Thank you. I will jump back in the queue.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Thanks, Chris.

Conference Operator: Our next question today will come from Michael Tupholme of TD Cowen. Please go ahead.

Michael Tupholme, Analyst, TD Cowen: Good morning. Thank you. Last quarter, you talked about expecting your 2025 adjusted EBITDA margin to approach 7%. Can you provide an update on your

Wayne Gingrich, Chief Financial Officer, Bird Construction: feel confident in our ability to hit that. We came in strong through fourth quarter and obviously finished a bit higher in 2024 at 6.3. So, yes, we still have the 70 basis points to get there instead of 100. We’re going to see an additional lift as we have a full year of Jacob Brothers consolidated in our 2025 results. But we also have a great mix of projects in our backlog, in our pending backlog, in our pipeline.

And we do say in our outlook, I just want to call that out, that we’re still seeing the embedded margins and backlog and our pending backlog be higher than the work program we just put in place. So that also gives us confidence as margins are going to continue to drive up.

Michael Tupholme, Analyst, TD Cowen: That’s helpful. Thank you. And then maybe Wayne, how do we think about margin progression then as you move through the year, particularly in view of the commentary about more of the growth coming in the second half of the year?

Wayne Gingrich, Chief Financial Officer, Bird Construction: I think the margin progression is less about the kind of the growth story between first half and second half and it’s just the normal seasonal trend that we have, right. So in first quarter, for example, obviously we have winter weather and we do a little bit less self perform work in that sector and have a little less equipment revenue. So EBITDA margins are a bit muted compared to the busy summer months in Q3

Terry McKibben, President and Chief Executive Officer, Bird Construction: and the close of the

Wayne Gingrich, Chief Financial Officer, Bird Construction: year in Q4. So I think normal seasonality is what you’ll see in terms of the flow to the total year 2025.

Michael Tupholme, Analyst, TD Cowen: Okay, that’s helpful. Thank you. And then just to be clear, I mean, you’ve got the contribution from Jacob Brothers in the first half of the year and a little bit into the beginning of the third quarter. But like when you talk about this sort of back half waiting for the revenue growth, should we still expect there to be positive organic growth in the first half of the year just at a reduced rate or how do we think about the organic growth specifically?

Wayne Gingrich, Chief Financial Officer, Bird Construction: Yes, that’s right. There’s still going to be positive organic growth compared to the first half of last year and then there’s going to be Jacob Brothers layered on that. It’s just not going to be the like 15% every single quarter. It’s going to be two thirds kind of weighted to the back half.

Michael Tupholme, Analyst, TD Cowen: Got it. Perfect. And then maybe just to pick up on one of the questions you were asked about the uncertainty that exists right now in view of trade and geopolitical issues. Terry, I take your point that it doesn’t sound like you believe there’s really any impact or risk to your current work program. Can you maybe shed some light on any conversations you’re having with customers about projects that haven’t yet been haven’t yet been approved or are they rethinking anything as far as projects that are sort of on the horizon at this point or looking at those any differently?

Just curious around the sort of the future opportunity in

Terry McKibben, President and Chief Executive Officer, Bird Construction: Yes, we haven’t had any customers in the core sectors that were focused on raising concerns or raising that in the sense of a pause. Like I said, the high majority of the areas we’re focused are long term. They have very well organized platforms and they’re moving along. And a lot of the things we’re doing are expansions of current programs we’re already on. So they’re just continuing.

So I think it’s the way we’ve diversified into so many areas and a blend of government work and a blend of private work in key growth areas for Canada. And then obviously the new opportunities evolving in defense, just positions us really well. So we’re very confident that we’re positioned as well as we could be. I honestly can’t even think of a sector that I wish we were positioned to be perfectly candid. I think we’re really well positioned to have a very balanced program.

Michael Tupholme, Analyst, TD Cowen: Okay. That’s helpful. Maybe just a quick follow on there. When you talk about defense, can you maybe give us a little bit of a sense for sort of the types of opportunities you’re most likely to see in the defense sector?

Terry McKibben, President and Chief Executive Officer, Bird Construction: Well, I think it’s public. In addition to these three new hubs that they’re building in Yellowknife, Nunavut and Iqaluit, the major bases are getting major expansions. So whether that’s Coal Lake to house their future program, whether it’s the Army bases in the country, Obviously for Canada to reach the 2% of GDP, it’s a lift to get there and they’re taking a pretty big swing at it. So yes, it’s exciting. It’s the programs that are coming through across the basis, the majority of which we’ve worked at is like I said it’s kind of daunting actually.

Conference Operator: Our next question today will come from Frederic Bastien of Raymond James Limited. Please go ahead.

Frederic Bastien, Analyst, Raymond James Limited: Guys, with Canada potentially looking at additional export markets for its natural resources, does that potentially accelerate projects like the Phase II of LNG Canada? And just curious as to your views on that. And obviously, you did really well on the initial phase of LNG Canada. So how would you position yourself for that work if you were to go ahead?

Terry McKibben, President and Chief Executive Officer, Bird Construction: Well, certainly seems to be government in the public forum, governments raising that topic that they would like to see in Phase two accelerated and moving along. So I’m sure those discussions are underway and we’re highly confident with our performance on Phase one that we participate strongly in Phase two. I’d say the one that is emerging, it might have emerged regardless of the interface, the tensions is Prince Rupert. Lots of activity related to Prince Rupert and that creates exciting opportunities for us. We’re very active obviously in Squamish on fiber.

So on the LG side, we’re nicely positioned and our reputation is giving us a lot of new opportunities to expand and from that perspective. We also expect

Wayne Gingrich, Chief Financial Officer, Bird Construction: considerable

Terry McKibben, President and Chief Executive Officer, Bird Construction: expansion of ports and facilities on both coasts. And as you said, Canada is redirecting and focused on rebalancing their export markets and to do that they’ve got to build infrastructure to facilitate that.

Frederic Bastien, Analyst, Raymond James Limited: Thanks for that color. And then I apologize if it’s been asked or brought up in the last forty minutes, but nuclear has been a new market for you in the last several years. You’ve done extremely well. Can you comment on maybe additional opportunities you’re seeing in that space? And if you have already answered that question, you feel free to ignore me.

Terry McKibben, President and Chief Executive Officer, Bird Construction: No, it hasn’t come up, but it’s certainly a major growth area for us. As you know, the two largest nuclear facilities in Canada and our clients with Bruce Power and OPG have got major programs that they’re developing. And obviously, we are participating quite significantly in those programs. We are doing a lot of the contemptation work with ultimately for Atomic Energy, but through CNL and that program continues to develop. We’ve got a large program underway up at Chalk River, which is the programs that have been talked about with a large campus that’s getting completely renewed and refurbished and those programs are underway.

So I think across the nuclear space, our teams continue to grow and expand and it’s become a major business front for us. So OPG has announced the refurbishment of Pickering and we’re doing a lot of support work and are excited about those opportunities that really support and create appropriate infrastructure to support that refurbishment and as we’ve been doing it at Darlington. But there’s just a number of programs that are underway in various markets that put us in a great spot with the evolving resume we have.

Frederic Bastien, Analyst, Raymond James Limited: Thanks, Terry. I appreciate it.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Thank you.

Conference Operator: Our next question today will come from Ian Gillies of Stifel. Please go ahead.

Ian Gillies, Analyst, Stifel: Good morning, everyone.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Good morning.

Ian Gillies, Analyst, Stifel: First question is operational in nature. As best I can tell, the East Harbor contract is the first collaborative contract where it’s done on the transit side. You’ve now moved into construction phase. Can you maybe talk about what were some of the positives moving through that first phase and what some of the negatives have been and maybe how you would tie that out to some of your broader strategies?

Terry McKibben, President and Chief Executive Officer, Bird Construction: Yes. And speaking I think it’s the Eastern Canada’s Second transit project of significant scale or any scale I think that’s been procured. And I would say this, the alliance model that we’re using there is a fully integrated partnership model with the client. And anytime you can use a model like that, you’ve got all the decision makers that are fully integrated in the team, you can break down any kind of barriers that you would not normally be able to break down if you’ve just you know you just contracted and you’re carrying all the risk. You’ve got motivated members from your client that are focused on meeting the targets and meeting the budget and doing whatever it takes to break down any kind of hurdles.

So it’s been a tremendous experience to date and we’ve been on this for a few years now as the design has been evolving and feedback I’m getting from the client is very positive about the excitement of that model. That model is also being used extensively in BC and the same kind of feedback that BC Partnerships is getting where they’re seeing what a powerful model that is because the predictability of the ultimate budget is highly likely when you have the whole team working collaboratively to get it done. So the negatives, I don’t I can’t think of a negative. I’d say that these projects take a little longer to get into construction. So that’s probably the only thing.

But honestly, if you start to position your backlog with a series of these, it starts to become more of a steady run rate. So, but the front end when you’ve got a few of them evolving, it does take longer to get revenue flowing, but it’s clearly worth it in the end based on the experience we’ve had to date. It’s also a model that is supportive of self performing the work because it assists the partnership in accelerating the work because you’ve got that self perform ability to turn up the crew sizes and hours of work to be able to meet milestone targets. So yes, overall very pleased, very few negatives.

Ian Gillies, Analyst, Stifel: That’s helpful. Maybe moving to a capital allocation question that I’ve asked before, but I’ll ask again because the valuation is looking a little discounted at this juncture. Has there been any additional thought towards putting in an NCIB on top of the dividend? I fully acknowledging the M and A strategy is strong. I mean, buying your own stock and around these levels would seem to be a pretty attractive use of capital from our perspective.

Wayne Gingrich, Chief Financial Officer, Bird Construction: Yes. I mean, it’s always an option that’s out there, but we tried to be very clear in our communications from our Investor Day in October. Our capital allocation priorities remain unchanged. We’re targeting 33% payout ratio on net income and the M and A market is still very active for us. So, we want to make sure we’re retaining enough capital in the business to invest in that growth and the work program is also growing, right.

And when you see growth in industrial and infrastructure that’s okay in the market, there’s going to be equipment needs with that as well. So we’re making sure that we got the capacity to support that growth. I’d say at this time, no, there hasn’t. We remain committed to the priorities we outlined previously.

Ian Gillies, Analyst, Stifel: Understood. Thanks very much. I’ll turn it back over.

Conference Operator: Our next question today will come from Maxim Sytchev of National Bank Financial. Please go ahead.

Maxim Sytchev, Analyst, National Bank Financial: Hi. Good morning, gentlemen. Terry, I was wondering if it’s possible maybe to get a sense if you’re seeing any change in customer behavior when you kind of look at it between public and private clients, if there’s any differentiation or you’re getting sort of the same feedback and kind of vibe from both cohorts? We haven’t seen

Terry McKibben, President and Chief Executive Officer, Bird Construction: concerns with those clients. There’s been no behavioral differences the way they think about the programs are long term initiatives, whether that’s in the government side across infrastructure, whether that’s transportation or healthcare, long term care, we start looking at that other types of transportation type things. And then on the private side, the large majority of things that we’re focused on are these large blue chip type clients that have a fifty year horizon any of the projects. So they’re thinking longer term. And obviously we’re well equipped with our various supply channels to redirect supply.

Many of these large clients that we’re working with will have free or show equipment even that comes in where they’re procuring things are coming from all over the world. So, yes, in that regard, I think there’s a fair bit of consistency, but certainly uncertainty as to where it’s also going to settle out as everyone is fully aware.

Maxim Sytchev, Analyst, National Bank Financial: Yes, for sure. And I guess is it possible to get a bit of a ballpark on your commodity exposure across the companies of like 20%, thirty %? So how should we think about that?

Terry McKibben, President and Chief Executive Officer, Bird Construction: Well, it’s still variable. And like I said, so many of our clients are sharing some of those commodities. But I will say this, we have did a deep forensic analysis of our existing backlog. And we haven’t found risk in that that would cause us any concern. So we have the flexibility to have that risk transferred to a subcontractor or in the case where we’re self performing, obviously we’ve conditioned our clients for that risk.

Maxim Sytchev, Analyst, National Bank Financial: Sorry, I just meant commodities when it comes to like iron ore, gold, natural gas, etcetera, if you were to look across. Oh, I see. You’re talking to the entire company. I was thinking from a vendor

Terry McKibben, President and Chief Executive Officer, Bird Construction: you’re talking about the sectors. So, so far, no. Obviously, there may be sectors like we’re in iron ore, for example. So, so far, no indication from those clients, but I think it’s a wait and see. You probably steel tariffs continue.

You probably see some tightening there, but our mining group is fairly diversified across different sectors. And our mining group is also the group that is our point on hydroelectric and other heavy civil type initiatives. So we’ve got that evolving now, which we wouldn’t have had a year ago. The large hydro project we have up in Northwestern Ontario is getting green lighted to get under construction now. So you know it gives us some flexibility, but so far no indications and we’re in close contact with our major clients on the iron ore side.

Maxim Sytchev, Analyst, National Bank Financial: Okay, that’s great. Thank you. And then a quick question for Wayne if I may. In terms of the working capital kind of like intensity, how should we think for 2025 if there’s like any kind of puts and takes versus 2024? Anything you can tell us would be great.

Wayne Gingrich, Chief Financial Officer, Bird Construction: Yes. Look, I think the flows between non cash working capital and cash, I think you’ll see the usual seasonality there. If some of the organic revenue growth is moving into the second half that we talked about with some of the pending backlog conversions. So then the investment in non cash working capital might be a little more muted in the first half, little more of a spike in Q3, but we would still expect to see the unwind that we usually get in fourth quarter again since this year.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Okay. So nothing unusual.

Maxim Sytchev, Analyst, National Bank Financial: Okay. That’s great. That’s it for me. Thank you. Thank you.

Conference Operator: This concludes the question and answer session. I will hand the call back over to Mr. McKibben for closing remarks.

Terry McKibben, President and Chief Executive Officer, Bird Construction: Thank you. Brit’s exceptional revenue and profitability growth in 2024 was driven by strategic changes that we made over the past several years that’s offered risk balance our work programs, expand our self perform capabilities and reach and focus on key market sectors that have long term demand drivers. We enter 2025 in a position of strength with almost $8,000,000,000 in our combined backlog, a robust bidding environment with margin accretive opportunities and a strategic plan that will see us continue to grow, become more profitable and deliver long term value to our shareholders. Before we close, I want to take a moment to thank their incredible teams from coast to coast to coast who are the foundation of our success. It’s the dedication, expertise and hard work of our people that drives Bird forward every day.

I’m proud of what we have accomplished together over the past year and excited for what’s to come. Thank you to all for joining us this morning on our earnings call.

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

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.