Bird Construction Inc

TSX:BDT

Earnings Call Transcript 2020-Q4

[Operator]

Welcome, ladies and gentlemen, to the Bird Construction Fourth Quarter and Fiscal 2020 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 webcast is being recorded. [Operator Instructions] Before commencing with the conference call, the company reminds those present that certain statements which are made express management's expectations or estimates of future performance and thereby constitute forward-looking information. Forward-looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Management's formal comments and responses to any questions you might ask may include forward-looking information. Therefore, the company cautions today's participants that such forward-looking information involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the company to be materially different from the company's estimated future results, performance or achievements expressed or implied by the forward-looking information. Forward-looking information does not guarantee future performance. The company expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events or otherwise. At this time, I would like to turn the conference over to Mr. Teri McKibbon, President and CEO of Bird Construction. Please go ahead.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thank you, operator, and thanks to everyone for joining us on today's fourth quarter and full year 2020 earnings conference call. Joining us on today's call is Wayne Gingrich, Chief Financial Officer. I am pleased to report a strong finish to what was, by all measures, a challenging year. Bird and Stuart Olson teams went above and beyond, putting the company, clients and their projects first and persevered in a challenging and uncertain environment. I would like to thank them for all their hard work. The culmination of the team's efforts resulted in the company posting a 32% increase in construction revenue, 150% improvement in adjusted EBITDA and 151% increase in net earnings in the fourth quarter. We also continued to build our backlog and pending backlog throughout 2020, up almost double on a combined basis when compared to year-end 2019. The the company entered 2020 on a strong financial footing and finished the year with an even stronger financial position. As at year-end, we retained significant financial flexibility with our new 3-year syndicated credit facility, which we finalized in the fourth quarter. Financial flexibility we retained throughout the year positioned Bird to undertake the transformative acquisition of Stuart Olson in Q3 2020. Our fourth quarter results marked the first full quarter of Stuart Olson's results in our consolidated financials. We are on track with the previously stated cost synergy targets, and Wayne and I will be going into more detail. But overall, we are very pleased with the progress we've made so far and continue to pursue potential upside in excess of our targets in future years. We have achieved 9 sequential quarters of improving trailing 12-month adjusted EBITDA margin, culminating with a 5.5% margin for trailing 12 month Q4 2020. I want to recognize our employees on our project sites who have worked tirelessly throughout the pandemic to safely deliver our project commitments. The Bird team's unwavering dedication to our company and clients over this challenging period allowed us to post strong revenue and profitability growth in the fourth quarter and fiscal year 2020. The second wave of the pandemic and the associated shutdowns have resulted in projects in the pursuit pipeline being pushed out to future dates. Bird has also experienced delays in project conversions from pending backlog to backlog. In total, management estimates that fiscal 2020 revenue was negatively impacted by approximately $175 million, with continuing impacts into 2021. While the landscape remains very fluid, we expect projects will get pushed from the first half of 2021 to the back half and potentially into calendar year 2022. The company has experienced temporary or partial shutdowns in Q1 2021 in BC due to public health protocols. Projects in Atlantic Canada and Manitoba continue to be delayed. These delays will have a negative impact in the first half 2021 revenues and profitability as active projects are impacted and customers defer decisions as the pandemic persists. Management does not anticipate it will qualify for CEWS to the same level in 2021 as it did in 2020, which will exert downward pressure on profitability margin year-over-year as the company expects to maintain its workforce. Despite this challenging backdrop, we secured impressive projects in the fourth quarter that have provided a strong foundation to launch 2021. The combination of Bird and Stuart Olson is starting to bear fruit. The teams are being integrated and best practices shared. From a revenue synergy standpoint, we are starting to see opportunities arise. Subsequent to quarter end, Bird Construction was awarded a design-build contract for the expansion of the Kenora Jail and Thunder Bay Correctional Center by Infrastructure Ontario. This contract exemplifies our ability to deliver a comprehensive solution, leveraging both the capabilities of Bird and Stuart Olson. Showcasing our newly combined full-service offering, this fast track rapid delivery solution will utilized Bird's design capabilities, along with Stack Modular and Stuart Olson's Commercial Systems business to execute this project. The company's teams in Manitoba and Ontario will utilize shared experience and local expertise, reaffirming our commitment to build meaningful partnerships with regional communities, including engagement with local indigenous communities. This project exemplifies the collaborative focus of the company, utilizing core components of the combined entities to deliver a high-profile project for the Ontario government. We believe that our operational capabilities and project execution will open the door for us in future opportunities to participate in additional rapid delivery projects for Infrastructure Ontario and across the country. Also subsequent to year-end, we announced that we secured a new 5-year MRO contract in excess of $550 million from a long-standing industrial customer in Alberta. This project and its scale further validates the strategic fit with Stuart Olson, and we feel will drive further cross-selling opportunities with our new broader offering of service. The recurring nature of this revenue stream also reduces seasonality and provides good visibility to future revenues over time. I would also like to highlight that during the fourth quarter, we secured $154 million design-build contract with the Nanaimo Correctional Center Replacement Project in Nanaimo, British Columbia. Overall, I'm very pleased with our team and our ability to secure projects and execute during these unprecedented times. That said, I would be remiss if I didn't point out that COVID-19 negatively impacted our results throughout 2020. The conversion of some projects from pending backlog to backlog were delayed, and there were delays in project tenders and awards. And we experienced reduced productivity on project sites. Nationally, these impacts were felt across a wide range of project scale. More recently, in British Columbia, several large projects were impacted in the first quarter of 2021 when the BC Public Health Office implemented work safe protocols, limiting the number of employees on project sites. Despite the uncertain and fluid environment the pandemic continues to present, we are well positioned operationally and financially to deliver for our clients and their projects throughout 2021 and beyond. With that, I'd like to turn it over to Wayne to discuss our financial results.

[Wayne R. Gingrich, Chief Financial Officer]

Thank you, Teri, and good morning, everyone. Please turn to Slide 9. Reviewing our fourth quarter results, we posted construction revenues of $555 million, representing a 31.9% year-over-year increase. The increase can primarily be attributed to the inclusion of Stuart Olson. Gross profit for the quarter amounted to $61.5 million or 11.1% of revenues. This represents a year-over-year increase of 133% and a 482 basis point improvement in comparison to the prior year period. The increase in gross profit is due to the recovery of $18.7 million of compensation expense in cost of construction under CEWS and the inclusion of Stuart Olson results. The CEWS is not purely fourth quarter-related. In our MD&A, we identified that approximately 53% of CEWS recognized in Q4 of 2020 related to the first 9 months of 2020. This was partially offset by the impacts at legacy Bird due to project delays as well as the stage of completion on certain industrial projects compared to last year. I would like to highlight that G&A expenses for Q4 were $32.8 million, representing 5.9% of revenues. This compares to $16.3 million or 3.9% of construction revenues in the fourth quarter of 2019. The year-over-year increase can primarily be attributed to the addition of Stuart Olson. We incurred an additional $3.4 million in professional fees, $2.1 million of which were related to the acquisition and integration activities. Compensation costs were also higher by $9.5 million year-over-year, net of $3 million, owing to cost recoveries from CEWS. And amortization and depreciation expense was $4.7 million higher, while technology costs were higher by $0.8 million. Adjusted EBITDA for the quarter was $40 million, reflecting a 7.2% margin. This represents an improvement of $24 million and a 340 basis point improvement in the margin compared to Q4 2019. Included in this figure is $21.7 million in pretax CEWS, of which $11.6 million or 53% related to prior quarters. Overall, we reported net income of $20.5 million and EPS of $0.39. On an adjusted basis, we reported net income and EPS of $21.5 million and $0.41, respectively, for Q4 2020. On a comparable basis, we reported $8.2 million in net income and adjusted EPS of $0.19 in Q4 2019. I would note that in Q4 -- that in the fourth quarter, $11.6 million of CEWS related to prior periods, and if tax affected, the CEWS benefits from prior periods positively benefited our fourth quarter adjusted earnings by $8.5 million or $0.19 per share using the weighted average shares outstanding for the full year. Turning to our full year results. Construction revenues were approximately $1.5 billion, representing a 9.3% increase year-over-year. The increase can largely be attributed to higher industrial project revenues and the inclusion of Stuart Olson's results starting late in the third quarter. This was partially offset by reduced commercial and institutional project revenues due to delays related to the pandemic. Gross profit for the full year was $126.3 million or 8.4% of construction revenues. This compares to gross profit of $71 million or 5.2% of revenues in 2019. I would highlight that part of the overall improvement in comparison to last year was a shift toward a more balanced work program, which carries higher margins. Additionally, the CEWS program offset compensation expense in cost of construction by $21.2 million. General and administrative expenses increased 34.2% year-over-year to $78.8 million or 5.2% of revenues. Professional fees were $9.6 million higher than in 2019, owing largely to acquisition and integration costs related to Stuart Olson of $7.2 million. Furthermore, there were higher compensation costs of $8.9 million, net of $3.6 million in cost recoveries from CEWS. Also, amortization and depreciation expense was $4.8 million higher than 2019 due to the inclusion of Stuart Olson. Overall, adjusted EBITDA for full-year 2020 was $81.9 million, reflecting a 5.5% margin. This represents a $49.6 million increase and a 310 basis point improvement in margin year-over-year. Net income for 2020 was $36.1 million or $0.80 per share. This compares to $9.5 million and $0.22 per share for the full-year 2019. On an adjusted basis, net income for 2020 was $41.6 million, while EPS was $0.92 per share. Before I turn to the progress we are making with the integration of Stuart Olson, I would like to note that in total, we estimate that the pandemic negatively impacted the top line by approximately $175 million with an associated decrease in profitability. Projects were negatively impacted financially as a result of additional safety protocols and lost productivity. Furthermore, we do not anticipate that we will qualify to the same extent from the CEWS program in 2021 that we did in 2020 based on updated criteria from the federal government. As a result, this will play downward pressure on our profitability margins. As it relates to Stuart Olson, integration planning targets that were set for the first 100 days have been achieved, and we are on track to attain the previously stated cost synergy target of $25 million annualized by the end of 2021. Of the $10 million in EBITDA synergies, we have set in motion $6.9 million in annualized cost savings. We have fully realized the annualized depreciation and interest cost savings of $5 million and $10 million, respectively. As Teri indicated previously, we have identified and are realizing further cross-selling opportunities and expect these opportunities to accelerate over time. Moving to our backlog. As at 2020 year-end, our backlog stood at approximately $2.7 billion, while our pending backlog was $1.6 billion. This represents a 99% increase on a combined basis as compared to year-end 2019. Backlog increased 73.4% year-over-year, primarily due to the acquisition of Stuart Olson, which added $996 million to backlog at acquisition date. We expect 59% of backlog to convert to revenue over the next 12 months. However, projecting the timing of converting projects and pending backlog into contracts has become more challenging as the effects of the pandemic has shifted several project conversions later into 2021. I would like to highlight that owing to the inclusion of Stuart Olson, pending backlog now includes a greater proportion of MSA contracts, estimated at $1.1 billion. These contracts typically span multiple years and represent a recurring revenue stream over the next 1 to 6 years, providing excellent visibility to forward revenues. Given our key focus on appropriately balancing the risk profile of our backlog through end-market diversification and contracting methods, the addition of Stuart Olson backlog further reduces this risk profile. However, it will slightly reduce the average embedded backlog margin going into 2021. Before moving on, after having assessed the legacy Stuart Olson backlog over a more fulsome period of time, we have greater confidence in the acquired backlog and its overall embedded margins and risk profile, noting we made necessary contingencies at the time of acquisition. Turning to our balance sheet. We generated cash flow from operations before changes in noncash working capital of $71.7 million, while we deployed $14.2 million towards capital expenditures and $17.6 million towards dividends. Given the uncertainty that pandemic presented the company, we reduced our CapEx envelope in 2020 out of an abundance of caution. Going forward, our CapEx program will be dictated by prevailing economic conditions as certainty around the work program begins to increase. As at December 31, 2020, cash and cash equivalents was $212.1 million, while cash and cash equivalents available for operations was $96.7 million. Net debt stood at negative $23.8 million, while our net debt to adjusted EBITDA ratio was a negative 0.29x, which is well within our comfort level. As we have mentioned previously, we will take a balanced approach to capital allocation. Near term, we expect to deploy capital towards further strengthening our balance sheet, which will allow us to capitalize on both organic and M&A-related growth opportunities. The company also remains committed to returning capital to shareholders through dividends, noting the Board of Directors have approved monthly distributions of $0.0325 per share for each of March and April. Overall, we are well positioned to support our clients in their projects as the recovery takes hold and are ideally situated to benefit from government stimulus spending, given its expanded capabilities, and we'll closely monitor projects as they're announced. With that, I will turn it back to Teri.

[Terrance Lloyd McKibbon, President, CEO & Director]

Thanks, Wayne. Before I turn it over for questions, I would like to update everyone on the evolution of Bird Construction. Turning to Slide 14. Our 5-year Build Bird Strategy is nearing completion. As a result, we are well advanced in the development of a new 3-year strategic plan in 2021, outlining our key goals and priorities, setting the stage for our next phase of growth for Bird. As always, we remain committed to building long-term shareholder value through sustainable, profitable growth as we focus on our team, our innovative offerings and the integration and synergies with Stuart Olson. Additionally, we remain dedicated to prioritizing sustainability. We will be including an updated sustainability overview in your annual report. I would like to once again thank our employees for their dedication, especially during these challenging and uncertain times. I believe that Bird has built a stronger team and a more resilient business model over the past year, and is well positioned to play a major role in the Canadian construction industry with the potential to create long-term value for all stakeholders for decades to come. I would now like to turn it over to the operator for questions.

[Operator]

[Operator Instructions]Our first question comes from Mona Nazir of Laurentian Bank.

[Mona Nazir, Director of Research & Industrials Analyst]

My first one is just a confirmational question. You stated in your opening remarks that COVID's impact on 2020 revenue was about $175 million. That's just Bird or does that include Stuart Olson as well?

[Wayne R. Gingrich, Chief Financial Officer]

That was just Bird. We didn't really put a quantification together for Stuart Olson in the fourth quarter.

[Mona Nazir, Director of Research & Industrials Analyst]

Okay. No, that's perfect. And just secondly, looking at the revenue on the legacy side of the business. In the MD&A, you speak about projects, and you just did as well, being pushed to the right across all verticals, and I understand this is expected to continue into 2021. I'm just wondering if you could provide some perhaps guidance on the magnitude of the declines on the legacy side. Do you think it could be similar to what we saw in Q4 or could we see a sequential improvement? And just also on the same line of thought, do you expect that cross-selling opportunities could materialize this year to positively impact the top line or would it be further out?

[Wayne R. Gingrich, Chief Financial Officer]

I can take that one, Mona. So I think in terms of looking into 2021, I think there could be a, plus or minus, similar impact in Q1 in the legacy Bird side. I think that's reasonable to assume. I think we're seeing pretty good resilience on the Stuart Olson revenue stream at this point. But on the legacy Bird side, while we have the work in backlog, it's just things are shifting to the right a bit. And then, in terms of the cross-selling opportunities, I think certain opportunities like the new correctional centers that we announced, that could have an impact this year, and we'll start working on those projects. But the further you get into 2021 as we announce some of these, it's probably more likely they're going to impact either fourth quarter or 2022. But we are seeing opportunities come up in the pipeline.

[Mona Nazir, Director of Research & Industrials Analyst]

Okay. That's great. And last question for me before I jump back in the queue. I'm just wondering, thinking about the model, if you've had to adjust your bids at all to account for an elevated cost environment. I mean, if we look at the recent MRO contract win, is the pricing higher or even a little bit or a lot than -- versus if you were to win the work pre-COVID?

[Wayne R. Gingrich, Chief Financial Officer]

Well, it certainly takes into account, Mona, the experience we have. It's a long-term contract, obviously. So in that regard, the nature of that contract is such that costs that we incur are compensated. So obviously, it's a performance-oriented-type contract, but something that gets evaluated, which is typical of these longer-term performance partnerships that we have with long-term clients. So ultimately, we're driving towards performance and -- but there is some impacts that you incur.

[Mona Nazir, Director of Research & Industrials Analyst]

Okay. Perfect. There were just more confirmation that new win should position the company for further profitability improvements going forward?

[Wayne R. Gingrich, Chief Financial Officer]

Correct. Yes, that is correct.

[Operator]

Our next question comes from Jacob Bout of CIBC.

[Jacob Jonathan Bout]

Yes, Just going back to the $175 million of, I guess you're calling it, delayed conversion of pending backlog. Is there any part of that would be -- that could be prominent?

[Wayne R. Gingrich, Chief Financial Officer]

No, I don't think so. I think it really is a shift. That $175 million comes from both just work not proceeding as quickly as it would have if it wasn't for the pandemic coming from our backlog. And then there's also just the impact for projects that we've been awarded that we haven't contracted yet. In some cases, they're taking longer to contract. But every quarter, we review every project that's in there. And we're still confident that everything we've reported is still going to get contracted, just a little further out than we would have otherwise expected.

[Jacob Jonathan Bout]

So should we see that $175 million realized in 2021?

[Wayne R. Gingrich, Chief Financial Officer]

I would think, yes, that $175 million is going to be recognized in 2021. But you also have to think there's other projects that are still shifting to the right. Like if that project is delayed, I wouldn't think of that $175 million as additive to our work program for the year. I think you're seeing kind of a shift of some of these projects moving into 2022 as well.

[Jacob Jonathan Bout]

Has there been any improvement that you've seen through to current date as far as the delayed conversion of pending backlog?

[Wayne R. Gingrich, Chief Financial Officer]

I think the second wave of the pandemic was probably stronger and had a bigger impact on the business than we would have foresaw in September, October timeframe coming into the fourth quarter. We think that is certainly going to continue that trend in Q1, and Q2 is tougher to say at this point in time. But we certainly did have reduced productivity on certain sites, particularly in BC that will have a big impact on revenues in Q1. Again, all of those revenues are in backlog, and we hope to be able to catch up for that delay later in the year, but that will create a bit of a timing difference from Q1.

[Jacob Jonathan Bout]

Okay. And my next question is just on the margin side. So if you back out CEWS, we're coming up with an EBITDA margin of, call it, 3.3% with SOX. How do you think about normalized margins on a go-forward basis?

[Wayne R. Gingrich, Chief Financial Officer]

Well, I think if -- I mean, CEWS is an interesting one on margins, right, because you're getting a cost recovery with no associated revenue with it. So it really does kind of play havoc with your margins when you're reporting them that way. So if you take out all of the CEWS and you kind of rebaseline the margin, then you look at it and say, okay, well, what's missing from that? Well, we've talked about having this $175 million of revenue that would have had associated gross profits with that. I would say, there's a good blend of industrial projects in there, which typically have higher margins than some of our commercial institutional work. So I think that $175 million was at a pretty healthy margin relative to the average of the total, if you will. So that would certainly have an impact, and you can kind of think about that coming into play in 2021. And then, the other thing I'd say is that our projects also experienced productivity impacts. And we recognize revenue on a percent complete basis. So we're including those productivity impacts in our estimates to complete on those projects, and that kind of puts a little bit of downward pressure on the margin that you recognize if we're still factoring those productivity impacts in. At some point, when, hopefully, things will subside here in the pandemic at some point in 2021, then you should see productivity return back to normal again, and you might get a bit more productivity and lift in your margins at that point as well.

[Jacob Jonathan Bout]

And then on a go-forward basis, how should we be thinking about seasonality of your margin profile versus what we saw historically with the legacy Bird?

[Wayne R. Gingrich, Chief Financial Officer]

I think you'll see a little bit less seasonality in our business going forward, and I say that because of primarily the MRO business gives us a nice recurring revenue stream that previously in legacy Bird, we didn't have. And if you look at the legacy financials of Stuart Olson, you can kind of see what was reported in that segment. So we'll certainly benefit from that type of revenue stream going forward. So it will take out some of the dip in Q1. But on the other legacy businesses that Bird had, you're still going to see that same seasonality.

[Operator]

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

[Christopher Allan Murray]

So maybe I'll take another crack at the margin question, maybe ask it a little bit differently. So in your script, you basically said the CEWS payments that you guys received didn't really cover, in your expectation, all your real costs in the year. So the thing that's kind of interesting, and there's a bit of a divergence here, is that we saw margins improve throughout the year pretty steadily. So now, what I'm trying to maybe square is, excluding the CEWS or maybe -- what would have been the real margin do you guys feel if you would just being able to run it through? Because it feels like if we back it all out, we're still at least on an improving trend on the underlying business.

[Wayne R. Gingrich, Chief Financial Officer]

Well, I think you're definitely seeing improvement in the Bird business. And if you think back to the first 9 months of the year, in Q3, we only reported $3.1 million of CEWS, if you will, and then we had this kind of $11.6 million catch-up in the fourth quarter. So if you look at our kind of year-to-date margins as of September 30, that probably gives you a better feeling for what the run rate of Bird is. And then, you can kind of factor in that maybe we haven't recovered all of the costs, and we picked up some of those costs in Q4. So you can associate some of those margins back to prior year, that $11.6 million. You may want a revenue effect to that if you're trying to normalize it because otherwise, it's kind of a pure cost reduction with no associated revenue.

[Christopher Allan Murray]

Okay. But I guess, maybe to think about it, like would you suggest that the CEWS was 50% of your costs or would it have been, we're talking like single-digit-type numbers over what you would have received?

[Wayne R. Gingrich, Chief Financial Officer]

Yes. I think it was smaller. Like it didn't quite cover all of our costs, but it was getting fairly close.

[Christopher Allan Murray]

Okay. That's helpful.

[Terrance Lloyd McKibbon, President, CEO & Director]

The other way to think of it, Chris, is a construction claim that contractors like us have. If you think of CEWS as a recovery of a construction claim during the year, it's not uncommon, we have issues that we incur with our clients, and we work hard to negotiate and settle those in the calendar year. In the Bird experience, it's not dissimilar. CEWS is -- it's just a different format of how that recovery was made. That's how we think about it.

[Christopher Allan Murray]

Fair enough. And then, Teri, maybe you want to take this one. But we look at the balance sheet today, you're essentially unlevered. And you made the comment about having a healthy pipeline of opportunities as you go into 2021. Can you talk a little bit about what you mean by in the pipeline? And is that new projects or is that more something around the M&A world that you're thinking about?

[Terrance Lloyd McKibbon, President, CEO & Director]

I think it's a mix of both. Obviously, we're in -- we've had good progress, busy with the integration with Stuart Olson. I'm really pleased with how that's evolving, building, I think, a tremendous foundation with the business, a stronger, certainly, a more diversified company. We've got, as you referenced, a very healthy backlog. So it really does position us with this balance sheet to have flexibility. And as COVID evolves and we see a light at the end of the tunnel, hopefully, by second half of the year, we're certainly well positioned. Our integration, by that point, will be in good shape. And whether it's opportunities in projects, in new pursuits or whether it's M&A opportunities. Obviously, we took advantage of the difficulty of COVID in the environment we're in to pursue and acquire Stuart Olson. And we think -- we know there are more opportunities out there for us to grow both organically and with M&A.

[Christopher Allan Murray]

Is there any particular, I don't know, practice area or anything that you want to maybe diversify into? Horizontal infrastructure? Is it something around buildings that you'd like to have? A different set of trades or something like that?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. If you think about the opportunities that in the world that's evolving with things like renewable power in the energy sector, those are interesting for us, and we have we have our foot in that already, and we've got organic growth there. So the whole energy sector with how it's transforming is a big opportunity. We do like the being horizontal infrastructure side of the market. We like that space. And you think of other areas like underground utilities and things like that, which we're in today and working on various types of projects. So those -- that would be sort of 3 areas. But one of the keys, we see the Ontario market as an exciting opportunity for us, and certainly, Ontario will be a big focal point. And also, it rebalances our revenue stream across Canada a little bit. We're more heavily West right now with the acquisition of Stuart Olson. Well positioned to grow a great foundation in Ontario with the pieces we acquired, plus our existing business. But we see certainly growth in Eastern Canada as we come out of this cycle, and we see stimulus. We're really excited about the strength in oil, developing new opportunities for the company. Certainly Stuart Olson business gives us a tremendous foundation to take advantage of new opportunities in oil and gas with a stronger oil price, and also, most importantly, a recovery -- potentially recovering economy in Alberta. And so some exciting things emerging. And we think as we get through COVID, the bigger impact of this will be 2022, but -- and beyond, at least at this point, based on what we can see. But we certainly see some exciting times, and we have a great foundation to leverage off of.

[Operator]

Our next question comes from Mark Stuebing of TD Securities.

[Mark Stuebing, Associate]

It's Mark on the line here for Michael Tupholme. It sounds like the integration of Stuart Olson is progressing well. I was wondering if you can discuss some of the major milestones you're working toward over the next year or so.

[Terrance Lloyd McKibbon, President, CEO & Director]

So we had a 100-day integration plan, which we've successfully completed. And if you think about the business today, obviously, I referenced in my comments that we're well underway with the strategic plan for the new group, which will be sort of a 3-year plan that we're working closely with our Board of Directors on. And so that's a big focal point. Cultural -- the cultural integration of a business, 2 businesses that are 100 years old, obviously, is another focal point that will leverage off the framework of our strategic plan. And then lastly, we brought 2 businesses. The construction industry today is emerging very rapidly with the use of complex technologies, and both Bird, and Stuart Olson were well developed in terms of various products. So we're working closely now with our teams to build a common platform. And it's a great time to be looking at the framework of technology if you're doing sort of a transformational framework for your company because of the evolution of products that have been done in the past few years certainly making it much easier to do these types of things. And we have the benefit of 2 platforms and a whole series of different tools that we -- both businesses have the -- almost the framework of a test drive so that we can look at and evaluate how these come together. So I'd say that a strategic plan, culture plan, technology are the -- sort of the 3 sort of major milestones in the next, certainly, 12 to 24 months.

[Mark Stuebing, Associate]

You mentioned in your outlook commentary that you're more comfortable today with the risk in Stuart Olson's backlog. I'm just wondering if there has there been any surprises, either positive or negative, after sort of completing more of your due diligence on the Stuart Olson backlog.

[Terrance Lloyd McKibbon, President, CEO & Director]

No, not -- there really hasn't. We've worked through the detail. We've been exposed to Stuart Olson now for 8 or 9 months and working through the due diligence. And this business was a business that generally had a lower risk profile. So it's not dissimilar to any other construction company big or small. You have some issues that you work through and you have some issues that have occurred where you have outstanding discussions with your clients. And with the acquisition, we're able to position appropriate contingencies to deal with any of that. So yes, so we're pleased. And -- but the framework of the business reflects the business that generally would have a lower risk profile, and as such, we're pleased after 8 or 9 months of being in a line of sight to have that detail.

[Mark Stuebing, Associate]

Great. And you mentioned the sharp increase in energy prices recently. Obviously, fairly early days, but I was wondering if you could talk about potential impact on expected new contract awards this year if oil prices stay around these levels.

[Terrance Lloyd McKibbon, President, CEO & Director]

Well, I think the big -- 2 big things. One, the Alberta government benefits significantly from oil at $60, and I think our large clients also will benefit. They've all worked very hard to get their costs to a level that's significantly below where they used to be. And so, obviously, those businesses are running well. We're, as a company, in a position today to support those businesses to continue to produce, and obviously, we're providing significant maintenance. But as oil strengthens and pipelines get built so that it unlocks more flow to justify more production, there's a significant amount of work that occurs on these sites to generate more production. So twofold, Alberta government and oil, obviously, in oil companies. I also think that on the private side, private developers gain more confidence in a growing Alberta economy. So -- but the 2 big ones for us would be the confidence of the oil sector and gas as well and then the Alberta government.

[Operator]

[Operator Instructions] Our next question comes from Frederic Bastien of Raymond James.

[Frederic Bastien, MD & Equity Research Analyst]

Just curious, we've been -- I guess, you've had Stuart Olson under your ownership for almost half a year now. We know -- we all know about the -- sort of the complementary things that Stuart Olson is bringing to the table. But just curious, Teri, if there's anything that came out of this acquisition that really surprised you to the sort of both positively or negatively. And what are the best surprises you've seen from this transaction?

[Terrance Lloyd McKibbon, President, CEO & Director]

So certainly -- it's a good question, Frederic. Certainly, the -- on the technology side, certainly, Stuart Olson was quite advanced. They have a specialized group that works extensively on smart building kind of framework. I was very surprised. We certainly weren't aware of that. Working with clients in the world that's evolving. Most of our clients have got a very high focus on carbon-neutral infrastructure. So obviously, our in-house engineering capabilities for that is quite -- is certainly impressive. Stuart Olson's business typically works early in the phase of a project with a client and is early on the development side. So it gives us really a nice marketing vehicle for things like our Stack Modular Business and other areas. Our -- if you think of the Canon business, Canon business, obviously, Tier 1 electrical contract in Western Canada, has evolved, obviously, as the installer on some of the smart building technology and some of the applications and things like security in that, which is interesting as that moves forward. They're working closely with us now in our Modular business. Then you look at, obviously, the MRO side. I was really impressed and -- with the -- just the use of technology and how advanced that is, more advanced than anything else we do, working with the large clients, using some of those different aspects of technology in oil and energy projects where we're providing those services. And some of that AI that they have developed, personally, I hadn't seen that type of technology at that level. So extremely advanced, and we're able to take advantage of that across our business now as our business evolves. So all in all, a series of areas that -- I'm sure I'm forgetting a few. But all in all, some pretty exciting complements to our core business.

[Frederic Bastien, MD & Equity Research Analyst]

Okay. That's super helpful. And you did touch on Stack a little bit in answering that first question. But I was wondering, obviously, you have this business that you recently invested in. And also, you mentioned in the MD&A, the mass -- the opportunities with mass timber. And I get -- I appreciate that these opportunities may have put -- maybe put on the back burner with all the COVID-related issues. But are you seeing -- are you excited about the opportunities within these 2 particular segments?

[Terrance Lloyd McKibbon, President, CEO & Director]

Yes. Certainly, like the Stack business is a disruptive business. So as we've all learned, disruptive businesses take a little while to mature and develop and to get architects and engineers and owners and developers used to the fact that these things have a different profile. So you've got to be working with your team and walking that design down a year before you're essentially erecting these units. So that's just not normal, and it's sometimes difficult to get all of your stakeholders aligned. So that takes a bit of time. And as such, I think some of the markets that our Modular business is geared for, such as the hotel industry, for example, has been under pressure. So we -- those will return, we expect, over time, but currently, some pressure there. Certainly, long-term care has been a big topic across Canada. And as we saw with some of the efforts in Ontario with their procurement of modularized long-term care, some exciting opportunities for us evolving there and beyond and across Canada in that regard. On the mass timber side, first and foremost, if you think about how companies are evolving with their focus around ESG, and we're no different, very focused in that area. Obviously, mass timber capabilities and mass timber facilities have really accelerated in terms of their development. But as we indicated, the general nature of projects that are in procurement in various phases are just taking longer, whether that's permitting or whether that's approvals. When all of your clients are working remotely, so the things just take longer to get over the finish line. But certainly, we have a very strong resume that we've developed over the years in mass timber. So we see that as a exciting platform moving forward. So the 2 areas are different, obviously, but exciting in the sense of how they are evolving over the longer term.

[Frederic Bastien, MD & Equity Research Analyst]

Congrats on a good year.

[Operator]

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

[Terrance Lloyd McKibbon, President, CEO & Director]

So thank you, everyone, for taking the time to join our fourth quarter earnings conference call. We have a very bright future ahead of us as a premier construction and infrastructure company. With 100 years behind us, we look forward to continuing to service Canadians for the next 100 years, delivering exciting, innovative and challenging new projects. Have a good day. Stay safe and stay healthy.

[Operator]

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