Mr. Teri McKibbon reports

BIRD CONSTRUCTION INC. ANNOUNCES 2020 SECOND QUARTER FINANCIAL RESULTS

Bird Construction Inc. has released its second quarter 2020 financial results.

Highlights:

• During the second quarter of 2020, the company recorded net income of $5.6-million on construction revenue of $282.8-million compared with a net income of $1.0-million on $315.4-million of construction revenue in 2019. Basic and diluted earnings per share in the second quarter of 2020 and 2019 were 13 cents and two cents, respectively. Volume was slightly lower; however, gross profit improved significantly year over year driven by growth in the industrial work program. The year-over-year increase in second quarter net income is primarily attributable to the mix of the higher-margin industrial work program. The second quarter of 2020 included approximately $1.3-million of pretax acquisition costs related to the due diligence and agreement to acquire Stuart Olson Inc. that was announced subsequent to quarter-end.
• Adjusted earnings and adjusted earnings per share in the second quarter of 2020 were $6.6-million and 15 cents, respectively, compared with adjusted earnings and adjusted earnings per share in the second quarter of 2019 of $1.0-million and two cents, respectively. The year-over-year increase in second quarter adjusted earnings is reflective of the improvement in earnings attributable to the mix of higher-margin industrial work program.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted EBITDA margin in the second quarter of 2020 were $12.3-million and 4.36 per cent, respectively. Adjusted EBITDA increased $6.9-million from the adjusted EBITDA of $5.4-million in the second quarter of 2019. Adjusted EBITDA margin increased 263 basis points from the adjusted EBITDA margin of 1.73 per cent recorded in the second quarter of 2019. The year-over-year improvement was driven by an increase in gross profit due to the revenue mix, and the impact of increased costs on a certain contract incurred in 2019 that did not recur in 2020.
• During the first half of 2020, the company recorded net income of $6.7-million on construction revenue of $604.4-million compared with a net loss of $5.5-million on $577.2-million of construction revenue in 2019. Basic and diluted earnings per share in the first half of 2020 and 2019 were 16 cents and a loss of 13 cents, respectively. The 4.7-per-cent year-over-year increase in revenue was driven by growth in the industrial work program while the commercial and institutional work program was effectively flat. The year-over-year increase in net income is primarily attributable to the mix of the higher-margin industrial work program. The first half of 2019 was negatively impacted by a Public Private Partnership (PPP) project that incurred additional cost due to design-related scope growth and acceleration expenses. There were substantial changes to the scope of the project requested by the client that are in commercial negotiation. This PPP project achieved substantial performance in the first quarter of 2020.
• Adjusted earnings and adjusted earnings per share in the first half of 2020 were $7.7-million and 18 cents, respectively, compared with an adjusted loss of $5.5-million and adjusted loss per share of 13 cents in the first half of 2019. The year-over-year increase in second quarter net income is reflective of the improvement in earnings attributable to the mix of the higher-margin industrial work program and the previously described PPP project.
• Adjusted EBITDA year to date at June 30, 2020, was $19.9-million compared with $2.3-million in the comparable period in 2019. Adjusted EBITDA margin during the first half of 2020 was 3.29 per cent and increased 289 basis points from the 0.40 per cent recorded in the first half of 2019. The year-over-year improvement was driven by an increase in gross profit due to the revenue mix, and the impact of increased costs on a certain contract incurred in 2019 that did not recur in 2020.
• The COVID-19 pandemic has added uncertainty to the construction industry as each provincial government has responded with different measures to address the threat to public health. While certain preventative measures have eased in various provinces to varying degrees, the duration continues to be unknown, and the corresponding impacts to the company's work force, supply chain and project sites are key variables that have uncertainty as a result. The financial results of second quarter 2020 were impacted by the COVID-19 pandemic in April and early May, when the company experienced temporary project shutdowns and reduced productivity on project sites. The health and safety of employees are paramount, and, as a result of the pandemic, the company has increased health and safety initiatives, such as physical distancing and added additional measures, to normal safety protocols. The situation remains extremely fluid; however, the company responded to the challenges presented in the first half of 2020 and is well positioned to respond to fluctuating scenarios in the near term.
• In 2020, the company secured $702.4-million of new contract awards and change orders, and executed $604.4-million of construction revenues. Backlog of $1,645.4-million at June 30, 2020, increased 19.3 per cent from backlog of $1,379.7-million at June 30, 2019. Backlog increased by $98.0-million, or 6.3 per cent, from $1,547.4-million of backlog recorded at Dec. 31, 2019, despite some awards that were expected in the first half of 2020 being delayed as a result of the COVID-19 pandemic.
• In the first six months of 2020, cash and cash equivalents decreased $8.9-million, before the effects of foreign exchange, to $171.5-million from $180.3-million at the end of 2019. Most of the changes in cash and equivalents during the period relate to changes in the non-cash net current asset/liability position, which can fluctuate significantly in the normal course of business. During the second quarter, the company repaid $16.3-million that it had drawn in the first quarter from one of its committed bank facilities for working capital purposes.
• During the second quarter, the company was awarded several new projects and achieved substantial completion of certain contracts:
  • Bird was awarded the Eric Hamber Secondary School replacement project in Vancouver, B.C., for approximately $92-million, under a design-build contract.
  • The company was awarded a construction management service contract for the 185 Enfield Place project in Mississauga, Ont., for approximately $107-million for GWL Realty Advisors (GWLRA).
  • The company was awarded a stipulated sum contract for the Louvre Residence at Century Park Project in Edmonton, Alta., for approximately $57-million under development by Procura Real Estate Services Ltd.
  • The company signed a contract for construction at a liquefied natural gas (LNG) liquefaction export terminal facility located in northwestern British Columbia. The contract is for the construction of concrete foundations and paving inside the battery limits of the LNG trains process area and is one of the largest concrete foundation packages ever awarded to Bird. The contract will start immediately and continue into 2022.
  • The company achieved substantial completion for the Niagara Falls Entertainment Centre in the first half of 2020. Designed and constructed to LEED V4 standards, the new 5,000-seat facility features performance space with multiple stage configurations.
• The board has declared an eligible dividend of 3.25 cents per common share for each of July, August, September and October, 2020.
• Subsequent to quarter-end, the company announced the sale of Bird Capital Ltd.'s 20-per-cent interest in the P3 concessions responsible for 18 schools and nine child care facilities in Saskatchewan to its project partner, Concert Infrastructure. Developed as the Saskatchewan Joint-Use Schools Project I (SJUSP I) and Saskatchewan Joint-Use Schools Project II (SJUSP II), the projects made up the largest school construction program in the history of the province at the time of construction.
• Subsequent to quarter-end, on July 29, 2020, the company entered into a definitive arrangement agreement under which the company will acquire all of the outstanding common shares of Stuart Olson Inc., pursuant to an arrangement under the Business Corporations Act (Alberta), for aggregate consideration of $96.5-million. The aggregate consideration of $96.5-million will consist of $30.0-million in cash and $66.5-million of the common shares of Bird, based on the five-day volume-weighted average trading price of the common shares of Bird ending July 17, 2020, of $6.32 per share. The proposed transaction, which was unanimously approved by the boards of directors of both companies, is expected to close early in the fourth quarter of 2020, subject to obtaining the required approvals of the Court of Queen's Bench of Alberta, the Competition Bureau, the Stuart Olson shareholders, secured bank lenders and unsecured convertible debentureholders of Stuart Olson, and other customary closing conditions.

"Our company has shown resilience in the second quarter with its seventh sequential quarter, where our trailing 12-month adjusted EBITDA has improved. The credit has to go to our field staff that safely worked through the height of the pandemic and ensured that our company delivered its projects," said Teri McKibbon, president and chief executive officer. "Our near record backlog and pending backlog will provide ample work at good margins to help the company be considerably more profitable in 2020 than recent years, despite a projected decline in revenue year over year."

                                         FINANCIAL RESULTS      
                         (in thousands of dollars, except per-share amounts)

                                                 Three months ended June 30,   Six months ended June 30,
                                                         2020          2019          2020          2019

Construction revenue                                 $282,766      $315,428      $604,412      $577,205
Net income (loss)                                       5,624         1,001         6,747        (5,465)
Basic and diluted earnings (loss) per share              0.13          0.02          0.16         (0.13)
Adjusted earnings (loss) per share (1)                   0.15          0.02          0.18         (0.13)
Adjusted EBITDA (1)                                    12,328         5,447        19,890         2,314
Cash flows from operations before changes in
non-cash working capital (2)                            8,990         6,512        16,049           825

• In the first six months, cash flows from operations before changes in non-cash working capital of $16.0-million increased $15.2-million year over year from $800,000 in cash generated in 2019 primarily due to the $12.2-million improvement in net income, a $4.6-million higher non-cash addback for income tax expense year over year, and a $1.9-million higher non-cash addback of finance and other costs, partially offset by $2.2-million-higher non-cash reduction for income from equity-accounted investments.

Bird Construction also announced that its board of directors has approved monthly eligible dividends for the following months in the amount of 3.25 cents per common share to be paid as follows:

1. The August dividend of 3.25 cents per share will be paid on Sept. 18, 2020, to the shareholders of record as of the close of business on Aug. 31, 2020.
2. The September dividend of 3.25 cents per share will be paid on Oct. 20, 2020, to the shareholders of record as of the close of business on Sept. 30, 2020.
3. The October dividend of 3.25 cents per share will be paid on Nov. 20, 2020, to the shareholders of record as of the close of business on Oct. 31, 2020.

Bird will host an investor webcast to discuss the quarterly results on Aug. 12, 2020, at 10 a.m. ET, to discuss the quarterly results. Analysts and investors may connect to the webcast. They may also dial 1-855-328-1925 for audio only, or to enter the question queue, attendees are asked to be on the line 10 minutes prior to the start of the call. The presentation can also be found on the company's website.

Related financial documents will be filed and available on SEDAR.

We seek Safe Harbor.