BIRD CONSTRUCTION INC. ANNOUNCES 2018 FOURTH QUARTER AND ANNUAL FINANCIAL RESULTS
LISTING: TORONTO STOCK EXCHANGE
- During the fourth quarter of 2018, the Company recorded net income of $6.4 million on construction revenue of $385.9 million, compared with net income of $2.0 million on $365.6 million of construction revenue respectively in 2017. The year-over-year increase in fourth quarter net income is reflective of the increase in revenue and earnings attributable to higher margin self-perform industrial work programs in the fourth quarter of 2018 as well as a reduction in pursuit costs and a foreign exchange translation gain on U.S. cash and equivalents held.
- In 2018, the Company recorded a net loss of $1.0 million on construction revenue of $1,381.8 million compared with net income of $8.8 million on $1,418.6 million of construction revenue in 2017. The decrease in net income year-over-year is attributable to a confluence of events that the Company experienced in 2018. Industrial operations, including mining in eastern Canada, were negatively impacted by project delays, including a labour strike at one of the Company’s primary mining clients, in the first half of 2018. Industrial project activity ramped up through the second half of the year as delays eased and alternative work programs became available, although later than initially anticipated. One of the Company’s offices experienced execution issues on several projects that were largely design related and for which the Company has recorded provisions to account for the increase in costs, taken steps to mitigate further impacts and is seeking recovery accordingly. In the first quarter of 2018, the Company incurred additional costs, including financing costs from lenders, on a PPP project that was late in achieving substantial completion.
- In 2018, the Company secured $1,491.7 million of new contract awards and change orders and executed $1,381.8 million of construction revenues. The new contract awards through the year contributed to a Backlog of $1,295.9 million for the Company at December 31, 2018, an increase of $109.9 million, or 9.3% from the $1,186.0 million of Backlog recorded at December 31, 2017. Key new contract awards in 2018 that demonstrate the Company’s success in diversifying its work program include
The Company announced in the third quarter that it 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 becomplete by the third quarter of 2019.
o In the fourth quarter, the contract for the engineering, procurement and construction of LNG Canada’s Cedar Valley Lodge project (the “Cedar Valley Lodge”) was novated to LNG Canada’s EPC contracto (“EPC Contractor”) and the EPC Contractor has issued a notice to proceed. Cedar Valley Lodge will house workers for the construction of LNG Canada’s export terminal project in Kitimat, B.C. Design and engineering of the Cedar Valley Lodge along with plans for construction execution are ongoing, with construction commencing in spring 2019.
o 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 construction of the detachments and will also own the concession responsible for financing the project through Bird Capital. In 2012, the Company successfully completed Phase 1 of the modernization program.
o In the first quarter, 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.
o In 2018, the Company had other strategic awards that were contracted including 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.
The Company achieved substantial completion on three Public Private Partnership and alternative finance (“PPP”) projects in the year ended December 31, 2018:
o Stanton Territorial Hospital Renewal – At over 280,000 sq. ft., the new hospital located adjacent to the current facility will offer outpatient and inpatient services including emergency, medical imaging, dialysis, obstetrics, pediatric, cardio and mental health departments as well as day procedure and surgery suites.
o Moncton Downtown Events Centre - The 8,800 seat, 250,000 sq. ft. facility is the largest projectthe 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.
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.
- In 2018, cash and cash equivalents increased $25.8 million net of the effects of foreign exchange to $158.9 million, from the $133.1 million balance at the end of 2017. The majority of the increase in cash and equivalents during the year 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 March 2019 and April 2019.
“While rebuilding our earnings base is taking longer than initially anticipated, I am encouraged by our performance in the second half of the year where the Company generated strong cash flow, grew backlog and is carrying a healthy list of awarded projects into 2019”, said Ian Boyd, President & CEO. “Building off this momentum, we expect to see a ramp up in earnings throughout the year towards the $25.0 million of net income recorded in 2016, consistent with our outlook communicated in the third quarter and driven by a more balanced work program, with positive contributions from all sectors.”
(in thousands of Canadian dollars, except per share amounts)
|Year ended December 31|
|2018||2017 restated (1)||2018||2017 restated (1)|
|Net income (loss)||$6,379||$1,990||$(1,013)||$8,836|
|Basic and diluted earnings (loss) per share||$0.15||$0.05||$(0.02)||$0.21|
|Cash flows from (used in) operations before changes in non-cash working capital||$10, 977||$7,902||$12,185||$26,983|
(1) 2017 reported figures have been restated applying IFRS 15. See note 4 of the notes to the unaudited interim condensed consolidated financial statements.
- The year-over-year decrease in cash flows from operations before changes in non-cash working capital from 2017 is primarily the result of the $1.0 million net loss in 2018 compared to $8.8 million net income in 2017 and the change in income tax recovery year-over-year of $1.7 million in 2018 from an income tax expense of $4.2 million in 2017.