Welcome, ladies and gentlemen, to the Bird Construction third 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 while 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 will hear a tone acknowledging your request. When we're ready for questions, you will 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 might 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 from the company's estimated future results, performance or achievements expressed or implied by the forward-looking information.
Forward-looking information does not guarantee future performance. The company expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events, or otherwise. In addition, our presentation today includes references to a number of financial measures, which do not have standardized meanings under IFRS and may not be comparable with similar measures presented by other companies and are therefore considered non-GAAP measures. I would now like to turn the call over to Teri McKibbon, President and CEO of Bird Construction. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining our third quarter 2023 conference call. Presenting with me today is Wayne Gingrich, Bird's Chief Financial Officer. Our results in the third quarter continued to demonstrate the outcomes of the strategic shift in the business over the past few years. The momentum from the first half of the year has continued, and we delivered another quarter with significant revenue and Adjusted EBITDA margin growth. Our teams have worked diligently to safely deliver on our clients' expectations, leading the company to another record quarter of revenue and delivering 17% revenue growth year to date. We have a significant combined backlog and an active bidding environment, supporting a strong finish to 2023 and our positive outlook through 2024.
Turning to our third quarter highlights, we delivered 17% revenue growth, closing the quarter with CAD 784 million in revenue. We continued to see considerable growth in earnings and additional leverage on our cost structure. The company's Adjusted EBITDA grew an impressive 60% year-over-year to CAD 49 million, representing 6.3% of revenue, compared to 4.7% in 2022, where its combined backlog grew by CAD 40 million, up almost 20% year-to-date, closing the quarter with CAD 2.8 billion in backlog and CAD 3.3 billion in pending backlog. Our pending backlog includes almost CAD 1.1 billion of master service agreements and recurring revenue work, which will be performed over the next three-seven years.
The company's diverse and highly collaborative combined backlog, with significant self-performed scopes, provides good visibility into 2024 organic revenue growth and further margin improvements. With a very active bidding environment and robust demand for our comprehensive services, we remain disciplined with our project selection, ensuring strategic alignment between capabilities, project type, and delivery model. Supported by the combination of higher embedded margins in the combined backlog and achieving additional leverage on our cost structure, we expect Adjusted EBITDA and earnings per share growth that will outpace revenue growth in 2024. The company's key fundamentals, outlined on Slide 7, remain at the forefront of our efforts to drive forward our business and further improve the company's results in 2024. Bird is experienced significant growth across virtually all markets with both public and private clients, which is reflected in our revenue and earnings growth and our growing combined backlog.
Our institutional buildings, enhanced infrastructure platform catalyzed by Dagmar, decade-high mining backlog, and our expanding role in the nuclear sector are key strengths. Recent industry announcements, including the approval of BHP's Jansen Potash Project stage two, which indicated a desire to leverage existing contractors, the completion of the pipeline connecting LNG's export terminal, which bodes well for subsequent phases, the CAD 3 billion in funding for Ontario Infrastructure Bank, aimed at creating opportunities in key sectors for Bird, such as long-term care, energy infrastructure, affordable housing, and transportation, and the generational opportunities in the energy transition and infrastructure modernization all contribute to a robust longer-term outlook for Bird and the wider industry. While continuing to drive sustained margin accretion and revenue growth, Bird remains focused on maintaining a healthy balance sheet with a low net debt position.
Our disciplined capital allocation aims to drive business growth while enhancing shareholder value with additional tuck-in acquisitions, smart capital investments, and returning capital to shareholders through dividends. Our dividend is well covered and an important part of Bird's total shareholder return strategy. We're actively pursuing our ESG initiatives, diligently preparing for upcoming reporting requirements. At the end of the third quarter, the company recorded CAD 2.8 billion in backlog and CAD 3.3 billion in pending backlog, representing a 20% increase in combined backlog from year-end 2022. Backlog was bolstered with CAD 2.2 billion in securements year to date. This significant combined backlog provides visibility to organic revenue in the coming year and to further margin improvements, driven by the higher embedded margins.
Bird is well established as a collaborative contractor, and the combined backlog includes over 75% of contracts being executed through collaborative delivery models. Within these types of contracts, Bird works collaboratively with the client and other partners to ensure the cost estimates, schedule forecasts, project planning, and design are sufficiently advanced before the construction phases. These collaborative models, which include IPD, Alliance, Progressive Design-Build, Construction Management , and MSAs, improve project delivery and outcomes for all parties, especially on complex builds. We've recently completed or are nearing completion on a number of projects in the water and wastewater sector that have demonstrated the value of collaborative delivery. Notably, one of the projects was the first project of its kind to be performed using the IPD model in Canada.
In the third quarter, Bird added additional recurring revenue through our environmental remediation portfolio for Canadian Nuclear Laboratories at Port Hope, as well as through a new MSA agreement for civil works on sites in Alberta's Heartland region for an important client. At quarter end, Bird's recurring revenue, MSAs, and pending backlog was almost CAD 1.1 billion, providing additional visibility to future revenues at accretive EBITDA margins. Bird had significant project awards across a range of end markets in the quarter and subsequent to quarter end. Last week, we announced a particularly exciting contract valued at over CAD 150 million for an early works at a new LNG export facility in Western Canada. This project further shapes our outlook with the potential to add to our scope as we mobilize on site.
Bird's contract for this large, multi-year project site demonstrates a reputation for strong safety and quality programs, our collaborative approach, and the exemplary delivery of our full project lifecycle services. These are also key factors for adding additional work packages in the future. We are committed to building our relationships with the client and other stakeholders, positioning our team as a long-term partner on this major industrial site. Additionally, we announced post-secondary project awards in BC, Alberta, and on the East Coast, all leveraging Bird's experience building sustainable and smart environments and emphasizing Bird's lower carbon building solutions, such as mass timber. Clients are increasingly seeking ways to build better, to achieve more sustainable buildings, and retrofit existing properties to reduce their carbon footprint, all of which Bird is well positioned to deliver.
Bird was also awarded considerable work in the mining sector, including work at Blackwater Gold, ArcelorMittal, and BHP's Jansen project, contributing to a decade high of mining backlog. Overall, we continued to execute our strategy in key focus areas, including fostering increased self-perform work, expanding cross-selling opportunities through business units, and leveraging strategic, internal and external partnerships, and collaborative contracting methods. Our teams are also kicking off our 2025-2027 strategic planning over the coming months, catalyzed by our solid foundation, our engaged, collaborative team, and our inclusive workplace. We are committed to adapting and growing to chart the best path forward in the evolving world. We've shared in the past, highlights around Bird's positioning and current portfolio of projects supporting the energy transition. There's a tremendous outlook for investment in electrification, public transportation, energy efficient projects, and building retrofits.
Bird's capabilities, particularly in our self-perform expertise, is strategically positioned to deliver the necessary skills required for the significant investment in infrastructure. Our expanding portfolio encompasses wind energy, hydroelectric, waste to heat, and nuclear projects, among others. The nuclear sector plays a critical role in the transition, and we have spotlighted the sector in the presentation today. Over the past five years, Bird has built up a significant portfolio of projects in the sector, and today our teams are currently working with all of Ontario's active nuclear operators. Our current projects can be thought of in three areas: site buildings and infrastructure, plant process and auxiliary systems, and decommissioning and demolition. Additionally, our teams are pursuing long-term growth and future opportunities in waste storage and decontamination facilities, SMR infrastructure, new large nuclear plants, and other site facilities and infrastructure.
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, our first half momentum continued into the third quarter as the company delivered another quarter of double-digit revenue growth and margin accretion. Revenue for the quarter of CAD 783.8 million represented a 17.3% increase compared to the same period in 2022. The company's margin profile improved in the quarter compared to the prior year, with gross profit percentage increasing to 9.3% and Adjusted EBITDA margin increasing to 6.3% from 8.8% and 4.7%, respectively. The increase in gross profit was primarily driven by project mix, with the improving margin profiles on newer work and a higher proportion of industrial construction.
General and administrative expenses were CAD 34.5 million, or 4.4% of revenue, compared to CAD 35.5 million or 5.3% of revenue in 2022, rather. The primary driver of the CAD 1 million decrease was CAD 1.1 million lower acquisition and integration costs in the current year, with all other costs being comparable. The third quarter had significant earnings growth as the company continued to show tangible benefits from executing our strategy. Net income and earnings per share were CAD 28.8 million and CAD 0.54 per share, compared to CAD 14.5 million and CAD 0.27 per share in 2022. Adjusted earnings and Adjusted earnings per share were CAD 29 million and CAD 0.54 per share, respectively, compared to CAD 15.5 million and CAD 0.29 per share in 2022.
This reflected the higher gross profit and increased income from equity accounted investments in the quarter. For the nine months ended September 30th, the company saw similar trends with significant year-over-year growth. We reported revenues of just over CAD 2 billion, reflecting a 16.6% increase from the CAD 1.7 billion recorded in the same period of 2022. Gross profit increased 16.5% to CAD 167.3 million, representing 8.3% of revenue. This reflects the company's highly collaborative work program, growing backlog with enhanced margin profiles, and expanding self-performed capabilities. Adjusted EBITDA increased 34.5% to CAD 94.9 million, or 4.7% of revenue, from CAD 70.5 million, or 4.2% in the prior year.
General and administrative expenses were CAD 102.3 million, or 5.1% of revenue, compared to CAD 97.9 million, or 55.7% of revenue in 2022. Net income and earnings per share were CAD 47.7 million and CAD 0.89 per share for the first nine months of 2023, compared to CAD 34.9 million and CAD 0.65 per share in 2022. Noting 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 year to date increased significantly to CAD 49.9 million and CAD 0.93 per share, compared to CAD 30.5 million and CAD 0.57 per share in 2022, where the one-time gain of CAD 7.6 million was excluded from Adjusted earnings in the prior year. Turning to our financial position, Bird continues to maintain its healthy balance sheet with significant financial flexibility and liquidity. We closed the third quarter with CAD 104.1 million of cash and cash equivalents, and an additional CAD 157 million available under the company's syndicated credit facility. Bird recorded positive operating cash flows while funding the working capital required to support the significant growth of the work program. We remain well positioned to 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 quarter, working capital stood at CAD 196.9 million, an increase of CAD 12.3 million over December 2022, ensuring support for current and future contractual requirements. Our liquidity and leverage ratios remain aligned with expectations. The company's current ratio was 1.22 times. Our adjusted net debt to trailing twelve-month Adjusted EBITDA ratio stood at 0.24 times, and our long-term debt to equity ratio was 21.1%, all demonstrating our commitment to maintaining a healthy and sustainable capital structure. In line with our commitment to capital allocation, we continue to uphold a balanced approach. We generated positive cash flows from operating activities while growing the business 17% and investing CAD 52 million in non-cash working capital in the third quarter.
Our dividend remains well covered by our earnings and cash flows, and our dividend remains an important component of our total shareholder return. I will now turn the call back over to Teri to comment on the outlook for the company.
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. Our strong year-to-date revenue growth and margin accretion and the positive momentum that continues to build, has positioned Bird for a strong finish to 2023 and a foundation for even stronger performance in 2024. With that, I'll now turn the call back to the operator for questions.
Thank you. We will now begin the question and answer session. Analysts who wish to ask a question may press star, then one on their telephone keypad to join the question queue. You will hear a tone acknowledging your request. If you are using a speakerphone, please ensure you lift the handset before pressing any keys. If you wish to remove yourself from the question queue, you may press star, then two. Anyone who has a question may press star, then one at this time. The first question comes from Chris Murray with ATB Capital Markets. Please go ahead.
Yeah, Good morning, folks. You know, just looking at the very strong revenue growth in the quarter, I think that came as a bit of a surprise to many of us. So a couple pieces of this. You know, first of all, your SG&A costs didn't move very much based on that level of work. So I just wondered if there's any thoughts around, you know, if you're currently now kind of stable in your SG&A costs and what we're seeing now is what we should be looking forward. And then, I guess the second part of this question, you know, you talked about call it, you know, high single digit, low teens growth rates into 2024.
But, you know, if we rebase 2023 off the Q3 results, you know, you've got a much higher starting point. So just any thoughts around, you know, 2024 versus 2023, with the higher jump-off point and SG&A costs would be great.
Yeah, I think, Chris, we like, we've worked really hard to position ourselves with a really talented leadership team, you know, to build that foundation, to have the strength with the opportunities that we're focused on, and we've had really good success with that, with really strong engagement. So I think from that lens, I think our team certainly has you know, the foundation and the framework to grow top-line revenue without, you know, without equivalent growth on the SG&A side. But, you know, as you know, many other factors flow into that with growth.
So, you know, in my mind, we're gonna see some leverage on SG&A in 2024, given that the team that we've assembled certainly has a lot of bandwidth to handle the growth that we're expecting.
Yeah, I can take the second part. So, in terms of the revenue outlook for 2024, you know, if you look at the baseline year for 2023, you know, we've talked about low double-digit revenue growth in the prior quarter. So if you take year-to-date revenues, and we kind of said for Q4, we like where the consensus estimates are. So if you take that into account, you're looking at 13%-14% year-over-year growth in 2023. So looking forward to 2024, you know, we still expect to see growth, you know, in next year.
I think high single digits is probably a better target at this point in time until a few things play out for us early in the next year. But we're pretty confident on being able to see strong organic growth next year as well.
Okay. And then kind of putting that together, you did mention that you think you'll see, as you said, operating leverage on earnings going forward, I guess, in your outlook. I guess the other question I have, and Teri and Wayne, I don't know who wants to take this one, but you know, for the last few quarters, things have been going right. And so, you know, the worry we always have with construction companies is, you know, the stuff that's gonna go wrong, and certainly that shows up in the multiple. You know, when we think about, you know, what's in the backlog, your customer mix, and even the conversion of pending backlog to backlog, you know, how are you feeling about the risk profile today for Bird versus where it's been historically?
You know, your comfort level on, you know, the unforeseen, if you will, as we go into the next couple of years.
Yeah, I think it's a really good question, Chris. I think we approach it as first of all, with a high degree of discipline in terms of, you know, our valuation of projects that we pursue. You know, and that starts with the appropriate maturity of a client, you know, relative to the complexity of the project they're trying to deliver, you know, sort of a first gate. And then, you know, as we referenced in our script, we you know, 75% of our backlog right now is in a collaborative framework, so that does significantly de-risk the, you know, the programs. And so in that regard, I think the organization is in a really good place. The backlog and pending backlog continues to evolve.
We're pretty confident in the pending backlog converting to backlog, and we also track opportunities that are not quite pending yet, and there's a significant pipeline sitting there as well. And most importantly, we're continuing to see accretion, you know, of margins in, you know, in that flow of business. So it's pretty exciting for us, you know, the team we have, the opportunities that we're seeing. We work really hard on diversification, and that's really paying dividends for the performance of the business.
Okay, I'll leave it there. Thanks, folks.
Thanks, Chris.
Thanks, Chris.
The next question comes from Ian Gillies with Stifel. Please go ahead.
Morning, everyone.
Morning.
Morning.
With respect to EBITDA margins and expansion moving forward, I mean, you really have three tailwinds working in your favor. You have backlog, operational leverage, and more self-perform work. Can you maybe force rank which of those components you think has the biggest impact on how margin expands over the next, call it, 12-24 months?
Yeah, I think, you know, certainly the mix of self-perform work in some of the new sectors that we're growing in, you know, particularly in infrastructure, I think that certainly helps. You know, the fact that we're on a couple large industrial projects right now, and we had the press release about the LNG facility. I think that bodes well for our margin profile.
You know, I think there's a general strong dynamics, too, like in the mining sector, that, you know, certainly when we have equipment generated or projects with heavy equipment, you know, components, that bodes well on margins. And then, yeah, to boot with the higher revenue we're seeing through, you know, we are getting leverage on our cost structure. So we're really benefiting from all three, but I think the industrial, the infrastructure, and the industry tailwinds are probably helping the most.
I'll just add another piece to that. Ian, our you know, we've shifted our building business to do more collaborative projects in the light industrial setting and, you know, a lot of activity in that regard. So that's also really helping our building businesses. You know, it's changed quite dramatically over the last few years to shift to higher margin opportunities, you know, and leveraging off, in some cases, the expertise that we have available on the industrial side to meet, you know, more complex, you know, sort of interfaces with I would call them industrial light clients, but in a collaborative framework. So that's also certainly has some tailwind.
Maybe following on as we think about margins as we head into 2024, is there any reason to think you couldn't get a similar amount of margin expansion in 2024 relative to 2023, or based on what we think 2023 may be, I guess I should say?
Yeah, I think that's, you know, that's ultimately where we're, how we're thinking about 2024 at this point. And, you know, we're just looking for that steady accretion quarter-over-quarter, year-over-year, you know, in the business, and that's how we look at the new opportunities. And as we look at, you know, the framework of new business flowing into pending, you know, that business has, certainly has margin profiles that would allow us to achieve that goal.
That, that's helpful. And maybe last one for me, because the tuck-in strategy seems to be working well. Are you able to quantify or talk a little bit about maybe what you've done with Dagmar with respect to growing the backlog or growing the top line in that business since you've bought it, just given Bird's got a bigger balance sheet, et cetera? Because I, I think that'll help illustrate, why that strategy is so important.
Yeah, I think, you know, it-- that's been a, a huge success for us, you know, both in Dagmar's current, book of business, but also, you know, as a catalyst to allow us to, engage on, on some of the larger infrastructure programs that are evolving in a collaborative framework. There's been quite a dramatic shift in the environment that, that we work in, you know, especially in, in brownfield transportation, where it, you know, it's moving quite dramatically to more of a collaborative contracting framework, which we have a, you know, a tremendous resume for.
And with the catalysts being, you know, Dagmar and Dagmar's extensive experience, you know, in that space, it allows us to participate in, you know, partnerships to pursue some of that work, and we're very active pursuing those opportunities where they're in an appropriate, you know, framework with an appropriate client within Canada. So, yeah, the key for us as we move forward as a business is finding an appropriate tuck-in that we can use as a catalyst to, you know, add Bird's, you know, capabilities on larger projects and move us in new areas where traditionally we wouldn't have had the resume to be able to participate in that area.
Great. Thanks very much. I'll turn the call back over.
Thank you.
The next question comes from Jonathan Lamers with Laurentian Bank Securities. Please go ahead.
Morning.
Morning.
Morning.
I noticed that over the last two quarters, the amount of securements that you're reporting, your quarterly results have been much greater than total awards that you've been press releasing. I know part of that's related to the collaborative contracting methodology. Could you just explain for us, you know, how it is that that makes it more difficult to press release the new awards? You're still confident in the backlog and the securements going into the backlog? Thank you.
Yeah, I can certainly take that. So, in terms of what we press release, generally, we only press release, you know, projects that are larger in size. So they maybe on an individual basis, they could be CAD 100 million, CAD 150 million, or, you know, if we think they're kind of strategically important to highlight, we might bundle them with a few other projects. But the company also wins a lot of other projects that just don't meet that type of dollar threshold that we don't disclose, and I think that probably makes up a lot of the difference.
You know, I think one trend that has happened with the business when you think about the shift to collaborative contracting, you know, has been as we get an award and, you know, for example, say it's an IPD project, for example, we get the award, you know, we've submitted designs, we've submitted indicative pricing, these types of things. But now we have to go through the validation phase, where you're inviting other related parties, the client, your subcontractors, architects, engineers. Other people are getting involved in the discussions about what's gonna be the best way to build this project, the best way to construct it, the best way to design it, what are really the client's needs.
That can take, you know, sometimes 12 months, sometimes, you know, longer. We've certainly seen that as well. So you, you're getting these awards, but they stay in our pending backlog until the client signs off on the final design and the final price. And sometimes, you know, you know, the client may have, you know, things that they want added in the project, and then when they see the final price, then we go back to value engineering because maybe that project has grown higher than they'd like. So you kinda value engineer it, and, and then you agree on the price. But it takes longer to move into backlog, but anything that we're putting into our pending backlog, we're highly confident that that is going to convert.
It's just going to take the time to follow the process.
So I think that's why you're, you're seeing this, this growth in, in the pending backlog. And, you know, backlog over the last few quarters has, you know, plus or minus CAD 100 or 200 million, you know, kind of, kind of been fairly steady, but you're seeing the growth in the pending backlog. So that gives us a nice kinda pipeline or, or funnel of projects that will convert to backlog here in the future.
Right. And I know you touched on this earlier, but just to be clear, when you look at the backlog, what is it about it that gives you confidence in margins improving into next year? Is it the higher mix of self-perform work? Is it a higher mix of, you know, industrial-type work and infrastructure work with just, you know, more favorable operating margins? Could you just.
I think it's a mix, Jonathan, and in the entry level, right? So in the entry level, you know, the service offering we have today, we can expect a higher level of return on it. And you know, in that regard, that's you know, the market's very strong for the complexity of the services we have. The other big piece that also enhances the overall performance and enhances our confidence is, you know, we're working collaboratively within our business units. So oftentimes on a project, you'll have multiple divisions, all with embedded margins, you know, in their delivery. So it you know, that gives us a high degree of confidence.
Like I said earlier, in our, you know, our building business is certainly, you know, involved in a number of the projects we have underway, so that's helping, you know, enhance their performance. So the collaboration is really paying dividends. The sort of rising tide rises all boats kind of framework, so.
I'd like to just touch on the LNG site early works award that was recently won. Can you share with anything, anything about anything with us in terms of how large the total project might be? You know, whether getting in on the early works would typically position Bird to win more work. You know, how are you thinking about the the life cycle of that project?
Well, certainly, you know, I think the project's budget is something like CAD 7 billion. So, this is early works getting underway. You know, any of these large projects of this kind of scale obviously involve very high standards in quality and execution and safety. And we've just developed a reputation for being certainly a go-to for this type of thing, no different than the activity we have at BHP Jansen site. So it's exciting, really exciting for the company to have multiple mega projects that we're very active in, you know, 'cause over the past few years, other than LNG Canada and Kitimat, that's kind of been the main mega project in the country that we would be interested in.
So now you've got multiple sites, multiple projects, and this one, like I said, being probably more so than others, because of the site's uniqueness, it certainly is a huge opportunity for us to grow into a major, you know, program on this project. And again, it's early days getting underway with early works. But very exciting, and we're really pleased to be working on this project.
Thanks for your comments.
Thanks, Jonathan.
Thank you.
The next question comes from Maxim Sytchev with National Bank Financial. Please go ahead.
Hi, good morning, gentlemen.
Hi, Maxim.
A couple of quick questions, as most have been already asked. Terry, I was wondering if you have any preliminary thoughts around the infrastructure bank that is being contemplated for Ontario, and maybe when we could potentially see some projects being funded via that vehicle? Thanks.
Yeah. I'm honestly really excited about the infrastructure bank because it gives us an interface between, you know, the larger pension funds in Canada and Ontario, you know, into infrastructure investments. And as you know, over the years, you know, the prior vehicle was really P3s, and oftentimes the equity check wasn't significant enough for them really to get involved. So it's really exciting for me and for Ontario, for our company to have this facility. It kind of reminds me of, to a certain extent, what happened in Quebec with the Caisse. So I think this is great.
I think it's a very smart strategic move for Ontario and allows, you know, in many of these projects that are evolving, they're collaborative now, so it's, you know, more complex to add the financing into a collaborative interface, because more difficult for lenders to, you know, obviously engage in that type of thing. So with an infrastructure bank as the interface, it just takes it solves that, you know, that framework. So I think it's, I think it's a really smart step for the government. I think it's gonna be a real catalyst for more activity. And in many cases, I'm sure you'll see the Canadian Infrastructure Bank and the Ontario Infrastructure Bank funding, you know, new projects.
And, you know, their focus areas and areas that we're very focused on as well, and we have a tremendous resume in. So I think it's a great step, and it kind of solves somewhat some of the funding and creates a more efficient flow of, you know, larger pension funds into Ontario infrastructure, where their pensioners are based. So I think it's great.
Yeah, yeah, for sure. And I guess again, like, no concerns from your perspective around the contract structure, it's still kind of, like, in the wheelhouse in terms of the risk/reward profile from, from your perspective?
Yeah, it's really highly collaborative now. Like, most of the projects that, like, there's the odd one, and it's a P3, but it's pretty rare that you see the P3s now. It's all especially brownfield, messy, you know, sort of, projects that, you know, you, you, you just can't control all the stakeholders and all the risk, you know, in a complete risk transfer. And, we'll still do a P3 if it's, you know, the appropriate agency in a greenfield environment, and we've had great success in, you know, multiple projects and school bundles and OPP bundles here in Ontario. And so we'll still look at one once in a while, but, you see less and less of that vehicle because a lot of this investment is happening in very dense urban areas, and it's the risks are.
The risk transfer is just too high, and there is an interest from the contracting community to pursue those projects, so they have no choice but flip them to something that's, you know, that's a better balance between the client and the contractor.
Yeah. Yeah, yeah. No, that's, that's great to hear. And then maybe just one question for Wayne. In terms of kind of the working capital, fluctuations, should we expect sort of a typical free up for the upcoming Q4? Any changes from the pacing there, Wayne?
I think you'll see Q4 follow similar trends in recent years. We usually have a pretty large unwind of non-cash working capital into cash, and we expect that again. I think the revenue that we had in Q3 at CAD 784 million, you know, certainly higher than what the Q4 estimate is, you know, kind of looking at consensus estimates. So yeah, we'll see that flow, probably historically similar.
Okay. That's it for me. That's, that's a great call. Thank you very much.
Thanks, man.
The next question comes from Frederic Bastien with Raymond James. Please go ahead.
Good morning, guys.
Good morning.
Hi, Fred.
We often see, you know, the ability to price in some better terms in your contracts is often a reflection of, you know, basically Economics 101. There's limited supply, big demand for your services, so it allows you to, you know, to tack in some better margins. What would you highlight as the biggest differentiator this year or the last several years in your ability to do that? Is it really a lack of competition, or is the demand that much more significant?
I think I would best articulate it as it's the complexity of the projects, and there's a limited number of companies that can deliver projects with that kind of complexity, you know, and that type of, you know, safety performance and, you know, quality and delivery performance. I think it has a lot to do with that. We obviously, over, you know, many years, have developed that expertise coming out of oil and gas and oil sands, you know, with large, complex owners from around the world. So we have a deep bench of talent that can then move into, you know, emerging opportunities across Canada, such as nuclear.
The teams work very hard, you know, to transition to nuclear, and it's really impressive to see the growth in that space in three, four years time since we started to focus on it coming off of the backlog we had in oil and gas, and then coupled with the growth of the business at LNG Canada and Kitimat. You know, rarely in the world do you see a mega project be developed, you know, CAD 18 billion on schedule and on budget. It's pretty rare. So when you're part of something like that, you have a resume that others are looking for because there's obviously a major team aspect to delivering a project with that success.
And with that, you know, obviously our phone has been ringing for more and more of that type of thing. So I think, you know, when you boil it all down, you know, you obviously need a return that justifies that capability, and if you've got the resume. So I think it has more to do with our resume than it really has to do with the market.
Super. That's helpful. And as you look at the work you've been winning, it seems like there's a fairly high percentage that is industrial-related work. Would you say that most of the opportunities you're looking at right now are indeed industrial focused?
I'd say that. Yeah, I would say a higher percentage is more of industrial, whether it's heavy industrial, whether it's light industrial. You know, there are a lot of activity, obviously, with the evolution of electrification and all the downstream impacts of that. A very exciting, you know, mining sector right now, which is obviously industrial oriented. And we've got, you know, a big focus on the infrastructure side with the opportunities that are evolving. So yeah, I'd say, you know, a high percentage is there, but there are many facets to that, you know, in terms of many different, you know, markets and end markets and geographical markets that touch that. But that's clearly where our strength is, and it's clearly where the margin profile, you know, suits the demand type thing.
Yeah, it's a good way to kind of look at it, is just saying projects with industrial orientation.
Great. Just one last one for me. Investors are, say, you know, quite worried about the higher interest rates we're facing, and it's really, you know, historically, it's really impacted construction activity. So, obviously, you're less exposed to some of the most sensitive areas of the economy, but just wanted to get your thoughts there. Have you seen any slowdown with any particular projects or any particular sectors?
Yeah, I think, you know, with so much momentum around the energy transition, you know, sector, I think, and you look across the types of projects that we're, you know, on, for example, you know, potash in Saskatchewan, you know, those are long-term investments. You know, nuclear is a long-term investment. So they really cut through any, you know, short-term or medium-term economic, you know, pressure because these things, you know, they, they take, you know, many years to get to FID. And then once they're at FID, they're moving and they, you know. And, and the types of companies that we, we obviously target are, are obviously the large blue chip organizations. So they're thinking longer term, put a lot of time and effort into it. So in that regard, there's more stability.
You know, I'd say that there's only a small percentage of the revenue that we do, probably less than 5%, that today has sensitivity to pressure on interest rates, you know, so and those would be projects that would touch the public, whether that's an apartment building or a commercial, you know, commercial projects where, you know, interest rates have an impact on. So it's a very small percentage of our current business, and it's also historically a percentage of our business that has lower margins. So, at the end of the day, you know, doing less of that is really our strategy to improve our margin profile and improve the accretion.
Thank you. Good luck keeping the momentum.
Thanks, Ric.
Thank you.
Once again, if you have a question, please press star, then one. The next question comes from Michael Tupholme with TD Securities. Please go ahead.
Thanks. Good morning. First question is just around the fourth quarter. I think, Wayne, earlier you mentioned that you're comfortable with consensus. I think that was a comment on revenue, so perhaps you can just clarify that. But I guess the question is, on the margin side of things, historically, we've seen sort of a lot of similarities between the margin performance in the third and fourth quarters. It sounds like there was a little bit of acceleration of some revenues in the third quarter that maybe helped things a bit in the third quarter. And then, just in your commentary, you're talking about kind of a more sort of normal performance, if you will, in the fourth quarter. So I'm just trying to get a sense for the fourth quarter margins.
I mean, can we see some kind of a performance that's similar to what we saw in the third quarter? Or should we be thinking more about a bit of a step back, sequentially?
Yeah. So I guess a couple things. So with the fourth quarter, you know, we're pretty comfortable with all of the consensus estimates that are out there, so revenue, you know, EBITDA, EPS and those things. I think in the margin in the fourth quarter, I don't know that we'll sustain the 6.3% that we had in Q3. I think, you know, through December, you'll probably start to see some of the equipment-related projects start to tail off a little bit and those types of things. So I think it's still gonna be really strong, but I don't think it's gonna be at 6.3% for the quarter.
Okay. That's helpful. Thank you. And then, I mean, it's clear from your commentary that you do see an opportunity for margin improvement in 2024 versus 2023 on a full year basis. I guess this is a little bit specific, but just looking specifically again, at the third quarter of this year and thinking about modeling next year, I mean, is there room to continue to improve even off of, you know, even off the third quarter level you did this year when we look at next year's third quarter? Or is this sort of a high-water mark that you did in the third quarter, given some of the factors at play, and we're really looking more at a full year improvement, not necessarily kind of every quarter of the year?
I think there is actually, like, thinking about 2024 by quarter, I think there is opportunity to improve or even a margin in every quarter, you know, next year. I mean, some quarters might have a larger improvement than others, but I think, you know, Q3 2024 could see, you know, higher than 6.3%, you know, EBITDA. But it might not be as large of an increase as what you might see in Q1 or Q2, you know, for example. But for the total year, I think you'll see a pretty significant improvement in EBITDA margins, year-over-year.
Yeah, and looking ahead, I mean, the company's been very focused on trying to improve our margin, you know, profile with the mix of work. You know, we have the sectors, the diversification, the companies that we're looking to do tuck-in acquisitions with are all margin accretive. So we think there's a good runway ahead of us to continue to improve margins going forward.
Okay, perfect. Thank you. And then, maybe just. You just mentioned there tuck-in acquisitions. Can you just comment on, I guess, sort of the pipeline, but also, I mean, is 2024 a year when we could see, potentially additional acquisition activity? Or are you still in the process of integrating and digesting what you've done in the last several years?
I think we have a team today, Michael, that's very experienced and have 20+ years of focus on the M&A side. I think we'll, you know, we're highly confident we'll be transacting, you know, over the next few quarters on opportunities that make sense. We've constantly have a pipeline that, you know, obviously, we're not setting any kind of targets on a year-over-year or year. But a lot of activity in that sector right now, obviously, with our momentum and the, you know, what outside companies are seeing that we do when we integrate an acquisition, which is, you know, is very evident the success we've had. So yeah, I think it's a nice fit for, you know, for us right now.
And, you know, our phone certainly has been ringing with opportunities, and we evaluate those carefully and have, you know, regular discussions with our board about what we're doing. But, it's a certainly a robust pipeline, which would give you a high degree of confidence that you'll continue to see our business grow on the M&A side, coupled with all the organic growth we've got.
All right. That's all very helpful. Thank you.
Thank you.
This concludes the question and answer session. I will hand the call back over to Mr. McKibbon for any closing remarks. Please go ahead.
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. With Remembrance Day approaching, I hope you have an opportunity to observe this important day and to take a moment to remember the brave individuals who have served and continue to serve our country. Thank you.
This concludes today's conference call and webcast. You may disconnect your lines. Thank you for participating, and have a pleasant day.