North American Construction Group Ltd. Announces Results for the First Quarter Ended March 31, 2025
Press Release
ACHESON, Alberta, May 14, 2025 North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA) today announced results for the first quarter ended March 31, 2025. Unless otherwise indicated, financial figures are expressed in Canadian dollars, and comparisons are to the prior period ended March 31, 2024.
First Quarter 2025 Highlights:
- Combined revenue of $391.5 million, the second-highest quarter in company history, compared favorably to $345.7 million in the same period last year and was driven equally by higher heavy equipment fleet commissioned in Australia and higher equipment utilization in Canada.
- Reported revenue of $340.8 million, compared to $297.0 million in the same period last year, was driven primarily by increased capacity in Australia and a 68% utilization in Canada. However, lower utilization in Australia, due to the high number of rain days in February and March, far exceeding historical average, tempered overall performance.
- Our net share of revenue from equity consolidated joint ventures was $50.7 million in 2025 Q1, compared to $48.7 million in the same period last year. While the Fargo project saw a quarter-over-quarter increase, this was offset by lower volumes within the Nuna Group of Companies and the discontinuation of the Brake Supply joint venture.
- Adjusted EBITDA of $99.9 million was a slight increase of $2.5 million, or 3%, compared to the 2024 Q1 result of $97.4 million. However, the operational challenges of excessive rainfall in Australia and an extended bitter cold snap in Canada fully offset the 15% increase in revenue.
- Combined gross profit of $51.6 million and margin of 13.2% declined compared to the $62.4 million and 18.1% metrics posted in the same period last year. The overall margin decrease reflects the specific impacts of rain and cold weather in Australia and Canada.
- Cash flows generated from operating activities reached $51.4 million, exceeding the $19.0 million reported in the same period last year, primarily due to a lower working capital draw in the current quarter. Sustaining capital additions of $89.9 million reflect the front-loaded nature of our capital maintenance program in Canada.
- Free cash flow resulted in a use of cash of $41.6 million in the quarter, driven by the consumption of $24.5 million by our working capital accounts. The working capital draw on cash remains directionally consistent to 2024 Q1 and aligns with the typical seasonal impacts of our annual business cycle.
- Net debt was $867.5 million at March 31, 2025, an increase of $11.3 million from December 31, 2024, as free cash flow usage and growth spending required debt financing. The cash-related interest rate during the quarter on our debt was 6.2% due to Bank of Canada posted rates and the impact on equipment financing rates.
- Additional highlights during and after the quarter: i) the Fargo-Moorhead flood diversion project passed the 65% completion mark prior to March 31; ii) successfully commenced the early development work at a copper mine in New South Wales; iii) first operational wins achieved under the new Finning parts and component supply and services agreement; iv) converted $73 million of debentures to 3.0 million common shares; and v) on May 1, completed $225 million of senior unsecured financing to increase liquidity as we advance efforts on heavy civil infrastructure and mining opportunities in Australia and North America.
Joe Lambert, President and CEO stated, “It’s no surprise that severe weather impacts our business, and Q1 2025 proved especially challenging across both geographies. However, we remain optimistic about the more stable conditions expected for the remainder of the year. Our full-year expectations remain intact, and we are eager to execute the contracted scopes for our customers. We continue to see significant opportunities and tailwinds in the heavy civil infrastructure and mining industries in Australia and North America and are diligently advancing efforts to secure new scopes, leveraging our strong reputation in these regions.”
Consolidated Financial Highlights
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
| (dollars in thousands, except per share amounts) | 2025 | 2024 | Change | |||||||||
| Revenue | $ | 340,833 | $ | 297,026 | $ | 43,807 | ||||||
| Cost of sales(i) | 242,228 | 195,670 | 46,558 | |||||||||
| Depreciation(i) | 60,714 | 47,862 | 12,852 | |||||||||
| Gross profit(i) | $ | 37,891 | $ | 53,494 | $ | (15,603 | ) | |||||
| Gross profit margin(i)(ii) | 11.1 | % | 18.0 | % | (6.9 | )% | ||||||
| General and administrative expenses (excluding stock-based compensation)(ii) | 11,090 | 10,835 | 255 | |||||||||
| Stock-based compensation (benefit) expense | (3,408 | ) | 3,608 | (7,016 | ) | |||||||
| Operating income(i) | 30,582 | 38,480 | (7,898 | ) | ||||||||
| Interest expense, net | 13,516 | 15,597 | (2,081 | ) | ||||||||
| Net income(i) | 6,163 | 11,511 | (5,348 | ) | ||||||||
| Comprehensive income(i) | 6,641 | 10,818 | (4,177 | ) | ||||||||
| Adjusted EBITDA(i)(ii) | 99,932 | 97,386 | 2,546 | |||||||||
| Adjusted EBITDA margin(i)(ii)(iii) | 25.5 | % | 28.2 | % | (2.7 | )% | ||||||
| Per share information | ||||||||||||
| Basic net income per share | $ | 0.22 | $ | 0.43 | $ | (0.21 | ) | |||||
| Diluted net income per share | $ | 0.21 | $ | 0.39 | $ | (0.18 | ) | |||||
| Adjusted EPS(ii) | $ | 0.52 | $ | 0.79 | $ | (0.27 | ) | |||||
(i)The prior year amounts are adjusted to reflect a change in policy. See “Accounting Estimates, Pronouncements and Measures”.
(ii)See “Non-GAAP Financial Measures”.
(iii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.
| Three months ended | ||||||||
| March 31, | ||||||||
| (dollars in thousands) | 2025 | 2024 | ||||||
| Consolidated Statements of Cash Flows | ||||||||
| Cash provided by operating activities(i) | $ | 51,418 | $ | 18,959 | ||||
| Cash used in investing activities(i) | (93,781 | ) | (66,095 | ) | ||||
| Effect of exchange rate on changes in cash | (1,075 | ) | (99 | ) | ||||
| Add back of growth and non-cash items included in the above figures: | ||||||||
| Growth capital additions(ii) | 28,066 | 19,607 | ||||||
| Capital additions financed by leases(ii) | (26,203 | ) | (14,156 | ) | ||||
| Free cash flow(i) | $ | (41,575 | ) | $ | (41,784 | ) | ||
(i)The prior year amounts are adjusted to reflect a change in policy. See “Accounting Estimates, Pronouncements and Measures”.
(ii)See “Non-GAAP Financial Measures”.
Declaration of Quarterly Dividend
On May 14th, 2025, 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 June 4, 2025. The Dividend will be paid on July 11, 2025, and is an eligible dividend for Canadian income tax purposes.
Resignation of Vanessa Guthrie
Effective May 14, 2025, Dr. Vanessa Guthrie, AO, resigned from her position as a director of NACG for personal reasons. Martin Ferron, Chair of the Board, stated “We wish to extend our sincerest thanks to Dr. Guthrie for the insight and perspectives she brought to the company during what was an important transitional period for us as we expanded operations into Australia. We wish her all the best in the future.”
Results for the Three Months Ended March 31, 2025
Revenue of $340.8 million represented a $43.8 million (or 15%) increase from 2024 Q1 as Heavy Equipment – Australia and Heavy Equipment – Canada were up 18% and 13%, respectively.
Revenue within Heavy Equipment – Australia, which is primarily comprised of the MacKellar Group (“MacKellar”), increased $23.8 million quarter-over-quarter primarily due to a 25% increase in the large capacity heavy equipment fleet over the past twelve months. This fleet increase was offset by the 12% decrease in equipment utilization (68% versus 2024 Q1 of 80%) as the high number of rain days experienced in both February and March well exceeded historical averages and operational expectations. The Carmichael mine was significantly affected by rain, receiving over 340 mm of rainfall over the two months, nearly double the historical average and our forecast of 180 mm. Excessive rainfall caused the slowdown of mining activity and the parking of the large capacity heavy mining equipment due to flooding of the lower lying mining areas as well as certain mine, access and service roads requiring additional maintenance.
Equipment utilization in the oil sands region of 68% drove a 13% increase from 2024 Q1 in the Heavy Equipment – Canada segment. Demand for large capacity heavy equipment was strong for the full quarter, with top-line performance constrained only by extended periods of cold weather and mechanical availability. The Millennium mine currently has approximately 40% of our fleet operating on site and is the primary driver of both equipment utilization and top-line revenue.
Combined revenue in the quarter of $391.5 million, the second-highest quarter in company history, represented a $45.8 million (or 13%) increase from 2024 Q1. Our share of revenue generated in the quarter by joint ventures and affiliates was $50.7 million, compared to $48.7 million in 2024 Q1 (an increase of 4%) with quarter-over-quarter increases in the Fargo project offset by lower volumes within the Nuna Group of Companies (“Nuna”) as well as the termination of the Brake Supply Joint Venture which occurred in the latter half of 2024. The Fargo project progressed past the 65% completion mark during the quarter with the modest top-line revenue reflecting the expected impact of winter conditions on civil earth-moving scopes.
Adjusted EBITDA of $99.9 million was a slight increase of $2.5 million, or 3%, from the 2024 Q1 result of $97.4 million as the operational challenges of excessive rainfall in Australia and a bitter extended cold snap in Canada fully offset the 15% increase in revenue. The adjusted EBITDA margin of 25.5% was lower compared to the previous quarter, primarily due to the challenging weather conditions in both segments, which affected operational efficiency. 2024 Q1, which experienced typical seasonal conditions, posted a 28.2% adjusted EBITDA margin with the approximate 3.0% variance being a fair reflection of the weather’s impact to 2025 Q1.
Excessive rainfall in Australia in February and March impacted operating margins with the Carmichael mine being the most affected in terms of the sheer quantity of rainfall experienced in those two months. Steady margin performance depends on the continuous operation of the primary fleet of large capacity heavy mining equipment. When this equipment is parked due to weather or other interruptions, not only is top-line revenue constrained, but it also becomes an opportune time to perform certain maintenance activities. While these activities support longer-term equipment reliability and utilization, they can increase costs, impacting margins in the current quarter. Additionally, rain days contribute to further cost pressures, as they introduce expenses not typically incurred during normal operations, such as site cleanup, dewatering, and related weather recovery efforts.
Based on historical precedent, gross margins at that site were over 10% lower than operational expectation and drove the decrease in gross profit margin in this segment from 24.7% in 2024 Q1 to 16.1% in 2025 Q1.
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