North American Construction Group Ltd. Announces Results for the Second Quarter Ended June 30, 2024
North American Construction Group (TSX:NOA.TO/NYSE:NOA) announced Q2 2024 results with combined revenue of $329.7 million, a 18% increase from Q2 2023. Adjusted EBITDA was $86.9 million with a 26.3% margin. The company reported net income of $14 million and adjusted EPS of $0.78. Strong performance in Australia offset lower equipment utilization in Canada due to adverse weather. The company updated its full-year 2024 outlook, projecting adjusted EPS of $3.95 to $4.15. Key focus areas include safety, execution, operational excellence, integration of MacKellar Group, diversification, and sustainability. NACG declared a quarterly dividend of $0.10 per share.
North American Construction Group (TSX:NOA.TO/NYSE:NOA) ha annunciato i risultati del Q2 2024 con un fatturato combinato di 329,7 milioni di dollari, un aumento del 18% rispetto al Q2 2023. L'EBITDA rettificato è stato di 86,9 milioni di dollari con un margine del 26,3%. L'azienda ha riportato un reddito netto di 14 milioni di dollari e un utile per azione rettificato di $0,78. Le solide performance in Australia hanno compensato il minor utilizzo delle attrezzature in Canada a causa del maltempo. L'azienda ha aggiornato le sue previsioni per l'intero anno 2024, progettando un utile per azione rettificato tra $3,95 e $4,15. Le aree chiave di attenzione includono sicurezza, esecuzione, eccellenza operativa, integrazione del MacKellar Group, diversificazione e sostenibilità. NACG ha dichiarato un dividendo trimestrale di $0,10 per azione.
North American Construction Group (TSX:NOA.TO/NYSE:NOA) anunció los resultados del Q2 2024 con ingresos combinados de 329,7 millones de dólares, un aumento del 18% en comparación con el Q2 2023. El EBITDA ajustado fue de 86,9 millones de dólares con un margen del 26,3%. La compañía reportó un ingreso neto de 14 millones de dólares y un BPA ajustado de $0,78. Un sólido desempeño en Australia compensó la menor utilización de equipos en Canadá debido al mal clima. La empresa actualizó sus pronósticos para todo el año 2024, proyectando un BPA ajustado de $3,95 a $4,15. Las áreas clave de enfoque incluyen seguridad, ejecución, excelencia operativa, integración del MacKellar Group, diversificación y sostenibilidad. NACG declaró un dividendo trimestral de $0,10 por acción.
북미 건설 그룹(North American Construction Group) (TSX:NOA.TO/NYSE:NOA)이 2024년 2분기 실적을 발표했습니다. 총 수익은 3억 2,970만 달러로, 2023년 2분기 대비 18% 증가했습니다. 조정된 EBITDA는 8,690만 달러로 26.3%의 마진을 기록했습니다. 회사는 순이익 1,400만 달러와 조정된 주당 수익(EPS)으로 $0.78을 보고했습니다. 호주에서의 강력한 실적이 캐나다의 기상 악화로 인한 장비 활용률 저하를 상쇄했습니다. 이 회사는 2024년 전체 연간 전망을 업데이트하고 조정된 EPS를 $3.95에서 $4.15로 예상했습니다. 주요 초점 분야에는 안전, 실행, 운영 우수성, MacKellar Group 통합, 다각화 및 지속 가능성이 포함됩니다. NACG는 주당 $0.10의 분기 배당금을 선언했습니다.
North American Construction Group (TSX:NOA.TO/NYSE:NOA) a annoncé les résultats du T2 2024 avec un chiffre d'affaires combiné de 329,7 millions de dollars, soit une augmentation de 18 % par rapport au T2 2023. L'EBITDA ajusté était de 86,9 millions de dollars avec une marge de 26,3 %. L'entreprise a rapporté un bénéfice net de 14 millions de dollars et un BPA ajusté de $0,78. Les performances solides en Australie ont compensé la baisse de l'utilisation des équipements au Canada en raison de conditions météorologiques défavorables. L'entreprise a mis à jour ses prévisions pour l'année 2024, prévoyant un BPA ajusté de $3,95 à $4,15. Les domaines clés d'accent incluent la sécurité, l'exécution, l'excellence opérationnelle, l'intégration du MacKellar Group, la diversification et la durabilité. NACG a déclaré un dividende trimestriel de $0,10 par action.
Der North American Construction Group (TSX:NOA.TO/NYSE:NOA) hat die Q2 2024 Ergebnisse bekannt gegeben, mit einem kombinierten Umsatz von 329,7 Millionen Dollar, was einem Anstieg von 18% im Vergleich zum Q2 2023 entspricht. Das bereinigte EBITDA betrug 86,9 Millionen Dollar mit einer Marge von 26,3%. Das Unternehmen berichtete von Nettoeinkommen von 14 Millionen Dollar und einem bereinigten EPS von $0,78. Starke Leistungen in Australien haben die niedrigere Auslastung der Geräte in Kanada aufgrund von schlechtem Wetter ausgeglichen. Das Unternehmen aktualisierte die Jahresprognose für 2024 und erwartet ein bereinigtes EPS von $3,95 bis $4,15. Wichtige Schwerpunkte sind Sicherheit, Ausführung, operative Exzellenz, Integration der MacKellar Group, Diversifizierung und Nachhaltigkeit. NACG erklärte eine vierteljährliche Dividende von $0,10 pro Aktie.
- Combined revenue increased 18% year-over-year to $329.7 million
- Adjusted EBITDA grew to $86.9 million with a 26.3% margin
- Adjusted EPS increased 66% to $0.78
- Strong performance in Australia with 82% equipment utilization
- Fargo-Moorhead flood diversion project surpassed 40% completion
- Lower equipment utilization (42%) in Canada due to adverse weather conditions
- Net debt increased by $109.3 million to $832.7 million
- Free cash flow was negative at $1.5 million for the quarter
- Updated full-year adjusted EPS guidance lower than previous expectations
Insights
North American Construction Group's Q2 2024 results reveal a mixed performance with some notable strengths and challenges. The company reported
Key positives include:
- Record Q2 combined revenue of
$329.7 million - Adjusted EBITDA of
$86.9 million , up67.7% year-over-year - Improved EBITDA margin of
26.3% vs18.6% in Q2 2023 - Strong performance in Australia with
82% equipment utilization
However, there are some concerns:
- Net debt increased to
$832.7 million , up$109.3 million from December 31, 2023 - Lower equipment utilization (
42% ) in Canada due to adverse weather - Updated full-year adjusted EPS guidance of
$3.95 to$4.15 , implying a stronger second half
The company's diversification strategy, particularly the MacKellar acquisition, appears to be paying off, helping to offset challenges in the Canadian market. However, investors should monitor the increasing debt levels and the company's ability to meet its updated guidance.
NACG's Q2 results highlight the company's ongoing transformation and market positioning. The acquisition of MacKellar Group has significantly boosted NACG's presence in Australia, providing a important hedge against regional challenges. This geographic diversification is proving valuable, as evidenced by the strong performance in Australia offsetting weather-related issues in Canada.
Key market insights:
- The Australian mining sector remains robust, with NACG's
82% equipment utilization rate indicating strong demand - The Canadian oil sands sector faced temporary setbacks due to wildfires and heavy rainfall, which are likely to be short-term issues
- The Fargo-Moorhead flood diversion project shows promising growth, surpassing
40% completion
The company's focus on operational excellence and cost management is evident in the improved EBITDA margins. However, the increase in general and administrative expenses as a percentage of revenue (
NACG's updated guidance suggests management's confidence in a stronger second half of 2024. This optimism, coupled with the company's strategic focus areas, indicates a proactive approach to navigating market challenges and capitalizing on opportunities across its diversified operations.
From a legal and regulatory perspective, NACG's Q2 2024 report raises several points of interest:
- The integration of MacKellar Group, acquired in October 2023, appears to be progressing well. However, the company must ensure full compliance with all relevant regulations in both Canada and Australia as it expands its international operations.
- The planned ERP implementation in Australia, targeting a Q3 go-live date, will require careful management to ensure data protection and privacy laws are fully adhered to, particularly given the cross-border nature of the company's operations.
- The declaration of a quarterly dividend of
$0.10 per common share is noted as an "eligible dividend for Canadian income tax purposes." This designation has important tax implications for shareholders and must be accurately reported. - The company's focus on safety as a strategic priority is commendable from a legal standpoint, as it can help mitigate potential workplace safety issues and associated liabilities.
- The increase in net debt to
$832.7 million should be monitored from a corporate governance perspective to ensure it remains within acceptable risk parameters for the company and its shareholders.
Overall, as NACG continues to grow and diversify, maintaining robust legal and compliance frameworks across its expanding operations will be important to mitigate risks and ensure sustainable growth.
ACHESON, Alberta, July 31, 2024 (GLOBE NEWSWIRE) -- 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 of82% 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 of26.3% compared favorably to the prior period operating metrics of$51.8 million and18.6% , 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 of18.3% was impacted by a one-time charge for equipment disposal. This margin compares favorably to the13.0% 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 was7.0% 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
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
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| 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".
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| 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 (
Financial Results for the Three Months Ended June 30, 2024
Revenue for Q2 2024 of
The Heavy Equipment - Australia segment showed strong performance, driven by MacKellar’s Q2 results, which exceeded Q1 2024 by
The Heavy Equipment - Canada segment posted a decline in revenue compared to the prior year as equipment utilization decreased to
Combined revenue of
Adjusted EBITDA and the associated margin of
Depreciation of our equipment fleet was
General and administrative expenses (excluding stock-based compensation) were
Cash related interest expense for the quarter was
Adjusted earnings per share ("EPS") of
Free cash flow for the three months ended June 30, 2024, was a use of cash of
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
| 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) | ||
| Adjusted EBITDA(i) | ||
| Sustaining capital(i) | ||
| Adjusted EPS(i) | ||
| Free cash flow(i) | ||
| Capital allocation | ||
| Growth spending(i) | ||
| 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: 1-800-717-1738
Conference ID: 50329
A replay will be available through September 2, 2024, by dialing:
Toll Free: 1-888-660-6264
Conference ID: 50329
Playback Passcode: 50329
The 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:
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
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| 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
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| (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
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| 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 Veenstra
Chief Financial Officer
North American Construction Group Ltd.
(780) 960-7171
IR@nacg.ca
www.nacg.ca
Interim 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 | 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 and
Comprehensive 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 | 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 | ||||
FAQ
What was NACG's combined revenue for Q2 2024?
How did NACG's Australian operations perform in Q2 2024?
What factors affected NACG's Canadian operations in Q2 2024?
What is NACG's updated adjusted EPS guidance for 2024?
Did NACG declare a dividend for Q2 2024?
