Bird Construction Inc

TSX:BDT

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Welcome, ladies and gentlemen, to the Bird Construction Third Quarter 2023 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]

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 under -- 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 involves known and unknown risks, uncertainties and other facts 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 now like to turn the call over to Teri McKibbon, President and CEO of Bird Construction. Please go ahead.

[Terrance McKibbon, executive]

Thank you, operator. Good morning, everyone, and thank you for joining our third quarter 2023 conference call. Presenting with me today is Wayne Gingrich, Bird's Chief Financial Officer.

Our results in the third quarter continue to demonstrate the outcomes of the strategic shift in the business over the past few years. The momentum from the first half of the year has continued, and we delivered another quarter with significant revenue and adjusted EBITDA margin growth.

Our teams have worked diligently to safely deliver on our clients' expectations, leading the company to another record quarter of revenue and delivering 17% revenue growth year-to-date. We have a significant combined backlog and the active bidding environment supporting a strong finish to 2023 and a positive outlook through 2024.

Turning to our third quarter highlights. We delivered 17% revenue growth, closing the quarter with $784 million in revenue. We continued to see considerable growth in earnings and additional leverage on our cost structure. The company's adjusted EBITDA grew an impressive 60% year-over-year to $49 million, representing 6.3% of revenue compared to 4.7% in 2022.

Bird's combined backlog grew by $40 million, up almost 20% year-to-date, closing the quarter with $2.8 billion in backlog and $3.3 billion in pending backlog. Our pending backlog includes almost $1.1 billion of master service agreements and recurring revenue work, which will be performed over the next 3 to 7 years. The company's diverse and highly collaborative combined backlog with significant self-performance scopes provides good visibility into 2024 organic revenue growth and further margin improvements.

With a very active bidding environment and robust demand for our comprehensive services, we remain disciplined with our project selection, ensuring strategic alignment between capabilities, project type and delivery model. Supported by the combination of higher embedded margins in the combined backlog and achieving additional leverage on our cost structure, we expect adjusted EBITDA and earnings per share growth that will outpace revenue growth in 2024.

The company's key fundamentals outlined on Slide 7, remain at the forefront of our efforts to drive forward our business and further improve the company's results in 2024. Bird experienced significant growth across virtually all markets with both public and private plans, which is reflected in our revenue and earnings growth and our growing combined backlog. Our institutional buildings, enhanced infrastructure platform catalyzed by Dagmar, decade-high mining backlog and our expanding role in the nuclear sector, are key strengths.

Recent industry announcements, including the approval of BHP's Jansen Potash Project Stage 2, which indicated a desire to leverage existing contractors; the completion of the pipeline connecting LNG's export terminal, which bodes well for subsequent phases; the $3 billion in funding for Ontario's new infrastructure bank aimed at creating opportunities in key sectors for Bird such as long-term care, energy infrastructure, affordable housing and transportation and the generalization -- or generational opportunities in the energy transition and infrastructure modernization all contribute to a robust longer-term outlook for Bird and the wider industry.

While continuing to drive sustained margin accretion and revenue growth, Bird remains focused on maintaining a healthy balance sheet with a low net debt position. Our disciplined capital allocation aims to drive business growth while enhancing shareholder value with additional tuck-in acquisitions, smart capital investments and returning capital to shareholders through dividends. Our dividend is well covered and an important part of Bird's total shareholder return strategy.

We are actively pursuing our ESG initiatives, diligently preparing for uptime reporting requirements.

At the end of the third quarter, the company recorded $2.8 billion in backlog and $3.3 billion in pending backlog, representing a 20% increase in combined backlog from year-end 2022. The backlog was bolstered with $2.2 billion in securement year-to-date. This significant combined backlog provides visibility to organic revenue in the coming year and to further margin improvements driven by the higher embedded margins.

Bird is well established as a collateral contractor, and the combined backlog includes over 75% of contracts being executed through collaborative delivery models. Within these types of contracts, Bird [indiscernible] works collaboratively with the client and other partners to ensure the cost estimates, schedule forecast, project planning and design are sufficiently advanced before the construction phases. These collaborative models, which include IPD, alliance, progressive design build, construction management and MSAs, improve project delivery and outcome for all parties, especially on complex bills.

We've recently completed or are nearing completion on a number of projects in the water and wastewater sector that have demonstrated the value of collaborative delivery. Notably, one of the projects was the first project of its kind to be performed using the IPD model in Canada.

In the third quarter, Bird added additional recurring revenue through our environmental remediation portfolio for Canadian Nuclear Laboratories at Port Hope as well as through new MSA agreement for civil works on sites in Alberta's Heartland region for an important client. At quarter end, Bird's recurring revenue, MSAs and pending backlog was almost $1.1 billion, providing additional visibility to future revenues at accretive EBITDA margins.

Bird had significant project awards across a range of end markets in the quarter and subsequent to quarter end. Last week, we announced a particularly exciting contract valued at over $150 million for an early works at a new LNG export facility in Western Canada. This project further shapes our outlook with potential to add to our scope as we mobilize on site. Bird's contract for this large multiyear project site demonstrates our reputation for strong safety and quality programs, our collaborative approach and the exemplary delivery of our full project life cycle services. These are also key factors for adding additional work packages in the future.

We are committed to building our relationships with the client and other stakeholders, positioning our team as a long-term partner on this major industrial site. Additionally, we announced post secondary project awards in BC, Alberta and on the East Coast, all leveraging Bird's experience building sustainable and smart environments and emphasizing Bird's lower carbon building solutions such as mass timber.

Clients are increasingly seeking ways to build better to achieve more sustainable buildings and retrofit existing properties to reduce their carbon footprint, all of which Bird is well positioned to deliver.

Bird was also awarded considerable work in the mining sector, including work at Blackwater Gold, ArcelorMittal and BHP's Jansen project contributing to a decade high of mining backlog. Overall, we continue to execute our strategy in key focus areas, including fostering increased self-perform work, expanding cross-selling opportunities through business units and leveraging strategic internal and external partnerships and collaborative contracting methods.

Our teams are also kicking off our 2025 to 2027 strategic planning over the coming months, catalyzed by our solid foundation, our engaged collaborative team and our inclusive workplace, we are committed to adapting and growing to track the best path forward in the evolving world.

We've shared in the past highlights around Bird's positioning and current portfolio of projects supporting the energy transition. There's a tremendous outlook for investment in electrification, public transportation, energy-efficient projects and building retrofits. Bird's capabilities, particularly in our self-perform expertise, is strategically positioned to deliver the necessary skills required for the significant investment in infrastructure.

Our expanding portfolio encompasses wind injury -- wind energy, hydroelectric, waste-to-heat and nuclear projects, among others. The nuclear sector plays a critical role in the transition, and we have spotlighted the sector in the presentation today. Over the past 5 years, Bird has built up a significant portfolio of projects in the sector. And today, our teams are currently working with all of Ontario's active nuclear operators. Our current projects can be thought up in 3 areas: site buildings and infrastructure, plant process and auxiliary systems and decommissioning and demolition.

Additionally, our teams are pursuing long-term growth and future opportunities in waste storage and deep contamination facilities, SMR infrastructure, new large nuclear plants and other site facilities and infrastructure.

With that, I'll turn it over to Wayne to go through our financial performance in more detail.

[Wayne Gingrich, executive]

Thank you, Teri. Turning to Slide 11. Our first half momentum continued into the third quarter as the company delivered another quarter of double-digit revenue growth and margin accretion. Revenue for the quarter of $783.8 million represented a 17.3% increase compared to the same period in 2022. The company's margin profile improved in the quarter compared to the prior year with gross profit percentage increasing to 9.3% and adjusted EBITDA margin increasing to 6.3% from 8.8% and 4.7%, respectively. The increase in gross profit was primarily driven by project mix with the improving margin profile on newer work and a higher proportion of industrial construction.

General and administrative expenses were $34.5 million or 4.4% of revenue compared to $35.5 million or 5.3% of revenue in 2024 -- in 2022 revenue. The primary driver of the $1 million decrease was $1.1 million lower acquisition and integration costs in the current year with all other costs being comparable.

The third quarter had significant earnings growth as the company continued to show tangible benefits from executing our strategy. Net income and earnings per share were $28.8 million and $0.54 per share compared to $14.5 million and $0.27 per share in 2022. Adjusted earnings and adjusted earnings per share were $29 million and $0.54 per share, respectively, compared to $15.5 million and $0.29 per share in 2022. This reflected a higher gross profit and increased income from equity accounted investments in the quarter.

For the 9 months ended September 30, the company saw similar trends with significant year-over-year growth. We reported revenues of just over $2 billion, reflecting a 16.6% increase from the $1.7 billion recorded in the same period of 2022. Gross profit increased 16.5% to $167.3 million, representing 8.3% of revenue. This reflects the company's highly collaborative work program, growing backlog with enhanced margin profiles and expanding self-perform capabilities. Adjusted EBITDA increased 34.5% to $94.9 million or 4.7% of revenue from $70.5 million or 4.2% in the prior year.

General and administrative expenses were $102.3 million or 5.1% of revenue compared to $97.9 million or 5.7% of revenue in 2022.

Net income and earnings per share were $47.7 million and $0.89 per share for the first 9 months of 2023 compared to $34.9 million and $0.65 per share in 2022. Noting that during the comparable period in 2022, the company received a onetime gain of $7.6 million and another $1.7 million of interest income related to the settlement of historical construction billings and related interest charges with the customer.

Adjusted earnings year-to-date increased significantly to $49.9 million and $0.93 per share compared to $30.5 million and $0.57 per share in 2022 for the onetime gain of $7.6 million was excluded from adjusted earnings in the prior year.

Turning to our financial position. Bird continues to maintain its healthy balance sheet with significant financial flexibility and liquidity. We closed the third quarter with $104.1 million of cash and cash equivalents and an additional $157 million available under the company's syndicated credit facility. Bird recorded positive operating cash flows, while funding the working capital required to support the significant growth of the work program.

We remain well positioned to invest in growth-related working capital, project-driven capital expenditures and potential tuck-in acquisitions to further enhance our service offerings and self-perform capabilities. At the end of the quarter, working capital stood at $196.9 million, an increase of $12.3 million over December 2022, ensuring support for current and future contractual requirements.

Our liquidity and leverage ratios remain aligned with expectations. The company's current ratio was 1.22x. Our adjusted net debt to trailing 12-month adjusted EBITDA ratio stood at 0.24x. And our long-term debt-to-equity ratio was 21.1%, all demonstrating our commitment to maintaining a healthy and sustainable capital structure.

In line with our commitment to capital allocation, we continue to uphold a balanced approach. We generated positive cash flows from operating activities while growing the business 17% and investing $52 million in noncash working capital in the third quarter. Our dividend remains well covered by our earnings and cash flows and our dividend remains an important component of our total shareholder return.

I will now turn the call back over to Teri to comment on the outlook for the company.

[Terrance McKibbon, executive]

We are confident in our business' strategic shifts over the past few years, including our position as a leading collaborative contractor and the appropriate risk balancing of our work program. Our strong year-to-date revenue growth and margin accretion and the positive momentum that continues to build is positioning Bird for a strong finish to 2023 and a foundation for even stronger performance in 2024.

With that, I'll now turn the call back to the operator for questions.

[Operator]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Chris Murray with ATB Capital Markets.

[Chris Murray, analyst]

Just looking at the very strong revenue growth in the quarter, I think that came as a bit of surprise to many of us. So a couple of pieces of this. First of all, your SG&A costs didn't move very much based on that level of work. So I just wondered if there's any thoughts around if you're currently now kind of stable in your SG&A costs and what we're seeing now is what we should be looking forward?

And then I guess the second part of this question, you talked about, call it, high single digit, low teens growth rates into 2024. But if we rebase 2023 off the Q3 results, you've got a much higher starting point. So just any thoughts around '24 versus '23 with the higher jump off point and SG&A cost would be great?

[Terrance McKibbon, executive]

Yes. I think, Chris, like we've worked really hard to position ourselves with a really talented leadership team to build that foundation to have the strength with the opportunities that we're focused on, and we've had really good success with that, with really strong engagement. So I think from that lens, I think our team certainly has the foundation of framework to grow top line revenue without equivalent growth on the SG&A side. As you know, many other factors flow into that with growth.

So in my mind, we're going to see some leverage on SG&A in 2024, given that the team that we've assembled certainly has a lot of bandwidth to handle the growth that we're expecting.

[Wayne Gingrich, executive]

I can take the second part. So on the -- in terms of the revenue outlook for 2024, if you look at the baseline year for '23, we've talked about low double-digit revenue growth in the prior quarter. So if you take year-to-date revenues, and we kind of sit for Q4, we like where the consensus estimates are. So if you take that into account, you're looking at 13% to 14% year-over-year growth in 2023.

So looking forward to '24, we still expect to see growth. In next year, I think high single digits is probably a better target at this point in time until a few things play out for us early in the next year, but we're pretty confident in being able to see strong organic growth next year as well.

[Chris Murray, analyst]

Okay. And then kind of putting that together, you did mention that you think you'll see, as you said, operating leverage on earnings going forward, I guess, in your outlook. I guess the other question I have, and Teri and Wayne, I don't know who wants to take this one, but for the last few quarters, things have been going right. And so the word we always have with construction companies is the stuff that's going to go wrong. And certainly, that shows up in the multiple.

When we think about what's in the backlog, your customer mix and even the conversion of pending backlog to backlog, how are you feeling about the risk profile today for Bird versus where it's been historically? And your comfort level on the unforeseen, if you will, as we go into the next couple of years?

[Terrance McKibbon, executive]

Yes, I think it's a really good question, Chris. I think the way we approach it as, first of all, with a high degree of discipline in terms of our valuation of projects that we pursue. That starts with the appropriate maturity of a client relative to the complexity of the project they're trying to deliver, sort of a first gate. And then as we referenced in our script, we -- 75% of our backlog right now is in a collaborative framework. So that does significantly derisk the programs.

And so in that regard, I think the organization is in a really good place. The backlog and pending backlog continues to evolve. We're pretty confident in the pending backlog converting to backlog, and we also track opportunities that are not quite pending yet, and there's a significant pipeline sitting there as well. And most importantly, we're continuing to see accretion margins in that flow of business.

So it's pretty exciting for us. The team we have, the opportunities that we're seeing. We work really hard on diversification and that's really paying dividends for the performance of the business.

[Operator]

The next question comes from Ian Gillies with Stifel.

[Ian Gillies, analyst]

With respect to EBITDA margins and expansion moving forward, I mean you really have three tailwinds working in your favor of backlog, operational leverage and more self-perform work. Can you maybe force rank which of those components do you think has the biggest impact on how margin expands over the next, call it, 12 to 24 months?

[Wayne Gingrich, executive]

Yes. I think certainly, the mix of self-perform work in some of the new sectors that we're growing in, particularly in infrastructure, I think that certainly helps the fact that we're on a couple of large industrial projects right now. We had the press release about the LNG facility. I think that bodes well for our margin profile. Yes, I think there's a general strong dynamics, too, like in the mining sector that certainly when we have equipment generated or projects with heavy equipment components, that bodes well on margins.

And then, yes, to be with a higher revenue, we're seeing fruit, we are getting leverage on our cost structure. So we're really benefiting from all three. But I think the industrial, the infrastructure and the industry tailwinds are probably helping them up.

[Terrance McKibbon, executive]

Just to add another piece of that, Ian, the -- we've shifted our building business to do more collaborative projects in the light industrial setting and a lot of activity in that regard. So that's also really helping our building businesses, has changed quite dramatically over the last few years to shift to higher-margin opportunities and leveraging off.

In some cases, the expertise that we have available on the industrial side to meet more complex sort of interfaces with, I would call them, industrial light clients, but in the collaborative framework. So that's also certainly had some tailwinds.

[Ian Gillies, analyst]

And maybe following on as we think about margins as we head into '24. Is there any reason to think you couldn't get a similar amount of margin expansion in '24 relative to '23 or based on what we think '23 may be, I guess, I should say?

[Terrance McKibbon, executive]

Yes. I think that's ultimately how we're thinking about '24 at this point. And we're just looking for that steady accretion quarter-over-quarter, year-over-year in the business, and that's how we look at the new opportunities. And as we look at the framework of new business flowing into pending, that business has -- certainly has margin profiles that would allow us to achieve that goal.

[Ian Gillies, analyst]

That's helpful. And maybe last one for me because the tuck-in strategy seems to be working well. Are you able to quantify or talk a little bit about maybe what you've done with Dagmar with respect to growing the backlog or growing the top line in that business since you bought it, just given Bird's got a bigger balance sheet, et cetera, because I think that will help illustrate why that strategy is so important?

[Terrance McKibbon, executive]

Yes. I think that's been a huge success for us, both in Dagmar's current book of business, but also as a catalyst to allow us to engage on some of the larger infrastructure programs that are evolving in a collaborative framework. There's been quite a dramatic shift in the environment that we work in, especially in brownfield transportation, where it's moving quite dramatically to more of a collaborative contracting framework, which we have a tremendous resume for.

And with the catalysts being Dagmar and Dagmar's extensive experience in that space, it allows us to participate in partnerships to pursue some of that work, and we're very active pursuing those opportunities where they are in an appropriate framework with an appropriate client within Canada.

So yes, the key for us as we move forward as a business is finding an appropriate tuck-in that we can use as a catalyst to add Bird's capabilities on larger projects and move us in new areas where traditionally we wouldn't have had the resume to be able to participate in that area.

[Operator]

The next question comes from Jonathan Lamers with Laurentian Bank Securities.

[Jonathan Lamers, analyst]

I noticed for the last 2 quarters, the amount of securements that you're reporting in your quarterly results have been much greater than total awards that you've been press releasing. I know part of that's related to the collaborative contracting methodology. Could you just explain for us how it is that, that makes it more difficult to press release the new awards? You're still confident in the backlog and the securements going into the backlog?

[Wayne Gingrich, executive]

Yes. I can certainly take that. So in terms of what we have press released, generally, we only press release projects that are larger in size. So maybe on an individual basis, it could be $100 million, $150 million or if we think are kind of particularly important to highlight, and we might bundle them with a few other projects. But the company also wins a lot of other projects that just don't meet that type of dollar threshold that we don't disclose, and I think that probably makes up a lot of the difference.

I think one trend that has happened with the business, when you think about the shift to collaborative contracting has been -- as we get an award and for example, it's an IPD project, for example, we get the award. We've submitted designs, we have submitted indicative pricing, these types of things. But now you have to go through the validation phase where you're inviting other related parties, the client, your subcontractors, architects, engineers, other people are getting involved in the discussions about, well, what's going to be the best way to build this project, the best way to construct it, the best way to design it, what are really the clients' needs.

But that can take sometimes 12 months. Sometimes longer. We've certainly seen that as well. So you're getting these awards, but they stay in our pending backlog until the client signs off on the final design and the final price. And sometimes, the client may have things that they want added in the project. And then when they see the final price, then we go back to value engineering because maybe that project has grown higher than they'd like. So you kind of value engineer and then you agree on the price.

So it takes longer to move into backlog. But anything that we're putting into our pending backlog, we're highly confident that, that is going to convert. It's just going to take the time to follow the process. So I think that's why you're seeing this growth in the pending backlog. And backlog over the last few quarters has, plus or minus, $100 million or $200 million, kind of been fairly steady, but you're seeing the growth in the pending backlog. So that gives us a nice kind of pipeline or funnel of projects that will convert to backlog here in the future.

[Jonathan Lamers, analyst]

And I know you touched on this earlier, but just to be clear, when you look at the backlog, what is it about it that gives you confidence in margins improving into next year? Is it the higher mix of self-perform work? Is it a higher mix of industrial-type work and infrastructure work with just more favorable operating margins? Could you just...

[Terrance McKibbon, executive]

I think it's a mix, Jonathan. In the entry level, right? So the entry level, the service offering we have today, we can expect a higher level of return on it. And in that regard, that's -- the market is very strong for the complexity of the services we have.

The other big piece that also enhances the overall performance and enhances our confidence is, we're working collaboratively within our business unit, so oftentimes on a project, you have multiple divisions, all with embedded margins in their delivery. So it gives us a high degree of confidence. Like I said earlier, our building business is certainly involved in a number of projects we have underway, so that's helping enhance their performance. So the collaboration is really paying dividends as sort of rising tide rises all boats kind of framework.

[Jonathan Lamers, analyst]

I'd like to just touch on the LNG site early works award that was recently won. Can you share with anything about -- anything of those in terms of how large the total project might be, whether getting in on the early works would typically position Bird to win more work? How are you thinking about the life cycle of that project?

[Terrance McKibbon, executive]

Well, certainly, I think the project's budget is something like $7 billion. So this is early works getting underway. Any of these large projects of this kind of scale obviously involve very high standards in quality and execution and safety and we've just developed a reputation for being certainly a go-to for this type of thing, no different than the activity we have at BHP Jansen site.

So it's exciting -- really exciting for the company to have multiple mega projects that we're very active in because over the past few years, other than LNG Canada and Kitimat, that's kind of been the main mega project in the country that we would be interested in. So now you've got multiple sites, multiple projects. And this one, like I said, being probably more so than others because of the site's uniqueness. It certainly is a huge opportunity for us to grow into a major program on this project.

And again, it's early days getting underway with early works but very exciting, and we're really pleased to be working on this project.

[Operator]

The next question comes from Maxim Sytchev with National Bank Financial.

[Maxim Sytchev, analyst]

A couple of quick questions as most have been already asked. Teri, I was wondering if you have any preliminary thoughts around the infrastructure bank that is being contemplated for Ontario and maybe when we could potentially see some projects being funded via that vehicle?

[Terrance McKibbon, executive]

Yes. I'm honestly really excited about the infrastructure bank because it gives us an interface between the larger pension funds in Canada, Ontario into infrastructure investments. And as you know, over the years, the prior vehicle is really P3s and oftentimes see the equity check wasn't significant enough for them to really to get involved. So it's really exciting for me and for Ontario, for a company to have this facility. It kind of reminds me of, to a certain extent, what happened in Quebec with the case.

So I think this is great. I think it's a very smart strategic move for Ontario and allows, in many of these projects that are evolving, they're collaborative now. So it's more complex to add the financing into a collaborative interface because more difficult for lenders to obviously engage in that thing. So -- an infrastructure bank is the interface, it just takes it solves that framework.

So I think it's a really smart step for the government. I think it's going to be a real catalyst for more activity. And in many cases, I'm sure you'll see the Canadian Infrastructure Bank and the Ontario Infrastructure Bank funding new projects. Their focus areas and areas that we're very focused on as well, and we have a tremendous resume in. So I think it's a great step, and it kind of solves somewhat some of the funding and creates a more efficient flow of larger pension funds into Ontario infrastructure where their pensioners are based. So I think it's great.

[Maxim Sytchev, analyst]

Yes. Yes, for sure. And I guess, again, like no concerns from your perspective around the contract structure. It's still kind of like in the wheelhouse in terms of the risk reward profile from your perspective?

[Terrance McKibbon, executive]

Yes. It's really highly collaborative now. Like most of the projects that -- like there's the odd one, and it's a P3, but it's pretty rare that you see the P3s now. It's all -- especially brownfield messy sort of projects that you just can't control all the stakeholders and all the risk in a complete risk transfer. And we'll still do a P3 of its -- the appropriate agency in a greenfield environment, and we've had great success in multiple projects and school bundles and OPP bundles here in Ontario and so we'll still look at one once in a while, but you see less and less of that vehicle because a lot of this investment that's happening in very dense urban areas, and it's -- the risks are that -- risk transfer is just too high, and there is an interest from the contracting community to pursue those projects. So they have no choice but flipped them to something that's a better balance between the client and the contractor.

[Maxim Sytchev, analyst]

Yes, yes, yes. No, sounds great to hear. And then maybe just one question for Wayne. In terms of kind of the working capital fluctuations, should we expect sort of a typical free up for that coming Q4? And any changes from the pacing there?

[Wayne Gingrich, executive]

I think you'll see Q4 follow similar trends in recent years. We usually have a pretty large unwind of noncash working capital into cash, and we expect that again. I think the revenue that we had in Q3 of $784 million, certainly higher than what the Q4 estimate is kind of looking at the consensus estimate. So yes, we'll see that flow probably historically similar.

[Operator]

The next question comes from Frederic Bastien with Raymond James.

[Frederic Bastien, analyst]

We often see your ability to price in some better terms in your contracts. It's often a reflection of basically, economics 101. There's limited supply, big demand for your services. So it allows you to tack in some better margins. What would you highlight as the biggest differentiator this year or the last several years and your ability to do that? Is it really a lack of competition? Or is the demand that much more significant?

[Terrance McKibbon, executive]

I think it's -- I think I would best articulate it as it's the complexity of the projects, and there's a limited number of companies that can deliver projects with that kind of complexity and that type of safety performance and quality and delivery performance. I think it has a lot to do with that.

We obviously, over many years have developed that expertise coming out of oil and gas and oil sands with large complex owners from around the world. So we have a deep bench of talent that can then move into emerging opportunities across Canada such as nuclear. The team's worked very hard to transition in nuclear, and it's really impressive to see the growth in that space in 3, 4 years' time since we started to focus on it coming off of the backlog we had in oil and gas. And then coupled with the growth of the business at LNG Canada and Kitimat, rarely in the world, you see a megaproject be developed $18 billion on schedule and on budget. It's pretty rare.

So when you're part of something like that, you have a resume that others are looking for because there's obviously a major team aspect to delivering a project with that success. And with that, obviously, our phone has been ringing for more and more of that type of thing. So I think when you boil it all down, you obviously need a return that justifies that capability. And if you're -- you've got the resume. So I think it has more to do with our resume than it really has to do with the market.

[Frederic Bastien, analyst]

Super. That's helpful. And as you look at the work you've been winning, it seems like there's a fairly high percentage that is industrial-related work. Would you say that most of the opportunities you're looking at right now are indeed industrial-focused?

[Terrance McKibbon, executive]

I would say that -- yes, I would say a higher percentage is more of industrial, whether it's heavy industrial, whether it's light industrial. There's a lot of activity, obviously, with the evolution of electrification and all the downstream impacts of that. A very exciting mining sector right now, which is obviously industrial oriented. And we've got a big focus on the infrastructure side with the opportunities that are evolving.

So yes, I'd say a high percentage is there, but there are many facets to that in terms of many different markets and end markets and geographical markets that touch that. But it's -- that's clearly where our strength is, and it's clearly where the margin profile suits the demand type thing. And yes, it's a good way to kind of look at it just saying in projects with industrial orientation.

[Frederic Bastien, analyst]

Great. Just one last one for me. Investors are quite worried about the higher interest rates we're facing and it's really -- historically, it's really impacted construction activity. So obviously, you're less exposed to some of the most sensitive areas of the economy. But just wanted to get your thoughts there. Have you seen any slowdown with any particular projects or any particular sectors?

[Terrance McKibbon, executive]

Yes. I think with so much momentum around the energy transition sector, I think -- and you look across the types of projects that we're on, for example, Potash in Saskatchewan, those are long-term investments. Nuclear is a long-term investment. So you really cut through any short-term or medium-term economic pressure because these things, they take many years to get to FID. And then once they're at FID, they're moving and the types of companies that we obviously target are obviously the large blue chip organization. So they're thinking longer term, put a lot of time and effort into it. So in that regard, there's more stability.

We -- I'd say that there's only a small percentage of the revenue that we do, probably less than 5%, that today has sensitivity to pressure on interest rates. So -- and those would be projects that would touch the public, whether that's an apartment building or commercial projects where interest rates have an impact on. So it's a very small percentage of our current business. And it's also historically a percentage of our business that has lower margins. So at the end of the day, doing less of that is really our strategy to improve our margin profile and improve the accretion.

[Frederic Bastien, analyst]

Good luck keeping the momentum.

[Operator]

[Operator Instructions] The next question comes from Michael Tupholme with TD Securities.

[Michael Tupholme, analyst]

First question is just around the fourth quarter. I think Wayne earlier, you mentioned that you're comfortable with consensus. I think that was a comment on revenue. So perhaps you can just clarify that. But I guess the question is on the margin side of things, historically, we've seen sort of a lot of similarities between the margin performance in the third and fourth quarters. It sounds like there was a little bit of acceleration of some revenues in the third quarter that maybe helped things a bit in the third quarter. And then just in your commentary, you're talking about kind of a more sort of normal performance, if you will, in the fourth quarter.

So I'm just trying to get a sense for the fourth quarter margins. I mean, can we see some kind of performance that's similar to what we saw in the third quarter? Or should we be thinking more about a bit of a step back sequentially?

[Wayne Gingrich, executive]

So I guess a couple of things. So in the fourth quarter, we're pretty comfortable with all of the consensus estimates that are out there. So revenue, EBITDA, EPS and other things. I think in the margin in the fourth quarter, I don't know that we sustain the 6.3% that we had in Q3. I think through December, you'll probably start to see some of the equipment-related projects start to tail off a little bit in those types of things. So I think it's still going to be really strong, but I don't think it's going to be at 6.3% for the quarter.

[Michael Tupholme, analyst]

Okay. That's helpful. And then -- I mean, it's clear from your commentary that you do see an opportunity for margin improvement in 2024 versus 2023 on a full year basis. I guess this is a little bit specific, but just looking specifically at the third quarter this year and thinking about modeling next year, I mean, is there room to continue to improve even off of the third quarter level you did this year when we look at next year's third quarter? Or is this sort of a high watermark that you did in the third quarter, given some of the factors at play and we're really looking more at a full year improvement not necessarily kind of every quarter in the year?

[Wayne Gingrich, executive]

I think there is actually -- like thinking about 2024, by quarter, I think there is opportunity to improve our EBITDA margin in every quarter next year. I mean, some quarters might have a larger improvement than others, but I think Q3 2024 could see higher than 6.3% EBITDA but it might not be as large of an increase as what you might see in Q1 or Q2, for example. But for the total year, I think you'll see a pretty significant improvement in EBITDA margins year-over-year. Yes.

And looking ahead, I mean, the company has been very focused on trying to improve our margin profile with the mix of work. We have the sectors, the diversification and the companies that we're looking to do tuck-in acquisitions with are all margin accretive. So we think there's a good runway ahead of us to continue to improve margins going forward.

[Michael Tupholme, analyst]

Okay. Perfect. And then maybe just -- you just mentioned there tuck-in acquisitions. Can you just comment on, I guess, sort of the pipeline, but also -- I mean, is 2024 a year when we could see potentially additional acquisition activity? Or are you still in the process of integrating and digesting what you've done in the last several years?

[Terrance McKibbon, executive]

I think we have a team today, Michael, that's very experienced and have 20-plus years of focus on the M&A side. I think we'll -- we're highly confident. We'll be transacting over the next few quarters on opportunities that make sense. We constantly have a pipeline that, obviously, we're not setting any kind of targets on a year-over-year, but a lot of activity in that sector right now, obviously, with our momentum and the -- what outside companies are seeing that we do when we integrate the acquisition, which is very evident, the success we've had.

So yes, I think it's a nice fit for us right now and our [ phone ] certainly has been ringing with opportunities, and we evaluate those carefully and have regular discussions with our Board about what we're doing. But it's certainly a robust pipeline, which would give you a high degree of confidence that you'll continue to see our business grow on the M&A side, coupled with all the organic growth we've got.

[Operator]

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

[Terrance McKibbon, executive]

Thank you, everyone, for joining our earnings call this morning, and thank you to the entire Bird team for their safe delivery and dedication to excellence. With Remembrance Day approaching, I hope you have an opportunity to observe this important day and to take a moment to remember the brave individuals who have served and continue to serve our country. Thank you.

[Operator]

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