BIRD CONSTRUCTION INC. ANNOUNCES 2018 THIRD QUARTER FINANCIAL RESULTS
LISTING: TORONTO STOCK EXCHANGE
- During the third quarter of 2018, the Company recorded a net income of $4.4 million on construction revenue of $381.4 million, compared with a net income of $5.9 million on $388.8 million of construction revenue respectively in 2017. The year-over-year decline in third quarter net income is reflective of lower volume recognized in the Company’s higher margin self-perform mining operations in eastern Canada, a result of client driven project delays experienced in 2018.
- During the first nine months of 2018, the Company recorded a net loss of $7.4 million on construction revenue of $995.9 million compared with net income of $6.8 million on $1,053.0 million of construction revenue in 2017. In addition to the delay in mining projects noted above, the industrial operations in western Canada were also impacted by project delays primarily in the first half of 2018. The Company was negatively impacted in the second quarter by a labour strike at one of the Company’s primary mining clients, resulting in a minimal work program combined with higher maintenance costs. In addition, one of the Company’s offices experienced execution issues on several projects that were largely design related, and the Company is seeking recovery accordingly. The Company has recorded provisions to account for the expected increase in construction costs on these projects and has taken steps to mitigate further impacts on results. In addition, the first quarter of 2018 was negatively impacted by the adoption of IFRS 15, Revenue from Contracts with Customers, which impacted the timing of recognition of revenue on a significant amount of change orders and claims related to a PPP project that achieved substantial completion during the first quarter of 2018 that was constrained to zero. Through the dispute resolution process and as the constraints on the variable consideration are removed, revenue from the change orders and claims will be recognized at that time.
- In the first nine months of 2018, the Company secured $1,044.9 million of new contract awards and change orders and executed $995.9 million of construction revenues. The new contract awards through the first nine months of the year contributed to a Backlog of $1,235.0 million for the Company at September 30, 2018, an increase of $49.0 million, or 4.1% from the $1,186.0 million of Backlog recorded at December 31, 2017.
- In the first half of 2018, the Company was awarded multiple work packages totaling $72.0 million for seven pump stations on the Enbridge Line 3 project. Work commenced late in the second quarter and is expected to contribute positively to financial results for the balance of 2018 and 2019.
- The Company announced that it has a 50% interest in a construction joint venture that is part of the Hartland Resource Management Group consortium that will design and build the residuals treatment facility for the Capital Regional District (“CRD”) in Victoria, BC. The Company also has taken a minority equity interest in the concession responsible for the design, construction, financing, operations and maintenance of the project through Bird Capital, a wholly owned subsidiary.
- In the second quarter, the Company was contracted to build a hotel and conference centre in Iqaluit, Nunavut for the Qikiqtaaluk Corporation. The project will use Stack Modular to supply modular units as part of the hotel.
- In the third quarter, the Company executed a contract for the Ontario Provincial Police (OPP) Modernization Phase 2 project to design, build and finance OPP detachments in nine Ontario communities. Bird will undertake the design and build and will also own the concession responsible for the financing of the project through Bird Capital. In 2012, the Company successfully completed Phase 1 of the modernization program.
- In the third quarter, the Company was selected as first negotiations proponent as part of the CBS JV Corp to execute, under an Integrated Project Delivery (“IPD”) contract model, the construction of the Advanced Nuclear Materials Research Centre (“ANMRC”) for Canadian Nuclear Laboratories (“CNL”) located in Chalk River, Ontario. Bird is part of the joint venture that will lead the construction of the project. The project has not yet been added to Backlog as CBS JV Corp is working through the validation phase, which confirms the project’s financial viability and is expected to be completed in the second quarter of 2019.
- The Company achieved substantial completion on two Public Private Partnership and alternative finance
(“PPP”) projects in the nine months ended September 30, 2018:
o East Rail Maintenance Facility – At more than 500,000 sq. ft. and built on 76 acres, construction included progressive maintenance bays, coach maintenance shops, locomotive maintenance shops, paint booth, wheel shop, wash bays, fuel storage, a track maintenance building, track, and track switches.
o Moncton Downtown Events Centre - The 8,800 seat, 250,000 sq. ft. facility is the largest project the City of Moncton has procured and completed. The centre will serve as a catalyst for downtown development in the City, will be the host for major sports and entertainment events.
- In the first nine months of 2018, cash and cash equivalents decreased $54.7 million net of the effects of foreign exchange to $78.4 million, from the $133.1 million balance at the end of 2017. The majority of the decrease in cash and equivalents during the nine months ended September 30, 2018 relate to changes in the non-cash net current asset/liability position which can fluctuate significantly in the normal course of business.
- The Board has declared monthly eligible dividends of $0.0325 per common share for November 2018,December 2018, January 2019 and February 2019.
“Results in the third quarter were largely as expected with the improvement in margin driven by a steady increase in the contribution from our industrial projects and generally more balance in our work program”, said Ian Boyd, President & CEO. “More encouraging for our Company is the anticipated growth in our Backlog over the next several quarters, reflecting our success in being awarded new projects valued at over $500 million that are in varying stages of being contracted, including the previously announced Cedar Valley Lodge Workforce Accommodation Centre for LNG Canada and the Advanced Nuclear Materials Research Centre for Canadian Nuclear Laboratories. These larger scale projects coupled with other recent wins in the institutional sector in western Canada and mining sector in eastern Canada will better position the Company for success in 2019 and beyond.”
(in thousands of Canadian dollars, except per share amounts)
|Nine months ended September 30|
|2018||2017 restated (1)||2018||2017 restated (1)|
|Net income (loss)||$4,360||$5,894||$(7,392)||$6846|
|Basic and diluted earnings (loss) per share||$0.10||$0.14||$(0.17)||$0.16|
|Cash flows from (used in) operations before changes in non-cash working capital||$9, 726||$11,412||$877||$18,608|
(1) 2017 reported figures have been restated applying IFRS 15. See note 4 of the notes to the unaudited interim condensed consolidated financial statements.
Bird Construction Inc. also announced that its Board of Directors has approved monthly eligible dividends for the months of November 2018, December 2018, January 2019 and February 2019 in the amount of $0.0325 per common share to be paid as follows: