North American Construction Group Ltd. Announces Results for the Fourth Quarter and Year Ended December 31, 2024
Press Release
ACHESON, Alberta, March 19, 2025 North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA) today announced results for the fourth quarter and year ended December 31, 2024. Unless otherwise indicated, figures are expressed in Canadian dollars with comparisons to prior periods ended December 31, 2023.
Fourth Quarter 2024 Highlights:
- Combined revenue of $372.7 million, compared to $405.4 million in the same period last year. Reported revenue of $305.6 million, compared to $328.3 million in the same period last year, was generated by our wholly owned subsidiaries as incremental scopes and strong equipment utilization of 82% in Australia were more than offset by lower demand for our Canadian heavy equipment fleet when comparing to 2023 Q4.
- Our net share of revenue from equity consolidated joint ventures was $67.1 million in 2024 Q4 and compared to $77.1 million in the same period last year as the consistency in the Fargo and MNALP joint ventures were offset by lower scopes being completed within the Nuna Group of Companies.
- Adjusted EBITDA of $103.7 million and margin of 27.8% compared favorably to the prior period operating metrics of $101.1 million and 24.9%, respectively, as operational excellence in both Australia and Canada drove margin improvements.
- Combined gross profit for the quarter was $54.3 million and a margin of 14.6%. When adjusting for $10.1 million of integration costs incurred and $8.9 million of claims extinguished to secure long-term contracts, the resulting 19.7% reflects operational performance and compares favorably to 18.3% posted in the same period last year.
- Cash flows generated from operating activities of $97.0 million were lower than the $168.6 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 $50.5 million as operational earnings were offset by routine capital maintenance and cash interest expenses with working capital and capital work in process balances generating positive cash in the quarter.
- Net debt was $856.2 million at December 31, 2024, a decrease of $26.3 million from September 30, 2024, as free cash flow generation and the impact of a stronger CAD/AUD exchange rate were offset by growth spending, the NCIB program, and the dividend payment .
- Additional highlights include: i) in November, we were awarded a $125 million heavy civil construction project primarily to construct diversion channels; ii) in December, we announced an extended and amended regional services contract, valued at $500 million, with a major producer in the oil sands region; iii) also in December, we were awarded a $100 million early works contract by a copper producer in the Australian state of New South Wales; iv) by the end of the year, we surpassed the 60% completion mark at the Fargo-Moorhead flood diversion project; and v) completed go-live activities for the ERP system in Australia during the quarter.
Joe Lambert, President and CEO, stated, “Once again, I would like to thank our operations team for their safe and efficient performance this quarter. The recent contract awards in Australia and Canada speak for themselves but are a testament to the quality and reputation of our operating teams. We’re off to a fast and robust start this year, and we couldn’t be more excited about completing the work our customers have awarded us. We see opportunities and tailwinds in the heavy civil infrastructure and mining industries in Australia and North America and are diligently advancing efforts to win scopes based on the reputation we have in the respective regions.”
| Consolidated Financial Highlights | ||||||||||||||||
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| (dollars in thousands, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 305,590 | $ | 328,282 | $ | 1,165,787 | $ | 964,680 | ||||||||
| Cost of sales | 218,834 | 220,672 | 789,056 | 678,528 | ||||||||||||
| Depreciation | 44,765 | 41,990 | 166,683 | 131,319 | ||||||||||||
| Gross profit | $ | 41,991 | $ | 65,620 | $ | 210,048 | $ | 154,833 | ||||||||
| Gross profit margin | 13.7 | % | 20.0 | % | 18.0 | % | 16.1 | % | ||||||||
| General and administrative expenses (excluding stock-based compensation)(i) | 13,696 | 18,702 | 47,245 | 41,016 | ||||||||||||
| Stock-based compensation expense | 5,625 | (496 | ) | 8,706 | 15,828 | |||||||||||
| Operating income | 22,544 | 45,944 | 153,330 | 96,330 | ||||||||||||
| Interest expense, net | 14,401 | 14,007 | 59,340 | 36,948 | ||||||||||||
| Net income | 4,808 | 17,646 | 44,085 | 63,141 | ||||||||||||
| Adjusted EBITDA(i) | 103,714 | 101,136 | 390,258 | 296,963 | ||||||||||||
| Adjusted EBITDA margin(i)(ii) | 27.8 | % | 24.9 | % | 27.6 | % | 23.2 | % | ||||||||
| Per share information | ||||||||||||||||
| Basic net income per share | $ | 0.18 | $ | 0.66 | $ | 1.65 | $ | 2.38 | ||||||||
| Diluted net income per share | $ | 0.19 | $ | 0.58 | $ | 1.52 | $ | 2.09 | ||||||||
| Adjusted EPS(i) | $ | 1.00 | $ | 0.87 | $ | 3.73 | $ | 2.83 | ||||||||
(i) See “Non-GAAP Financial Measures”.
(ii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||
| Cash provided by operating activities | $ | 96,989 | $ | 168,569 | $ | 217,607 | $ | 278,090 | ||||||||
| Cash used in investing activities | (75,764 | ) | (137,756 | ) | (274,683 | ) | (244,879 | ) | ||||||||
| Effect of exchange rate on changes in cash | 1,400 | (4,532 | ) | 353 | (5,994 | ) | ||||||||||
| Add back of growth and non-cash items included in the above figures: | ||||||||||||||||
| Acquisition of MacKellar(i) | — | 51,671 | — | 51,671 | ||||||||||||
| Acquisition costs | — | 5,934 | — | 7,095 | ||||||||||||
| Buyout of BNA Remanufacturing LP | 4,210 | — | 4,210 | — | ||||||||||||
| Growth capital additions(ii) | 23,646 | 35,941 | 84,633 | 40,416 | ||||||||||||
| Capital additions financed by leases(ii) | — | (931 | ) | (14,157 | ) | (28,159 | ) | |||||||||
| Free cash flow(ii) | $ | 50,481 | $ | 118,896 | $ | 17,963 | $ | 98,240 | ||||||||
(i)Acquisition of MacKellar is the purchase price less cash acquired.
(ii)See “Non-GAAP Financial Measures”.
Results for the Three Months Ended December 31, 2024
Revenue from wholly-owned entities was $305.6 million, down from $328.3 million in the same period last year. The quarter-over-quarter reduction reflects a reduction in overall work scopes in the Heavy Equipment – Canada segment due to a reduction in equipment utilization to 54%, compared to 65% in 2023 Q4, largely offset by improved performance in the Heavy Equipment – Australia segment. Revenue generated in that segment of $160.3 million includes a strong contribution from MacKellar of $155.4 million, up from $122.5 million in Q4 of last year, as the group commences work on new contracts and increases equipment utilization at existing sites. Eliminations in the quarter largely relate to equipment maintenance performed by the Heavy Equipment – Canada segment on MacKellar equipment.
Gross profit was $42.0 million, representing 13.7% of revenue, compared to $65.6 million and a 20.0% gross margin in the same period last year. The decline was primarily driven by lower contributions from the Heavy Equipment – Canada segment. Cost of sales for the quarter totaled $218.8 million, down from $220.7 million in the prior-period, reflecting lower overall revenue levels. Gross profit in the Heavy Equipment – Canada segment was impacted by the $8.9 million customer claim extinguishment as part of a four-year $500 million contract extension executed in December 2024. Gross profit in the Heavy Equipment – Australia segment was impacted by $10.1 million of integration costs, primarily transportation of haul trucks from North America to Australia.
General and administrative expenses (excluding stock-based compensation expense) were $13.7 million, or 4.5% of revenue, for the three months ended December 31, 2024, down from $18.7 million, or 5.7% of revenue, in the same period last year. The current year decrease is due to the inclusion of non-recurring MacKellar acquisition costs totaling $5.9 million in the prior year, offset by spend related to increased activity levels in the Heavy Equipment – Australia segment.
Cash related interest expense of $13.7 million represents an average cost of debt of 6.7% (compared to $13.2 million and 8.8%, respectively, for the three months ended December 31, 2023). The increase in interest expense is primarily attributed to a higher balance on the Credit Facility, along with greater equipment financing—mainly from the addition of MacKellar—partially offset by the elimination of our customer supply chain financing arrangement late in Q3.
Net income of $4.8 million in Q4 2024, compared to $17.6 million in the same period last year, was lower due to the lower gross profit factors discussed above, partially offset by lower general and administrative expenses and improved results from the equity joint ventures.
Free cash flow in the quarter was $50.5 million, driven primarily by adjusted EBITDA of $103.7 million less sustaining capital spending of $47.7 million and cash interest paid of $13.7 million.
Liquidity
Including equipment financing availability and factoring in the amended Credit Facility agreement, total available capital liquidity of $275.3 million includes total liquidity of $170.6 million, $86.7 million of unused finance lease borrowing availability, and $17.9 million of unused other borrowing availability as at December 31, 2024. Liquidity is primarily provided by the terms of our $522.6 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 2027.
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