Bird Construction Inc

TSX:BDT

Earnings Call Transcript 2022-Q1

[Operator]

Ladies and gentlemen, welcome 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. Analysts who wish to ask a question should have their webcast muted when dialing into the conference number provided. [Operator Instructions.] As a reminder, 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.

In addition, our presentation today includes references to a number of financial measures, which do not have standardized meanings under IFRS and may not be comparable with similar measures presented by other companies and are therefore, considered non-GAAP measures. I would like to turn the call over to Teri McKibbon, President and CEO of Bird Construction.

[Terrance McKibbon, executive]

Thank you, operator, and good morning, everyone. Thanks for joining us on today's first quarter of 2022 earnings conference call. Joining me on today's call is Wayne Gingrich, Chief Financial Officer. I'm pleased to report solid financial results for the first quarter of 2022, whereby we posted strong year-over-year revenue growth, reported a record combined backlog and continue to possess a strong balance sheet. We posted these strong results despite early headwinds from pandemic-related personnel absenteeism and supply chain challenges as well as weather-related delays.

Our first quarter results continue to reflect our efforts to bring together the Bird, Stuart Olson and Dagmar teams to leverage our combined strengths. This effort has resulted in bird winning projects that it would not have otherwise won on its own. As I've said previously, I believe that we've built a strong foundation such that we can grow our top line while improving our overall EBITDA margins to accelerate growth of our bottom line.

As you will see on Slide 6, we posted first quarter construction revenues of $476 million, a 77% increase year-over-year. While revenues for both quarters were negatively impacted by the pandemic. The nature of those impacts were quite different. In 2021, we've witnessed full project shutdowns and postponements due to COVID-19 compared to 2022, where we experienced smaller individual impacts due to absenteeism and supply chain delays but across a broader range of projects. The CEWS program to help mitigate some of the impacts to our bottom line in 2021 but was not available this year.

Net income for the quarter was $6.4 million or $0.12 per share. On an adjusted basis, EBITDA was $17.8 million, representing a 3.8% margin, while earnings were $6.5 million or $0.12 a share. Procurements in the quarter amounted to $507 million, while our backlog was at a record $3 billion at quarter end and pending backlog of $1.7 billion, which is approaching the prior record set in Q3 of 2021. Overall, our bid pipeline remains robust as opportunities continue to present themselves, which gives us continued confidence in the near to medium term.

Moving to Slide 7. For the first quarter, we reported an adjusted EBITDA margin of 3.8%. On a trailing 12-month basis, we reported an adjusted EBITDA margin of 4.7%. I'm encouraged by the strength of our margin this quarter given that Q1 is a seasonally slow quarter, and in light of the continued impacts of the pandemic this past quarter. One of our strategic priorities is to focus on achieving a higher overall margin profile, and our expanded capabilities will continue to present cross-selling opportunities. This, coupled with an increased level of self-perform work is expected to result in a higher margin profile over time.

Our strategic pursuits are paying off, as you can see on Slide 8. We announced meaningful contracts in the first quarter, subsequent to quarter end. In the first quarter, Bird’s joint venture was selected by the city of Barrie as a general contractor for the city's wastewater treatment facility upgrade program and will assume primary responsibility for construction services for the duration of the project, which will be delivered through an IPD model. The construction cost estimate of the project is valued at approximately $125 million.

Additionally, subsequent to quarter end, the company was awarded 2 5-year master service agreements or MSA contracts for industrial maintenance services and 2 industrial facility turnaround contracts. The total value of the awarded contracts is an estimated $90 million. Also, after quarter end, Bird was awarded a multiyear mining services contract valued at approximately $70 million over the term of the contract. Leveraging the recent acquisition of Dagmar Construction, we are pleased to announce a contract for railway track, signal and station works by Metrolinx for the Kitchener GO Corridor expansion project valued at approximately $62 million. This contract is the first step in a series of infrastructure upgrades planned as part of the Kitchener GO expansion program, which will transform the line and bring increased 2-way all-day service and better connectivity to the larger GO transit network. This contract speaks to the strength of Dagmar’s capabilities, and we expect to leverage our combined pursuits with Dagmar to capture additional value-added work over time.

Lastly, we were selected as a proponent for the Port Hope area initiative master construction contract, or MCC, by the Canadian Nuclear Laboratories, under the MCC as 1 of 3 proponents, Bird has the opportunity to bid on work packages covering close to $1 billion of decommissioning and remediation work over the life of the initiative. I'd like to highlight that this contract speaks to our relationship with CNL given our expanded self-perform capabilities and stronger civil and earthworks experience, which position us to deliver substantial value to CNL and the Port Hope area initiative over time.

The announced contracts in the first quarter of 2022 and subsequent to quarter end, build on our extensive portfolio of projects, as illustrated on Slide 9. These projects span Lake City Studios and the Okanagan Indian Band water system upgrade in British Columbia, a bundle of schools and the University of Calgary, McKimmie Block in Alberta to working on Stage 2 of the Confederation Line and the Ontario Power Generation Clarington campus in Ontario.

In total, we are currently working on over 300 projects with a combined value of $6.7 billion, as shown on Slide 10. Taking it one step further, we have a notable portfolio of major contracts that provide good visibility over a multiyear time frame. Our major projects are multidisciplinary, span from coast to coast and provide good visibility given the longer maturity of these contracts.

Furthermore, as I have talked about previously, over the past number of years, we have made a concerted effort to reduce the overall risk profile of the company by way of entering into collaborative contracting methods, which balances the risk transfer between Bird and our clients. Ultimately, these contracting [measures] allow us to share the risk appropriately with our clients. To this end, currently, we have 15% of our contracts under collaborative IPD Alliance contracts, while we have 20% of our major contracts under the collaborative method.

To provide a bit of color, these collaborative contracting methods bring all parties together early in the process to provide transparency and few surprises. As such, client works with the designer and contractor through all the delivery phases as one integrated collaborative team. This delivery method provides higher owner control, commitment and dedicated resources, which increases transparency and as a result, provides increased project budget certainty for the client. By its very nature, these collaborative integrated delivery methods allow a balanced transfer risk to allow the client -- allowing the client and Bird to share the risk, which reduces our overall risk profile. Additionally, we have amassed significant capabilities to offer master service agreements to clients under long-term contracts, providing excellent visibility to forward revenues. In fact, within our pending backlog, we have roughly $850 million of recurring MSA work that span between 1 and 5 years. Our MSAs are predominantly comprised of [indiscernible] contracts with industrial clients where we have long histories of working together.

While we have historically had a large presence in Alberta within the oil and gas sector, we have broadened our footprint moving out east to provide substantial capabilities to clients outside of the oil and gas sector. Our strong construction and self-perform capabilities, combined with our commercial systems group where we employ over 1,000 electricians allow us to provide a compelling one-stop shop offering to our clients. I believe this is a competitive advantage for us, and we'll continue to bear fruit going forward. In fact, we have taken our deep bench strength and broadened service offering into new emerging markets, further diversifying our book of business. We're working with our clients to build sustainable projects.

As you can see on Slide 12, we are leveraging our civil, structural and mechanical and electrical capabilities to complex major projects and the alternative energy and environmental sectors. Over the past 50 years, Bird has executed on some of the largest infrastructure projects from hydroelectric infrastructure, nuclear and renewable power to organic waste processing and waste energy recovery projects. Overall, we are well positioned to capitalize on and contribute to new environmentally friendly solutions, which provides us with significant growth for Bird in the coming years. Additionally, as it relates to sustainability, I'd also like to highlight that we just released our 2021 sustainability report, I would encourage everyone to visit our website and download the report.

All told, our ability to win an increased share of business through a broader service offering, coupled with a significant portfolio of major contracts and MSAs under long-term contracts has allowed us to report a record combined backlog of $4.7 billion as at the end of the first quarter, which you can see on Slide 14. The record combined backlog in combination with a healthy economic backdrop and strong expected government infrastructure spending provides strong tailwinds to organic revenue in the near term to medium term. Our goal over the past number of years to drive increased diversification, revenue visibility and higher margins, all while reducing our risk profile since 2018 is bearing fruit as evidenced by our first quarter results. We expect our go-forward results to continue to reflect our strategic goals and to continue to add value for our clients and build Canada over the next century.

With that, I'd like to turn it over to Wayne to go over our financial results.

[Wayne Gingrich, executive]

Thank you, Teri. Please turn to Slide 15. Despite the challenges of managing through the pandemic as well as weather-related delays, we reported construction revenues of $475.5 million for the first quarter. This represents a 6.9% increase year-over-year. Gross profit was $41.6 million or 8.8% of revenues for Q1 2021. This compares to $39.9 million or 9% of revenues in the comparable period in 2021. The year-over-year increase in gross profit was driven by higher construction volume and stable gross profit margins from disciplined project execution, contracting and execution and just good management of construction costs incurred.

I would highlight that this increase was posted despite a meaningful year-over-year $11 million CEWS recovery, which helped to offset pandemic-related costs in Q1 2021, which did not recur this year. General and administrative expenses were $31.3 million or 6.6% of revenues this quarter compared to $29.4 million in the first quarter of 2021. Adjusted EBITDA for the first quarter of 2022 was $17.8 million or 3.8% of construction revenues. This compares to adjusted EBITDA of $21 million in Q1 2021 or 4.7% of revenues, impacting the year-on-year comparison were the CEWS recoveries in Q1 2021 totaling $11.2 million recorded in cost of construction and general and administrative expenses.

As I just mentioned, no such recoveries were recorded this quarter. These CEW subsidies will distort the year-over-year comparative reported margins until Q3 this year when the trailing 12-month impact of subsidies will lapse. Net income for the period amounted to $6.4 million compared to $7.1 million in Q1 2021. On a per share basis, earnings were $0.12 versus $0.13 in the prior year quarter.

As Teri indicated, we've made a concerted effort to diversify our business, drive higher revenues through recurring revenue streams and increase our embedded margin and manage the overall risk profile of our business. We've accomplished this in a number of ways. Notably, we have maintained a diversified sectorial work program balanced across institutional, commercial and industrial contracts to drive stronger growth, both on the top line and on the bottom line.

As can be seen on Slide 16, our contract portfolio is comprised mainly of low to medium risk contracts. In fact, over 95% of our revenues for full year 2021 were in the lower 2 risk categories, meaning IPD or Alliance, construction management, stipulated some or unit price contracts, for example.

Moving on, I'd like to quickly touch on the integrations of both Stuart Olson and Dagmar Construction. We have brought all the teams together and now believe that we have a cohesive team that is able to cross-sell our capabilities across Canada. To-date we’ve seen synergistic top-line benefits from the Bird, Stuart Olson, and Dagmar combination and we have one contract that individually we would not have won on our own. From a cost standpoint, we have largely worked through acquisition and integration related expenses and do not expect these to recur in a meaningful way on a go-forward basis as we’ve talked about previously. We expect to realize further cost savings over the next couple of years as we integrate both companies onto one unified IT platform.

Turning to our financial position on Slide 18. We continue to retain a strong balance sheet with significant financial flexibility. As of the end of the quarter, we have accessible cash and cash equivalents of $73 million and approximately $140 million of available capacity under our committed syndicated credit facility. As at quarter end, all of our financial metrics are well within our comfort levels and provide ample flexibility to pursue additional accretive M&A. Our adjusted net debt to trailing 12-month adjusted EBITDA ratio was 0.03x, while our debt-to-equity ratio was 20.3%.

Turning to Slide 19. We continue to balance our capital allocation priorities between organic opportunities, dividends, M&A and debt repayments. For Q1 2022, we generated cash flow from operations before noncash working capital of approximately $19 million, while CapEx was $5 million. We expect that as the business returns to normal, capital expenditures will return to pre-pandemic levels. As always, we remain committed to returning excess capital to shareholders via our monthly dividend payment. For the first quarter, we returned $5 million by way of dividends. As it relates to our M&A strategy, we will remain disciplined and opportunistic. And overall, we have made significant strides in building our business profitably while diversifying by end market and geographical exposure. As such, I'm very pleased with our financial strength and our positioning within the Canadian construction industry.

With that, I'll turn it back to Teri.

[Terrance McKibbon, executive]

Thanks, Wayne. I think our Q1 results are a true reflection that we have built a strong platform for future growth and strong profitability. Given our long-standing experience in the Canadian construction industry, we are well positioned to capitalize on the strength of the Canadian economy. As highlighted on Slide 20, heightened expected infrastructure spending announced by the federal and provincial governments with their recent budget announcement, combined with previously announced infrastructure-related spending is expected to provide a healthy pipeline of opportunities for us.

Additionally, a higher commodity price environment, which has resulted in increased capital spending in LNG, oil and gas, agriculture and mining should also act as a natural tailwind for Bird. This underpinned by our strong backlog and growing diversified presence geographically as well as by product offering is expected to result in solid organic revenue growth in 2022 and in the years to come.

With that, I'd like to turn it back to the operator for questions.

[Operator]

[Operator Instructions.] Our first question comes from Chris Murray of ATB Capital Markets.

[Chris Murray, analyst]

Can we just talk a little bit about your backlog that you've got at this busier point and how we should be thinking about embedded margins, particularly as the quality of work looks like it's been improving a little bit. Appreciating that if we already account for the Qs numbers, how you think that those should evolve over the year?

[Wayne Gingrich, executive]

Yes, I can take that one, Chris. I think, overall, we're pretty happy with the margin profile embedded in our backlog and our pending backlog for that matter. We have a nice balance of work between self-perform and general contracted work. And as we've said in prior quarters, we generally have higher embedded margin in self-perform work in the industrial business, where generally most of our self-perform work is, that and commercial systems have a really good margin profile there.

CEWS certainly, that was not something that's embedded in our backlog margins at all. That was obviously a subsidy recorded as a cost reduction in prior quarters in the comparative periods, but not something that factors into our margin profile. So, what you kind of see in Q1 here is just the margins we're earning either from backlog or just through the favorable settlement of claims with contracts where every quarter, we have a few of those.

[Chris Murray, analyst]

Okay. All right. Fair enough. And then maybe just thinking about M&A. When you look at the opportunities, it certainly sounds like the acquisition of Stuart Olson and Dagmar have gone well. Any thoughts around what to acquire right now? I would assume most contractors at this point are pretty healthy. How are you thinking about acquisitions in terms of growth at this point? And any thoughts about maybe needing to go into the U.S. or anything like that?

[Terrance McKibbon, executive]

So, we're constantly looking for new opportunities, some small, some larger constantly evaluating. I would say that in the past 6 months or so, we've had a lot of opportunities with the new diversified platform for organic growth. But we're always -- we've always got our eye on opportunities that are evolving. And I think we've, in the past, have communicated areas that we're interested in growth. Obviously, areas in renewable power in the energy sector in increased capacity to broaden our civil infrastructure platform in Canada, leveraging off the success and the strength of Dagmar, looking at expanded mechanical electrical process, obviously, with an emerging energy environment with disruption with a lot of things happening, having that internal capability to self-perform a lot of that work coupled with existing teams we have is an area of focus. So, it's a mix of things, but a heavier bent on self-perform, I would say, in terms of what we're interested in.

As far as the U.S., the opportunities in Canada right now certainly are keeping us completely consumed. But I think as you look longer term, our current strategic plan is focused on Canada. But as you look longer term, I think we have an eye on opportunities there. But I'd say that right now in the near term, it's a big focus on Canada.

[Chris Murray, analyst]

And then just a couple of cleanup questions on this. So, Wayne, you did mention that CapEx will be back to pre-pandemic levels, but diplomatically pre-pandemic also didn't include 2 other acquisitions and some IT spending. So, would you mind maybe dialing in what that number might look like a little more in detail? And also, any thoughts around working capital, anything unusual we should expect from the pattern this year?

[Wayne Gingrich, executive]

I'll take the second question first. So -- I'm sorry, were you talking about noncash working capital or is just working capital?

[Chris Murray, analyst]

Yes, noncash working capital, exactly.

[Wayne Gingrich, executive]

Noncash working capital. So Q1, we invested about $30 million in noncash working capital, which is an improvement over prior year. And that's really driven by some growth year-over-year, but just project mix that we have as well. I think through Q2 and Q3, as you see the work program ramp up, you're going to see investment in noncash working capital. And then our usual seasonality flows subset in Q4, generally that releases to a significant degree in -- at the end of the year, and we expect that to continue. I'd say in certain cases, we're trying to be proactive in getting in front of acquiring certain materials on projects so that we can try to manage any sort of supply chain delays. We had a little bit of that in Q1. I think you'll see that continue in Q2 and 3. And again, I think you'll probably see that release in Q4. So, nothing really unusual there other than that our business is expected to grow, and we expect it to grow every quarter this year. So that drawn cash will be spread through the year, not all at one point in time.

And then in terms of CapEx, so if you look at the chart we posted there, we had Bird in 2019 at $14 million and primarily just Bird in 2020 at $14 million, and then last year was even reduced with the combination of both Stuart Olson and Bird at $12 million. When you look at our first quarter here, for example, we had $5 million. A good portion of that related to things that we wanted to acquire in 2021, but we couldn't get delivery. So, we had disclosed that as a contingent liability and then received those things in the first quarter. So, you get a bit of a timing issue that way, carrying into 2022 from 2021. I think you'll see our regular cadence on project expenditures in Q2, Q3. You are going to see an increased spend as we roll out our technology platform.

Yes. So, in terms of order of magnitude, I don't usually give specific guidance, but I think you're certainly going to be north of $20 million for the year, maybe even in the $25 million range. And then any variance from there is really just project-driven variances, I suppose.

[Operator]

Our next question comes from Frederic Bastien of Raymond James.

[Frederic Bastien, analyst]

Can you speak to the recent changes at the Board level and how they broadly strengthen your organization?

[Terrance McKibbon, executive]

Yes. So, we're certainly excited with the new directors that have come on board. Obviously, Jennifer Koury has got extensive experience with large global firms more recently, BHP. And in today's world, having an established leader with the experience and people and culture. Obviously, our organization is -- its success is founded on our people and culture strategy and so certainly enjoying having Jen join the Board.

Kim Fennell would be considered a global expert in information technology and certainly in the recent year, the last 12 months or so, a big uptick in the focus from Silicon Valley and construction. So, getting a Silicon Valley executive with the experience he has from being in the [inner circle] C suite of Uber across a number of other companies, more recently serving on the board of Ritchie’s. Certainly, Kim gives us a real wealth of knowledge. And lastly, Gary Merasty, certainly, Alberta has got, I think, an extensive reputation across Canada working with various partners across a number of different sectors there. And Gary comes to us with extensive experience in Western Canada in the construction industry in Saskatchewan and also as a federal MP. So having Gary assist us and guide us with our indigenous relations strategy is tremendous and enjoying having him on the team.

So yes, really excited about the new group. I think they're well suited for the future of the company as the company evolves and -- but also sad to see 2 of our retiring directors who have been part of the history of the company for many years, 20, 30 years of history and obviously guided us through some challenging times in the economy. And so, I certainly want to thank Ron Munkley and Doyle for those -- for their contribution over such an extended period of time. And so, we'll miss them.

[Frederic Bastien, analyst]

Ontario's residential construction sector is facing one of its largest strikes in years currently. And I guess the fear is that this may spread into the ICI sector. Do you have any comment on -- I mean, the trend that's happening here, and it's a tough question, but just wondering if you had any thoughts there?

[Terrance McKibbon, executive]

Yes, I think it does -- we do expect that it's going to affect our business here in Ontario. The time frame is sometimes difficult to predict. In the residential side, there is a term limit that is a 6-week term limit that beyond that, it moves to arbitration. So, depending on how it evolves, there is a series of -- there's about 30 different agreements and trades that are in that sector. And about half of them have ratified their agreements. So, we are dealing with isolated areas. We do expect it will migrate to impact ICI. But again, it's a -- you're right, it's a complicated question because it has multiple tentacles in terms of the various agreements we have. I mean we have a lot of [extra] work right now. The [extra] agreements are not subject to these agreements that would cause us this interruption of labor.

So -- but yes, obviously, we'd like to see things get resolved. It's the first time in many, many years that this is happening. It's not something that we're used to. So, it's a little difficult to predict the impact of it other than to say in the residential side, it won't be longer than 6 weeks in the ICI side, it's a little more complicated answer to that as it evolves. But I've said before, the unions in Canada have a very strong leadership. We have a tremendous relationship with them. The leadership is their businessmen. They understand the impact of what this can cause. And obviously, in a very robust market right now as Canada's economy recovers, we just hope that there's a semblance of fairness that is thought of as these conditions continue.

[Operator]

Our next question comes from Michael Tupholme of TD Securities.

[Michael Tupholme, analyst]

First question is just about the comments that you made regarding seeing increased employee absenteeism and intermittent supply chain challenges that affected the first quarter. So not surprised that you called those factors out. I guess what I'm wondering is, are you able to quantify what sort of an impact those factors had on revenues and margins in the quarter?

[Wayne Gingrich, executive]

Yes. I mean we didn't specifically disclose it. But if you think about it this way, we did say last year in Q1, we had specific project sites that were shut down, so it was a little bit easier to quantify. And I think we had it pegged somewhere in the $80 million, $90 million range. This year is probably less than that. It's more difficult to quantify because it's spread across a much broader range of projects, but in smaller impacts, but it's probably not to the same degree as last year, but it's not an insignificant number. Like I think you're looking in the $50 million, $60 million, $70 million range for sure.

[Michael Tupholme, analyst]

Okay. And then any comment on how that would have impacted margins. There's obviously less overhead absorption when you experience those factors. Just I guess the reported EBITDA margin was 3.8%. Can you talk at all about what sort of impact that would have had on the margin?

[Wayne Gingrich, executive]

Yes. I think even more like our gross profit percentage is -- take that times the impact and tax affected, and you probably do have some overhead-related expenses that go against that. But it's not going to flow through at the same 3.8%. It certainly would have been additive to our overall EBITDA percentage because a lot of your G&A costs are fixed and you would have got leverage on those.

[Michael Tupholme, analyst]

Okay. And then looking forward, I mean, the supply chain challenges likely persist. I think you sort of talked about that. I mean the Omicron impact I suspect you called out that was more in the early part of the quarter. So, I guess, as we look forward to Q2 and I guess the rest of the year, yes, I don't know, are you able to kind of talk about the extent to which these kinds of factors and maybe it's again more on the supply chain side are likely to continue to be a headwind. And I guess you did call out the prospect or the expectation of improving rates of year-over-year growth in revenues. And on that point, I guess I'm just trying to understand, is this sort of a step up in Q2, the year-over-year rate of growth in Q2 steps up versus what it was in Q1 and then it kind of runs at some sort of more consistent level? Or are you looking for that to ratchet up every quarter as you move through the year?

[Wayne Gingrich, executive]

I think, plus or minus, you're going to see the growth rate year-over-year in the high single-digit levels, and that obviously includes the addition of Dagmar in there when I say that. So somewhere between where we were in Q1, which is probably 7% and maybe in the 8%, 9% when things recover from the pandemic a little bit with the S&P that we had there in Q1.

Yes, I think certainly, there's always factors that can have an impact on that. Right now, we're seeing less impact from the pandemic going into Q2 here. But supply chain issues, we think will still persist throughout the year, and we're trying to manage those as best we can. The situation with the strikes that we talked about before. I mean, that can be a bit of a wild card to depending on what turn that takes.

[Michael Tupholme, analyst]

Maybe just 2 follow-ups on all of that. I guess, first off, can you talk a little bit about on the supply chain side, where is it that -- what areas are you seeing the greatest challenges in? And then secondly, with respect to -- that's very helpful your commentary about the rate of revenue growth. Just trying to get a sense for the strike. I realize it's -- there's a lot of unknowns there at this point, but could that be a situation that could materially change what you're thinking about at this point for the kinds of rates of revenue growth you just called out, Wayne? Or is this sort of more at the margin in terms of changes that, that could have?

[Wayne Gingrich, executive]

So, I'll answer the second one first on the strike. It's ballpark 20% of our revenue is in Ontario. So, you can sort of look at it that way. But currently, we have some slowdowns on sites because of the strikes that are underweight currently. So, the sites are not shut down. They're just -- there's some slowdowns. Difficult to predict what's ahead over the next on the residential side. Like I said, there's a term that allows us to at least predict where that ends.

On the supply chain side, it's a combination of, obviously, escalation on uncertain materials. Shipping is not to be underestimated. There’s shipping delays and shipping challenges throughout the world. And then lastly, the impact of war in Europe, obviously, is creating on some of the specialized components that we would have on more complex mechanical electrical equipment and things like that, that might be sourced from European countries. There's certainly some impacts there. So, it's a mix, and it's from one week to the next, it ebbs and flows, and we work with our clients to find alternative products. And so, it's more difficult to really in both the supply chain escalation and labor unrest, it's a moving target every week. So, it's difficult to put any kind of forecast to it. I wish we could, but it's really difficult to do that.

[Michael Tupholme, analyst]

Okay. That's helpful. And then just last one. In talking about the bidding prospect pipeline, you highlighted the improvement in commodity prices is one of the reasons to be optimistic about the outlook. I appreciate the fact that in many areas, commodity prices have increased quite substantially. And so, like I take your point on the suggestion that this could be positive for the outlook. I guess what I'm wondering is if you can comment a little bit more on some of the discussions you're having with your customers. Have you actually seen sort of a step-up in the number of opportunities in the commodity and resources sector? I mean, obviously, there's a big focus on capital discipline by a lot of commodity producers. So just wondering if you've actually seen and can talk about the kind of increase in opportunities if there has been one so far? Or if this is sort of more perspective you're thinking at this point?

[Terrance McKibbon, executive]

Well, we certainly see, obviously, I’ll speak to oil and gas. When commodity prices are higher, they will do more, there'll be more activity. It’s just generally the way it ebbs and flows. You'll see more of the longer-term work that they sometimes will not do when commodity prices are tighter. So, you'll see more of that type of activity. Then you look across, we're really seeing, obviously, a higher demand now as mining and start thinking about the future electrification. Some of it is just driven by that. Some of it is related to higher commodity prices. So, you get more metals that are utilized in electrification being mined and produced. And you start looking at things like potash, obviously, some big investments going into companies in Saskatchewan, such as such as Jensen with BHP. So big commitments there and that project is moving along.

If you look at the new mining announcement we announced in Ontario. It's the first big mining announcement we've had in Ontario for a while. So, we start to see some of those areas. And then you start seeing some of the diversification of energy with things like hydrogen, obviously, pretty exciting with what's happening and the commitments being made by governments and major producers to -- and when you start looking at the infrastructure that's needed to fuel rail systems with hydrogen, fair amount of infrastructure has got to be built to be able to -- whether you're using it for rail or whatever you're using for, there's just -- so there's some really exciting opportunities we feel that are evolving.

So, you go across all those sectors. And then extending upon the potash idea, thinking of it as mining, but extending to ag, a lot of agricultural efforts being made right now, big investments coming into food manufacturing. So, we're seeing a lot of -- we have a trends resume in that area for delivery projects, complex scale food manufacturing facilities, we're certainly a go-to for that type of thing. So, we're seeing a lot of opportunities there in dairy and [pea] processing and all that type of thing.

So, it's pretty exciting. Unfortunately, the -- you had some impacts with supply chains and labor unrest things like that, but we'll get through that. And we expect to see some pretty robust activity as we get through those -- what would call them shorter-term challenges.

[Operator]

Our next question comes from Maxim Sytchev of National Bank Financial.

[Maxim Sytchev, analyst]

Teri, just maybe the first question for you. I mean, given, generally speaking, a pretty robust backdrop on infra and industrial type work, do you think you're going to be able to keep that 95% kind of low to medium risk contract composition from a backlog perspective on a prospective basis?

[Terrance McKibbon, executive]

Yes, I think so Max, because we're -- what we're seeing now is the larger projects in that space are all really moving towards an Alliance water treatment are predominantly moving to IPD. So, we're seeing it now being used extensive progressive design build. We're seeing a lot of those evolving. So yes, I think that's what we're really focused on. It's one of the differentiators with us. We've been very focused on this now for 3 years, and it's certainly helping to bring better predictability to our performance.

[Maxim Sytchev, analyst]

Right. And in terms of Dagmar contract sort of risk profile, how would you sort of qualify there?

[Terrance McKibbon, executive]

You're referencing the recent announcement or just the --

[Maxim Sytchev, analyst]

Just in general yes. Yes.

[Terrance McKibbon, executive]

Yes. So, they're a company that typically has had a tremendous consistent track record working on, what I would call, predominantly unit priced projects that you see in the types of things they target. So, we would quantify unit price type work in that sort of medium risk sort of profile. They're not in a focus in design builds, things like that or the P3 type thing. So yes, they -- it's really impressive to work with that team and the depth of that team and we really feel that team can be leveraged into other projects with the balance of the Bird team. And we've got pretty extensive capabilities in Western Canada. So, we're coupling those together to look at opportunities that are evolving in [indiscernible] months of that acquisition to be performing and hitting so many opportunities in front of us.

[Maxim Sytchev, analyst]

Okay. Good to hear. And my last question pertains to the LNG Canada project. I think in the past, we're thinking about sort of instrumentation, electrical, pickup in activity on that site sort of circa 2023. Do you mind maybe just providing a bit of an update in terms of where you are in terms of the bidding process there. Yes, so, I guess any color there.

[Terrance McKibbon, executive]

Yes. We're very focused on the work remaining 2022 into 2023. A lot of it is just extension in remaining components of what we were currently doing. And we've had great success there. Our team on that side has performed at tremendous levels, given all the pandemic pressures. And our clients on that side have been very pleased with the performance. So, we're seeing all the gaps that -- the project is going well overall at Kitimat, and we're seeing just a number of opportunities to fill some of the gaps in the interface between modules and the foundations and scope of work on site.

So, I'd say early days on some of the future works. A lot of this has been modularized. So, it's more of that interconnection that will be opportunities, and we'll see where that evolves. But early days on that, I would say, right now, Max.

[Maxim Sytchev, analyst]

Okay. But it should be still, I guess, in 2023, 2024, just so that we get kind of --

[Terrance McKibbon, executive]

Yes, probably more like -- I would say more 2024, probably those types of more specialized areas in the final but maybe mid-2023 into 2024. But I would say right now, we're very focused on the core assignments and the expansion of those as they continue to roll out. The big -- some of the bulk work has been done. Now there's still a lot of work to do there that's not contracted yet.

[Maxim Sytchev, analyst]

Okay. Okay. That's good to hear. And then in terms of potentially thinking about the second train, is this still a 2025 kind of like FID timeline? Or I mean, given LNG pricing right now, is there sort of any [shot] on the ground in terms of potentially accelerating this? Or is there even the ability to do some or not?

[Terrance McKibbon, executive]

Yes. So, it's just to clarify, the 2 trains, we're building first trains and then Phase 2 is 2 further trains. So, the first 2 trains are, like I said, proceeding extremely well. The client’s pleased. I think the project is proceeding well. Obviously, we're not privy to the framework of where they're at relative to FID. There was an announcement or there was a recent discussion around, it was public, in the press around studying whether Phase 2 could start earlier than 2025. I don't have any color on that other than what I read that they were looking at -- could some of that start earlier? I -- it's not something we can really comment on because we're not controlling some of that sequencing. But I would say that if I was -- based on the success in the markets as you referenced, I would be highly confident that Phase 2, Train 3 and 4 is well underway in 2025.

[Operator]

Our next question comes from Ian Gillies of Stifel.

[Ian Gillies, analyst]

With respect to some of the government work you may be pursuing, are you seeing any change in behavior in that they may be looking to slow down just given what's happening with inflation and so on and so forth? Or has there been no change there?

[Terrance McKibbon, executive]

So far, no change at our lens, Ian, and there's such a multitude of things that are happening across the country with $350 billion in spending opportunities. So, I would say, so far, no indications that there's any changes that are evolving.

[Ian Gillies, analyst]

Okay. With respect to the oil sands, once again, are you seeing any changes in customer behavior, either maybe adding in a bit more work or maintenance given the strength of oil prices or even potentially delaying because they want to keep production as high as possible where prices are robust, just anything interesting happening there?

[Terrance McKibbon, executive]

Yes, it's an interesting way to look at it. We typically see a higher demand when pricing is higher and more of the things that they should do or done versus just the minimal things are done in lower commodity price environment. So, I think generally speaking, we would see a higher demand, and we are seeing a higher demand and there's -- I think our resume and reputation continues to grow, and there continues to be new opportunities every quarter. I think we referenced we signed $90 million of new opportunities in the first quarter in our MRO business. So, we're continuing to see a pretty strong pace. And we're looking at opportunities outside of that core. We had a very successful year in 2021 with a new non-oil sands client, which was TransAlta. That's expanding into further work. And so great performance there by our MRO team, and that was predominantly mechanical, which is also -- is unique in the sense that is historically we were more predominantly electrical with the historical layered entity, which was in oil sands since oil sands started.

So, in fact, we just spent 3 days in Fort McMurray and Cold Lake last week. So, we were able to, with our senior leadership team, spend a bit of time and get a good update from our teams. So, it was time will spend and really impressive to see the scale of some of the things we're doing.

[Ian Gillies, analyst]

Got it. Last one for me. On the NCIB front, I know you guys have not been particularly interested in that path historically. Does it become any more interesting now, given what's transpired with the share price and the outlook, which, quite frankly, doesn't seem like it's changed a whole lot?

[Terrance McKibbon, executive]

Yes. It's certainly something that with our Board on a quarterly basis, we talked about, obviously, opportunities and options and framework relative to the various options that are available to us. But it's not something that I would say is on the radar currently.

[Operator]

Our next question comes from Gabriel Moreau of iA Capital Markets.

[Gabriel Moreau, analyst]

About the Port Hope area initiative, what exactly is the kind of work and contract that you think you will be able to bid on?

[Terrance McKibbon, executive]

So CNL is managing the remediation of a broad area that many years ago got contaminated with low-level radiation. And so, part of that scope, it’s obviously -- we're on an MSA with 2 other companies to work on various assignments. Some of them are related to landfill sort of management of this contaminated material. Some of them are broader where you're going into areas and communities where there is contamination in the soil and removing that soil and replacing it. I would say when you think about just remediating an area, various things that you need to do as part of that, predominantly centered on contamination that's in the soil.

[Operator]

[Operator Instructions.] Our next question comes from Michael Tupholme of TD Securities.

[Michael Tupholme, analyst]

Just stay a further clarification on the Port Hope Barrie initiative contract. The -- over what time period would you be looking at doing this work, Teri?

[Terrance McKibbon, executive]

Ten years, Mike. And right now, it's set at, I think, $1 billion, but it's a 10-year framework; 10-year program.

[Michael Tupholme, analyst]

Okay. And the -- do you have a sense for how many other groups are sort of eligible like have a group of companies been selected and therefore, are all sort of eligible to bid and how large --

[Terrance McKibbon, executive]

Three groups. So, we're 1 of 3 groups, and we're all invited to bid on, I think, every assignment that comes out. I think that's how it works. We bid on the assignments and move along.

[Operator]

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

[Terrance McKibbon, executive]

Thank you, everyone, for taking the time to join our first quarter earnings conference call. I'd like to thank the entire Bird team for their efforts, dedication and commitment to build safely to build together and to build value for our company, our clients, our communities and our shareholders. I look forward to updating you with our second quarter results.

[Operator]

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