Welcome, ladies and gentlemen, to the Bird Construction first quarter 2020 financial results conference call. We will begin with Terrance McKibbon, President and Chief Executive Officer's presentation, which will be followed by a question and answer session. At any time during the call today, you may press the star and one button on your telephone to be placed into the question queue. You will hear a tone acknowledging your request. When you 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 and two. As a reminder, all participants are in listen-only mode, and the conference 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 would like to remind those participating that certain statements which are made express management's expectations or estimates of future performance and thereby constitute forward-looking statements. Forward-looking statements are 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. In particular, management's formal comments and responses to any questions may include forward-looking statements. Therefore, the company cautions today's participants that such forward-looking statements 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 these forward-looking statements. Forward-looking statements are not guarantees of future performance.
The company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, events, or otherwise. At this time, I would like to turn the conference over to Mr. Terrance McKibbon, President and CEO of Bird Construction. Please go ahead.
Hello, thank you for participating in Bird Construction's first quarter 2020 earnings call. Co-presenting with me today is Wayne Gingrich, Bird's CFO. We hope that all our employees in the investment community are staying safe and healthy during COVID-19 pandemic. On March 11, 2020, the World Health Organization declared a global pandemic due to the contagiousness of the novel coronavirus and severe respiratory disease, COVID-19, that could be developed after contracting the virus. The COVID-19 pandemic has added uncertainty to the industry, as each provincial government has responded with different measures to address the public health threat. The duration of these measures is currently unknown, the corresponding impacts to our workforce and to our project sites are key variables that have uncertainty as a result.
The first quarter financial performance of the company was generally not impacted by the pandemic, but the company had seen impacts in early April, late April and early May, related to the temporary project shutdowns and reduced productivity on project sites as a result of physical distancing and additional health and safety measures added to our normal protocols. The situation remains very fluid, and the company is well-positioned to respond to fluctuating scenarios in the near term. Our highest priority is always to protect the health and safety of our employees. The company acted quickly to implement a pandemic response plan combined with a rigorous COVID-19 health and safety program, which meets or exceeds guidance from applicable public health authorities.
The response plan includes best practices for managers, self-assessment tools, enhanced cleaning protocols and hygiene measures, physical distancing practices, new COVID-19 measure audits, and a complete proximity activity hazard management process, including additional personal protective equipment requirements. Strategies to reduce concentration of site workers such as staggered start times, breaks, and lunch times have also been implemented on construction sites. The company has also created online COVID-19 information centers for employees and managers to ensure all team members are kept informed as the situation evolves. Remote work practices facilitated by information technology have been implemented across all offices. The company continues to communicate on a regular basis with all employees and has highlighted the additional support offered by the provider of the Employee and Family Assistance Program to support employees and their families during this time.
The company was proactive in managing its cost structure and balance sheet by implementing precautionary measures to position itself in the event of a prolonged impact to the business by instituting a temporary reduction in salary in mid-April for the board of directors, executives, and non-project related employees. Where projects have been temporarily slowed down or suspended by the client or by a provincial government, the company has implemented temporary layoffs. Additionally, the company has also reduced discretionary spending, deferred capital expenditures where possible out of an abundance of caution. All these efforts contribute to a strengthened financial position should the pandemic run longer than expected or if a second wave of COVID-19 occurs.
The executives and directors want to acknowledge the efforts and sacrifices that our employees have made to ensure that the company is operating safely and effectively, delivering upon its project commitments through these unprecedented times.
In the first quarter of 2020, the company continued to execute a more diverse work program and delivered significantly improved net income and adjusted EBITDA year-over-year. Adjusted EBITDA and adjusted EBITDA margin in the first quarter of 2020 were CAD 7.6 million and 2.35%, respectively. Adjusted EBITDA increased CAD 10.7 million from the negative CAD 3.1 million in the first quarter of 2019. Adjusted EBITDA margin increased 355 basis points from the negative 1.2% recorded in the first quarter of 2019. The year-over-year improvement was driven by an increase in gross profit due to the revenue mix and the impact of increased costs on a certain contract incurred in 2019 that did not recur in 2020.
We are pleased with the continued progress completing our challenging legacy programs and in the impacts of our efforts to diversify revenue streams across a portfolio of both geographic and balanced risk profiles.
We continue to be encouraged by the growth of our pending backlog, of which many are in a delivery model that supports a more traditional portfolio risk balance of Bird in our overall work program. Our earnings base has begun to reflect this. The COVID-19 pandemic did impact the timing of conversion of some of our pending backlog, pushing some expected awards after the first quarter of 2020. In 2020, the company secured CAD 220.8 million of new contract awards and change orders and executed CAD 321.6 million of construction revenues. The backlog of CAD 1.43 billion for the company at March 31st, 2020 increased 11.2% from the CAD 1.28 billion in backlog a year ago.
Backlog decreased CAD 121 million or 7.8% from the CAD 1.55 billion of backlog recorded at December 31st, 2019, as several awards expected in the first quarter of 2020 were delayed, including the Eric Hamber Secondary School Replacement Project. The company experienced two minor project cancellations in the quarter as a result of the COVID-19 pandemic, one from backlog and one from pending backlog. The board has declared an eligible dividend of CAD 0.0325 per common share for May 2020, and it is meeting monthly through the COVID-19 crisis and will communicate dividend declaration monthly on a go-forward basis. Subject to the quarter end, the company announced the award of the Eric Hamber Secondary School Replacement Project in Vancouver, British Columbia, for approximately CAD 92 million under a design-build contract.
Wayne will now walk us through the financial results for the quarter compared with the prior year.
Thank you, Terrance. Before I discuss the financial results, I'd like to take a moment to thank all employees, including those who are working remotely and help with our financial reporting process. The COVID-19 pandemic has changed the way we work, and I appreciate the flexibility and continued dedication of our team to support and maintain the business through this crisis. During the first quarter of 2020, the company recorded net income of CAD 1.1 million on construction revenues of CAD 321.6 million, compared with a net loss of CAD 6.5 million on CAD 261.8 million of construction revenue in 2019. The year-over-year increase of revenue in the first quarter of 22.9% was driven by growth in the industrial work program, while the commercial and institutional work program was effectively flat.
The year-over-year increase in first quarter net income is reflective of the improvement in revenue and earnings attributable to the mix of higher margin industrial work program. The company 2020 first quarter gross profit of CAD 16.9 million was CAD 10.6 million 167.8% higher than the CAD 6.3 million recorded a year ago. The increase in the amount of gross profit is driven by the higher quarterly construction revenues year-over-year. The increase in gross profit was due to a higher margin work program as revenue contribution shifted from predominantly institutional and commercial projects to a more balanced work program, including industrial. The first quarter of 2019 was also negatively impacted by a PPP project that incurred additional costs due to design-related scope growth and acceleration expenses.
There were substantial changes to the scope of that project requested by the client that are still in commercial negotiation.
This PPP project achieved substantial performance in the first quarter of 2020. Gross profit percentage in the first quarter of 2020 was 5.3% and 2.9% higher than the gross profit percentage of 2.4% recorded a year ago for the same reasons as gross profit. Income from equity accounted investments in the first quarter of 2020 was CAD 1.7 million, compared with CAD 0.7 million in the same period of 2019. Included in the first quarter of 2020 was a net gain on sale of one of the company's investments in equity accounted entity held for sale of CAD 400,000. The remainder of the increase in income was primarily driven by the margin earned from an equity accounted investment based in Atlantic Canada.
In the first quarter of 2020, general and administrative expenses of CAD 14.8 million or 4.6% of revenue were slightly lower than the CAD 15 million or 5.7% of revenue in the corresponding period a year ago. During the first quarter, the company had lower compensation expense of CAD 0.4 million. Third-party pursuit costs were CAD 0.3 million lower and CAD 0.1 million higher foreign exchange gains than the amounts recorded a year ago. Partially offsetting these reductions in expenses were CAD 0.6 million higher professional fees relating to information technology and consulting fees than the amounts recorded in 2019.
Finance income of CAD 0.8 million in the first quarter of 2020 is comparable to the CAD 0.6 million recorded in the same period of 2019 due to higher cash balances being carried during the quarter compared to the prior year.
Finance and other costs of CAD 3.1 million were CAD 1.6 million higher than the CAD 1.5 million reported in the first quarter of 2019. The increase was due to CAD 0.8 million higher interest expense on non-recourse project financing and CAD 0.5 million higher losses on interest rate swaps. There was also a CAD 0.4 million increase in interest expense on loans and borrowings. In the first quarter of 2020, income tax expense was CAD 0.4 million, compared to the income tax recovery of CAD 2.4 million recorded in the first quarter of 2019. The effective tax rate of 27.1% in 2020 is comparable to the 27% in 2019. I will now turn the call back over to Terrance to comment on the future operating performance for the company.
Thank you, Wayne. The trend for the company over the past several years towards a growing proportion of industrial project revenues is expected to continue throughout 2020. Diversification into LNG, nuclear, public transit, modular, environmental sectors will balance the risk profile and help stabilize earnings. In the third quarter of 2020, the company expects to sell two equity investments in PPP projects. This is consistent with the company's strategy not to hold these investments through the entire duration of the concession agreement. At March 31st, 2020, the company was carrying a backlog of CAD 1,426.6 million, which is 11.2% higher than that recorded a year ago. The company expects to recognize 66% of the remaining performance obligations over the next 12 months.
This estimate reflects any short-term impact on financial results from projects that have been put on hold by clients as a result of the pandemic.
This expectation is based on management's best estimate, but contains uncertainty as it is subject to factors outside of management's control. Embedded margin in backlog improved throughout 2019 and improved year-over-year in the first quarter of 2020. Backlog is more diversified than in prior years across a broad range of markets and contracting methods with a more balanced risk profile. This can be seen in the disaggregation of the revenue in the company's 2020 first quarter financial statements, whereby revenue earned in higher risk contract categories such as PPP, alternative finance, and complex design-build projects comprised 16.1% of total revenue in the first quarter of 2020 compared to 26.1% in the same time period in 2019. The proportion of revenue earned from higher risk contract types is expected to remain lower throughout 2020 when compared year-over-year.
The company has minimal direct exposure to projects in the oil sector in its backlog. In addition, the company has CAD 625 million of pending backlog as of the end of the first quarter of 2020. The projects are geographically diverse and span multiple sectors. This includes the addition of the Eric Hamber Secondary School Replacement Project in Vancouver, B.C., for approximately CAD 92 million under a design-build contract. Subsequent to the end of the first quarter, the project was contracted and recorded in the backlog. Projecting the timing of converting the rest of these projects into contracts has become more difficult in the current market conditions as a result of the pandemic, and several have shifted beyond the second quarter into the second half of 2020, which will impact the revenue this year.
The project pursuit pipeline remains healthy and falls within our targeted risk or risk tolerance.
The company continues to be selective on prospective pursuits, ensuring our clients' expectations are an appropriate match for our capacity within our overall work program. Project cancellations in the pursuit pipeline have been minimal to date. The company is seeing projects in the pursuit phase shift further out, which will have a modest impact in the second half of 2020. At this point, the company does not expect this shift of timing of pursuits to impact 2021. In the near term, opportunities will primarily consist of smaller environmental projects, mid-sized social infrastructure projects, and a range of projects in the LNG sector and mining sectors. The award of any of these projects will benefit the second half of 2020 and beyond. Recognizing that the longer the COVID-19 pandemic circumstances persist, the higher the risk to the company's underlying assumptions.
The company maintains an optimistic outlook considering the impacts to date and the positive indications for gradual reopening of the provincial economies in the near term. The company has experienced impacts of the pandemic in April related to temporary project shutdowns and reduced productivity on project sites as a result of physical distancing and additional health and safety measures added to our normal protocols. As May evolve, our operational workforce have become accustomed to the new operational landscape and productivity levels are returning to normal. The company expects to benefit in 2020 from having a healthy backlog with higher margins than a year ago and more balance in terms of contractual risk profile of the work program, notwithstanding expectations that revenues will be lower year-over-year as a result of the pandemic.
When the company's work program fully mobilizes, there will be a period of time in which the company will experience growth in non-cash working capital as the business ramps back up until a steady state of operations is achieved. This concludes the prepared remarks section of the conference call. I'll now turn the call over to the conference call operator, who will take your questions in turn.
Thank you. We will now begin the question and answer session. Analysts and institutional investors 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 and two. Anyone who has a question may press star and one at this time. Our first question comes from Yuri Lynk of Canaccord. Please go ahead.
Good morning, guys.
Morning, Yuri.
Morning.
Morning. Just wondering how the quarter turned out vis-a-vis your initial expectations, because it looked like a pretty good quarter from our vantage point.
Yeah, I think generally, Yuri, as expected. Certainly, we put a lot of focus into our business, our forecasts, our budgets, and generally as expected for the business.
Okay. Obviously trying to get a handle on the degree to which revenues might be down this year. The MD&A implies about an 8% reduction in the revenue that you expect to burn from backlog over the next 12 months, compared to what you had in the Q4. Is that kind of ballpark the revenue decline you're expecting, or can you give us any additional color on how to think about that?
We haven't disclosed, obviously, what we expect our revenue to be for the year, but suffice to say, we expect Q2 will be significantly down from a year ago. We are seeing some of our project sites return to work. We're seeing some ramp up on other sites where they had kind of previously ramped down through April. Q2 is certainly going to be impacted. Some of the new project awards that were in our pending backlog that coming into the year we thought were going to convert to awards in Q1 or Q2, are starting to push to the right, and that is going to have a negative impact on Q3 and Q4.
If you think back to our Q4 disclosure, we had said that 66% of our backlog would come into revenue in the next 12 months. 66% of that would come into 2020.
At the end of Q1, again, the number is still 66%, in the next 12 months, but it's on a CAD 1.4 billion backlog, so that's coming down as well. We haven't pegged a revenue number, but I don't think a 8% reduction that you're putting out there is far off from a total year perspective.
Thank you. One last one from me, and I'll turn it over. Terrance, do you have any concerns about being on the hook in any way for the additional costs that you're experiencing on probably almost all your job sites associated with dealing with COVID-19?
Generally, Yuri, obviously our contracts, we have a varying degree of types of contracts with varying degrees of contractual coverage. Our subcontractors are back to back on those. You always have the risk of challenges of trades weathering this type of environment. You do your best to have security on the larger ones, but there's always a bit of that risk. Generally speaking, it's not something that we're worried about based on what we're seeing today. I think that generally relates to the fact that the industry really kept going, and it's obviously humbling to see how the construction industry has performed through a very uncertain time. We had certainly some contracts that were paused and legislated to pause.
Overall, it is really impressive to see our industry, not just within Bird's business, but generally across the industry, continue the way it has.
We have not had a worker on a site at Bird diagnosed with COVID-19. We've had certainly symptoms that we ran through extensive testing on, but across our whole suite of business, across the country, we've not had a positive test. I think that's a testament to the efforts that we're making on hygiene and protocols, safe distancing, things like that. It really is impressive to see. Obviously a second wave can occur, but we feel that we've gone through this first wave and can certainly handle another wave as well.
Okay. I appreciate the color. Thanks.
Our next question comes from Frederic Bastien of Raymond James. Please go ahead.
Good morning, guys. I was hoping to get your thoughts on how the second quarter is shaping up right now relative to perhaps how you felt it might be maybe six weeks ago.
We're seeing signs of certainly clients restarting projects that were paused. It's still early days, Frederic. We had certainly some absentees in the early part of April.
Productivity, everyone getting used to the new normal that we're seeing. I would say in most markets, some strength, I would say we're more optimistic about the back half of the second quarter than we would've been six weeks ago. Again, it's a higher level of confidence just because we're getting adjusted to this framework that we've worked in, and our clients are starting to get mobilized. We're feeling better than we did six weeks ago for sure.
Okay. Thanks for that. Can you also provide an update on LNG Canada? I understand you have three projects, three contracts on this particular site. Give us an update, please.
Yeah. Same sort of thoughts there. Early days, early April, certainly, significant reduction in scale, but that is returning to anticipated levels as we speak. The team there and our client have done a phenomenal job with protocols and the parameters of managing the workforce. Just have done some really impressive things and to this point, no positive tests within our employee, certainly within our landscape, and I don't think there's been one on the site. Within our landscape, and we have line of sight to, it's been really impressive. Returning to our anticipated levels as we speak.
Okay. Awesome. Last one for me, probably for Wayne. In respect to the two investments that you plan to sell shortly, are you expecting similar types of gains to the one that you enjoyed in Q1?
I think the gain on the project that we'll be selling forward is larger than that gain. It's kind of an opportunistic item that came up in Q1. We did monetize that asset. The two that'll occur in Q3, I think the gains will be slightly larger than what we saw in the first one.
Okay. Awesome. Thanks, guys.
Thanks, Ray.
Our next question comes from Michael Tupholme of TD Securities. Please go ahead.
Thanks. Good morning. Terrance, you provided a bit of an update there on LNG Canada, so clearly sounds like that was one of the projects where you did experience some impact from COVID-19. I'm just wondering, were the impacts that you did see from COVID-19 across other parts of the business, was it pretty general and fairly widespread, or was it fairly concentrated to a handful of other projects?
Fairly concentrated to a handful of other projects in provinces where the governments really put restrictions in place, such as Ontario. We had some impacts on Atlantic Canada on some of our educational work. It was purely government legislation that affected that. We have activity in northern Quebec with our mining business, with ArcelorMittal. That was also affected with Quebec's legislation they put in place. I'd say that the economic demand, inventory levels, things like that on the iron ore side will certainly delay further demand in that business in the second quarter and expect that'll be third quarter, fourth quarter. It's seasonal anyway, and we've anticipated that, and it certainly doesn't have a major impact on our business per se. It's much smaller.
Okay. It sounds like things are generally starting to normalize in terms of activity levels and ramping back up. The second half of the year, to the extent that revenues are softer than you had originally expected, is that primarily a function of some of the awards that you thought would come through in the first half may not be at the level?
Yes
it originally thought to be?
Yeah. Coupled with the softer second quarter revenue from some of the delays or some of the restrictions.
Right. Okay. Then just in terms of your earnings outlook commentary, it reads consistent with the way it read in Q4, and that you do talk about continuing to expect earnings to be higher than in recent years. Not to try to pin you down to an exact number, because I'm sure you won't provide that, but when you talk about higher than recent years, there's quite a divergence depending on how far you go back. If you look at 2018, there was actually a small loss. Then in 2019 you earned CAD 0.22. Just trying to get some sense when you talk about recent years, should we be focused more on 2019 or how far back are we looking here?
Yeah. Obviously our commentary relates to 2019. Although we anticipate that it'll be lower than expected, our commentary holds that we expect accretive performance from 2019, and we have a level of confidence of that based on the backlog and the embedded margin in that backlog and the performance that we've had to date.
Okay. That's helpful. Thank you. Then, just in terms of some of the projects being pushed to the right and that were in the pursuit phase, is that in any particular end markets or sectors, or is it more broad? Just any color around where you're seeing what areas those projects are in would be helpful.
It's somewhat broad, but I would say more focused on the private commercial institutional work and the mining side where things are getting pushed through. Generally, our industrial program hasn't seen that to any extent other than active work that's been underway. We're not seeing that as much on anything that's in the industrial program. It's more our commercial institutional side in the private sector, private investment side of that is where it's been pushed a bit.
Okay. Just lastly, in terms of you made some commentary around 2021 and at this point, not expecting a shift in the timing of pursuits to impact your 2021. Just wondering what gives you the confidence to say that? Is that a function of the fact that you're now seeing activity ramp back up on some of your existing projects and maybe pursuits, even though they've been pushed, you still do expect awards in the second half? Just trying to get a sense for sort of at this point.
Yeah
the level of uncertainty, how you can say that?
First and foremost, it's the anchor projects that we have in our backlog. Projects that are evolving such as Canadian Nuclear Laboratories up in Chalk River, as an example. Confederation Line extension in Ottawa is another example. LNG, we're still largely in the early phase of procurement of LNG. That's significant growth opportunities in all of those projects. Really, the confidence comes from the position we have, the strength of that backlog and just, I'd say, dialogue that we've had with some of our commercial institutional clients that are starting to re-engage now and reset. Whether that's some of the larger pension funds that we work for that hit the pause button for the month of April. We're starting to engage with those, and move those towards fully contracted.
I think the more important piece is we have a very clear line of sight to the risk of our backlog and the predictability of that. We're in a good spot, and if we can continue to evolve like we have through getting through this month of April and starting to see more normal evolution of the business, I think we've got some exciting things ahead of us in the balance of the year and well into 2021 and beyond.
Okay. Thank you. That's great.
Our next question comes from Maxim Sytchev of National Bank Financial. Please go ahead.
Hi. Good morning, gentlemen.
Hi, Max.
Hey, Max.
Wanted to circle back quickly on Q2. Given the fact that revenue is obviously being impacted by some of the dislocations, what you are doing on the cost side, should we still expect positive EBITDA for Q2, or this is still kind of too uncertain to call or make a commentary on that?
At this point, we expect positive EBITDA in Q2.
Okay. I guess, so Terrance, that really comes from the cost side, or what are the levers there? Is that the right?
I think a combination of both, Max, but I think obviously the Q2 has been impacted. I think it's a combination of the margin profile of the projects that are underway and we've been really aggressive on the cost side.
Okay, that's very helpful. Thank you. I was wondering, if you don't mind maybe revisiting kind of the addressable market opportunity on LNG Canada. As you said, you are sort of very early in terms of that site development. Speaking with sort of the main EPCs and the proponents, is there any change in terms of your ability to drive incremental revenue from that site?
We're continuing to evolve on that site. We've performed extremely well. Very proud of the performance of the team from a safety perspective, obviously dealing with the pandemic. From a schedule perspective, we performed extremely well and any time you're underneath these large global EPCs and you perform well, you certainly get a lot of opportunities that evolve. As you know, we've been very focused on the workforce accommodation. We've secured non-process facilities for the project. We've secured some of the larger earth gradings, so you can sort of follow along as you see the project evolve and all the different components on something of this scale. We've had good success securing each phase. Obviously, the trains have fabrication in Asia, components of that.
There'll be a lot of interconnector, things like that'll provide opportunities. Lots of ancillary facilities that are still evolving.
Obviously, all of the foundational work, concrete, all those things are in procurement as we speak. Yeah, no, we're excited and just couldn't be happier with the performance of the team there. There's obviously potential for phase two of the project. We don't have any color on that today, that's a future opportunity potentially as they consider that at some point in the future. Yeah, it's been a nice replacement for our historical oil sands opportunities. The team that we've got there obviously have extensive experience in oil sands in a major way with a major scale, and we've been able to obviously take that entire team and build upon that team. Yeah, really pleased to see this group deliver something at this scale, this complexity in what I would call a pretty remote location too.
Yeah, no, for sure. Thanks for the color. Do you mind maybe commenting, if it's possible, on the kind of the payment terms, maybe on LNG Canada specifically? I don't know if you want to address those. Just in general, if you have seen any slippage from any clients on accounts receivable and things like that, or it's still kind of business as usual on those things?
No, clearly, we've been at LNG Canada now for some time. They've been excellent. Everything is on time. No issues there whatsoever. Balance of clients. Obviously, where you're in an economic landscape like this, you do have to put considerably more attention to receivables and whatnot. To date, we haven't been impacted by anyone out of the ordinary. We have certain clients that are just generally slow and they continue to be, but no change, I guess, Max, as to this point. We put appropriate measures in place to protect our performance, whether that's surety from larger performers. We've got the protection on the subcontract side. Our clients have been good. We haven't seen. It is worrisome for sure.
Yeah. Actually, as you touched on a good point around the subs, do you feel comfortable in terms of kind of that other side of the supply chain being relatively intact and available in terms of to be able to do the work? These companies, obviously, have smaller scale, but they're not being impacted too much where you have to start worrying about them being able to carry out the contracts.
A couple things. We put higher standards of performance expectations in place in terms of surety on any new. On existing, I think if we would've had a lot longer impact, two, three months, maybe into that third month, I think it would've been more worrisome than it is today. The fact that we've been largely able to continue, all of our subcontractors have been able to continue. I think, at this point, we're not anticipating that there'll be challenges. There's always going to be a subcontractor out there that was in trouble in the first place and can't handle that month that they've been impacted. There's always going to be that dynamic. We are typically well covered with performance surety.
Okay. No, that's helpful. I'm just wondering in terms of your concessions monetization, I'm not sure if in the past you have publicly stated in terms of kind of the potential expectation. Is this CAD tens of millions, CAD millions, just so that we can anchor kind of the expectations around the cash injection into the balance sheet in Q3?
Oh, you're asking the sale of the two assets?
Yeah.
In Q1, I think our inflow is CAD 5.4 million. In Q2, the inflow would be higher than that, but less than CAD 10 million.
Okay. No, that's helpful. Just maybe last sort of bigger picture question, if it's possible for Terrance. I mean, as we're thinking, obviously, there's a lot of discussion around infrastructure spending and things like that in general to stimulate the economy. I'm just wondering if you have any kind of early indications from conversations with the government, what you guys are hearing on the ground in terms of the potential spending in late 2020 and maybe in 2021.
I think a little early in terms of the quantum, but we're certainly seeing activity, getting organized in various governments, municipally and provincially, for stimulus programs. The interest levels for Bird are probably highest in the social infrastructure side, educational facilities. We saw that in 2008. We've experienced that more recently with the SIF program, in Canada from the federal government. The other area that we've grown considerably in is on the environmental side. We expect to see environmental projects get stimulus investment. A lot of municipalities and provinces in Canada have had to do considerable upgrades to existing, and that's work you can get underway fairly quickly. You may have caught history, a pretty large bill in the U.S. designed around stimulus on water, wastewater investment. Pretty significant federal U.S.
We're not in the U.S. in that sector, but you can see that's some of the early stuff the U.S. is getting to market. I'm quite confident that Canada will do the same.
Right. Is there anything on the healthcare side where you see potential opportunity, or right now it's just really on the OpEx, on the CapEx side?
Yeah, no, I would bundle that underneath the social infrastructure side. Some of the larger healthcare stuff is longer in duration because it's P3 typically, or depending on the province and agency, but the larger programs. Yeah, the smaller mid-size opportunities that are there, we have one that's in procurement right now in Atlantic Canada, in the second quarter. It's continuing forward. A nice fit for us, but we'll see. Those were not COVID related, but they haven't interrupted the procurement. They've continued forward with it. It's a government driven initiative, so we'll see where the dust settles on that. Yeah, it's still a space. I'd say the educational mix with university investment, high school, elementary across the country, which is certainly those projects I would expect are closer to being shovel-ready.
In the environmental side, would be closer to being shovel-ready, waiting for funding. Those are the two areas that I'm most interested in. We're not to any extent in the horizontal landscape, in terms of road building, that kind of thing. In a minor way we are, but not to take advantage of that. The larger LRT type work, I think it's just a longer duration. Typically, P3 delivery takes longer.
Okay. That's great. Thank you so much.
Thanks, Max.
Our next question is a follow-up from Michael Tupholme of TD Securities. Please go ahead.
Yeah, thanks. Just two follow-ups. Firstly, Terrance, just with respect to the two minor project cancellations you mentioned, how do you see or how would you assess your level of concern around the potential for any future cancellations?
It's pretty low, Michael. These occur early on, so we certainly don't have any line of sight to anything else devolving. If anything, it's things that had some delay that you'd expect might get canceled or restarting. I'd say lower. It's not a worry right now.
Okay. A question for Wayne. Just there's a comment in the MD&A regarding working capital investment as a business risk backup. Just wondering how your expectations for changes in non-cash working capital for the year have changed, I guess both on a full year basis and then just the cadence through the year. If you could comment on that'd be helpful.
Yeah. Really what that comment is intended to say is that total working capital necessarily won't be impacted by this. As we start to see the work program ramp up, again, hopefully in June and July timeframe, that's gonna require investment in cash into non-cash working capital. That'll start to release again in late September, early October. It's kind of a timing issue that we just wanted to highlight there.
Okay. Thanks for that.
There are no further questions at this time. I would now like to hand the call back over to Mr. McKibbon for closing remarks.
I want to thank all of our employees for their resilience and for the sacrifices they've made to ensure the company remains healthy in our 100th year of operation. Our field staff deserve a special recognition for having continued to work on our projects with utmost professionalism and dedication while quickly embracing new safety practices and procedures. Our primary concern is always the health and safety of our employees. We hope our strong safety culture also permeates into the daily lives of our employees and serves to help protect their families and communities in which we live and work. The first quarter of 2020 represents the sixth sequential quarter where our 12-month trailing adjusted EBITDA margin has improved.
While it's difficult to estimate the impacts of the pandemic on our company at this time, discipline and focus of the team over the past several years on reducing the risk profile and increasing the diversification of the work program will help the company emerge from this crisis with a healthy backlog and maintain a strong balance sheet. We have sufficient cash and liquidity to support our anticipated work program while maintaining the current dividend based on our current expectations of the impact of COVID-19. Despite those impacts, we will still expect 2020 to be more profitable than recent years. We look forward to properly celebrating the century mark for our company with our clients, shareholders and employees later this year. Thank you for participating in Bird Construction's first quarter 2020 conference call.
As always, Wayne and I are available if additional information is required, so please do not hesitate to get in touch with us. Have a nice day and stay safe.
This concludes today's conference call. You may disconnect your lines. Thank you for participating.