Bird Construction Inc. (BDT) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen to the Bird Construction Fourth Quarter and Full Year 2022 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-answer session. [Operator Instructions] As a reminder, the webcast is being recorded. [Operator Instructions] Before commencing with the conference call, the company reminds those present that certain statements which are made express management's expectations or estimates of future performance and thereby constitute forward-looking information. Forward-looking information is necessarily based on a number of estimates and assumptions that while considered reasonable by management are inherently subject to significant business, economic and competitive uncertainties and contingencies. Management's formal comments and responses to any questions you might ask may include forward-looking information. Therefore, the company cautions today's participants that such forward-looking information involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the company to be materially different from the company's estimated future results, performance or achievements expressed or implied by the forward-looking information. Forward-looking information does not guarantee future performance. The company expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events, or otherwise. In addition, our presentation today includes references to a number of financial measures which do not have standardized meaning 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.

Thank you, operator. Good morning, everyone and welcome to our fourth quarter and year end 2022 conference call. Joining me on today's call is Wayne Gingrich, Chief Financial Officer. Before we get started, I want to bring attention to International Women's Day and recognize and celebrate the inspiring women within Bird. It's also important to acknowledge the ongoing struggles in the pursuit of gender equity. Bird promotes the importance of diversity and ally ship in the workplace through our women at Bird employee resource group and partnerships with organization such as women building futures. Together, there's still work to do and we're dedicated to enhancing inclusion in creating a more equitable and inclusive industry. We are pleased with the strong finish to 2022, demonstrating the results of the company's strategy to reposition itself over the past several years. Fourth quarter and full-year performance reflect our team's efforts embracing the collaborative approach in driving our diversified risk balanced model forward. During 2022, our performance was supported by larger scopes on self-perform work, greater depth of cross-selling opportunities and a vast majority of revenues generated from lower-risk contract types. The diligent focus of our One Bird team ensured we maintained a strong financial position, ending the year with significant financial flexibility and liquidity to support the company's future growth and disciplined capital allocation approach. Turning to Slide 6, our team delivered a significant organic revenue growth of just under 10% for the fourth quarter with revenues of CAD 657.2 million. We generated an adjusted EBITDA of CAD 30.6 million or 4.7% of revenues, compared to CAD 28.4 million or 4% of revenues in Q4 2021, while adjusted earnings and adjusted earnings per share were CAD 15.5 million and CAD 0.29 respectively, which equates to a 19% increase to adjusted earnings year-over-year. Along with the significant revenue growth, we generated increased cash flows from operations before changes in non-cash working capital in the quarter of CAD 33.5 million, up almost 30% from 2021. On a full-year basis, a record 2022 revenue of CAD 2.4 billion was driven by both acquisitive and organic growth, representing a 7% increase year-over-year. The growth was balanced across the company's work programs with organic growth, accounting for approximately 5% of the increase, which included Dagmar growth in the last 4 months of the year. In 2022, we delivered an adjusted EBITDA of CAD 101.2 million or 4.3% of revenues, compared to CAD 108.1 million recorded in 2021. Adjusted earnings and adjusted earnings per share were CAD 46 million and CAD 0.86 in 2022, compared to CAD 51 million and CAD 0.96 per share in the prior year. One of our key strategic priorities is to achieve a higher overall margin profile. Our business model allows Bird to better manage and share inflationary impacts on cost of construction and this has and will continue to support enhanced margins. Increased self-perform activity, strategic growth in key markets, acquisitions, performance, acquisitions and performance and disciplined cost management also support margin expansion. The solid 2022 performance was achieved despite pandemic related impacts and the challenges in the first half of 2022 with labor disputes, permitting delays and supply-chain challenges. These eased throughout the year and had limited impact in the fourth quarter of 2022. No CEWS recoveries were recorded in the current year to offset pandemic related impacts compared to CAD 21.9 million of CEWS recoveries recorded in 2021. We continue to see high-demand for our services in self-perform scopes, leaving the company to set a record for combined backlog and pending backlog at December 31. The record combined backlog and pending backlog of risk balanced contracts and awards with over 70% in a collaborative delivery contract structure uphold our confidence for the upcoming year. This has a shift does not happen overnight. However, our concerned efforts and discipline over the past few years have positioned the company with a strong foundation that we're leveraging today to achieve continued growth and enhanced profitability. These efforts have solidified the key fundamentals that set Bird apart in our sector outlined on Slide 7. We are confident in our revenue growth expectations for 2023, underpinned by our diverse, active Bird programs operating in a high-demand and high-growth sector. The record combined backlog and pending backlog comprises a diverse mix of collaborative risk balanced contracts and awards. Margin improvements will be driven by our disciplined project selection, which has generated highly collaborative and lower-risk platform today, allowing us to better manage inflationary impacts on our cost of construction. Cross-selling, our integrated solutions, large scope to self-perform work and strategic diversification in key sectors further support margin expansion. Our annual business planning process provided good visibility for our outlook for 2023 and combined with the positive momentum of 2022 let our Board to improve and increase to our monthly dividend of 10%, commencing with the March 2023 dividend payable in April. Bird is delivering a top quartile return profile on settlement metrics as return-on-equity and return on invested capital. These have long-standing importance and are tied to executive performance. In addition to the robust return profile, our strong balance sheet and competitive -- compelling growth outlook, enhancing our shareholder value. We have the financial flexibility, low leverage and low net-debt to invested operations and acquisitions and maintain a balanced approach to capital allocation. The acquisition of Trinity Communications completed subsequent to year end was funded 90% through cash with balance from common shares. It is aligned with our strategy to seek our tuck-in, specialized or high-margin potential offerings, additional self-perform capabilities and sound organic growth potential post-acquisition. Bird's environmental, social and governance program continues to mature in response to business, client and industry demands. Bird's robust self-perform capabilities have re-positioned us to deliver energy transition projects such as renewables, nuclear, waste-heat projects, as well as sustainable new builds and retrofits. Overall, these factors position us to deliver steady growth and expanded margin profile. Business continues to evolve in the right direction, building our revenue and EBITDA trends on Slide 8. We are positioned with the appropriate balance of contracts in-place, diversified across sectors and clients both public and private. Our balanced work between institutional, commercial and industrial remains relatively consistent and in-line to drive more robust growth. The company is well-positioned in the current economic client, with a risk balanced work program where the majority of contracts are considered low to medium risk. At December 31, 2022, the company carried a record combined backlog and pending backlog of risk balance contracts and awards bolstering our confidence in revenue and earnings growth for the upcoming year. Pending backlog was CAD 2,489.9 million compared to CAD 1,624.7 million at December 31, 2021, an increase of CAD 865.2 million or 53.3%. The company's backlog was CAD 2,636.5 million, down slightly from its record level in the first quarter of 2022 due to timing of project conversions from pending backlog. Our backlog and pending backlog provide good visibility into future revenue and growth. The collective demand for Bird's specialized self-perform capabilities in infrastructure, renewables, nuclear environmental, telecommunications as well as our institutional construction capabilities is expected to drive steady growth in 2023. In addition, we have fully offset the revenue and margin contributions from the Company's LNG Canada Phase one work program. Over 70% of contracts in our backlog and pending backlog have a collaborative delivery model and Bird has developed a strong reputation for delivering sophisticated projects in these types of frameworks. As the company is awarded more of these project, our participation in early stages of the project development cycle can result in significant amounts of work of awarded project value being reflected in pending backlog for longer periods of time before transitioning demand. However, once transitioned to backlog, collaborate contracts provide more predictable cost and price structures with less downside risk due to the mutual alignment of desired outcomes. Growth in recurring revenue streams for their supports or overall outlook, providing visibility to future revenues. As we've highlighted in the past, we have even a significant portfolio of master service agreements and other multi-year service contracts valued at over CAD 900 million at December 31st, 2022. Our high-performing maintenance, repair and operation team executes much of this work, however, in 2022, received notice to proceed on our first multi-year task order for environmental remediation of nuclear sites. This expands our recurring revenue stream within the energy sector and positions us for future work on one of Canada's largest remediation projects. Company remains focused on pursuing the right opportunities and projects, projects that reflect an appropriate risk balance and align with Bird's combining capabilities across country. Bird's 2022 to 2024 strategic plan focuses on the further development of Bird's team, strong project execution and performance and the diversification of service offerings across Canada. We are executing well on our strategy and see key focus areas such as growing self-perform, expanding cross-selling opportunities through M&A and internal partnerships and disciplined project selection, contributing to the enhanced fundamentals and our positive outlook. A highlight in 2022 is Bird becoming a founding member of the Canadian Construction Safety Council, which aims to raise safety standards and performance across the industry, with like-minded partners and aligns with our safety-first mindset. In 2022, we continue to elevate our culture of learning, an essential driver of engagement and performance. Bird's learning culture is a growth culture that seeks collaboration on new ideas, methods and opportunities to engage and innovate together. Attracting and retaining top qualified personnel remains an important differentiator. We announced several meaningful contract wins during the year and subsequent to year end, representing a diverse range of sectors and geographies. Subsequent to year end, Bird was awarded a progressive design-build contract for a net 0 processing facility in Ontario, with a total project value of over CAD 200 million. The steady growth expected in 2023 is supported by this healthy backlog and our ability to acquire new work in competitive markets. Slide 11 demonstrates Bird's expanded self-perform capabilities and comprehensive service offerings. Bird can maximize cross-selling potential through this nationwide platform and leverage our integrated, innovative client solutions to pursue and deliver projects across many sectors. Recent strategic M&A has further enhanced our ability to secure and execute projects of increased scale and complexity. Subsequent to year end, Bird acquired Trinity Communication Services Limited, a diversified telecommunications and utility infrastructure contractor based in Ontario, that specializes underground, aerial, commercial inside plant and multi-dwelling unit installations. These self-perform capabilities enable cross-selling, opportunities with Bird's sizable national client base and serve as a growth catalyst for the Company's utilities portfolio. Bird's growing power and sustainable energy portfolio is leveraging Bird's collaborative, innovative and solutions focused approach to help our clients to meet their sustainability goals. The pivot to cleaner energy is largely dependent on enhanced electrification where Bird has well-established capabilities and is positioned to capture opportunities for our business. In addition, we're not new to the future entity and sustainable project environment having self-perform, a significant number of projects in these sectors over the past years. Bird's mechanical, electrical and instrumentation and civil and structural capabilities are delivering sustainable -- sustainability projects ranging from hydroelectric infrastructure and other large utility-scale renewables to work programs on all of Ontario's nuclear sites from waste-heat recovery at Toronto Western hospital to various waste water and organic waste processing facilities across the country. Bird is also executing Net Zero agri food processing facilities. The growing civil infrastructure team catalyzed by Dagmar is developing real projects and supporting the development of public transportation networks. For our buildings teams, the transition to a lower carbon future presents many opportunities to apply and will develop sustainable building solutions including mass timber and modular, deep energy retrofits, Net Zero buildings, innovative special projects and smart building technology. Overall, Bird is competitively positioned in this sector, which is expected to gain more significance in the future. The company's existing culture and robust governance structures combined with dedicated work-over the past few years to build our long-term ESG strategy, ensure internal readiness for forthcoming disclosure requirements, we look-forward to sharing more about our sustainability journey in the upcoming 2022 sustainability overview. With that, I'll turn it over to Wayne to go over our financial results.

Thank you, Teri. Despite the challenges we faced in the first half of the year, we wrapped up 2022 with a strong fourth quarter of revenue growth, profitability and cash-flow generation, making for a solid year overall. For the fourth quarter, we reported a 9.9% increase in construction revenue to CAD 657.2 million, compared to CAD 597.8 million in 2021. Gross profit for the quarter is CAD 58.1 million or 8.8% of revenues. This compares to CAD 51.3 million or 8.6% of revenues in Q4 2021. General and administrative expenses in the quarter were CAD 34.5 million or 5.3% of revenues compared to CAD 37.1 million or 6.2% of revenues in the fourth quarter of 2021. Adjusted EBITDA in Q4 2022 amounted to CAD 30.6 million or 4.7% of revenues compared to CAD 28.4 million or 4.8% of revenues in 2021. Adjusted earnings and adjusted earnings per share for the quarter were CAD 15.5 million or CAD 0.29 respectively, compared to CAD 13 million and CAD 0.24 in Q4 2021. Turning to our full-year results. We reported construction revenues of CAD 2.4 billion for 2022. This represents a 7.1% increase year-over-year compared to CAD 2.2 billion for the full-year 2021. The year-over-year growth was driven by acquisitive and organic growth with strong performance by Dagmar throughout the year. Gross profit for the full year 2022 was CAD 201.8 million, reflecting an 8.5% margin, up from 8.4% in 2021. Our increase in gross profit margin was complemented by decreasing general and administrative expenses as a percentage of revenue, representing 5.6% of revenues as opposed to 5.7% in 2021. Adjusted EBITDA for 2022 was CAD 101.2 million, representing a 4.3% margin. This compares to adjusted EBITDA of CAD 108.1 million or a 4.9% margin for full year 2021. Adjusted earnings for the full year 2022 was CAD 46 million or CAD 0.86 per share compared to CAD 51 million or CAD 0.96 per share in 2021. In the second quarter of 2022, Bird received a onetime CAD 7.6 million gain related to the settlement of historical construction billings and related interest charges with the customer. This was excluded from adjusted earnings due to the onetime nature, however, was a positive outcome for shareholders. As a reminder, 2021 included the impact of CAD 21.9 million of CEWS recoveries that helped offset the impact of pandemic-related project delays and additional costs. No similar recoveries were recorded in 2022, resulting in pandemic-related impacts being absorbed in current year results. CEWS impact will no longer impact year-over-year comparisons on a go-forward basis. Bird remain committed to maintaining a strong balance sheet with significant financial flexibility and liquidity. In December, the company successfully amended its syndicated credit facility, extending the maturity of the facility to December 15, 2025 and increasing amounts available under the committed revolving facility by CAD 35 million to CAD 220 million. The fourth quarter generated significant cash flow as non-cash working capital was released, resulting in a year-end cash balance of CAD 175 million. In addition, we had CAD 172 million of available capacity under our committed syndicated credit facility. At December 31st, 2022, the company had working capital of CAD 184.6 million, an increase of CAD 32.8 million or over 20% year-over-year improvement driven by the company's performance. The company's current ratio at year-end further improved to 1.23x compared to 1.21x at year-end 2021. Bird's balance sheet and available liquidity creates a strong foundation to support continued growth and drive robust return metrics. Our capital management measures are well within our comfort levels at year-end. Bird's capital allocation priorities remain balanced between capital investment in the business, dividends, M&A and debt repayments. For the fourth quarter, we generated cash flow from operations before non-cash working capital of CAD 32.4 million. We reinvested CAD 7.7 million by way of CapEx in the quarter, bringing us to CAD 27.8 million for the year. The increase in capital expenditures was reflective of project requirements and greater availability of equipment to purchase in the current year. We also distributed CAD 20.9 million in dividends to shareholders throughout the year. The strength of the company's balance sheet in access to financing supports, our disciplined approach to investing in Bird's future growth, both organically and through opportunistic tuck-in acquisitions. We are well positioned to pursue accretive tuck-ins in key sectors and remain open to larger opportunities where it makes sense. In December 2022, the company announced a 10% dividend increase, raising the monthly dividend to CAD 3.58 per share, commencing with the March 2023 dividend to be paid in April. The company anticipates significant growth in earnings per share and adjusted EBITDA in 2023, sufficient to achieve an expected dividend payout ratio below 40% of net income for the year. Overall, I'm pleased with our financial strength, ability to capitalize on organic and inorganic opportunities and our respective position within the Canadian construction industry. With that, I'll turn it back to Teri.

Thanks, Wayne. We're pleased to finish 2022 on a high note, closing the year with strong revenue growth, profitability and cash flow generation. We have a diversified and risk-balanced business model with extensive self-perform scopes, cross-selling opportunities and a highly collaborative portfolio of contracts, increasing levels of self-perform work, accretive acquisitions and cross-selling opportunities in the robust bidding environment that allows us to be selective on pursuing new opportunities are drivers of future margin improvement. Additionally, we expect to leverage the current cost structure further to improve margin as the company grows. Bird makes strategic investments in construction technologies leading to optimize productivity, safety and collaboration that enables us the delivery of innovative solutions for clients. As we move through 2023, we expect to maintain our mid to high scale single-digit revenue growth for the year, capitalizing on the company's record combined backlog and growing recurring revenue streams. We expect the seasonality of revenues and earnings to return to more normalized patterns in 2023 with modest revenue growth in the first and second quarter and more robust performance in the third and fourth. We were excited to welcome Trinity Communications to our team in February. Now our focus is on integration and working together on future growth potential through cross-selling and new services to our national client base. Our foundation is set, it is strong and we're well positioned to achieve profitable growth and enhance shareholder value in 2023. With that, I'll turn it back to the operator for questions.

[Operator Instructions] The first question is from Chris Murray from ATB Capital Markets.

Just maybe turning to some of the disclosure around the backlog. And then Teri, I love your perspective on some of these things, book-to-bill in the quarter in Q4 was actually probably a little bit weaker we would have expected given where you're at. But I guess a couple of pieces of this. If I look at the disclosure around recurring revenues, that certainly seems to be growing, but how should we be thinking about backlog in the coming quarters as you take on more of these collaborative design projects. And maybe if you want to maybe address there was a project I think you guys were doing for OPG, there was a mass timber building that perhaps got changed or canceled. If you can maybe address how that would play through backlog, maybe as an example, that would be helpful?

So certainly, we -- with the collaborative nature of the projects that we are currently heavily focused on, there are -- at times, it can be a bit more heavily weighted and pending as the project evolves in that regard. So I think you're seeing a bit of that and it's -- if you look at quarter-to-quarter, at times, there can be some variability from a quarter to a quarter, if we were simply booking fixed lumpsum design-build projects, it would be more definitive, less pending, but the pending side certainly is affected by projects like that. Yes, we're disappointed, obviously, that OPG didn't proceed with their mass timber assignment and we are pleased to win, obviously, against the toughest competition in the country. But sometimes those things happen and things ebb and flow and that's why those types of projects are impending. So...

And I'd just say, Chris, that OPG project is not in any of our year-end reported numbers. It's removed from those figures.

So I guess along those lines, is it fair to think that we'll probably see -- historically pending has always been sort of MSA contracts inside the next 5 years, but it's fair to think that the pending bucket will be more about your interpretation of where you think some of these progressive design build projects will end up over time? Is that maybe the right way to think about it?

Yes, we're finding that as you win some of these collaborative contracts, it just takes longer to finalize the design and get the owner to sign off on everything. So while we've been awarded on it, we've been given limited notices to proceed to maybe start some early work or those types of things, the final scope of the project, it takes a little longer to finalize. And once that's finalized, that's when you contract it and when we bring it in. From a -- you'll see a nice increase in our pending backlog in Q4 and we were awarded some nice projects. But the ironic part about collaborative contracts is now when it comes to doing a press release, there's a lot more aggressive people to collaborate with and it takes longer to get the development, but we did some nice wins.

I think the other part of it is, when you're in an inflationary environment, you're sometimes going back to the drawing board to redesign to offset those inflationary impacts. If we were sitting in a lump sum environment, we'd be wearing that and we'd be working feverishly to try and offset that. So one of the benefits of working in a collaborative environment is the client's got that risk and the downside is that sometimes it takes you longer to fully contract because you're working through alternative materials and alternative designs to get FID. But certainly, a lot of activity, the OPG assignment is pretty rare that we have something that gets to a point of being announced in our pending backlog and then it doesn't proceed, but it was logical when the GM building became available right around the corner. It made a lot of sense that they should consider that as opposed to building something new, but it would have been nice to build a state-of-the-art mass timber building at Darlington.

And so I guess what I'm trying to get at or try to make sure I understand correctly, so even though firm backlog is down, you still feel comfortable about that single-digit type growth number in 2023 because your sources of revenue are going to be coming from areas other than just out of your fixed backlog that you've burned down over the next year is the best way to think about it?

Yes and I think the pace of business right now, the activity level is higher than we've seen. So we're very confident at the current pace that we'll have a very strong year in 2023.

And then maybe just moving on to maybe that recurring bucket and thank you for the disclosure. It is interesting to see how it's growing over time. Can you talk a little bit about the Trinity acquisition, exactly what that brings to you and how that will work across a number of the different areas that you're working in? And how does that dovetail perhaps with what you've got in Canada mid-West?

Yes, so it's a really nice fit for us because it's a high-performing business first of all on a standalone basis without further integration within Bird. Obviously, the business is specialized in communications in today's world, most homes are striving for more data. So there's a high demand to create faster data, more sources of data. And in many things we build today, we're putting -- increasingly putting fiber optic sensors and things like that, whether that's on an industrial site or on a vertical building. So there's a lot of demand for that type of capability and specialized capabilities of splice through and things like that. We have some of those capabilities in Northern Alberta, where we service our energy clients. So it does fit together. And then on the [ Cannib ] side, obviously, we are typically more in our lane on the electrical side if we're doing a project for a client and obviously, having this now in our wheelhouse will increase our capabilities on projects to also offer a communication solution and many of the projects we build today are typically for sophisticated clients that have a lot of sensors, a lot of components inside the facility that are wired in communicating on a 24/7 kind of basis, whether it's an energy facility or a monitor of everything from security to monitoring systems and things like that. So it's a very nice fit. As you know, we're also working in the U.S., predominantly in communications with another facet of our utility business, worked across 11 states over the last couple of years, installing communication and hydro distribution for some of our clients, both in renewable projects and also in communications, transmission in various states. And obviously, the Trinity capabilities dovetail nicely that as well. And there's some overlap opportunity as provided, certainly, solutions for some of our clients on an independent base is now being sort of a total solution within Bird. It's a much broader offering for many of our clients. So we're really pleased, good team, great culture and we continue -- we expect to leverage that similar to what we've done with Dagmar.

The next question is from Yuri Lynk of Canaccord Genuity.

Teri, it's been a key part of the success for the last few years as the collaborative contracts, I mean at this point with inflation where it is, I mean, there's more price risk than ever. I mean if I was a client, I'd be -- I'd want the contractor to continue to wear as much risk as possible. So what's in it for the client to go along with these collaborative contracts? And does the fact that they're becoming more prevalent speak to perhaps a shift in pricing power for lack of a better term towards the contractors?

Yes, for sure. I think that's been shifting. And also think it is a facet of some challenging P3s, we obviously read about in the paper. I think clients have realized that just isn't a good ending is despite the fact that you think you've transferred all of the risk to the contractor, you end up in extensive litigation and there's no happy ending to it. So there has to be a balance. And I think -- but they're definitely with the demand in Canada for our services, we can be very disciplined and just hold our ground in negotiations and we've been very successful in doing that. But you obviously have to be very disciplined and you have to have an approach that you got to be prepared to walk away. We've got pretty good at that. So that the demand for sophisticated services is still very, very high. So clients obviously have been receptive to a collaborative framework because ultimately, in a market like this are going to pay for it one way or another, right? So in that sense, I think it's an appropriate, like any time you could build a mega project that's got scale and you can start work collaboratively with the team and create the design and value engineering the design and work all your way through it and work through a budget transparently and then agree to that framework. It's a really smart way to do business. And I think over the years, some pretty smart entities out there that our clients have looked at it and said, this may be a better way. There's -- it's a much more productive and a much more accurate way to contract. So for many, many years, I always believed this is a better way to contract on really sophisticated work and we tend to do really sophisticated work. So as such, those types of clients are willing to find a balance and they're also willing to accept that when the project is over, you have to be -- the contractors got to be healthy. So, we seek out those types of clients and we've been lucky to build a big portfolio of that type of interface.

I guess it wasn't that long ago, though, that there were other companies out there, international or otherwise that would come in with an attractive fixed price offered to these clients? And are you seeing less of that now? Like -- because we've all read about the number of companies that have left the space and I'm just trying to draw a line towards if that really happened, are they really gone? And is that what's allowing you to take less risk and yet print some of the highest gross margins we've seen in years, like usually, those 2 are inconsistent with one another.

I think there's a bit of that, Yuri. There's certainly less new international entities entering the market, the ones that are still in Canada are very mature and I think generally have an approach not dissimilar to our approach. You still see the odd company come in, that's here for the first time. Ultimately, there's enough of a, I'd say, a track record where some of these entities have failed. And I think clients have got wiser to signing up for an unproven entity enduring Canada, it's not easy to work in Canada when you're coming in for the first time and you're starting to manage through the seasons and manage through the various labor platforms and manage through and also things subcontractors have become a lot smarter to that as well. So most of the guys that come in don't really bring any resources. They've got to rely on the local resources and their local resources are pretty tight. So in that sense, it's pretty hard to get established here in the current environment just because the demand is pretty high. That will swing, that pendulum swing sometimes and it will swing someday, but there's just it feels like a perfect storm of demand across many different industries. And we were -- we've been lucky to very well lucky and smart just to be focused on a diversified platform. So we're taking advantage of those industries such as the various new energy sort of markets that are evolving in such an increased focus on renewables and mining has obviously got a lot of activity. So you start adding those into the mix and you add in ag with potash, evolving and other ag processing facilities. And just generally, a real uptick in Canadian manufacturing, industrial manufacturing is really -- seems to be gaining a lot of momentum. When you look at all those areas and then couple that with the infrastructure projects, which is where you sort of see the internationals coming in, it's a tighter, tighter capacity. So we're enjoying it.

Before I hop in the queue, I just want to ask a quick one on -- make sure I understand the guidance. Modest revenue growth in Q1 and Q2, I get that. Does that hold true for EBITDA, particularly in Q1? And I'm asking because Q1 of last year looks like a bit of a tough comp from a margin perspective. So could we see revenue slightly up, but maybe fall a little short of last year's EBITDA, at least in the first quarter?

I think that's exactly what you're going to see, Yuri and the reason for that is in Q1 last year, we had our work program in LNG Canada in full swing and we're kind of working through some of the winter months and had good contribution of that self-perform work in those margins flowing into the quarter, which certainly helped our overall margin percent. This year, those projects have primarily wrapped up. We still certainly have some things on the go, but not to the same extent. And we have announced that we have replaced the contribution and revenues from the LNG Canada with other things. It's just -- I think you're going to see more seasonality of that where you're going to see that the pickup for the year is going to be busier in the summer months, so that Q1 is going to have a softer contribution from the self-perform, but it's really just going to be a timing issue through the quarterly close this year.

The next question is from Bryan Fast of Raymond James.

Just hoping to get some comments maybe on labor availability and just labor rates. How has this trended off late? And do you feel some of those pressures that you endured over the last few years have somewhat normalized or alleviated?

Yes, I don't -- we don't feel any alleviation right now. The pressure is still there. I think we have -- as we've spoken previously, we have the benefit of such a collaborative focus with our various districts that are close to coast that we can ebb and flow and take some of the peaks and valleys out of some of that -- those demands and we had good success doing that. The collaborative effort we've made at Bird to work harmoniously across all our divisions is really, really paying off and that's worked well. But I'd say that the labor demand, especially in big urban centers like Toronto and Vancouver are very high. And there's definitely a tight labor market there. In Ontario, the labor agreements are essentially locked in now for the next 3 to 5 years, depending on the entity you're contracted with. So there's no pressure on price. It's more a function of availability and other markets have different timing. But we're not so concerned about price in terms of cost of labor. It's more availability of labor, depending on the type of work and where you're operating, but we're in so many centers. We just have a real advantage to draw from communities that might not have that same demand profile.

And maybe just to follow on your comments on the U.S. Could you frame just how much revenue is generated south of the border? And maybe just broader comments on your strategy and positioning for that market?

Yes, to be honest with you, it's been an effort to really break trail or break ground in the U.S., just to get a sense of various states. So we've had about 3 years and we're gaining a lot of experience typically working for clients that we work for already in Canada, some of the specialized services we have. It's not significant for us in the CAD 15 million probably range on a normal year, but growing and -- but most importantly, giving us a really good lens of the attractiveness and the demands in those states and what are some of the challenges with labor and unions and things like that. And we've worked in some of the tougher states in the U.S. and in some of the states that are more reasonable to come in and grow in. So we've got a really good framework evolving and we expect to continue to see growth over the medium term in the U.S.

The next question is from Maxim Sytchev of National Bank Financial.

This is Kazim speaking in for Maxim today. My first question is regarding what future accretive tuck-ins that you mentioned in your MD&A in your outlook section. Is that the strategy that you're going forward or larger deals not out of the question given your net cash position on your balance sheet?

Yes, certainly, we're continuously working on smaller tuck-ins predominantly because there is a number of them out there and it seems like a good environment right now, so we're constantly evaluating the smaller ones. The larger ones don't ebb and flow very often. So it really has to do with finding things that fit for us, but you typically don't see the larger transformational deals very frequently. So I think it's -- the way we characterize it is the small to medium-size tuck-ins are what we're focused on predominantly because that's what's out there. But if something comes along that fits our interests and obviously, as accretive and we've got a comfort level with our balance sheet relative to that, obviously, we'll transact and we have shown that in the past. So in that regard, we're excited about the M&A market much stronger than it was a year ago, seems to be a number of companies looking for succession and a lot of these are fit nicely into our wheelhouse. So...

In terms of seasonality, I know someone asked before as well. Do you -- could you like split it up between like the first half and second half, what do you expect the split to be because we are expecting like softer revenue in the first half and same for EBITDA?

Yes, so for the year, we said mid to high single-digit revenue growth. I think you're going to see more muted growth in certainly in the first quarter and starting to ramp up second quarter and then the average out in that range, you're going to be high single digits and maybe low double digits in the summer months. I think you're going to see a flow of EPS such that you might have 70% in the second half of the year and you're going to see ramp up in Q2 towards that level. So you can read into what Q1 might look like, but it certainly will be less than the CAD 0.12 we delivered last year and it's really just a timing issue for us.

Lastly, how should we like think about CapEx for this year and the next? I know this year, we saw an uptick versus last, was that mostly maintenance? Or are you focusing more on growth this year?

It's end of both in that number, I think the number that you saw in 2022 reflects a more normalized environment and availability of equipment. Through the pandemic, we probably had more cautious approach to CapEx and really focused on maintenance. This year, we returned back to some of the growth CapEx and obviously maintenance as well. We're also doing some work with our IT systems in capitalizing some of the intangible assets there and that's going to continue this year. So I think when you look at 2023, I don't think the CAD 28 million that we spent in 2022, I think it will be similar to that in 2023.

Just the last one, final one for me is, are you guys seeing any accelerated award wins for your electrical infrastructure business on the commercial side? I know there is like a lot of trends going on towards electrifications. Are you seeing that convert in terms of award wins?

We're certainly seeing. Yes, it's probably a bit early days on some of that, although we're certainly in that space. But obviously, there's -- it's a multifaceted environment with generation and transmission and distribution and all of the various facets that tie together. So a very exciting future for us. And as we spoke previously, we employ at times over 2,000 electricians. So we've got a big army ready for that type of work, but it's probably early days. We're busy with our normal course of business currently. So...

The next question is from Jonathan Lamers of Laurentian Bank.

Just following up on the seasonality comments, Wayne. Are you able to speak to the new industrial contracts that are ramping up and just provide us a little bit of color on how you expect those to launch, maybe which months they might start in?

Yes, I mean certainly, if we haven't press released it by now, it means we can't and some of those are in pending backlog and further along in that pre-construction phase and we hope that we'd be coming out with some press releases here in the coming months or so on those. So hard to give exact color on it, but we do have the work in hand. And then we did have a couple of nice press releases in Q4. We talked a little bit about some of the Port Hope Area initiative work and also the one industrial plant as well recently.

The next question is from Naji Baydoun of iA Capital Markets.

I just wanted to ask a sort of a longer-term question. At the pace that you're going, you kind of look to maybe hit that CAD 3 billion a year run rate revenue within maybe a 4 to 5 year timeframe. Can you just help us maybe what could help accelerate that pace? I mean you've upsided the clips, you offset the credit facility, you didn't need to do that, but is that just a more sign of more M&A? Or how could you accelerate growth? And what's in the M&A pipeline today?

Yes, so we certainly expect to get to the CAD 3 billion faster than your timeframe just because of the pace of business and the amount of activity and we've been somewhat stunted with pandemic and COVID-related impacts. So if you strip those away and you move forward, we move forward notionally even in '23. So I think the platform that we're on, the resume that we built coming out of over CAD 1 billion at LNG Canada has given us an outstanding resume to be a partner of choice on a lot of the new energy growth, mining growth, bank growth in Canada and those are longer term in that sense, multi-year assignments, multibillion-dollar projects evolving, whether that's in new assignments in hydrogen or LNG or future phases of LNG programs, whether it's in large mining or potash mining, like opportunities at [ BHP ] and things like that and then just generally in the ag sector. So those are exciting and I think all of that coupled together, we're really pleased with the efforts our team has made to collaborate internally and diversify into new areas. And so all of that combined is giving us lots of momentum.

And I guess, just on the second part of the question, what kind of M&A are you targeting or thinking about to help you get to that number faster?

So I think it's a mix of things in the industrial, mechanical, electrical capabilities that enhance the existing work we're doing. We're certainly really excited about the Stuart Olson business we acquired on the MRO side and there seems to be lot of growth opportunities there, consolidation to a certain extent in some markets that we focus on. So there's opportunities in that regard. We're very excited about our growth in infrastructure and looking for opportunities for further growth in that sector of the company. But obviously, there's such a -- Canada has got such a diverse energy resource base that it certainly gives us lot of opportunity to grow in energy and capacity and capabilities in that regard. And then just in the whole communication data, those areas with telecommunications, which we're growing in now. And obviously, that's a big growth area. We just self-performed a large data center very successfully here in Ontario for Microsoft. So we got things like that are evolving. And in that sense, we continue to look for agencies that can complement the focus we have in these various markets. And so far, the effort we've made has really paid dividends. Dagmar has been a great acquisition training. We expect it will be a great acquisition for us, Stuart Olson piece gave us a whole series of new offerings. So continuing to augment areas that we're diversifying and is really what we're seeking. And certainly, a lot of demand for our services and as such puts a lot of confidence in the continued acquisition growth in those areas.

And just in the investor deck, you highlighted sort of several energy transition, sort of growth avenues. Can you just maybe talk about which ones that you see the most opportunity in today? How is it like when you think about renewables versus nuclear or NG or storage, just thinking about positioning in those markets?

Well, nuclear is certainly exciting. We're working all with largely at other sites in Ontario and there's just such a big market and such a broad demand of things that are required and we've got a really strong resume after shifting our focus away from new capital investment in oil and gas into nuclear and that's really paid off for us. If you look across other energy markets, obviously, there's emerging demand for the capacity to build hydrogen facilities. It continues to be evolution in LNG. So things like that are happening. We would expect to see more growth in existing LNG facilities in the future, which we have a very strong resume. The renewable platform is high. We're building renewable programs today for wind and we've got an extensive platform of business in Ontario and hydro. So those types of opportunities evolving and there's certainly more and more hydro that is expected to be built in Canada that we'll be well positioned for. So, it is the energy side is more dynamic, probably more dynamic than we've seen since the big oil booms and it's all non-oil, which is really interesting. So there's a lot happening and we expect that, that will be a strong demand for us for the next 5 to 10 years.

That also helps kind of think about where you'd be looking to expand into? And just last question, not so much about '23, but just kind of -- when you think about margins, is there a Northstar that you're aiming for? Where do you kind of see the full potential of the business sort of over time?

Well, certainly, we want to continue on a yearly basis to grow and have accretion of our EBITDA margin profile and we're well underway towards that in 2023 and we anticipate that growing in 2024. So that's a focus. It's a little early days to provide any kind of longer-term targets externally, but we're very, very focused on that discipline of ensuring that we're focusing on opportunities that we can gain accretion from.

[Operator Instructions] The next question comes from Ian Gillies of Stifel.

With -- the balance sheet is obviously in good shape. You've talked a lot about bolt-on M&A here, but there's also going to be a pretty decent amount of free cash flow generation this year. Has there been any additional discussion at the Board level that you'd be willing to share with us on the thoughts of round putting in NCIB, given where the stock sits today and the performance of the business?

Not at this point, obviously, on a quarter-over-quarter basis, our Board is -- certainly, it's a topic that is discussed. I'd say that we've tended to focus on a dividend platform. And in that sense, whether NCIB becomes part of the discussion we'll see. But at this point, our focus has been more around the dividend.

With respect to progressive contracts that Metrolinx rolled out a little while ago, you've seen some contract awards there. I assume you've taken a closer look at them. Has it changed your view at all or your desire to pursue some of the larger, I guess, transit-related infrastructure projects in Ontario? Or how are you thinking about that specific part of your business right now?

Yes, we're active in those where we can be complementary and have the service capacity for -- Dagmar has made a huge difference for us and gives us a Toronto-based heavy civil rail contractors. So we've been sought after as a partner because of that. I think our resume on building large maintenance facilities like we've built for Metrolinx out of East Rail a number of years ago, we've got certainly a very strong resume in that area and we're building stations certainly currently successfully in Ottawa for our client there, which is the Phase II team that are building the auto LRT. So that's gone well for us. So I'd say that we have a number of areas where we have capacity and offering to those projects. And as such, we're interested in those and are pursuing those that fit our capacity.

And then last one for me. If you look at small and medium-size businesses today, they're generally characterized as having succession issues. So sale processes are going to become the norm. Is that how you'd characterize some of the smaller and medium-size construction businesses that you see in no well in Canada at this point? I know you can't paint them all the same way, but I'm just curious.

No, I think and it may be just coming out of COVID, there's -- it's accelerated that succession, feels like there's a real uptick in that space. And it could be just that they're coming out of COVID and there's a bit longer line of sight to performance. So it's an easier transaction. We've been focused on companies that, first and foremost see our culture. We don't like to participate in a sale process that relates to an auction periodically do, but we just -- we're not that interested in those. We're interested in targets that want to become part of our team, part of Bird and obviously, unlock the potential of the business with all the skills and service offerings we have. So we're seeing that type of thing in many areas and as such, have a team full time focused in that area. And so we expect to continue to see that over the near term.

This concludes the question-and-answer session. I will hand the call back over to Mr. McKibbon for closing remarks.

Thank you, everyone for taking the time to join our earnings call this morning and thank you to the entire Bird team. We are proud of the work executed every day, working safely, working together and building value for our company, our clients, our communities and our shareholders.

This concludes today's conference call and webcast. You may disconnect your lines. Thank you for participating and have a pleasant day.