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

Welcome, ladies and gentlemen, to the Bird Construction 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. [Operator Instructions] And 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 its intention or obligation to update or revise any forward-looking information which as a result of new information, events or otherwise. In addition, our presentation today includes references to a number of financial measures, which do not have standardized meanings under IFRS, and may not be comparable with similar measures presented by other companies and are therefore considered non-GAAP measures. I would like to turn the conference over to Mr. Teri McKibbon, President and CEO of Bird Construction.

Thank you, operator. Good morning, everyone, and thank you for joining us. With me today is Wayne Gingrich, Bird's Chief Financial Officer. Today's call is focused on the transaction we announced at the close of market yesterday. The news release and presentation slides for today are posted on our website. Over the past year, Bird has continued to achieve significant milestones marked by margin expansion, robust revenue growth and further diversification through organic growth and M&A. Yesterday, we were very pleased to announce that we had entered into a definitive share purchase agreement under which Bird will acquire Jacob Brothers Construction for an estimated aggregate consideration of $135 million. This acquisition is a significant step forward in expanding our infrastructure business and provides immediate access to the BC infrastructure market, which is the largest in Western Canada. Over the next few slides, we'll walk through the market outlook, the profile of the acquired business, the benefits and structure of the transaction, the expected financial impact and how this transaction will deliver value for all stakeholders. The demand for infrastructure and construction projects across Canada is significant, and BC is no different. It is the largest infrastructure market in Western Canada and a key market for Bird. The provincial and municipal governments in BC have committed substantial funds to various infrastructure projects, creating a robust pipeline of opportunities over the medium to long term. And our strategic acquisition of Jacob Brothers further positions us to capitalize on these opportunities. BC's 2024 budget allocates over $43 billion for capital spending in the next 3 years with a focus on transportation, health, education and housing. Additionally, the city of Vancouver and Metro Vancouver Regional District, our invested billings in housing, public facilities and utility improvements, including water mains, reservoir and wastewater management. There are significant modernization and expansion efforts underway across the transportation and power sectors, the Vancouver International Airport has a $9 billion expansion underway until 2037, while the Port of Vancouver's $3 billion expansion will enhance its capacity and efficiency over the coming 6 years. BC Hydro is investing $1 billion in upgrades to the electrical grid in 2024, while the 10-year plan indicates over $36 billion in investments. There's also a focus on BC produced critical minerals. The BC Mining Association reports that 16 proposed critical mineral mines represent a near-term investment of $36 billion. The combined strength of our existing operations and the civil infrastructure and special project capabilities of Jacob Brothers will enable us to pursue projects of varying size, complexity and scope. The acquisition of Jacob Brothers will also allow us to cross-sell our combined self-performed services and offer more comprehensive solutions through the full project life cycle to new and existing clients. Headquartered in Surrey, BC, Jacob Brothers is a privately-owned civil infrastructure construction business with self-perform capabilities, serving public and private clients across the region. The company has a highly skilled workforce of approximately 350 salaried and craft personnel, who will continue to deliver their services under the Jacob Brothers brand while pursuing and providing support for additional projects through the Bird team. They specialize in civil infrastructure and self-perform most work using an in-house team and a modern fleet of equipment. Examples of projects include airports, seaports, rail bridges and structures, earthworks, energy projects and utilities. Additionally, Jacob Brothers delivers expertise and specialized projects that require innovative, purpose-built custom solutions and leverage their suite of comprehensive services. These projects range across sectors, including health care, education, light industrial and select retail and commercial. Jacob Brothers also leverages their large fleet of construction equipment or equipment [ rents ] and performance maintenance and a state-of-the-art maintenance facility in South Surrey. The leadership team has built a strong people-first culture, recruiting for the long term and providing their employees with the tools they need to build successful projects and construction careers. Well aligned with Bird, the company focuses on engaging their people and cultivating an environment that promotes connectivity and employee satisfaction. And acknowledge of this, Jacob Brothers has been recognized as a top employer in both BC and Canada in recent years. Perhaps most importantly, the company has a strong culture of safety and a proven track record of safe operations. The current leaders, Scott Jacob, President and CEO; Todd Jacob, COO, bring extensive experience and leadership to birth. Both leaders will continue as part of the Bird executive team leading our Western Infrastructure business and Jacob Brothers. Over the next few slides, we'll highlight the alignment of Jacob Brothers projects with the significant outlook for infrastructure investment. Their experience and reputation, combined with important client relationships and self-perform capabilities are well positioned for the demand trends and government and private spending we identified on Slide 4. Jacob Brothers undertakes highway works of a significant scale, self-performing site works, concrete structures, utility relocates where required and paving. Projects include significant interchanges, widening of highways, construction of multiple bridge and [ ore ] price structures. There's over $15 billion allocated over the next 3 years for transportation network upgrades in the region. Jacob Brothers' team has a significant range of -- Jacob Brothers' team has a range of significant airport-related projects. This includes projects such as the YVR South Airport Cargo redevelopment. This project involves rearranging cargo facilities, extending an existing taxiway and airfield rehabilitation works and include concrete demolition, pavement installation and utility works. The company completes work directly for YVR as well as other related airport and cargo infrastructure works for clients such as Air Canada. BC is also working to increase port capacity, improve trade infrastructure, projects include the recently completed Centerm Expansion project which increases handling capacity at Canada's main Asia Pacific Entry Port. Jacob Brothers worked in partnership on the construction of the continued terminal expansion and improvements to the surrounding port road infrastructure for the Vancouver Fraser Port Authority. The company is also working with Bird on the BC Ferries Maintenance Facility project, which involves redeveloping existing facilities to expand capacity with Jacob Brothers completing the civil works. Significant spending and expansion plans for major critical mineral, mining and LNG development are underway. BC's strategy to become a leading global supplier of responsibly produced critical minerals is aimed at supporting the demand for clean technologies like solar panels, batteries and electric vehicles. Jacob brought their extensive experience to the Woodfibre LNG project, completing site prep, infrastructure, removal and other civil works, where Bird is also on site. Jacob's range of expertise makes them an ideal partner on major industrial and mining projects where they can complete early civil works for site development. They also have heavier civil capabilities, which is impaired through their work on the Hartland Landfill Aggregate Production project, which involves heavy earthmoving blasting and aggregate production over 3 years. 2024, BC Hydro announced a revised senior capital plan, increasing investments to $36 billion from $24 billion. Jacob specialized capabilities support hydro infrastructure upgrade projects such as completing civil works and foundation for 500kV transmission line crossing the Fraser River, as well as more remote projects such as the Box Canyon Hydro Electric project, which involves the construction of multiple intake structures of powerhouse and ultimately, a connection to BC's Hydro grid. Jacob Brothers role on sizable institutional projects such as these 2 health care development projects demonstrates the versatility of their civil expertise, again, bringing an early site works in civil infrastructure to projects of a significant size will continue to serve the demand for public facilities to support the growing population. Utility works are required across the greater Vancouver area to rehabilitate and expand capacity to support growing communities. Significant investments are being directed to water, wastewater and solid waste-related utilities. For example, once complete, the Gilbert Trunk Sewer Project will facilitate future maintenance, provide increased conveyance capacity to minimize backups and accommodate future growth for over 220,000 residents of Richmond. The outlook for the construction sector remains positive through 2032, driven by energy transition, population growth and infrastructure modernization demands. Specialized projects such as works at Railyard involve EV charging pads, electrical and substation pads and extensive underground electrical and concrete work. These works ultimately support the transition to electric vehicles for intermodal use in urban areas. It's an exciting time in the BC market and our strong combined team is well positioned to capitalize on the significant opportunities that exist. Wayne will now cover the transaction overview.

Aligned with our approach for past acquisitions, we believe the anticipated financial contributions of Jacob Brothers and the consideration mix are beneficial to both Bird shareholders and Jacob Brothers principles. Importantly, the transaction maintains the Bird's healthy balance sheet to support our strategy and future growth. The transaction with estimated aggregate consideration of $135 million has an implied purchase multiple of 3.7x Jacob Brothers projected full year 2024 adjusted EBITDA, exclusive of future synergies. The estimated aggregate consideration consists of approximately 1.49 million Bird common shares issued to the principals of Jacob Brothers. This is based on the volume weighted average trading price of Bird common shares on the TSX for the 10 trading days prior to June 10. The consideration also includes approximately $97 million of cash funded through existing cash on hand in short and long-term debt under Bird's credit facilities. Bird will also assume an estimated $4 million of equipment debt. In connection with the transaction, Bird has also expanded its revolving credit facility to $300 million, an increase of $50 million and extended the maturity to 2027. 10% of term debt is repayable on an annual basis, which is consistent with our prior agreement. Other than the assumption of equipment debt, Jacob Brothers will be acquired on a cash free, debt free basis. We anticipate the transaction to close early in Q3 2024, subject to regulatory approvals and other customary closing conditions, including approval under the Competition Act.

Turning to Slide 16. The acquisition of Jacob Brothers is quite compelling for several key strategic operational and financial reasons. This transaction advances Bird's strategy to build out a national full-service infrastructure vertical. Over the past few years, we have strategically diversified our revenue sources through organic growth and strategic M&A, while at the same time, we have significantly enhanced our profitability. Jacob Brothers' self-perform civil infrastructure business expects full year 2024 revenues of approximately $300 million. The company has a robust project backlog of approximately $350 million with significant projects across multiple sectors. The company's strong market reputation, highly skilled team and proven track record for delivering complex projects to long-term clients, complement Bird's similar track record for client service and strong project delivery. Together, the self-perform services along with special projects focus is expected to enhance Bird's adjusted EBITDA margin to support further value creation with anticipated 10% EPS accretion on a full year basis. As with past acquisitions, we are heavily focused on a post-acquisition growth, and we see significant upside potential from cross-selling opportunities and other synergies in the combined business. Scott and Todd have proven their leadership and ability to grow the company since founding it in 2008. And together, the 2 companies will have a wider range of services and solutions to offer our clients. With that, I'll hand it back to Wayne to discuss our combined operations.

Thank you, Teri. As part of our 2023 annual reporting, we updated our annual revenue breakdown to better align with Bird's position in the industry and focus on the industrial buildings and infrastructure markets. At the time, we noted there is still a significant runway of expansion and diversification opportunities that will continue to support margin accretion and drive Bird's growth strategy over the coming years. In line with this strategy, the acquisition of Jacob Brothers immediately grows our underweighted infrastructure vertical. Looking at our 2023 figures as reported plus the estimated full year 2024 revenue from Jacob Brothers shows growth in infrastructure from approximately 9% in 2019 to 21% on a pro forma basis. This acquisition advances the diversification of growth that has been a strategic priority and a key element of our 2022 to 2024 strategic plan. Continued long-term earnings accretion in the business is supported by robust demand in our target sectors and macro trends, such as the energy transition, population growth and infrastructure modernization along with the significant spending in BC that Teri touched on earlier. Future growth expectations will be driven by cross-selling opportunities, similar to Bird's approach and success with past acquisitions. Historically, the 2 companies proceeds have not overlapped. However, we have partnered in the past to deliver an expanded offering to our clients. This business combination will allow both companies to access new clients and provide new services to existing clients at a greater scale. By leveraging the knowledge, insight and experience gained from our successful past acquisitions, we are confident in similar success with Jacob Brothers. This is a highly complementary business combination. As we mentioned earlier, Jacob Brothers is expected to significantly contribute to Bird's top and bottom line with anticipated full year 2024 revenue of approximately $300 million and adjusted EBITDA of $37 million. Here, we've laid out the pro forma revenue and EBITDA estimates based on analyst consensus as of May 31, 2024. Pro forma revenue for full year 2024 is 9% higher than the current consensus estimate, while pro forma adjusted EBITDA represents a 21% increase. Jacob Brothers strong margin support Bird's strategic focus on margin accretion with the acquisition expected to add 60 basis points to the adjusted EBITDA margin on an annualized basis. As we have discussed throughout the presentation, this acquisition aligns with Bird's M&A criteria, which we've articulated on Slide 19. This acquisition supports our strategy of targeting high-performing culturally aligned, complementary businesses with strong cross-selling opportunities and developing a national civil infrastructure vertical. The acquisition facilitates sector and geographic growth, enhancing Bird's presence in BC, which boost a robust medium- to long-term outlook for infrastructure spending. We anticipate further upside post acquisition, driven by cross-selling opportunities, strong market demand and the combined company's ability to pursue projects on varying size and scale, some of which wouldn't have been accessible to either company separately. The acquisition also meets Bird's financial criteria. Jacob Brothers is accretive to EBITDA margins and EPS, providing a significant boost to revenue supported by strong backlog. Bird has leveraged its strong financial position to complete the acquisition with a targeted balance of equity and cash. Post acquisition, we expect our debt ratios to remain consistent with our long-standing practice of maintaining low leverage with future optionality to continue both organic and inorganic growth. Our capital allocation remains balanced blending M&A, smart capital investments and returning capital to shareholders through dividends. Bird will continue to emphasize capital investments in equipment, productivity and technology enhancements, which will grow to include the fleet that will be gained through the acquisition. Future M&A will remain an area of focus for Bird. We will continue to look for opportunities that fit our M&A criteria. I'll now hand it back to Teri to wrap up.

In summary, the acquisition of Jacob Brothers is highly complementary to our existing business supports our long-term growth strategy and establish Bird in British Columbia's high-demand infrastructure market. This immediately grows our infrastructure vertical, add scale and diversification in the region. In addition, the combined company will benefit from Jacob Brothers highly experienced and skilled team. Through increased exposure to key secular tailwinds, the combined company will be positioned for opportunities related to electrification, the growing demand for low carbon and green infrastructure solutions and transportation infrastructure requirements. In addition to increasing Bird's full surface, self-perform civil and special projects expertise, we anticipate that the acquisition will support margin expansion through an improved mix of complex work, robust backlog and a fleet of monitoring equipment. The acquisition creates value with an anticipated 10% adjusted EPS accretion and the potential to realize further upside through cross-selling opportunities and other synergies. Finally, while contributing to significant growth, the transition structure preserves Bird's strong balance sheet and maintains ample liquidity to support our capital allocation strategy and continued growth in the future. With that, I'll hand the call back to the operator and take your questions.

[Operator Instructions] Our first question is from Yuri Lynk with Canaccord Genuity.

Congrats on what looks like a very compelling acquisition. Teri, maybe just back it up a little bit and give us a bit of the history here. When were you first introduced to Scott and Todd, how did that come about? Have you worked with them on any projects?

Yes. So we have a close relationship with them through our BC District, our leader in the BC market has known them for many years. And I was introduced about 18 to 24 months ago. And then it has kind of evolved over time. It fits the criteria that we look for. We look for opportunities where an ownership team is looking to merge with a larger organization to allow them to continue to grow and -- into a larger scale. Obviously, we were exclusive through the period and as such, reached the conclusion yesterday, which we're obviously very excited about and very excited to welcome their team to the new combined entity.

Can you give us some sense as to the recent historical performance of Jacob Brothers in terms of revenue and how that's kind of evolved over the last 3, 5 years?

Yes, it's been pretty consistent, quite honestly, it's been -- and that was what was quite attractive to us, just the consistency of the overall business. And I've been lucky enough to be involved in a lot of acquisitions throughout my career. And this one would be certainly among the top in terms of an organization that just runs at such a highly professional level. Everything they do at their sites, their offices is the way they're set up is a really impressive first-class operation, and that was really exciting for me as I got to know them and these 2 leaders are operating on a level of professionalism that is just Tier 1. And we're looking for an opportunity to have a more diversified entity to work with. So we're quite excited.

The next question is from Jacob Bout with CIBC.

Teri and Wayne. This is Rahul on for Jacob. So I had a question on synergies. You mentioned that there should be significant cross-selling opportunities and noted a number of new clients like the Vancouver International Airport, BC Hydro and Fortis, could you provide a bit more detail on the cross-selling opportunities you envision? And how soon do you expect to see these opportunities arise?

Well, we've referenced certainly some of the work we've currently got underway. We've got other projects that we were partnered on that we're in pursuit of across these various market sectors. I think we're excited about the plethora of markets that they're already in, combined with the markets we're already in. And I think it's just a broad array of things. We also want to continue to hold the relationships that they have with their existing customers as well. And that's important that they can continue to be a Tier 1 civil contractor to some of the major clients that they have that may or may not involve Bird. So we also -- we want that ability not dissimilar to other businesses that we own.

Right. Right. No, that's helpful. And maybe just from a project contract type and risk perspective, how does Jacob Bros compared to the stand-alone business? I guess another way of asking that is do you still see about 75% of combined backlog to the collaborative project contract types?

Yes. We haven't spent a lot of time on that yet, but obviously, they perform a lot of work that would be under government-oriented contracts that have a lot of consistency to them. We typically have a high percentage of work this unit price. I spent my whole career in that sector. So obviously, I have a lot of experience in that area. So we like the risk profile. We think it fits really nicely into the things we're currently doing. We also see the emergence in a major way in BC with alliance-type contracts, IPD contracts that we've got currently underway in the province and progressive design build target type opportunities. And we have an extensive resume on that, which we expect will be an important aspect to Jacob moving forward to have that resume.

The next question is from Chris Murray with ATB Capital Markets.

So Teri just following on maybe on that last -- following on that last question, just thinking about where you're at today. I think you made the comment that there were some projects that now you're starting to look at and probably part of the rationale for the combination is either yourselves or Jacob independently maybe couldn't bid for certain things. Are their larger scale projects that you're thinking about or different styles of project that now open up? And are there certain aspects or elements of the self-perform business that Bird brings to Jacob or vice versa that you can maybe leverage outside of BC?

Yes, I think so. When you think about the emergence of these collaborative contracts and we would have the highest number of collaborative contracts by far in the country. When you think about how BC is moving in that direction quite extensively with larger projects, we're quite comfortable with those, especially with the addition of Jacob Brothers because they add a major component of those projects. So we're quite comfortable with the larger scale when they're in a collaborative framework and, in that sense, the combined team. And as importantly, a more attractive partner for others that are in that area as well. Often, these very large projects have got partnerships that are established. So we become a more attractive partner with the combination of the various things we do. And I look forward to those opportunities. And -- but I think this is -- over time, this is just kind of evolved, it's been doing more and more work together already and have been for a number of years, and looking at other irrespective of this because our teams weren't aware, this was playing out. So they were working with the Jacob Brothers company quite extensively. And then obviously, we're able to announce it yesterday, but it was a very small group that was aware that this was underway on both sides. So it was an exciting day yesterday for various teams of both Jacob Brothers and ourselves.

Okay. Interesting. Okay. So we've got also a few questions just about the transaction structure or just some details. So maybe I don't know if you or Wayne want to hit on these. But I guess the first thing to think about, you've given us some financial metrics, but just in terms of either synergies, you've highlighted revenue synergies, certainly, and that seems to be the driver here. But on the cost side, when we think about SG&A for the business, you talked about the fact that it was a very well-run business. But wondering if there's any SG&A synergies or other costs that we should be thinking about in terms of integration?

I think at this point, we're really focused on the cross-selling side. I mean, obviously, it's a very small group that we work with to this point on the Jacob Brothers side. So over time, we'll see. But the intent is -- this is a really well-run business. And you can tell from the margins. This business has got a Tier 1 team that's been performing at the levels they've been performing at for the last number of years, over 5 years at this level. So for us, it's more about the cross-selling synergies than it is about cost synergies. I think there'll be complementary services that will -- I always find with acquisitions, we learn as much from them as they learn from us. So -- and that's how we're going to approach it, and we don't have any targets in mind. I think there'll be some things, obviously, that will improve with just the scale that we have in many areas, but maybe, Wayne, you can add a little bit more color, but that's kind of how we're looking at it. It's important that we are looking at this as status quo, which is important.

Yes. I agree, Teri, this is a high-performing business. And we're really excited to have the team members of Jacob Brothers, joined with Bird. This is probably some thing like Bird's insurance program, we might have better volume discounts for example. So there's going to be those types of things that come up. But we don't -- this transaction is not built on cost synergies. It's built on the growth that we think we can have in the business and the cross-selling. So yes, it's a good team, and we're excited to have them join the company.

Okay. Great. Maybe a couple of other questions. One, just looking at the profile, they have a -- I call it a real estate marketing piece of the business where they kind of -- it looks like they do kind of build and then lease and rent warehousing space, things like that. Is that also going to be included with the transaction? Or is that getting carved out?

No, that's carved out.

Okay. And then finally, Wayne, any initial thoughts on purchase price allocation? I assume there'll be a lot of fixed assets given the equipment fleets, but any thoughts around that would be helpful.

Yes. I think we haven't disclosed anything yet on purchase price allocation, but it's what you expect it to be. I mean there's certainly going to be a good level of working capital to be able to operate the business. There's a really nice fleet of equipment. We'll do a fair market value adjustment of that as we do our opening balance sheet. There's going to be the usual intangible assets. So if you think about the value placed on customer relationships, backlog margin, the brand is very valuable to us, and we expect to continue to use that brand going forward. So we'll place the value on those things. And obviously, goodwill will be the difference.

The next question is from Michael Tupholme with TD Cowen.

Congratulations on the acquisition. In your prepared remarks, you talked a fair bit about the favorable end market tailwinds that are benefiting Jacob Brothers. I guess I was wondering if you could speak a little bit more specifically about the revenue growth outlook for the acquired business and if you expect it to generate similar type of revenue growth in 2024 to that, which you were forecasting for stand-alone Bird?

I think it's early days to speak to that. I think we're certainly seeing some really unique opportunities emerging, but I think we'd like to get a little more time under our belt to see how things evolve. But in reality, could achieve those levels, but I think early days, we probably have more color in our second quarter to that.

Okay. Fair enough. We'll wait for that. And then in terms of the mix within the business, I think you mentioned, Teri, there's a fair bit of public sector exposure in the release, you talked about exposed to both private and public sectors. So just wondering if you can be a little bit more specific about how that breakdown looks?

Yes. I would just guess, it's -- we haven't done the analysis of that. There's probably 70-30, probably what it is like they do a lot of -- and this would be Crown Corporation working for airports and working for ports and working for highway transportation. So a lot of government -- and we like that. Obviously, we like to continue to have a blended mix, but I'm guessing it's probably 70-30.

Okay. And then in terms of Bird's strategic objective to create a national civil infrastructure platform, this acquisition is clearly a big step forward in that regard. Wondering now if you can comment on the other regions in your business that you'd look to potentially -- or want to look to potentially bolster in terms of your civil infrastructure presence? And I guess, sort of as a follow-on to that, is that something that you would likely do through further M&A or with sort of this presence here in BC and with the presence you have in Ontario in civil infrastructure, could you do that organically to fill in some of the gaps.

I think it will be a mix of both. The existing team at Jacob Brothers has historically also worked in Alberta, so they have experience in Alberta. So that's an opportunity that -- in other significant markets with those -- with that province and the way that province is growing. We're very focused in Eastern Canada with the leverage off of the Dagmar acquisition and H.J. O'Connell from a number of years ago in both Quebec and [indiscernible] in Eastern Canada and Atlantic provinces as well. So we're well positioned. And then organically, we've moved some of the civil -- industrial civil folks into Toronto and they are active on some of the larger infrastructure projects in the GTA, which is obviously a monstrous market. But I think it will be a mix as we go forward as opportunities like this arise. They're in the format that we described that they're obviously accretive to the targets we're setting, if they're -- we're in an exclusive arrangement where the owner really cares about where they're going and what's going to be the new partnership. That's why we don't participate in auctions. We don't want to acquire business where the owner doesn't care who buys it, he just wants the highest price. This was not that case.

Okay. That's very helpful. And then maybe just lastly, Wayne did mention that acquisition growth does remain a key part of the company's strategy. I guess, I'm just wondering though with this acquisition, is there a need to pause while you integrate or if something else attractive were to present itself in the relatively near term, could you act on additional acquisition opportunities near term?

Yes, as we certainly are always careful and approach opportunities in an opportunistic fashion. We've got a well-oiled machine here to respond to things and obviously, a very strong balance sheet. So again, we're opportunistic, and -- but we're not on a burning platform to find M&A deals. We're very, very selective that we're seeing a lot, and as such, the types of things we do are carefully -- prepare carefully matured with strong support from our Board.

The next question is from Ian Gillies with Stifel.

There's obviously some very solid EPS accretion coming from the deal. As we think can move into 2025, is there any reason why Bird would move off a dividend payout ratio of, call it, 30% of earnings?

We've disclosed historically that we're targeting a 33% payout ratio. And retaining 2/3 of net income to support growth in the business. And we haven't come off of that in Q1. And obviously, we're working on diligence on this transaction through Q1. So right now until we say otherwise, that's our expectation.

It is something that we discuss on a quarterly basis quite extensively with our Board.

Okay. Maybe switching gears. Over the course of time, I tend to find to be some skepticism around cross-selling and revenue synergies. In this instance, I believe they're probably real. But I guess, are you able to provide any tangible examples, whether it be from the Dagmar acquisition or Stuart Olson where you've been able to execute that and maybe some learnings and how you apply it here.

Yes. So Dagmar is a good example where we acquired the business, the business has more than doubled since we've acquired it a couple of years ago and was a key catalysts for us to enter into a very large infrastructure project here in the GTA, without the Dagmar resume and having that catalyst, that wouldn't have been possible. So we do see the same type of catalyst here for future projects that evolve. But across a broader spectrum because it's considerably larger and also it has a broader array of capabilities that cross into many sectors as we referenced earlier with the profile of projects that they've completed.

And then last one for me. Like as you think about the self-perform capabilities within Jacob and your ability to apply them into other parts of your businesses, is there any particular services where you think it's going to be like very helpful or where you really see that's going to be a strong point?

Yes. I think it's -- again, the merger of the 2 businesses certainly have complementary and unique services, like I said earlier about the resume we have on alliances and that type of thing. I think any time you have a company our size, we have an extensive ability proposals and development. We've got strong support in many areas, obviously, across people and culture, across safety, across all the proposals and things we do. I think being a public company is a benefit given that we're in the press in the sense of the profile of the business. It's attractive for recruiting. We've got high engagement in our organization. So I think it's just -- there's a lot of benefits that come from that. I think the team at Jacob with their profile in BC, it just gives us a great foundation there. Obviously, the type of company that's first in on large projects, but it just gives us again, another tool in our belt that we've got a multitude of offerings for clients. And as this market evolves, client projects are getting more complex and larger in scale. And in that sense, I think the combination of the 2 businesses is going to be a very attractive entity for partnering with other companies in the country as well as working jointly on opportunities that we have.

Next question is from Maxim Sytchev with National Bank Financial.

Teri and Wayne, obviously, congrats on the deal. Just wanted to ask you a question around the margin differential between the acquired entity and kind of the legacy Board, do you mind maybe providing a bit more color around the reason for that? Is it sort of the equipment component CapEx intensity, I guess, are you comfortable with the controls and systems that are in place just if you don't mind providing a bit of color, this will be helpful.

Yes. So there you're right in the sense of the profile is directly attributable to the CapEx requirements of the business. This is a really well-run business, very solid systems and controls and operates on a very high level. I think fits together very nicely with us are through an extensive due diligence time frame, we were able to get quite comfortable. We work with a number of outside agencies to support our reviews. And it was a good journey for us. And like I said, we had a good -- a very good partnership right from the get-go and it proved out through due diligence that everything that was indicated was there and everything that was highlighted was exactly what it was highlighted to be. So we had a very successful journey. It was extensive our team working incredibly hard for the last few months to get to this place. So I want to thank them for that effort that they put in.

Yes, absolutely. No, that's super helpful. And then, Teri, I think you mentioned that the top line of the acquired asset was relatively consistent. So how should we think on a prospective basis in terms of growth sort of be similar to, I guess, what Bird as kind of the mother ship is doing on a prospective basis?

Yes. It's early days, Max, but I think there's certainly potentials there. We are -- certainly, when you see the market the way it's evolving in BC and the demand in so many areas, I think -- and that was one of the attractions from the company to us and their interest in joining Bird was to have a larger scale to respond to some of these opportunities. So I think that's quite exciting. The cross-selling opportunities here are significant. So I think in that sense -- and I think we've just developed a really good reputation in our industry for being very professional at how we acquire and integrate businesses and we have a tremendous track record in that. So that made this a smooth process. But yes, the opportunities are very exciting as to what's happening in that market and we get to see that market every day with our existing businesses. We have a large electrical business. We have a large building business. We've got large industrial projects underway across manufacturing and mining, and obviously, LNG. So it's a big market for us now that -- with this acquisition.

[Operator Instructions] The next question is from Frederic Bastien with Raymond James.

Congrats on the deal. Just I'm fairly comfortable with the rationale and everything behind that. So I was just going to focus on a couple of modeling questions, if you don't mind. I would assume -- maybe I'm wrong, but is it fair to say or assume that there's a fair amount of seasonality in the business?

I think there is, but it's a little less seasonality than there is in markets like Ontario and Alberta, you don't get the significant free saw cycle. So there's some differences in that regard. So it's -- to me, it would feel like a market that wouldn't have a severe seasonality compared to a civil business in Northern Alberta or Ontario per se, and Quebec kind of thing.

Okay. Maybe it's too early to say, but will you guys be able to tell us or at least provide some guidelines as to how to split that $300 million of revenue on a go-forward basis?

Okay. Yes. When we come out like after close and in Q2 disclosures, and that will certainly have more information. But I think as a starting point for modeling like as Teri said, there's probably a little less seasonality to this business than what you see on the average Bird. But as the starting point for modeling, I think you can probably take the weighting of each of the 4 quarters in terms of revenue flows and leverage that on this as well.

Okay. And then just moving on the second one would be around the capital intensivity of the business. Presumably, there's more CapEx tied to that business than the average Bird. Any guidelines you can provide on either CapEx or what we should think about in terms of D&A, depreciation and amortization, on a go-forward basis?

Yes, certainly. So the business is more capital intensive than the average of the Bird portfolio, but not dissimilar to what other infrastructure businesses we have in our portfolio are. But certainly, when you -- on a consolidated Bird, when you take the buildings business, for example, is less capital intensive than this. I think CapEx on a go-forward basis, like it's certainly going to be driven by project mix and needs. But plus or minus, you're probably looking at $8 million of CapEx, maybe $9 million, somewhere in that order of magnitude. So one of the things that we kind of said, well, if you get 9% revenue growth, if you're building this off of consensus estimates as [indiscernible] well, you're going to get 21% EBITDA growth. The reason you're getting 10% accretion is the depreciation is running higher than, say, the average of Bird. So we can think about this business on an EBIT basis, too.

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

Thank you, everyone, for taking the time to join our Jacob Brothers acquisition call this morning. We're excited to welcome Jacob Brothers to the team and look forward to seeing what we can accomplish together.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.