North American Construction Group Ltd. ("NACG")
(TSX:NOA.TO/NYSE:NOA) today announced results for the second
quarter ended June 30, 2024. Unless otherwise indicated,
financial figures are expressed in Canadian dollars, and
comparisons are to the prior period ended June 30, 2023.
Second Quarter
2024 Highlights:
- Combined revenue of
$329.7 million compared favorably to $278.6 million in the same
period last year, is a second quarter record and reflected best
operational quarter to date from the Australian fleet of the
MacKellar Group which was acquired on October 1, 2023.
- Reported revenue of
$276.3 million, compared to $195.2 million in the same period last
year, was primarily generated by strong equipment utilization of
82% in Australia but was offset by lower equipment operating hours
in the oil sands region due to adverse weather conditions in May
and June.
- Our net share of
revenue from equity consolidated joint ventures was $53.4 million
in Q2 2024 and compared to $83.4 million in the same period last
year as the increases at Fargo project in the current quarter were
offset by gold mine project scopes in Northern Ontario completed in
the prior quarter.
- Adjusted EBITDA of
$86.9 million and margin of 26.3% compared favorably to the prior
period operating metrics of $51.8 million and 18.6%, respectively,
as revenue increases drove higher gross EBITDA with margin
improvements driven by effective operations in Australia and
Canada.
- Combined gross
profit of $60.4 million and margin of 18.3% was impacted by a
one-time charge for equipment disposal. This margin compares
favorably to the 13.0% posted in the same period last year as
diversification efforts and effective operations contributed to
improved margins in the quarter.
- Cash flows generated
from operating activities of $59.0 million was higher than the
$40.2 million generated in the prior period as higher cash
generation from the strong EBITDA was offset by the temporary
impact of changes to working capital in the quarter.
- Free cash flow used
in the quarter was $1.5 million. Free cash flow prior to working
capital changes and increases in capital work in progress was over
$30 million resulting from strong revenues and margins offset by
our routine capital maintenance program.
- Net debt was $832.7
million at June 30, 2024, an increase of $109.3 million from
December 31, 2023, as year-to-date free cash flow usage and
growth asset purchases required debt financing. The cash-related
interest rate was 7.0% primarily driven by Bank of Canada posted
rates and correlated equipment financing rates.
- Additional
highlights: i) transport and delivery of approximately twenty haul
trucks from Canada to Australia remains on schedule with
commissioning expected in late Q3; ii) ERP implementation in
Australia targeting a go-live date in Q3; and iii) equipment
telematics progressed with the introduction of Hitachi
functionality in Canada and establishment of mobile data
infrastructure at mine sites in Australia.
In response to a challenging first half of 2024, the Company has
updated its full year expectations with the outlook for the second
half of 2024 remaining in line with original expectations set in
October 2023. The updated full year adjusted earnings range is
$3.95 to $4.15 per share and, with $1.56 generated in the first
half of the year, implies a second half range of approximately
$2.40 to $2.60 per share.
Joe Lambert, President and CEO, stated, "I am encouraged by the
underlying fundamentals of our business. Our drive for operational
excellence day-in day-out remains strong as ever and I am proud of
the operating culture we have here at NACG. In reviewing our medium
and long-term outlooks with our operational and estimating teams in
Australia and Canada, we have much to be excited about in the
second half of 2024, full year 2025 and beyond."
Consolidated Financial Highlights
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
(dollars in thousands, except per share amounts) |
|
|
2024 |
|
|
|
2023 |
(iv) |
|
|
2024 |
|
|
|
2023 |
(iv) |
Revenue |
|
$ |
276,314 |
|
|
$ |
195,188 |
|
|
$ |
573,340 |
|
|
$ |
439,517 |
|
Total combined revenue(i) |
|
|
329,723 |
|
|
|
278,568 |
|
|
|
675,436 |
|
|
|
600,909 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
49,669 |
|
|
|
21,595 |
|
|
|
102,959 |
|
|
|
62,695 |
|
Gross profit margin(i) |
|
|
18.0 |
% |
|
|
11.1 |
% |
|
|
18.0 |
% |
|
|
14.3 |
% |
|
|
|
|
|
|
|
|
|
Combined gross profit(i) |
|
|
60,350 |
|
|
|
36,258 |
|
|
|
122,575 |
|
|
|
92,177 |
|
Combined gross profit
margin(i)(ii) |
|
|
18.3 |
% |
|
|
13.0 |
% |
|
|
18.1 |
% |
|
|
15.3 |
% |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
38,705 |
|
|
|
10,334 |
|
|
|
76,981 |
|
|
|
36,042 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(i)(iii) |
|
|
86,881 |
|
|
|
51,833 |
|
|
|
180,132 |
|
|
|
136,456 |
|
Adjusted EBITDA
margin(i)(iii) |
|
|
26.3 |
% |
|
|
18.6 |
% |
|
|
26.7 |
% |
|
|
22.7 |
% |
|
|
|
|
|
|
|
|
|
Net income |
|
|
14,007 |
|
|
|
12,262 |
|
|
|
25,376 |
|
|
|
34,108 |
|
Adjusted net earnings(i) |
|
|
20,822 |
|
|
|
12,489 |
|
|
|
41,710 |
|
|
|
37,766 |
|
|
|
|
|
|
|
|
|
|
Cash provided by operating
activities |
|
|
59,013 |
|
|
|
40,185 |
|
|
|
70,879 |
|
|
|
72,009 |
|
Cash provided by operating
activities prior to change in working capital(i) |
|
|
68,911 |
|
|
|
27,145 |
|
|
|
142,803 |
|
|
|
92,980 |
|
|
|
|
|
|
|
|
|
|
Free cash flow(i) |
|
|
(1,518 |
) |
|
|
(4,699 |
) |
|
|
(43,303 |
) |
|
|
(30,757 |
) |
|
|
|
|
|
|
|
|
|
Purchase of PPE |
|
|
75,307 |
|
|
|
38,419 |
|
|
|
141,960 |
|
|
|
74,915 |
|
Sustaining capital
additions(i) |
|
|
37,313 |
|
|
|
38,311 |
|
|
|
97,190 |
|
|
|
85,502 |
|
Growth capital
additions(i) |
|
|
19,943 |
|
|
|
2,748 |
|
|
|
39,550 |
|
|
|
2,748 |
|
|
|
|
|
|
|
|
|
|
Basic net income per
share |
|
$ |
0.52 |
|
|
$ |
0.46 |
|
|
$ |
0.95 |
|
|
$ |
1.29 |
|
Adjusted EPS(i) |
|
$ |
0.78 |
|
|
$ |
0.47 |
|
|
$ |
1.56 |
|
|
$ |
1.43 |
|
(i)See "Non-GAAP Financial Measures". (ii)Combined gross profit
margin is calculated using combined gross profit over total
combined revenue.(iii)Adjusted EBITDA margin is calculated using
adjusted EBITDA over total combined revenue.(iv)The prior year
amounts are adjusted to reflect a change in accounting policy. See
"Change in significant accounting policy - Basis of
presentation".
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
Cash
provided by operating activities |
|
$ |
59,013 |
|
|
$ |
40,185 |
|
|
$ |
70,879 |
|
|
$ |
72,009 |
|
Cash used in investing activities |
|
|
(81,965 |
) |
|
|
(39,236 |
) |
|
|
(138,698 |
) |
|
|
(80,153 |
) |
Effect of exchange rate on changes in cash |
|
|
1,491 |
|
|
|
(417 |
) |
|
|
(877 |
) |
|
|
(362 |
) |
Add
back of growth and non-cash items included in the above
figures: |
|
|
|
|
|
|
|
|
Growth capital additions(i)(ii) |
|
|
19,943 |
|
|
|
2,748 |
|
|
|
39,550 |
|
|
|
2,748 |
|
Capital additions financed by leases(i) |
|
|
— |
|
|
|
(7,979 |
) |
|
|
(14,157 |
) |
|
|
(24,999 |
) |
Free cash flow(i) |
|
$ |
(1,518 |
) |
|
$ |
(4,699 |
) |
|
$ |
(43,303 |
) |
|
$ |
(30,757 |
) |
(i)See "Non-GAAP Financial Measures".(ii)Included above in Cash
used in investing activities.
Declaration of Quarterly
Dividend
On July 31, 2024, the NACG Board of Directors declared a
regular quarterly dividend (the "Dividend") of ten Canadian cents
($0.10) per common share, payable to common shareholders of record
at the close of business on August 30, 2024. The Dividend will be
paid on October 4, 2024, and is an eligible dividend for Canadian
income tax purposes.
Financial Results for the Three Months Ended
June 30, 2024
Revenue for Q2 2024 of $276.3 million represented an increase of
$81.1 million (or 42%) from Q2 2023. The increase is primarily due
to the inclusion of results from the MacKellar Group ("MacKellar")
following its acquisition on October 1, 2023.
The Heavy Equipment - Australia segment showed strong
performance, driven by MacKellar’s Q2 results, which exceeded Q1
2024 by 9.9%, largely due to steady and consistent operating
conditions in particular at the Carmichael and Middlemount mine
sites. Equipment utilization for the quarter was 82% with May
posting a 89%, above the stated target for the Australian fleet of
85%. The month of June did experience some rains late in the month
bringing utilization to 79% in that month and tempering revenues
slightly. In addition to stable operating conditions during the
quarter, certain growth assets were commissioned in both Western
Australia and Queensland and had meaningful, but not full quarter,
contributions to top-line revenue. DGI Trading Pty Ltd. ("DGI")
posted another strong quarter and continues to benefit from
international demand for low-cost used components and major parts
required by heavy equipment fleets in the mining industry.
The Heavy Equipment - Canada segment posted a decline in revenue
compared to the prior year as equipment utilization decreased to
42% from adverse weather conditions in May and June. Wildfire
protocols caused work stoppages in May and heavy rainfall in May
and June caused work shifts being cancelled due to mine site and
haul road conditions. It is estimated that the abnormally poor
weather conditions in the quarter affected top-line results by
approximately $20 million. Quarter over quarter, revenue decreased
30.6% and was primarily driven by changes in work completed at the
Fort Hills and Syncrude mines as volumes at the Millenium mine
remained consistent, in addition to the poor weather. Additionally,
the comparative quarter benefited from higher utilization rates
from NACG assets being operated at the gold mine in northern
Ontario, a project that concluded in late August 2023.
Combined revenue of $329.7 million represented a $51.2 million
(or 18%) increase from Q2 2023. Our share of revenue generated in
Q2 2024 by joint ventures and affiliates was $53.4 million,
compared to $83.4 million in Q2 2023. The completion of the gold
mine project in northern Ontario at the end of August 2023 was the
primary driver of this quarter over quarter variance. Offsetting
this variance was the Fargo-Moorhead flood diversion project which
completed another strong operational quarter, posted a 98% increase
from scopes completed in the prior quarter and surpassed the 40%
completion mark in June.
Adjusted EBITDA and the associated margin of $86.9 million and
26.3% exceeded our Q2 2023 results of $51.8 million and 18.6%,
respectively. Despite lower revenue in the oil sands region,
effective and efficient operation of the heavy equipment fleets in
Australia and Canada and the implemented reductions of variable and
fixed costs where necessary generated a strong EBITDA margin for Q2
2024. EBITDA margin for this quarter was relatively consistent with
Q1 2024 and is reflective of the underlying consistent business of
our heavy equipment fleets.
Depreciation of our equipment fleet was 14.3% of revenue in the
quarter but when factoring out the one-time loss on disposal,
averaged 12.8% for the quarter. Depreciation as a percentage of
revenue was 17.7% for the Heavy Equipment - Canada fleet which was
higher than our historical average as increased customer demand for
heavy equipment rentals has changed the revenue profile. The Heavy
Equipment - Australia fleet, which averaged approximately 9.4% of
revenue, was driven by MacKellar and reflected both productive
operations in the quarter as well as the depreciation of fair
market values allocated upon purchase. On a combined basis,
depreciation averaged 13.4% of combined revenue in the quarter as
the lower capital intensity in Fargo and Nuna joint ventures
modestly reduced the ratio.
General and administrative expenses (excluding stock-based
compensation) were $12.8 million, or 4.6% of revenue, compared to
$7.2 million, or 3.7% of revenue in Q2 2023. The increase in
expenses reflects the acquisition of the MacKellar Group. The
increase as a percentage of revenue, in particular from the Q1 rate
of 3.8%, equally reflects both the lower revenue in the quarter but
also the impacts of higher accounting, audit and legal costs
associated with the added first-year integration of the MacKellar
acquisition.
Cash related interest expense for the quarter was $13.6 million
at an average cost of debt of 7.0%, compared to 6.9% in Q2 2023, as
rates posted by the Bank of Canada directly impact our Credit
Facility and have a delayed impact on the rates for secured
equipment-backed financing. Total interest expense was $14.3
million in the quarter, compared to $7.5 million in Q2 2023 based
on the debt financing incurred upon acquisition of the MacKellar
Group on October 1, 2023.
Adjusted earnings per share ("EPS") of $0.78 on adjusted net
earnings of $20.8 million was up 66% from the prior year figure of
$0.47, consistent with the adjusted EBIT performance which was up
102.1% quarter over quarter. As mentioned above, the step-changes
in interest from the MacKellar acquisition offset EBIT performance
with the effective income tax rates being comparable for both
quarters. Weighted-average common shares levels for the second
quarters of 2024 and 2023 were relatively stable at 26,730,049 and
26,409,357, respectively, net of shares classified as treasury
shares.
Free cash flow for the three months ended June 30, 2024, was a
use of cash of $1.5 million. Adjusted EBITDA of $86.9 million less
sustaining capital additions of $37.3 million and cash interest
expense of $13.6 million generated $36.0 million of cash flow in
the quarter. The difference of $37.5 million is primarily related
to increases in working capital ($9.9 million) and capital work in
progress ($18.2 million) balances.
2024 Strategic Focus Areas
- Safety - now on an
international basis, maintain our uncompromising commitment to
health and safety while elevating the standard of excellence in the
field;
- Execution - enhance
equipment availability in Canada and Australia through in-house
fleet maintenance, reliability programs, technical improvements,
and management systems;
- Operational
excellence - with a specific focus on Nuna Group of Companies, put
into action practical and experienced-based protocols to ensure
predictable high-quality project execution;
- Integration -
implement ERP and best practices at MacKellar, including
identification of opportunities to better utilize our capital and
equipment in Australia;
- Diversification -
pursue diversification of customers and resources through strategic
partnerships, industry expertise and investment in Indigenous joint
ventures; and
- Sustainability -
further develop and deliver into our environmental, social, and
governance targets as disclosed and committed to in our annual
reporting.
Liquidity
Our current liquidity positions us well moving forward to fund
organic growth and the required correlated working capital
investments. Including equipment financing availability and
factoring in the amended Credit Facility agreement, total available
capital liquidity of $189.0 million includes total liquidity of
$145.9 million and $26.0 million of unused finance lease borrowing
availability as at June 30, 2024. Liquidity is primarily
provided by the terms of our $480.7 million credit facility which
allows for funds availability based on a trailing twelve-month
EBITDA as defined in the agreement.
|
|
|
June 30,2024 |
|
|
|
December 31,2023 |
|
Cash |
|
$ |
68,343 |
|
|
$ |
88,614 |
|
Credit Facility borrowing limit |
|
|
480,706 |
|
|
|
478,022 |
|
Credit Facility drawn |
|
|
(370,706 |
) |
|
|
(317,488 |
) |
Letters of credit outstanding |
|
|
(32,366 |
) |
|
|
(31,272 |
) |
Cash liquidity(i) |
|
$ |
145,977 |
|
|
$ |
217,876 |
|
Finance lease borrowing limit |
|
|
350,000 |
|
|
|
350,000 |
|
Other
debt borrowing limit |
|
|
20,000 |
|
|
|
20,000 |
|
Equipment financing drawn |
|
|
(258,701 |
) |
|
|
(220,466 |
) |
Guarantees provided to joint ventures |
|
|
(68,325 |
) |
|
|
(74,831 |
) |
Total capital liquidity(i) |
|
$ |
188,951 |
|
|
$ |
292,579 |
|
(i)See "Non-GAAP Financial Measures".
NACG’s Outlook for 2024
The following table provides projected key measures for 2024.
These measures are predicated on contracts currently in place,
including expected renewals, and the heavy equipment fleet that we
own and operate.
Key measures |
|
2024 |
Combined revenue(i) |
|
$1.4 - $1.5B |
Adjusted EBITDA(i) |
|
$395 - $415M |
Sustaining capital(i) |
|
$150 - $170M |
Adjusted EPS(i) |
|
$3.95 - $4.15 |
Free
cash flow(i) |
|
$100 - $120M |
|
|
|
Capital allocation |
|
|
Growth spending(i) |
|
$55 - $70M |
Net debt leverage(i) |
|
Targeting 1.8x |
(i)See "Non-GAAP Financial Measures".
Conference Call and Webcast
Management will hold a conference call and
webcast to discuss our financial results for the quarter ended
June 30, 2024, tomorrow, Thursday, August 1, 2024, at
7:00 am Mountain Time (9:00 am Eastern Time).
The call can be accessed by dialing: Toll free:
1-800-717-1738Conference ID: 50329
A replay will be available through September 2, 2024, by
dialing: Toll Free: 1-888-660-6264 Conference ID: 50329Playback
Passcode: 50329The Q2 2024 earnings presentation for the webcast
will be available for download on the company’s website at
www.nacg.ca/presentations/
The live presentation and webcast can be accessed at:
North American Construction Group Ltd. Second Quarter Results
Conference Call Registration (onlinexperiences.com)
A replay will be available until September 2, 2024, using the
link provided.
Basis of Presentation
We have prepared our consolidated financial
statements in conformity with accounting principles generally
accepted in the United States ("US GAAP"). Unless otherwise
specified, all dollar amounts discussed are in Canadian dollars.
Please see the Management’s Discussion and Analysis ("MD&A")
for the quarter ended June 30, 2024, for further detail on the
matters discussed in this release. In addition to the MD&A,
please reference the dedicated Q2 2024 Results Presentation for
more information on our results and projections which can be found
on our website under Investors - Presentations.
Change in significant accounting policy
- Basis of presentation
During the first quarter of 2024, we changed our accounting
policy for the elimination of our proportionate share of profit
from downstream sales to affiliates and joint ventures to record
through equity earnings in affiliates and joint ventures on the
Consolidated Statements of Operations and Comprehensive Income.
Prior to this change, we eliminated our proportionate share of
profit on downstream sales to affiliates and joint ventures through
revenue and cost of sales. The change in accounting policy
simplifies the presentation for downstream profit eliminations and
has no cumulative impact on retained earnings. We have accounted
for the change retrospectively in accordance with the requirements
of US GAAP Accounting Standards Codification ("ASC") 250 by
restating the comparative period. For details of retrospective
changes, refer to note 16 in the Financial Statements.
Forward-Looking Information
The information provided in this release contains
forward-looking statements. Forward-looking statements include
statements preceded by, followed by or that include the words
"anticipate", "believe", "expect", "should" or similar expressions
and include all information provided under the above heading
"NACG's Outlook".
The material factors or assumptions used to develop the above
forward-looking statements and the risks and uncertainties to which
such forward-looking statements are subject, are highlighted in the
MD&A for the three and six months ended June 30, 2024. Actual
results could differ materially from those contemplated by such
forward-looking statements because of any number of factors and
uncertainties, many of which are beyond NACG’s control. Undue
reliance should not be placed upon forward-looking statements and
NACG undertakes no obligation, other than those required by
applicable law, to update or revise those statements. For more
complete information about NACG, please read our disclosure
documents filed with the SEC and the CSA. These free documents can
be obtained by visiting EDGAR on the SEC website at
www.sec.gov or on the CSA website at www.sedarplus.com.
Non-GAAP Financial Measures
This press release presents certain non-GAAP financial measures
because management believes that they may be useful to investors in
analyzing our business performance, leverage and liquidity. The
non-GAAP financial measures we present include "adjusted EBIT",
"adjusted EBITDA", "adjusted EBITDA margin", "adjusted EPS",
"adjusted net earnings", "capital additions", "capital work in
progress", "cash provided by operating activities prior to change
in working capital", "combined gross profit", "combined gross
profit margin", "equity investment EBIT", "free cash flow",
"general and administrative expenses (excluding stock-based
compensation)", "gross profit margin", "growth capital", "margin",
"net debt", "sustaining capital", "total capital liquidity", "total
combined revenue", and "total debt". A non-GAAP financial measure
is defined by relevant regulatory authorities as a numerical
measure of an issuer's historical or future financial performance,
financial position or cash flow that is not specified, defined or
determined under the issuer’s GAAP and that is not presented in an
issuer’s financial statements. These non-GAAP measures do not have
any standardized meaning and therefore are unlikely to be
comparable to similar measures presented by other companies. They
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. Each
non-GAAP financial measure used in this press release is defined
and reconciled to its most directly comparable GAAP measure in the
"Non-GAAP Financial Measures" section of our Management’s
Discussion and Analysis filed concurrently with this press
release.
Reconciliation of total reported revenue to total
combined revenue
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
(ii) |
|
|
2024 |
|
|
|
2023 |
(ii) |
Revenue from wholly-owned entities per financial statements |
|
$ |
276,314 |
|
|
$ |
195,188 |
|
|
$ |
573,340 |
|
|
$ |
439,517 |
|
Share
of revenue from investments in affiliates and joint ventures |
|
|
112,377 |
|
|
|
158,485 |
|
|
|
238,215 |
|
|
|
347,970 |
|
Elimination of joint venture subcontract revenue |
|
|
(58,968 |
) |
|
|
(75,105 |
) |
|
|
(136,119 |
) |
|
|
(186,578 |
) |
Total combined revenue(i) |
|
$ |
329,723 |
|
|
$ |
278,568 |
|
|
$ |
675,436 |
|
|
$ |
600,909 |
|
(i)See "Non-GAAP Financial Measures".(ii)The prior year amounts
are adjusted to reflect a change in accounting policy. See "Change
in significant accounting policy - Basis of presentation".
Reconciliation of reported gross profit to combined
gross profit
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
(ii) |
|
|
2024 |
|
|
|
2023 |
(ii) |
Gross profit from wholly-owned entities per financial
statements |
|
$ |
49,669 |
|
|
$ |
21,595 |
|
|
$ |
102,959 |
|
|
$ |
62,695 |
|
Share of gross profit from investments in affiliates and joint
ventures |
|
|
10,681 |
|
|
|
14,663 |
|
|
|
19,616 |
|
|
|
29,482 |
|
Combined gross profit(i) |
|
$ |
60,350 |
|
|
$ |
36,258 |
|
|
$ |
122,575 |
|
|
$ |
92,177 |
|
(i)See "Non-GAAP Financial Measures".(ii)The prior year amounts
are adjusted to reflect a change in accounting policy. See "Change
in significant accounting policy - Basis of presentation".
Reconciliation of net income to adjusted net earnings,
adjusted EBIT, and adjusted EBITDA
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
|
$ |
14,007 |
|
|
$ |
12,262 |
|
|
$ |
25,376 |
|
|
$ |
34,108 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Loss (gain) on disposal of property, plant and equipment |
|
|
32 |
|
|
|
(713 |
) |
|
|
293 |
|
|
|
500 |
|
Stock-based compensation (benefit) expense |
|
|
(1,859 |
) |
|
|
4,804 |
|
|
|
1,749 |
|
|
|
10,741 |
|
Change in fair value of contingent obligation from adjustments to
estimates |
|
|
7,420 |
|
|
|
— |
|
|
|
8,858 |
|
|
|
— |
|
Restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
4,517 |
|
|
|
— |
|
Write-down on assets held for sale |
|
|
4,181 |
|
|
|
— |
|
|
|
4,181 |
|
|
|
— |
|
Loss on equity investment customer bankruptcy claim settlement |
|
|
— |
|
|
|
759 |
|
|
|
— |
|
|
|
759 |
|
Loss (gain) on derivative financial instruments |
|
|
273 |
|
|
|
(1,852 |
) |
|
|
273 |
|
|
|
(4,361 |
) |
Net unrealized (gain) loss on derivative financial instruments
included in equity earnings in affiliates and joint ventures |
|
|
(984 |
) |
|
|
(1,655 |
) |
|
|
970 |
|
|
|
(1,221 |
) |
Tax effect of the above items |
|
|
(2,248 |
) |
|
|
(1,116 |
) |
|
|
(4,507 |
) |
|
|
(2,760 |
) |
Adjusted net earnings(i) |
|
|
20,822 |
|
|
|
12,489 |
|
|
|
41,710 |
|
|
|
37,766 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Tax effect of the above items |
|
|
2,248 |
|
|
|
1,116 |
|
|
|
4,507 |
|
|
|
2,760 |
|
Increase in fair value of contingent obligation from interest
accretion expense |
|
|
4,143 |
|
|
|
— |
|
|
|
8,098 |
|
|
|
— |
|
Interest expense, net |
|
|
14,339 |
|
|
|
7,511 |
|
|
|
29,936 |
|
|
|
14,822 |
|
Income tax expense |
|
|
5,152 |
|
|
|
1,757 |
|
|
|
9,557 |
|
|
|
10,159 |
|
Equity earnings in affiliates and joint ventures(iii) |
|
|
(6,629 |
) |
|
|
(9,344 |
) |
|
|
(5,117 |
) |
|
|
(18,686 |
) |
Equity investment EBIT(i)(iii) |
|
|
6,555 |
|
|
|
9,541 |
|
|
|
2,787 |
|
|
|
19,324 |
|
Adjusted EBIT(i) |
|
|
46,630 |
|
|
|
23,070 |
|
|
|
91,478 |
|
|
|
66,145 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
39,941 |
|
|
|
24,664 |
|
|
|
84,182 |
|
|
|
61,355 |
|
Write-down on assets held for sale |
|
|
(4,181 |
) |
|
|
— |
|
|
|
(4,181 |
) |
|
|
— |
|
Equity investment depreciation and amortization(i) |
|
|
4,491 |
|
|
|
4,099 |
|
|
|
8,653 |
|
|
|
8,956 |
|
Adjusted EBITDA(i) |
|
$ |
86,881 |
|
|
$ |
51,833 |
|
|
$ |
180,132 |
|
|
$ |
136,456 |
|
(i)See "Non-GAAP Financial Measures".
Reconciliation of equity earnings in affiliates and
joint ventures to equity investment EBIT
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
(ii) |
|
|
2024 |
|
|
|
2023 |
(ii) |
Equity earnings in affiliates and joint ventures |
|
$ |
6,629 |
|
|
$ |
9,344 |
|
|
$ |
5,117 |
|
|
$ |
18,686 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Interest (income) expense, net |
|
|
(146 |
) |
|
|
(530 |
) |
|
|
(719 |
) |
|
|
(173 |
) |
Income tax expense |
|
|
72 |
|
|
|
722 |
|
|
|
(1,436 |
) |
|
|
846 |
|
Loss (gain) on disposal of property, plant and equipment |
|
|
— |
|
|
|
5 |
|
|
|
(175 |
) |
|
|
(35 |
) |
Equity investment EBIT(i) |
|
$ |
6,555 |
|
|
$ |
9,541 |
|
|
$ |
2,787 |
|
|
$ |
19,324 |
|
(i)See "Non-GAAP Financial Measures".(ii)The prior year amounts
are adjusted to reflect a change in accounting policy. See "Change
in significant accounting policy - Basis of presentation".
About the Company
North American Construction Group Ltd. is a premier provider of
heavy civil construction and mining services in Canada, the U.S.
and Australia. For 70 years, NACG has provided services to the
mining, resource and infrastructure construction markets.
For further information contact:
Jason VeenstraChief Financial OfficerNorth American Construction
Group Ltd.(780) 960-7171IR@nacg.cawww.nacg.caInterim Consolidated
Balance Sheets
(Expressed in thousands of Canadian
Dollars)(Unaudited)
|
|
|
June 30,2024 |
|
|
|
December 31,2023 |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash |
|
$ |
68,343 |
|
|
$ |
88,614 |
|
Accounts receivable |
|
|
142,451 |
|
|
|
97,855 |
|
Contract assets |
|
|
12,886 |
|
|
|
35,027 |
|
Inventories |
|
|
69,388 |
|
|
|
64,962 |
|
Prepaid expenses and deposits |
|
|
7,942 |
|
|
|
7,402 |
|
Assets held for sale |
|
|
10,707 |
|
|
|
1,340 |
|
|
|
|
311,717 |
|
|
|
295,200 |
|
Property, plant and equipment, net of accumulated depreciation of
$453,854 (December 31, 2023 – $423,345) |
|
|
1,204,091 |
|
|
|
1,142,946 |
|
Operating lease right-of-use assets |
|
|
13,962 |
|
|
|
12,782 |
|
Investments in affiliates and joint ventures |
|
|
81,206 |
|
|
|
81,435 |
|
Other
assets |
|
|
5,666 |
|
|
|
7,144 |
|
Intangible assets |
|
|
8,066 |
|
|
|
6,971 |
|
Total assets |
|
$ |
1,624,708 |
|
|
$ |
1,546,478 |
|
Liabilities and shareholders’ equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
119,742 |
|
|
$ |
146,190 |
|
Accrued liabilities |
|
|
57,100 |
|
|
|
72,225 |
|
Contract liabilities |
|
|
9 |
|
|
|
59 |
|
Current portion of long-term debt |
|
|
91,962 |
|
|
|
81,306 |
|
Current portion of contingent obligations |
|
|
32,350 |
|
|
|
22,501 |
|
Current portion of operating lease liabilities |
|
|
1,670 |
|
|
|
1,742 |
|
|
|
|
302,833 |
|
|
|
324,023 |
|
Long-term debt |
|
|
692,150 |
|
|
|
611,313 |
|
Long-term portion of contingent obligations |
|
|
81,478 |
|
|
|
93,356 |
|
Operating lease liabilities |
|
|
12,705 |
|
|
|
11,307 |
|
Other
long-term obligations |
|
|
42,103 |
|
|
|
41,001 |
|
Deferred tax liabilities |
|
|
113,808 |
|
|
|
108,824 |
|
|
|
|
1,245,077 |
|
|
|
1,189,824 |
|
Shareholders' equity |
|
|
|
|
Common shares (authorized – unlimited number of voting common
shares; issued and outstanding – June 30, 2024 - 27,827,282
(December 31, 2023 – 27,827,282)) |
|
|
229,455 |
|
|
|
229,455 |
|
Treasury shares (June 30, 2024 - 1,097,940 (December 31, 2023 -
1,090,187)) |
|
|
(16,394 |
) |
|
|
(16,165 |
) |
Additional paid-in capital |
|
|
23,279 |
|
|
|
20,739 |
|
Retained earnings |
|
|
143,060 |
|
|
|
123,032 |
|
Accumulated other comprehensive income (loss) |
|
|
231 |
|
|
|
(407 |
) |
Shareholders' equity |
|
|
379,631 |
|
|
|
356,654 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,624,708 |
|
|
$ |
1,546,478 |
|
Interim Consolidated Statements of Operations andComprehensive
Income
(Expressed in thousands of Canadian Dollars, except per share
amounts)(Unaudited)
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2024 |
|
|
|
2023 |
(i) |
|
|
2024 |
|
|
|
2023 |
(i) |
Revenue |
|
$ |
276,314 |
|
|
$ |
195,188 |
|
|
$ |
573,340 |
|
|
$ |
439,517 |
|
Cost of sales |
|
|
187,022 |
|
|
|
149,241 |
|
|
|
386,817 |
|
|
|
316,085 |
|
Depreciation |
|
|
39,623 |
|
|
|
24,352 |
|
|
|
83,564 |
|
|
|
60,737 |
|
Gross profit |
|
|
49,669 |
|
|
|
21,595 |
|
|
|
102,959 |
|
|
|
62,695 |
|
General and administrative
expenses |
|
|
10,932 |
|
|
|
11,974 |
|
|
|
25,685 |
|
|
|
26,153 |
|
Loss
(gain) on disposal of property, plant and equipment |
|
|
32 |
|
|
|
(713 |
) |
|
|
293 |
|
|
|
500 |
|
Operating income |
|
|
38,705 |
|
|
|
10,334 |
|
|
|
76,981 |
|
|
|
36,042 |
|
Interest expense, net |
|
|
14,339 |
|
|
|
7,511 |
|
|
|
29,936 |
|
|
|
14,822 |
|
Equity earnings in affiliates
and joint ventures |
|
|
(6,629 |
) |
|
|
(9,344 |
) |
|
|
(5,117 |
) |
|
|
(18,686 |
) |
Change in fair value of
contingent obligations |
|
|
11,563 |
|
|
|
— |
|
|
|
16,956 |
|
|
|
— |
|
Loss
(gain) on derivative financial instruments |
|
|
273 |
|
|
|
(1,852 |
) |
|
|
273 |
|
|
|
(4,361 |
) |
Income before income taxes |
|
|
19,159 |
|
|
|
14,019 |
|
|
|
34,933 |
|
|
|
44,267 |
|
Current income tax (benefit)
expense |
|
|
(1,469 |
) |
|
|
567 |
|
|
|
2,765 |
|
|
|
1,703 |
|
Deferred income tax expense |
|
|
6,621 |
|
|
|
1,190 |
|
|
|
6,792 |
|
|
|
8,456 |
|
Net income |
|
$ |
14,007 |
|
|
$ |
12,262 |
|
|
$ |
25,376 |
|
|
$ |
34,108 |
|
Other comprehensive
income |
|
|
|
|
|
|
|
|
Unrealized foreign currency translation (gain) loss |
|
|
(1,331 |
) |
|
|
417 |
|
|
|
(638 |
) |
|
|
362 |
|
Comprehensive income |
|
$ |
15,338 |
|
|
$ |
11,845 |
|
|
$ |
26,014 |
|
|
$ |
33,746 |
|
Per share information |
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.52 |
|
|
$ |
0.46 |
|
|
$ |
0.95 |
|
|
$ |
1.29 |
|
Diluted net income per share |
|
$ |
0.47 |
|
|
$ |
0.42 |
|
|
$ |
0.86 |
|
|
$ |
1.12 |
|
(i)The prior year amounts are adjusted to reflect a change in
accounting policy. See "Accounting Estimates, Pronouncements and
Measures".
|
|
|
June 30,2024 |
|
|
|
December 31,2023 |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash |
|
$ |
68,343 |
|
|
$ |
88,614 |
|
Accounts receivable |
|
|
142,451 |
|
|
|
97,855 |
|
Contract assets |
|
|
12,886 |
|
|
|
35,027 |
|
Inventories |
|
|
69,388 |
|
|
|
64,962 |
|
Prepaid expenses and deposits |
|
|
7,942 |
|
|
|
7,402 |
|
Assets held for sale |
|
|
10,707 |
|
|
|
1,340 |
|
|
|
|
311,717 |
|
|
|
295,200 |
|
Property, plant and equipment, net of accumulated depreciation of
$453,854 (December 31, 2023 – $423,345) |
|
|
1,204,091 |
|
|
|
1,142,946 |
|
Operating lease right-of-use assets |
|
|
13,962 |
|
|
|
12,782 |
|
Investments in affiliates and joint ventures |
|
|
81,206 |
|
|
|
81,435 |
|
Other
assets |
|
|
5,666 |
|
|
|
7,144 |
|
Intangible assets |
|
|
8,066 |
|
|
|
6,971 |
|
Total assets |
|
$ |
1,624,708 |
|
|
$ |
1,546,478 |
|
Liabilities and shareholders’ equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
119,742 |
|
|
$ |
146,190 |
|
Accrued liabilities |
|
|
57,100 |
|
|
|
72,225 |
|
Contract liabilities |
|
|
9 |
|
|
|
59 |
|
Current portion of long-term debt |
|
|
91,962 |
|
|
|
81,306 |
|
Current portion of contingent obligations |
|
|
32,350 |
|
|
|
22,501 |
|
Current portion of operating lease liabilities |
|
|
1,670 |
|
|
|
1,742 |
|
|
|
|
302,833 |
|
|
|
324,023 |
|
Long-term debt |
|
|
692,150 |
|
|
|
611,313 |
|
Long-term portion of contingent obligations |
|
|
81,478 |
|
|
|
93,356 |
|
Operating lease liabilities |
|
|
12,705 |
|
|
|
11,307 |
|
Other
long-term obligations |
|
|
42,103 |
|
|
|
41,001 |
|
Deferred tax liabilities |
|
|
113,808 |
|
|
|
108,824 |
|
|
|
|
1,245,077 |
|
|
|
1,189,824 |
|
Shareholders' equity |
|
|
|
|
Common shares (authorized – unlimited number of voting common
shares; issued and outstanding – June 30, 2024 - 27,827,282
(December 31, 2023 – 27,827,282)) |
|
|
229,455 |
|
|
|
229,455 |
|
Treasury shares (June 30, 2024 - 1,097,940 (December 31, 2023 -
1,090,187)) |
|
|
(16,394 |
) |
|
|
(16,165 |
) |
Additional paid-in capital |
|
|
23,279 |
|
|
|
20,739 |
|
Retained earnings |
|
|
143,060 |
|
|
|
123,032 |
|
Accumulated other comprehensive income (loss) |
|
|
231 |
|
|
|
(407 |
) |
Shareholders' equity |
|
|
379,631 |
|
|
|
356,654 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,624,708 |
|
|
$ |
1,546,478 |
|
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