Welcome, ladies and gentlemen, to the Bird Construction Second Quarter 2023 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 Star, then one on your telephone keypad to be placed into the question queue. You'll hear a tone acknowledging your request. When we're ready for questions, you'll be introduced into the conference in the order that you were 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 then zero. 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 may ask may include forward-looking information. Therefore, the company cautions today's participants that such forward-looking information involves 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 for the co-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 like to turn the call over to Teri McKibbon, President and CEO of Bird Construction.
Thank you, operator. Good morning, everyone, and welcome to our second quarter 2023 conference call. Joining me today is Wayne Gingrich, Chief Financial Officer. Bird's strong second quarter results reflect the work of our teams across the country, safety, delivering our projects, and advancing our strategic plan and operational objectives. We have worked hard for the past few years to establish ourselves as a leading collaborative contractor with significant self-performed capabilities. Our teams have built a well-balanced backlog of contracts, strategically minimizing risk while diversifying into higher margin sectors. Today, our growing backlog, comprising a diverse range of industrial, institutional, and infrastructure projects, brings higher embedded margin profiles. These efforts position us for sustained revenue growth and enhanced margins, supporting our future performance expectations.
Turning to our second quarter highlights, we delivered 19.6% revenue growth, 95% of which was organic, leading to an impressive quarter for revenue of CAD 686 million. Adjusted earnings and adjusted EPS were up significantly quarter-over-quarter, our EBITDA also grew 37% compared to last year. Reflecting Bird's comprehensive services and robust market demand, Bird added almost CAD 1 billion in securements to its backlog during the quarter, bringing our primarily collaborative combined backlog to record levels. Backlog grew to CAD 3 billion, pending backlog totaled CAD 3.1 billion, including almost CAD 1.1 billion of master service agreements and recurring revenue work to be performed over the next 3-7 years. The company remains disciplined in its project selection and focused on low-to-medium risk projects.
This is reflected in our well-diversified combined backlog and quarterly revenue, with approximately 90% of revenue coming from lower-risk contract types. Our bidding pipeline remains robust, and there's significant demand for Bird's strong project delivery and collaborative style, including in nuclear, agri-food processing, water and wastewater treatment, industrial maintenance and repair, light industrial, telecom, transportation, healthcare, and the educational sectors. Bird's key fundamentals outlined on slide 7 remain at the forefront of our efforts to drive forward our business. We remain confident in our full-year outlook for improved earnings, primarily due to the visibility of our growing combined backlog. Following the significant growth delivered in the second quarter, we have revised our expectations for full-year revenue and now anticipate low double-digit organic growth, plus additions from Trinity, representing about 1% of revenue growth.
Our strategic positioning in higher margin and high demand sectors, combined with disciplined project selection, support our positive outlook. We remain very selective when considering a project type and the appropriate contracting model. Aligned with our strategic plan, we have shifted our historical non-institutional building business into the light industrial sector, and our results at the end of the second quarter are beginning to reflect that shift. Maintaining a healthy balance sheet with a low net debt position, we are well equipped to pursue our strategic priorities, including additional tuck-in acquisitions, where there is good operational and a cultural fit. Our operating cash flows are strong, funding our growth and supporting strategic investments in productivity, capital expenditures, and M&A. As we've done in the past, adding to our self-perform capabilities through tuck-in acquisitions is an essential piece of our strategy.
We have taken existing self-perform capabilities at Bird, newly acquired self-perform capabilities, and diversified into new markets, leveraging cross-selling and our One Bird approach. Bird's contributions to the energy transition and to lower carbon solutions remain evident throughout our recent awards in hydroelectric facilities and the delivery of innovative, sustainable post-secondary and healthcare facilities. Our growing portfolio includes work on wind energy projects, hydroelectric-related projects, waste-to-heat projects, sustainable institutional facilities coast to coast, and work with all of Ontario's active nuclear operators. We're also actively pursuing our ESG initiatives, diligently preparing for upcoming reporting requirements. As noted, the company recorded a combined backlog of risk balanced contracts and awards, consisting of CAD 3 billion in backlog and CAD 3.1 billion in pending backlog at the end of the quarter.
As you can see in the chart, our combined backlog has almost tripled since 2020 through a combination of diversification, both organic and acquisitive. We've also improved our trailing 12-month EBITDA, adjusted EBITDA margin profile, and adjusted earnings similarly over that time. Bird has firmly established itself as a collaborative contractor, and the combined backlog maintains over 70% of contracts being executed through a collaborative delivery model. At quarter end, Bird's recurring revenue, MSAs, and pending backlog exceeded CAD 1.1 billion, providing additional visibility to future revenues. In the quarter and subsequent to quarter end, Bird had several significant project announcements across a range of end markets. I'm pleased to see Bird's track record and reputation as a key partner for Canada's most significant industrial projects reflected in these recent announcements.
The company is delivering its self-perform capabilities as an early contractor at the Jansen Potash Project, the Blackwater Gold Mine, and Bloom Lake Mine, and final works on a large industrial project in northwestern BC. By offering full project lifecycle capabilities and maintaining strong client relationships, we are well positioned to meet the long-term demand of large-scale industrial projects. We continue to execute our strategy in key focus areas, such as fostering increased self-perform work, expanding cross-selling opportunities through M&A and internal partnerships, and maintaining disciplined project selection. These contributed to our growth, enhanced fundamentals, and the securements of almost CAD 1 billion in the quarter. Bird is focused on meeting our clients' sustainable infrastructure needs. There's a tremendous outlook for investment in electrification, public transportation, energy efficiency projects, and building retrofits.
Our capabilities, particularly our self-perform expertise in earthworks, concrete, fabrication, process, mechanical, electrical, and instrumentation, are transferable and strategically positioned to deliver the necessary skills required for the energy transition and the electrification of our energy systems. Clients in the institutional world are increasingly seeking ways to build better, achieve more sustainable buildings, or retrofit existing properties to reduce their carbon footprint. Bird's experienced teams, sustainable solutions, and our Centre for Building Performance support the execution of clients' goals in these areas. With that, I'll turn it over to Wayne to go through our financial performance in more detail.
Thank you, Teri. Turning to slide 11, construction revenue for the second quarter of CAD 686.4 million represented a 19% increase compared to the same period in 2022. On a year-to-date basis, revenues of CAD 1.22 billion for the first half of 2023 represented a 17% increase from 2022. The company's margin profile improved in the quarter compared to the prior year, with gross profit percentage increasing to 7.9% and adjusted EBITDA margin increasing to 4.3% from 7.5% and 3.7% respectively. This increase was primarily driven by the company's highly collaborative work program, growing backlog with enhanced margin profiles, and expanded self-perform capabilities.
General and administrative expenses were CAD 36.2 million, or 5.3% of revenue, versus CAD 31 million and 5.4% of revenue in the corresponding period a year ago. I will note that the current year includes CAD 2.4 million in costs related to rationalizing office space, reflecting the ongoing efforts to improve cost efficiency and gain leverage on overhead. Turning to earnings, net income and earnings per share were CAD 13.7 million and CAD 0.26, respectively, compared to CAD 14.1 million and CAD 0.26 in 2022. I would highlight here that during the comparable period in 2022, the company received a one-time gain of CAD 7.6 million and another CAD 1.7 million of interest income related to the settlement of historical construction billings and related interest charges with a customer.
Adjusted earnings and adjusted earnings per share increased significantly compared to the prior year, reflecting the higher gross profit to CAD 15.7 million and CAD 0.29, compared to CAD 8.5 million and CAD 0.16 in the prior year. Bird maintains a healthy balance sheet with significant financial flexibility and liquidity. We closed the second quarter with CAD 107 million in cash and cash equivalents and an additional CAD 172 million available under our credit facility. This enables us to continuously invest in growth-related working capital, project-driven capital expenditures, and potential tuck-in acquisitions to further enhance our service offerings and self-perform capabilities....At the end of the second quarter, our working capital stood at CAD 177 million, ensuring support for the current and future contractual requirements. As of June 30th, our current ratio was 1.22 times.
Our adjusted net debt to trailing 12 months adjusted EBITDAR ratio stood at 0.08 times, and our long-term debt to equity ratio is 23.4%, demonstrating our commitment to maintaining a healthy and sustainable capital structure. In the second quarter, we maintained our balanced approach to capital allocation, and during the second quarter of 2023, we generated positive cash flows from operating activities of CAD 7.1 million, a significant improvement of almost CAD 80 million compared to the CAD 73 million cash used in the second quarter of 2022. Keeping in mind that cash in the comparable period in 2022 was positively impacted by a sizable settlement and collection of historical construction billings and related interest charges.
The positive cash flow generation in the second quarter of this year was achieved while growing the business 19% and investing CAD 18.7 million in non-cash working capital. Throughout the recent years of business growth, the dividend payout ratio of net income has consistently declined as the earnings have grown, which has further strengthened the company's financial flexibility and helps to fuel future growth. The company continues to expect significant growth in earnings per share in 2023, sufficient to achieve an expected dividend payout ratio below 40% of net income for the year. I will now turn the call back over to Teri to comment on the outlook for the company.
We are pleased with the company's performance this quarter. We are confident in our business's strategic shifts over the past few years, including our position as a leading collaborative contractor and the appropriate risk balancing of our work program. Bird's strong quarterly revenue, increasing margins, growing backlog, and strong cash generation contributed to the positive outlook for the near to medium term. Driven by improving gross profit margins and further leverage on our cost structure, we expect earnings per share and adjusted EBIT growth to outpace our revenue growth. We raised our growth expectations this quarter compared to Q1, where we previously said high High double-digit growth, and are now expecting low double-digit organic revenue growth for the full year, keeping in mind that Trinity is approximately 1% of additional acquisitive growth.
Our markets are fueled by infrastructure investments, the energy transition, and the more robust commodities environment. We are confident in delivering expanded margins and revenue growth, reaffirming Bird's commitment to increasing value to our stakeholders. With that, I'll turn it back to the operator for questions.
We will now begin the question and answer session. Analysts who wish to ask a question, may press star, then 1 on your telephone keypad to join the question queue. You'll hear a tone acknowledging your request. If you're 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 2. Anyone who has a question may press star then 1 at this time. The first question comes from Jacob Bout from CIBC. Please go ahead.
Hi, good morning, Teri and Wayne. This is Rahul, in for Jacob.
Good morning.
Morning.
Morning. So, so very strong levels of new awards in the quarter and, and a couple of big awards after the quarter end, too. Just curious what you would attribute this to. Is this strength industry-wide or a factor of higher win rates on your side, or a combination of both?
I think it's, you know, it's a combination of both. We're, we're certainly seeing, you know, strong demand across the various sectors that we focus on. We're also seeing a strong demand for, you know, the collaborative style of contracting that we've, we've been, you know, obviously, a leading, leading entity, you know, in our sector, delivering that. We're seeing, you know, that type of modeling. In order to deliver that type of project, you will, you often need a very strong resume to be able to be selected for these things, and we're seeing, you know, a very big uptake of clients because it's a very efficient way to deliver Canada's infrastructure.
It's a combination of strong markets in the industrial side, in the mining side, in the horizontal infrastructure side, and then on the institutional side, again, as we transition our vertical institutional business to light industrial, we're seeing very good performance and growth in agri-food and in those types of areas, light manufacturing and things like that. It's a mix of things, but certainly we have good, good sight to a very strong pipeline for the future.
Right. No, that's helpful. Maybe just a question on full year 2023 revenue expectations. First half revenue growth was very impressive at 17%, and you're now guiding for low double-digit organic growth for the full year. Would it be fair that your revised expectations imply a high single digit growth for the back half of the year? Is there upside to this, given, you know, all these recent wins and record backlogs of it?
A couple things. I, I, I think what you're saying makes sense. High single digit in the, in the back half, like in the, in the back half of last year, we had had a strong second half, so we're still gonna see some nice growth this year, but it won't be at the, the 16.8% we saw in the first half of this year. Yeah, it's, it's certainly possible, you know, that we could have even stronger revenues than high single digits. You know, obviously depends on just some of the other factors going on in the country today in, in terms of, you know, where the wildfires are and, and whether there's any impact to projects.
We've had very minimal impact to date, but certainly something we're monitoring going forward.
Great. Maybe just last question from me on the labor side. Looks like it's still pretty tight labor market, and just given the increased levels of work, how are you managing on the labor side? Are you finding enough skilled workers? Maybe just comment on how labor utilization levels are trending.
One of the benefits, and we've spoke to this in the past, but one of the benefits of Bird's national presence is we can, we can draw from labor markets Canada-wide, and you never have, you know, a scenario where you've got, you know, full, you know, utilization of Canada's labor. You've got to have local relationships and local businesses to be able to, you know, position, you know, those local employees to, to move and, and, and, and take advantage of, of higher opportunities in other markets. With our collaborative model, and we're using divisions to work, jointly on many projects, that, you know, solves that problem to a certain extent for us. It's still a very tight labor market.
Obviously, the demands, you know, continue to be strong, but we're very disciplined around projects that we pursue, that we're comfortable with our labor strategy or, you know, obviously, we'll, we'll look to other things that maybe have a different labor weighting. Overall, we continue to have consistent performance, and we don't have a project today in our mix that we're concerned about the labor availability on.
Very helpful. Thank you. I'll turn it over.
The next question comes from Chris Murray from ATB Capital Markets. Please go ahead.
Thanks, guys. Just maybe turning back to the margin discussion. You know, as we went through COVID and, and, and the Q statements and stuff like that, I think margins became a bit muddled. Now that we're kind of on the far side of that, a couple questions on this. I mean, I guess, first of all, Wayne, you talked about some SG&A costs that you're working on right now. And that's part of it, but it's also, you know, opportunities for gross margin. I guess a couple pieces on this. You know, where do you think you guys can get gross margin to based on what you're seeing in terms of demand?
Wayne, you know, is there a level of SG&A that we can settle into that drives higher EBITDA levels, you know, on a go-forward basis?
Yeah, certainly, I guess, you know, a couple things there, Chris. Yeah, we think we have certainly, upside on our EBITDA, margins, and that's gonna be a factor of, higher growth profits and, and leverage on our, our cost structure. In terms of EBITDA in the second quarter, we delivered, you know, 4.3%. I'd say, our equipment-related revenues were probably lower in, in second quarter than what we'd expect to see in the second half. We expect to see a nice lift in our, margins, you know, above that 4.3% in the, in the second half. When you kinda average it out, you know, for the year, I think, year to date, we're something like 3.7%.
We certainly are, are gonna expect to see an uplift, you know, from that by the end of the year, where you're, you're probably, you know, mid to high, like, you know, 4.6, 4.7, 8, you know, or, or even above there. Next year, aspirationally, is, is kind of the, the last year of the current strategic plan that we have in place. Again, you know, margin expansion has been a big focus for us through this strategic plan, so I, I think you'll see further improvement through 2024.
Is this a type of thing that's looking at where you've got to come into the backlog, you know, that, that, you know, you think you guys can hold, you know? I mean, if you think you're getting to, like, kind of high 4s here, like holding something, you know, above 5 on a regular basis is kind of an achievable target?
Yeah, I, I, I think that's, that's a fair assessment of, of what we're seeing right now.
Okay. Sounds great. Then, and then, Teri, I, I don't know who wants to take this. Just, you know, part of the, part of it is looking at the at the recurring revenue kind of in backlog, and trying to understand, you know, what, what kind of additional growth levers are there in terms of, in terms of recurring revenue? You know, at, at CAD 1.1 billion a year, I mean, that's a pretty healthy number. Is there more room for that to grow from where it is today, or is that just gonna be a pretty, pretty steady Eddie type of, type of business that you've got now that you've got Trinity in there? Because I'm gonna guess that Trinity's got a lot of the telecom, tied to it.
Any thoughts around, you know, the growth opportunities around recurring revenue would be great.
Yeah, certainly, you know, and as you know, you know, some of our clients in the energy side are, are focusing on a smaller, you know, sort of contractor footprint, in an effort to, you know, make their business more efficient and, and have a stronger, you know, overall safety performance that gives us lots of opportunity. As you look across the various entities, the scale with Bird's, you know, focus its collaborative, you know, reputation. You know, we're just seeing a lot of demand there. It, it's lumpier because, you know, you sign these things, and it's a pretty big mobilization. It's not as, you know, it's not a smooth transition from one big assignment to the next. We're certainly seeing no shortage.
We really haven't tapped some of the markets that exist, outside of Alberta to a large extent, other than, as you referenced, with Trinity and the work we do for, Canada's, you know, primarily Canada's telecoms. You know, lots of opportunity. Lots of opportunity to continue to grow, and I think we're, we're seeing, you know, a number of those opportunities, you know, in that regard.
All right. That's helpful. Thanks, folks. I'll turn it over.
The next question comes from Michael Tuvo from TD Securities. Please go ahead.
Thank you. Good morning.
Good morning, Michael.
Maybe just to, to start, I just wanna go back to the, the comments you made in response to a couple of Chris's questions there about margins. Just, just to be clear, I guess, for, for Wayne, the suggestion of, of seeing margins kind of in that 4.6, 4.7, 4.8% range, that's you're talking about the full year 2023 EBITDA margin, with the benefit of, of improvements you expect to see in the second half, getting, getting to that level on a full year basis?
Yeah, that, that's, that's correct.
Okay, perfect. And as we look out to next year, you, you suggested you think there's room for some further improvement. Is the, is the improvement that you could see in 2024, is that more likely to be driven by year-over-year improvements in, in the first half of, of 2024, and, and sort of what you'd expect to do in the second half of this year, you can sort of re-replicate that again next year? Or do you think there's really room on a year-over-year basis kind of throughout the year as we look out to 2024?
I think probably a, a bit of both. Like, we're, we're now mobilized on some pretty significant industrial projects across the country. We, we would expect those work programs to have opportunity to grow now that we're on site. And, and those are typically, you know, self-performed type work packages that carry higher margins certainly as well. You know, we're seeing nice nice growth and opportunities for us in the infrastructure, you know, space. You know, we're seeing our institutional business make great strides in terms of the margins and profitability they're driving right now, with a combination of some of their traditional markets and also doing work in some of the light industrial sectors as well.
It's pretty broadly held, what's driving the, the margin improvement.
Okay, that's helpful. Is it possible to talk a little bit about the embedded margins in backlog and, and how what's in backlog now compares to what you would have seen, in backlog sort of 12-18 months ago? Then also just to, to talk about, you know, as you bid new work now, you know, what are the margins looking like on, on the new work you're bidding versus what you've, you know, you've been seeing, I guess, up until this point?
Yeah. Our backlog margin, we don't disclose what that is, but, you know, we have been, you know, making comments in our MD&A about improving margin trends that we are seeing in our backlog. You know, compared to a year ago, it certainly is higher than what it was. We still see runway for that to improve. The margins in our pending backlog, which will eventually obviously convert to backlog, you know, those margins are higher than what we're carrying in our backlog as well. That's what gives us confidence about kind of continued improvement in our margin profile there, too. You know, in terms of the pipeline of work, like there's a...
It's, it's a very active market for us in, in all of our verticals right now. You know, that means we can be more selective on, on what we're pursuing, so we're looking for the right opportunities for us, and, and there's probably a little bit less competition for some of these complex projects, too. You know, read into that, that, you know, going-in margins are, are, are pretty healthy as well.
Okay, that's helpful. Then, on, on the, on the revenue growth side of things, obviously, the, the updated guidance for low double-digit revenue growth for 2023, and you made some comments about the back half of the year. I guess, as we look out to next year, given the, the record level of backlog slash pending backlog, can you just speak about sort of how we can potentially think about growth into 2024? I mean, the, the pending backlog in particular is up, you know, very, very significantly. I guess, harder to understand maybe how that gets converted. Just looking for any, any help on how we think about growth opportunities next year, I guess, given the, given the, you know, the backlog plus the, the, the demand environment.
Yeah. Certainly. You know, if you look at our booked backlog right now, just short of CAD 3 billion, you know, we said that 67% of that will be put into place over the next 12, 12 months. CAD 2 billion of that CAD 3 billion comes into place. Already in pending backlog, you kind of have these two categories, right? You, you, you've got the MSAs and, you know, the, the CAD 1.1 billion. You know, those contract terms kind of span 3 to 7 years. You know, read, read into that, the CAD 200 million, CAD 250 million of that may come into place in the next 12 months.
... Of the remaining CAD 2 billion in pending backlog, we would expect almost all of that to convert to backlog again in the next 12 months. Going into next year, you've kind of got, you know, probably CAD 1.5 billion of existing backlog. You're converting the CAD 2 billion, you're getting some of the MSA. We have pretty good visibility of the work program going into next year. In terms of growth, like, you know, we do our business plans later in the year, but I think we'd be kind of comfortable in the 6%, 7%, 8% growth range for next year.
Okay, that's very helpful.
At this point, based on, on what we're seeing. Yeah.
Yep. No, that's, that's great. Thanks for- and thanks for the sort of the, the build up to, to that with the, the details. I guess just last question would be just on, on M&A. Trinity was completed earlier in the year. Are you still looking at opportunities? Is that, is that still a core part of the, the strategy right now? If so, can you provide a bit of details around sort of what it is you'd, you'd have interest in, and sort of what the environment looks like right now in terms of opportunities?
Well, certainly, a lot of opportunities in the marketplace right now. We're continuously evaluating. We have a team on this, you know, on a full-time basis, looking at things that make sense for us. Some are, you know, you know, these, these ultimately looking for the right cultural fit, you know, where we can acquire a company that brings a team and aligned with our culture. We tend to find exclusive opportunities. We don't like typically participating in auctions, where the, the owner doesn't really care who acquires the business. We tend to be, you know, in a, in a narrow band, but there's, there's a number of opportunities out there that, that fit that, that profile. Yeah, very active. Many, many opportunities at various stages of evaluation.
But it continues to be a strong area for us, predominantly in the tuck-in, you know, side. The larger, more transformative, you know, opportunities don't come along very often. But we'll, we'll, we'll obviously adapt to one if it does, so.
Okay, that's great. Maybe, just one follow on there, Teri. Which sort of sectors or end markets would be of greatest interest to you right now?
Well, it, it never lines up perfectly with the area that you're specifically focused on growing, but I would say that, you know, if you think about what we're building out, we're building out a, you know, a new infrastructure vertical. That's an area we're, we're very interested in and looking for opportunities. We've got continue to enhance. We've had tremendous growth in our industrial vertical, especially in Eastern Canada, and now we're getting a lot of momentum in Western Canada. Areas that can enhance that are, are our focal point. I'd say those would be the two primary areas that we're focused on, businesses that can enhance our industrial, you know, performance and, and, and continue to grow our infrastructure vertical, and, and most importantly, that, you know, are accretive, you know, to our EBIT, EBITDA targets.
Okay. It's all very helpful. Thank you.
The next question comes from Rola Chen from iA Capital Markets. Please go ahead.
Good morning. This is Rola Chen. Most of our questions already got answered, but we're wondering in terms of like project mix, currently, there is around 90% are more lower to medium risk and 10% is higher risk. In the backlog, there is more than 70% collaborative delivery model. How does that align with your long-term targets as a whole?
I would say that, you know, that's certainly, a reasonable performance right now with the business, and the market ebbs and flows, and opportunities come and go. I, I, I think it's, you know, if there's projects that come along that have a risk profile that we are not comfortable with, we, we take an off-ramp and, and don't continue to pursue it or, or don't even get to first base in the first place. I think, you know, there's a, a very high trend of this work right now, and it's, it's a great model, and I think it'll be a model that continues to have legs in the long term, because it, it's the most efficient model that you can use to work very closely with your client and, and have a, a high performance delivery.
It's a model that's gained considerable strength in other jurisdictions like Australia and the UK, and I think it'll continue. I think in that regard, the demand is very high. We don't see that demand softening in the near term, even the medium term. I think this mix that we have right now will be a nice balance, and we're comfortable with it. The projects that we take on that have higher risk, obviously, we refer to them as higher risk, but obviously we approach those with an appropriate mix of, you know, contingency and risk and escalation allowances if those projects enter into our fold. You know, obviously, we take a very conservative approach if the risk is higher.
Ultimately, you know, clients, our clients, general clients are, are trending towards using these collaborative models, and they're having huge success with them. It, it becomes a, you know, a much more efficient model and a much more cost-effective model to work in these, in these delivery models.
That's helpful, Teri. Just following up on the recent acquisition, how is the integration so far?
Yeah, no, it's going really well. We're well underway with some of our system integration right now and launched some of the system things that we would do. We've got a number of variables, our safety program is fully integrated, you know, in that regard. You, you know, it's a business that is complementary to what we do, so it's got some uniqueness with Trinity and working in utilities and communication markets. It, it has, it bolted on to the company quite nicely, and the leadership team has fit in really well. Mike Attardo, who's our, our, lead in that business, who founded the business originally with his uncle, is, is doing a great job.
We're really pleased with it and, really especially with the culture, the way it fits with our organization, it's exceeded our expectations.
Got you. Well, thank you. That's all my questions. I'll come back.
Thank you.
Thank you.
The next question comes from Ian Gillies from Stifel. Please go ahead.
Morning, everyone.
Morning.
Morning.
Teri, could you talk a little bit on a risk-adjusted basis, would your preference be to pursue one of these large infrastructure projects that are going in Canada or maybe a larger M&A deal to help augment growth in the business significantly? I ask this in the context because the business has obviously been performing quite well and the balance sheet's in very good shape, so the ability to do either is looks pretty good right now.
Yes, I think within our organization, Ian, it really, it depends, you know, on, on each. It really doesn't distract us to a large extent if we were doing a large M&A, you know, deal in comparison to a large infrastructure project. You know, similar to the, the more recent Stuart Olson transaction that we did, which was very successful and, you know, it's worked out really well for us. We had a very small team working on that of about 10 people, so none of which would be involved in a large infrastructure, you know, project. The, on the infrastructure side, you know, a number of those opportunities are out there. They're all in, you know, various stages of evolution.
The various clients we work for in Canada are working with a lot of different models currently, some, you know, with different levels of risk. We're focused on those that fit our, our profile. You know, again, early days on some of the larger ones we're working on with teams. The good news is, we're seeing more and more of those evolve. We're able to complement those teams quite strongly with our team. It's exciting because the scale of investment that's going on in both social infrastructure and horizontal infrastructure by the various governments in Canada is unprecedented. We've had good success.
We're building, you know, LRT projects currently, and we've had good success with those, in the approach we've taken, which is a collaborative interface with our client, who ultimately has a different interface with the owner. We're very pleased with how we're performing on the scopes that we have, and we're developing a very strong resume to complement any project in Canada that evolves. Yeah, I think a little bit, you know, the way, the way we operate, we're a little bit divided, but we like, we like both if the fit is right and the dynamic is right for us.
No, that, that's helpful. I suspect I know an answer, the answer to this next question, but the guidance keeps going up. The share price probably isn't following it the way it should, in our opinion. Does an NCIB get any more interesting at these sorts of share price levels, or is that just a continuing conversation with the board?
Yeah, it's a continuing conversation with the board. We look at, you know, at the various use of our capital, and, you know, ultimately it's a, it's a quarterly conversation that we talk about, you know, balancing, you know, the needs of the business and our forecasted growth, the balance sheet we need for the types of things we're doing, the, the, the dividend mix. You know, it's, it, it's an ongoing evaluation as we move the business forward.
Okay. Then last one for me, probably directly at Wayne. I apologize if I missed this earlier. There's been a bit of volatility in the G&A quarter to quarter. Can you maybe just help us map out the rest of the year there and, where you think that shakes out on a full year basis and, so on and so forth?
Yeah, certainly. In Q2, yeah, our G&A was CAD 36.2 million. That included impairment, you know, charges that we had, right? From an ongoing run rate basis, you can kind of back, back those charges out, and that kind of gives you a new baseline. You know, the, the increase from Q1, you know, if you think of it this way, you know, the, the company has a, a profit sharing program, and, and we accrue profit sharing in, in proportion to profits earned, right? You know, Q2 had higher, earnings than, than Q1, so proportionally, you're gonna accrue, more profit sharing, and, and that's kind of that impact.
When you're modeling that out, just to keep that, keep that factor in mind, I guess that, that's really the, the 1 variable nature that we have in there. Our largest cost in G&A is people, and we're getting leverage on our overhead structure right now. Our 2nd largest cost would be office locations. Obviously, you know, we're getting more efficient on that side. You know, with the impairments that we took or the 2 offices in particular that we're moving out of, you can read into that maybe CAD 800,000-CAD 850,000 of savings a year. Under IFRS 16, you know, those savings are gonna be reported in depreciation and interest expense.
I, I don't know if that gives you a bit of guidance or help?
No, that, that's, that's very helpful. I, I appreciate that. Thanks very much. I'll turn the call back over.
The next question comes from Frederic Bastien from Raymond James. Please go ahead.
Good morning. Guys, you secured a number of contracts in the energy and mining sectors, which is quite encouraging, given the generally better margin profile that, that is embedded in that work. Do you see this momentum continuing into the back half of this year and into next? If so, what gives you that level of confidence? Thanks.
We certainly do, Fred. As I commented earlier, we have strong, you know, strengthening pipeline and work on hand evolving in the West. We've had tremendous growth in the East. Yeah, there's a number of things that are out there that we're in early stages, some cases further along, you know, into further discussions on. There seems to be...
You know, coming off the large industrial work program that we had up in northwestern BC, the reputation that we've developed from that project and the scale of the work we did there and the performance of that project, given that it's, you know, a mega project being delivered in Canada, basically on budget and ahead of schedule, is, is when you're part of something like that, you get tremendous uptake across the country, 'cause it doesn't take long for, for, other industrial players to find out what was the team there and how did that happen. We're getting, we're getting a tremendous lift off that across the country, which is tremendous, and our teams have worked very hard and been very dedicated.
Yeah, so I'd say that we have a very bright pipeline of things across energy, mining, nuclear, and horizontal infrastructure.
That's, that's great to hear. Thanks. That's all I have.
Thanks.
Once again, if you have a question, please press Star then One. The next question comes from Maxim Sytchev from National Bank Financial. Please go ahead.
Hi, good morning, gentlemen.
Hi, Max.
Hey.
Just a couple of quick ones for me. I think in the Q&A, Teri, you were talking about some cross-selling successes, and I'm just curious if you can maybe talk about some of them. Thanks.
Sure. The big one, Max, is we're, you know, as I've indicated, we're steering our buildings business, our vertical buildings, our institutional commercial business into light industrial. Part of that comes from the resume that we have in our industrial, you know, business, which is, you know, goes back many, many years of delivering large industrial facilities. When you can cross-sell and partner obviously, take advantage of that resume, and you can move your institutional commercial focus into that lighter industrial side and cross-selling in a partnership, you know, it just dovetails into higher margins. Ultimately, the rising tide rises all boats sort of thing. We're doing a lot of that that, you know, all centered around the One Bird, you know, framework.
The teams have responded really well to that. That's a direct, you know, correlation to our improving margins in the business to date. It's, you're starting to see that now in, in the second quarter. Then, you know, if you look at a project like a large data center, we just delivered a large data center for Microsoft and, you know, starting with the site development. The site development was done by, by Dagmar. The mechanical electrical was done by our Tandem Group. The, you know, the, our buildings team in, in, in Ontario did a lot of self-perform work on that, including, you know, self-perform concrete, and, and our buildings team had the overall management of it. As you know, data is nobody's, nobody's got enough data storage.
There's a lot of data opportunities in the country. It's just an example where... That project initially came from the acquisition of Dagmar. They had the relationship doing site development on these things in the underground utilities. Now, with Trinity, we could have done all the communications as well. That platform is, is really paying off, and that's what we refer to as, you know, as, as cross-selling. But we're also cross-selling divisions in different regions, where we might have a certain business focus in a region. We're cross-selling clients, you know, to bring in our industrial team or vice versa, and in some cases, the infrastructure guys. That's what we kind of refer to as cross-selling. It's just being able to leverage, but the collaboration that's going on is really impressive.
Yeah. No, indeed, yes. Thanks, that's super helpful. Maybe just kind of following up on, on the sort of industrial dynamic. I'm, I'm just curious, as you on site right now in some of the very large sort of industrial jobs, if we should be thinking about kind of the ramp-up utilization, and sort of the ability to maybe score additional work on, on the more recent- on these recent projects, kind of, similar to what we've seen kind of like in LNG Canada or kind of the good old days of oil sands. Just, yeah, curious if it's kind of the same copy and paste applies here as well? Thanks.
Yeah, I think so, Max. Like, we're seeing it. When we get on site with an assignment, it's very rare that we don't take on multiple assignments unless there's a, you know, we don't like the look of, you know, commercial interface, and that doesn't happen very often. You know, in that regard, we're, we're seeing continuous growth on the big assignments we've got, and new ones, you know, percolating. When we did, you know, our, our large project up in northwestern BC, we, you know, that was the only one in Canada, so we were able to really build a very large team.
The only one in Canada, in industrial, there's many other large infrastructure projects, but, you know, we were able to build a very large team of the best of the best, and now that group is all over the country on new assignments and getting, you know, early days. Because we work collaboratively, oftentimes, we're, we're working in the dark for a while without, you know, a, a, a firm commitment. But we know that that pipeline is very strong because we're working on early, early contractor involvement, which is, doesn't move the needle very high on the revenue side, but, you know, and it's not really announceable, but we, we're on a lot of those right now. Yeah, that, that, that pipeline is very strong.
Okay, excellent. That's it for me. Thank you so much.
Thanks.
This concludes the question and answer session. I will hand the call back over to Mr. McKibbon for closing remarks.
Okay. Thank you, everyone, for joining our earnings call this morning, and thank you to the entire Bird team for their safe delivery and dedication to excellence. Have a good day.
This concludes today's conference call and webcast. You may disconnect your lines. Thank you for participating, and have a pleasant day.