Bird Construction Inc

TSX:BDT

Earnings Call Transcript 2021-Q1

[Operator]

Welcome, ladies and gentlemen, to the Bird Construction first quarter financial results conference call and webcast. We will begin with Teri McKibbon, President and Chief Executive Officer's presentation, which will be followed by a question-and-answer session.[Operator Instructions] As a reminder, all participants are in listen-only mode, 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 any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events or otherwise.At this time, I would like to turn the conference over to Mr. Teri McKibbon, President and CEO of Bird Construction. Please go ahead, Mr. Teri McKibbon.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thank you, operator, and good morning, everyone. Thanks for joining us on today's first quarter 2021 earnings conference call. Joining me on today's call is Wayne Gingrich, Chief Financial Officer.I'm pleased to report solid first quarter 2021 financial results despite the negative impacts the global pandemic had on our operations this quarter. While public health pandemic-related restrictions impacted our productivity at various times during the first quarter, the majority of our project teams were able to return to job sites by March and continue executing on our projects.Once again, the Bird team went above and beyond, and I want to thank them for the dedication in putting clients and projects first during these incredibly challenging times.Turning to Slide 4. We reported another profitable quarter. Revenues increased 38%, while adjusted EBITDA was up 178%, and adjusted earnings improved 714% compared to the comparable quarter in 2020. Additionally, we secured $389 million in new contract awards in the first quarter, a 94% increase compared to Q1 last year.Looking at our backlog and pending backlog on a consolidated basis. We ended the first quarter at a similar level compared with year-end 2020. While we continue to see delays in project tenders and awards due to the pandemic, we secured a number of strategic awards, which I will highlight shortly.Once again, we ended the quarter on very strong financial footing, which positions us to grow not just organically, but also be more acquisitive in the future.Turning to Slide 5. One of our key priority is to improve our overall margin profile. I'm happy to report that our adjusted EBITDA margin profile continues to improve sequentially.With our first quarter results, we have now posted 10 sequential quarters of trailing 12-month adjusted EBITDA margin improvement. Our adjusted EBITDA margin in the first quarter of 2021 was 4.7%, reflecting a 230-basis point improvement year-over-year. On a trailing 12-month basis, our adjusted EBITDA margin was 5.9%, which is a significant improvement compared to a year ago.As we have discussed previously, the inclusion of Stuart Olson will weigh on our near-term margin profile. However, we are confident we have assembled a business that can support higher-margin profile over the medium to long term. In fact, Bird-Stuart Olson business combination is yielding results as opportunities continue to present themselves.As you can see on Slide 6, we secured a new 5-year maintenance contract from a long-standing industrial customer in Alberta to provide MRO services. This contract is estimated to be in excess of $550 million, a majority of which has been recorded in pending backlog.Additionally, we secured a contract with Infrastructure Ontario for the design-build expansion at Kenora Jail and Thunder Bay Correctional Center. While this is a smaller project, it is very much a strategic win for Bird, as it leverages both Bird and Stuart Olson's capabilities, spanning our innovative Stack Modular capabilities and commercial systems offerings to our national and geographic presence.Subsequent to quarter-end, we were awarded $172 million fixed price construction services contract by Concert Properties for the Sherbourne project or the Burke in Toronto, Ontario. The Burke is a residential tower consisting of 53 floors and 501 residential suites. This announcement builds on our long-standing relationship with Concert Properties as we have had ongoing success in this market for years.Additionally, in May of 2021, we announced we secured 2 separate civil works contracts valued at approximately $135 million. The first contract is at an existing project site in Northwestern British Columbia and includes the construction of 2 concrete, storm and effluent ponds. This project award reflects our extensive industrial experience, growing self-performing capabilities and our demonstrated operational excellence throughout the years working on this site.The second project is located in Northern Alberta. The lump-sum contract includes the construction of an overpass that will facilitate access to an ore preparation plant from a mine. Installation of the cast-in-place concrete structure will be supported by substantial earthworks and a high-voltage electrical relocation.This project award demonstrates the strength of Bird's self-performing capabilities that have been further enhanced through the acquisition of Stuart Olson.Overall, I am pleased with the results and the operational progress we have made to-date, notwithstanding the impacts of COVID-19 that has had on our business. The combination of Bird-Stuart Olson is yielding revenue synergies, evidenced by the benefits from cross-selling the combined capabilities of Stuart Olson and Bird to deliver a higher value proposition to our clients.Additionally, our outlook is becoming brighter as we emerge from the pandemic and projects return to pre-pandemic levels, noting we are witnessing a strong bid pipeline to-date.Furthermore, we are seeing opportunities surface with the improvement in natural resource prices, which is noticeably improving the business prospects in Alberta as well as a significant planned infrastructure spending announced by the federal and individual provincial governments with their most recent budget announcements.As you can see on Slide 7, we have identified numerous opportunities that arise from stimulus program coast to coast. The aggregate, federal and provincial expenditures outlined in recent budgets on infrastructure and related spending is over $350 billion.As a top-tier nationwide construction company, we expect to fully participate in these planned work programs over time, which we expect will be additive to our top line growth in 2022 and beyond.Now I would like to turn it over to Wayne to go over our financial results.

[Wayne R. Gingrich, Chief Financial Officer]

Thanks, Teri, and good morning, everyone. Please turn to Slide 8. I'm very pleased with our first quarter 2021 financial results as they reflect more resiliency and less seasonality in our business compared to recent years.For the first quarter of 2021, we reported construction revenues of $445 million, reflecting a 38% increase compared to the first quarter of 2020. The year-over-year increase can be attributed to the inclusion of Stuart Olson as the pandemic delayed the securement of some new projects and temporary shutdowns or delays on existing projects resulted in lower revenues on some work programs with the estimated impact of the pandemic totaling approximately $90 million on Q1 2021 revenues.Gross profit was $39.9 million or 9% of revenues in Q1 2021. This compares to gross profit of $16.9 million or 5.3% of revenues in the prior year period. The year-over-year increase in gross profit is due to a combination of additional gross profit from the inclusion of Stuart Olson and diversification of the company's work program, as well as improving year-over-year margins in operations.The pandemic had a negative impact on gross profit due to lower productivity and project delays and was partially offset by the recovery of $11 million of compensation expense in cost of construction under the Canadian Emergency Wage Subsidy or CEWS program.General and administrative expenses increased by $14.6 million year-over-year to $29.4 million in the first quarter. The main driver of the increase is higher compensation costs of $7.4 million due to the addition of Stuart Olson, as well as higher variable compensation expenses. General and administrative expenses also included $2.7 million of integration costs in the first quarter of 2021.Overall, we expect discretionary general and administrative expenses to be at similar levels in Q2 as they were this quarter and resume to a more normalized level as economic activity picks up to pre-pandemic levels.Q1 2021 adjusted EBITDA was $21 million, representing 4.7% of revenues. This compares to adjusted EBITDA of $7.6 million and an associated margin of 2.4% in Q1 2020. This represents a $13.5 million increase and a 230-basis point improvement year-over-year.Adjusted net earnings was $9.1 million or $0.17 per share in the first quarter of 2021 compared to $1.1 million or $0.03 per share in the first quarter of 2020. The year-over-year increase in adjusted net earnings reflects a combination of additional margin from the acquisition of Stuart Olson, inclusive of synergies as well as progress with diversifying the work program and improving year-over-year margins in operations.Adjusted net earnings in the first quarter of 2021 was negatively impacted by reduced productivity and project delays resulting from the pandemic, which had a significant unfavorable impact on earnings and were partially mitigated by a pretax compensation expense recovery of $11.2 million recognized in the quarter from the CEWS program and the adjustment of $2 million of tax-affected integration expenses incurred in the first quarter of 2021.I'd like to turn to Slide 9 to briefly provide everyone with an update on the integration of Stuart Olson. We're very pleased with the integration to-date and are on-track with realizing the previously stated $25 million in cost synergies. To-date, we have set in motion $8 million of the stated $10 million in EBITDA synergies and have fully realized the remaining $15 million in depreciation and amortization and interest cost savings. And as Teri had mentioned previously, we expect to see revenue synergies materialize over time.We're off to a good start given recent contract wins that either company could not have necessarily been able to secure individually. So we expect to see more wins in the future as we continue to leverage our enhanced value proposition with our clients.Turning to Slide 10. Our backlog was largely flat compared to the end of 2020. As at March 31, 2021, backlog stood at approximately $2.6 billion compared with $2.7 billion as at year-end 2020, representing a slight decrease of approximately 2%. We expect 64% of the backlog to convert to revenue over the next 12 months.Our pending backlog as at the end of the quarter was $1.7 billion, up 3% from $1.6 billion as of December 31, 2020. I would like to remind everyone that pending backlog includes a greater proportion of MSA contracts of approximately $1 billion of the $1.7 billion pending backlog.These contracts are typically with industrial clients that spend multiple years for MRO services and represent a recurring revenue stream over the next 1 to 6 years. The company expects to convert these MSAs to backlog on a quarterly basis as purchase orders are received and provide excellent visibility to forward revenues.Projecting the timing of converting the non-MSA projects to pending backlog into contracts has been challenging with the effects of the pandemic shifting some project conversions later into 2021. Overall, I'm very pleased with the composition of our future work program.We remain focused on appropriately balancing the risk profile of our backlog through end market diversification and contracting methods.Moving to Slide 11. The company continues to have a solid balance sheet with a lot of financial flexibility. I would like to remind everyone that from a seasonal perspective, the first quarter is typically the lowest point in our cash cycle as our accounts payable decreases. This quarter was no different with accessible cash declining $65.6 million in the first quarter of 2021 from $96.7 million to $31.1 million. Additionally, during the quarter, we reduced our indebtedness by $7.6 million, of which $5 million was nonscheduled as we repaid a portion of the revolving credit facility.As such, we ended the first quarter of 2021 with cash and cash equivalents of $125 million, while cash and cash equivalents available for operations was $31.1 million. Adjusted net debt stood at $34.2 million or 0.36x trailing 12-month adjusted EBITDA, which is well within our comfort level.As we have talked about previously, we remain committed to a balanced approach to capital allocation. As shown on Slide 12, during the first quarter of 2021, we generated cash flow from operations before noncash working capital of approximately $21 million, with a small portion of these proceeds being deployed towards capital expenditures of $1 million.In the near term, we will continue to strengthen our balance sheet by reducing our net indebtedness with the ultimate goal of capitalizing on organic growth opportunities as well as margin accretive M&A that further diversifies our service offerings and balances our geographic presence.Bird remains committed to returning capital to shareholders through our monthly dividend, which amounted to $5.2 million in dividend payments during the first quarter of 2021.Overall, we are pleased with our financial strength and are ideally situated to benefit from government stimulus spending and stronger resource prices given our expanded capabilities.I will now turn it back to Teri.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thanks, Wayne. I would like to spend a minute on our sustainability strategy on Slide 13. Since our last quarterly earnings call, we published our inaugural sustainability report. Our values outlined in this report reflect our commitment to entrenching sustainability best practices within all of the business -- all areas of the business, transforming the way we work, build and live.Bird already has a strong track record in utilizing sustainable construction methods, such as mass timber and modular construction, and we are actively seeking ways to reduce our carbon footprint, including through tracking our greenhouse gas emissions.Overall, our core values are rooted in building green, working green, living green, anchored by strong corporate governance practices. These values will guide our sustainability goals as we create value for all stakeholders involved for the next 100 years. I would encourage everyone to visit our web page and explore our new sustainability page.Turning to Slide 14. Overall, we have built a strong foundation. I continue to believe that Bird has built a stronger team and a more resilient business model over the past year and is well positioned to play a major role in the Canadian construction industry.We are ideally situated to capitalize on the significant growth opportunities ahead of us as the economy recovers and the strong infrastructure stimulus spending takes hold over the near to medium term. We're also ideally situated from a balance sheet perspective to capitalize on acquisition opportunities, which we expect will materialize over time.Lastly, I would like to once again thank our employees for their dedication, especially during these challenging and uncertain times.With that, I'd like to turn it back to the operator for questions.

[Operator]

[Operator Instructions] The first question is from Jacob Bout of CIBC.

[Jacob Jonathan Bout]

On the fourth quarter call, you talked about $175 million of sales that had been delayed. Is that the current run rate? And has any of that delayed work being canceled from backlog?

[Wayne R. Gingrich, Chief Financial Officer]

None of that work has been canceled from backlog. There is a shift to the right. I don't know that I'd characterize the $175 million as a run rate. That was a total year 2020 impact that moved towards this year. And then again, from our expectations as a result of some of the provincial measures put in place, we had $90 million of revenue from Q1 kind of push out further into the year, but none of it has been canceled.

[Jacob Jonathan Bout]

Okay. So what would that total amount be that's been delayed as it stands right now for the run rate?

[Wayne R. Gingrich, Chief Financial Officer]

In terms of normalizing a quarter?

[Jacob Jonathan Bout]

Yes. I mean just work that's actually been -- that has been pushed out.

[Wayne R. Gingrich, Chief Financial Officer]

I mean I think at a point in time, it's that $90 million that we talked about in Q1. And then, as well, Q1 is a seasonally lower quarter for us. So as our work program continues to ramp up, you can think of it as -- if we didn't have the pandemic, our revenue would be $90 million higher. And then you'd have the appropriate amount of ramp up coming up in Q2, Q3 and Q4.

[Jacob Jonathan Bout]

How are you managing through the rapid rise in raw material costs? Lumber and steel has been quite dramatic. And how is that impacting quoting activity, logistics, that type of thing?

[Terrance Lloyd McKibbon, President, CEO & Director]

So it's a mix of solutions, Jacob. You -- in some cases, we're indexing our proposals with our clients. So the clients realize that we can't take that risk on. In other cases, it's a pure pass-through. In other cases, you've got subcontractors that are taking that risk, depending on the type of project we work with, certainly Tier 1 subcontractors, so they're taking it on. And then in the last case, there are situations where we will build in, obviously, contingencies or building a hedge position against a supply channel.So there's a multitude of solutions, but our teams are working very hard to cover that. But it is certainly uncertainty out there, and it's something we deal with every day.

[Jacob Jonathan Bout]

Okay. And then just lastly, just a question on embedded margins on your recent project wins. Obviously, there's been quite a few versus the rest of your historic backlog.

[Wayne R. Gingrich, Chief Financial Officer]

Are you asking how we feel about the margin profile on those wins?

[Jacob Jonathan Bout]

Yes. The embedded margin is higher or lower than -- like -- so Burke, Nanaimo, Kenora, Thunder Bay, the embedded margins, how does that compare to the rest of your backlog?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. I think if you look at -- take the prison, for example, so with our ability to leverage the Stack Modular solution in that, certainly, that has a higher embedded margin with that program, but just due to the nature of it. And then we also earn equity earnings from our 50% share of Stack Modular as well in terms of manufacturing of those modules. So it's certainly healthy.When you think about the MRO win that we announced, the $550 million, certainly, the margins are consistent with prior years on that. So I'd say it's consistent.If you think about the project with Concert on Sherbourne, that's an institutional project for us. And again, I think we're happy with the margin profile on it, but there will be a large subcontracted component of that program. And then if you think about the 2 civil jobs, those are self-performed jobs and typically in our industrial work program and we self-perform. We have a higher-margin profile. So again, I think those are stronger margins than maybe the overall work program we have, which gets impacted by the mix of institutional work.

[Terrance Lloyd McKibbon, President, CEO & Director]

Let's say, generally, Jacob, we're being very disciplined with the projects we're pursuing and the projects we select to pursue that we've got the opportunity to have accretive margin on those projects. So in a general, we're seeing a fairly robust pipeline on types of projects that we're very interested in. So we're very pleased with the -- and excited about what's ahead right now.

[Operator]

The next question comes from Chris Murray of ATB Capital Markets.

[Christopher Allan Murray]

Just turning back to the margins in Q1. And I think you talked a little bit about the $90 million that was pushed out, but I guess it was also the CEWS payment. So a couple of questions around the CEWS. So first of all, kind of normalizing for, call it, the $11 million that impacted EBITDA and the gross margin, but again, the revenue coming out. How should we be thinking about what margins would have been if you could have executed that $90 million in the quarter? And then just second, as we go forward, how should we think about CEWS impacting Q2 and Q3?

[Wayne R. Gingrich, Chief Financial Officer]

Certainly. So I think if you're trying to just normalize that, what we said in our MD&A is that -- so revenue was impacted by $90 million. So if you want to make an adjustment, you could add $90 million back onto the top line. And then what we said is that the $11.2 million of CEWS payments almost covered off the impacts of COVID. So for simplicity, you can say it covered it off.So the amount of margins that we earned, I think, on a normalized basis, probably are reflective of the work program we have in place now. This revenue is a little bit lower. So if you're looking at gross profit margin or EBITDA margins, they're probably higher than they would be if you added that $90 million back, right? It would lower the overall percentage. But I think in dollar terms, they're reflective.

[Christopher Allan Murray]

Okay. And just the impact for CEWS on Q2 and Q3?

[Wayne R. Gingrich, Chief Financial Officer]

So then -- so I think the company will still qualify to some extent, although probably to a lesser degree for CEWS leading up to the June 5 time line, which was kind of the end of that program prior to the recent government announcement on it. I think beyond June 6, the company probably will not qualify. So I think at this point in time, from what we see happening in the business, June 5 is when it will end.I think from a dollar value, it's hard to actually put a dollar on it, but I think it will certainly be less than the amount we recorded in Q1 here.

[Christopher Allan Murray]

Okay. Fair enough. And then just thinking about the Modular business, the win in Thunder Bay, some of the other projects you've done. The majority of your projects seem to be, call it, institutional. I know there was a hotel project you've done, some stuff going back you've done. But I guess, a question, there seems to be a lot of demand from the government around housing and social housing. And it seems to be an area that you guys haven't had a lot of success in so far. So just sort of curious about your thoughts around being able to use Stack in that kind of environment and whether or not building additional modular capability either internally or through acquisition or something you're thinking about?

[Terrance Lloyd McKibbon, President, CEO & Director]

So I think, Chris, that again, much of our side of our business is evolving, and it's such a significant change for the industry where you're building things in a remote location with -- in plants and then shipping. It takes certainly takes time for all stakeholders to yet to acclimatize or accustomed to that type of a build.We are seeing opportunities arise. Some of the smaller builds in Canada have been at times, if it's smaller demand, if it's smaller scale projects, the efficiency isn't there to access with our Stack business. But we are seeing the business gaining momentum and seeing opportunities evolve and expect to see some opportunities in the near to medium term on some of the social housing type initiatives with various governments.

[Christopher Allan Murray]

And Stack's predominantly a metal fabricator. But I know a lot of the other companies and the competitors are into wood. Is that something we might be thinking of?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. It's a different space for us to go into the wood side. There's some very significant players. The ATCO's of the world, guys like that, that are in the wood business. So I think it's just a different delivery. We haven't looked at it seriously because we think that there's a lot of capacity there.For us, the benefits of the steel modular build are significant heights that you can achieve in that regard. And I think the long-term -- the long-term capability of that design, durability of that design being steel is something is important, the types of things we're focused on. So the wood side certainly hasn't really been on our radar.

[Operator]

The next question is from Yuri Lynk with Canaccord Genuity.

[Yuri Lynk]

Just want to go back to the $90 million. What are you seeing in terms of delays in Q2? Well, does that $90 million, does half of that kind of come back in the second quarter? Or is it more back-end weighted?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. I think all things being equal, I think we'll be able to recover the $90 million through the course of the year. I think it's going to be probably more spread over the 3 quarters than a higher proportion in Q2. But I think for the year, we may be able to recover on that. And then in Q2, like the largest projects was impacted in Q1 was the LNGC project that was shut down primarily for all of January and February, and then we slowly ramped up in March. But we're at full capacity now.I think with some of the restrictions announced a few weeks ago in Ontario, we really only have 1 project that's currently on hold, and it's not that material in terms of the overall impact. So right now, we don't see a significant impact in Q2 as what we had in Q1.

[Yuri Lynk]

Okay. And Wayne, could you provide us with the revenues on the Stuart Olson business in the first quarter?

[Wayne R. Gingrich, Chief Financial Officer]

We did not disclose the mix of legacy Stuart Olson or legacy Bird revenues in the quarter.

[Yuri Lynk]

Okay. When you talked about the $90 million in delays, is that across Stuart Olson projects as well?

[Terrance Lloyd McKibbon, President, CEO & Director]

I think -- I mean, the short answer is yes, but I think the majority of it relates to what I would say, our legacy Bird projects. I think the Stuart Olson business had some impacts, but not nearly to the extent that the legacy Bird business had.

[Operator]

The next question is from Michael Tupholme with TD Securities.

[Michael Tupholme, Research Analyst]

In the press release, it was mentioned that you were nearing the completion of the initial Stuart Olson integration plan. I'm just wondering if you can provide a bit of an update. I know you did indicate that the synergies are running to plant in terms of realization. But is the integration now essentially complete? Or is there a subsequent phase to this -- the integration plan?

[Terrance Lloyd McKibbon, President, CEO & Director]

So generally speaking, it's complete, but we -- obviously, we're seeing some really exciting cross-selling opportunities, and the integration has gone really well. We're really excited about the combination of the 2 businesses, the chemistry. The teams has worked out quite well, considering we're in a pandemic, and we're largely isolated to a certain extent and not able to have that sort of team building sessions you would -- in a normal environment, you would have, but it's gone incredibly well.We still have a longer-term technology integration, but it's not specific to the integration. It's really in the absence of the integration. We would be doing this anyway. The construction industry right now is in a, what I would call, a revolutionary phase of technology focus. And so we're busy with that, and then we're lucky that we have 2 entities with considerable experience and considerable exposure to different types of technology that we can pick the best of both, and we're making good progress on that as well.So -- but the bulk of the day-to-day integration and team structure, organizational structure and harmonized compensation and benefits, that's all gone extremely well.

[Michael Tupholme, Research Analyst]

That's helpful. Just in terms of the cross-selling opportunities, it sounds like you're starting to see some realization. So just to be clear, it doesn't sound like they're necessarily hitting revenues yet in terms of benefiting revenues. But am I correct that you've actually secured some work that's now sitting in backlog that you sort of deemed to have been achieved through the benefit of the combination of the 2 firms?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. Yes, some of the new projects we've announced are the combination of the 2 firms. I think the scale of the business, as we are able to service clients with a company with 5,000 employees is a different offering than where we would have had 7 months ago.

[Michael Tupholme, Research Analyst]

Okay. And how are these materializing? Are these opportunities where you're in pursuit of some work and then the opportunity set has expanded because of the combined entity and its capabilities? Or is this, clients coming to you and saying, it looks like you can offer us additional opportunities or services? So can you just talk a little bit about that, please?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. It's a bit of both. In certain situations, we can bring, if you look at it from the Bird lens, we can bring some of the Stuart Olson entities into existing opportunities that we are in pursuit of. Oftentimes, like we're seeing an evolution of new commercial models, an extensive use of integrated project delivery, for example, which requires a different front-end in terms of the amount of time you spend with a client, Stuart Olson is accustomed to that type of thing, maybe a lot of that today, working on development of projects, so that combination of Bird-Stuart Olson obviously creates a very dynamic delivery, certainly solution for clients, and we're making really good traction. And I think that's a model that will be used quite extensively in the future, and we're seeing that accelerate with various clients and significant scale where projects have got considerable complexity.And the risk for us is with cap. So we -- obviously, we are interested in that type of delivery profile. But certainly -- and I'd say that back to the scale, there's -- when you've got clients looking at the new entity, it just gives you a much broader offering and a broader solution and a more resilient labor solution.So I think it's a mix of different things that are evolving, but the opportunity with the modular and the jail work in Ontario for IO, we're bringing in different entities within the Bird Group to deliver that. So that's an example where we're adding considerable value and enhancing our margin profile by using different subsets of the business.

[Michael Tupholme, Research Analyst]

Okay. You were asked earlier about rising materials costs. And I think you spoke to how you're managing through that. I just have a follow-on, though, related to what sort of an impact is this having on client decisions to move forward with projects to the extent that projects are going to be costing more than they would have previously given the rising price environment. Is this having any impact on client decision-making?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, certainly, from our lens, a lot of the work that we do, it's a mix of different types of clients. And obviously, we tend to work with Tier 1 sort of entities, so they understand these fluctuations. And obviously, if we're indexing the impacts by the time you're in the ground on some of the longer-term things we're working on, that index could be back to current conditions.So I'd say we're not seeing any sort of pause with the types of projects that we pursue from the types of clients, at least at this point. You might see it in smaller private development type work. It's obvious as we're putting our budgets forward, that the budgets aren't meeting their financial model. But we haven't seen it to any extent at this point.

[Michael Tupholme, Research Analyst]

Okay. Great. And then just last, a quick housekeeping item. Wayne, you talked about Q1 in terms of seasonality from a cash perspective, and there was a close to a $70 million investment and changes in noncash working capital in the first quarter. How should we think about that over the full year?

[Wayne R. Gingrich, Chief Financial Officer]

I think the pattern that we've seen in recent years will continue this year. Like, I think you're going to see our work program in Q2 increase. So I think that's going to put pressure on cash as our noncash working capital grows. I think in Q3, you're so going to see a little bit more normalcy in the business, if you will, and this should be a very strong revenue quarter.And then Q4 is typically where we generate most of our free cash flow in the year where the investment in working capital through Q2 and Q3 starts to release in Q4. And again, I think we're expecting Q4 to be a pretty strong cash flow quarter again.

[Michael Tupholme, Research Analyst]

Okay. Just in terms of where that leaves you at the end of the year, does that -- do you expect to be in a position where you on a full year basis you've invested? Or does that Q4 recovery bring back most of what you've invested through the first part?

[Wayne R. Gingrich, Chief Financial Officer]

I think it will bring back what we invested in the first part.

[Operator]

The next question comes from Frederic Bastien with Raymond James.

[Frederic Bastien, MD & Equity Research Analyst]

I was wondering if you could comment on how the competitors are behaving these days. You obviously benefit from a healthy and diversified backlog. But some smaller and more concentrated players may not have the luxury of waiting around for the markets to pick up. So just wondering what kind of opportunities may present themselves from that, but also there might be some potential challenges that come out of it as well?

[Terrance Lloyd McKibbon, President, CEO & Director]

I think generally, Frederic, we've been very selective on the projects that we've been pursuing. So we're not typically in the space where we're competing with some of the smaller guys that might be under more pressure than we are. And I think as you referenced, our diversified service offering allows us to be into a different profile.I think we're seeing a lot of opportunities on the industrial side where we've got projects that require significant experience and ability to deliver. And you don't see the smaller guys in those very often. So that's exciting for us.I think just generally, overall, we're focusing on a different horizon than some of the smaller guys.

[Frederic Bastien, MD & Equity Research Analyst]

Okay. And if we flip that around, does that create opportunities for you potentially on the M&A side? And...

[Wayne R. Gingrich, Chief Financial Officer]

Yes.

[Frederic Bastien, MD & Equity Research Analyst]

Or are you still kind of dedicated and solely focused on integrating Stuart Olson right now?

[Terrance Lloyd McKibbon, President, CEO & Director]

No, we're very pleased with the progress we've made with Stuart Olson. So we are actively looking at opportunities. Obviously, we're being very selective in ensuring that they're in a space that we want to grow and feel that, that market has got legs and resiliency.And obviously, as we mentioned in the notes on the call, we're focusing on a geographical balance. We're focusing on accretive businesses that can complement what we're currently doing, but also creating some more diversity.

[Frederic Bastien, MD & Equity Research Analyst]

Great. Well, whatever you're doing is working right now. So keep doing it. Congrats.

[Operator]

[Operator Instructions] The next question comes from Maxim Sytchev with National Bank Financial.

[Maxim Sytchev, MD & AEC]

Wayne, if you don't mind, because just trying to get the sense of the cadence on LNG Canada. So I mean, obviously, you were impacted Jan, February in terms of revenue generation. But is this kind of the revenue which is lost just given kind of the seasonality component? Or is it -- can you put more boots on the ground to be able to sort of fully recapture that? Just trying to make sure that we properly reflect this because this has been pushed pretty much.

[Wayne R. Gingrich, Chief Financial Officer]

No, when BC Health announced the shutdown of the 5 projects, one of them was the LNG Canada project. The number of boots on the ground we had to reduce in January and February. So had that not been in place, we would have had a lot more activity onsite in January and February. And even in March, we were ramping up on that project. So we didn't really get to a full capacity towards the end of the quarter. So it did have an impact from what we otherwise would have had.

[Maxim Sytchev, MD & AEC]

Right. And so -- but again, so will you be generating on a like-for-like basis, I guess, like more EBITDA in Q3, Q4 because of that catch-up dynamic? Or that's not how you guys are thinking about it?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. No, I think that's a fair comment. For the work that was delayed in Q1, we think we'll be able to make that up through the course of the year.

[Maxim Sytchev, MD & AEC]

Okay. That's helpful. And then, Teri, if you don't mind, I mean, obviously, with WTI where it is, can you maybe talk about the oil and gas opportunities, maybe for legacy Stuart Olson? And then given the pricing of iron ore, gold, and I mean there's much more movement there -- in copper as well. Anything kind of on the mining side of things that makes you guys excited looking forward from a bidding perspective?

[Terrance Lloyd McKibbon, President, CEO & Director]

Certainly, on the oil and gas side, we're certainly seeing an uptick in the demand for our services and the pace of activities has certainly increased. You're always active with projects that are sort of evolving given when we announced and been evolving for a period of time. But with the strength of oil pricing, we've seen these things accelerate now and move along, and we're seeing more things, more new announcements and whatnot that are exciting for the market in that regard. So sort of the rising tide scenario.On the mining side, it's still a little bit slower in terms of new capital pouring into new projects and whatnot. I think there's still a lag there. At least, we're seeing a bit of a lag in the kinds of things that we pursue. But we anticipate that, that will strengthen. I think part of it is still in the pandemic as well. So we'll see over time. We're not currently seeing that side of our business pick up but anticipate that it will by third quarter.

[Maxim Sytchev, MD & AEC]

Okay. That's super helpful. And I guess, like obviously, you have a slide showcasing the infra spend by province. Any pinch points on the potential horizon in terms of workforce to be able to undertake all these contracts? Maybe any mitigation strategies that you guys are thinking about right now?

[Terrance Lloyd McKibbon, President, CEO & Director]

So we certainly haven't experienced the pinch points at this point. And obviously, we're always very careful that the projects we pursue are within our capacity and capabilities, and we're comfortable with the teams. It's just a function of being very disciplined.Ultimately, the programs announced like these -- that have been recently announced with the government, take a bit of time. And so we do anticipate that there will be some time that will allow us to properly structure our positions on these things and take it from there. But at this point, Canada has got pretty significant capacity. So I don't anticipate in the short term to medium term, Maxim, there'll be any kind of pinch points.

[Operator]

The next question comes once again from Michael Tupholme with TD Securities.

[Michael Tupholme, Research Analyst]

Just a follow-up on one of the last couple of questions there, Teri, regarding improving oil prices. So it's clear there's obviously been a material improvement. I'm just wondering though, the opportunities that you're seeing, can you be a little bit more specific? Are these sort of more debottlenecking type opportunities? Or are you actually seeing some opportunities related to sort of growth expansionary type spending?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, typically with the existing plants, they're always focused on increasing their capacity. So there is such significant scale to these producers that it sort of quietly evolves where you've got expansion on these sites.And so for us, that's what we're seeing, certainly some significant evolution there. And when oil prices are stronger, the spending is higher, and that's just the way it evolves. And then you're starting to see new announcements with new opportunities evolving, generally, in the landscape -- in the energy landscape. So we're certainly excited about. And we're also seeing companies that are in oil and gas that are obviously expanding their renewable footprint and those are exciting.So we positioned ourselves really well to take advantage of a diversified platform of projects, and we're seeing that really start to bear fruit.

[Operator]

There are no further questions at this time. I will now hand the call back over to Mr. McKibbon for closing remarks.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thank you, everyone, for taking the time to join our first quarter earnings conference call. We have a very bright future ahead of us as the premier construction and infrastructure company with the potential to create long-term value for all stakeholders.Have a good day, stay safe, and we look forward to updating you with our second quarter results.

[Operator]

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