Bird Construction Inc
TSX:BDT

Watchlist Manager
Bird Construction Inc Logo
Bird Construction Inc
TSX:BDT
Watchlist
Price: 29.92 CAD -0.23% Market Closed
Market Cap: 1.7B CAD
Have any thoughts about
Bird Construction Inc?
Write Note

Earnings Call Transcript

Earnings Call Transcript
2021-Q4

from 0
Operator

Welcome, ladies and gentlemen, to the Bird Construction Fourth Quarter Financial Results Conference Call and Webcast. We will begin with Teri McKibbon, President and Chief Executive Officer's presentation, which will be followed by a question-and-answer session. [Operator Instructions] And the webcast is being recorded. [Operator Instructions]

Before commencing with the conference call, the company reminds those present that certain statements which are made express management's expectations or estimates of future performance and thereby constitute forward-looking information. Forward-looking information is necessary based on the 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 unknown and known risks and uncertainties and other factors that may cause actual financial 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 conference over to Teri McKibbon, President and CEO of Bird Construction.

T
Terrance McKibbon
executive

Thank you, operator, and good morning, everyone. Thanks for joining us on today's fourth quarter and full year 2021 earnings conference call. Joining me on today's call is Wayne Gingrich, Chief Financial Officer. I'm pleased to report strong financial results for the fourth quarter of 2021, which capped off a solid year financially for Bird. We posted these strong results despite the continued challenges with the emergence of the Omicron variant in the fourth quarter. Our fourth quarter and full year financial results are a true reflection of the efforts to bring together the Bird, Stuart Olson and Dagmar teams and to leverage our combined strengths.

As a reminder, we completed the acquisition of Stuart Olson in late September of 2020 and 2021 represents the first full year of consolidated results. Of the previously stated $25 million in annualized cost synergies, $10 million related to annualized EBITDA synergies that were not only achieved but exceeded by the end of the year on a run rate basis. Additionally, we closed the acquisition of Dagmar in the third quarter. Dagmar has extensive experience across key civil infrastructure sub-sectors, including road, bridges, rail, sewer and water and site development on commercial institutional sites, capabilities both Bird and Stuart Olson did not have previously. The integration of the companies has gone according to plan, and we're able to cross-sell our capabilities and bid on and win business needed Bird, Stuart Olson and Dagmar would be able to win on their own.

As such, our bidding pipeline remains healthy, and I'm confident in our ability to deliver strong organic growth given our expanded capabilities. Overall, I believe that we've built a strong foundation such that we can grow our top line, we're improving our overall EBITDA margins accelerate growth of the bottom line. As you can see on Slide 6, we posted record fourth quarter construction revenues of $598 million, representing an approximate 8% increase year-over-year. Net income was $9.9 million or $0.18 per share. On an adjusted basis, earnings were $13 million or $0.24 a share, while adjusted EBITDA was $28.4 million. Once again, we reported record securements and change orders in the fourth quarter amounting to $772 million. Our backlog stood at a record as at the end of 2021, while our pending backlog was comparable to levels achieved in the last quarter. Looking into 2022, our bid pipeline remains robust, giving us continued confidence in the near- to medium-term prospects for the company.

Moving to Slide 7. For the fourth quarter, we reported an adjusted EBITDA margin of 4.8%. On a trailing 12-month basis, we reported an adjusted EBITDA margin of 4.9%. As we have discussed previously, one of our strategic priorities is to focus on achieving a higher overall margin profile. We believe that the combination of our expanded capabilities, which will continue to -- which will continue to present cross-selling opportunities, as well as undertaking an increased level of self-perform work, coupled with strong execution, and this will result in a higher margin profile over time.

As you will see on Slide 8, we announced a number of meaningful contract wins in the fourth quarter. In particular, we announced the first phase of a progressive Design-Build contract with early collaborative contractor involvement in the Ontario Power Generation Clarington Corporate Campus Project. Construction is expected to begin in 2022 with completion in 2024. Additionally, Bird will participate in 3 IPD contracts in Western Canada with a combined value in excess of $150 million. The contracts include a substantial food and beverage facility expansion project, the Okanagan Indian Band water system upgrade and the North Okanagan Wastewater Recovery Project.

Through an Alliance Agreement with the renewable energy company, Noventa Energy Partners, we announced the successful financial close of the recently announced Toronto Western Hospital Wastewater Energy Transfer or WET project valued at approximately $43 million. This is the world's largest raw wastewater energy transfer project. And once it's complete, we'll provide over 19 megawatts of low carbon thermal energy to the hospital facility, which is approximately 90% of the hospital's heating and cooling requirements. The alliance was formed to jointly pursue opportunities for WET projects across Canada with Bird acting as the exclusive constructor. Currently, currently developing opportunities that utilize these technologies under this agreement represent over 500 and 150 megawatts of energy. Overall, this represents a meaningful opportunity for Bird over the longer term.

Separately, through a joint venture, Bird successfully completed the validation phase of the IPD contract for the Advanced Nuclear Materials Research Center for Canadian Nuclear Laboratories. The estimated value of this project is over $500 million, and the completion of the validation phase means that the project will now proceed. Bird's share of the project value is expected to exceed $220 million. Also during the quarter, Bird was awarded a contract for the construction of Lake City Studios in Burnaby, British Columbia. Once complete, Lake City Studios will create a significant economic development opportunity in the community and result in a world-class film studio with the potential to attract major reductions and support the overall growth of the film industry locally. The contract has a contract -- the project has a contract value in excess of $200 million. The contracts announced during the fourth quarter helped to drive our backlog to a record level.

As you can see on Slide 9, at the end of 2021, backlog stood at $3 billion, an all-time high and is $320 million or 11.9% greater compared to the same period in 2020. Pending backlog was $1.6 billion at December 31, 2021. On a combined basis, backlog and pending backlog were comparable to record levels reported at the end of the third quarter in 2021. With the addition of Stuart Olson and Dagmar, I'm proud of the team's efforts to diversify our business by geography and by end market. Additionally, as we have discussed on previous conference calls, the collaborative framework we have adopted has allowed us to balance the overall risk profile of our business. As a result, I believe that our overall risk-adjusted return profile embedded in our combined backlog is very attractive.

From a macroeconomic standpoint, expected infrastructure spending announced by the federal and individual provincial governments and a higher commodity price environment, which has resulted in increased capital spending in LNG, oil and gas, agriculture and mining should act as a natural tailwind for Bird. This combined with the visibility we have on our backlog is expected to result in significant organic revenue growth in 2022 and in the years to come.

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

W
Wayne Gingrich
executive

Thank you, Teri. Please turn to Slide 10. Despite the challenges related to the pandemic, for the fourth quarter, we reported an approximate 8% increase in construction revenues to $598 million. Gross profit for the quarter was $51.3 million or 8.6% of revenues. This compares to $61.5 million or 11.1% of revenues in Q4 2020. The year-over-year decrease can primarily be attributed to a recovery of $18.7 million of compensation expense in cost of construction recorded in the fourth quarter of 2020. This represented a 9-month cumulative catch-up under the Canadian Emergency Wage Subsidy or CEWS program. The 9-month cumulative CEWS recovery helped offset additional costs incurred by the company related to the pandemic.

No such offsets were recognized in Q4 2021. General and administrative expenses in the quarter were $37.1 million or 6.2% of revenues compared to $32.8 million or 5.9% of revenues in Q4 2020. The year-over-year increase can be primarily attributed to higher compensation costs of $2.2 million and higher integration costs related to the acquisition of Stuart Olson. G&A expenses this quarter included non-recurring acquisition and integration costs of $4.1 million compared to the $2.1 million in the fourth quarter of last year. We expect that the restructuring costs that we incurred in Q4 2021 will result in additional cost savings that can allow us to exceed our annualized EBITDA synergies target on a go-forward basis.

Adjusted EBITDA in Q4 2021 amounted to $28.4 million or 4.8% of construction revenues compared to $40 million or 7.2% of revenues in Q4 2020. Adjusted earnings was $13 million or $0.24 per share in the fourth quarter versus $21.5 million or $0.41 per share in the comparable period in 2020. As a reminder, we qualified for CEWS in the fourth quarter of 2020 and for the first half of 2021, which bolstered our margin percent during these periods of reduced revenues. As such, these subsidies will act as a headwind to reported year-over-year margin improvement until the third quarter of this year when the trailing 12-month impact of the subsidies falls off. While we reported strong fourth quarter results, I'd like to highlight that the emergence of the Omicron during late in the quarter resulted in an increase in employee absenteeism, modest delays in project tenders and awards from clients and intermittent supply chain challenges. These issues ultimately constrained revenues and profitability in the fourth quarter and are expected to persist earlier in the first quarter of 2022.

Turning to our full year results. We reported construction revenues of $2.2 billion for 2021. This represents a 48% increase year-over-year compared to construction revenues of $1.5 billion for full year 2020. The year-over-year increase is primarily driven by the acquisition of Stuart Olson in Q3 2020. Gross profit for full year 2021 was $187 million, reflecting an 8.4% margin, while G&A expenses increased to $127 million or 5.7% of revenue for the year. Adjusted EBITDA for 2021 was $108 million, representing a 4.9% margin. This compares to adjusted EBITDA of $82 million or a 5.5% margin for full year 2020.

Adjusted earnings for the full year 2021 was $51 million or $0.96 per share. Adjusted earnings for 2020 was $42 million or $0.92 per share. As Teri indicated previously, our backlog is at an all-time high, sitting at $3 billion, while our pending backlog was $1.6 billion as at year-end 2021. On a combined basis, backlog and pending backlog were at comparable levels to the third quarter of 2021 and 7% higher than last year. Within pending backlog is approximately $800 million in MSA contracts, which are typically with industrial clients that span multiple years of MRO work. As always, 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 5 years, providing us excellent revenue and profit visibility.

Additionally, as you'll see on Slide 11, we have materially reduced the embedded overall risk profile of the revenue we have recognized over the past 4 years. Projects in our backlog, as well as our pending backlog remain balanced and have an attractive risk reward profile. A significant portion of our contracts are collaborative IPD and Alliance contracts, which also have attractive risk reward margin profiles.

On Slide 12, you'll see how we've balanced and flexed our work programs between commercial and institutional work, while largely maintaining the proportion of industrial work to drive stronger growth, both on the top line and on the bottom line. Overall, I'm comfortable with the current composition of our backlog and pending backlog, as well as our sector diversification between institutional, industrial and commercial contracts as they appropriately balance customer concentration, contract size, contracting method and end market diversification.

Moving to Slide 13. I'd like to provide a brief update on our integration efforts of both Stuart Olson and Dagmar construction. As it relates to Stuart Olson, and as we've talked about previously, we identified $10 million of annualized EBITDA synergies. As at the end of the fourth quarter, we achieved these synergies and believe we'll be able to exceed these synergistic targets, noting we took additional charges in the fourth quarter to align our operations. Additionally, we expect to realize further cost savings over the next couple of years as we integrate both companies onto one unified IT platform. And while it's still early days with Dagmar, we are already seeing synergistic benefits as we're able to cross-sell our capabilities across our national platform.

Overall, I'm very pleased with the progress we've made with both Stuart Olson and Dagmar. We've realized meaningful cost synergies to-date, particularly as it relates to the integration of Stuart Olson, and we expect to realize more in the years to come. However, what is more exciting are the top line cross-selling opportunities that have emerged since Stuart Olson and Dagmar have joined the company. While we made the transformative acquisition of Stuart Olson and broadened our expertise into civil infrastructure with Dagmar, Bird remains rooted in maintaining a strong balance sheet with significant financial flexibility.

As you'll see on Slide 14, as at December 31, 2021, we have accessible cash and cash equivalents of $103 million and approximately $140 million of available capacity under our committed syndicated credit facility. Furthermore, we have an additional $50 million available under our non-committed accordion option. As a reminder, in the third quarter of 2021, we expanded our syndicated credit facility to $235 million from $200 million and retained the $50 million accordion feature. We further extended the term of the credit facility to September 1, 2024. Of note, we voluntarily repaid an additional $5 million against our revolving credit facility in the fourth quarter. As a result, for full year 2021, we repaid $10 million against our revolver.

In addition to our significant accessible cash position at year-end, our adjusted net debt position stood at negative $24.3 million, which is comparable to the prior year. Our adjusted net debt to trailing 12-month adjusted EBITDA ratio was negative 0.22x as at December 31, 2021. All our financial metrics are well within our comfort levels and provide ample flexibility to pursue additional accretive M&A.

Turning to Slide 15. We continue to balance our capital allocation priorities between organic opportunities, dividends, M&A and debt repayments. For full year 2021, we generated cash flow from operations before changes in non-cash working capital of approximately $103 million. Our investment has remained modest -- our capital investment has remained modest in 2021 as we deployed approximately $12 million towards capital expenditures. However, looking into 2022, we expect CapEx to return to more normalized pre-pandemic levels.

As always, we remain committed to returning excess capital to shareholders via our monthly dividend payment. For the full year, we made roughly $21 million in dividend payments to shareholders. As it relates to our M&A strategy, as always, we will remain disciplined and opportunistic. Overall, we've made significant strides building our business profitably while diversifying by end market and geographical exposure. As such, I'm very pleased with our financial strength and our positioning within the Canadian construction industry.

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

T
Terrance McKibbon
executive

Thanks, Wayne. Turning to Slide 16. I continue to believe that Bird has built a strong platform for future growth and strong profitability. While the challenges we faced in the fourth quarter are expected to persist into the first quarter of 2022, we are seeing increased momentum for the remainder of the year. The additions of both Stuart Olson and Dagmar are bearing fruit as we are seeing increased bidding activity as we are witnessing enhanced cross-selling opportunities. Additionally, both Stuart Olson and Dagmar have served as further catalyst to diversify our product offerings and geographic exposures. I believe that we have built and will continue to build a business that can capitalize on the significant growth prospects of the Canadian economy, while delivering superior risk-adjusted returns for Bird's shareholders.

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

Operator

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

C
Chris Murray
analyst

Just looking at the Q4 margin profile, I guess things were a little bit better than what I would have expected, particularly given some of your commentary from your peers. I'm just trying to understand this will be the first quarter or Q4 would be the first quarter with Dagmar as part of your operation. Just trying to get a sense of how you felt about margins in the quarter, Dagmar's performance and contributing to them? And should we be thinking about that kind of margin performance going forward?

T
Terrance McKibbon
executive

Yes. See, Dagmar in its first quarter within the company has been -- for me, it's been really exciting to see the potential. I don't think we fully even realized the potential that would exist working with their team. And as we've got fully integrated now, the opportunities are fast and furious. And I would say a portion of their business has a government-related activity, and that not dissimilar to the -- to other parts of our business in Canada that has a government interface, some of their backlog that took a little longer to develop, but 2022 looks like a really exciting year on the Dagmar side, and I'm really impressed with the cross-selling and the opportunities that are coming with our teams.

We really have a strong culture of a collaborative organization and the leaders are coming up with ideas that are really impressive. So yes, really pleased with that business. And I think fourth quarter had some pressure with Omicron. And I think we see that to a certain extent into the first quarter of 2022, but we're seeing the momentum building now. And as we get into spring, we are pretty confident about the year ahead.

C
Chris Murray
analyst

Okay. That's helpful. And then my other question, when you -- I think you talked about this a little bit about synergies. So a couple of questions. The $4.1 million in acquisition and restructuring costs that were in the quarter, how should we be thinking about the magnitude of those costs as we enter 2022? And can you just spend a little more time maybe walking through how we should be thinking about some of these investments or changes that you're making in terms of your SG&A maybe as a percentage of revenue or some sort of way to kind of gauge how to think about where these investments are going to contribute down the road?

W
Wayne Gingrich
executive

Yes, certainly. So as it relates to the adjusted costs for the integration and acquisition costs of $4.1 million in the quarter, there's a component of that, that we had a retention program in place that was recurring through Q1, Q2, Q3, Q4 of 2021, which was actually paid out in the first quarter of 2022. So that won't be recurring next year at all. And then the other piece relates to really severances and some restructuring we did. Those are one-time costs. Those won't be recurring. So we took those charges in Q4. And I think 2022, you'll benefit probably in that leaner overhead structure going forward.

C
Chris Murray
analyst

Any magnitude do you think you can share, like is it sort of a one-for-one in terms of dollars type of thing?

W
Wayne Gingrich
executive

Yes, I probably wouldn't disclose the magnitude of the savings. But suffice to say the -- that there'll be significant savings through the course of the year.

Operator

Our next question comes from Mark Stuebing of TD Securities.

M
Mark Stuebing
analyst

It's Mark on the line here for Michael. You noted that there were some productivity impacts related to the Omicron variant in Q4. Just in general, can you talk about how productivity on Bird's projects is at present, and how that productivity compares to Q4? And would you expect to see more or less impact on these projects than in Q4?

T
Terrance McKibbon
executive

I think Q1 will have a similar profile. We're 2/3 of the way through Q1, but I think it's a similar profile to Q4. And some of the productivity side relates to just absenteeism. Omicron seem to be a -- have more of an impact on absenteeism than previous variants within COVID. So I think -- and obviously, Q1 is -- most of our activities have somewhat of a muted sense because of winter conditions. And obviously, but in Bird's core business with a large component now is self-perform and -- but even within sites where we had high subcontract base, it was the absenteeism that we really noticed more so than we'd ever noticed in the 2 years of COVID.

M
Mark Stuebing
analyst

Thanks. Yes, we've also been hearing a lot about labor market tightness in Canada, particularly within skilled trades. I'm wondering how you'd characterize your ability to retain and attract talent in the current environment just in the context of your really strong backlog? And also can you speak to your ability to pass along these higher labor costs?

T
Terrance McKibbon
executive

Yes. So on your first question, Bird has been in the Canadian market for over 100 years now. And I think from that perspective, especially over the last 15 years or so, we've really entrenched ourselves in core operational centers in every major province, every major city, Stuart Olson even further enhance that. So -- and with a collaborative strategy, you can really accelerate the flow of resources and people and teams and whatnot 2 different markets. And so we're really seeing the momentum build. So that helps us take some of the peaks and valleys of labor demand. I won't say labor demand is high in certain markets, especially markets like Toronto and in -- and Vancouver tighter. But we're moving teams to support them. We assembled very large teams, our project, a large work in LNG in BC, we assembled a team of 2,000 people. So we can assemble teams and move folks from one jurisdiction to the other fairly easily.

So in that regard, I think we've had some good success in those areas. Your second question, I think was really important to recognize with Bird is, Bird has some really related to the profile of our backlog, like we had some trickier contracts that we worked our way through that quite honestly, we would deem them to be inappropriate, an inappropriate use of a commercial framework to deliver a project, and we had a series of those, and we paid the price for that. And we worked our way through that in '17 and '18, there was some trailing effect in '19. But if you look at our profile today, our profile is quite a bit different, and the nature of that backlog is considerably different than what it was. And it's sort of a bit of a -- it's sort of a hidden gem within Bird as we go forward now.

So we start to look at pressure from escalation and things like that. Our contracts are collaborative with our clients. So if there's an escalation pressure, that's something our client has signed up for. So we're able to pass that through. So the nature of the style of the business, we can cut through some of that and the majority of it. We have a couple of contracts that we have that are higher performance. And obviously, it's an area that we're very comfortable with, and we're working for clients that have a very deep track record of delivering these projects in this framework. So in those, obviously, there's some pressure and we work through those, but we're feeling comfortable that we approached them with the right level of contingency and the right levels of escalation. So in that regard, yes, we're pleased with the work we did a couple of years ago to get us to where we are today. So in that regard, I think we're a bit different than some of the others.

Operator

Our next question comes from Masa Song of Laurentian Bank Securities.

M
Masa Song
analyst

So in terms of the revenue mix, it's great to see a meaningful reduction for the PPP versus the historical level as a percentage of the top line. As more infrastructure projects hit the market in the post-pandemic environment, how do you foresee your revenue mix to evolve? Is this strategy still targeting lower risk profile and higher margin work?

T
Terrance McKibbon
executive

Yes, I'd say that it's a mix, like I mentioned in the previous discussion on previous questions that there were projects in the Canadian marketplace that were being procured with an inappropriate commercial interface and an inappropriate risk transfer, and that's all changing now. And we have a leading position in Canadian construction as being a company that is working extensively on large IPD and Alliance type contracts. So we're in a great spot in governments where if you had an agency that had a higher propensity to call projects with a P3 delivery, that's shifting now to Alliance and IPD framework and it really positions us really well.

We're also seeing a higher volume of long-term MSA contracts. And in those cases, we have -- because of our scale, we've got limited competition. So we're very excited about some of that that's happening. And yes, some exciting things that are evolving in that regard. So I really like the framework of the way the business and the way we've approached collaboration and our One Bird initiative is really settling in. I never anticipated that it would accelerate the way it is, and the amount of cooperation and collaboration and team efforts that are going into delivering these projects.

And it allows us to ratchet up into some larger assignments because the nature of the commercial interface has got an appropriate risk transfer. And oftentimes, you cut through some of the things that can give you some brief. Large projects are difficult, large projects in a brownfield environment or even worse. So there has to be an appropriate -- and I think most of the larger governments in Canada that do a lot of this kind of thing have realized that there's a different approach is more appropriate for getting these projects delivered.

M
Masa Song
analyst

That's really helpful. And on the MRO side, given the oil price has been really healthy or against the elevated levels, what are some of the discussions you're having with clients? And how do you think about the organic growth profile for that part of the business?

T
Terrance McKibbon
executive

Yes. We're excited about that because any time that you've got higher commodity prices, these larger clients that we've worked for, for many years, we'll have more of an appetite to do further longer-term maintenance and longer-term expansion and the combination of certainly Bird and Stuart Olson with many of those clients where we used to work in parallel, but not in anything we really didn't work jointly. Now we're working as one offering, and that's a much higher offering for these types of clients. So it's certainly bearing fruit. And in that regard -- but we're -- and we're also looking at in cases where we have an opportunity to build a new facility for a client, there's nothing, I would say, that would be smarter for a client to do than have the same guys that built to maintain it.

So there's those opportunities that are evolving as well that you're not going to find any way with more knowledge of the facility than the guys that built it. So we're seeing a lot of that kind of combination now be packaged. And our large clients are looking for a very, very high standard of safety, a very high standard of quality and collaborative interface. And in 2021, we set record performance in our safety performance, and we've had excellent performance in quality across our organization.

So we're in a good place. And that extends beyond oil and gas, like the number of activities that are evolving for us in Ag in -- especially in Western Canada, certainly some processing plants in Eastern Canada as well, but Western Canada is really investing heavily and growing to feed the world's population. Mining is getting -- we're seeing some really cool momentum now in mining. So yes, we're in a good spot when commodity prices rise, obviously, that tide raises all boats. So we're happy to be in a higher commodity type environment.

M
Masa Song
analyst

And then in terms of the LNG Canada, have you started to also see more work on site? And if so, what are the scopes or types of the work that you may be targeting?

T
Terrance McKibbon
executive

So we're seeing like it's a monstrous project, first of all, and we're partway through. There's a lot of work to that there's opportunities for us. So we're just seeing a steady pipeline of opportunities on pieces of that, that project. We've had tremendous performance. Our -- I can't say enough about our team and how hard they work to work through really difficult conditions and working in a remote location and deliver a project to that high of quality and the high safety record is outstanding on that side. So we're -- yes, we're just seeing a steady pipeline of new things. And I think anytime you work for some of the pinnacle of energy producers in the world, you work for them, you've got to have very, very high performance, and our team is knocking it out of the park.

M
Masa Song
analyst

That's really helpful. My last question is for Wayne. On the non-cash working capital, it looks just a bit negative for the years in the minus $30 million range. How should we think about the line item for 2022? And then should we be expecting a bit heavier usage given the ramp-up?

W
Wayne Gingrich
executive

I think you're certainly going to see organic growth in our business in 2022, and that's going to translate to an investment in non-cash working capital. I don't think you're going to see it as one massive spike come up, but I think you're going to see it more as a steady increase, so that we'll see organic growth in each of the quarters next year, which kind of spreads out that required investment. So I wouldn't be surprised if the amount of investment we need is not dissimilar to what we invested this year.

Operator

Our next question comes from Ian Gillies of Stifel.

I
Ian Gillies
analyst

I was -- I want to start on the M&A front. I mean, by all accounts, Stuart Olson has been integrated very well and been very successful. Similarly, it sounds like Dagmar is around the same path. Have you seen more opportunity from an M&A perspective given the strong integration that's happened there, i.e., is there going to be -- is there been more opportunity moving forward for M&A?

T
Terrance McKibbon
executive

Yes, I think so. But I also think that we're really impressed with the amount of organic growth that's occurring in the amount of collaboration and the cross-selling. So as you can well imagine, we're in the middle of a large technology launch with integrating all our businesses. So we're continuing to look for companies that fit our profile, but it's part of our focus, but it's not our biggest priority. The organic side of the business, organic growth has just been really, really daunting. And it's something we're putting a lot of time and effort into and ensuring that we're approaching those projects in those areas with the right assessment of risk and the right assessment of capacity to deliver.

And -- but we continue to keep a watchful eye on opportunities that are out there. And we're very focused on that accretive margin framework and very focused on strong execution. And sometimes in the evolution as the business evolves, we've obviously grown quite considerably and now putting a new technology framework across all the companies, big focus on that. So in that regard, some of our M&A is maybe taking a little bit of a back seat, but it's still something that we're keeping a close eye on.

I
Ian Gillies
analyst

Got it. Wayne, perhaps maybe a bit more for you. But with respect to the technology launch and the impact it has on the business, do you think it reduces costs because there's just more automation built in or will it help with bidding across the entire firm because you'll have more data? Can you maybe talk a little bit where you think you get the savings from that and when the estimated completion date is for that project?

W
Wayne Gingrich
executive

Yes. I think it's all those things to be honest, Ian, and probably the biggest thing even would just be our ability to collaborate and being easy to work with each other. I mean today, we're operating on multiple platforms and we're making it work well. But certainly, when you have all of your project date at one system and you have people across the country that can access information and leverage it for either other bids they're working on or bring in talent from other businesses to support your project, it's just you get a lot of productivity when you can do that seamlessly. So we're very focused on that.

I don't think the technology program that we're running right now, I don't think you can say, well, it's going to be done in 18 months from now. This is going to be a journey. We've got a good road map. We're going to get some nice wins over the next 18 months in that time frame, but there's other things that we've already identified that we want to continue to do. So I think for us, this is going to be a 2- to 3-year journey is the time horizon we're looking at anyway.

T
Terrance McKibbon
executive

I think the other piece to add is that you -- the construction industry for probably the first time in many years is getting a lot of focus from Silicon Valley in terms of new solutions and AIs has become a much bigger aspect of our business. And I would call the -- I would call it virtual design is the single most impactful use of technology and probably 50 years in construction, like the model is becoming the center of the project. And it's not just how building is designed, it's how we'll estimate, it's how we will manage workplace planning and manage productivity and manage commercial interface with our clients and it's just becoming -- it's really, really impressive to see.

Construction is when you're working on various ways to build, you're constantly working through problems and working -- getting over impacts and delays and things like that, but the model just smooths that out and just creates a -- more automation and more of a -- so that in my mind is, it's just -- it's a good place. We're really focused on ensuring that the center of our universe is really the virtual model the projects that we build, and we'll use it quite extensively across a lot of different things. And so we're seeing that as a game changer. And projects that we're using models on to the fullest extent have significantly higher performance. And that's a really cool aspect of doing it because -- and the reason for that is you're just -- you're debottlenecking well ahead of the actual activity in the field.

I
Ian Gillies
analyst

That's an interesting point. And then the last one for me on backlog. Would it be a fair assumption that the backlog right now from a contract perspective looks reasonably similar to what the revenue splits were by contract in 2021?

W
Wayne Gingrich
executive

I think for the most part, I mean, in late last year, we announced the Alberta Schools P3 project. So you'll probably see more revenue on that, but the P3 contract type is very appropriate for that type of project, and Bird has had a lot of success in bundled projects in the past. So you probably see P3 go up a little bit, but I don't think that should be a concern to anyone. We're pretty pleased with how that project is starting to come out of the ground. But that's probably the only shift that I can think of.

T
Terrance McKibbon
executive

Yes, lots of momentum on the industrial side. I think you might not see it as a ratio in 2022, but by 2023, I would expect you'll see a higher ratio maybe between industrial and buildings. And also our -- because of the collaborative nature of how we're approaching business, we're using a blend of some of our teams for certain types of things where our local district or division in a particular market has some expanded skill set beyond just doing commercial institutional work.

So for example, our team in Winnipeg delivered a very high profile project for Merit Foods. Well, that's the core of the growth in Ag. So we have a very strong team and acquisition. Stuart Olson brought some individuals on our team that are strong agricultural background. And so it's just accelerating our opportunities in Western Canada now with that type of approach. And that a large Ag plant, I would -- we would refer to that as a lighter industrial type facility. So we're also shifting our -- what was traditionally a more commercial institutional into more lighter industrial because the margins are higher.

I
Ian Gillies
analyst

That's good color. I appreciate that, and certainly going to be topical given what's going to happen with food supply chain. So with that, I'll turn it back over.

Operator

[Operator Instructions] Our next question comes from Naji Baydoun of iA Capital Markets.

N
Naji Baydoun
analyst

Just wanted to spend a few minutes on your priorities for this year. One of them is increasing recurring revenues. The number of the quantum of MSA contracts in the pending backlog has kind of ticked down since last year and last quarter. I'm just wondering if you can talk about the outlook for that business for 2022? And is there maybe a certain run rate level that you're looking to achieve?

T
Terrance McKibbon
executive

Yes. I think on the MSA side, if anything, there's momentum there now with higher commodity prices and our clients will generally spend a bit more robust spending when you've got -- they'll do things that are longer term that they might not have done in a weaker environment. So we're seeing certainly that evolution. So in that regard, I think -- and it's -- the MSA world is a little lumpier because you're signing these long-term contracts. So you're not signing a new one every week. You might do 1 or 2 a year kind of thing. And so it's got that kind of a flow to it when you're doing long term. But we're seeing pretty good momentum in the use of MSAs and different types of industries that are evolving. So we expect to see continued growth as 2022 evolves.

N
Naji Baydoun
analyst

Okay. And just, I guess, more broadly on the organic growth side, total sort of contract awards for the year were relatively close to last year. But what are you seeing so far in the pipeline for 2022? And again, maybe what's a level that you would like to achieve over time?

T
Terrance McKibbon
executive

Well, we're certainly -- we're focused primarily on increasing our accretive EBITDA, both as a quantum and as a percentage of revenue. So that's our main focus. Top line revenue less important for us. We're putting a major focus on that growth. I'll also say that as the business is evolving, the types of contracts we're doing are much more heavily collaborative, and the collaborative contract has a much longer evolution. So now we're talking about a client when they have an idea as opposed to talking to a client where they had an idea, they hired an engineering firm, engineering firm did a design and then we're into procurement against many others.

When you're in collateral, it's very front-ended, and these projects take a little longer to evolve. So for us, I think a lot of the stuff we've been working on in '21 and into the first quarter of '22, we won't really see revenue until '23. So that's pretty exciting what's happening. And obviously, with the higher commodity market, a lot of these are in the industrial framework. But many of them as well, with the switch in government's focus to move to more collaborative contracts with IPD and Alliance, those are also involvement, they take a while. Like we think of our -- what we announced up at CNL, very large project, but it's taken a few years to get from initially being selected to getting through to reach FID with our clients. So these things take a little longer. And obviously, we are -- the timing sometimes can be affected by things that are happening in the world. Yes, so in that regard, I think -- but organic growth is certainly very active within the business and the diversification that we really put a big focus on from '16, '17, '18 is really paying off.

N
Naji Baydoun
analyst

Understood. It sounds like you don't necessarily want to start being on every other project, but sort of maintaining that discipline until you get those longer, more attractive, higher-margin contracts over time...

T
Terrance McKibbon
executive

And they take a little longer -- they take a little longer to develop. Because of the service offering, it's not that it's a much higher service offering, and you've got to be the type of entity that has that ability to offer that complex service offering. And I think the pieces, when we add Stuart Olson, we added Dagmar, creates that for us, and it gives us that tool belt that's full of different types of tools and different types of clients are looking for that. So whether you're building a big complex data center, well -- and I think the -- something that's kind of a hidden value within our suite of companies. It's not well recognizes we have upwards of 4,000 electricians that go to work every day for us.

And when you think about what's emerging in the world with a high focus on electrification, whether that's in communities or whether that's in vehicles or rail systems, having 4,000 electricians is a pretty cool component of your core business and steering those resources into markets is something we're pretty excited about as things evolve in our landscape. So it's not often that it's not as well known, but it's something that is kind of a real jewel the way our business is working. And in that, 90% of that came from the acquisition of Stuart Olson.

N
Naji Baydoun
analyst

Understood. That's very interesting detail. Last question, I guess, with Stuart Olson and Dagmar and this repositioning that you've done with the portfolio over the last few years, today, you're kind of sitting in a very good position. When you just think about capital allocation for this year, organic growth aside, it sounds like maybe M&As were lower on the priority list. Does that change your view on dividends at all for this year, given the low payout?

T
Terrance McKibbon
executive

I don't see that M&A is a balance for us right now. And we look at a lot of things and we look for opportunities not dissimilar to the collaboration we expect to work with our clients, we don't like to participate in an auction. So there's lots of auctions out there. But we're looking for companies that the leadership team wants to stay and be part of our team. And in that regard, it's -- those opportunities sometimes take a little longer to evolve, sometimes they come from partnering with a firm, sometimes they come from a company that's been watching what we're doing and wants to be part of it.

And in that regard, the focus for us is a little bit different. We're looking for individuals that fit our culture and fit the framework of what we're doing and have a collaborative nature. And we've been really impressed with the Stuart Olson team and the Dagmar team, how effective that's been. And our team has really enjoyed the time over the last year in a bit with Stuart Olson and a few months with Dagmar, it's been really impressive. Those acquisitions have gone really well.

Operator

Our next question comes from Bryan Fast of Raymond James.

B
Bryan Fast
analyst

Just one question for myself here. As you look across the portfolio of projects, are there areas where you think you are underweight or where you see better relative opportunity, whether it be end market or by geography?

T
Terrance McKibbon
executive

Obviously, Dagmar has given us civil capacity predominantly in the GTA area. So that would be an area that we probably be interested in growth. Areas of process, expanding mechanical electrical process would be areas of important growth for us. When you look at renewable, renewable would be a pretty high priority, obviously, having expertise in some renewable areas. But we've added considerable hydroelectric expertise with the acquisition of Stuart Olson. So that's been good to see. And also I think if you think across those areas, both horizontal infrastructure process, electrical mechanical, more on the industrial side, renewable, those would be kind of 3 areas that I would think would be near the top in priorities. Utilities, we like utilities as well. We've been growing in that area, underground utilities for clients in that. So...

B
Bryan Fast
analyst

Okay. That's helpful.

Operator

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

T
Terrance McKibbon
executive

Thank you, everyone, for taking the time to join our fourth quarter earnings conference call. I'd like to thank the entire Bird team for their efforts, dedication and commitment to build safely, to build together and to build value for our company, our clients and our communities and our shareholders during 2021. We have a stronger team and more resilient business model than in the past. And consequently, we have and will continue to position Bird to play a major role in the Canadian construction industry. Thank you.

Operator

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