Highlights: Bird Construction announces 2016 second quarter results

Bird Construction’s RCMP E Division project in Surrey, BC.

HIGHLIGHTS:

• Second quarter 2016 net income of $3.9 million on construction revenue of $413.2 million, compares with $10.8 million and $335.3 million, respectively, in the second quarter of 2015. The decrease in the amount of second quarter 2016 net income is primarily a result of the realization of a lower gross profit percentage inherent in the Company’s commercial and institutional work program offset to some extent by lower general and administrative expenses.
• The second quarter was impacted negatively by the wildfires in the Fort McMurray area in both industrial and institutional project sites. The negative pre-tax impact was $3.1 million in the quarter. In addition, two projects experienced design delays and other issues which served to increase the cost to complete by $3.2 million in the aggregate, further impacting the results in the quarter. The Company has put the owner of each project on notice of our intention to file a claim. Due to the complexity of the projects, we expect the claims process for each project to extend beyond the end of 2016 to resolve.
• For the six months ended June 30, 2016 the Company recorded net income of $13.2 million on construction revenue of $751.5 million, compared with net income of $15.5 million on construction revenue of $641.5 million in 2015. The reduction in 2016 earnings is mainly due to the realization of a lower gross profit percentage realized on the Company’s commercial and institutional work program offset to some extent by lower general and administrative expense.
• During the first half of 2016, the Company secured $634.7 million of new construction contracts, including change orders on existing contracts which contributed to a Backlog of $1,546.0 million at June 30, 2016, compared with $1,662.8 million at December 31, 2015. Construction contract awards were received in all market sectors across the country including the industrial sector in Western Canada.
• In the second quarter, the Bird-Civeo Joint Venture was selected as the contractor to deliver the Cedar Valley Lodge, the workforce accommodation project required by LNG Canada to support the construction of its proposed liquefaction and export facility in Kitimat, BC and were authorized to proceed with the actual design and engineering of the workforce accommodations. The Bird-Civeo Joint Venture was notified shortly after the close of the quarter that the Final Investment Decision (FID) by the joint venture partners of the LNG Canada development, led by Shell, has been delayed indefinitely. At this time, there is no impact to our backlog from this decision and the design and engineering project is ongoing and expected to be completed in fourth quarter.
• Bird’s Board of Directors declares monthly dividends of $0.0633 per common share for August, September and October 2016.

“Notwithstanding the impact of the wildfires in Fort McMurray, our second quarter results reflect the anticipated shift in our work program from higher margin industrial projects to lower margin institutional work” commented Mr. Ian Boyd, President and CEO of Bird Construction. “With over $1.5 billion in Backlog, we anticipate strong revenues through the end of 2016, although earnings will not replicate those recorded in 2015, adjusted for the impact of the impairment charge. The Company is anticipating an active institutional market in 2017 with numerous alternative finance project opportunities, for which the Company is now positioning itself and will actively pursue. However, successful award of these projects would primarily benefit years subsequent to 2017. Consequently, with industrial opportunities still waning and the timing of the institutional opportunities, 2017 will be a transition year in rebuilding the Company’s earnings base.”