North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA)
today announced results for the first quarter ended March 31,
2024. Unless otherwise indicated, financial figures are expressed
in Canadian dollars, and comparisons are to the prior period ended
March 31, 2023.
First Quarter
2024 Highlights:
- Combined revenue of
$345.7 million compared favorably to $322.3 million in the same
period last year, is a first quarter record and reflected a second
consecutive strong operational quarter from the Australian fleet of
the MacKellar Group which was acquired on October 1, 2023.
- Reported revenue of
$297.0 million, compared to $244.3 million in the same period last
year, was primarily generated by strong equipment utilization in
Australia but was offset by lower equipment operating hours in the
oil sands region due to remobilizing and repositioning of the heavy
equipment fleet.
- Our net share of
revenue from equity consolidated joint ventures was $48.7 million
in Q1 2024 and compared to $78.0 million in the same period last
year as the prior period included significant project scopes
related to the gold mine in Northern Ontario which was completed in
Q3 2023.
- Adjusted EBITDA of
$93.3 million and margin of 27.0% compared favorably to the prior
period operating metrics of $84.6 million and 26.3%, respectively,
as revenue increases drove higher gross EBITDA with margin
improvements driven by operating performances in Australia.
- Combined gross
profit of $62.2 million and margin of 18.0% compared favorably to
the $55.9 million and 17.3% metrics posted in the same period last
year. The margin increases reflect strategic diversification
efforts as all growth segments contributed to posting a higher
overall combined margin in the quarter.
- Cash flows generated
from operating activities of $11.9 million was lower than the $31.8
million posted in the prior period as higher cash generation from
the strong EBITDA was more than offset by the temporary impact of
changes to working capital in the quarter.
- Free cash flow used
in the quarter was $36.4 million. Free cash flow prior to working
capital changes and joint venture cash management was over $20
million, resulting from strong revenues and margins offset by our
front-loaded annual capital maintenance program.
- Net debt was $781.4
million at March 31, 2024, an increase of $58.0 million from
December 31, 2023, as free cash flow usage required debt
financing. The cash-related interest rate during the quarter on our
debt was 9.1% due to Bank of Canada posted rates and the correlated
impact on equipment financing rates.
- Additional
highlights during the quarter: i) contractual backlog increased
$294 million to over $3.0 billion for the first time in company
history; ii) based on contractual volumes in Australia, transport
of approximately 20 haul trucks commenced with commissioning
expected in late Q3; ii) steady progress on the ERP implementation
in Australia with a targeted go-live of September 1; and iii) the
telematics project implemented operational tracking, which
supplements maintenance monitoring, and began work on installations
in Australia.
"Our first quarter performance was in line with our EBITDA
guidance, slightly exceeding 20% of our annual estimate. Our
operations teams continue working diligently to optimize the
utilization of and returns on our heavy equipment assets through an
increased bid pipeline overall and, more specifically, some
fantastic Australian opportunities with long-term commitments and
blue-chip customers,” said Joe Lambert, President and CEO.
"This year's quarterly results will vary significantly from
historical averages with a ramp up from now to Q3 peak EBITDA and
an expected approximate 45/55 split between first and second half
of the year, but we remain confident and committed in delivering
into our guidance range and setting ourselves up for improving
utilization and return on our assets for many years to come.”
Consolidated Financial Highlights
| |
|
Three months ended |
|
|
|
|
|
March 31, |
|
|
|
(dollars in thousands, except per share amounts) |
|
|
2024 |
|
|
|
2023(iii) |
|
|
|
Change |
|
|
Revenue |
|
$ |
297,026 |
|
|
$ |
244,329 |
|
|
$ |
52,697 |
|
| Cost of sales |
|
|
199,795 |
|
|
|
166,844 |
|
|
|
32,951 |
|
|
Depreciation |
|
|
43,941 |
|
|
|
36,385 |
|
|
|
7,556 |
|
|
Gross profit |
|
$ |
53,290 |
|
|
$ |
41,100 |
|
|
$ |
12,190 |
|
| Gross profit margin(i) |
|
|
17.9 |
% |
|
|
16.8 |
% |
|
|
1.1 |
% |
| General and administrative
expenses (excluding stock-based compensation)(i) |
|
|
11,145 |
|
|
|
8,243 |
|
|
|
2,902 |
|
| Stock-based compensation
expense |
|
|
3,608 |
|
|
|
5,936 |
|
|
|
(2,328 |
) |
| Operating income |
|
|
38,276 |
|
|
|
25,708 |
|
|
|
12,568 |
|
| Interest expense, net |
|
|
15,597 |
|
|
|
7,311 |
|
|
|
8,286 |
|
| Net income |
|
|
11,369 |
|
|
|
21,846 |
|
|
|
(10,477 |
) |
| |
|
|
|
|
|
|
| Adjusted EBITDA(i) |
|
|
93,251 |
|
|
|
84,622 |
|
|
|
8,629 |
|
| Adjusted EBITDA
margin(i)(iii) |
|
|
27.0 |
% |
|
|
26.3 |
% |
|
|
0.7 |
% |
| |
|
|
|
|
|
|
| Per share
information |
|
|
|
|
|
|
| Basic net income per
share |
|
$ |
0.43 |
|
|
$ |
0.83 |
|
|
$ |
(0.40 |
) |
| Diluted net income per
share |
|
$ |
0.39 |
|
|
$ |
0.71 |
|
|
$ |
(0.32 |
) |
|
Adjusted EPS(i) |
|
$ |
0.78 |
|
|
$ |
0.96 |
|
|
$ |
(0.18 |
) |
(i)See "Non-GAAP Financial Measures".(ii)Adjusted EBITDA margin
is calculated using adjusted EBITDA over total combined revenue.
(iii)The prior year amounts are adjusted to reflect a change in
accounting policy. See "Accounting Estimates, Pronouncements and
Measures".
| |
|
|
| |
|
Three months ended |
|
|
|
March 31, |
|
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
Cash provided by operating activities |
|
$ |
11,866 |
|
|
$ |
31,824 |
|
|
Cash used in investing activities |
|
|
(56,733 |
) |
|
|
(40,917 |
) |
|
Effect of exchange rate on changes in cash |
|
|
(2,368 |
) |
|
|
55 |
|
| Add back of growth and
non-cash items included in the above figures: |
|
|
|
|
|
Growth capital additions(i) |
|
|
19,607 |
|
|
|
— |
|
|
Non-cash changes in fair value of contingent obligations |
|
|
5,393 |
|
|
|
— |
|
| Capital
additions financed by leases(i) |
|
|
(14,156 |
) |
|
|
(17,020 |
) |
|
Free cash flow(i) |
|
$ |
(36,391 |
) |
|
$ |
(26,058 |
) |
(i)See "Non-GAAP Financial Measures".
Declaration of Quarterly Dividend
On April 30th, 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 May 31, 2024.
The Dividend will be paid on July 5, 2024, and is an eligible
dividend for Canadian income tax purposes.
2024 Sustainability Report
On May 1, 2024, we have released our 2024
Sustainability Report. This annual report provides our structured
framework for environmental, social, and governance initiatives
moving forward. This report allows stakeholders to measure progress
in a variety of business areas with increasing rigor and metrics.
The 2024 Sustainability Report is available for download on the
company’s website at www.nacg.ca/about-us/sustainability.
Results for the Three Months
Ended March 31, 2024
Revenue of $297.0 million represented a $52.7 million (or 22%)
increase from Q1 2023 as a result of the acquisition of the
MacKellar Group ("MacKellar"). Following the October 1, 2023
acquisition, MacKellar completed its second full quarter of revenue
since the change in control and posted another strong quarter with
top-line results in the first quarter of 2024 similar to that of
the fourth quarter of 2023. Significant rainfall carried into
January and early February and impacted MacKellar's top-line but,
in general and like Q4 2023, the revenue achieved was consistent
with acquisition expectations. The most significant mine sites for
the MacKellar fleet remain the Carmichael and Middlemount mines,
located in the Queensland region, which both provided strong
contributions in the quarter.
Equipment utilization in the oil sands region, within the Heavy
Equipment - Canada segment, of 53% drove a 30% quarter-over-quarter
reduction in equipment related revenue from that region's heavy
equipment fleet. Fleet remobilization and repositioning, primarily
from the Fort Hills mine to the Millennium mine, in February and
early March reduced productive operating hours and associated
revenues. Offsetting these decreases, revenues generated in the
quarter by DGI Trading Pty Ltd. ("DGI"), within the Heavy Equipment
- Australia Segment, were higher than Q1 2023 reflecting strong
international demand for used components and major parts required
by heavy equipment fleets.
Combined revenue of $345.7 million represented a $23.4 million
(or 7%) increase from Q1 2023. Our share of revenue generated in
the quarter by joint ventures and affiliates was $48.7 million,
compared to $78.0 million in Q1 2023 (a decrease of 38%) as the
completion of the gold mine project in Northern Ontario was only
partially offset by increases within the Fargo joint venture. The
Fargo project progressed on schedule during the quarter with modest
top-line revenue reflecting the expected impact of winter
conditions on civil earth-moving scopes.
Adjusted EBITDA of $93.3 million was an increase of $8.6
million, or 10%, from the Q1 2023 result of $84.6 million, slightly
better than the aforementioned combined revenue increase of 7% due
to quarter-over-quarter margin improvements. Adjusted EBITDA margin
of 27% was higher than Q1 2023 primarily due to margins posted by
the MacKellar fleets which again exceeded 30% in the quarter.
Continued rainfall in Queensland, Australia into January and
February impacted margins in those months due to reduced operating
hours but steady, effective operations in March provided for a
strong overall quarter.
Margins in the Heavy Equipment - Canada segment were notably
impacted by fixed and indirect costs incurred during remobilization
efforts but benefited from a strong March as equipment was
commissioned and usage stabilized. For the installed and mobilized
heavy equipment fleet, favourable operating and haul road
conditions, typical for the winter season, allowed for effective
operation at the Millennium, Kearl and Fort Hills mines under
primarily time and material and rental based contract
structures.
Restructuring efforts within the Nuna Group of Companies were
fully completed during the quarter. Newly installed leadership has
brought an operational focus and redirected resources as required.
The projects in Northern BC and the Northwest Territories were
finalized and debrief sessions held with operational personnel to
ensure lessons learned. Adjusted EBITDA margin of less than 10%
illustrates project execution challenges with one-time charges
removed to reflect operational performance in the quarter.
Restructuring expenses incurred in the quarter relate primarily to
severance costs and one-time expenses required to complete legacy
projects.
Depreciation of our equipment fleet was 14.8% of revenue in the
quarter, compared to 14.9% in Q1 2023. The Heavy Equipment - Canada
fleet averaged approximately 19.5% of revenue due to remobilization
efforts. This is offset by depreciation on the Heavy Equipment -
Australia fleet, which averaged approximately 9.8% of revenue,
largely driven by MacKellar depreciation of 10.5% of revenue in the
quarter reflecting both productive operations in the quarter as
well as the depreciation of fair market values allocated upon
purchase. On a combined basis, depreciation averaged 13.9% of
combined revenue in the quarter as the lower capital intensity in
Fargo and Nuna joint ventures modestly reduced the ratio based on
the MacKellar fleet's increasing prominence.
General and administrative expenses (excluding stock-based
compensation) were $11.1 million, or 3.8% of revenue compared to
$8.2 million, or 3.4% of revenue in Q1 2023. The acquisition of
MacKellar did not impact the run rate expectation of administrative
expenses being less than 4% of revenue.
Cash related interest expense incurred on our debt for the
quarter was $13.5 million at an average cost of debt of 9.1%,
compared to 6.7% in Q1 2023, as rate increases posted by the Bank
of Canada directly impact our Credit Facility and have a delayed
impact on the rates for secured equipment-backed financing.
Adjusted earnings per share ("EPS") of $0.78 and adjusted net
earnings of $20.9 million were down 19% and 17% from the prior year
figures of $0.96 and $25.3 million, respectively. The $4.4 million
decrease in adjusted net earnings is due to the higher EBITDA and
lower incomes taxes being more than offset by the higher interest
and depreciation expenses associated with the debt assumed and
fleet acquired upon acquisition of MacKellar.
Weighted-average common shares outstanding for the first
quarters of 2024 and 2023 are comparable at 26,733,473 and
26,415,004, respectively, and were not a factor in the earnings per
share variance.
Free cash flow was a use of cash of $36.4 million in the quarter
primarily due to the consumption of $62.0 million by our working
capital accounts. This working capital draw on cash is higher than
Q1 2023 primarily due to the increased size of our business.
Adjusted EBITDA generated $93.3 million and when factoring in
sustaining capital additions ($59.9 million) and cash interest paid
($12.4 million), positive cash of $21.0 million was generated by
the overall business in the quarter.
Business Updates
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 $236.3 million includes total liquidity of
$158.1 million and $62.1 million of unused finance lease borrowing
availability as at March 31, 2024. Liquidity is primarily
provided by the terms of our $474.3 million credit facility which
allows for funds availability based on a trailing twelve-month
EBITDA as defined in the agreement, and is now scheduled to expire
in October, 2025.
|
|
|
|
March 31,2024 |
|
|
|
December 31,2023 |
|
|
Cash |
|
$ |
80,095 |
|
|
$ |
88,614 |
|
| Credit Facility borrowing
limit |
|
|
474,260 |
|
|
|
478,022 |
|
| Credit Facility drawn |
|
|
(364,260 |
) |
|
|
(317,488 |
) |
| Letters
of credit outstanding |
|
|
(32,045 |
) |
|
|
(31,272 |
) |
|
Cash liquidity(i) |
|
$ |
158,050 |
|
|
$ |
217,876 |
|
|
Finance lease borrowing limit |
|
|
350,000 |
|
|
|
350,000 |
|
| Other debt borrowing
limit |
|
|
20,000 |
|
|
|
20,000 |
|
| Equipment financing drawn |
|
|
(220,187 |
) |
|
|
(220,466 |
) |
|
Guarantees provided to joint ventures |
|
|
(71,600 |
) |
|
|
(74,831 |
) |
|
Total capital liquidity(i) |
|
$ |
236,263 |
|
|
$ |
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) |
|
$1.5 - $1.7B |
| Adjusted EBITDA(i) |
|
$430 - $470M |
| Sustaining capital(i) |
|
$170 - $190M |
| Adjusted EPS(i) |
|
$4.25 - $4.75 |
| Free cash flow(i) |
|
$160 - $185M |
| |
|
|
|
Capital allocation |
|
|
|
Growth spending(i) |
|
$55 - $70M |
| Net
debt leverage(i) |
|
Targeting 1.5x |
(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
March 31, 2024, tomorrow, Thursday, May 2, 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: 92465
A replay will be available through June 3, 2024, by dialing:
Toll Free: 1-888-660-6264 Conference
ID: 92465Playback Passcode: 92465
The Q1 2024 earnings presentation for the webcast will be
available for download on the company’s website at
https://nacg.ca/presentations/
The live presentation and webcast can be accessed at: North
American Construction Group Ltd. First Quarter Results Conference
Call Registration (onlinexperiences.com)A replay will be available
until June 3, 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 March 31, 2024, for further detail on the matters
discussed in this release. In addition to the MD&A, please
reference the dedicated Q1 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.
The material factors or assumptions used to develop the above
forward-looking statements include, and the risks and uncertainties
to which such forward-looking statements are subject, are
highlighted in the MD&A for the three months ended March 31,
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 |
|
|
|
March 31, |
|
(dollars in thousands) |
|
|
2024 |
|
|
|
2023(ii) |
|
|
Revenue from wholly-owned entities per financial statements |
|
$ |
297,026 |
|
|
$ |
244,329 |
|
| Share of revenue from
investments in affiliates and joint ventures |
|
|
125,838 |
|
|
|
189,485 |
|
|
Elimination of joint venture subcontract revenue |
|
|
(77,151 |
) |
|
|
(111,473 |
) |
|
Total combined revenue(i) |
|
$ |
345,713 |
|
|
$ |
322,341 |
|
(i)See "Non-GAAP Financial Measures".(ii)The prior year amounts
are adjusted to reflect a change in accounting policy. See
"Accounting Estimates, Pronouncements and Measures".
Reconciliation of reported gross profit to combined
gross profit
| |
|
Three months ended |
|
|
|
March 31, |
|
(dollars in thousands) |
|
|
2024 |
|
|
|
2023(ii) |
|
|
Gross profit from wholly-owned entities per financial
statements |
|
$ |
53,290 |
|
|
$ |
41,100 |
|
| Share
of gross profit from investments in affiliates and joint
ventures |
|
|
8,935 |
|
|
|
14,819 |
|
|
Combined gross profit(i) |
|
$ |
62,225 |
|
|
$ |
55,919 |
|
(i)See "Non-GAAP Financial Measures".(ii)The prior year amounts
are adjusted to reflect a change in accounting policy. See
"Accounting Estimates, Pronouncements and Measures".
Reconciliation of net income to adjusted net earnings,
adjusted EBIT and adjusted EBITDA
| |
|
Three months ended |
|
|
|
March 31, |
|
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
|
Net income |
|
$ |
11,369 |
|
|
$ |
21,846 |
|
| Adjustments: |
|
|
|
|
|
Loss on disposal of property, plant and equipment |
|
|
261 |
|
|
|
1,213 |
|
|
Stock-based compensation expense |
|
|
3,608 |
|
|
|
5,936 |
|
|
Change in fair value of contingent obligations |
|
|
1,438 |
|
|
|
— |
|
|
Restructuring costs |
|
|
4,517 |
|
|
|
— |
|
|
Gain on derivative financial instruments |
|
|
— |
|
|
|
(2,509 |
) |
|
Net unrealized loss on derivative financial instrumentsincluded in
equity earnings in affiliates and joint ventures |
|
|
1,954 |
|
|
|
434 |
|
|
Tax effect of the above items |
|
|
(2,260 |
) |
|
|
(1,644 |
) |
|
Adjusted net earnings(i) |
|
|
20,887 |
|
|
|
25,276 |
|
| Adjustments: |
|
|
|
|
|
Tax effect of the above items |
|
|
2,260 |
|
|
|
1,644 |
|
|
Amortization of fair value of contingent obligations |
|
|
3,955 |
|
|
|
— |
|
|
Interest expense, net |
|
|
15,597 |
|
|
|
7,311 |
|
|
Income tax expense |
|
|
4,405 |
|
|
|
8,402 |
|
|
Equity loss (earnings) in affiliates and joint
ventures(i)(iii) |
|
|
1,512 |
|
|
|
(9,342 |
) |
|
Equity investment EBIT(i)(iii) |
|
|
(3,768 |
) |
|
|
9,783 |
|
|
Adjusted EBIT(i) |
|
|
44,848 |
|
|
|
43,074 |
|
| Adjustments: |
|
|
|
|
|
Depreciation and amortization |
|
|
44,241 |
|
|
|
36,691 |
|
|
Equity investment depreciation and amortization |
|
|
4,162 |
|
|
|
4,857 |
|
|
Adjusted EBITDA(i) |
|
$ |
93,251 |
|
|
$ |
84,622 |
|
|
Adjusted EBITDA margin(ii) |
|
|
27.0 |
% |
|
|
26.3 |
% |
(i)See "Non-GAAP Financial Measures".(ii)Adjusted EBITDA margin
is calculated using adjusted EBITDA over total combined
revenue.(iii)The prior year amounts are adjusted to reflect a
change in accounting policy. See "Accounting Estimates,
Pronouncements and Measures".
Reconciliation of equity earnings in affiliates and
joint ventures to equity investment EBIT
| |
|
Three months ended |
|
|
|
March 31, |
|
(dollars in thousands) |
|
|
2024 |
|
|
|
2023(ii) |
|
|
Equity (loss) earnings in affiliates and joint ventures |
|
$ |
(1,512 |
) |
|
$ |
9,342 |
|
| Adjustments: |
|
|
|
|
|
Interest (income) expense, net |
|
|
(573 |
) |
|
|
357 |
|
|
Income tax (benefit) expense |
|
|
(1,508 |
) |
|
|
124 |
|
|
Gain on disposal of property, plant and equipment |
|
|
(175 |
) |
|
|
(40 |
) |
|
Equity investment EBIT(i) |
|
$ |
(3,768 |
) |
|
$ |
9,783 |
|
(i)See "Non-GAAP Financial Measures".(ii)The prior year amounts
are adjusted to reflect a change in accounting policy. See
"Accounting Estimates, Pronouncements and Measures".
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 Veenstra, CPA, CAChief Financial OfficerNorth American
Construction Group Ltd.(780) 960-7171IR@nacg.cawww.nacg.ca
Interim Consolidated Balance Sheets
(Expressed in thousands of Canadian Dollars)(Unaudited)
|
|
|
|
March 31,2024 |
|
|
|
December 31,2023 |
|
|
Assets |
|
|
|
|
| Current assets |
|
|
|
|
|
Cash |
|
$ |
80,095 |
|
|
$ |
88,614 |
|
|
Accounts receivable |
|
|
138,451 |
|
|
|
97,855 |
|
|
Contract assets |
|
|
15,874 |
|
|
|
35,027 |
|
|
Inventories |
|
|
68,876 |
|
|
|
64,962 |
|
|
Prepaid expenses and deposits |
|
|
7,946 |
|
|
|
7,402 |
|
|
Assets held for sale |
|
|
1,257 |
|
|
|
1,340 |
|
|
|
|
|
312,499 |
|
|
|
295,200 |
|
| Property, plant and equipment,
net of accumulated depreciation of $442,247 (December 31, 2023 –
$423,345) |
|
|
1,165,183 |
|
|
|
1,142,946 |
|
| Operating lease right-of-use
assets |
|
|
14,402 |
|
|
|
12,782 |
|
| Intangible assets |
|
|
7,614 |
|
|
|
6,971 |
|
| Investments in affiliates and
joint ventures |
|
|
74,498 |
|
|
|
81,435 |
|
| Other
assets |
|
|
6,015 |
|
|
|
7,144 |
|
|
Total assets |
|
$ |
1,580,211 |
|
|
$ |
1,546,478 |
|
|
Liabilities and shareholders’ equity |
|
|
|
|
| Current liabilities |
|
|
|
|
|
Accounts payable |
|
$ |
124,017 |
|
|
$ |
146,190 |
|
|
Accrued liabilities |
|
|
61,502 |
|
|
|
72,225 |
|
|
Contract liabilities |
|
|
1,366 |
|
|
|
59 |
|
|
Current portion of long-term debt |
|
|
84,178 |
|
|
|
81,306 |
|
|
Current portion of contingent obligations |
|
|
27,258 |
|
|
|
22,501 |
|
|
Current portion of operating lease liabilities |
|
|
1,891 |
|
|
|
1,742 |
|
|
|
|
|
300,212 |
|
|
|
324,023 |
|
| Long-term debt |
|
|
654,953 |
|
|
|
611,313 |
|
| Long-term portion of
contingent obligations |
|
|
91,834 |
|
|
|
93,356 |
|
| Operating lease
liabilities |
|
|
12,868 |
|
|
|
11,307 |
|
| Other long-term
obligations |
|
|
45,738 |
|
|
|
41,001 |
|
|
Deferred tax liabilities |
|
|
108,661 |
|
|
|
108,824 |
|
|
|
|
|
1,214,266 |
|
|
|
1,189,824 |
|
|
Shareholders' equity |
|
|
|
|
| Common shares (authorized –
unlimited number of voting common shares; issued and outstanding –
March 31, 2024 - 27,827,282 (December 31, 2023 – 27,827,282)) |
|
|
229,455 |
|
|
|
229,455 |
|
| Treasury shares (March 31,
2024 - 1,094,163 (December 31, 2023 - 1,090,187)) |
|
|
(16,277 |
) |
|
|
(16,165 |
) |
| Additional paid-in
capital |
|
|
22,140 |
|
|
|
20,739 |
|
| Retained earnings |
|
|
131,727 |
|
|
|
123,032 |
|
|
Accumulated other comprehensive income |
|
|
(1,100 |
) |
|
|
(407 |
) |
|
Shareholders' equity |
|
|
365,945 |
|
|
|
356,654 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
1,580,211 |
|
|
$ |
1,546,478 |
|
Interim Consolidated Statements of Operations and
Comprehensive Income
(Expressed in thousands of Canadian Dollars, except per share
amounts)(Unaudited)
| |
|
Three months ended |
|
|
|
March 31, |
|
|
|
|
2024 |
|
|
|
2023(i) |
|
|
Revenue |
|
$ |
297,026 |
|
|
$ |
244,329 |
|
| Cost of sales |
|
|
199,795 |
|
|
|
166,844 |
|
|
Depreciation |
|
|
43,941 |
|
|
|
36,385 |
|
|
Gross profit |
|
|
53,290 |
|
|
|
41,100 |
|
| General and administrative
expenses |
|
|
14,753 |
|
|
|
14,179 |
|
| Loss on
disposal of property, plant and equipment |
|
|
261 |
|
|
|
1,213 |
|
|
Operating income |
|
|
38,276 |
|
|
|
25,708 |
|
| Equity loss (earnings) in
affiliates and joint ventures |
|
|
1,512 |
|
|
|
(9,342 |
) |
| Interest expense, net |
|
|
15,597 |
|
|
|
7,311 |
|
| Change in fair value of
contingent obligations |
|
|
5,393 |
|
|
|
— |
|
| Gain on
derivative financial instruments |
|
|
— |
|
|
|
(2,509 |
) |
|
Income before income taxes |
|
|
15,774 |
|
|
|
30,248 |
|
| Current income tax
expense |
|
|
4,234 |
|
|
|
1,136 |
|
|
Deferred income tax expense |
|
|
171 |
|
|
|
7,266 |
|
|
Net income |
|
$ |
11,369 |
|
|
$ |
21,846 |
|
| Other comprehensive
income |
|
|
|
|
|
Unrealized foreign currency translation loss (gain) |
|
|
693 |
|
|
|
(55 |
) |
|
Comprehensive income |
|
$ |
10,676 |
|
|
$ |
21,901 |
|
|
Per share information |
|
|
|
|
|
Basic net income per share |
|
$ |
0.43 |
|
|
$ |
0.83 |
|
|
Diluted net income per share |
|
$ |
0.39 |
|
|
$ |
0.71 |
|
(i)The prior year amounts are adjusted to reflect a change in
accounting policy. See "Accounting Estimates, Pronouncements and
Measures".
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