Welcome, ladies and gentlemen, to the Bird Construction Third Quarter Financial Results Conference Call and Webcast. We will begin with Teri McKibbon, President and Chief Executive Officer's presentation, which will be followed by a question and answer session. Analysts and institutional investors who wish to ask a question should have their webcast muted when dialing into the conference number provided. At any time during the presentation today, you may press the star and one on your telephone to be placed into the question queue. You will hear a tone acknowledging your request. When we are ready for questions, you will be introduced into the conference in the order that you are received. If you wish to remove yourself from the question queue, you may press star then two. 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 meanings under IFRS and may not be comparable with similar measures presented by other companies and are therefore considered non-GAAP measures. At this time, I would like to turn the conference over to Teri McKibbon, President and CEO of Bird Construction.
Thank you, operator, and good morning, everyone. Thanks for joining us on today's Third Quarter 2021 Earnings Conference Call. Joining me today on the call is Wayne Gingrich, Chief Financial Officer. I'm pleased to once again report solid financial results for the third quarter of 2021. Over the past few years, we've made a concerted effort to grow the business profitably, all while balancing the overall risk profile of the company. A key element of this strategy was to increase collaboration internally, externally with third parties, and with our clients. To this end, we have secured a number of projects using a collaborative framework such as integrated project delivery or alliance partnerships, which create an appropriate balance of risk between a contractor and a client. With our broadened service offering, I believe the strong foundation that we have created, combined with our collaborative approach, is bearing considerable fruit.
This is evidenced by the record securements and change orders we booked in the quarter, as well as the record revenues, backlog, and pending backlog reported this quarter. This quarter also marks the first anniversary of the acquisition of Stuart Olson. We are extremely pleased with the integration, the new team that we now have at our disposal, and how the two teams have come together collaboratively to secure and execute projects. Furthermore, during the third quarter, we announced the acquisition of Dagmar Construction. With an 80+ year history, Dagmar's work program spans structures, roadwork, rail, and servicing and other specialty projects. Dagmar has an established track record of long and proven stable revenues, healthy margins of profitability, which is a testament to the company's ability to manage costs and consistently deliver projects on budget.
With Dagmar underpinning our infrastructure business, we expect a unified coast-to-coast infrastructure business with civil infrastructure capabilities to accelerate the next phase of the company's growth. Overall, I'm excited about Dagmar joining the Bird team, and in the span of two months, we have a number of exciting projects in our pipeline. Lastly, on September ninth with Investor Day, we unveiled our new three-year Strategic Plan. Our Strategic Plan is rooted in three key pillars, team, perform, and diversify. As such, the plan focuses on the further development of Bird's team, strong project execution, and a geographic diversification of service offerings. We believe that the achievement of our strategic objectives in three years' time will position Bird as a leader across our industry with world-class safety, high employee engagement, and collaboration across our teams and divisions.
If you haven't already done so, you can stream the Investor Day on our website under the investor section. Turning to slide 6, the culmination of our efforts resulted in strong third quarter 2021 financial results. In fact, revenues for the third quarter were at an all-time high, up 80% year-over-year. Once again, the combined Bird, Stuart Olson entity yielded top-line synergies this quarter. Adjusted EBITDA increased 30% and adjusted earnings were up 12%. Additionally, as I indicated previously, we reported record securements and change orders of CAD 740 million in the quarter. This drove our backlog to a new high as at September 30. As we look into the remainder of the year and into next year, our bid pipeline remains robust, giving us continued confidence in the near- to medium-term prospects for the company.
As you can see on slide 7, we reported an adjusted EBITDA margin of 4.6% in the third quarter of 2021. On a trailing 12-month basis, our adjusted EBITDA margin stood at 5.5%. Overall, Stuart Olson has been accretive since the date of acquisition. That said, as we have discussed on previous conference calls, the inclusion of Stuart Olson will weigh on our near-term margin profile. However, embedded within our 3-year strategic plan is our pursuit to achieve a higher margin profile over time as we leverage our combined expertise with our clients from coast to coast, which will continue to present cross-selling opportunities as well as undertaking an increased level of self-perform work. Moving to slide 8. We announced that we negotiated a construction services contract with the international real estate firm Hines for a mixed-use project in the heart of Toronto.
The project is a 17-story mixed-use building that will be constructed by leveraging green building practices with sustainable solutions. Additionally, we announced that the consortium Concert-Bird Partners was awarded a design, build, finance, and maintain contract for five Alberta high schools with the Alberta government under a P3 model. The project has a total combined contract value in excess of CAD 300 million and is part of Alberta's Recovery Plan to create jobs and diversify the economy. Additionally, we announced a number of high-profile awards subject to quarter end that were added to pending backlog. Specifically, we were awarded the first phase of a progressive design build with early collaborative contract involvement for OPG's Clarington Corporate Campus project. The project is divided into three phases to reflect the design's progressive nature, ensure the cost estimate, schedule project forecast, and project planning are sufficiently advanced before construction.
Construction is expected to begin in 2022, with completion in 2024. We also announced that we will participate in 3 integrated project delivery contracts or IPD contracts in western Canada with a combined value in excess of CAD 150 million. These contracts include a substantial food and beverage facility expansion project, the Okanagan Indian Band Water System upgrade, and the North Okanagan Wastewater Recovery Project. Lastly, we entered into an alliance agreement with the renewable energy company Noventa Energy Partners to jointly pursue opportunities for waste energy transfer projects across Canada, with Bird acting as the exclusive constructor. The current addressable market is estimated at over CAD 500 million. The alliance relationship between Bird and Noventa commences with the successful financial close of the recently announced Toronto Western Hospital WET project that is valued at approximately CAD 43 million. Awards were added to pending backlog.
Awards that were added to pending backlog embody the philosophy that we are pursuing as part of our new three-year strategic plan, which is to work collaboratively. Additionally, given our positioning in green building techniques such as mass timber and stack, I'm confident we will continue to win mandates where we're able to help our clients achieve their climate goals. These contract awards drove our backlog and pending backlog to an all-time high, as shown on slide nine. At the end of Q3, our backlog stood at CAD 2.8 billion, while tender backlog amounted to CAD 1.8 billion. Overall, I'm pleased with our financial and operational progress. With Stuart Olson having been part of the Bird team for a year now, we are extremely pleased with how accretive Stuart Olson has been to date.
The combined Bird Stuart Olson entity has continued to yield revenue synergies as evidenced by benefits from cross-selling the combined capabilities of Stuart Olson and Bird. Additionally, with Dagmar now part of the Bird team, we expect to deliver even greater value proposition to our clients. From a macro perspective, as we continue to emerge from the pandemic, we continue to see opportunities surface with the sustained improvement in natural resource prices, which is notably improving the business prospects in Alberta, as well as the significant planned infrastructure spending announced by the federal and individual provincial governments. With that, I'd like to turn the call over to Wayne to go over our financial results.
Thanks, Teri, and good morning, everyone. Please turn to slide 10. I'm pleased with our third quarter 2021 financial results. We reported record revenues, backlog, and pending backlog for the quarter. In the third quarter, we generated construction revenues of CAD 621 million, representing an 80% increase compared to the third quarter of 2020. The year-over-year increase can be largely attributed to the inclusion of Stuart Olson. Additionally, despite the recent fourth wave of the COVID-19 pandemic, the company observed increases in revenues across all of its work programs this quarter as the market continues to recover to pre-pandemic levels. Gross profit for the third quarter was CAD 46 million or 7.5% of revenues. This compares to gross profit of CAD 27 million and a gross profit margin of 7.9% in Q3 2020.
The year-over-year increase in gross profit can be primarily attributed to the inclusion of Stuart Olson, as well as the diversification of the company's work programs, particularly in the company's self-perform industrial projects. I would note that the company recorded a recovery of CAD 2.5 million of compensation expense in cost of construction for the Canada Emergency Wage Subsidy, or CEWS program, in Q3 2020. No such recovery was recorded in the cost of construction this quarter. As Teri indicated, going forward, we will be facing challenging year-over-year margin comparisons. This is a result of qualifying for the CEWS program in the back half of 2020 and the first half of 2021, which positively impacted our margin percentages. Given we no longer expect to qualify for the CEWS program, all else equal, our margin percentages will decline in comparison to prior year comparable periods.
General and administrative expenses for Q3 came in at CAD 30 million or 4.8% of revenues. This was CAD 12 million higher than the CAD 18 million or 5.1% of revenues reported in Q3 2020. The primary reason for the year-over-year increase is related to the addition of Stuart Olson. Q3 2021 adjusted EBITDA amounted to CAD 29 million or 4.6% of revenues. This compares to CAD 22 million or 6.4% of revenues in Q3 2020. As Teri mentioned, the inclusion of Stuart Olson will weigh on our near-term margin profile. However, we are confident we are building a business that can support a higher margin profile over the medium to long term.
Adjusted earnings was CAD 14 million or CAD 0.26 per share in the third quarter of 2021, compared to CAD 12 million or CAD 0.29 per share in Q3 2020. Turning to our year-to-date results, construction revenues were CAD 1.6 billion year-to-date 2021. This compares to CAD 949 million for the first 9 months of 2020. The 71% year-over-year increase can be largely attributed to the acquisition of Stuart Olson. I would highlight that revenues year-to-date 2021 were unfavorably impacted by approximately CAD 116 million due to the pandemic, noting that the entire impact was felt within the first two quarters of 2021. Gross profit year-to-date was CAD 135 million, representing a 109% increase compared to the comparable period in 2020, while G&A expenses increased 96% to CAD 90 million.
Adjusted EBITDA year-to-date 2021 was CAD 80 million, representing a 4.9% margin. Adjusted EBITDA for the comparable period in 2020 was CAD 42 million or 4.4% of revenues. Adjusted earnings year-to-date was CAD 38 million or CAD 0.71 per share. This compares to CAD 20 million or CAD 0.47 per share for the first three quarters of 2020. Similar to what drove our Q3 results, the year-over-year improvement in our year-to-date 2021 results was driven by the combination of additional margin for the acquisition of Stuart Olson, which includes synergies as well as progress with diversifying our work program and improving profitability margins in our operations. We have a strong and balanced work program in place across the country. Before moving on, as Teri pointed out, our backlog and pending backlog stood at an all-time high as of quarter end.
I'd like to point out that our pending backlog includes over CAD 900 million of MSA contracts as at September 30th, 2021. These contracts are typically with industrial clients that span multiple years for MRO services. We expect to convert these MSAs to backlog on a quarterly basis as purchase orders are received. Overall, these MSA contracts represent a recurring revenue stream over the next 1 to 5 years, providing us excellent revenue and profit visibility. As always, we are diligently focused on appropriately balancing the risk profile of our backlog through end market diversification and contracting methods. I believe that the current composition of our backlog and pending backlog, for that matter, appropriately balances customer concentration, contract size, contracting method, and end market diversification. Moving to slide 11, I'd like to quickly touch on the progress we've made to date with the integration of Stuart Olson.
Overall, we're on track with our previously stated objectives. This includes CAD 10 million in annualized EBITDA synergies that we expect will be realized as we finish out the year. Additionally, we expect to realize further cost savings over the next couple of years as we integrate both companies into one unified IT platform. On September 1st, 2021, we acquired Dagmar Construction. As you can see on slide 12, the purchase price of the transaction was CAD 32 million before working capital adjustments. The transaction was financed 80% with debt and the balance coming from Bird treasury shares issued to the seven principal vendor shareholders. On slide 13, you can see Dagmar's clients and work programs are well diversified across work type, with no one sector making up more than 30% of overall revenues.
In addition, the company boasts a well-respected and long-standing clientele list, including Canadian National Railway, Canadian Pacific Railway, Metrolinx, municipal and governmental bodies, in addition to others. Overall, Dagmar will allow us to increase our self-performed capabilities in the high-growth civil infrastructure sector and drive higher margins for the consolidated company. Furthermore, with Dagmar in the mix, we expect to continue to see cross-selling opportunities as emerge as we can leverage our broader service offerings. Moving to slide 14, we continue to retain a strong balance sheet, which provides significant financial flexibility. During the quarter and announced concurrent with the acquisition of Dagmar, we expanded our syndicated credit facility to CAD 235 million from CAD 200 million and retained a CAD 50 million accordion feature. We further extended the term of the credit facility to September 1st, 2024.
The expansion and extension of the credit facility speaks to the strength of the relationships we have with our lenders and their confidence in Bird and the strategic direction we're taking the company. Overall, as at quarter end, accessible cash was CAD 75 million, a CAD 72 million improvement from the end of Q2 2021, while adjusted net debt stands at CAD 11 million. Our adjusted net debt to trailing 12-month adjusted EBITDA ratio is a very healthy 0.09 times as at September 30th, 2021. All financial metrics are well within our comfort level at the end of the quarter. Turning to slide 15, we continue to balance our capital allocation priorities between organic opportunities, dividends, M&A, and debt repayments. In the first 9 months of 2021, we generated cash flow from operations before non-cash working capital of approximately CAD 77 million.
Our capital investment has remained modest in 2021 as we deployed CAD 6 million toward CapEx year to date. As always, we remain committed to returning excess capital to shareholders via our monthly dividend payment. We paid cash dividends of CAD 16 million year to date 2021. As it relates to our M&A strategy, as always, we will remain disciplined and opportunistic. Overall, I'm very pleased with our financial strength and our positioning within the Canadian construction industry, which will allow us to capitalize on anticipated strong economic growth, coupled with the backdrop of higher commodity prices. With that, I'll turn it back to Teri.
Turning to slide 16. I continue to believe that Bird has built a strong platform for future growth and strong profitability. We've made tremendous strides over the past few years as our employees have embraced change and built a solid and stable business despite the challenges the pandemic has presented to date. This strong foundation has allowed us to capitalize on a robust pipeline as we're seeing cross-selling opportunities continue to emerge through the collaboration of Bird and Stuart Olson. While it is early days with the integration of Dagmar, we are excited about the growth prospects it provides in the civil infrastructure market, and to date, we are seeing opportunities evolving. Both acquisitions are acting as catalysts for Bird to grow and diversify, all while maintaining a balanced risk profile in our work program.
As we embark on our new three-year strategic plan, which takes us to the end of 2024, we're focused on strengthening our team, delivering solid operational and financial performance, and continuing to diversify our business. I believe these priorities will set us up for success for years to come, which will ultimately allow us to build shareholder value over the longer term. With that, I would like to turn the call back to the operator for questions.
Thank you. We will now begin the question-and-answer session. Analysts who wish to ask a question may press star and one on their touchtone telephone to join the question queue. You will hear a tone acknowledging your request. If you are using a speakerphone, please ensure you lift the handset before pressing any keys. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. Our first question comes from Frederic Bastien of Raymond James. Please go ahead.
Hey, good morning, guys.
Hi, Fred.
Morning.
I was wondering if you could add a bit more color on the opportunity that you see in Dagmar. Obviously, it seems like a pretty strategic move. Lots of opportunities in the Ontario transit market. You know, is there any additional color you can provide here?
Well, certainly, it has a, you know, the 80 years of history, tremendous track record in safety and consistent performance. It's got a, you know, really exciting team that we're working with and getting to know a little better. And most importantly, it's a group of leaders that, you know, obviously with Bird, you know, feel larger scale enables them to look at projects collaboratively with the Bird infrastructure teams and grow. And that at times takes us beyond even, you know, the pure infrastructure side of the business, where you might be doing a larger site development for a list of preferred clients that now get introduced to Bird as well with the broader balance of Bird's services.
It's a very diversified group. We're really excited, especially after the first couple of months, a number of really unique projects that we feel are very strategic, that are in the pipeline.
I would anticipate that their business is a bit more seasonal than the overall Bird company. Is that a fair assessment?
Yeah. To a certain extent. You know, there's a bit more seasonality to it. Again, it depends on the mix of work. Obviously, if you're doing grading and that kind of thing, you know, you can't really do much of that with frost. You know, they'll do like deep underground type utilities and things like that that usually proceed. You know, some of the structural work that they do would proceed if you're into a schedule that, you know, requires that. They're, you know, obviously very adept to working in Canada's winter conditions. You're right. You know, there is certainly it does come off a bit, and not dissimilar to some of the other areas of business that we have.
Well, last question for me. I mean, your margins held up quite nicely during COVID, and they're on an upward trend. You know, obviously factoring the Stuart Olson acquisition and its own margin profile. You know, generally speaking, we've seen a nice upward trend. How many more levers can you pull to continue driving profitability higher?
Well, I think, you know, we're certainly excited about the growth of collaborative platforms. I think, you know, in comparison to, you know, other forms of contracts where, you know, you you're not in that framework, it gives you the consistency. Most importantly, what's most exciting about, you know, collaborative commercial platform like IPD or alliance contracts is you're working very, very closely with the client, you know, from day one. You're breaking down any of the you know, the stakeholder issues and that, you know, can give you grief in terms of delays and permit approvals and, you know, utility relocation, things like that. You're well into that long before you get to construction.
You know, anytime a contractor can have that type of front-end development before you hit the ground, it's pretty exciting. We got a lot of that. We're quite excited about that because it just gives you a much more consistent performance in your business. I think the more of that platform we see evolve, and it's evolving at quite a clip right now, you know, there's more levers there to obviously move the balance of the mix of work and the mix of backlog. It'll trend higher just because
You know, you've got a much different service offering that clients are prepared to pay more for so.
Thanks, Teri. Well done.
Thank you.
Our next question comes from Michael Tupholme of TD Securities. Please go ahead.
Thank you. Good morning. First question is just.
Good morning.
Good morning, Teri. First question is around the backlog. Obviously a very strong record level. Just curious, what is the duration of the backlog look like, and has that changed at all relative to what the durations historically look like for Bird?
I think the duration is similar. You know, we've disclosed in the next 12 months, about 62% of our backlog will be recognized in revenue. You know, plus or minus, we've been in that 59%-63% range in recent quarters. You know, the one piece that goes out longer is of course, those MRO MSAs that we have. Those actually aren't recorded in our backlog. Those are in our pending backlog until we get those POs that allow us to do the work in the short term. Some of the longer term items are actually in pending backlog, not backlog.
Okay. That's helpful, Wayne. Thank you. The next thing I was gonna ask you about pending backlog. That's also at a record level, I believe, very strong. How do we think about the conversion of that pending backlog into sort of firm or hard backlog?
What we've kind of been saying is that we've got out of the 1.8 billion that's there, we've got CAD 900 million that's these MSAs for MRO contracts, and those typically span 1-5 years. You know, if you even just straight line that, you're just under CAD 200 million a year if you kinda think of it that way in a simplistic view, I guess. And if you look at the other CAD 900 million, typically those are projects that we would expect to convert into backlog in the next 12 months.
You know, again, typically, you know, if we're looking at bringing in, you know, roughly 62% of projects of backlog into revenue in the next 12 months, you know, probably a similar way to think about it in terms of that other CAD 900 million. Those will convert. Like some of the ones in there are IPD projects, and you have to go through that validation phase before you can really finalize what the scope and the contractual price is gonna be. They do stay in pending backlog a little bit longer than some of the other contracting methods we have.
Okay. What's the status of the nuclear project that's been in or that was in pending backlog for a period of time?
Yeah. I think with that, we're getting very close to finalizing the validation phase with the client, and we're pretty confident we'll see that convert in the near term.
Okay. Just sort of shifting over to some of the commentary you'd made about expecting organic growth in 2022 on a year-over-year basis. I'm wondering if you can, if it's possible to elaborate a little bit on what your expectations are, how you see the year unfolding as far as any kind of progression in organic growth, et cetera.
Yeah. I mean, we don't give specific guidance in terms of what our our outlook is gonna be in terms of revenue or profit as you know. Q3 was a very strong benchmark for us. What we said is, you know, that CAD 116 million of pandemic impact, that really impacted the first 6 months of the year. If you kinda take Q3 as that's really the first quarter with the combined, you know, Stuart Olson and only 1 month of Dagmar Construction in there, but with the combination of Stuart Olson and Bird without a lot of impact from the pandemic. That can give you a good baseline for a starting point when you think about us growing organically next year.
Okay. Thanks for that, Wayne. Lastly, for me, can you help with how we should be thinking about changes in non-cash working capital in the fourth quarter, where that leaves you for the year, and then how we think about that for next year as well, please?
Yeah. I think the seasonality that you've seen in Bird is similar to what you're gonna see this year. Like, I think Q4 will still be a strong cash generation quarter for us. You'll see non-cash working capital start to decline, particularly as you get into December. I'd say Q3, we had a really high proportion of self-perform work, and typically those types of contracts have longer payment terms as well. What may be a little bit different this quarter is, instead of all of that non-cash working capital converting to cash in Q4, you may see some of that slip into January. But I think Q4 will still be pretty strong from that perspective.
You know, looking ahead to Q1, yeah, there won't be that much self-perform work performed in Q1 as it would be in the summer months, of course. I think you'll see pretty low investment in working capital there.
Okay. Just on a full year basis for 2021, I get that you expect to see some of that come back in the fourth quarter, but where does that leave you, do you think, for the year? Will you have invested, notwithstanding the reversals you're expecting in the year?
Yeah. I think we'll generate positive free cash flow for the year. I think year to date, we're probably
You know, have a negative CAD 27-CAD 28 million, somewhere in there, but I think we'll generate positive free cash flow for the year.
Okay.
Yeah.
All right. Thank you.
Our next question comes from Maxim Sytchev of National Bank Financial. Please go ahead.
Hi. Good morning, gentlemen.
Hi.
Teri, maybe the first question going back to Dagmar. Do you mind maybe just providing a bit of color in terms of kind of a typical project that, you know, they can do, and then the hope in terms of where you can bring it in terms of size and obviously the risk profile, kind of on a, you know, in a couple of years timeframe with Bird's capability?
Well, certainly, you know, with a company with that kind of history in a market like Toronto, you know, there really is a number of different sectors, you know, that are evolving. If you think of the growth of light rail and heavy rail, you know, that's an area that they have a very strong track record and, you know, certainly a very close relationship with their larger clients for that type of work, and we're excited about that, and we're excited about that growth. As you know, some of these projects are, you know, certainly increasingly complex where you're building rail, you're relocating rail, you're building, in some cases, you know, rail stations to support that of which Bird has a good resume.
You've also got, in some cases, you're building mixed-use facilities on top of rail platforms. You know, when you think about that type of a delivery, you know, obviously, right, you know, down the fairway for us with all the different capabilities we have. Now you go into a broader array of business, whether it's growing, you know, in commercial retail development, you know, which are typically, you know, have scale, some of the larger, you know, warehouse type facilities, whether that's, you know, the Amazon, those types of things, you know, you just.
You offer the client a much broader array of delivery of which, you know, these types of clients have a very high expectation as in the standards of being on time, you know. You give them that assurance with the self-perform capabilities. You start to get into some of the other areas that are growing in Canada, such as, you know, even, you know, things like, you know, as we acquired Dagmar, they had pretty impressive track record on larger data centers.
That's quite, you know, quite an interesting sector that's evolving for us because, you know, when you think of Bird, you know, and just to give you a data point on a company like Bird and as it evolves is we ran through 2021, and we certainly weren't running at peak levels. We employ, you know, in order of magnitude of 2,000 electricians. So you start to think about the capabilities and you grow and whether that's renewable power, whether that's data centers, whether that's, you know, Canada's becoming a hub for Bitcoin mining. You know, you get all these areas and all of these types of projects in an integrated fashion that Dagmar brings that, you know, that resume and those projects, which is quite exciting for us. I, you know, touched on a few.
There's probably many more, but those are areas that I think are front burner in terms of exciting opportunities.
Right. I guess just to kind of separate the available kind of spectrum of opportunities, in terms of, like, for example, like Dagmar would not be doing alone sort of an LRT project. I mean, that's outside of their scope. I guess in time.
Correct.
The idea is to bring it up to that level, right?
Yeah. The type of thing would be in a collaborative delivery. We've looked at a couple. We're seeing some of those move now to a collaborative, you know, sort of alliance model. And we've looked at a couple. Like, Bird's expertise in that area is on the station side. Dagmar's expertise is grading and rail and in that integration and that's where their expertise. It fits together quite nicely with us. You know, and if you roll the clock back a couple of years, like we're building stations for Kiewit - VINCI right now in Ottawa on the phase two of Confederation Line.
You know, that we would've had a broader service offering to be part of that team with a company like Dagmar in the mix. As well, there, you know, and there's more of those, you know, that are evolving and what we like about the models changing on those to a certain extent, so we've been invited on a few of those to date. We haven't engaged in one yet, but we, you know, early days for us and, you know, only having a couple months on the integration of Dagmar. You know, there's a mix of stuff that's evolving.
There's rail and station work for Metrolinx that's evolving, you know, a number of projects with a collaborative type model, that, you know, fit together quite well with our offering and, so yeah. Early days, but we're quite excited. Mostly, you know, the team that we've, you know, inherited with this acquisition is really impressive, so.
Yeah. Super helpful. Just my second question pertains to the better commodity backdrop on oil and I guess mining in general. Was wondering how you view this as an opportunity for your kind of legacy Stuart Olson businesses and some of the heaviest-
Yeah.
exposure.
No, it's the Bird business as well because, you know, rising tide raises all boats in the oil sands, and it strengthens the Alberta economy, you know, the Bird civil and industrial business, you know, opportunities are evolving because, you know, a stronger cash flow for those clients means more investment in sustaining capital on their projects. You know, a stronger oil price obviously is a catalyst for that. We're seeing more opportunities.
We're also seeing you know, the approach to ESG, which you know, anytime you've got something like the evolution of ESG for you know, companies that need to improve their overall you know, footprint, that's disruptive and creates opportunities for us because we have a fairly impressive service offering to present, whether that's a mass timber you know, facility, whether you know, you can look at a number of different areas. Mass timber, for example, is certainly accelerating in Canada with the number of opportunities, and that's right down the fairway for us with what we're up to.
Right. Okay. Anything on the mining side there, Teri?
Yeah, mining's, you know, I think there's. We're seeing opportunities start to evolve. Still a little bit early. We've been pricing, you know, budgetary interface with some of the larger guys, currently. It's a little. I don't know, I'm finding it a little slower to evolve. It may just be that they're being a bit more careful and focused on strengthening their balance sheets at this point after some tough years. But we're seeing, you know. It's early days, but we're seeing some good signs there that there's growth opportunities and new mines getting through the permitting phase and starting to engage with us. You know, obviously, lots of news about BHP on the potash side. So that's another mega project for Canada.
It's quite exciting, and we certainly have an impressive track record coming off of our work to date at LNG.
Okay. Super helpful. Thank you so much.
Thank you.
Once again, if you have a question, please press star then one. Our next question comes from Ian Gillies of Stifel. Please go ahead.
Morning, guys.
Morning.
Morning.
With respect to the goal of doing more self-perform work to help drive margins, are you able to articulate how much do you think you can do organically, i.e., by hiring people or just building out businesses yourself and what you think may need to be done through acquisition?
Well, I think it's a mix. Like, you know, obviously, you know, an acquisition like Dagmar gives us, you know, an acceleration of organic growth because you're buying a construction team and that resume and that experience. That's certainly a catalyst to help us grow. I think, you know, Bird as a company, you know, was historically very focused on, you know, work in Northern Alberta and primarily, predominantly in oil and gas. We've moved that, you know, that focus to become, you know, considerably more diversified in a number of different sectors. In the same breath, you know, on our vertical building side, we're focusing on an increased amount of self-perform in that group as well.
We're using the collaborative ability, you know, for from the industrial side, you know, to in infrastructure to complement that. You know, if you think of Bird as it moves forward, a very collaborative, you know, organization. I think, you know, the geographic footprint that exists today is considerably larger than it was, you know, in terms of focal point, you know, a few years ago, in that regard. To a certain extent, we're following our clients. Our clients are, you know, obviously, many of our clients have a national, you know, platform and, you know, that continues to evolve.
You know, a company like Dagmar can just having that resume and having the leadership team that, you know, has experience in some of these areas coupled with our existing teams, it just gives you a catalyst to add, you know, and focus on areas where we're interested in finding new organic, you know, opportunities.
Understood. Then the follow-on on the M&A side, you know, Stuart Olson looks to by and large be integrated at this point. Looks like it's been quite successful. You've also done a smaller acquisition in Dagmar. As you move ahead, is there appetite to do another large acquisition yet, or do you still think you have a bit more wood to chop there on just the integration side, just maybe even getting people settled and all that sort of stuff?
I think it really is these acquisitions obviously are centered around timing, and sometimes the timing works for you and sometimes it doesn't. I wouldn't say, Ian, that we have a you know focal point right now in terms of what's the next you know in terms of the scale of the next you know target you know whether it's small or large. We will be opportunistic. We have you know a tremendous support from our board and we like the mix of what we've got right now and something evolves that looks interesting for us to take the next step you know in terms of diversification you know and could be a you know a nice catalyst for us you know we'll be there.
We've got a very experienced team, you know, in terms of evaluating, you know, M&A opportunities. We get a ton of stuff coming through our office to think about. You know, we're looking at those types of opportunities. They have to be the right opportunity and the right timing and fit with what our Strategic Plan is.
Understood. That's helpful. Thanks very much. I'll turn the call back over.
Thank you.
Our next question comes from Michael Tupholme of TD Securities. Please go ahead.
Thank you for taking the follow-up. I just wanted to ask you about wage inflationary pressures, to what extent you're seeing those in the business and how you're managing through that?
It's certainly something that is, you know, is out there. Typically, we have multiyear agreements with our trades, and the timing of those multiyear agreements are often, you know, not sequential. They overlap, you know, in that sense at different times and whatnot across the country. We have a mixed labor force of unionized labor and, you know, non-union labor and clock labor. We have a multitude of things. We have our own labor association, in fact, in one of our companies where we have 1,000 people go to work every day in their own association, which is similar to any of the other unions.
I'll say this, in the past 15 years, what I've found with the leaders of the larger unions is that end of the day they're businessmen. They enter into, you know, multiyear contracts with us knowing that we have to be healthy, and they have to be healthy. I'll say this, in the last 15 years, they've always been, I would call them, you know, quite fair. Are we anticipating, you know, some pressure there? You know, potentially, but it's not gonna be something that has a material impact on us, because there's that longer term view.
Bird's been in business for 100 years, and I think our union leaders, you know, today, it wasn't always that way, but in the last 15 years, in my experience, I've seen them take the higher ground as business leaders and realize that, you know, we're gonna go through fluctuations and we're gonna be fair. As such, they have to be fair, and they have to think of us, you know, being healthy, just like we think of them being healthy. Our relationships with those larger union leaders is very strong. You know, I think there is the potential for some pressure, but I honestly don't think at this point it'll be a material impact for us.
Okay. That's very helpful. Thank you. Labor availability, is that something that's, you know, something you're having to watch a little more closely right now as well?
Yeah. There's pressure, no question. I think, you know, and some of it's an adjustment. You know, some of it's certainly some labor has left the workforce to focus in other areas that, you know, quite honestly wouldn't be as lucrative. Some of that will return as things strengthen. Some of it is, you know, if you go back six, seven years when, you know, when things were really strong in oil and gas and energy, you'd be moving 100,000 people, you know, a week, you know, out of Atlantic Canada. Currently, that's not currently happening because the demand hasn't reached that point yet. You know, obviously there's costs involved with that type of thing.
I think we're not close to that at this point. We are. You know, when you get these large turnarounds that go on in these large sites, and some of them have been larger in scale recently than, you know, than anticipated, which, you know, puts a bit of pressure there. If they all hit at the same time, and then you've got some big mega projects that are hitting, you know, peaks, you know, there can be some tightness. It takes a little bit of time for that to adjust. Then also you're broadening your reach a bit further.
Most of the large work we've been doing to date with where we have large labor workforces of, you know, outside of Ontario, have been in, you know, Alberta and BC, and the labor to support that is coming from Alberta and BC, not from other parts of Canada at this point. As things strengthen, I think there'll be a broader flow. We're also looking at, you know, we've got some pretty exciting programs for increasing content, you know, from Indigenous communities, increasing the content of our labor force, you know, with women entering the construction industry because it's a great way to start your career, pay off some university debt, you know, that type of thing.
you know, we're seeing certainly good traction in those areas as well, which we're quite excited about from a diversification or a diversity perspective.
Okay. Thank you. Maybe somewhat related to this line of questioning, on the subject of, I guess, escalating material costs and then also supply chain issues, which, you know, many companies are facing issues on that front. You know, it certainly didn't seem like there's any issues occurring in your business in the third quarter's results. I'm just wondering if you can comment on how you're protecting yourselves and managing through higher material costs, and then also whether or not you foresee any supply chain issues affecting any of your projects or opportunities.
Maybe not necessarily materials that you use, but maybe you know, maybe certain whether it's electronics or things of that nature, you know, that are coming via imports, if there's any issues kind of on that front that's having any kind of impact on project activity.
First of all, we have a very high percentage of our backlog in a collaborative, you know, nature. We're able to, you know, certainly work with clients, you know, in terms of appropriate strategies to manage through that. In some cases, you'll have a scenario where you're concerned about a future escalation in material and you're, you know, working with your client and you decide to lock that in, and you might even lock it in and have it delivered and have it stored. You know, that's what a collaborative contract allows you to do, is that kind of, you know, really strong common sense that you've got that capability.
If you're working for some of the clients we have, they have storage facilities because they're larger governments and things like that, so we can do that type of thing, you know, in that regard. I think the experience we have in our teams as we've been evolving through the COVID pandemic, you know, where we've been quite careful in terms of the risk of escalation on some of our projects. We've been careful to ensure we've got adequate contingency and address it, you know, in that regard. I think in that regard, we're, you know. We study this quite carefully as we look, you know, month to month, quarter to quarter.
We're comfortable with where we are at this point in time. You know, the piece we can't control in some scenarios might be, you know, delivery, not so much the cost. It's just the actual delivery itself. That seems to me like something that will smooth out in, you know, three to six months, and delivery systems and channels will improve that, you know, get through some of this, you know, some of these delays. We've had a few delays on a few things that we've been doing, but we find ways to work around that. Our modular business obviously is a business that requires considerable, you know, logistics and shipping.
We have a pretty good, you know, sense on a day-to-day basis what's happening in some of the Asian ports and that type of thing with shipping channels. You know, obviously, we're working through those types of bottlenecks, and there's things we can do to either address, you know, that as well. I think, you know, as we close, you know, and talk about our current quarter and talk about our future quarters, you know, based on our lens at this point, we're feeling reasonable about, you know, what's ahead. I think we've done a nice job in, you know, in balancing risk, you know, as we should be doing.
Okay. I appreciate all the time. Thank you.
Our next question comes from Gabriel Moreau of iA Capital Markets. Please go ahead.
Hi. Good morning.
Good morning.
Good morning.
In September, you announced a CAD 300 million contract for five Alberta high schools under a P3 model. In the past, you've expressed some concern about pursuing a P3 opportunity. Can you give us more detail about this one?
Our concern about P3 models centers around concerns when the stakeholders that are critical to the success of a P3 are not aligned, you know, with all parties. You know, certainly we've had experience where we've entered into a P3, and the agency that we've been working for just didn't have their alignment of the various parties that they were anticipated to control, nor did they fully understand that they were expected to control, you know, those areas. We're happy to work in a P3 model when the client and the various stakeholders that are involved have a track record of managing that, you know, that risk and their objectives and their deliverables appropriately.
We've had considerable success. I think this is our fourth P3 program, something like that, you know, in schools, you know, in Western Canada. We've been very successful. We've had two large programs in Ontario for IO building OPP facilities, and those have gone, you know, very well for us. We've had a great track record, but we're very selective. If it's you know, a messy brownfield type site where, you know, the client is trying to offload all the risk, we're gonna stay on higher ground. It's not that we're not against using P3s.
We'll use P3s where they're appropriately used with an experienced delivery agency that has a track record of doing things, you know, consistently and with the right type of project. In some of those projects, you know, you should be working in a more of a collaborative model because no one can control the unknowns and the risks and, you know, the framework of that because a lot of it's unknown, especially in a brownfield site. You know, we're seeing clients shift now, and partly because, you know, companies like us are willing to sign up for that risk transfer. That's happening quite dramatically in the landscape from our lens. Hence the growth of appropriate, you know, more appropriate models.
It doesn't mean that, you know, in some of our models, you know, it could be a you know, a progressive P3, where you're working with the client to finalize the design, and then you're putting financing and you know, other you know, deliverables of maintenance and operations on top of that contract once you finalize the design and got comfortable with all of the unknowns. You know, we're seeing, you know, evidence of that type of you know, delivery evolving as well, which we would be you know, happy to work in.
Like I said earlier, anytime a contractor can get a design to the point where it's essentially frozen and you understand all the risks and all the, you know, and you can properly estimate, you know, those costs, it's any contractors would aspire to be at that level. It just makes it easier, you know, and it reduces all those risks. But, you know, we're not against P3s in any sense. We're just, they need to be used appropriately, and we've had experience, you know, over the last five years where they weren't. We're a lot more selective today.
Our next question comes from Troy Sun of Laurentian Bank Securities. Please go ahead.
Hi, good morning, gentlemen.
Hi, Troy.
Morning, Troy.
Maybe just a quick question. I'm wondering if, Teri, you can make a quick comment on just looking at your revenue mix today, and especially on the part of the contract type exposure and how that compares to 2017. Would it be fair to say that you have achieved a better risk profile in the project portfolio that you're working on? Also more importantly on a going forward basis, should we be expecting sort of a similar composition?
Yeah, I think so. You know, it's dramatically different from where we were in 2017, as I referenced in the previous question, you know, around the mix of work we had. Back in 2017, we had a mix of what I would call P3s that weren't appropriate for P3 delivery. Today, you know, our backlog mix has changed dramatically. The magnitude I was saying earlier, the magnitude of our backlog that's being delivered in a collaborative framework is very high. You know, in comparison to, you know, it's significantly different. It's a completely different framework than what we were in 2017. In that regard, you know, we like this evolution of where we're at. We like the mix of things.
We like to build projects that have some complexity and in a higher level of complexity, whether you're building a weapons-grade uranium laboratory or whether you're building a complex Bitcoin mining facility or a complex egg. You like to use the appropriate contracting framework to do that. Clients have been open to that because I think, you know, they want the track record, and they want that resume that we're able to provide.
Great. That's very helpful. Maybe just switching gears onto that very recent wastewater partnership that you formed. Obviously lots of opportunities there. I'm just wondering if you can provide a bit more color on how the company's expertise sort of led you to that award. More so from the fact that, like, given your existing headcounts, are you comfortable, you know, from a headcount perspective to capture incremental market share in that vertical?
I assume you're referring to the Noventa.
Correct. Yes.
Okay. Yeah. We have a team that has experience in that type of thing. You know, I think the Noventa entity is a company that's been, or at least, you know, the leadership team there is used to delivering, you know, these types of projects in different formats. You know, we certainly have known them. Some of our team members have known them for a long time.
In that regard, you know, I think our approach to that, you know, and experience we have, you know, coming out of some cases, some complex, even in an oil and gas facility in Northern Alberta, you know, you come out of some complex areas there with deep undergrounds and dealing with, you know, in some cases, water and things like that make it more complex. In that regard, you know, strong experience. We have the model, obviously, we've got a resume of working in that type of model. Then expanding that into the broader Canadian landscape. Today, a very high percentage of the wastewater type projects that are evolving are evolving in IPD. I would think.
I'm just thinking about this a lot, over the last, you know, in the last 18 months or so, every single water treatment project we've been awarded is in an IPD delivery. That's a great model. Those are municipal governments. Typically, they're using those models, and they, you know, they like the ability for a company like Bird that works across Canada with different clients and different types of technology solutions, to be able to provide that expertise in a, you know, in a collaborative platform. That's working well for us.
Maybe just a quick follow-up on that. Just to capture, let's say the incremental share out of that CAD 500 million, you know, telegraphed backlog, do you believe that you have the proper, you know, tools and the headcount today to do it organically, or is there still-
Oh, yeah.
some work that needs to be done?
No. We have the tools. The CAD 500 million that's referenced is a list of projects that are in various stages of evolution. You wouldn't be doing 10 at once, so you'll be doing 2 or 3 incrementally at once. It's very suitable to use the teams and move from one phase of the project to the next. Obviously if that pace picks up, we're very comfortable in that regard with the.
Some of that experience has come from the acquisition of Stuart Olson as well, because we've inherited this very, you know, very sophisticated group that can do quite, you know, some really complex, you know, hydroelectric and complex types of project deliveries. Yeah, for us, it's, you know, getting underway as we speak, and it's an exciting tranche of opportunities.
Okay, great. Thanks, Teri. That's it from me.
Thanks, Troy.
There are no further questions at this time. I will now hand the call back over to Mr. McKibbon for any closing remarks.
Thank you everyone for taking the time to join our Third Quarter Earnings Conference Call. We've a very bright future ahead of us as a premier construction and infrastructure company and the potential to create long-term value for all stakeholders. We expect the momentum that we saw in Q3 to continue to build as we remain focused on our collaborative approach and as projects in the economy return to pre-pandemic levels. Furthermore, we have a favorable backdrop with a strong infrastructure stimulus spending and a favorable commodity price environment. As such, we're ideally situated to capitalize on the significant growth opportunities ahead of us. We have a stronger team, a more resilient business model than in the past, and consequently, we have and will continue to position Bird to play a major role in the Canadian construction industry. Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.