Bird Construction Inc. Announces 2021 First Quarter Financial Results

COMPANY: BIRD CONSTRUCTION INC.
LISTING: TORONTO STOCK EXCHANGE
CITY: MISSISSAUGA
SYMBOL: BDT
DATE: May 11, 2021
SUBJECT: BIRD CONSTRUCTION INC. ANNOUNCES 2021 FIRST QUARTER FINANCIAL RESULTS

“I am pleased to report solid first quarter 2021 financial results despite the negative impacts the global pandemic had on our operations this quarter. The Company has now posted ten successive quarters of trailing twelve month Adjusted EBITDA margin improvement and, once again, Stuart Olson contributed positively to our results demonstrating it has been accretive to Bird shareholders from day one,” said Mr. Teri McKibbon, President and CEO, Bird Construction. “The integrated company is driving new opportunities as our clients recognize the significant bench strength that has started to yield cross-selling opportunities, contributing to a robust and balanced backlog. Through our diverse national capabilities, we are uniquely positioned to benefit from both stronger resource prices and recent government budget announcements with additional infrastructure spending. The integration has resulted in a more resilient business and as we continue to pursue accretive growth, we are well positioned to create long-term value for all stakeholders.”

FINANCIAL HIGHLIGHTS

First Quarter 2021 compared to First Quarter 2020

• Construction revenue of $444.6 million, representing a 38.2% increase year-over-year.

• Net income and earnings per share were $7.1 million and $0.13, respectively, compared to $1.1 million and $0.03 in Q1 2020.

• Adjusted Earnings and Adjusted Earnings Per Share were $9.1 million and $0.17, respectively, compared to $1.1 million and $0.03 in Q1 2020.

• Adjusted EBITDA of $21.0 million, or 4.7% of revenues, reflects a 178.2% increase in Adjusted EBITDA and a 230 bps improvement in Adjusted EBITDA Margin.

• Backlog of $2,627.2 million and Pending Backlog of $1,684.9 million at March 31, 2021.

• Strong balance sheet with $128.1 million of working capital and $79.9 million of non-restricted cash at March 31, 2021.

OVERVIEW

• As previously announced, the Company completed its transformative acquisition of Stuart Olson late in the third quarter of 2020 and welcomed the additional employees, clients, shareholders and all other stakeholders to this dynamic organization and new leading construction company. Bird is nearing the completion of its initial integration plan and has worked to successfully combine two strong, experienced workforces and integrate and harmonize its policies, processes and people.
  
  
• During the first quarter of 2021, the Company recorded net income of $7.1 million on construction revenue of $444.6 million compared with net income of $1.1 million on $321.6 million of construction revenue in the first quarter of 2020. Basic and diluted earnings per share in the first quarter of 2021 and 2020 was $0.13 and $0.03, respectively. The year-over-year increase in first quarter revenue is attributable to the inclusion of Stuart Olson. Revenues were negatively impacted in the quarter by approximately $90.0 million due to both public health restrictions and delays in permitting associated with the global pandemic. The year-over-year increase in net income reflects a combination of additional margin from the acquisition of Stuart Olson, inclusive of synergies, as well as progress with diversifying the work program and improving year-over-year margins in operations. Net income in the first quarter of 2021 was negatively impacted by reduced productivity and project delays resulting from the pandemic, which had a significant unfavourable impact on earnings and were partially mitigated by a pre-tax compensation expense recovery of $11.2 million recognized in the quarter for the Canada Emergency Wage Subsidy ("CEWS").
  
  
• Adjusted Earnings and Adjusted Earnings Per Share in the first quarter of 2021 were $9.1 million and $0.17, respectively, compared with Adjusted Earnings and Adjusted Earnings Per Share in the first quarter of 2020 of $1.1 million and $0.03, respectively. The year-over-year increase in first quarter Adjusted Earnings is reflective of the improvement in net income described above and the adjustment for $2.0 million of tax effected integration and restructuring expenses incurred in the first quarter of 2021.
  
  
• Adjusted EBITDA and Adjusted EBITDA Margin in the first quarter of 2021 were $21.0 million and 4.7%, respectively. Adjusted EBITDA increased $13.4 million from the Adjusted EBITDA of $7.6 million in the first quarter of 2020. Adjusted EBITDA Margin increased 230 basis points from the Adjusted EBITDA margin of 2.4% recorded in the first quarter of 2020.
  
  
• During the first quarter of 2021, the Company secured $389.3 million of new contract awards and change orders and executed $444.6 million of construction revenues. Backlog of $2,627.2 million at March 31, 2021 decreased slightly from Backlog of $2,682.5 million at December 31, 2020, due to COVID-19 delays in project tenders and awards from clients.
  
  
• During the first quarter of 2021, the Company announced that it was awarded the following projects and contracts:
  
  
  • A five-year contract valued in excess of $550.0 million to provide MRO services for a longstanding industrial customer in Alberta. Under the terms of the multi-site, multi-use agreement, the Industrial Maintenance team will deliver a multi-disciplined offering for maintenance services, turnarounds and sustaining capital construction projects, drawing on the full suite of services of both Stuart Olson and Bird. The contract is converted from Pending Backlog to Backlog as purchase orders under the contract are received.
    
    
  • The Company was awarded a $154.0 million design-build contract for the Nanaimo Correctional Centre (“NCC”) Replacement Project in Nanaimo, British Columbia. The contract was included in Backlog at December 31, 2020. The NCC Replacement Project features modernized spaces for educational, vocational, and certified trades training in addition to rehabilitative and culturally responsive Indigenous programming. It also includes Vancouver Island’s first provincial custody capacity for women. Two local First Nations, Snuneymuxw and Snaw’Naw’As, will also have input into the design as well as job and contract opportunities during construction.
    
    
  • A contract was signed with Infrastructure Ontario for the design-build expansion at the Kenora Jail and the Thunder Bay Correctional Centre. The contract was added to Backlog at March 31, 2021. The project will leverage the Company’s integrated conventional site construction and innovative modular construction solutions through Bird’s valued partnership with Stack Modular. The Company’s teams in Manitoba and Ontario will bring together experience and local expertise, reaffirming Bird’s commitment to building meaningful partnerships with regional communities including engagement with local Indigenous communities.
    
    
• During the first quarter of 2021, cash and cash equivalents decreased $87.0 million, before the effects of foreign exchange, to $125.0 million from $212.1 million at the end of 2020. The majority of the change in cash and cash equivalents during the period relate to changes in the non-cash net current asset/liability position which can fluctuate significantly in the normal course of business. Cash flows from operations used cash of $68.5 million mainly due to changes in non-cash working capital and outflows of $18.6 million for income taxes paid. Cash flows from investing activities used cash of $0.5 million mainly related to investments in equity accounted entities. Cash flows from financing activities used cash of $17.9 million mainly due to the payment of dividends and repayment of loans and borrowings and right-of-use liabilities. During the quarter, the Company repaid $5.0 million of its revolving credit facility and $0.5 million of its non-revolving term loan facility.
  
  
• The Board has declared an eligible dividend of $0.0325 per common share for each of May 2021, June 2021 and July 2021.
  
  
• Subsequent to quarter end, the Company announced that it was awarded the following projects and contracts:
  
  
  • The Company was awarded a $172.0 million fixed price construction services contract with Concert Properties for the Sherbourne Project ("The Burke") in Toronto, Ontario. The contract was added to Pending Backlog at March 31, 2021. The Burke is a residential tower consisting of 53 floors and a gross floor area of 43,300 m², combining a healthy blend of residential and retail space, while incorporating an existing heritage building. Bird's commitment to sustainable construction will be realized once again as it adds The Burke to its 200+ Leadership in Energy and Environmental Design (LEED®) project portfolio. The new building will be constructed to a LEED® gold standard, leveraging green building practices and environmentally sound solutions
    
    
  • The Company was awarded two contracts for civil works on two separate sites: construction of two storm and effluent ponds at an existing project site in northwestern British Columbia, and construction of an overpass in northern Alberta. The combined value of the contracts awarded is approximately $135.0 million.
    
    

Adjusted Earnings, Adjusted Earnings Per Share, Adjusted EBITDA, and Adjusted EBITDA Margin have no standardized meaning under IFRS and are considered non-GAAP measures. Therefore, these measures may not be comparable with similar measures presented by other companies.

Management uses Adjusted Earnings and Adjusted EBITDA to assess the operating performance of its business. Management believes that investors and analysts use these measures, as they may provide predictive value to assess the ongoing operations of the business and a more consistent comparison between financial reporting periods.

Adjusted Earnings and Adjusted EBITDA are reconciled as follows: