Bird Construction Inc (TSX: BDT, OTC: BIRDF), after reporting expectations-meeting fourth-quarter and full-year 2013 operating and financial numbers, announced on March 24, 2014, that it had been awarded new construction contracts totaling approximately CAD300 million.

According to management’s announcement, the projects involve civil and building construction across all of Bird’s segments, weighted toward projects in the commercial and institutional sectors. They’re geographically distributed across Canada and include a large contract to construct a condominium complex in downtown Toronto.

Bird generally has a threshold of CAD100 million for announcing new contract awards, so the implication here is that one of the commercial contracts is valued at CAD100 million or more.

Work on the new projects will commence immediately, with expected completion dates extending into 2017.

These project awards will be added to Bird’s first-quarter 2014 backlog.

Management noted that most of the new contracts are with repeat clients.

The majority of Bird’s recent contract awards have been weighted toward the industrial sector, particularly the Alberta oil sands. But the work announced in late March are weighted approximately 80 percent toward commercial and institutional projects and should help the company maintain a balanced mix of revenue between the industrial (37 percent of 2013 revenue), commercial (37 percent) and institutional (26 percent) sectors.

Bird reported backlog of CAD1.3 billion as of Dec. 31, 2013, an increase of 18 percent from Dec. 31, 2012.

Bird is bidding on several projects in the institutional segment, with several opportunities to add to its already impressive backlog. The company, as part of various consortia, is short-listed for the Swift Current Long-Term Care Facility in Saskatchewan and the Saskatoon Civic Operations Centre. And it’s also been qualified to bid on the Building Alberta Schools Construction Program.

This is further evidence that Bird is poised to post much stronger results in 2014 and coming years, with a proven management team well positioned to improve margins.

Management booked an additional CAD8 million loss on a fixed-price contract whereon Bird experienced execution issues during the third and fourth quarters. This contract, which we discussed on our report on Bird’s third-quarter results, has been completed.

For 2013 Bird reported net income of CAD12.1 million on construction revenue of CAD1.332 billion, compared with CAD58.2 million and CAD1.455 billion, respectively, in 2012.

Adjusted net income was CAD14.6 million, or CAD0.34 per share, versus CAD62 million, or CAD1.47 per share, in 2012.

Fourth-quarter net income was CAD5.7 million on revenue of CAD363.7 million, down from CAD24.7 million and CAD420.3 million, respectively, for the fourth quarter of 2012.

Adjusted net was CAD6.1 million, or CAD0.14 per share, down from CAD25.6 million, or CAD0.61 per share, for the prior corresponding period.

Management booked an additional CAD8 million loss on a fixed-price contract whereon Bird experienced execution issues during the third and fourth quarters. This contract, which we discussed on our report on Bird’s third-quarter results, has been completed.

The full-year payout ratio based on cash flow from operations was 98.6 percent.

Execution issues on this contract reduced fourth-quarter earnings by about CAD0.14 per share.

Growth in 2014 will be based on a shift in Bird’s mix toward higher-margin industrial work after that segment accounted for 37 percent of 2013 revenue versus 43 percent in 2012.

The company won CAD400 million worth of new contracts during the fourth quarter, with a heavy emphasis on the industrial sector work, including work on Suncor Energy Inc’s (TSX: SU, NYSE: SU) Fort Hills oil sands project.

Management noted during its year-end conference call that Bird is well positioned for more industrial projects, with several steam-assisted gravity drainage (SAGD) oil sands and pipeline projects moving forward in western Canada.

Bird won a company-record CAD1.518 billion worth of work in 2013.

Management described fourth-quarter and full-year 2013 results as “disappointing,” though CEO Tim Talbott also noted that with new contract awards and the troubled contract behind it Bird is set for a better 2014 and “future growth.”

Bird’s most recent dividend increase was announced in March 2013, in the aftermath of the company’s outstanding 2012 financial and operating performance. We’ve yet to see a cut in the monthly payout rate, even during the Global Financial Crisis/Great Recession.

Bird’s backlog into 2014 and recently awarded contracts suggests the next increase will come in March 2015.

The stock price has seen a strong rally after hitting a near-term low of CAD11.20 on Aug. 29, 2013, following the announcement of third-quarter 2013 results and the revelation of the problematic fixed-price contract, as investors have priced in Bird’s longer-term track record as well as its ability to win new work, particularly from repeat customers.

Since late August 2013 Bird has generated a total return in US dollar terms of 27.1 percent, far outperforming the S&P/Toronto Stock Exchange Composite Index at 10.6 percent and the S&P 500 Index at 15.5 percent.

Despite this run Bird is still trading below our recommended buy-under target. Bird Construction, which is yielding 5.3 percent, is a strong buy under USD14.50.

Let’s Get Technical

This month, as we do every month, we present a set of “technical” data points for CE Portfolio Conservative and Aggressive Holdings.

Our analysis of underlying businesses begins with criteria that establish a CE Safety Rating, including payout ratios (dividends as a percentage of earnings), earnings visibility, the absolute level of debt a company carries, debt maturing between now and the end of 2015 and reliability of revenue and dividends.

The “Conservative Technicals” and Aggressive “Technicals” tables look at our Holdings in a slightly different way, by considering more technical factors. They are:

Market capitalization (in billions of Canadian dollars) is basically the market value of each company, measured by multiplying the total number of units by the unit price. It’s shown in Canadian dollars, which for comparison purposes is worth about USD0.9104.

Larger companies are usually more adept at weathering market cycles. Smaller companies have an easier time moving the profit meter, and a low market cap can attract takeover interest as well.

Shorts/Float measures the total short volume as a percentage of total shares of stock in circulation. Short sellers borrow units of a company and sell them in the market, with the goal of buying them back later at a lower price.

Higher short volume indicates more bets against a company, but if shorts are wrong they can be forced to sell at rising prices. A very high volume of shorts can cause a short squeeze, as short sellers are forced to buy at any price to stanch losses.

Institutional Ownership measures mutual funds and other large shareholders’ percentage ownership of each Canadian company. Higher numbers can indicate greater volatility.

I like to see large percentages of Insider Ownership, but bigger companies usually have more spread ownership and less influence from insiders.

Insider Additions shows the percentage change in insiders’ total holdings of a company over the past six months. Obviously, I like to see a rising percentage here, though a falling percentage isn’t necessarily the kiss of death.

Starting from the left in the Analyst Buy–Hold–Sell column, the first figure shows the number of analysts who rate the stock a “buy,” the second shows the number of “holds” and the third the number rating the stock a “sell.”

I like to see more “buys” than “holds” or “sells” all else equal. However, a large number of skeptics can bring a lot of upside by shifting sides, should a company beat expectations.

Beta is a measure of volatility relative to the S&P/Toronto Stock Exchange Composite Index. Higher numbers indicate greater volatility. Not surprisingly, Conservative Holdings tend to have lower betas than Aggressive Holdings due to less commodity-price sensitivity.

2013 Total Return and 2014 Total Return is the bottom line for each Holding and provides a good gauge for price momentum of these holdings. The 2014 figure is through April 2.

Like everything else about a stock these technical factors should be viewed along with everything else about a company, primarily, of course, business fundamentals.

Conservative Update

Nearly a year ago, in July 2013, Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF) announced the acquisition of four properties in Dublin, Ireland, comprising 338 apartment suites, for CAD59 million. The four properties were all built between 2006 and 2008.

It was the residential REIT’s first property acquisition outside of Canada, driven by a favorable Dublin rental market where supply amounted to less than half the market demand.

At the time management promised the assets would “never be a material part” of the CAP REIT portfolio and hinted at an eventual spin-out that would facilitate further Irish expansion.

Management followed through on April 4 with the announcement that CAP REIT will make an initial public offering for Irish Residential Properties REIT Plc, hoping to raise EUR200 million. CAP REIT will subscribe to 10 percent of the deal.

CAP REIT still sees a lot of room for growth in the Dublin rental market, but management wants to keep its focus on the flagship Canadian operation.

There are many condominium properties for sale in Dublin in the aftermath of an aggressive build-up ahead of the Global Financial Crisis, as many buyers were unable to close deals.

Lenders have become owners, and they have little experience managing rental units. CAP REIT has established a property manager in Ireland, and the fees it earns will flow back into CAP REIT through a management agreement.

The original Dublin acquisition was predominately financed through debt. This IPO will increase CAP REIT’s equity investment in the strategy. And it will allow CAP REIT to monetize the approximately 12 percent increase in the value of the Dublin properties since July 2013.

Irish Residential Properties REIT will become the first Irish multi-family REIT, giving it a first-mover advantage in the effort to consolidate apartment units in a strong rental market.

Based on the expected capital commitment of EUR200 million, with 50 percent leverage, CAP REIT could generate asset and property management fees approaching CAD5 million annually.

CAP REIT’s Irish venture is still a relatively small part of its CAD5.5 billion portfolio. But there is a longer-term opportunity to earn a growing fee stream as Irish Residential Properties REIT grows its portfolio.

Canadian Apartment Properties REIT, which is currently yielding 5.5 percent, is a buy under USD25.

Dundee REIT (TSX: D-U, OTC: DRETF) announced an agreement to extend the lease with Aviva Insurance for the 316,000 square feet this tenant currently occupies for one additional year until September 2017.

Aviva Insurance leases approximately 90 percent of Dundee’s 353,000 square foot property located at 2200‐2206 Eglinton Avenue East in Toronto and will be relocating at the expiration of the lease. They are currently paying a net rent of approximately CAD7.20 per square foot.

The property, acquired in 2009, is located on a 15.8 acre site that is underutilized. Dundee bought it with the intention of rezoning it for residential use and adding additional retail space. Significant retail growth is already underway around the site, and a new subway line under construction, with an adjacent stop, will add foot traffic.

The lease extension with Aviva will give Dundee additional time to focus on its redevelopment strategy.

Also, effective May 12, 2014, Dundee will change its name to Dream Office REIT.

Dundee REIT, which is yielding 7.7 percent as of this writing, is a buy under USD39.

Aggressive Update

Ag Growth International Inc (TSX: AFN, OTC: AGGZF) posted record trade sales and adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) for 2013, as year-over-year comparables looked particularly good versus a 2012 negatively impacted by a serious North American drought that impaired US corn production and checked equipment demand.

Results were driven by a “very strong” second half, as Ag Growth capitalized on favorable crop
conditions in North America and saw further success in international markets. Ag Growth’s leading market share in portable grain-handling equipment allowed it to take full advantage of record North American crop production volumes and a prolonged US harvest.

Sales of commercial grain-handling equipment increased substantially compared to 2012 due to robust domestic demand and a significant increase in international business.

International sales were up 29 percent, accounting for 26 percent of total sales, as Ag Growth continues to expand its global reach and solidify its position in key international markets. South America and Asia-Pacific are regions with significant upside potential.

Trade sales for the year were CAD358.35 million, a 14 percent improvement over 2012. Adjusted EBITDA were up 24 percent to CAD61.19 million.

Funds from operations (FFO) for the year were up 63.4 percent to CAD52.79 million. The payout ratio for the year was 57 percent, down from 93 percent in 2012 and 75 percent in 2011.

Fourth-quarter adjusted EBITDA were CAD13.9 million beat a consensus estimate of CAD13.1 million and were 194 percent above the CAD4.7 million for the prior corresponding period. Trade sales improved by 47 percent to CAD88.02 million.

Management expects an improvement in 2014 first-half results compared to the prior corresponding period of 2013, as its dealers order additional portable grain augers, which account for 30 percent to 40 percent of total revenue, to build inventory depleted from last year’s record corn harvest and equipment demand.

Moderating agricultural commodity prices have incentivized farmers to store more of their 2013 crop on the farm, which is supportive of post-harvest demand for storage, aeration and handling equipment. Off-season demand is higher than typical, and participation in Ag Growth’s annual preseason programs was very strong as dealers rebuilt inventories in advance of the 2014 growing season.

For 2014, the US Dept of Agriculture (USDA) has forecast continued high US corn production at 14.260 billion bushels, above a 2013 total of 13.925 billion bushels.

The impact of this solid estimate could be partially offset by lower Ukraine sales given the current conflict over the Crimea region.

For 2015, the USDA forecasts corn production of 14.010 billion bushels.

Ag Growth does have significant exposure to events in the Ukraine. In 2013 Ukraine sales were approximately CAD50 million to CAD55 million, or 14 percent to 15 percent of total revenue.

Management noted that CAD400 million of the total prospective CAD650 million bidding on new business is in Eastern Europe, and Ag Growth utilizes the Ukraine’s main port in Odessa, which is west of Crimea but could potentially be subject to conflict as well. Management also noted that alternative ports may be available.

Notably, Ag Growth’s Ukraine customers trade in US dollars instead of the declining Ukraine currency.

Management still expects to do “significant” business in Eastern Europe, including Ukraine, in 2014, though political volatility in the region could delay shipments of committed orders.

Ag Growth’s growing global presence was further evidenced by sales in the Middle East, Southeast Asia and Australia in 2013, and management anticipates continued success in these regions in 2014. Based on current conditions, management anticipates overall international sales in 2014 to exceed the record levels achieved in 2013.

Ag Growth also benefits from current currency trends, as a weaker Canadian dollar positively impacts sales and gross margin percentages when comparing to prior periods.

Ag Growth International is a buy on dips below USD40.

For the fourth quarter and for 2013 Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF) once again posted “under-promise/over-deliver” results.

Fourth-quarter production averaged 127,641 barrels of oil equivalent per day (boe/d), well ahead of a consensus forecast of 122,800 boe/d. Cash flow for the period was CAD533 million, or CAD1.35 per share, beating a consensus forecast of CAD1.21 per share.

During 2013 The company added 93.600 million boe proved plus probable reserves from organic sources at a cost of CAD20.09 per boe.

Based on a cash flow netback of CAD46.64 per boe, Crescent Point posted a recycle ratio of 2.3 times, a solid achievement relative to its peers, particularly so given its size. Technical revisions–driven primarily by the assignment of wateflood reserves in the Bakken and the impact of cemented liner completions–added approximately 20 percent to reserves.

Management expects a pattern of positive technical revisions to continue in future years as its waterflood program is expanded and cemented liner completions are applied across its capital program.

Applying cemented liner completions in its Viewfield Bakken resource has led to a 45 percent reduction in frac water use, 10 percent lower first-year declines and a 25 percent improvement to estimated ultimate recovery (EUR) numbers.

Based on management estimates wells completed with the 25-stage cemented liner method should have EURs of 300,000 barrels per well, a 36 percent improvement over the

16-stage cemented liner completion method, which had EURs of 220,000 barrels per well.

Crescent Point’s 2013 results proved the sustainability of its business model, as it demonstrated strong organic production and reserve growth.

Viewfield Bakken is growing more significant for Crescent Point as production has grown to approximately 5,500 boe/d. The company has 30 wells on production currently and believes it has identified 600 drilling locations on its lands. The economics of the play competes highly with other plays in its portfolio and Crescent Point plans to drill 48 wells in 2014.

Management expects to drill 27 wells in the upper Shaunavon resource play in 2014 and will be applying its cemented liner completion technology used in the Bakken here as well.

Fourth-quarter waterflood operations in the area have been most active to date with the conversion of seven producing wells into water injection wells. The company plans to apply for unitization for the second development area in the second quarter of 2014.

Crescent Point has managed to grow production and reserves by more than 30 percent since its entry into the Uinta Basin in November 2012.

Operated activity to date has been largely focused on vertical development, but the company plans to kick off a horizontal development program in the second half of this year, employing cemented liner completions. Twelve wells are currently being surveyed as part of that process.

Management revised upward its 2014 cash flow guidance CAD2.25 billion from CAD2.1 billion due to higher commodity prices, as production guidance has been left unchanged at average volumes of 126,500 boe/d.

Crescent Point has demonstrated to the market that it can economically grow reserves organically. Among oil and gas producers this is a defensive play, given its generous dividend rate of CAD0.23 per share per month, good for a current yield of 6.8 percent, active hedging program, low leverage, strong management and conservative guidance.

Crescent Point–a high-quality energy producer offering attractive value at these levels–is a buy under USD48.

Lightstream Resources Ltd’s (TSX: LTS, OTC: LSTMF) share price has been on a roller coaster since management cut the dividend by 50 percent in November 2013, falling to a five-year low of CAD5.15 on Dec. 11, 2013, rising to CAD6.44 on Feb. 19, 2014, falling to CAD5.39 on March 13 and climbing back up to CAD6 on the Toronto Stock Exchange as of April 4.

The latter price was reached after management reported year-end reserves as well as fourth-quarter and full-year 2013 results. The market sees some very early signs that the dividend cut was a long-term positive that will help the company fund a turnaround.

Yet the needle to thread–with reducing leverage being management’s top priority–is to fix the balance sheet via asset sales that typically reduce debt but cut cash flow at the same time.

Average daily production for 2013 increased to 46,438 barrels of oil equivalent per day (boe/d), a 9 percent increase over 2012 average production of 42,784 boe/d.

Average fourth-quarter production was 45,521 boe/d, essentially unchanged compared to the third quarter and down 4 percent year over year.

Operating netback for 2013 was CAD50.00 per boe, 4 percent higher than 2012. For the fourth quarter it was CAD45.43 per boe, down 5 percent from the fourth quarter of 2012.

Funds flow were CAD671 million, or CAD3.43 per share, for 2013, a 12 percent increase over 2012; fourth-quarter funds flow were CAD146 million, or CAD0.73 per share, down 13 percent compared to the prior corresponding period.

Lightstream exited 2013 with net debt of approximately $2.3 billion, including USD900 million in notes and USD6.5 million convertible debentures, or 3.9 times annualized fourth-quarter cash flow. The company had $1.16 billion drawn on its $1.4 billion credit facility at year’s end.

In early March management announced a CAD112 million non-core asset disposition, with proceeds earmarked for debt reduction, part of the company’s plan for CAD600 million of asset sales through 2015.

Lightstream has guided to 2014 capital spending of CAD525 million to CAD575 million and cash flow of CAD635 million to CAD665 million. It plans to pay out CAD0.48 per share in dividends, a total of CAD95.9 million based on the current share count.

This would result in a 2014 all-in payout ratio–including dividends and CAPEX–below 100 percent, which lines up with the company’s goal of not increasing debt levels.

Lightstream Resources is a buy for aggressive investors only up to our reduced buy-under target of USD8.

Another Quarter’s Numbers

Here are estimated and confirmed dates for the next set of operating and financial numbers from Canadian Edge Portfolio Holdings. Except where noted, Holdings will be reporting first-quarter 2014 results.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–April 24, 2014 (estimate)
• Artis REIT (TSX: AX-U, OTC: ARESF)–May 8, 2014 (confirmed)
• Bank of Nova Scotia (TSX: BNS, NYSE: BNS)–May 27, 2014 (FY 2014 Q2, confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–May 13, 2014 (estimate)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–May 7, 2014 (estimate)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–May 3, 2014 (estimate)
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)–May 13, 2014 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–May 9, 2014 (estimate)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–May 7, 2014 (estimate)
• Dundee REIT (TSX: D-U, OTC: DRETF)–May 7, 2014 (estimate)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–May 14, 2014 (estimate)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–May 13, 2014 (confirmed)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–May 7, 2014 (estimate)
• Northern Property REIT (TSX: NPR, OTC: NPRUF)–May 8, 2014 (estimate)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–May 8, 2014 (estimate)
• RioCan REIT (TSX: REI, OTC: RIOCF)–May 2, 2014 (estimate)
• Shaw Communications Inc (TSX: SJR/B, NYSE: SJR)–April 10, 2014 (FY 2014 Q2, confirmed)
• Student Transportation Inc (TSX: STB, NSDQ: STB)–May 9, 2014 (estimate)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–April 21, 2014 (estimate)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN OTC: ACAZF)–May 9, 2014 (estimate)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–May 9, 2014 (estimate)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–May 1, 2014 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–May 15, 2014 (estimate)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–May 8, 2014 (confirmed)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–May 9, 2014 (estimate)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–May 9, 2014 (estimate)
• Magna International Inc (TSX: MG, NYSE: MGA)–May 9, 2014 (estimate)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–May 2, 2014 (estimate)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–May 15, 2014 (estimate)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–May 7, 2014 (estimate)
• Lightstream Resources Ltd (TSX: LTS, OTC: LSTMF)–May 1, 2014 (estimate)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–May 14, 2014 (estimate)
• Vermilion Energy Inc (TSX: VET, NYSE: VET)–May 2, 2014 (confirmed)
• Wajax Corp (TSX: WJX, OTC: WJXFF)–May 6, 2014 (confirmed)