BIRD CONSTRUCTION INC. ANNOUNCES 2016 THIRD QUARTER RESULTS AND REDUCTION IN DIVIDEND EFFECTIVE JANUARY 31, 2017
('000s except per share amounts)
- During the third quarter of 2016, the Company generated net income of $6.0 million on construction revenue of $407.7 million compared with a net loss of $5.6 million on construction revenue of $389.9 million in 2015. The net loss in 2015 is primarily attributable to a non-cash charge to earnings of $22.4 million ($20.3 million after deferred tax reversals) for the impairment of goodwill and intangible assets relating to the Company’s investment in its wholly owned subsidiary H.J. O’Connell Limited. The reduction in 2016 net income from the adjusted 2015 net income of $14.7 million (a non-GAAP measure) is primarily a result of the shift in the composition of the 2016 work program from higher margin industrial projects to lower margin commercial and institutional projects. The effect on earnings was, to some extent, offset by the additional profit realized on higher revenues resulting from organic growth.
- Construction revenue of $407.7 million was $17.8 million or 4.6% higher than $389.9 million recorded in the third quarter of 2015. The increase in construction revenues is largely due to the execution of the Company’s significant commercial and institutional work program, including many Public Private Partnerships (“PPP”) and alternative finance projects. As expected, the Company’s industrial revenues declined relative to those recorded in 2015, primarily due to the reduction in the capital spending programs of many of our industrial clients in response to low commodity prices.
- In the third quarter, bidding activity on PPP and alternative finance projects increased as there are now three active projects under pursuit, all of which are scheduled to be submitted in the next two quarters. The Company was also part of a team that was shortlisted on the Regional Express Rail – Stouffville Corridor project.
('000s except per share amounts)
|Three months ended Sept.30||Three months ended Sept.30||Nine months ended Sept.30||Nine months ended Sept.30|
|Net income and comprehensive income||$5,975||$(5,616)||$19,204||$9,926|
|Basic & diluted earnings per share||$0.14||$(0.13)
|Adjusted net income (1)||$5,975||$14,704||$19,204||$30,246|
|Adjusted net income per share||$0.14||$0.35||$0.45||$0.71|
(1) Adjusted Net Income is a non-GAAP measure and does not have standardized meaning. Refer to the Company's Management Discussion and Analysis for a description of adjusted net income and reconciliation with net income.
- During the first nine months of 2016, the Company generated net income of $19.2 million on construction revenue of $1,159.2 million compared with $9.9 million and $1,031.4 million, respectively in 2015. In 2015, the Company recorded a non-cash charge of $22.4 million ($20.3 million after deferred tax reversals) for the impairment of goodwill and intangible assets relating to the Company’s investment in its wholly owned subsidiary H.J. O’Connell Limited. Adjusting for the after-tax non-cash impairment charge of $20.3 million, the Company would have recorded Adjusted Net Income of $30.2 million (a non-GAAP measure) on construction revenue of $1,031.4 million in 2015. The reduction in 2016 net income is primarily a result of the shift in the composition of the 2016 work program from higher margin industrial projects to lower margin commercial and institutional projects. The effect on earnings was, to some extent, offset by the additional profit realized on higher 2016 revenues (12.4% organic growth) and a reduction in general and administrative expenses.
- In the first nine months of 2016, the Company secured $824.6 million of new contract awards and executed $1,159.2 million of construction revenues. The success in securing new work through the first nine months of the year contributed to a Backlog of $1,328.2 million at September 30, 2016, compared with $1,662.8 million at December 31, 2015. The decline in backlog from the end of 2015 is representative of the fact that the Company has not secured a major project in 2016 as opportunities have been limited. The Company has been successful in securing many smaller but strategic projects with opportunities for expansion in scope as the Company looks to diversify its revenue streams into new markets and with new clients.
- Bird Construction Inc. announced today that its Board of Directors (the “Board”) has approved a reduction to its monthly dividend by 48.7% to $0.0325 per share from $0.0633 per share. On an annualized basis, the new dividend rate is $0.39 per share down from $0.76 per share. Management estimates that this change will preserve approximately $15.7 million in cash annually and help to maintain the strength of the Company’s balance sheet. The new dividend will be effective in January 2017 and will be paid on February 17, 2017 to shareholders of record as of January 31, 2017.
Mr. Ian Boyd, President and CEO of Bird Construction Inc. commented on the dividend reduction and future outlook, "In recent years our earnings and dividends benefited greatly from a resource boom in both the oil sands of western Canada, and mining operations in eastern Canada, and we focused heavily on capturing the higher margin opportunities associated with this more remote and technically challenging work. Although we have been feeling the effects of the simultaneous reduction in activity in both of these markets for nearly two years, we have continued to benefit to some degree from completion of the higher margin work until now, due to the usual lagging effect common in our industry.
The Company has been adapting to these changes occurring in the marketplace with a renewed focus on the commercial and institutional sectors. We were highly successful in capturing PPP projects last year and, despite a lull in these opportunities this year, we believe that we are well positioned for the robust pipeline of PPP and other federal and provincial infrastructure opportunities anticipated to come forward in 2017. We are also diversifying our work program to include transportation projects, the maintenance, repair and operation (MRO) segment of the industrial market, water and waste water facilities and other environmental projects.
I believe that we have sufficient opportunities and the capabilities to secure and execute them profitably. We are focused on rebuilding our earnings base and executing our diversification strategy. However, with the higher margin industrial work now behind us, and the time required to complete our diversification strategy, we anticipate that 2017 will see a significant reduction in earnings. In view of this, and in order to sustain the equity and working capital which will be required to support the rebuilding of our earnings base, we have concluded that it is prudent to reduce the Company's monthly dividend rate beginning next year."
Bird Construction Inc. also announced that its Board of Directors has approved regular cash dividends for the months of November and December 2016 in the amount of $0.0633 per common share for each month and January, February, March 2017 in the amount of $0.0325 per common share for each month to be paid as follows;;
i) The November dividend of $0.0633 per share will be paid on December 20, 2016 to the Shareholders of record as of the close of business on November 30, 2016.
ii) The December dividend of $0.0633 per share will be paid on January 20, 2017 to the Shareholders of record as of the close of business on December 30, 2016.
iii) The January dividend of $0.0325 per share will be paid on February 17, 2017 to the Shareholders of record as of the close of business on January 31, 2017.
iv) The February dividend of $0.0325 per share will be paid on March 20, 2017 to the Shareholders of record as of the close of business on February 28, 2017.
v) The March dividend of $0.0325 per share will be paid on April 20, 2017 to the Shareholders of record as of the close of business on March 31, 2017.
A conference call for analysts and investors will be held at 10:00AM ET on Thursday, November 10, 2016, to discuss the quarterly results. The dial in number is 1-855-328-1925. Attendees are asked to be on the line 10 minutes prior to the start of the call.
This press release contains forward-looking statements that involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.
For further information contact:
I.J. Boyd, President & C.E.O or
W.G. Gingrich, C.F.O
Bird Construction Inc.
5700 Explorer Drive, Suite 400
Mississauga, ON L4W 0C6
Phone: (905) 602-4122 Fax: (905) 602-1516
Bird Construction Inc. Announces 2016 Third Quarter Results And Reduction In Dividend Effective January 31, 2017 : News & Media : Bird Construction