Bird Construction Inc

TSX:BDT

Earnings Call Transcript 2021-Q2

[Operator]

Welcome, ladies and gentlemen, to the Bird Construction Second Quarter 2021 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] The conference is being recorded. [Operator Instructions]Before commencing 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 business -- 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'd like to turn the conference over to Mr. Teri McKibbon, President and CEO of Bird Construction. Please go ahead, Mr. McKibbon.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thank you, operator, and good morning, everyone. Thanks for joining us on today's second quarter 2021 earnings conference call. Joining me on today's call is Wayne Gingrich, Chief Financial Officer. I'm pleased to report very strong second quarter 2021 financial results. In fact, we reported our highest ever revenues as well as strongest quarter adjusted EBITDA and adjusted EPS in the company's history. Furthermore, we exited the quarter with a record combined backlog. Overall, I'm really pleased with the progress we have made to date, integrating Stuart Olson, and I'm excited about the future potential of the combined organization.While we continue to contend with the lingering effects of the pandemic, productivity largely returned to pre-pandemic levels and bidding activity was healthy. As evidenced by our record combined backlog, we are seeing a return to normalcy, and we fully expect to capitalize on the ensuing pent-up growth in the Canadian economy.Turning to Slide 5. The strength of our Q2 financial results once again reflect the commitment and dedication of our employees. The culmination of our efforts resulted in revenues increasing 97% with the combined Bird Stuart Olson entity yielding top line synergies. Adjusted EBITDA increased 144%, while adjusted earnings was up 128% compared to a year ago. During the quarter, we secured approximately $639 million in new contracts, which allowed us to end the quarter with a record combined backlog, which sits at approximately $4.4 billion. And as we look into the back half of the year, we're seeing a healthy pipeline of opportunities emerge, which gives us added comfort in the near to medium-term prospects for Bird.Moving to Slide 6. We reported an improved trailing 12-month adjusted EBITDA margin in the second quarter of 2021, marking the 11th consecutive quarter of improved adjusted EBITDA margins. Overall, our trailing 12-month adjusted EBITDA margin stood at 6% as at quarter end, reflecting a 240 basis point improvement compared to the 12-month period ending June 30, 2020. Overall, Stuart Olson has been accretive since the date of the acquisition. That said, as we have discussed on previous conference calls, the inclusion of Stuart Olson will weigh on our near-term margin profile. However, we are confident we are building a business that can support a higher-margin profile over the medium to longer term.As you can see on Slide 7, during the second quarter, we were awarded $172 million fixed price construction services contract with Concert Properties for the Sherbourne Project or The Burke in Toronto. The Burke is a residential tower, consisting of 53 floors and a gross floor area of 43,300 square meters, combining a healthy blend of residential and retail space that will be constructed to a LEED gold standard, leveraging green building practices and environmentally sound solution.Additionally, we're awarded 2 contracts for civil works on 2 separate sites, construction of 2 storm effluent ponds at an existing project site in Northwestern British Columbia and construction of an overpass in Northern Alberta. The combined value of the contracts awarded is approximately $135 million. Also during the quarter, we were awarded a 3-year contract with a 2-year extension option for mechanical and electrical maintenance services for the North West Redwater partnership. The total value of the contract is potentially up to $75 million and spans multiple years.Lastly, subsequent to quarter end, we negotiated a construction services contract with the international real estate firm Heinz for a mixed-use project in the heart of Toronto. The project is a 7 story mixed-use building located near the corner of King and Bathurst. The new building will be constructed by leveraging green building practices with sustainable solutions and is expected to convert to backlog in the third quarter. Overall, I am pleased with our results and the operational progress we have made. The combined Bird Stuart Olson entity is continuing to yield revenue synergies as evidenced by the benefits from cross-selling the combined capabilities of Stuart Olson and Bird to deliver a higher value proposition to our clients.The Stuart Olson having been part of Bird for almost a year. And as we continue to emerge from the pandemic, our outlook is becoming brighter by the day. We continue to see opportunities surface with the sustained improvement in natural resource prices, which is notably improving the business prospects in Alberta as well as the significant planned infrastructure spending announced by the federal and individual provincial governments in recent quarters.With that, I would like to turn the call 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 second quarter 2021 financial results. We reported record revenues and our highest ever second quarter adjusted EBITDA and EPS in our history. For the second quarter, we reported construction revenues of $556 million, representing a 97% increase in comparison to the second quarter of 2020. The year-over-year increase can be largely attributed to the inclusion of Stuart Olson. We experienced modest pandemic related impacts during the second quarter, which we estimate impacted revenues by $16 million. With that said, we observed moderate increases in revenue in certain projects that were temporarily delayed by clients due to the pandemic and have since returned to normal.Gross profit for Q2 2021 was $49 million or 8.8% of revenues. This represents a $28.5 million increase and a 160 basis point margin improvement compared to Q2 2020. The year-over-year increase is due to a combination of additional gross profit from the inclusion of Stuart Olson and the diversification of the company's work program as well as improved margins across our operations. I would like to highlight that there was a recovery of $7.8 million of compensation expense and cost of construction-related to the CEWS program this quarter. Going forward, we do not expect that we will continue to qualify for CEWS beyond the second quarter of 2021, but will continue to monitor eligibility for certain portions of our business.General and administrative expenses this quarter came in at $30.5 million or 5.5% of revenue. This was $17 million higher than the $13.5 million or 4.8% of revenue reported in Q2 last year. The primary reason for the year-over-year increase is related to the addition of Stuart Olson. As we've stated previously, we expect G&A expenses to resume to a more normalized level as economic activity continues towards pre-pandemic levels.Q2 2021 adjusted EBITDA amounted to $30.1 million or 5.4% of revenues. This compares to $12.3 million or 4.4% of revenues in Q2 2020. Adjusted earnings was $15 million or $0.28 per share in the second quarter of 2021 compared to $6.6 million or $0.15 per share in the second quarter of 2020. I would note that we incurred $400,000 more in integration and restructuring expenses compared to the same period last year on a tax-effected basis.Turning to our year-to-date results. Revenues amounted to $1 billion for the first half of 2021 compared to $604 million in the first half of 2020. The year-over-year increase can be largely attributed to the inclusion of Stuart Olson. This was partially offset by lower revenues in certain projects as a result of the pandemic. In the first half of 2021, we experienced a reduction in revenues of approximately $116 million, which can be associated with the pandemic.Gross profit year-to-date was $88.9 million, representing a 138% increase year-over-year, while G&A expenses increased 112% to $60 million. In the first half of 2021, we recognized a total CEWS recovery of $20 million, of which $18.8 million related to cost of construction and $1.4 million related to G&A. Adjusted EBITDA for the first half of this year was $51.2 million, representing a 5.1% margin. Adjusted EBITDA for the first half of 2020 was $19.9 million or 3.3% of revenues. Adjusted earnings year-to-date was $24.1 million or $0.45 per share. This compares to $7.7 million or $0.18 per share in the first half of 2020.Similar to what drove our Q2 results, the year-over-year improvement in our first half of 2021 results were driven by the combination of additional margin from the acquisition of Stuart Olson, which includes synergies as well as progress with diversifying our work program and improving profitability margins in our operations. We have a strong work program in place across the country.Moving to Slide 9. I'd like to quickly touch on the progress we've made to-date with the integration of Stuart Olson. Overall, we're on track with our previously stated objectives. To-date, we set in motion $10 million in annualized EBITDA synergies that we expect will be realized as we move through the back half of this year. This is on top of the previously realized $15 million in cost synergies related to annualized interest and depreciation and amortization expenses that were realized upon closing.Furthermore, as we have started to see over the past couple of quarters, cross-selling synergies are real as our broader services offering has materialized and meaningful contract wins to date. Given the strength of our service offering across the combined platform, we expect to see additional top line opportunities to emerge going forward.The cross-selling opportunities are evident when looking at our backlog on Slide 10 and pending backlog, which on a combined basis, sits at an all-time high. As at the end of Q2, our backlog stood at $2.7 billion, while our pending backlog amounted to $1.6 billion. I'd like to highlight the pending backlog includes approximately $1 billion of MSA contracts. These contracts are typically with industrial clients that spend multiple years for MRO services. We expect to convert these MSAs to backlog on a quarterly basis as purchase orders are received. Overall, these MSA contracts represent a recurring revenue stream over the next 1 to 6 years, providing us excellent revenue and profit visibility.As always, we are diligently focused on appropriately balancing the risk profile of our backlog through end market diversification and contracting methods. The composition of our backlog and pending backlog affords us the ability to not only diversify and mitigate risk, but also improve our overall margin profile over time as we undertake an increased level of self-perform work.Moving to Slide 11. We continue to retain a strong balance sheet, which provides significant financial flexibility. I'd like to point out that given our work program in the second quarter and our planned work program as we move into the back half of the year, non-cash working capital was net negative $49 million. As a result, our accessible cash stood at $2.8 million as at June 30. With that said, we have $124.8 million of capacity under our $165 million committed syndicated credit facility as well as a non-committed accordion of up to an additional $50 million. This capacity not only allows us to be nimble and fund organic growth, but also allows us to opportunistically capitalize on M&A opportunities as they arise. Overall, as at quarter end, adjusted net debt stood at $60.7 million or 24.6% from a long-term debt to equity ratio perspective, which is well within our comfort level.Turning to Slide 12. We continue to balance our capital allocation priorities between organic opportunities, dividends, M&A and debt repayments. During the quarter, we generated cash flow from operations before non-cash working capital of approximately $28 million. As I mentioned previously, given the meaningful organic opportunities that have arisen since completing the Stuart Olson acquisition, we have seen significant shifts in our work program project mix and in the stage of completion of certain projects. This includes a significant increase in self-perform projects, which I would remind everyone, have higher embedded margins.As a result, non-cash working capital grew approximately $49 million in the second quarter. Our capital investment has remained modest in 2021 as we deployed $2.2 million towards CapEx in the quarter and $3.2 million year-to-date. As always, we remain committed to returning excess capital to shareholders via a monthly dividend payment. In the second quarter, we returned $5.2 million in dividend payments.Overall, I'm very pleased with our financial strength and our positioning within the Canadian construction industry, which will allow us to capitalize on anticipated strong economic growth coupled with the backdrop of higher commodity prices.With that, I'll turn it back to Teri.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thanks, Wayne. Turning to Slide 13. I continue to believe that Bird has built a strong platform for future growth and strong profitability. We have a stronger team, a more resilient business model than in the past. And as such, we have and will continue to position Bird to play a major role in the Canadian construction industry. Consequently, we are ideally situated to capitalize on the significant growth opportunities ahead of us as market conditions recover, coupled with strong infrastructure stimulus spending and a favorable commodity price environment.Lastly, before turning the call over to the operator for questions, I would like to remind everyone that we will be holding our virtual Investor Day on Thursday, September 9, which you will be able to stream live on our website. At the end of the day, we hope you'll come away with a better understanding of our business, our strategy and our vision, as we will be sharing elements of our new 3-year strategic plan that will allow Bird to capitalize on the opportunity set in front of us over the near, medium and long-term.With that, I'd like to turn it back to the operator for questions.

[Operator]

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

[Christopher Allan Murray]

Yes, maybe looking at results and the margin profile. So you kind of alluded to the fact that margins even at this point aren't where you think that they could eventually get to. And I guess a couple of pieces to this question. I mean first, trying to understand what's left to do with the Stuart Olson backlog or projects or even just further synergies there? And what kind of time frame are we looking at? And then the second part of that is, where ultimately do you think you can drive these margins on a combined basis?

[Terrance Lloyd McKibbon, President, CEO & Director]

So maybe just start with a Stuart Olson framework. Chris, we're obviously well along with our integration. In certain geographical markets, we have some overlap. So we're continuing to refine the team and align the team with the new suite of services we have. And obviously, not as easy to do this in a COVID environment than it would be absent a COVID environment. But in that regard, we've made really good progress. And most of that is in Alberta and B.C. businesses where there's more overlap in the various entities. And obviously, getting in front of clients and communicating the framework of the new business, much cleaner, easier framework with our MRO business because really the overlap was a lot smaller. And obviously, our commercial systems business is an independent group. So no real changes there. In that regard, what's left to do? We're working on a combined technology platform for both companies. Both companies were, I would say, due for some investment and to develop a new platform. And quite honestly, the construction industry is kind of going through a what I would call, a technology transformation. There's just some really exciting things that are happening with AI, digital twins and things like that, and we're catching up really quickly and very focused in those areas. So that's going to be certainly a journey, which would have been likely a bit of a journey for both businesses regardless. But we have some pretty significant synergies from that, that we're excited about and make the business more efficient. On the remaining sort of areas on that would be post-COVID, obviously, driving higher engagement, driving a more common culture, but some of that is an in-person sort of framework. And then I would say on the margin side, year-to-date margins are higher. They've got some inclusion of CEWS in there. So they're higher in that regard. The cross-selling side of the business, margins are very positive. So we're really seeing really good traction there. And that's a bit of a transformation on the Bird side as well because we're really driving a one Bird framework. So that's somewhat new in the Bird side. So yes, timing has been good in that regard. So we're continuing to move the business forward. The markets are opening up to us with the type of company that we've built. Obviously, with the use of IPD and the use of alliance and collaborative contract. We're seeing that really accelerate across a number of our major clients. So that's very positive. So continuing to focus on accretive growth, very disciplined approach to new projects. And yes, we feel pretty excited about what's ahead and very excited about the Stuart Olson acquisition to-date.

[Christopher Allan Murray]

Okay. That's helpful. Just turning to kind of cash and expectations for cash flow. And also, I want to maybe touch on dividends a little bit. So when you end up the quarter, I think, as you mentioned, with a lower level of cash as you're working through, basically, working capital builds, I guess, in advance of higher activity levels. Should we be thinking, though, that full year that should kind of reverse back out with billings at the end of the year? And then just thinking about cash on hand and stuff like that, how much cash do you guys need to deal with, I think, that -- about that? And then the other piece of this question, did note that you guys just confirmed your dividend for the next few months. At what point do we start looking at with these kind of financial -- this kind of financial performance, thinking about when the dividend starts moving higher.

[Wayne R. Gingrich, Chief Financial Officer]

Maybe I can start the answer to that with just the discussion on cash. So at the end of Q2, we had $2.8 million of accessible cash and our non-cash working capital on a year-to-date basis grew, I think, about $115 million or $49 million in the quarter. And I think what you're seeing happening this year in the first half is that as our work program is growing, certainly, that's having an impact on our cash as we put that in non-cash working capital. I think what you're going to see in Q3 is that our work program is going to continue to build. And that's going to require cash to fund the working capital. And then historically, Bird has generated most of its cash flow for the year in the fourth quarter. I think you're going to see that again where we generate positive cash flows in Q4. But I think just based on the timing of how some of our self-perform projects are working and some of the turnarounds we have. We may see an investment in September and October, maybe early November on turnaround activity, which that typically wouldn't unwind in December that might actually unwind into January. So the seasonality is changing a little bit, but I think suffice to say, Q4 is still going to be our best cash flow quarter of the year, but we may see some of that turnaround work unwind in January, early February.

[Christopher Allan Murray]

And to the dividend.

[Wayne R. Gingrich, Chief Financial Officer]

Yes. And then on the dividend. So we need to discuss the dividend with our Board every quarter. It's certainly something that we're cognizant of. The dividend has remained a very important part of our total shareholder return strategy. But I think until the pandemic subsides, I don't think you're going to see any movement in the dividend until we can kind of say the pandemic is behind us, and then we'll evaluate things at that point in time.

[Operator]

The next question is from Frederic Bastien with Raymond James.

[Frederic Bastien, MD & Equity Research Analyst]

You had a -- I think you had a positive contribution from stack in the quarter. Can you please speak to that a bit?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. So with the work program we have with stack right now. We're working on 2 prison projects for Infrastructure Ontario. Those are currently under construction and performing very well for us. So certainly, that did help us in our equity earnings as we do have a 50% ownership stake in that business and consolidate the proportionate earnings using the equity method.

[Terrance Lloyd McKibbon, President, CEO & Director]

We're continuing to see that evolve, Frederic, in terms of -- I think of that business as a bit of a start-up, similar to a start-up in North America, so it's somewhat disruptive, but we're seeing some good traction and continue each quarter and each year to see more activity and more engagement. We're seeing more of a pickup with the engineering community, lots of dialogue now with the major engineering firms around modular. We're pretty excited about it. We're very excited about the quality and our speed and our -- we're refining every project we refine our construction techniques and our delivery and we had good success with a portion of CBL at LNG Canada. So we had good success there. And each project is -- continues to evolve. But feeling better and sheer, it seems to get more of an uptake, not dissimilar to a startup where you're creating a business that's disruptive to the normal way construction is done.

[Frederic Bastien, MD & Equity Research Analyst]

Okay. Teri, you had some interesting comments on AI and the future of construction. But there's also -- we're seeing also a big push globally to make infrastructure more resilient to natural events, caused by climate change and et cetera. Are you seeing similar emphasis in Canada? And does that provide any opportunities for a company like Bird?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, certainly, it does. I would say that lots of dialogue about that at this point, Frederic. I wouldn't say that we're seeing projects that are entering into our framework of pursuits that you've noticed a difference on. I would say that much -- from an ESG perspective, we're seeing a ton of activity in things like mass timber, obviously, our modular business, we're seeing a big focus on carbon footprint reduction of buildings across Canada, existing buildings, new buildings. Yes, some pretty cool things going on there. But I wouldn't say that we're at a point where we're seeing resiliency building coming into the infrastructure in terms of the engineering design. It's not in our world yet, but interesting thought in that regard. But yes, we're well positioned. We do some of the more complex types of projects in Canada for complex clients like large LNG facilities, large oil facilities, large energy, large industrial facilities. So we're building things that are built for to withstand all kinds of unique weather events and things like that. So we're well positioned with a resume to support that. But I would say early days for us.

[Operator]

Our next question is from Michael Tupholme with TD Securities.

[Michael Tupholme, Research Analyst]

Obviously, a strong year-over-year increase in revenues in the second quarter. I'm wondering if you can break that down in terms of how much of the growth was driven by the acquisition of Stuart Olson versus organic gains?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. I mean, I'd say, Mike, at this point, we're not disclosing how much revenue was Stuart Olson or Bird. But what I would say, and this is kind of an interesting comparison year-over-year. Last year, in Q2, Bird results contracted when compared to first quarter. And I don't think that's ever happened, but that was really driven by the impact of the pandemic. And then certainly, that unwound some of the non-cash working capital, and we generated positive cash last year. This year is a very different story where we had good growth Q2 compared to Q1. And then the impact on cash was obviously headed in the other direction as well as we invest in working capital.

[Michael Tupholme, Research Analyst]

Okay. On that point, when actually I was going to ask you specifically, I think you touched on working capital already. But just to be clear, yes, so as you mentioned, you have invested through the first half of the year. And as you noted, seasonally, there's typically an unwinding of that later in the year. But how should we think about the second half, specifically Q3 versus Q4 in terms of changes in non-cash working capital? And where does that -- where do you think you wind up for the year on a full year basis, I guess, in terms of that line item?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. So I think in third quarter, I think you may see some modest growth in non-cash working capital, just as our work program continues to ramp up through the busy summer months here. I think you'll see it unwind in Q4. I don't think you're going to see it unwind by the full $115 million that we've invested year-to-date in it. But I would expect you'd probably see a decrease of $50 million or $60 million certainly in Q4.

[Michael Tupholme, Research Analyst]

Okay. That's helpful. Wanted to get a bit of an update on the LNG Canada project and the work you're doing there and also ask you about any progress or any opportunities to secure further work on that project.

[Terrance Lloyd McKibbon, President, CEO & Director]

So certainly, it's been an exciting project for us. I was just there 2 weeks ago and spent a couple of days with our team, looked at all the activity that we've got underway there. The Cedar Valley Lodge now is nearing completion. It's been a very successful project for us. So we've got a number of assignments on-site and large -- we're doing the foundation -- a lot of the foundations for the LNG trains. We're doing a whole series of administration buildings and nonprocess buildings. We've got these large concrete water storage facilities we're building right now that are the size of a football field. So we've got a lot of cool stuff happening. We're getting into new opportunities there as well. So yes, it's a -- it's certainly for Canada, one of the few mega projects that exist, and we're quite excited about the amount of activity we have on that project.

[Michael Tupholme, Research Analyst]

Okay. Perfect. And then I guess, just sort of sticking with the resource sector. You did note in your MD&A that you talked about your Alberta presence and how you see stronger commodity prices that we've been seeing of late, how that's a potential positive in terms of new awards. Can you provide a little bit more detail about the conversations you're having with clients that operate in the commodity or the resource sector? What sorts of opportunities you're seeing or hearing about? And what kind of visibility you have in terms of potential acceleration in awards in that area?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, certainly, I think strong commodity prices in the national resource sector is sort of a rising tide that rises all boards. The government's feel more confident to invest in infrastructure, which bodes well in Alberta landscape right now. They've got a number of initiatives underway that in procurement, a whole series of schools and different configurations, some in P3 delivery, things like that, that are out there. You've got -- so starting with the government side, there's just a lot of folks. I think the premier is very focused on refining -- redefining the framework of how Alberta -- the opportunities that exist in Alberta and a very major focus on ag in that sense. So those are opportunities for us that are -- we're seeing evolve in that regard. So it's somewhat the nonenergy side has got a whole lot of activity because of stronger resource pricing. And then moving to the energy side, I think there's -- with stronger commodity prices, there's more demand for our maintenance services. There's more demand for auxiliary sort of components on an existing site to make that site more efficient to reduce its carbon footprint. And then in some cases, you've got clients that just want to continue to invest in energy that reduces their carbon footprint. In that regard, and then you got all of your clients that want to reduce the carbon footprint of their headquarters and things like that. So we're feeling pretty excited about the -- just the dynamic of what's happening. And part of it -- obviously, it's a post recovery type framework that's evolving. And so in that regard, we're seeing a lot of different new opportunities. And I think that's really the key for us. We're feeling good about the way we're diversifying our business, not just geographically, but across a lot of different clients, and that will obviously build resilience into the performance of Bird over the next 5 years. So we're seeing some good signs, and feeling pretty good about what's ahead.

[Michael Tupholme, Research Analyst]

Okay. And then just lastly, a couple of questions pertaining to the nuclear sector or nuclear opportunities. So first off, can you confirm that the advanced nuclear materials research center project is still in pending backlog and provide an update on the status of that project? And then secondly, are you able to just comment a little bit more generally on other opportunities in the nuclear sector? And if that is an area that you think could contribute to growth going forward for Bird?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. So we're -- I can confirm that, that facility is still on our pending backlog, and it's a project that, as you can well imagine, when you're building a weapons grade uranium laboratory goes through a lot of different gates and steps and gets refined, and that's the beauty of IPD. And I think you're going to see IPD used quite extensively. And we're seeing it even with major energy clients where they're starting to use, in fact, some of the awards that we've announced we're founded on the basis of a collaborative contracting model in IPD or alliance or collateral contract. So that model is going to be right in the forefront, I think, with government clients and major industrial type clients. It will be the go to, I think, in the future because it's just a very successful model. You spend a tremendous amount of time on the front end to really lock down the design and finalize the design, finalize the permits and get all those approvals before you even put a foot on the ground to start any construction. So in the case of, obviously, our facility at Chalk River, we are -- is a great example. We're very focused on all of that front end. And if you can get that right, you have a much higher propensity to have a successful project. So I think government clients are realizing that and seeing that, and we've got a number of opportunities. And we become a company in Canada that's got a very strong resume in this area. So we're getting invited into things that quite honestly, aren't really in our window of focus only because we have that resume. So it's quite exciting in that sense.

[Michael Tupholme, Research Analyst]

Okay. That's helpful. And then I guess, just maybe as a follow-on to that, with respect to the Chalk River project, when do you think you would begin to see that move forward in terms of -- on the construction side and having it begin to contribute to your results?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. So it will be built in phases, and we will be into the ground on that project. At this point, it looks like Q4. So late Q3, early Q4, we'll -- it will evolve. But that's kind of how it's materializing at this point. So we'll be talking more about that as it evolves. But there'll be phases that drive that evolution. And as you can well imagine, these things have a lot of complexity to them. So -- but it's become a very large project, and it's certainly nice to be in that space on that type of dynamic. And then following on with your question on broader nuclear, we're seeing new opportunities arise, we're getting invited to participate in some of the small modular nuclear reactor type opportunities with different large global EPCs that are in that. Obviously, being the type of company we are and being -- with the good resume on nuclear sites, we're well thought up in that sense. So it seems like there's a lot of activity there. We have a team that's focused in those areas in that sense. And then there's also all the auxiliary support that goes into any nuclear site, whether it's a new head office for a nuclear entity or whether it's training centers or facilities, that kind of stuff, which is certainly core to our business and especially on our industrial business. So we're seeing those opportunities evolve in the landscape as well.

[Operator]

Our next question is from Naji Baydoun with IA Capital Markets.

[Naji Baydoun, Equity Research Analyst]

I just wanted to start off with the mixed use building project in Toronto, in the press release, I think you noted using some green practices on sites. Can you talk about what are some of the sustainable solutions that you're bringing to that project? And maybe how much of a role that played in securing the contract versus just pricing?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, start. So the first one we announced was Concert. And in that sense, it's a long-standing relationship we have with Concert. So we're we have -- we're in, obviously, the design evolution phase of the project right now and working through that. And there's a number of -- Concert is a very progressive client. We're very lucky to have that type of client in our mix, and we continue to work through and we have that relationship for a number of years. They also partnered with us on some of the P3 pursuits that we've historically had and as a developer. So there's -- in each project, there's always the sort of the smart building technology that's an option. There's different types of energy systems that create, obviously, a lower footprint. This is -- this first one is a gold lead standard. So there's certain attributes that drive the ability to reach that certification, I guess you'd say, or that standard. So -- and in that regard, there's things like waste management, how that's handled. So there's a number of different areas that drive you towards gold LEED standards.

[Naji Baydoun, Equity Research Analyst]

And in terms of maybe securing similar opportunities in the market, how much do you think your sustainable building practices or solutions are going to play a role in being able to secure new awards?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, certainly it's something that we have a lot of interesting service entities within the combined entity now. And part of the Stuart Olson acquisition, we acquired an engineering group that focuses on -- it referred to as our center for building performance. So that group is -- works exclusively on innovative ideas to make buildings more efficient when you start to think about digital twin technology to be able to replicate the framework of how building performs and how longer-term maintenance of that building and how to manage that building's performance is obviously front and center. And so we're integrating it into how we approach all our projects, and we're creating that service offering for all clients with our center for building performance. But goes beyond that in terms of the types of things that we're able to build into that offering across the different types of projects that we build for clients.

[Naji Baydoun, Equity Research Analyst]

Okay. Maybe just moving on to Stuart Olson. It sounds like there's more to come on the revenue synergy side. I guess, as you bring in towards the 2 teams and companies together, have you been able to identify any other sort of cost savings that could be put in place over the near-term?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, there's still more to do on the technology side as we get on a common platform because we're running 2 stand-alone technology platforms right now, and we're slowly moving those to a common platform, but that will take a bit of time. At the same time, we're updating our -- both our companies to what I would call sort of state of the art global solutions that are really exciting that will not just be a cost savings, but also will be an improved efficiency and improved performance on our projects. So that sense is -- and I just -- I think the acceleration of the focus of Silicon Valley and the construction industry is really quite something right now. So the types of solutions that we're starting to see really are exciting. So we couldn't be -- timing is just optimal for us to be thinking about all this while we're putting a new platform together because we can really ramp up our businesses in terms of the types of technology that we use.

[Naji Baydoun, Equity Research Analyst]

Yes. It sounds like there's more to come, but that's going to be sort of gradual over time. I guess what I'm trying to get at is, do you think the low-hanging fruit has been picked on the margin side for now, and it's going to be -- or the focus is going to shift more really towards top line growth at the moment?

[Terrance Lloyd McKibbon, President, CEO & Director]

I would say that more from a cost perspective that we've certainly -- we've taken care of the certainly the early low hanging fruit quite comfortably. But on the margin side, longer term, as we move the business sort of a blend of Bird's core focus and Stuart Olson's core focus into a broader array of services, broader array of contracts. And I can't emphasize how important it is that the commercial landscape of our contracts is evolving into a collaborative framework because within that collaborative framework, you have a wider array of opportunities to self-perform. And so that drives certainly higher margin. But the sophistication of our new offering with the combined companies and some of the things we bring to the business is also increasing the interest and the scale of the -- into the interest is high. So in that regard. And just generally some exciting opportunities that are evolving, whether it's for a client like Infrastructure Ontario with some of the modular work we're doing now and new modular work continuing to evolve in healthcare and social infrastructure and things like retention centers and things like that. And the combination of things that we bring to the table is quite exciting.

[Naji Baydoun, Equity Research Analyst]

That's great. And I know you're still working through the details, but any sneak peek that you can give us into the Investor Day? What's really going to be the focus? Or how are you thinking about the new strategic plan?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. So we just finished yesterday, and we were Monday and Tuesday with our Board, finalizing things. Our Board has been aligned with us since back in December in terms of this development. So heavy involvement with our Board on a monthly basis and great feedback we had, and we've sort of reached that milestone of getting there. So now our focus is just obviously, consolidating the feedback, consolidating the presentation. And so September 9 will be an opportunity for us to talk about what our future looks like and the kind of things we're focused on. But we're -- the framework of that centers around having -- we're really, really pleased with the leadership team we've assembled. And if you can start with a really strong leadership team, you can have, I think, very dynamic performance. Focused on collaboration, focused on having world class safety, a highly engaged workforce. Our performance, very focused on accretive margin improvements across a platform that's nimble. I think the technology is going to help us even become more nimble, very disciplined focus around risk management. And then just lastly say, you'll hear us talk about some of the things we're doing in terms of diversification. We -- in order to have resiliency in our earnings performance, we've got to have not just sector diversification across the different types of sectors we work in, but also geographic diversification. And so you'll hear us focus on some of those areas. But I think you'll be pleased when you see the framework of what we're up to.

[Operator]

[Operator Instructions] Our next question is from Maxim Sytchev with National Bank Financial.

[Maxim Sytchev, MD & AEC]

Teri, I was wondering, in your outlook, obviously, you talk about revenue normalizing in the back half. But I was wondering if you don't mind venturing sort of the quantum of increase? Or how should we think about it as -- how do you define normalization, I guess, in the back half?

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, I think we're certainly seeing, as we noted in our comments, we're seeing a bit more normalcy entering into our business. And I think you'll see certainly consistent revenue performance-based on what we know today in terms of the pandemic in that regard. So from a performance perspective, the opportunities are coming into our mix are certainly at a higher pace than previous quarters. So in that sense, it's a question of how fast we can contract. Q3 has typically been our busiest quarter. So we expect to see a fairly busy quarter continuing. And again, as things continue to hopefully open up, you'll see that momentum from that perspective.

[Maxim Sytchev, MD & AEC]

Right. And I guess in terms of the margin profile, again, in the back half, we should obviously expect a compression versus last year because we're comping with CEWS, right? Is that how you guys are thinking about this as well?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. I think that's the right way to look at it, Max. I mean with CEWS, well, it helps to offset costs that we've incurred as a result of the pandemic. When you think of it from an accounting perspective, it's kind of a credit against your cost, but there's no associated revenue with that. And now with our work program kind of returning back to normal, we're going to be earning those revenues on the project and earning the gross profits, but it has a different overall margin impact and now the revenue is associated with it, right?

[Maxim Sytchev, MD & AEC]

Yes. Yes, for sure. No, that makes sense. Just one double check that. And then Teri, correct me if I'm wrong, if I saw it in the press release, but it seems to me that you've got some incremental work for -- on a bridge. And just curious in terms of your thoughts around horizontal infrastructure, whether that's becoming sort of a bigger focus in terms of you addressing this market? Or is that a bit more for a one off? So how should we think about this longer term?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. I'd say that we have historically not has been as focused on horizontal infrastructure. It -- there's some specialized capabilities needed. So we're focused where our core demands have been. And -- but obviously, the skill set we have is easily able to translate the types of things we do and have historically done such as bridges, built bridges in Alberta and we built bridges in Manitoba. So obviously, that self-perform capability is significant. You don't see it in the open very often because we're typically on large industrial sites, energy sites that are usually in remote locations. So it's not something you see from the outside world as much as you would if we're on a public project in Canada, but we certainly have that capability. And in that regard, what we haven't liked is much about the horizontal infrastructure market has been the contracts. We haven't really felt that, that risk transfer was appropriate. And so in that sense, but we see that changing now. And with that changing, it becomes more interesting for us. And we've been -- I referenced earlier that we've been invited into a few projects that had certainly a pure horizontal nature. Because of that resume that we have on IPD and alliance type framework because it's obviously core to have the ability to qualify. Yes. So we'll see how things evolve. If that trend continues, it will be an area we're very focused on.

[Maxim Sytchev, MD & AEC]

Yes, absolutely. And that's the right question. Right. And sorry, is that from legacy Bird or legacy Stuart Olson? Or is that really kind of the combination of the 2 right now that enables you to better address this market?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes, it'd be legacy Bird to a large extent. But the framework of alliance and IBD type projects is across the entire organization. We've got projects right now being led by Stuart Olson, and are significant in size and scale that are alliance in the social infrastructure side of our business. But the Bird side is where you have that significant scale of self-perform first moving concrete form work, that kind of thing. And as you know, we have a mining business in Northern Quebec and Western Labrador, which again is large earthmoving equipment associated with that. So again, it's -- we have the pieces. And as time evolves, I think you'll see us present in that area.

[Maxim Sytchev, MD & AEC]

Right. Does it make sense to -- you talked about tuck-in acquisitions in the past to sort of geographically where the markets are conducive for that to scale up your capability? Or how do you think about that?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. We're always -- in the M&A side, we're always open to consider that. Things -- I'd say that there's always things that we're looking at considering, and we work with our Board to determine what makes sense for the growth of the company. It's a constant ebb and flow, and we have a very defined framework. We're not as interested in participating in public auctions for companies. We're looking for companies where a really strong management team, high-performing business that fits within our culture. And -- but then again, sometimes something will come along. It's a little more transformative for a whole bunch of different reasons that makes sense for us to think about. But yes, it's a constant ebb and flow on a quarterly basis with our Board of Directors.

[Maxim Sytchev, MD & AEC]

Yes that makes sense. And my last question pertains to Canem. I mean, obviously, it's a legacy part of Stuart Olson, but because typically, that business kind of lags, correct me if I'm wrong, like 9 to 4 months, kind of the rebound in activity levels. Is that kind of what you guys are expecting for this division to take place? Or were you already seeing an inflection point in that division as well?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. I think you're probably right in the sense of that timing. I haven't really thought about it that way, but you're right. Typically, their scope is towards the mid to back-end of a project and the markets they've been in, obviously, with a fairly large focus in Alberta, there's been pressure in that market. So we're seeing good signs. But yes, you're right, the back end of -- they're more back-ended in terms of that recovery, but we're pleased with the business. We like the idea of its service offering. We provide security type framework for clients across the country now. We've got services and sort of a special project group that works across the country, where different clients are provided specialized services for thousands of small contracts. And then we have the larger scope and a normal bid build work and then some of the larger projects, and we work for a number of different large companies in Canada. We obviously run that business at arm's length. So it's a standalone entity, but we're pleased to have it in the mix, and it's evolving along the lines of the Alberta economy.

[Maxim Sytchev, MD & AEC]

Right. That's super helpful. And last question in terms of LNG Canada, I remember speaking in the past with some of the mechanical opportunity coming up later as the project sort of cycles through. Is this still for you kind of a 2022 event? Or is it potentially 2023, just kind of thinking about the timing of the bidding opportunity here.

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. It's a mix of things. So mechanical, electrical opportunities are out there. They'll continue to evolve maintenance -- a significant amount of maintenance occurs on those types of projects, as you well know. So we're not really thinking -- obviously, some of the construction side, you're right, it's '22, '23, 24. And obviously, there's lots of different things that we're performing really well there. We've got a great safety record. We've got a high engagement with the clients. So all kinds of things just kind of ebb and flow on a monthly basis on that site. So continuing to see that evolve. We don't really see -- right now, at least, there's a nice lineage of opportunities there. So that's obviously been a high-performing site for us. And because of that, we're getting a number of new opportunities that continue.

[Operator]

This concludes the question-and-answer session. I'll now turn 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 second quarter earnings conference call. We have a very bright future ahead of us as a 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 at our virtual Investor Day on September 9.

[Operator]

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