Welcome, ladies and gentlemen, to the Bird Construction fourth 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 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 and 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.
Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. 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 necessary based on the 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 unknown risks and uncertainties and other factors that may cause actual financial 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. I would now 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 fourth quarter and full year 2021 earnings conference call. Joining me on today's call is Wayne Gingrich, Chief Financial Officer. I'm pleased to report strong financial results for the fourth quarter of 2021, which capped off a solid year financially for Bird. We posted these strong results despite the continued challenges with the emergence of the Omicron variant in the fourth quarter. Our fourth quarter and full year financial results are a true reflection of the efforts to bring together the Bird, Stuart Olson, and Dagmar teams and to leverage our combined strengths. As a reminder, we completed the acquisition of Stuart Olson in late September of 2020, and 2021 represents the first full year of consolidated results.
Of the previously stated CAD 25 million in annualized cost synergies, CAD 10 million related to annualized EBITDA synergies that were not only achieved but exceeded by the end of the year on a run rate basis. Additionally, we closed the acquisition of Dagmar in the third quarter. Dagmar has extensive experience across key civil infrastructure sub-sectors including road, bridges, rail, sewer and water, and site development on commercial institutional sites, capabilities both Bird and Stuart Olson did not have previously. The integration of the companies has gone according to plan, and we're able to cross-sell our capabilities and bid on and win business neither Bird, Stuart Olson, or Dagmar would be able to win on their own. As such, our bidding pipeline remains healthy and I'm confident in our ability to deliver strong organic growth given our expanded capabilities.
Overall, I believe that we've built a strong foundation such that we can grow our top line. We're improving our overall EBITDA margins to accelerate growth of the bottom line. As you can see on slide six, we posted record fourth quarter construction revenues of CAD 598 million, representing an approximate 8% increase year-over-year. Net income was CAD 9.9 million or CAD 0.18 per share. On an adjusted basis, earnings were CAD 13 million or CAD 0.24 per share, while Adjusted EBITDA was CAD 28.4 million. Once again, we reported record securements and change orders in the fourth quarter amounting to CAD 772 million. Our backlog stood at a record as at the end of 2021, while our pending backlog was comparable to levels achieved in the last quarter.
Looking into 2022, our bid pipeline remains robust, giving us continued confidence in the near to medium-term prospects for the company. Moving to slide seven. For the fourth quarter, we reported an Adjusted EBITDA margin of 4.8%. On a trailing 12-month basis, we reported an Adjusted EBITDA margin of 4.9%. As we have discussed previously, one of our strategic priorities is to focus on achieving a higher overall margin profile. We believe that the combination of our expanded capabilities, which will continue to present cross-selling opportunities, as well as undertaking an increased level of self-performed work coupled with strong execution, and this will result in a higher margin profile over time. As you will see on slide eight, we announced a number of meaningful contract wins in the fourth quarter.
In particular, we announced the first phase of a progressive design build contract with early collaborative contractor involvement in the Ontario Power Generation Clarington Corporate Campus project. Construction is expected to begin in 2022 with completion in 2024. Additionally, Bird will participate in three IPD contracts in Western Canada with a combined value in excess of CAD 150 million. The contracts include a substantial food and beverage facility expansion project, the Okanagan Indian Band water system upgrade, and the North Okanagan wastewater recovery project. Through an alliance agreement with the renewable energy company, Noventa Energy Partners, we announced the successful financial close of the recently- announced Toronto Western Hospital Wastewater Energy Transfer, or WET project, valued at approximately CAD 43 million.
This is the world's largest raw wastewater energy transfer project, and once it's complete, will provide over 19 MW of low carbon thermal energy to the hospital facility, which is approximately 90% of the hospital's heating and cooling requirements. The alliance was formed to jointly pursue opportunities for WET projects across Canada, with Bird acting as the exclusive constructor. Currently developing opportunities that utilize these technologies under this agreement represent over CAD 500 million and 150 MW of energy. Overall, this represents a meaningful opportunity for Bird over the longer term. Separately, through a joint venture, Bird successfully completed the validation phase of the IPD contract for the Advanced Nuclear Materials Research Center for Canadian Nuclear Laboratories. The estimated value of this project is over CAD 500 million, and the completion of the validation phase means that the project will now proceed.
Bird's share of the project value is expected to exceed CAD 220 million. Also during the quarter, Bird was awarded a contract for the construction of Lake City Studios in Burnaby, British Columbia. Once complete, Lake City Studios will create a significant economic development opportunity in the community and result in a world-class film studio with the potential to attract major productions and support the overall growth of the film industry locally. The project has a contract value in excess of CAD 200 million. The contracts announced during the fourth quarter helped to drive our backlog to a record level. As you can see on slide nine, at the end of 2021, backlog stood at CAD 3 billion, an all-time high, and is CAD 320 million or 11.9% greater compared to the same period in 2020.
Pending backlog was CAD 1.6 billion at December 31, 2021. On a combined basis, backlog and pending backlog were comparable to record levels reported at the end of the third quarter in 2021. With the addition of Stuart Olson and Dagmar, I'm proud of the team's efforts to diversify our business by geography and by end market. Additionally, as we have discussed on previous conference call, the collaborative framework we have adopted has allowed us to balance the overall risk profile of our business. As a result, I believe that our overall risk-adjusted return profile embedded in our combined backlog is very attractive.
From a macroeconomic standpoint, expected infrastructure spending announced by the federal and individual provincial governments in a higher commodity price environment, which has resulted in increased capital spending in LNG, oil and gas, agriculture, and mining should act as a natural tailwind for Bird. This, combined with the visibility we have on our backlog, is expected to result in significant organic revenue growth in 2022 and in the years to come. With that, I'd like to turn it over to Wayne to go over our financial results.
Thank you, Teri. Please turn to slide 10. Despite the challenges related to the pandemic, for the fourth quarter, we reported an approximate 8% increase in construction revenues to CAD 598 million. Gross profit for the quarter was CAD 51.3 million or 8.6% of revenues. This compares to CAD 61.5 million or 11.1% of revenues in Q4 2020. The year-over-year decrease can primarily be attributed to recovery of CAD 18.7 million of compensation expense in cost of construction recorded in the fourth quarter of 2020. This represented a nine-month cumulative catch up under the Canada Emergency Wage Subsidy, or CEWS program. The nine-month cumulative CEWS recovery helped offset additional costs incurred by the company related to the pandemic. No such offsets were recognized in Q4 2021.
General and administrative expenses in the quarter were CAD 37.1 million or 6.2% of revenues, compared to CAD 32.8 million or 5.9% of revenues in Q4 2020. The year-over-year increase can be primarily attributed to higher compensation costs of CAD 2.2 million and higher integration costs related to the acquisition of Stuart Olson. G&A expenses this quarter included non-recurring acquisition and integration costs of CAD 4.1 million compared to the CAD 2.1 million in the fourth quarter of last year. We expect that the restructuring costs that we incurred in Q4 of 2021 will result in additional cost savings that can allow us to exceed our annualized EBITDA synergies target on a go-forward basis.
Adjusted EBITDA in Q4 2021 amounted to CAD 28.4 million or 4.8% of construction revenues, compared to CAD 40 million or 7.2% of revenues in Q4 2020. Adjusted earnings was CAD 13 million or CAD 0.24 per share in the fourth quarter versus CAD 21.5 million or CAD 0.41 per share in the comparable period in 2020. As a reminder, we qualified for CEWS in the fourth quarter of 2020 and for the first half of 2021, which bolstered our margin percent during these periods of reduced revenues. As such, these subsidies will act as a headwind to reported year-over-year margin improvement until the third quarter of this year, when the trailing 12-month impact of the subsidies falls off.
While we reported strong fourth quarter results, I'd like to highlight that the emergence of the Omicron variant late in the quarter resulted in an increase in employee absenteeism, moderate delays in project tenders and awards from clients and intermittent supply chain challenges. These issues ultimately constrained revenues and profitability in the fourth quarter and are expected to persist earlier in the first quarter of 2022. Turning to our full year results, we reported construction revenues of CAD 2.2 billion for 2021. This represents a 48% increase year-over-year compared to construction revenues of CAD 1.5 billion for full year 2020.
The year-over-year increase is primarily driven by the acquisition of Stuart Olson in Q3 2020. Gross profit for full year 2021 was CAD 187 million, reflecting an 8.4% margin, while G&A expenses increased to CAD 127 million or 5.7% of revenue for the year. Adjusted EBITDA for 2021 was CAD 108 million, representing a 4.9% margin. This compares to Adjusted EBITDA of CAD 82 million or a 5.5% margin for full year 2020. Adjusted earnings for the full year 2021 was CAD 51 million or CAD 0.96 per share. Adjusted earnings for 2020 was CAD 42 million or CAD 0.92 per share.
As Teri indicated previously, our backlog is at an all-time high, sitting at CAD 3 billion, while our pending backlog was CAD 1.6 billion as of year-end 2021. On a combined basis, backlog and pending backlog were at comparable levels to the third quarter of 2021 and 7% higher than last year. Within pending backlog is approximately CAD 800 million in MSA contracts, which are typically with industrial clients that span multiple years of MRO work. As always, 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 five years, providing us excellent revenue and profit visibility. Additionally, as you'll see on slide 11, we have materially reduced the embedded overall risk profile of the revenue we have recognized over the past four years.
Projects in our backlog, as well as our pending backlog, remain balanced and have an attractive risk-reward profile. A significant portion of our contracts are collaborative IPD and alliance contracts, which also have attractive risk-reward margin profiles. On slide 12, you'll see how we've balanced and flexed our work programs between commercial and institutional work while largely maintaining a proportion of industrial work to drive stronger growth, both on the top line and on the bottom line. Overall, I'm comfortable with the current composition of our backlog and pending backlog, as well as our sector diversification between institutional, industrial, and commercial contracts as they appropriately balance customer concentration, contract size, contracting method, and end market diversification. Moving to slide 13, I'd like to provide a brief update on our integration efforts of both Stuart Olson and Dagmar Construction.
As it relates to Stuart Olson, and as we've talked about previously, we identified CAD 10 million of annualized EBITDA synergies. As at the end of the fourth quarter, we achieved these synergies and believe we'll be able to exceed these synergistic targets, noting we took additional charges in the fourth quarter to align our operations. Additionally, we expect to realize further cost savings over the next couple of years as we integrate both companies onto one unified IT platform. While it's still early days with Dagmar, we are already seeing synergistic benefits as we're able to cross-sell our capabilities across our national platform. Overall, I'm very pleased with the progress we've made with both Stuart Olson and Dagmar. We've realized meaningful cost synergies to date, particularly as it relates to the integration of Stuart Olson, and we expect to realize more in the years to come.
However, what is more exciting are the top-line cross-selling opportunities that have emerged since Stuart Olson and Dagmar have joined the company. While we made the transformative acquisition of Stuart Olson and broadened our expertise into civil infrastructure with Dagmar, Bird remains rooted in maintaining a strong balance sheet with significant financial flexibility. As you'll see on slide 14, as at December 31st, 2021, we have accessible cash and cash equivalents of CAD 103 million and approximately CAD 140 million of available capacity under our committed syndicated credit facility. Furthermore, we have an additional CAD 50 million available under our non-committed accordion option. As a reminder, in the third quarter of 2021, we expanded our syndicated credit facility to CAD 235 million from CAD 200 million and retained the CAD 50 million accordion feature.
We further extended the term of the credit facility to September 1st, 2024. Of note, we voluntarily repaid an additional CAD 5 million against our revolving credit facility in the fourth quarter. As a result, for full year 2021, we repaid CAD 10 million against our revolver. In addition to our significant accessible cash position at year-end, our adjusted net debt position stood at -CAD 24.3 million, which is comparable to the prior year. Our adjusted net debt to trailing 12-month Adjusted EBITDA ratio was - 0.22x as at December 31st, 2021. All our financial metrics are well within our comfort levels and provide ample flexibility to pursue additional accretive M&A. Turning to slide 15, we continue to balance our capital allocation priorities between organic opportunities, dividends, M&A, and debt repayments.
For full year 2021, we generated cash flow from operations before changes in non-cash working capital of approximately CAD 103 million. Our capital investment has remained modest in 2021 as we deployed approximately CAD 12 million towards capital expenditures. However, looking into 2022, we expect CapEx to return to more normalized pre-pandemic levels. As always, we remain committed to returning excess capital to shareholders via our monthly dividend payment.
For the full year, we made roughly CAD 21 million in dividend payments to shareholders. As it relates to our M&A strategy, as always, we will remain disciplined and opportunistic. Overall, we've made significant strides building our business profitably while diversifying by end market and geographical exposure. As such, I'm very pleased with our financial strength and our positioning within the Canadian construction industry. With that, I'll turn it back to Teri.
Thanks, Wayne. Turning to slide 16, I continue to believe that Bird has built a strong platform for future growth and strong profitability. While the challenges we faced in the fourth quarter are expected to persist into the first quarter of 2022, we are seeing increased momentum for the remainder of the year. Additions of both Stuart Olson and Dagmar are bearing fruit as we're seeing increased bidding activity as we are witnessing enhanced cross-selling opportunities.
Additionally, both Stuart Olson and Dagmar have served as further catalysts to diversify our product offerings and geographic exposures. I believe that we have built and will continue to build a business that can capitalize on the significant growth prospects of the Canadian economy while delivering superior risk-adjusted returns for Bird shareholders. With that, I'd like to turn 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 touch-tone 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 then two. Anyone who has a question may press star and one at this time. Our first question comes from Chris Murray of ATB Capital Markets. Please go ahead.
Yeah, thanks, folks. Good morning. Just looking at the Q4 margin profile, I guess things were a little bit better than what I would have expected, particularly given some of your commentary from your peers. I'm just trying to understand, you know, this will be the first quarter, Q4 would be the first quarter with Dagmar as part of your operation. Just trying to get a sense of how you felt about margins in the quarter, Dagmar's performance in contributing to them, and should we be thinking about that kind of margin performance going forward?
Yeah. See, Dagmar in its first quarter within the company has been for me really exciting to see the, you know, the potential. I don't think we fully even realize the potential that would exist, you know, working with their team. As we've got it fully integrated now, you know, the opportunities are fast and furious. I would say, you know, a portion of their business has a government- related activity and that, you know, not dissimilar to other parts of our business in Canada that has that government interface. You know, some of their backlog took a little longer to develop, but 2022 looks like a really exciting year on the Dagmar side.
I'm really impressed with the cross-selling and the opportunities that are coming with our teams. We really have a strong culture of a collaborative organization, and the leaders are coming up with ideas that are really impressive. Yeah, we're really pleased with that business. I think you know, fourth quarter had some pressure with Omicron and, you know, I think we see that, you know, to a certain extent into the first quarter of 2022. We're seeing the momentum building now, and as we get into spring, we're pretty confident about the year ahead.
Okay. That's helpful. And then my other question, you know, I think you talked about this a little bit about synergies. A couple questions. You know, the CAD 4.1 million in acquisition and restructuring costs that were in the quarter, you know, how should we be thinking about the magnitude of those costs, as we enter 2022? Can you just spend a little more time maybe walking through how we should be thinking about some of these investments or changes that you're making in terms of your SG&A, maybe as a percentage of revenue or some sort of way to kind of gauge how to think about where these investments are gonna contribute down the road?
Certainly, as it relates to the adjusted costs or the integration and acquisition costs of CAD 4.1 million in the quarter, there's a component of that, you know, we had a retention program in place that, you know, was recurring through Q1, Q2, Q3, Q4 of 2021, which was actually paid out in the first quarter o f 2022. That won't be recurring next year at all. The other piece relates to really severances and some restructuring we did. Those are one-time costs, t hose won't be recurring. We took those charges in Q4. I think 2022, you'll benefit probably in that leaner overhead structure going forward.
Any magnitude do you think you can share? Like, is it sort of a one for one in terms of dollars type of thing?
Yeah. I probably wouldn't disclose the magnitude of the savings. You know, suffice to say there'll be significant savings through the course of the year.
Okay. Thanks. I'll turn over the line. Thank you.
Thanks.
Our next question comes from Mark Stuebing of TD Securities. Please go ahead.
Good morning. It's Mark on the line here for Michael. You noted that there were some productivity impacts related to the Omicron variant in Q4. Just in general, can you talk about how productivity on Bird's projects is at present and how that productivity compares to Q4? Would you expect to see more or less impact on these projects than in Q4? Thank you.
I think Q1 will have a similar profile. You know, we're 2/3 of the way through Q1, but I think it's a similar profile to Q4. Some of that, the productivity side relates to just absenteeism. You know, Omicron seemed to have more of an impact on absenteeism than previous variants within COVID. I think obviously Q1 is, you know, most of our activities have somewhat of a muted sense because of winter conditions. You know, obviously, but in Bird's core business with, you know, a large component now is self-perform . But even within sites where we had high subcontract base, it was the absenteeism that we really noticed more so than we'd ever noticed in the two years of COVID.
Thanks. Yeah, we've also been hearing a lot about labor market tightness in Canada, particularly within the skilled trades. I'm wondering how you'd characterize your ability to retain and attract talent in the current environment, just in the context of your really strong backlog. Can you speak to your ability to pass along these higher labor costs?
Yeah. On your first question, you know, Bird has been in the Canadian market for over 100 years now. I think from that perspective, you know, especially over the last 15 years or so, we've really entrenched ourselves in core operational centers in every major province, every major city. Stuart Olson even further enhanced that. With a collaborative strategy, you can really, you know, accelerate, you know, the flow of resources and people and teams and whatnot to different markets. We're really seeing the momentum build. That helps us take some of the peaks and valleys off, you know, labor demand.
I will say labor demand is high in certain markets, especially markets like Toronto and Vancouver, you know, tighter. You know, we're moving teams to, you know, support that. We've assembled very large teams. Our project, you know, our large work in LNG in BC, we assembled a team of 2,000 people. We can assemble teams and move folks from one jurisdiction to the other fairly easily. You know, in that regard, I think we've had, you know, some good success, you know, in those areas. Your second question, I think what's really important to recognize with Bird is, you know, Bird had some related to the profile of our backlog.
Like, Bird had some, you know, trickier contracts that we worked our way through that, quite honestly, we would deem them to be inappropriate use of a commercial framework to deliver a project. We had a series of those, and we paid the price for that, and we worked our way through that. You know, in 2017 and 2018, there was some trailing effect in 2019. If you look at our profile today, you know, our profile is quite a bit different. The nature of that backlog is considerably different than what it was. It's sort of a bit of a, you know, hidden gem within Bird as we go forward now.
When we start to look at, you know, pressure from escalation and things like that, our contracts are collaborative with our clients. You know, if there's an escalation pressure, that's something our client has signed up for. We're able to pass that through. You know, the nature of the style of the business, we can cut through some of that, majority of it. We have a couple of contracts that we have that are higher performance and, you know, obviously it's an area that we're very comfortable with, and we're working for clients that have a very deep track record of delivering these projects in this framework.
In those, you know, obviously there's some pressure and we work through those, but we're feeling comfortable that we approach them with the right, you know, the right level of contingency and the right levels of escalation. In that regard, yeah, we're, you know, we're pleased with the work we did, you know, a couple of years ago to get us to where we are today. In that regard, I think we're a bit different than some of the others.
Great. Thanks for taking my questions.
Thank you.
Our next question comes from Maxim Sytchev of Laurentian Bank Securities. Please go ahead.
Hello, good morning. In terms of the revenue mix, it's great to see a meaningful reduction for the P3 versus the historical levels as a percentage of the top line. As more infrastructure projects hit the market in the post-pandemic environment, how do you foresee your revenue mix to evolve? Is this strategy still targeting lower risk profile and higher margin work?
Yeah, I'd say that it's a mix. Like, you know, I mentioned in the previous discussion, the previous questions, that there were projects, you know, in the Canadian marketplace that were being procured with an inappropriate commercial interface and an inappropriate risk transfer. That's all changing now. You know, we have a leading position in Canadian construction as being a company that is working extensively on large, you know, IPD and alliance type contracts. We're in a great spot in governments where, you know, if you had an agency that had a higher propensity to call projects with a P3 delivery, that's shifting now to, you know, to alliance and IPD framework, and it really positions us, you know, really well. We're also seeing a higher volume of long-term MSA contracts.
In those cases, you know, because of our scale, we've got limited competition, so we're very excited about some of that that's happening. Yeah, some exciting things that are evolving in that regard. I really like the framework. The business and the way we've approached collaboration and our One Bird initiative is really settling in. I never anticipated that it would accelerate the way it is and the amount of cooperation and collaboration and team efforts that are going into delivering these projects.
It allows us to ratchet up into some larger assignments because, you know, the nature of the commercial interface has got an appropriate risk transfer and oftentimes, you know, you cut through some of the things that can give you some grief. Large projects are difficult. Large projects in a brownfield environment are even worse. There has to be an appropriate, and I think most of the larger governments in Canada that do a lot of this kind of thing have realized that, you know, there's a different approach that's more appropriate for getting these projects delivered.
Thank you. That's really helpful. On the MRO side, given the oil price has been really healthy or I guess elevated levels, what are some of the discussions you are having with clients and how do you think about the organic growth profile for that part of the business?
Yeah, we're excited about that because, you know, anytime that you've got, you know, higher commodity prices, these larger clients that we've worked for many years will have more of an appetite to, you know, to do further, you know, longer term maintenance and longer term expansion and the combination of certainly Bird and Stuart Olson with many of those clients where we used to work in parallel but, you know, not in anything, you know, we really didn't work jointly. Now we're working as one offering and that's a much higher offering for these types of clients. It's certainly bearing fruit.
In that regard, you know, we're also looking at in cases where we have an opportunity to build a new facility for a client. There's nothing I would say that would be smarter for a client to do than have the same guys that built it maintain it. You know, there's those opportunities that are evolving as well, that you know, you're not gonna find anybody with more knowledge of the facility than the guys that built it. We're seeing a lot of that kind of combination now be packaged. You know, our large clients are looking for a very, very high standard of safety, a very high standard of quality and, you know, a collaborative interface. In 2021 we set record performance in our safety performance.
We've had excellent, you know, excellent performance in quality across our organization. We're in a good place. That extends beyond oil and gas. Like the number of activities that are evolving for us in ag, you know, especially in Western Canada, and you know, certainly some processing plants in Eastern Canada as well. Western Canada is really, you know, investing heavily in growing to feed the world's population. You know, we're seeing some really cool momentum now in mining. Yeah, we're in a good spot when commodity prices rise. Obviously, that tide rises all boats, so we're happy to be in a higher commodity type environment.
Thank you. In terms of the LNG Canada, have you started to also see more work on site? And if so, what are the scopes or types of the work that you may be targeting?
We're seeing. Like it's a monstrous project first of all, and you know, we're partway through. It is a lot of work, you know, that is opportunities for us. We're just seeing a steady pipeline of opportunities on pieces of that, you know, that project. We've had tremendous performance. You know, I can't say enough about our team and how hard they've worked to work through really difficult conditions and work in a remote location and deliver a project to that high of quality and that high of safety.
Our safety record is outstanding on that site. Yeah, we're just seeing a steady pipeline of new things. I think anytime you work for, you know, some of the, you know, the pinnacle of energy producers in the world, you work for them, you've got to have very, very high performance and our team is knocking it out of the park.
That's really helpful. My last question is for Wayne. On the non-cash working capital, it looks just a bit negative for the years in the -CAD 30 million range. How should we think about the line item for 2022? Should we be expecting a bit heavier usage given the ramp up?
I think you're certainly gonna see organic growth in our business in 2022 and that's gonna translate to an investment in non-cash working capital. I don't think you're gonna see it as one massive spike come up. I think you're gonna see it more as a steady increase so that we'll see organic growth in each of the quarters next year, which kind of spreads out that required investment. I wouldn't be surprised if the amount of investment we need is not dissimilar to what we invested this year.
Thank you very much. I'll pass it back to the operator.
Thank you.
Thank you.
Our next question comes from Ian Gillies of Stifel. Please go ahead.
Morning, everyone.
Hi, Ian.
Morning.
I wanted to start on the M&A front. I mean, by all accounts, Stuart Olson's been integrated very well and been very successful. Similarly, it sounds like Dagmar is on the same path. Have you seen more opportunity from an M&A perspective given the strong integration that's happened there? I.e., is there a bit more opportunity moving forward for M&A?
Yeah, I think so, but I also think that we're really impressed with the amount of organic growth that's occurring and the amount of, you know, collaboration across the link. You know, as you can well imagine, we're in the middle of a large technology launch with integrating all our businesses. You know, we're continuing to you know to look for, you know, companies that fit you know our profile, but it's you know it's part of our focus, but it's not our biggest priority. The organic side of the business, organic growth has just been you know really daunting.
It's something we're putting a lot of time and effort into and ensuring that we're approaching those projects in those areas with the right, you know, assessment of risk and the right assessment of capacity to deliver. You know, we continue to keep a watchful eye on opportunities that are out there. You know, we're very focused on that, you know, that accretive margin, you know, framework and very focused on strong execution.
Sometimes, you know, in the evolution as these, you know, business evolves, you know, we've obviously grown quite considerably, and, you know, now putting a new technology framework across all the companies, big focus on that. In that regard, you know, some of our M&A has maybe taken a little bit of a back seat, but it's still something that we're keeping a close eye on.
Got it. Wayne, perhaps maybe a bit more for you, but with respect to the technology launch and the impact it has on the business, do you think it reduces costs because there's just more automation built in? Or will it help with bidding across the entire firm because you'll have more data? Can you maybe talk a little bit where you think you get the savings from that, and when the estimated completion date is for that project?
Yeah, I think it's all those things, to be honest, you know, Ian. And probably the biggest thing even would just be our ability to collaborate and being easy to work with each other. I mean, today we're operating on multiple platforms and, you know, we're making it work well. Certainly, when you have all of your project data in one system and you have people across the country that can access information and leverage it for either other bids they're working on or bring in talent from other businesses to support your project, it's just you get a lot of productivity when you can do that seamlessly. We're very focused, you know, on that.
You know, I don't think the technology program that we're running right now. I don't think you can say, "Well, it's gonna be done in 18 months from now." This is gonna be a journey. You know, we've got a good roadmap. We're gonna get some nice, you know, wins over the next, you know, 18 months in that timeframe, but there's other things that we've already identified that we wanna continue to do. So I think for us, this is gonna be a, you know, two to three-year journey. Is the time horizon we're looking at anyway. I think the other piece to add is that you...
The construction industry, you know, for probably the first time in many years, is getting a lot of focus from Silicon Valley in terms of new solutions and, you know, AI has become a much bigger aspect of our business. You know, I would call it, you know, virtual design is the single most impactful use of technology in probably 50 years in construction. Like, the model is becoming the center of the project, and it's not just, you know, how the building's designed, it's how we'll estimate. It's how we will manage, you know, workplace planning and manage productivity and manage, you know, commercial interface with our clients. It's just becoming really impressive to see.
Construction is, you know, when you're working on various ways to, you know, to build, you're constantly working through problems and getting over impacts and delays and things like that. The model just smooths that out and just creates a, you know, more automation and more, you know, of a... That, in my mind, is just, you know, it's a good place. We're really focused on ensuring that, you know, the center of our universe is really the virtual model that, you know, projects that we build, and we'll use it quite extensively across a lot of different things. We're seeing that as a game changer.
Projects that we're using models on to the fullest extent have significantly higher performance. That's a really cool aspect of doing it because the reason for that is you're just debottlenecking well ahead of the actual activity in the field. Oh, that's an interesting point. The last one for me, o n backlog, would it be a fair assumption that the backlog right now, from a contract perspective, looks reasonably similar to what the revenue splits were by contract in 2021?
I think for the most part. I mean, in you know, late last year, we announced the Bird Schools P3 project. You'll probably see more revenue on that. You know, the P3 contract type is very appropriate for that type of project, and Bird has had a lot of success in bundled projects in the past. You probably see P3 go up a little bit, but I don't think that should be a concern you know, to anyone. We're pretty pleased with how that project is starting to come out of the ground. That's probably the only shift that I can think of. Yeah, and also at minimum on the industrial side.
I think you might not see it as a ratio in 2022, but by 2023, I would expect you'll see a higher ratio maybe, you know, between industrial and buildings. Because of the collaborative nature of how we're approaching business, we're using a blend of some of our teams for certain types of things where our local district or division in a particular market has some expanded skill set beyond just doing commercial institutional work. For example, our team in Winnipeg delivered a very high-profile project for Merit Functional Foods. That's a core of the growth in ag.
you know, we have a very strong team, and the acquisition of Stuart Olson also brought some individuals onto our team that have a strong agricultural background. It's just accelerating our opportunities in Western Canada now with that type of approach. That, you know, a large ag plant, we would refer to that as a light industrial type facility. We're also shifting our you know our what was traditionally more commercial and institutional into more light industrial because the margins are higher.
Well, that's good color. I appreciate that. Certainly gonna be topical given what's going to happen with food supply chains. Maybe with that, I'll turn it back over. Thanks very much.
Thank you.
Once again, if you have a question, please press star then one. Our next question comes from Naji Baydoun of iA Capital Markets. Please go ahead.
Hi, good morning. Just wanted to spend a few minutes on your priorities for this year. One of them is, you know, increasing recurring revenues. The quantum of MSA contracts in the pending backlog has kind of ticked down since last year and last quarter. I'm just wondering if you can talk about the outlook for that for that business for 2022, and is there maybe a certain run rate level that you're looking to achieve?
I think, you know, in the MSA side, if anything, there's momentum there now with, you know, higher commodity prices, and our clients will generally spend, you know, a bit more robustly when you've got. You know, they'll do things that are longer term that they might not have done in a weaker environment. You know, we're seeing certainly that evolution.
In that regard, I think, you know, and it's the MSA world is a little lumpier because you're signing these long-term contracts. You know, you're not signing a new one every week. You know, you might do one or two a year kind of thing. It's got that kind of a flow to it, you know, when you're doing long term. But we're seeing pretty good momentum in the use of MSAs in different types of industries that are evolving. You know, we expect to see continued growth, you know, as 2022 evolves.
Okay. Just, I guess more broadly on the organic growth side, total sort of contract awards for the year were, you know, relatively close to last year. What are you seeing so far in the pipeline for 2022? Again, maybe what's a level that you would like to achieve over time?
Well, we're focused primarily on increasing our accretive EBITDA, both at, you know, as a quantum and as a percentage of revenue. That's our main focus. Top line revenue, less, you know, less important for us. We are putting a major focus on, you know, that growth. I'll also say that as the business is evolving, you know, the types of contracts we're doing are, you know, much more heavily collaborative, and a collaborative contract has much longer, you know, evolution. You know, now we're talking about a client when they have an idea, as opposed to talking to a client where they had an idea, they hired an engineering firm, engineering firm did a design, and then we're into procurement against, you know, many others. When you're in collaborative, it's very front-ended, and it.
These projects take a little longer to evolve. You know, for us, I think a lot of the stuff we've been working on in 2021 and into the first quarter of 2022, we won't really see revenue until 2023. It's pretty exciting, you know, what's happening and obviously with the higher commodity market, a lot of these are in the industrial framework. But many of them as well with the switch in government's focus to move to more collaborative contracts with IPD and Alliance, you know, those are also evolving, but they take a while. Like, if you think of our, you know, what we announced up at CNL, very large project. But it's taken a few years to get, you know, from initially being selected to getting through to, you know, reach FID with our clients.
These things take a little longer. Obviously we're you know the timing sometimes you know can be affected by things that are happening in the world. In that regard, I think organic growth is certainly very active within the business and the diversification that we really put a big focus on from 2016 to 2017, 2018 is really paying off.
Understood. It sounds like, you know, you don't necessarily wanna start bidding on every other project, but sort of maintaining that discipline until you get those longer, more attractive, higher margin contracts over time. I think that's kinda making that-
Yeah. They take a little longer.
Yeah.
They take a little longer to develop because of the service offering. It's not that, you know, it's a much higher service offering, and you've gotta be a, you know, the type of entity that has that ability to offer that, you know, that complex service offering. I think the pieces, you know, when we added Stuart Olson, we added Dagmar, it, you know, creates that for us, and it gives us that, you know, that tool belt that's full of different types of tools, and different types of clients are looking for that. You know, whether you're building out, you know, a big complex, you know, data center, well, you know.
I think the something that's kind of a hidden value within our suite of companies that's not well-recognized is we have upwards of 4,000 electricians that go to work every day for us. When you think about what's emerging in the world with the high, you know, focus on electrification, whether that's in communities or whether that's in, you know, in vehicles or rail systems, having 4,000 electricians is a pretty cool, you know, component of your core business. Steering those resources into markets, you know, is something we're pretty excited about as, you know, as things evolve in our landscape. It's not often that, you know...
It's not as well-known, but it's something that, you know, is kind of a real jewel, the way our business is, you know, working in that. You know, 90% of that came from the acquisition of Stuart Olson.
Understood. That's very, very interesting, detail. Last question, I guess. With Stuart Olson and Dagmar and this repositioning that you've done with the portfolio over the last few years, today you're kind of sitting in a very good position. When you just think about capital allocation for this year, you know, organic growth aside, sounds like maybe M&A is lower on the priority list. Does that change your view on dividends at all for this year, given the low payout ratio?
I wouldn't say. Like, M&A is a balance for us right now. You know, there we look at a lot of things and we look for opportunities not dissimilar to the collaboration we expect to work with our clients. We don't like to participate in an auction, so there's lots of auctions out there. We're looking for companies that the leadership team wants to stay and be part of our team. You know, in that regard, you know, it's those opportunities sometimes take a little longer to evolve. Sometimes they come from partnering with a firm. Sometimes they come from, you know, a company that's been watching what we're doing and wants to be part of it. You know, in that regard, you know, the focus for us is a little bit different.
You know, we're looking for individuals that fit our culture and fit the framework of what we're doing and have a you know, a collaborative nature. We've been really impressed with the Stuart Olson team and the Dagmar team, how effective that's been. You know, our team has really enjoyed the time over the last year and a bit with Stuart Olson and a few months with Dagmar. It's been really impressive. Those acquisitions have gone really well.
Okay, understood. Thank you very much.
Our next question comes from Frederic Bastien of Raymond James. Please go ahead.
Yeah, good morning.
Hey, Brian.
Morning, Frederic Bastien.
Just, one question from myself here. As you look across the portfolio of projects, are there areas where you think you are underweight or where you see better relative opportunity, whether it be end market or by geography?
You know, obviously Dagmar has given us civil capacity predominantly in the GTA area. That would be an area that we'd probably be interested in growth. Areas of process, expanding mechanical electrical process, would be areas, you know, of important growth for us. We could look at, you know, renewable. Renewable would be pretty high priority, obviously, having expertise in some renewable areas.
We've added considerable hydroelectric expertise with the acquisition of Stuart Olson. That's been good to see, you know. I think, you know, if you think across those areas, both, you know, horizontal infrastructure, process, electrical, mechanical, more on the industrial side, renewable, those would be kind of three areas that I would think would be near the top in priorities. Utilities, we like utilities as well. We've been growing in that area, underground utilities for clients in that, so.
Okay, that's helpful. That's it for me. Thanks.
Okay. Thank you.
There are no further questions at this time. I will now hand back the call to Mr. McKibbon for closing remarks.
Thank you everyone for taking the time to join our fourth quarter earnings conference call. I'd like to thank the entire Bird team for their efforts, dedication, and commitment to build safely, to build together, and to build value for our company, our clients, and our communities, and our shareholders during 2021. We have a stronger team and 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.