Welcome, ladies and gentlemen, to the Bird Construction Fourth Quarter and Fiscal twenty twenty Financial Results Conference Call and Webcast. We will begin with Terri McKibbon, President and Chief Executive Officer's presentation, which will be followed by a question and answer session. 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. At this time, I would like to turn the conference over to Mr.
Terry McKibbon, President and CEO of Bird Construction. Please go ahead.
Thank you, operator, and thanks to everyone for joining us on today's fourth quarter and full year twenty twenty earnings conference call. Joining us on today's call is Wayne Gingrich, Chief Financial Officer. I am pleased to report a strong finish to what was, by all measures, a challenging year. Bird and Strudels and teams went above and beyond, putting the company, clients and their projects first, persevered in a challenging and uncertain environment. I would like to thank them for all their hard work.
The culmination of the team's efforts resulted in the company posting a 32% increase in construction revenue, 150% improvement in adjusted EBITDA and 151% increase in net earnings in the fourth quarter. We also continued to build our backlog and pending backlog throughout 2020, up almost double on a combined basis when compared to year end twenty nineteen. The company entered 2020 on a strong financial footing and finished the year with an even stronger financial position. As at year end, we retained significant financial flexibility with our new three year syndicated credit facility, which we finalized in the fourth quarter. Financial flexibility we retained throughout the year positioned Brewer to undertake the transformative acquisition of Stuart Olson in Q3 twenty twenty.
Our fourth quarter results mark the first full quarter of Stuart Olson's results in our consolidated financials. We are on track with the previously stated cost synergy targets, and Wayne and I will be going into more detail. But overall, we are very pleased with progress we've made so far and continue to pursue potential upside in excess of our targets in future years. We've achieved nine sequential quarters of improving trailing twelve month adjusted EBITDA margin, culminating with a 5.5 margin for trailing twelve month Q4 twenty twenty. I want to recognize our employees on our project sites who have worked tirelessly throughout the pandemic to safely deliver our project commitments.
The Bird team's unwavering dedication to our company and clients over this challenging period allowed us to post strong revenue and profitability growth in the fourth quarter and fiscal year twenty twenty. The second wave of the pandemic and the associated shutdowns have resulted in projects in the Pursuit pipeline being pushed out to future dates. Bird has also experienced delays in project conversions from pending backlog to backlog. In total, management estimates that fiscal twenty twenty revenue was negatively impacted by approximately $135,000,000 with continuing impacts into 2021. While the landscape remains very fluid, we expect projects will get pushed from the 2021 to the back half and potentially into calendar year 2022.
The company has experienced temporary or partial shutdowns in Q1 twenty twenty one in BC due to public health protocols. Projects in Atlantic Canada and Manitoba continue to be delayed. These delays will have a negative impact in the first half twenty twenty one revenues and profitability as active projects are impacted and customer customers defer decisions as the pandemic persists. Management does not anticipate it will qualify for SEWS to the same level in 2021 as it did in 2020, which will exert downward pressure on profitability margin year over year as the company expects to maintain its workforce. Despite this challenging backdrop, we secured impressive projects in the fourth quarter that have provided a strong foundation to launch 2021.
The combination of Burt and Stuart Olson is starting to bear fruit. The teams are being integrated and best practices share. From a revenue synergy standpoint, we are starting to see opportunities arise. Subsequent to quarter end, Bird Construction was awarded a design build contract for the expansion of the Kenora Jail and Thunder Bay Correctional Centre by Infrastructure Ontario. This contract exemplifies our ability to deliver a comprehensive solution leveraging both the capabilities of Bird and Stuart Olson.
Showcasing our newly combined full service offering, this fast track rapid delivery solution will utilize Bird's design capabilities along with StackModular and Stuart Olson's commercial systems business to execute this project. The company's teams in Manitoba and Ontario will utilize shared experience and local expertise, reaffirming our commitment to build meaningful partnerships with regional communities, including engagement with local indigenous communities. This project exemplifies the collaborative focus of the company utilizing core components of the combined entities to deliver a high profile project for the Ontario government. We believe that our operational capabilities and project execution will open the door for us in future opportunities to participate in additional rapid delivery projects for Infrastructure Ontario and across the country. Also subsequent to year end, we announced that we secured a new five year MRO contract in excess of $550,000,000 from a long standing industrial customer in Alberta.
This project and its scale further validates the strategic fit with Stuart Olson, and we feel will drive further cross selling opportunities with our new broader offering of service. The recurring nature of this revenue stream also reduces seasonality and provides good visibility to future revenues over time. I would also like to highlight that during the fourth quarter, we secured $154,000,000 design build contract for the Nanaimo Correctional Center Replacement Project in Nanaimo, British Columbia. Overall, I'm very pleased with our team and our ability to secure projects and execute during these unprecedented times. That said, I would be remiss if I didn't point out that COVID-nineteen negatively impacted our results throughout 2020.
The conversion of some projects from pending backlog to backlog were delayed, and there were delays in project tenders and awards, and we experienced reduced productivity on project sites. Nationally, these impacts were felt across a wide range of project scale. More recently in British Columbia, several large projects were impacted in the 2021 when the BC Public Health Office implemented work safe protocols limiting the number of employees on project sites. Despite the uncertain and fluid environment the pandemic continues to present, we are well positioned operationally and financially to deliver for our clients and their projects throughout 2021 and beyond. With that, I'd like to turn it over to Wayne to discuss our financial results.
Thank you, Terri, and good morning, everyone. Please turn to Slide nine. Reviewing our fourth quarter results, we posted construction revenues of $555,000,000 representing a 31.9% year over year increase. The increase can primarily be attributed to the inclusion of Stuart Olson. Gross profit for the quarter amounted to $61,500,000 or 11.1% of revenues.
This represents a year over year increase of 133% and a four eighty two basis point improvement in comparison to the prior year period. The increase in gross profit is due to the recovery of $18,700,000 of compensation expense in cost of construction under CUES and the inclusion of Stuart Olson results. The CUES is not purely fourth quarter related. In our MD and A, we identified that approximately 53% of Qs recognized in 2020 related to the first nine months of twenty twenty. This was partially offset by the impacts at legacy Bird due to project delays as well as the stage of completion on certain industrial projects compared to last year.
I would like to highlight that G and A expenses for Q4 were $32,800,000 representing 5.9% of revenues. This compares to $16,300,000 or 3.9% of construction revenues in the fourth quarter of twenty nineteen. The year over year increase can primarily be attributed to the addition of Stuart Olson. We incurred an additional $3,400,000 in professional fees, dollars 2,100,000.0 of which were related to the acquisition and integration activities. Compensation costs were also higher by $9,500,000 year over year, net of $3,000,000 owing to cost recoveries from Hughes and amortization and depreciation expense was $4,700,000 higher while technology costs were higher by $800,000 Adjusted EBITDA for the quarter was $40,000,000 reflecting a 7.2% margin.
This represents an improvement of $24,000,000 in a three forty basis point improvement in the margin compared to Q4 twenty nineteen. Included in this figure is $21,700,000 in pre tax Qs of which $11,600,000 or 53% relates to prior quarters. Overall, we reported net income of $20,500,000 and EPS of $0.39 On an adjusted basis, we reported net income and EPS of 21,500,000 and $0.41 respectively for Q4 twenty twenty. On a comparable basis, we reported $8,200,000 in net income and adjusted EPS of $0.19 in Q4 twenty nineteen. I would note that in Q4 that in the fourth quarter, dollars 11,600,000.0 of Qs related to prior periods and if tax affected, the Qs benefits from prior periods positively benefited our fourth quarter adjusted earnings by $8,500,000 or $0.19 per share using the weighted average shares outstanding for the full year.
Turning to our full year results, construction revenues were approximately $1,500,000,000 representing a 9.3% increase year over year. The increase can largely be attributed to higher industrial project revenues and the inclusion of Stuart Olson's results starting late in the third quarter. This was partially offset by reduced commercial and institutional project revenues due to delays related to the pandemic. Gross profit for the full year was $126,300,000 or 8.4% of construction revenues. This compares to gross profit of $71,000,000 or 5.2% of revenues in 2019.
I would highlight that part of the overall improvement in comparison to last year was a shift toward a more balanced work program, which carries higher margins. Additionally, the CUES program offset compensation expense in cost of construction by $21,200,000 General and administrative expenses increased 34.2% year over year to $78,800,000 or 5.2% of revenues. Professional fees were $9,600,000 higher than in 2019, owing largely to acquisition and integration costs related to Stuart Olson of $7,200,000 Furthermore, there were higher compensation costs of 8,900,000.0 net of $3,600,000 in cost recoveries from CUES. Also amortization and depreciation expense was $4,800,000 higher than 2019 due to the inclusion of Stuart Olson. Overall, adjusted EBITDA for full year 2020 was $81,900,000 reflecting a 5.5% margin.
This represents a $49,600,000 increase in a three ten basis point improvement in margin year over year. Net income for 2020 was $36,100,000 or $0.80 per share. This compares to $9,500,000 and $0.22 per share for the full year 2019. On an adjusted basis, net income for 2020 was $41,600,000 while EPS was $0.92 per share. Before I turn to the progress we are making with the integration of Stuart Olson, I would like to note that in total, we estimate that the pandemic negatively impacted the top line by approximately $175,000,000 with an associated decrease in profitability.
Projects were negatively impacted financially as a result of additional safety protocols and lost productivity. Furthermore, we do not anticipate that we will qualify to the same extent from the CUES program in 2021 that we did in 2020 based on updated criteria from the federal government. As a result, this will place downward pressure on our profitability margins. As it relates to Stuart Olson, integration planning targets that were set for the first one hundred days have been achieved and we are on track to attain the previously stated cost synergy target of $25,000,000 annualized by the end of twenty twenty one. Of the $10,000,000 in EBITDA synergies, we have set in motion $6,900,000 in annualized cost savings.
We have fully realized the annualized depreciation and interest cost savings of $5,000,000 and $10,000,000 respectively. As Terry indicated previously, we have identified and are realizing further cross selling opportunities and expect these opportunities to accelerate over time. Moving to our backlog, as at 2020 year end, our backlog stood at approximately $2,700,000,000 while our pending backlog was $1,600,000,000 This represents a 99% increase on a combined basis as compared to year end 2019. Backlog increased 73.4% year over year primarily due to the acquisition of Stuart Olson, which added $996,000,000 to backlog at acquisition date. We expect 59% of backlog to convert to revenue over the next twelve months.
However, projecting the timing of converting projects and pending backlog into contracts has become more challenging as the effects of the pandemic has shifted several project conversions later into 2021. I would like to highlight that owing to the inclusion of Stuart Olson, pending backlog now includes a greater proportion of MSA contracts estimated at $1,100,000,000 These contracts typically span multiple years and represent a recurring revenue stream over the next one to six years, providing excellent visibility to forward revenues. Given our key focus on appropriately balancing the risk profile of our backlog through end market diversification and contracting methods, the addition of Stuart Olson backlog further reduces this risk profile. However, it will slightly reduce the average embedded backlog margin going into 2021. Before moving on, after having assessed the legacy Stuart backlog over a more fulsome period of time, we have greater confidence in the acquired backlog and its overall embedded margins and risk profile noting we made necessary contingencies at the time of acquisition.
Turning to our balance sheet, we generated cash flow from operations before changes in non cash working capital of $71,700,000 while we deployed $14,200,000 towards capital expenditures and $17,600,000 towards dividends. Given the uncertainty the pandemic presented the company, we reduced our CapEx envelope in 2020 out of an abundance of caution. Going forward, our CapEx program will be dictated by prevailing economic conditions as certainty around the work program begins to increase. As of 12/31/2020, cash and cash equivalents was $212,100,000 while cash and cash equivalents available for operations was $96,700,000 Net debt stood at negative $23,800,000 while our net debt to adjusted EBITDA ratio was a negative 0.29 times, which is well within our comfort level. As we have mentioned previously, we will take a balanced approach to capital allocation.
Near term, we expect to deploy capital towards further strengthening our balance sheet, which will allow us to capitalize on both organic and M and A related growth opportunities. The company also remains committed to returning capital to shareholders through dividends, noting the Board of Directors have approved monthly distributions of $0.03 $25 per share for each March and April. Overall, we are well positioned to support our clients and their projects as the recovery takes hold and are ideally situated to benefit from government stimulus spending given its expanded capabilities and will closely monitor projects as they're announced. With that, I will turn it back to Terry.
Thanks, Wayne. Before I turn it over for questions, I would like to update everyone on the evolution of bird construction. Turning to Slide 14, our five year Build BIRD strategy is nearing completion. As a result, we are well advanced in the development of a new three year strategic plan in 2021 outlining our key goals and priorities, setting the stage for our next phase of growth for BIRD. As always, we remain committed to building long term shareholder value through sustainable, profitable growth as we focus on our team, our innovative offerings and the integration and synergies with Stuart Olson.
Additionally, we remain dedicated to prioritizing sustainability. We will be including an updated sustainability overview in our annual report. I would like to once again thank our employees for their dedication, especially during these challenging and uncertain times. I believe that Bird has built a stronger team and a more resilient business model over the past year and is well positioned to play a major role in the Canadian construction industry with the potential to create long term value for all stakeholders for decades to come. I would now like to turn it over to the operator for questions.
Thank you. We will now begin the question and answer and you. A. Our first question comes from Mona Nazir of Laurentian Bank. Please go ahead.
Good morning and thank you for taking my questions. My first one is just a confirmation question. You stated in your opening remarks that COVID's impact on 2020 revenue was about a 175,000,000. That's just Bird, or does that include Jordan Olsen as well?
That was just, that was just Bird. We didn't really, put a quantification together for Stuart Olsen in the, in the fourth quarter.
Okay. No. That's perfect. And just secondly, looking at the revenue on the legacy side of the business, in the MD and A, you speak about projects, and you just did as well-being pushed to the right across all verticals. And I understand this is expected to continue into 2021.
I'm just wondering if you could provide some perhaps guidance on the magnitude of the declines on the legacy side. Do you think it could be similar to what we saw in q four, or could we see a sequential improvement? And just also on the same line of thought, do you expect that cross selling opportunities could materialize this year to positively impact the top line, or would it be further out?
I can take that one, Mona. So I think in terms of looking into 2021, I think there could be a plus or minus similar impact in Q1 on the legacy Bird side. I think that's reasonable to assume. I think we're seeing pretty good resilience on the Stuart Olson revenue stream at this point. But on the legacy bird side, why we have the work in backlog is just things are shifting to the right a bit.
And then in terms of the cross selling opportunities, I think certain opportunities like the new correctional centers that we announced, that could have an impact this year and we'll start working on those projects. But the further you get into 2021 as we announce some of these, it's probably more likely going to impact either fourth quarter or 2022. But we are seeing opportunities come up in the pipeline.
Okay. That's great. And last question for me before I jump back in the queue. I'm just wondering, thinking about the model, if you've had to adjust your bids at all to account for an elevated cost environment. I mean, we look at the recent MRO contract win, is the pricing higher or even a little bit or a lot than versus if you were to win the work pre COVID?
Well, it certainly takes into account, Mona, the, you know, the the experience we have. It's a long term contract, obviously. So in that regard, you know, the nature of that contract is such that, you know, costs that we incur are are compensated. So, you know, obviously, it's a it's a performance oriented type contract, but something that gets evaluated, which is, you know, typical of these longer term performance partnerships that we have with long term clients. So, ultimately, we're driving towards that performance and but there is some impacts that you incur.
Okay. Perfect. There was just more confirmation that new wins should position the company for further profitability improvements going forward.
Correct. Yes. That is correct.
That's great. Thank you.
Thank you, Mona.
Our next question comes from Jacob Bout of CIBC.
Just going back to the 175,000,000 of I guess you're calling it delayed conversion of pending backlog. Is there any part of that would be that could be permanent?
No, I don't think so. I think it really is a shift. That $175,000,000 comes from both work not proceeding as quickly as it would have if it wasn't for the pandemic coming from our backlog. And then there's also just the impact for projects that we've been awarded that we haven't contracted yet. In some cases, they're taking longer to contract.
But every quarter, we review every project that's in there, and we're still confident that everything we've reported is still going to get contracted just a little further out than we would have otherwise expected.
So should we see that 175,000,000 realized in 02/2021?
I I I would think, yes. The that 175 is gonna be recognized in in 2021, but you also have to think there's other projects that are still shifting to the right. Like if that project is delayed, I wouldn't think of that 1 75 is additive additive to our work program for the year. I think you're seeing kind of a shift, you know, of some of these projects moving into 2022 as well.
Has there been any improvement that you've seen through current date as as far as the delayed conversion of of pending backlog?
I think the second wave of the pandemic was probably stronger and had a bigger impact on the business than we would have foresaw in September, October timeframe coming into the fourth quarter. We think that is certainly going to continue that trend in Q1 and Q2 is tougher to say at this point in time. But we certainly did have reduced productivity on certain sites, particularly in BC that will have a big impact on revenues in Q1. Again, all of those revenues are in backlog and we hope to be able to catch up for that delay later in the year, but that will create a bit of a timing difference from Q1.
Okay. My next question is just on the margin side. So if you back out, Sius, we're coming up with an EBITDA margin of, call it, 3.3% with SOX. How how do you think about normalized margins on a go forward base basis?
Well, I I think if mean, Qs is an interesting one on margins, right, because you're getting a cost recovery with no associated revenue with it. So it really does kind of play havoc with your margins when you're reporting them that way. So if you take out all of the queues and you kind of rebaseline the margin, and you look at and say, okay, well, what's missing from that? Well, we've talked about having this $175,000,000 of revenue that would have had associated gross profits with that. I would say there's a good blend of industrial projects in there, which typically have higher margins than some of our commercial institutional work.
So I think that $175,000,000 was at a pretty healthy margin relative to the average of the total, if you will. So that would certainly have an impact and you can kind of think about that coming into play in 2021. And then the other thing I'd say is that our products also experienced productivity impacts and we recognize revenue on a percent complete basis. So we're including those productivity impacts in our estimates to complete on those projects and that kind of puts a little bit of downward pressure on the margin that you recognize if we're still factoring those productivity impacts in. At some point when hopefully things will subside here in the pandemic at some point in 2021, then you should see productivity return back to normal again, and you might get a bit more productivity and lift in your margins at that point as well.
And then on a go forward basis, how should we be thinking about seasonality of your margin profile versus what we saw historically with the legacy Byrd?
I think you'll see a little bit less seasonality in our business going forward. And I say that because of primarily the MRO business gives us a nice recurring revenue stream that previously in legacy Bird we didn't have. And if you look at the legacy financials of Drew Olson, you can kind of see what was reported in that segment. So we'll certainly benefit from that type of revenue stream going forward. So it will take out some of the dip in Q1, but on the other legacy businesses that Bird have, you're still going to see that same seasonality.
I'll leave it there. Thank you.
Okay. Thank you, Jacob. Our
next question comes from Chris Murray of ATB Capital Markets. Please go ahead.
Thanks, folks. Good morning.
So
maybe I'll take another crack at the margin question, maybe ask it a little bit differently. So in your script, you basically said the Qs payments that you guys received didn't really cover, in your expectation, all your real costs in the year. So the thing that's kind of interesting, and there's a bit of a divergence here, is that we saw margins improve throughout the year pretty steadily. So now what I'm trying to maybe square is excluding the Qs or maybe what would have been the real margin do you guys feel if you would have just been able to run it through? Because it feels like if we back it all out, we're still at least on an improving trend on the underlying business.
Well, I think you're definitely seeing improvement in the bird business. And if you think back to the first nine months of the year, in Q3, we only reported 3,100,000 of queues, if you will. And then we had this kind of $11,600,000 catch up in the fourth quarter. So if you look at our kind of year to date margins as of September 30, that probably gives you a better feeling for what the run rate of Bird is and then you can kind of factor in that maybe we haven't recovered all of the costs and we picked up some of those costs in Q4. So you can associate some of those margins back to prior year, that 11.6%.
You may want a revenue effect to that if you're trying to normalize it because otherwise it's kind of a pure cost reduction with no associated revenue.
Okay. But I guess maybe to think about it, like, would you suggest that the, like, Qs was, you know, 50% of your costs or would have been, you know, we're talking like single digit type numbers over what you would have received?
Yes. I think it was smaller. It didn't quite cover all of our costs, but it was getting fairly close.
That's helpful.
Another way to think of it, Chris, is a construction claim that contractors like us have. If you think of queues as a recovery of construction claim during the year, it's not uncommon we have issues that, you know, that we incur with our clients, and and you work hard to negotiate and settle those in in a in a calendar year. In the bird experience, it's it's not dissimilar. Fuze is, it's just a different format of how that recovery was made. That's how we think about it.
Fair enough. And then, Terri, maybe you want to take this one. But we look at the balance sheet today, essentially unlevered. And you made the comment about having a healthy pipeline of opportunities as you go into 2021. Can you talk a little bit about what you mean by in the pipeline?
And is that new projects? Or is that more something around the M and A world that you're thinking about?
I think it's a mix of both. Obviously, we're in we've had good progress, busy with the integration with Stuart Olson. I'm really pleased with how that's evolving, building, I think, a tremendous foundation with the business, a stronger, certainly more diversified company. We've got, as you referenced, a very healthy backlog. So it really does position us with this balance sheet to have flexibility.
And as COVID evolves and we see a light at the end of the tunnel, hopefully, by second half of the year, we're certainly well positioned. Our integration by that point will be in good shape. And whether it's opportunities in projects, in new pursuits or whether it's M and A opportunities, obviously, we took advantage of the difficulty of COVID and the environment we're in to pursue and acquire Stuart Olson. And we think we know there are more opportunities out there for us to grow both organically and with M and A.
Okay. Is there any particular, I don't know, practice area or anything that you want to maybe diversify into? Horizontal infrastructure? Is there something around buildings that you'd like to have? A different set of trades or something like that?
Yeah. Well, if you think about the, you know, the opportunities that, you know, in the in the world that's evolving with things like renewable power, you know, in in the energy sector, Those are interesting for us, and we have our foot in that already, and we've got organic growth there. So the whole energy sector with how it's transforming is a big opportunity. We do like the horizontal infrastructure side of the market. We like that space.
And you think of other areas like underground utilities and things like that, which we're in today and working on various types of projects. So those that would be sort of three areas. But one of the keys, we see the Ontario market as an exciting opportunity for us, and certainly, Ontario will be a big focal point. Also, it rebalances our revenue stream across Canada a little bit. We're more heavily West right now with the acquisition of Stuart Olson.
Well positioned to grow a great foundation in Ontario with the pieces we acquired plus our existing business, but we see certainly growth in Eastern Canada as we come out of this cycle and we see stimulus. We're really excited about the strength in oil, developing new opportunities for the company. Certainly, Stuart Olson business gives us a tremendous foundation to take advantage of new opportunities in oil and gas with a stronger oil price and also, most importantly, a recovering potentially recovering economy in Alberta. And, so some exciting things, emerging, and we think, you know, as we get through COVID, the bigger impact of this will be 2022, but, and beyond, at least at this point based on what we can see. But, we certainly see some exciting times and we have a great foundation to leverage off of.
Great. That's great. I'll hop back in queue. Thanks, folks.
Our next question comes from Mark Steuben of TD Securities. Please go ahead.
Good morning. It's Mark on the line here for Michael Topholm. Thanks for taking my questions. Sounds like the integration of Stuart Olson is progressing well. I was wondering if you can discuss some of the major milestones you're working toward over the next year or so.
So we had one hundred day integration plan, which we successfully completed. And if you think about the business today, obviously, I referenced in my comments that we're well underway with the strategic plan for the new group, which will be sort of a three year plan that we're working closely with our Board of Directors on. So that's a big, big focal point. Cultural the cultural integration of a business, two businesses that are 100 years old, obviously, is another focal point that'll leverage off the framework of our strategic plan. And then lastly, we brought two businesses.
The construction industry today is emerging very rapidly with the use of complex technologies, and both Bird and Stuart Olson were well developed, you know, in terms of various products. So we're we're working closely now with our with our teams to to build a common platform. And, you know, it's a it's a great time to be looking at the framework of technology if you're, you know, doing a sort of a transformational framework for your company because of the evolution of products that have have been done in, you know, in in the past few years, certainly making it much easier to do these types of things. And we have the benefit of two platforms and a whole series of different tools that we both businesses have the almost the the framework of a test drive, you know, so that we can look at and evaluate how how these come together. So I'd say that, you know, a strategic plan, cultural plan, technology are the sort of three, you know, sort of major milestones in in the next, certainly twelve to twenty four months.
Thanks for the detail. You mentioned in your outlook commentary that you're more comfortable today with the risk in Stuart Olson's backlog. I'm just wondering if there there been any surprises, say, either positive or negative after completing more of your due diligence on the Stuart Olson backlog?
No, not there really hasn't. We've worked through the detail. We've you know, exposed to Stuart Olson now for eight or nine months and working through the, you know, the due diligence. And, you know, this business was a business that generally had a lower risk profile. So, you know, it's it's, you know, it's it's not dissimilar to any other construction company with big or small.
You you know, you have some issues that you work through, and you have some, you know, issues that have occurred where you have outstanding discussions with your clients and, you know, with the with the acquisition, we're able to, you know, to position appropriate contingencies to to deal with any of that. So, yeah, so we're pleased. And but the framework of the business reflects the business that generally would have a lower risk profile. And and as such, we're pleased after, you know, eight or nine months of of being, you know, being in in a line of sight to to have that detail.
Great. And you mentioned the sharp increase in energy prices recently. Obviously, fairly early days, but I was wondering if you could talk about potential impact on expected new contract awards this year if oil prices stay around these levels?
Well, I think the big you know, two big things. One, you know, the Alberta government benefits, you know, significantly from, you know, oil at $60. And I think our large clients also, you know, will benefit. They've they've all worked very hard to get their costs, to a level that's significantly below where they where they used to be. And, so so, obviously, those businesses are running running well.
We're, as a company, in a position today to support those businesses to continue to produce, and and, obviously, we're, you know, providing significant maintenance. But as, you know, oil strengthens and, you know, pipelines get built so that it, know, it it unlocks more flow to, you know, to justify more production, you know, there's a significant amount of work that occurs on these sites to, to generate more production. So twofold, Alberta government and oil, obviously, and oil companies. I also think that on the private side, private developers gain more confidence in a growing Alberta economy. But the two big ones for us would be the confidence of the oil sector and gas as well and then the Alberta government.
Thank you for your time.
Thank you.
Our next question comes from Frederic Bastien of Raymond James. Please go ahead.
Hi. Good morning, guys. Just curious. We've we've been I guess, you've you've had Duoden under your ownership for almost half a year now. We know we all know about the sort of the complimentary things that Stuart Olsen's bringing to the table.
But just curious, Terry, if there's anything that came out of this acquisition that really surprised you to the sort of both, you know, positively or negatively? And, you know, what are the best surprises you've seen from this transaction?
So certainly and it's a good question, Frederic. Certainly, on the technology side, certainly, Stuart Olson was quite advanced. They have a, you know, a specialized group that works extensively on smart building kind of framework. Was very surprised. We certainly weren't aware of that.
Working with clients in the world that's evolving, most of our clients have got a very high focus carbon neutral infrastructure. So obviously, our in house engineering capabilities for that is quite is certainly impressive. Sure. Olson Business typically works early in the phase of a project with a client and is early on the development side. So it gives us really a nice marketing vehicle for things like our stack modular business and other areas.
Our if you think of the Cannon business, Cannon business, obviously, one electrical contract Western Canada has evolved, obviously, as the installer on some of the smart building technology and some of the applications and things like security and which is which is interesting as as that moves forward. They're working closely with us now in our modular business. And you look at, you know, obviously, the the MRO side. I was really impressed in you know, with the just the use of technology and how advanced that is, more advanced than anything else we do working with the large clients, you know, using some of those type different different aspects of of technology, you know, in in oil and and energy, you know, projects where we're providing those services. And, you know, some of that AI that they've developed personally, I hadn't seen that type of technology at that level.
So, you know, extremely advanced, and we're able to take advantage of that across our business now as our business evolves. So, you know, all in all, a series of areas that I'm sure I'm forgetting a few, but, you know, all in all, you know, some some, you know, some pretty exciting compliments to our core business. K. That that's super helpful.
And you did touch on stack a little bit in answering that first question, but I was wondering if so, you know, you have this business that you recently invested in. And, also, you mentioned in the MD and A, the mass the the opportunities with mass timber. And I I get I appreciate that these opportunities may have put maybe, you know, put on a back burner with, you know, all the COVID related issues. But are you seeing are you excited about the opportunities within these two particular segments?
Yeah. Certainly. Like, the stack business, you know, is a is a disruptive business. So, you know, if any as as as we've all learned, disruptive businesses take a little while to mature and develop and to get, you know, architects and engineers and owners and developers used to the fact that these things have a different profile. So, you you know, you've gotta be working with your team and walking that design down a year before you're essentially erecting these units.
So that's just not normal, and it's sometimes difficult to get all your stakeholders aligned. So that takes a bit of time. And as such, I think some of the markets that our modular business is is geared for, you know, such as the hotel industry, for example, you know, has been under pressure. So, you know, we were those those those will return, we expect, over time, but, currently, you know, some pressure there. We know, certainly long term care has been, you know, a big topic across Canada, and as we saw with, you know, some of the, efforts in Ontario with their procurement of modularized long term care.
Some exciting opportunities for us, you know, evolving there and beyond and and across Canada, you know, in that regard. On the mass timber side, first and foremost, if you think about how companies are evolving with their focus around ESG, and we're no different, very focused in that area. Obviously, timber capabilities and mass timber facilities have really accelerated in terms of their development. But, you know, as we indicated, these, you know, the the general nature of projects that are, you know, in procurement in various phases are, you know, just taking longer, whether that's permitting or whether that's approval when, you know, all of your clients are, you know, working remotely. So the things just take longer to to get over the finish line.
But, certainly, we have a, you know, a very strong resume that we've developed over the years in Mass Timber. So we see that as a exciting platform moving forward. So the two areas are different, obviously, but exciting in the sense of how they are evolving over the longer term.
Thank you very much and congrats on a good year.
Thank you, Carter.
There are no further questions at this time. I will now hand the call back over to Mr. McKibbin for any closing remarks.
So thank you, everyone, for taking the time to join our fourth quarter earnings conference call. We have a very bright future ahead of us as a premier construction and infrastructure company. With one hundred years behind us, we look forward to continuing to service Canadians for the next one hundred years, delivering exciting, innovative and challenging new projects. Have a good day. Stay safe and stay healthy.
This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.