Ian Boyd – President and Chief Executive Officer Wayne Gingrich – Chief Financial Officer

Michael Tupholme – TD Securities Chris Keefe – Canaccord Genuity Frederic Bastian – Raymond James Maxim Sytchev – National Bank Financial

Good morning, everyone. Thank you for participating on our second quarter 2018 conference call.

With me today is Wayne Gingrich, our CFO. The company had a challenging first half of 2018 due to a combination of headwinds, both external and internal, that had negatively impacted results.

Despite the disappointing results year-to-date, the company remains committed to its Build Bird strategic plan, which includes diversification of our work program. We have made significant progress in diversification as evidenced by the awards and announcements made this year.

In the environmental sector, the company secured a P3 residual treatment facility for the capital regional district in British Columbia announced in the first quarter. Success for their industrial process capabilities have recently included several work packages at seven pump stations for Enbridge Line 3 located across Alberta, Saskatchewan and Manitoba.

Leveraging our investments in stock modular, the company was awarded a hotel and conference centre in Iqaluit, Nunavut utilizing steel frame modular construction technology for the hotel rooms. After the close of second quarter 2018, the company announced it has achieved preferred proponent status for another social infrastructure P3 project, OPP 2 located in nine communities throughout Ontario, which is a great fit for Bird's industry- leading multisite project execution capabilities.

Also subsequent to the end of the second quarter, the company announced a project that can expand our portfolio of nuclear sector projects. The company, as part of a joint venture, has been named first negotiations proponent for the Canadian nuclear laboratories, Advanced Nuclear Materials Research Centre in Ontario.

Through the execution of our strategy, we believe the company will become healthier and more balanced as we move forward. In the second quarter, the company achieved substantial completion on the Moncton Downtown Events Centre, an 8,800 seat, 250,000 square foot facility, which is the largest project the city of Moncton has procured and completed.

The centre will serve as the catalyst for downtown development in the city, will be the host for major sports and entertainment events and the home of the Moncton Wildcats of the Quebec Major Junior Hockey League. In the first half of 2018, the company secured $668.6 million of new contract awards and change orders and executed $614.5 million of construction revenues.

The net new contract awards through the first half of the year contributed to a backlog of $1.24 billion for the company at June 30, 2018, an increase of $54 million or 4.6% from the $1.19 billion of backlog recorded at December 31, 2017. At yesterday's Board of Directors meeting, the board declared monthly eligible dividends of $0.0325 per common share for August, September and October 2018.

Six month ended June 30, 2018 compared with six months ended June 30, 2017. During the first half of 2018, the company recorded a net loss of $11.8 million on construction revenue of $614.5 million compared with net income of $1 million on $664.2 million of construction revenue a year ago.

Construction revenue of $614.5 million was $49.6 million, 7.5% lower than the $664.2 recorded in the first half of 2017. Volume in the second quarter was negatively impacted by several factors in the market, which the company serves, including the labor strike at one of the company's primary mining clients in Eastern Canada that put active projects on hold until the strike ended late in the second quarter.

In addition, delays in mining and industrial projects in both Eastern Canada and Western Canada largely impacting self-perform operations combined with the extension of the procurement timelines of several P3 projects, primarily in the Ontario region, has resulted in lower volumes executed in the current quarter. These factors, coupled with an industrial work program that had lower backlog entering the year from a historical perspective, contributed to a softer first half.

In the first quarter of 2018, the company was significantly impacted by the adoption of IFRS 15, revenue from contracts with customers that changes the timing of the recognition of revenue from change orders and claims, which are variable consideration under IFRS 15. As a result, a significant amount of change orders and claims related to a P3 project that achieved substantial completion during the first quarter of 2018 was constrained to zero.

When and if resolved, revenue from the change orders and claims will be recognized at that time. Cash flow has been negatively impacted as most of the cost to complete for the project has been paid.

The company is pursuing commercial negotiations in accordance with the contract, so that the constrained variable consideration can be recognized as revenue for the project. The company's gross profit of $15.4 million in the first half of 2018 was $12.7 million or 45.2% lower than the $28.2 million recorded in the first half of 2017.

The first half of 2018, the gross profit percentage of 2.5% was 1.7% lower than the gross profit percentage of 4.2% recorded in the first half of last year. Reduction in both gross profit and gross profit percentage in 2018 as a result of several factors that have transpired through the first six months of 2018.

In the first quarter of 2018, the company incurred additional costs including financing costs from lenders on a P3 project that was late in achieving substantial completion. The company has submitted the claim against a claim for delay and resulting impacts although no revenue recovery has been recorded to date in accordance with the adoption of the new IFRS 15 accounting standard as it relates to constrained variable consideration.

Further impacting gross profit and gross profit percentage in 2018 with lower volumes recognized in the company's higher margin self-perform operations in both the industrial operations in Western Canada and mining operations in Eastern Canada are result to project delays and the labor strike at one of the company's primary mining clients. In the second quarter of 2018, the company incurred a significant amount of repair and maintenance cost on its heavy civil mining fleet to take advantage of the equipment downtime realized due to the labor strike at one of its primary mining clients.

The company expects to recoup this expense with higher equipment utilization in the balance of 2018 as a work program comes back online. In addition, late in the second quarter, it became apparent one of the company's offices was experiencing difficulty in the execution of several projects, primarily due to design-related issues.

The company has recorded provisions to account for the expected increase in construction costs in these projects, has taken steps to mitigate further impacts on the results and in seeking recovery accordingly. Income from equity accounted investments in the second quarter of 2018 was $0.7 million and comparable with $0.7 million in the first half of 2017.

In the first half of 2018, general and administrative expenses of $31.3 million or 5.1% of revenue was $3.7 million higher than $27.6 million or 4.2% of revenue in the first half of 2017. During the first half, the company spent $2.4 million in third-party pursuit cost, which is $1.3 million higher than the amount recorded in 2017.

The compensation expense was $2.6 million higher year-over-year, primarily due to a loss recorded in the total return swap program resulting from the decline in the company share price in the first half of 2018. Included in the compensation expense of variance was the impact in the second quarter of $07 million due to a labor strike at one of the company's primary mining clients in Eastern Canada and $0.3 million related to the hiring of staff to support the expected increase in the anticipated investor work program in Western Canada.

Finance income in the first half of 2018 of $06 million was comparable to the first half of 2017. Finance and other cost of $1.7 million in the first half of 2018 was $1.1 million higher than the $0.6 million reported in the first half of 2017.

The increase is due to higher interest cost associated with increased loans and borrowings and nonrecourse project financing. The first half of 2018, income tax recovery was $4.5 million compared to income tax expense of $0.3 million recorded in the first half of 2017.

Three months ended June 30, 2018 compared with three months ended June 30, 2017, during the second quarter of 2018, the company reported a net loss of $5.3 million in construction revenue of $320.1 million compared with a net income of $3.2 million on a $350.3 million construction revenue respectively in 2017. Volume in the second quarter was negatively impacted by several factors in the market, which the company serves, including the labor strike at one of the company's primary mining clients in Eastern Canada that put active projects on hold until the strike ended late in the quarter.

In addition delays in mining and industrial projects in both Eastern Canada and Western Canada largely impacting self-perform operations combined with the extension of procurement timelines of several P3 projects primarily in the Ontario region has resulted in lower volumes executed in the current quarter. The company’s second quarter gross profit $8.3 million, was $9.3 million or 52.8% lower than the $17.6 million recorded a year ago.

The decrease in the amount of second quarter 2018 gross profit is primarily due to the lower total gross profit realized and lower quarterly construction revenues. Company’s second quarter 2018 gross profit percentage of 2.6% was 2.4% lower than the gross profit percentage of 5$ recorded a year ago.

On a comparative basis, year-over-year gross profit and gross profit percentage in 2018 was negatively impacted by lower volumes recognized in the company's higher margin self perform operations in both the industrial operations in Western Canada and mining operations in Eastern Canada. A result of project delays and a labor strike at one of the company's primary mining clients.

In the second quarter of 2018, the company incurred a significant amount of repair and maintenance costs on its heavy civil mining fleet, a conscious decision to take advantage of the equipment downtime realized due to the labor strike at one of its primary mining clients. Company expects to recoup this expense with higher equipment utilization in the balance of 2018 as the work program comes back online.

In addition late in the second quarter, it became apparent one of the company's offices was experiencing difficulty in the execution of several projects primarily due to design related issues. The company has recorded provisions to account for the expected increase in construction costs in these projects, has taken steps to mitigate further impacts and results in seeking recovery accordingly.

Income from equity accounted investments in the second quarter of 2018 was $0.4 million in comparable with 2017. The second quarter of 2018 general and administrative expenses of $15.5 million or 4.8% of revenue was $1.7 million higher than the $13.8 million or 3.9% percent of revenue recorded in the comparable period a year ago.

During the second quarter the company spent $0.6 million in third party pursuit costs which is $0.1 million higher than the amount recorded in 2017. Compensation expense was $1.4 million higher than the amount recorded a year ago primarily due to a loss record in the total return swap program resulting from the decline in the company's share price in the first half of 2018.

Including the compensation expense variance was an impact of $0.7 million due to a labor strike at one of the company's primary mining clients in Eastern Canada and $0.3 million related to the hiring of staff to support the expected increase in the anticipated industrial work program in Western Canada. Finance income of $0.3 million, in the second quarter of 2018 is comparable to 2017.

Finance and other cost of $1 million reporting $0.8 million higher than the $0.2 million reported in the second quarter of 2017. The increase is due to higher interest costs associated with loan under borrowings and non-recourse project financing.

In the second quarter of 2018 income tax recovery was $2.1 million compared to income tax expense of $1.2 million recorded in the second quarter of 2017. Outlook.

I'll now provide some brief remarks about her outlook for fiscal 2018. At June 30, 2018 the company was carrying a backlog of $1.24 billion, representing an increase from the $1.19 billion carried at the end of 2017.

The increase in backlog in the six months of 2018 relates to the securement of multiple contracts with clients across a broad range of market sectors, including a P3 projects for a residual treatment facility for the CRD in Victoria. It means the company has taken a minority equity interest in the concession.

This represents Bird Capital's seventh P3 project in which it will invest equity. Current backlog is predominantly characterized by institutional work, a result of securing a significant number of new awards in this sector.

Our backlog attributable to the industrial work program in Western Canada has increased rather through the first six months of 2018. It remains low from a historical perspective.

For mining operations in eastern Canada, backlog has remained low but stable to the end of June with the strike at one of our primary mining clients resulting in delays in both the work program and the tendering of new opportunities. The company expects to see a steady increase in backlog attributable to our industrial and heavy civil divisions in the second half of 2018, which the company attributes to improving market conditions in the energy and resource sectors, projects proceeding that have otherwise been delayed in the mining sector and more broadly through its diversification efforts in new markets sectors.

New project opportunities in midstream oil and gas market in Western Canada, the nuclear market in Ontario and for mining in Eastern Canada remain active, a trend anticipated to continue through 2018. In addition for oil and gas-related opportunities in Western Canada and nuclear opportunities in Ontario, there Ontario there are more projects of larger scale in value than have otherwise been available in the last several years.

Mining opportunities in Eastern Canada remain smaller to mid-size of an annual nature as opposed to multiyear projects. While the environment remains challenging and competitive.

Activity levels have increased as have the number and size of opportunities, which should support an overall progressive increase in the level of activity in the second half of 2018. There is more positive sentiments with respect to the LNG Canada proposed natural gas liquefaction in export terminal in Kitimat, BC.

The company does not foresee a significant positive financial contribution to revenue and earnings in 2018 from this development but is actively preparing in the event a positive final investment decision is reached in the fourth quarter of 2018. The company would benefit in 2019 and beyond from its 2016 award, which is not included in backlog of the Cedar Valley Lodge, the 4,500 person Workforce Accommodation Centre.

For the institutional and commercial sector, market conditions remains stable and generally healthy with some softness remaining in Alberta. The pipeline at P3 projects in the institutional market remains robust although there continue to be delays in tendering timelines, primarily for transportation-related projects in Ontario.

As of June 30, 2018 the Company is actively responding to five requests for proposals in which the company has been short listed. The company has also been short listed on two P3 projects and is awaiting a request for proposals although timing is uncertain and may extend into 2019 and is also in the request for qualification stage for two more P3 projects.

Based on procurement timelines for these opportunities, management expects P3 pursuit cost to decline in the second half of 2018 as compared to the first half. In addition, the award of any of these project opportunities in the current year will primarily benefit 2019 and beyond.

Commercial and the retail market remains challenged although opportunities for smaller renovation work to existing shopping centers remain active, the company continues to have opportunities with private developers for mixed use residential projects primarily in the Greater Toronto region. Company expects to see a steady increase in revenue and earnings attributable to its higher margins self-perform industrial work program in the second half of 2018 and expects overall earnings in the second half to exceed those as compared to IFRS adjusted figures in the same quarters for 2017.

During 2017 and 2018 the company was impacted by claims of clients that were constrained to zero from a timing of achieving virtual certainty on insurance claims. Management expects to resolve and realize income related to the settlement of various outstanding constrained variable consideration as well as insurance claims in the future.

Company is navigating the potential impact of steel and aluminum tariffs sourced from United States on gross profit for fixed-price contracts. The company is assessing the situation at German West if any additional expense may be incurred.

Heading into 2019 the company expects to have a work program that is more balanced and diversified than it has been over the last several years supporting progress towards returning to its historical levels of profitability and growth. This concludes the prepared remarks section of the conference call.

I’ll now turn the call over to the conference call operator who will take your questions in turn.

Hi, good morning.

Good morning Chris.

Just firstly regarding the projects that you're facing design issues on. I was wondering if firstly you could say how many projects are involved and what their various stages of completion are and then if you could quantify the charge that you guys took in the second quarter here.

I won't get into the number but essentially it is a manageable number of contracts and they all included a design components -- design build component. And so from our perspective, we saw some issues arising through the course of second quarter, again, most of them design related of which we have avenues of recourse.

So ultimately, I guess the message is, is it did impact Q2. The biggest impact in Q2, in my mind, was be with the strike at the mining -- with our mining client, our primary mining client in Eastern Canada which had kind of a more profound impact in the sense that we didn't have any revenue coming through, or very little revenue coming through versus what we would have expected to have happened in normal course.

And we also on top of that had an increase in maintenance costs, which is relatively normal course, as you get through the cycle in mining is essentially starting in May and then working through to the end of November with first part of the year really getting your fleet back ready for the start in May again. In this instance, obviously we didn't start back in May.

We had the maintenance program going full flight expecting we would start back. When it became apparent we were not going to start back, we also made a conscious decision.

Some of our gear ends-up being utilized almost all of the year in those programs. So, we ultimately made a decision to bring that gear, get it off-site in the event the strike was extended more beyond than it for just the second quarter.

And, then we did additional maintenance on that fleet, that we otherwise would have done perhaps progressively through the year. So that's been the bigger factor on the overall results and in the second quarter and in the projects in themselves don't get any quantum in terms of what the impacts were.

But suffice to say it was enough that we included in the MD&A in terms of the commentary to explain what happened in the second quarter.

Okay, I guess just a follow up on those contracts. Just in the past, when you've had design issues, how successful have you been in recovering costs.

It hasn't been as big an issue in the past I would argue. And, so I would say to a certain degree there is the track record is – from an historical perspective, it's thin in that sense.

And the reason I say that is that in normal course operations we would you would always run into some design issues and ultimately, you typically have them resolved. What's happening, we're seeing particularly in certain markets is that you have a heated – the industry has become heated with some of the size and scale of projects that are available.

I think it's straining the industry in general, but I also think it's training design an engineering industry as well. And so what you're seeing is that strain manifesting itself in just having difficulty in terms of overall I'll call commitment level and timing related design and perhaps even quality elements of design and that's what we're seeing more so in the last, we'd say in the last while.

And it manifests itself in several of these projects, more so in Q2 for us. So the answer to your question, it's process and in terms of recovery certainly our contracts enable us either through insurance or through direct negotiations with the design and engineering firms to be able to recover these amounts that we've been impacted by.

So it's a process though and it will take a process, especially if you consider ultimately we become whether it's insurance or whether it becomes negotiations with the design and engineering firms to be able to become commercial negotiations in terms of resolution and getting some recovery. So, I would argue there's not – we don't have a significant track record necessarily in either a normal course operations we would look to resolve those within the project itself without any impact.

In this instance these are more serious and we need to take alternative pathways to get the recovery.

Okay, thank you that is helpful. And I just my second one would be if you guys could give any thoughts on your dividend just given the issues that you're experiencing.

Now I think we reevaluated, obviously, and we do that at every board meeting and the board feels comfortable. I think we're really, we're approved at this point through October.

And from our standpoint, we really are optimistic about the buildup of our program in the second half of 2018. And so when we do that I think that that ultimately leads us to a pathway of being more balanced in our work program, which results if you look at our historical performance, we're more balanced in our work program, meaning contributions from all of our different sectors.

That's when we have our best results and that's where were optimistic, that's what we're starting to see. Whereas, I would argue in the last two years, we did not have that – that same balance.

And so, therefore it made for a more difficult time period in terms of the overall performance of the business

Okay thanks. Those were my questions.

I'll turn it over.

Thanks good morning.

Good morning Michael.

Just back on the execution issues related to these design issues. This sounds a little bit different but I suppose when we normally, ordinarily when we hear about execution issues there's despite best efforts to provide for such issues in any given quarter there's there can be risk that you have – an extension of those same kinds of issues into future quarters.

In this case is that a risk in your mind and if not maybe you can just explain what gives you the confidence to say that it's not a risk.

But I would say it is always a risk and you always are putting your best estimate to complete. I think when you start to see issues it certainly causes you to dive deeper in terms of what the issues are and then how do you quantify those issues.

So but to say there's not a risk on a go forward basis that there could be some level of erosion related to these projects that we've identified. I don't think it’s necessarily the case.

I think there's always that risk that exists because it's difficult when you're in the stages of construction to figure out what exactly the full impact maybe. But suffice to say you do dive deeper, we’re comfortable that we've taken a deep dive at the projects that were identified.

And then made the provisions accordingly. And as we work through some of these and some of these are at the point where they're close to being design finished and awarded out.

So then literally, it's a construction execution element more so than it is any design risk on a go forward basis or less design risk on a go forward basis. So, I think from that standpoint you are also from our standpoint – I don't think any of your competitors will be different.

You also obviously put your best people on trying to manage these contracts and make sure that we're addressing them on a go forward basis. So I think there's a lot of management that goes in when you identify a problem.

But to say that there isn't any risk associated with future erosion I would say is probably not accurate either. It's just a very difficult thing to predict sometimes in our business.

And just to be clear the issues stem from third party design issues and that has in turn affected your ability to execute. Yeah, I would say the most significant issues on these projects are design related, which is third party.

We don't have any in-house design within our operations. And so, ultimately, how is that -- it manifests itself is that the design you get what we call design scope creep so ultimately you have what you anticipated you would build and you priced it within your estimate.

And then ultimately the final design is being developed and there's more to the design. In other instances it's simply errors or omissions that have happened within the design scope that ultimately have manifested themselves typically after you've awarded a subcontract.

And then ultimately, you've got a subcontract there that has changed condition in which they are asking you to pay. It's not a flow through to the owners, so ultimately, you are the one that has to deal with that additional cost, which from a subcontractor standpoint, is legitimate.

But ultimately, you've got to figure out how you deal with that. And from a commercial and negotiation standpoint and then ultimately, who's responsible.

And that's the situation we find ourselves in, in both instances. Kind of overall design scope creep, I would call it, and just some errors and omissions that have impacted us more so than we normally see in design build projects that we've traditionally executed.

With respect to some of the other issues in the quarter that you talked about in terms of factors that that contributed to the year-over-year decline in results, this strikes specifically in the impact that that had. Is there any way to quantify how much of a negative impact on your Q2 revenues that strike had?

No, I don't know. We don’t want to get into that level of details.

Suffice to say that was the biggest impact on Q2. When you look at it, it's not only – it's a revenue impact not so obviously, not generating gross profit.

You also have an overhead structure but when the overhead structure, you see that in our G&A but you also see it in our gross profit generation and gross profit is impacted by that increase in maintenance cost of which you're not getting offset, which typically happens through utilization. So it really is not only just an impact to the gross profit, in the sense of not having revenue generation, there's a negative gross profit generated just through the maintenance cost expense and then ultimately you are also impacted from the standpoint of your G&A because staff that would normally be project dedicated and allocated to the projects from a operational standpoint now are coated over to overheads.

And that's where, that would normally not happen, certainly not in Q2. We have a little bit of that in Q1 just simply because you have a staffing that you're going to have that you're going to carry through when you're in your most season time period that would get coded overhead more so.

That normally alleviates somewhere in that May timeframe when you're actually going to start your work program. And obviously with the strike on and the revenue not going through projects not proceeding the way that we anticipated ultimately, those cost didn't shift back over to projects and actually remained in SG&A

Right, okay. And then as far as the project delays, you talked about -- I mean, I understand that one element of this is some of the P3 opportunities have shifted to the right but it sounds also as though there's some delays or there were some delays on projects that you actually had in hand that were awarded to you and those were slower to move.

Is that correct and what's the status as of right now?

That is the case. So yes, the story in P3, so primarily Ontario.

OPP 2, just to go over the P3, OPP 2 was initially supposed to close early in the first quarter. It ultimately didn't close.

And when I say close, I mean, our price being submitted, didn't go in until May timeframe. And then ultimately, we get preferred proponent just recently.

So we’ve expected that we would be started again in May timeframe, actually mobilizing on site and starting to do work on OPP 2. That's a prime example of one of those delays.

And then you look at our transportation projects, the ones that were preferred subcontractor on between the ones in Ottawa, which is trillion in Confederation Line Phase 2. They were both in that March and April timeframe in, which they were supposed to close or have pricing submitted.

And ultimately they will not close and have pricing submitted till late in the third quarter. And then Ontario is the third one there that was again supposed to be priced out and submitted in around March, end of March.

And now will be the end of November, as I understand it. So those are all primary examples of our P3, primarily in Ontario that is shifted, which actually is abnormal for P3s.

Like normally P3s in the past, when they have a schedule they generally adhere to that schedule and it is very predictable. So this has been a little bit different this year than it has been in past years.

And so, that's part of it. Now the projects that we've also had in backlog as far as Q1, there are a couple of sizable contracts across our operations that we were awarded that went through, some I'll call it some revised design and pre-construction that we're trying to get now in the ground and started in each of those cases, Iqaluit is actually one of those projects that just given the timeframe associated with your access in and out rolling.

And there were certain amount of work in Iqaluit this year because of the timeframe, meaning design development. And then ultimately, when you can get into Iqaluit to be able to do the work and they're working timelines in the fall are going to be shortened than it normally would in other parts of Canada.

So we're going to end up doing the majority of that work in 2019. Now Stack will start to ramp up their production here at the end of the year and be ready to deliver somewhere in the July range for that particular projects.

So there's still kind of circumstances where you have it in backlog but you actually aren't seeing it necessarily much revenue come through. But we're obviously dedicated project resources in -- are more we're working on the execution is just more – I call it more pre-construction and it has been actual revenue flow through in the construction side of things.

So, there are some unique circumstances that are happening this year that don't often happen or haven't happened to us and that's to the same degree in years past. So that's some of what's happening.

The good part is that they are all starting to gain momentum, which is positive.

Okay, that is helpful. Just a question on changes in non-cash working capital.

It's been a use of cash $53.8 million through the first half of the year. How does that look in the second half and where do you think you wind up for the full year.

I think it is certainly going to improve in the second half. I mean part of that issue is just on the MDC contract that we achieved substantial completion on where we get nonrecourse financing, low in the financing section.

So it also gets impacted. But as of June 30, we have built that contract for MDC within AR and subsequently in July was paid and it's repaid via the financing.

Historically, I'd say the second half is always much stronger in terms of cash generation and we expect that to be the same. That being said, as our industrial work program starts to ramp up here in the second half, typically, those self-perform operations, I'll say, burn more cash through growth in working I don't know that overall we're going to see our cash balances increased tremendously for where they were at the end of Q2 because I think we're going to have a larger investment in working capital as the industrial work program ramps up in the second half.

Okay, so relatively stable cash balance is the expectation.

Yes, I think that's fair.

And then just lastly with respect to LNG Canada and the Cedar Valley Lodge Workforce Accommodation center opportunity, imagine that that is pricing on that is being revalidated and it remains to be seen if the project goes or not. But can you just remind us, Ian, how large of an opportunity that was at the time that it was awarded and clarify your share of that?

Yeah, it was north of $500 million at the time that we closed the project. And our share of it is, we're the managing partner, at 60% share of that particular project.

So it's significant, $300 million plus in terms of the impact to us. So – and industrial projects in which if it proceeds, you're the first in, which is kind of been where we've seen additional opportunities come out not just with, obviously, workforce accommodations, but if that whole project proceeds, I think, vision yourself well to be able to pursue additional projects after that intended opportunity.

So the most immediate one, obviously, were first accommodation. You were correct, there is a validation process going on right now in terms of overall pricing.

. Revisiting the design to make sure that essentially it was done in 2016, but just basically, I'll call tweaking the design and then reconfirmation of pricing and then waiting, hopefully, being in a position where if there is a positive FID, we can hit the ground running because it is a relatively fast track project in around 24 months to have that project complete, which is sizable.

And especially given that the design build, obviously, have the advantage of the design proceeding, now you're going to have a little bit of an advantage in terms of being able to get your pricing reconfirmed, we are advancing. As you can see in our SG&A, we are hiring people that is one of the projects in which we are hiring people in advance to be able to make sure that we are in a position to be - successfully deliver that project, which is not helping our current situation.

But certainly, I think it's the right decision, given the circumstances.

Okay, thank you very much.

Hey good morning guys. I was wondering if you could provide specific examples of the bigger industrial jobs that are in various stages of procurement and approval?

Yeah I mean obviously L&G, we just spoke of, so that one we've secured as of 2016, done a design north of $500 million and ultimately waiting for positive FID. So that's a significant project.

We’ve actually did a relatively sizable other camp accommodation project recently for one of our clients in the oil sands and that's north of $200 million. We have some other industrial work that’s happening not just in the oil sands but other areas where we're seeing you know sizable opportunities.

I'll call it with existing with existing clients. And then you look at just the diversification efforts.

So what we're seeing in the nuclear opportunity in Ontario particularly, which we – that primarily is being driven by our industrial operations and centered in Western Canada. So, that diversification piece when you look at that we just announced obviously the preferred negotiating proponent or first negotiating proponent for the CNL project which is sizable in the $250 million range.

And we see other projects not just at CNL but also at Bruce Power. And we also are looking work right now at Darlington in a smaller P3 project for a treatment plant.

So those are the kind of opportunities we are seeing. Whereas I would say, for the last since 2014 we saw the decline in the oil and gas and resource pricing.

We were seeing opportunities when they were available and I say it started to build maybe a little bit in 2017 more so but still projects sizes were more in the range of $10 million or maybe $20 million range. Now you’re starting to see projects in more of them that are north of $100 million or in the $200 million range, which we're well positioned for – through our diversification efforts.

And hopefully we start to see that build through the course of the remainder of 2018.

Okay, great that's helpful. Speaking of the CNL contract the value was disclosed but it's unclear to me how many companies are part of the consortium that was short listed.

Can you provide a bit more color there.

Yeah, there is two primary partners, I should say there's two sort of equal partners and a third minority partner. Is how I described it, so three partners total.

Okay great and then on the other hand – your 100% of the OPP bundle but that value wasn't disclosed. Any idea, can you provide an approximation of what this contract value might be.

Yeah, I would say it's north of $125 million bucks.

Okay. That's all I have thank you very much.

Thank you

Just more, I guess, a philosophical question. Thinking about whether you believe that the business model has become more lumpy over the last couple of years if that's just the fact off the evolution of the marketplace, or just really sort of the commodities falling off the cliff over the last couple of years and just maybe if you can paint a picture off, is there anything structurally impeding you from achieving historical, sort of, acceptable by Bird's standard levels of profitability in kind of 2019, 2020 timeframe.

Maybe if you don’t mind just addressing these points.

Is there's anything structural, I’ll answer your last part of your question maybe first. I don’t think there is anything structural within our business.

In fact, we probably improved the structure of our business in the sense that we've become more diversified and less centered on the oil sands when it comes to our industrial work programs. So in some respects, the whole idea for a strategic plan was to become healthier and not so centered on that geography and the amount of work.

And so I would say that we've actually improved it, such that I believe that we're on a pathway that will get us to the whole historical levels of profitability by Bird's standards, as you put it, that we would expect. So I think that structurally, there's nothing -- we've only improved that situation in my mind.

Now it's been a bit of a painful process because you're in a sense, you're investing and you're absolutely are investing in a diversification in order to build the work program that is more diversified. So we've done that in the time period in which it's been tougher market conditions from our legacy market.

So you can't even rely on legacy markets to help you sort of then diversify out from that while still gaining the advantage of the legacy markets. So I think that's been what you've seen a little bit in the results.

I would say that the lumpiness of our results to a certain degree, I would say in the last several years maybe what is differing – just because of the nature of the energy in the resource market is the project sizes have been smaller and shorter cycle in duration. So that seasonality has been more pronounced, so they've more annualized work program.

And I would say that that's made the seasonality more pronounced than it may have been in the past prior to say, 2017 and what we saw this year. So I think that maybe different.

Now again if you get some larger scale projects, particularly through our investor west operations and see good opportunities, then you carry more backlog through when you have work programs that the seasonality becomes less of an issue. So I think it's been market condition-driven that you've seen the structural change, seasonality become more pronounced than in 2017 and 2018.

But with building up a work program in our industrial West, getting more balanced overall in the work program, I think that maybe even less seasonality as you move forward which still again structurally leads us to historical levels of profitability by Bird standards. The only other thing I'd say and it's no different, I don't think that's a change that lasted a while, our backlog does become lumpier because you are going after these, these larger scale projects.

And if you start to see larger scale projects with respect to industrial, which we are seeing, that ultimately means you're going to pursue those for a time period and then you're ultimately going to see it an award. And those awards tend to be lumpier.

They tend to be larger scale in value and therefore have a big impact on the individual quarter perhaps for the backlog. And I think that's true with institutional with a P3 work program which we've seen more of given the track record that we've had with P3s.

So -- but to answer your primary question, I think structurally, we've enhanced the company to be healthier, more diversified so that in fact we can get back to historical levels of profitability and growth and then less susceptible if you're going to have a downturn in the energy and resource markets in the future.

Okay, that is helpful. And talking about investing through the down cycle.

So you feel especially as you address some of the sort of newer verticals, on nuclear specifically, that you have the internal capability to make sure that the execution is going to be on par with the estimated margin that you have in the backlog a couple of years down the road. Just again making sure that you have that internal capability to estimate properly and so forth.

So you feel that, that's the case?

Absolutely, we do. And if you look at the opportunities, the larger scale opportunities, this isn't clean our industrial west.

While we are branching out into new -- in different works, so in our industrial and mechanical process work that we're doing and which leads to our maintenance repair operation and build up of that work program, primarily in the oil sands with core clients, we see that. And that is maybe a little bit newer work to us but it's also of a smaller scale, and we are growing and adapting to that work program with success.

And if you look at that, when you look at, say, our nuclear program, our nuclear program makes for boost power is a training and administration facilities on build. We know how to do, right, and we've done that.

Whether it's in the oil sands, we've done that. Whether it's workforce accommodations, whether it's structure ops or administration facilities, for those types of clients, we're doing that now for Bruce Power.

And when you look at the lab, so the CNL lab, ultimately, it's a building construction on a, I wouldn't call it an institutional site, a nuclear site. And we're going to use our same group that's done the industrial west, the building that we have done for the last 30 years.

So from my standpoint, we actually absolutely have the team to be able to do it. I'm not concerned about.

It being a new market sector, yes, but I think it's more about the new client. I think the work is very much in line with what we have in our strength and being able to deliver that.

Okay and that is very helpful. And the last question, I mean, as you alluded in your MD&A talking about improvements and profitability in the back half, do you mind maybe just pointing to how we should be thinking about the complexity in kind of Q3, Q4.

Is it more Q4 weighted? Or just trying to gauge the pace of profitability improvement in the back half this year.

Yes, I think it's more ramping up, so you definitely see more improvement in Q3, obviously, from what you've seen to day. It's not to be flip it, that's not difficult to do.

But you're going to see it ramp up more so. So I would say Q3 is seeing to be obviously positive.

And then ultimately, Q4 continues on that trajectory.

So more gradual I guess.

Just given procurement timelines and just sort of kicking in, like a lot of our program here is even just kicking in like we just started Enbridge Line 3. So ultimately, you're starting to see that progress now and that will have more impact.

But again, it will have more impact by the time you get to Q4 that will necessarily in Q3. OPP is just starting.

So some of these projects is just a natural progression of when we secure them. Again, a little bit later than we anticipated now when is it kicking in.

And I think just a natural progress of construction is, is that you're going to see revenues and earnings are going to be gradual because that's the very nature of how you're going to build the actual project.

And we haven’t seen any slippage in your secured backlog over the last, let's call it months, in terms of how this programs will role from backlog to revenue based on what you see right now.

No I’m not sure if I totally understand. We haven't seen any slippage in the backlog.

It remains relatively stable. Obviously, up a little bit from where it was at year-end.

And when you think about it, even the CRD was not -- we're in a joint all that volume wasn't -- is not a huge project from a standpoint of a revenue. We really haven't seen a major project award through the first course of 2018, yet we've been able to maintain the backlog at a relatively stable point and even increase it.

Now you see OPP will fall into backlog. CNL will be a little bit more time before it falls in the backlog just by the nature of the way that the IPD program works.

But you'll, again, we'll start to see that backlog. I think it will be a little bit lumpier as we see.

And I think it is even later Q3, Q4 is where you going to see some of the other projects that we hope we are well positioned to secure actually come in the backlog. So that answers your questions.

My question pertain more to -- so let's say you have a contract from a given client and they haven't slowed down the actual pace of procurement. I mean, that's more the question on that front.

No, right now, our projects that have come in the backlog are the only ones, there are certain ones that we’ve had in backlog that hasn’t started right way, that we anticipated would start away or right away. And ultimately, those are now starting to progress and they will in the second half.

There are some unique circumstances. Like I said earlier, with the Iqaluit, just given the timing of actually being able to work there.

When you're going -- the fact that it's stacked and it's going to be a module our supply. You're going to see a little more lumpy revenue associated with that because you're going to get started and then you're going to go away until next spring.

And then ultimately, you're going to have a whole slew of activity including modular as it gets delivered. So it would be a little bit of lumpiness.

But I think overall, the work program will gradually through without much anticipated hiccup based on everything we're seeing.

And the last question, when you were talking about the other workforce accommodation project, do you know when potentially you would know if you are successful on that endeavor or not?

It is hard to say because you never quite know it is private client ultimately and so the timelines are never really communicated other than what they may outline in our P&L and tell you that desired timeline, but that doesn't let us know we're here too. So I would say later Q3, maybe early Q4.

That could be earlier. So, I don’t know if the but it’s I think you will certainly have a decision within the next three to four months is kind of where I see it.

Is it conditional on one of the sort of larger adjacent projects to commence in order for the clients to award this contract are those are two separate things?

I think this client is working, in excess through the wins of what they currently have and you are using for their accommodations on an existing plant site. And ultimately, I think they looked at it and said, our desires to do something more of our own, which they aren't using their own currently today.

And so, it's more about that client and ultimately, getting what they want for accommodation and not using a third party and driving that decision-making. I suspect some of it has to do with just generally if you do get positive FID in the Cedar Valley Lodge then ultimately, a lot of capacity could be taken up in the immediate term with respect to some of the modular suppliers.

And I suspect that's a factor in the timing for this particular client, but I'm not sure it's a factor in the timing when they actually say yes or no to that project simply because I think that's going to come down to financial for them.

Okay that is very helpful, that is it from me thank you very much.

Thanks again to everyone for your participation in our second quarter conference call. As always, we're available with additional information as required so please do not hesitate to get in touch with us.

Thanks again and enjoy the rest of your day.