North American Construction Group Ltd. ("NACG")
(TSX:NOA.TO/NYSE:NOA) today announced results for the third quarter
ended September 30, 2024. Unless otherwise indicated,
financial figures are expressed in Canadian dollars and compared to
the prior period ended September 30, 2023.
Third Quarter
2024 Highlights:
-
Combined revenue of $367.2 million compared favorably to $274.8
million in the same period last year, is a third quarter record,
and reflected the best operational quarter to date from the
Australian fleet of the MacKellar Group which was acquired on
October 1, 2023.
-
Reported revenue of $286.9 million, compared to $196.9 million in
the same period last year, was primarily driven by strong equipment
utilization of 84% in Australia but was also supported by the
Canadian heavy equipment fleet which posted an increase from 2024
Q2.
- Our
net share of revenue from equity consolidated joint ventures was
$80.3 million in 2024 Q3 and compared to $77.9 million in the same
period last year as the increases at the Fargo project in the
current quarter were offset by gold mine project scopes in Northern
Ontario completed in the prior quarter.
-
Adjusted EBITDA of $106.4 million and margin of 29.0% compared
favorably to the prior period operating metrics of $59.4 million
and 21.6%, respectively, as revenue increases resulted in higher
gross EBITDA with margin improvements driven by effective
operations in Australia and Canada.
-
Combined gross profit of $80.4 million and margin of 21.9% compares
favorably to the 13.8% posted in the same period last year as both
diversification efforts and effective operations during steady and
consistent months contributed to improved margins in the
quarter.
-
Cash flows generated from operating activities of $48.2 million was
higher than the $37.5 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 generated in the quarter was $10.8 million. Free
cash flow prior to working capital changes and increases in capital
work in progress was over $55 million resulting from strong
revenues and margins offset by our routine capital maintenance
programs.
- Net
debt was $882.5 million at September 30, 2024, an increase of
$159.1 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 6.5% driven by Bank of Canada
posted rates and corresponding equipment financing rates.
- On
October 29, 2024, the Board of Directors declared a regular
quarterly dividend of twelve cents which represents a 20% increase
from the previous rate of ten cents per quarter.
-
Additional highlights include: i) in August, signed a $375 million
five-year contract for fully maintained equipment fleet in
Queensland; ii) in September, surpassed the 50% completion mark at
the Fargo-Moorhead flood diversion project, iii) in October,
completed delivery to site of twenty-five haul trucks from Canada
to Australia; iv) commenced go-live activities for the Company's
ERP system in Australia phased integration ongoing through early
November and iv) extended the credit facility agreement through to
October 2027.
Joe Lambert, President and CEO, stated, "I would
like to thank our operations team for their safe and efficient
performance this quarter. The quarterly records set in Australia
demonstrate both growth and operational excellence. The recent
five-year contract award and the 25 trucks delivered from Fort
McMurray have pushed this region to higher than 50% of our overall
business and are further indicators of what will be an exciting
2025. In the oil sands region, we are in discussions with producers
and expect to secure meaningful contracts in the near term,
reaffirming strong client relationships and supporting our targets
for next year."
Consolidated Financial
Highlights
| |
|
Three months ended |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
(dollars in thousands, except per share amounts) |
|
2024 |
|
2023(iv) |
|
2024 |
|
2023(iv) |
|
Revenue |
|
$ |
286,857 |
|
|
$ |
196,881 |
|
|
$ |
860,197 |
|
|
$ |
636,398 |
|
|
Total combined revenue(i) |
|
|
367,155 |
|
|
|
274,757 |
|
|
|
1,042,591 |
|
|
|
875,666 |
|
| |
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
65,098 |
|
|
|
26,518 |
|
|
|
168,057 |
|
|
|
89,213 |
|
|
Gross profit margin(i) |
|
|
22.7 |
% |
|
|
13.5 |
% |
|
|
19.5 |
% |
|
|
14.0 |
% |
| |
|
|
|
|
|
|
|
|
|
Combined gross profit(i) |
|
|
80,415 |
|
|
|
38,004 |
|
|
|
205,229 |
|
|
|
130,181 |
|
|
Combined gross profit margin(i)(ii) |
|
|
21.9 |
% |
|
|
13.8 |
% |
|
|
19.7 |
% |
|
|
14.9 |
% |
| |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
53,805 |
|
|
|
14,344 |
|
|
|
130,786 |
|
|
|
50,386 |
|
| |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(i)(iii) |
|
|
106,384 |
|
|
|
59,371 |
|
|
|
286,516 |
|
|
|
195,827 |
|
|
Adjusted EBITDA margin(i)(iii) |
|
|
29.0 |
% |
|
|
21.6 |
% |
|
|
27.5 |
% |
|
|
22.4 |
% |
| |
|
|
|
|
|
|
|
|
|
Net income |
|
|
13,901 |
|
|
|
11,387 |
|
|
|
39,277 |
|
|
|
45,495 |
|
|
Adjusted net earnings(i) |
|
|
31,253 |
|
|
|
14,295 |
|
|
|
72,961 |
|
|
|
52,060 |
|
| |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
48,184 |
|
|
|
37,512 |
|
|
|
119,063 |
|
|
|
109,521 |
|
|
Cash provided by operating activities prior to change in working
capital(i) |
|
|
79,838 |
|
|
|
41,666 |
|
|
|
222,641 |
|
|
|
134,646 |
|
| |
|
|
|
|
|
|
|
|
|
Free cash flow(i) |
|
|
10,785 |
|
|
|
8,940 |
|
|
|
(32,518 |
) |
|
|
(21,817 |
) |
| |
|
|
|
|
|
|
|
|
|
Purchase of PPE |
|
|
61,812 |
|
|
|
39,295 |
|
|
|
203,772 |
|
|
|
114,210 |
|
|
Sustaining capital additions(i) |
|
|
21,127 |
|
|
|
42,290 |
|
|
|
118,317 |
|
|
|
127,792 |
|
|
Growth capital additions(i) |
|
|
21,437 |
|
|
|
1,727 |
|
|
|
60,987 |
|
|
|
4,475 |
|
| |
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.52 |
|
|
$ |
0.43 |
|
|
$ |
1.47 |
|
|
$ |
1.72 |
|
|
Adjusted EPS(i) |
|
$ |
1.17 |
|
|
$ |
0.54 |
|
|
$ |
2.73 |
|
|
$ |
1.96 |
|
(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 |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
(dollars in thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
$ |
48,184 |
|
|
$ |
37,512 |
|
|
$ |
119,063 |
|
|
$ |
109,521 |
|
|
Cash used in investing activities |
|
|
(60,221 |
) |
|
|
(26,970 |
) |
|
|
(198,919 |
) |
|
|
(107,123 |
) |
|
Effect of exchange rate on changes in cash |
|
|
1,385 |
|
|
|
(1,100 |
) |
|
|
508 |
|
|
|
(1,462 |
) |
|
Add back of growth and non-cash items included in the above
figures: |
|
|
|
|
|
|
|
|
|
Growth capital additions(i)(ii) |
|
|
21,437 |
|
|
|
1,727 |
|
|
|
60,987 |
|
|
|
4,475 |
|
|
Capital additions financed by leases(i) |
|
|
— |
|
|
|
(2,229 |
) |
|
|
(14,157 |
) |
|
|
(27,228 |
) |
|
Free cash flow(i) |
|
$ |
10,785 |
|
|
$ |
8,940 |
|
|
$ |
(32,518 |
) |
|
$ |
(21,817 |
) |
(i)See "Non-GAAP Financial Measures".(ii)Included
above in Cash used in investing activities.Declaration of
Quarterly Dividend
On October 29, 2024, the NACG Board of
Directors declared a regular quarterly dividend (the "Dividend") of
twelve Canadian cents ($0.12) per common share, payable to common
shareholders of record at the close of business on November 27,
2024. The Dividend will be paid on January 3, 2025, and is an
eligible dividend for Canadian income tax purposes.
Financial Results for the Three Months
Ended September 30, 2024
Revenue for 2024 Q3 of $286.9 million represented
an increase of approximately $90.0 million (or 46%) from 2023 Q3.
The increase is primarily due to the inclusion of results from the
MacKellar Group ("MacKellar") following our acquisition on October
1, 2023.
The Heavy Equipment - Australia segment showed
strong performance, driven by MacKellar’s Q3 results generated from
stable operating conditions during the quarter. Equipment
utilization of the MacKellar fleet for the quarter of 84% was
similar to 2024 Q2 but generated higher revenue as growth assets
commissioned late in the second quarter in Western Australia and
Queensland provided full quarter contributions. The month of July
was particularly strong with utilization being above the target of
85% while August and September averaged 82%. DGI Trading Pty Ltd.
("DGI") posted lower revenue in the quarter due to timing of large
component sales but 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 was 51% for the quarter in comparison to 56% in 2023
Q3. Quarter over quarter, the decrease in revenue represented a 23%
decrease and was primarily driven by changes in work scopes at the
Fort Hills and Syncrude mines offset by increases in operating
hours at the Millennium mine. Additionally, the prior year's
quarter benefited from higher utilization rates from NACG assets
being operated at the gold mine in northern Ontario, a project that
concluded in 2023 Q3. When comparing to 2024 Q2, top-line revenue
achieved in the quarter was 8% higher on consistent operating
conditions from July to September as well as increased work scopes
at the Millennium mine.
Combined revenue of $367.2 million represented a
$92.4 million (or 34%) increase from 2023 Q3. Our share of revenue
generated in 2024 Q3 by joint ventures and affiliates was $80.3
million, compared to $77.9 million in 2023 Q3. The Fargo-Moorhead
flood diversion project, which completed another strong operational
quarter, posted a 32% increase from scopes completed in the prior
quarter and surpassed the 50% completion mark during the quarter.
Mostly offsetting this variance was the completion of the gold mine
project in northern Ontario which occurred in 2023 Q3.
Combined gross profit and margin of $80.4 million
and 21.9% compares favorably to the $38.0 million and 13.8% posted
in the prior quarter and was the compilation of strong operations
across all business lines. In particular, consistent weather
conditions in Australia resulted in productive operations and a
24.6% gross margin over the three months. In Canada, heavy
equipment operations posted a 19.4% margin as operations stabilized
from the first half of the year. The joint ventures posted a 19.1%
margin, up from 14.7% in the prior quarter, as Nuna returned to
profitable operations. The increases in margin were offset slightly
within the Fargo joint ventures as additional costs were recognized
in the quarter primarily related to project cost escalation.
Adjusted EBITDA and the associated margin of $106.4
million and 29.0% exceeded our 2023 Q3 results of $59.4 million and
21.6%, respectively. As mentioned above and despite lower revenue
in the oil sands region, effective and efficient operation of the
heavy equipment fleets in Australia and Canada generated a strong
EBITDA margin. EBITDA margin for this quarter was more consistent
with the first quarter and is reflective of the underlying
consistent business of our heavy equipment fleets.
Depreciation of our Canadian and Australian heavy
equipment fleets was 13.4% of revenue in the quarter. Depreciation
as a percentage of revenue was 16.4% for the Heavy Equipment -
Canada fleet which is 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 11.7% of revenue 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 12.1% 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 $9.6 million, or 3.4% of revenue,
compared to $6.9 million, or 3.5% of revenue in 2023 Q3. The
increase in expenses reflects the acquisition of the MacKellar
Group. Cash related interest expense for the quarter was $14.2
million at an average cost of debt of 6.5%, compared to $7.8
million at an average cost of debt of 7.1% in 2023 Q3, 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 $15.0 million in the quarter,
compared to $8.1 million in 2023 Q3 based on the debt financing
incurred upon acquisition of the MacKellar Group on October 1,
2023.
Adjusted earnings per share ("EPS") of $1.17 on
adjusted net earnings of $31.3 million was up 117% from the prior
year figure of $0.54, consistent with the adjusted EBIT performance
which was up 144% 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 for the third
quarters of 2024 and 2023 were relatively stable at 26,823,124 and
26,700,303, respectively, net of shares classified as treasury
shares.
For the quarter, free cash flow generation was
$10.8 million, driven primarily by adjusted EBITDA of $106.4
million. After accounting for sustaining capital additions of $21.1
million, cash interest expense of $14.2 million, and cash taxes
paid of $9.3 million, the positive cash flow generation reached
$61.8 million. However, changes in working capital and increases in
capital work in progress deferred approximately $45 million of cash
flow to future quarters, and the accumulation of distributable
profits in our joint ventures negatively impacted cash flow by $10
million. Sustaining capital expenditures were focused on routine
maintenance of heavy equipment fleets in Australia and Canada, with
Canadian expenditures being lower than previous periods due to
reduced operating hours and a disciplined approach in preparation
for winter work scopes.
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 $173.1 million includes total liquidity of
$135.7 million and $20.0 million of unused finance lease borrowing
availability as at September 30, 2024. Liquidity is primarily
provided by the terms of our $485.7 million credit facility which
allows for funds availability based on a trailing twelve-month
EBITDA as defined in the agreement.
|
|
|
September 30,2024 |
|
December 31,2023 |
|
Cash |
|
$ |
77,670 |
|
|
$ |
88,614 |
|
|
Credit Facility borrowing limit |
|
|
485,700 |
|
|
|
478,022 |
|
|
Credit Facility drawn |
|
|
(395,700 |
) |
|
|
(317,488 |
) |
|
Letters of credit outstanding |
|
|
(32,011 |
) |
|
|
(31,272 |
) |
|
Cash liquidity(i) |
|
$ |
135,659 |
|
|
$ |
217,876 |
|
|
Finance lease borrowing limit |
|
|
350,000 |
|
|
|
350,000 |
|
|
Other debt borrowing limit |
|
|
20,000 |
|
|
|
20,000 |
|
|
Equipment financing drawn |
|
|
(267,544 |
) |
|
|
(220,466 |
) |
|
Guarantees provided to joint ventures |
|
|
(65,008 |
) |
|
|
(74,831 |
) |
|
Total capital liquidity(i) |
|
$ |
173,107 |
|
|
$ |
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) |
|
$85 - $95M |
|
Net debt leverage(i) |
|
Targeting 2.1x |
(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
September 30, 2024, tomorrow, Thursday, October 31, 2024,
at 7:00 am Mountain Time (9:00 am Eastern Time).
The call can be accessed by dialing:
Toll free: 1-800-717-1738
Conference ID: 86919
A replay will be available through November 29,
2024, by dialing: Toll Free:
1-888-660-6264 Conference ID:
86919 Playback Passcode:
86919
The 2024 Q3 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:
https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=71BDBAD7-6AC1-4CF9-9CFF-5BBCBBDEF924
A replay will be available until November 29, 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 September 30, 2024, for further detail
on the matters discussed in this release. In addition to the
MD&A, please reference the dedicated 2024 Q3 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 nine months ended
September 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 |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
(dollars in thousands) |
|
|
2024 |
|
2023(ii) |
|
|
2024 |
|
2023(ii) |
|
Revenue from wholly-owned entities per financial statements |
|
$ |
286,857 |
|
|
$ |
196,881 |
|
|
$ |
860,197 |
|
|
$ |
636,398 |
|
|
Share of revenue from investments in affiliates and joint
ventures |
|
|
144,574 |
|
|
|
168,667 |
|
|
|
382,789 |
|
|
|
516,637 |
|
|
Elimination of joint venture subcontract revenue |
|
|
(64,276 |
) |
|
|
(90,791 |
) |
|
|
(200,395 |
) |
|
|
(277,369 |
) |
|
Total combined revenue(i) |
|
$ |
367,155 |
|
|
$ |
274,757 |
|
|
$ |
1,042,591 |
|
|
$ |
875,666 |
|
(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 |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
(dollars in thousands) |
|
|
2024 |
|
2023(ii) |
|
|
2024 |
|
2023(ii) |
|
Gross profit from wholly-owned entities per financial
statements |
|
$ |
65,098 |
|
|
$ |
26,518 |
|
|
$ |
168,057 |
|
|
$ |
89,213 |
|
|
Share of gross profit from investments in affiliates and joint
ventures |
|
|
15,317 |
|
|
|
11,486 |
|
|
|
37,172 |
|
|
|
40,968 |
|
|
Combined gross profit(i) |
|
$ |
80,415 |
|
|
$ |
38,004 |
|
|
$ |
205,229 |
|
|
$ |
130,181 |
|
(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 |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
(dollars in thousands) |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net income |
|
$ |
13,901 |
|
|
$ |
11,387 |
|
|
$ |
39,277 |
|
|
$ |
45,495 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Loss (gain) on disposal of property, plant and equipment |
|
|
348 |
|
|
|
(311 |
) |
|
|
641 |
|
|
|
189 |
|
|
Write-down on assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
4,181 |
|
|
|
— |
|
|
Stock-based compensation (benefit) expense |
|
|
1,332 |
|
|
|
5,583 |
|
|
|
3,081 |
|
|
|
16,324 |
|
|
Change in fair value of contingent obligation from adjustments to
estimates |
|
|
17,727 |
|
|
|
— |
|
|
|
26,585 |
|
|
|
— |
|
|
Restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
4,517 |
|
|
|
— |
|
|
Acquisition costs |
|
|
— |
|
|
|
1,161 |
|
|
|
— |
|
|
|
1,161 |
|
|
Loss on equity investment customer bankruptcy claim settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
759 |
|
|
Loss (gain) on derivative financial instruments |
|
|
572 |
|
|
|
(2,618 |
) |
|
|
845 |
|
|
|
(6,979 |
) |
|
Net unrealized loss (gain) on derivative financial instruments
included in equity earnings in affiliates and joint ventures |
|
|
1,836 |
|
|
|
572 |
|
|
|
2,806 |
|
|
|
(649 |
) |
|
Tax effect of the above items |
|
|
(4,463 |
) |
|
|
(1,479 |
) |
|
|
(8,972 |
) |
|
|
(4,240 |
) |
|
Adjusted net earnings(i) |
|
|
31,253 |
|
|
|
14,295 |
|
|
|
72,961 |
|
|
|
52,060 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Tax effect of the above items |
|
|
4,463 |
|
|
|
1,479 |
|
|
|
8,972 |
|
|
|
4,240 |
|
|
Increase in fair value of contingent obligation from interest
accretion expense |
|
|
4,262 |
|
|
|
— |
|
|
|
12,360 |
|
|
|
— |
|
|
Interest expense, net |
|
|
15,003 |
|
|
|
8,119 |
|
|
|
44,939 |
|
|
|
22,941 |
|
|
Income tax expense |
|
|
6,768 |
|
|
|
1,733 |
|
|
|
16,325 |
|
|
|
11,892 |
|
|
Equity earnings in affiliates and joint ventures(iii) |
|
|
(4,428 |
) |
|
|
(4,277 |
) |
|
|
(9,545 |
) |
|
|
(22,963 |
) |
|
Equity investment EBIT(i)(iii) |
|
|
4,365 |
|
|
|
3,983 |
|
|
|
7,152 |
|
|
|
23,307 |
|
|
Adjusted EBIT(i) |
|
|
61,686 |
|
|
|
25,332 |
|
|
|
153,164 |
|
|
|
91,477 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
38,662 |
|
|
|
28,884 |
|
|
|
122,844 |
|
|
|
90,239 |
|
|
Write-down on assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
(4,181 |
) |
|
|
— |
|
|
Equity investment depreciation and amortization(i) |
|
|
6,036 |
|
|
|
5,155 |
|
|
|
14,689 |
|
|
|
14,111 |
|
|
Adjusted EBITDA(i) |
|
$ |
106,384 |
|
|
$ |
59,371 |
|
|
$ |
286,516 |
|
|
$ |
195,827 |
|
|
Adjusted EBITDA
margin(i)(ii) |
|
|
29.0 |
% |
|
|
21.6 |
% |
|
|
27.5 |
% |
|
|
22.4 |
% |
(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 presentation. See "Accounting Estimates,
Pronouncements and Measures".
Reconciliation of equity earnings in
affiliates and joint ventures to equity investment
EBIT
| |
|
Three months ended |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
(dollars in thousands) |
|
|
2024 |
|
2023(ii) |
|
|
2024 |
|
2023(ii) |
|
Equity earnings in affiliates and joint ventures |
|
$ |
4,428 |
|
|
$ |
4,277 |
|
|
$ |
9,545 |
|
|
$ |
22,963 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Interest (income) expense, net |
|
|
(618 |
) |
|
|
(742 |
) |
|
|
(1,337 |
) |
|
|
(915 |
) |
|
Income tax expense |
|
|
738 |
|
|
|
448 |
|
|
|
(698 |
) |
|
|
1,294 |
|
|
Loss (gain) on disposal of property, plant and equipment |
|
|
(183 |
) |
|
|
— |
|
|
|
(358 |
) |
|
|
(35 |
) |
|
Equity investment EBIT(i) |
|
$ |
4,365 |
|
|
$ |
3,983 |
|
|
$ |
7,152 |
|
|
$ |
23,307 |
|
(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.ca
Interim Consolidated Balance Sheets
(Expressed in thousands of Canadian
Dollars)(Unaudited)
|
|
|
September 30,2024 |
|
December 31,2023 |
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash |
|
$ |
77,670 |
|
|
$ |
88,614 |
|
|
Accounts receivable |
|
|
158,179 |
|
|
|
97,855 |
|
|
Contract assets |
|
|
16,128 |
|
|
|
35,027 |
|
|
Inventories |
|
|
77,150 |
|
|
|
64,962 |
|
|
Prepaid expenses and deposits |
|
|
8,477 |
|
|
|
7,402 |
|
|
Assets held for sale |
|
|
7,355 |
|
|
|
1,340 |
|
|
|
|
|
344,959 |
|
|
|
295,200 |
|
|
Property, plant and equipment, net of accumulated depreciation of
$474,655 (December 31, 2023 – $423,345) |
|
|
1,235,447 |
|
|
|
1,142,946 |
|
|
Operating lease right-of-use assets |
|
|
13,404 |
|
|
|
12,782 |
|
|
Investments in affiliates and joint ventures |
|
|
85,192 |
|
|
|
81,435 |
|
|
Other assets |
|
|
5,082 |
|
|
|
7,144 |
|
|
Intangible assets |
|
|
10,052 |
|
|
|
6,971 |
|
|
Total assets |
|
$ |
1,694,136 |
|
|
$ |
1,546,478 |
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
|
$ |
123,110 |
|
|
$ |
146,190 |
|
|
Accrued liabilities |
|
|
47,724 |
|
|
|
72,225 |
|
|
Contract liabilities |
|
|
300 |
|
|
|
59 |
|
|
Current portion of long-term debt |
|
|
94,485 |
|
|
|
81,306 |
|
|
Current portion of contingent obligations |
|
|
37,601 |
|
|
|
22,501 |
|
|
Current portion of operating lease liabilities |
|
|
1,852 |
|
|
|
1,742 |
|
|
|
|
|
305,072 |
|
|
|
324,023 |
|
|
Long-term debt |
|
|
723,487 |
|
|
|
611,313 |
|
|
Contingent obligations |
|
|
101,752 |
|
|
|
93,356 |
|
|
Operating lease liabilities |
|
|
12,010 |
|
|
|
11,307 |
|
|
Other long-term obligations |
|
|
41,768 |
|
|
|
41,001 |
|
|
Deferred tax liabilities |
|
|
118,133 |
|
|
|
108,824 |
|
|
|
|
|
1,302,222 |
|
|
|
1,189,824 |
|
|
Shareholders' equity |
|
|
|
|
|
Common shares (authorized – unlimited number of voting common
shares; issued and outstanding – September 30, 2024 - 27,827,282
(December 31, 2023 – 27,827,282)) |
|
|
229,455 |
|
|
|
229,455 |
|
|
Treasury shares (September 30, 2024 - 996,435 (December 31, 2023 -
1,090,187)) |
|
|
(15,809 |
) |
|
|
(16,165 |
) |
|
Additional paid-in capital |
|
|
22,524 |
|
|
|
20,739 |
|
|
Retained earnings |
|
|
154,398 |
|
|
|
123,032 |
|
|
Accumulated other comprehensive income (loss) |
|
|
1,346 |
|
|
|
(407 |
) |
|
Shareholders' equity |
|
|
391,914 |
|
|
|
356,654 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
1,694,136 |
|
|
$ |
1,546,478 |
|
Interim Consolidated Statements of Operations
andComprehensive Income
(Expressed in thousands of Canadian Dollars, except
per share amounts)(Unaudited)
| |
|
Three months ended |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2024 |
|
2023(i) |
|
|
2024 |
|
2023(i) |
|
Revenue |
|
$ |
286,857 |
|
|
$ |
196,881 |
|
|
$ |
860,197 |
|
|
$ |
636,398 |
|
|
Cost of sales |
|
|
183,405 |
|
|
|
141,771 |
|
|
|
570,222 |
|
|
|
457,856 |
|
|
Depreciation |
|
|
38,354 |
|
|
|
28,592 |
|
|
|
121,918 |
|
|
|
89,329 |
|
|
Gross profit |
|
|
65,098 |
|
|
|
26,518 |
|
|
|
168,057 |
|
|
|
89,213 |
|
|
General and administrative expenses |
|
|
10,945 |
|
|
|
12,485 |
|
|
|
36,630 |
|
|
|
38,638 |
|
|
Loss (gain) on disposal of property, plant and equipment |
|
|
348 |
|
|
|
(311 |
) |
|
|
641 |
|
|
|
189 |
|
|
Operating income |
|
|
53,805 |
|
|
|
14,344 |
|
|
|
130,786 |
|
|
|
50,386 |
|
|
Equity earnings in affiliates and joint ventures |
|
|
(4,428 |
) |
|
|
(4,277 |
) |
|
|
(9,545 |
) |
|
|
(22,963 |
) |
|
Interest expense, net |
|
|
15,003 |
|
|
|
8,119 |
|
|
|
44,939 |
|
|
|
22,941 |
|
|
Change in fair value of contingent obligations |
|
|
21,989 |
|
|
|
— |
|
|
|
38,945 |
|
|
|
— |
|
|
Loss (gain) on derivative financial instruments |
|
|
572 |
|
|
|
(2,618 |
) |
|
|
845 |
|
|
|
(6,979 |
) |
|
Income before income taxes |
|
|
20,669 |
|
|
|
13,120 |
|
|
|
55,602 |
|
|
|
57,387 |
|
|
Current income tax expense |
|
|
2,238 |
|
|
|
1,495 |
|
|
|
5,003 |
|
|
|
3,198 |
|
|
Deferred income tax expense |
|
|
4,530 |
|
|
|
238 |
|
|
|
11,322 |
|
|
|
8,694 |
|
|
Net income |
|
$ |
13,901 |
|
|
$ |
11,387 |
|
|
$ |
39,277 |
|
|
$ |
45,495 |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation (gain) loss |
|
|
(1,115 |
) |
|
|
1,100 |
|
|
|
(1,753 |
) |
|
|
1,462 |
|
|
Comprehensive income |
|
$ |
15,016 |
|
|
$ |
10,287 |
|
|
$ |
41,030 |
|
|
$ |
44,033 |
|
|
Per share information |
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.52 |
|
|
$ |
0.43 |
|
|
$ |
1.47 |
|
|
$ |
1.72 |
|
|
Diluted net income per share |
|
$ |
0.47 |
|
|
$ |
0.39 |
|
|
$ |
1.32 |
|
|
$ |
1.51 |
|
(i)The prior year amounts are adjusted to reflect a
change in accounting policy. See "Accounting Estimates,
Pronouncements and Measures".
North American Construct... (TSX:NOA)
Historical Stock Chart
From Oct 2024 to Nov 2024
North American Construct... (TSX:NOA)
Historical Stock Chart
From Nov 2023 to Nov 2024
