North American Construction Group Ltd. Announces Results for the Second Quarter Ended June 30, 2025
Press Release
ACHESON, Alberta, Aug. 13, 2025 North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA) today announced results for the second quarter ended June 30, 2025. Unless otherwise indicated, financial figures are expressed in Canadian dollars, and comparisons are to the prior second quarter ended June 30, 2024.
Second Quarter 2025 Financial Highlights:
- Combined revenue was $370.6 million and increased 12% (reported revenue of $320.6 million, increased 16%)
- Combined gross profit was $39.8 million (11%) and decreased 37% (reported gross profit of $35.8 million (11%), decreased 29%)
- Adjusted EPS was $0.02 and decreased 98% (basic earnings per share of $0.35, decreased 35%)
- Adjusted EBITDA was $80.1 million and decreased 12% (net income of $10.3 million, decreased 29%)
- Free cash flow was a use of cash of $0.4 million and increased $10.2 million
- Net debt was $896.9 million and increased $29.5 million
Second Quarter 2025 Operational Highlights:
Revenue and combined revenue for the second quarter increased, driven by global equipment utilization of 74%, consistent with 74% in the prior year, as well as strong performance in the both the Heavy Equipment – Australia and Heavy Equipment – Canada segments.
- Heavy Equipment – Australia revenue increased 14% to $168.1 million from $147.2 million due to their expanded heavy equipment fleet and ongoing production at a new copper mine project.
- Heavy Equipment – Canada revenue increased 20% to $147.4 million from $122.8 million due to increased reclamation activities and the ramp-up of the stream diversion project.
- Revenue generated by joint ventures and affiliates decreased 6% to $50.0 million from $53.4 million primarily due to lower revenue contributions by the Nuna joint venture.
- Our portion of revenue generated by the civil-infrastructure Fargo project remained strong this year, comparable to the prior year, as the project continued strong production momentum through the quarter.
Gross profit for the quarter was negatively impacted by one-time or infrequent disruptions. We have taken targeted actions to mitigate certain issues, and we do not expect them to affect future performance.
- A temporary over-reliance on subcontractor labour in Australia increased costs and impacted margins. We are now focused on hiring and training internal labour to minimize this going forward.
- An abrupt, customer-requested shut-down of work, followed by a ramp back up later in the quarter, impacted margin efficiency for the Heavy Equipment – Canada segment.
Adjusted EPS for the second quarter fell short of expectations largely due to the same issues impacting gross profit, along with a $7.7 million cumulative catch-up reduction in equity earnings. This adjustment is a one-time item arising from the settlement of a claim and a subsequent forecast revision for the Fargo project, resulting in a true-up to the forecast margin percentage.
The Q2 adjusted EBITDA was lower year-over-year due to the same factors that impacted gross profit.
Free cash flow for the quarter was a use of cash of $0.4 million. This use of cash was primarily based on adjusted EBITDA generation of $80.1 million offset by sustaining capital additions ($68.2 million), cash interest expense ($13.4 million), and current income tax expense ($0.8 million).
Our net debt increase in the current quarter was primarily driven by growth capital of $24.5 million.
Joe Lambert, President and CEO stated “Our outlook for the second half remains positive. We remain confident in delivering second half year results consistent with our original expectations aside from our oil sands business. While we expect revenue in the remainder of 2025 in the oil sands consistent with original expectations, we now expect increased costs due to demand volatility and near-term costs on our largest truck fleets. Beyond 2025, our long-term growth targets remain intact, with anticipated organic revenue growth of 5% to 10% annually, underpinned by ongoing Australian growth and new infrastructure projects that will further enhance operational diversification.”
Declaration of Quarterly Dividend
On August 12th, 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 August 29, 2025. The Dividend will be paid on October 3, 2025, and is an eligible dividend for Canadian income tax purposes.
NACG’s outlook for 2025
The following table provides projected key measures for 2025. While our revenue guidance remains unchanged, supported by our backlog, our EBITDA and EPS guidance for the second half of 2025 have been adjusted to reflect increased near-term costs related to demand volatility and higher maintenance requirements. Guidance on sustaining and growth capital spending and free cash flow remain unchanged. Our updated debt leverage target reflects the debenture conversions in the first quarter of 2025.
| Actual results for the six months ended | Outlook for the six months ended | ||||||||||||
| June 30, 2024 | December 31, 2024 |
June 30, 2025 | December 31, 2025 | ||||||||||
| Current | Previous | ||||||||||||
| Key measures | |||||||||||||
| Combined revenue(i) | $675M | $740M | $762M | $700 – $750M | No Change | ||||||||
| Adjusted EBITDA(i) | $188M | $202M | $180M | $190 – $210M | $205 – $225M | ||||||||
| Adjusted EPS(i) | $1.58 | $2.15 | $0.54 | $1.40 – $1.60 | $1.95 – $2.15 | ||||||||
| Sustaining capital(i) | $138M | $69M | $158M | $60 – $70M | No Change | ||||||||
| Free cash flow(i) | ($50M) | $68M | ($42M) | $95 – $105M | No Change | ||||||||
| Capital allocation | |||||||||||||
| Growth spending(i) | $40M | $45M | $53M | Approx. $25M | No Change | ||||||||
| Net debt leverage(i) | 2.2x | 2.2x | 2.2x | Targeting 2.1x | 1.7x | ||||||||
(i)See “Non-GAAP Financial Measures”.
Results for the three and six months ended June 30, 2025
Consolidated Financial Highlights
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (dollars in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Revenue | $ | 320,634 | $ | 276,314 | $ | 661,467 | $ | 573,340 | ||||||||
| Cost of sales(i) | 230,293 | 182,804 | 472,521 | 378,474 | ||||||||||||
| Depreciation(i) | 54,511 | 43,151 | 115,225 | 91,013 | ||||||||||||
| Gross profit(i) | $ | 35,830 | $ | 50,359 | $ | 73,721 | $ | 103,853 | ||||||||
| Gross profit margin(i)(ii) | 11.2 | % | 18.2 | % | 11.1 | % | 18.1 | % | ||||||||
| General and administrative expenses (excluding stock-based compensation)(ii) | 11,698 | 12,483 | 22,788 | 23,318 | ||||||||||||
| Stock-based compensation expense (benefit) | 964 | (1,859 | ) | (2,444 | ) | 1,749 | ||||||||||
| Operating income(i) | 22,789 | 39,395 | 53,371 | 77,875 | ||||||||||||
| Interest expense, net | 14,123 | 14,339 | 27,639 | 29,936 | ||||||||||||
| Net income(i) | 10,250 | 14,503 | 16,413 | 26,014 | ||||||||||||
| Comprehensive income(i) | 9,691 | 15,834 | 16,332 | 26,652 | ||||||||||||
| Adjusted EBITDA(i)(ii) | 80,113 | 91,089 | 180,045 | 188,475 | ||||||||||||
| Adjusted EBITDA margin(i)(ii)(iii) | 21.6 | % | 27.6 | % | 23.6 | % | 27.9 | % | ||||||||
| Per share information | ||||||||||||||||
| Basic net income per share | $ | 0.35 | $ | 0.54 | $ | 0.57 | $ | 0.97 | ||||||||
| Diluted net income per share | $ | 0.33 | $ | 0.48 | $ | 0.55 | $ | 0.88 | ||||||||
| Adjusted EPS(ii) | $ | 0.02 | $ | 0.80 | $ | 0.54 | $ | 1.58 | ||||||||
(i)The prior year amounts are adjusted to reflect a change in policy. See “Change in significant accounting policy”.
(ii)See “Non-GAAP Financial Measures”.
(iii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.
Free cash flow
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||
| Cash provided by operating activities(i) | $ | 64,674 | $ | 66,431 | $ | 116,092 | $ | 85,390 | ||||||||
| Cash used in investing activities(i) | (71,823 | ) | (87,017 | ) | (165,604 | ) | (153,112 | ) | ||||||||
| Effect of exchange rate on changes in cash | 915 | (875 | ) | (160 | ) | (974 | ) | |||||||||
| Add back of growth and non-cash items included in the above figures: | ||||||||||||||||
| Growth capital additions(ii) | 24,463 | 19,943 | 52,529 | 39,550 | ||||||||||||
| Capital additions financed by leases(ii) | (18,605 | ) | (9,031 | ) | (44,808 | ) | (21,069 | ) | ||||||||
| Free cash flow(i) | $ | (376 | ) | $ | (10,549 | ) | $ | (41,951 | ) | $ | (50,215 | ) | ||||
(i)The prior year amounts are adjusted to reflect a change in policy. See “Change in significant accounting policy”.
(ii)See “Non-GAAP Financial Measures”.
Net debt
| (dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 |
|||||||||
| Credit Facility(i) | $ | 257,536 | $ | 421,702 | $ | 395,844 | ||||||
| Equipment financing(i) | 314,414 | 310,361 | 253,639 | |||||||||
| Contingent obligations(i) | 96,837 | 131,246 | 127,866 | |||||||||
| Senior debt(ii) | 668,787 | 863,309 | 777,349 | |||||||||
| Senior unsecured notes | 225,000 | — | — | |||||||||
| Mortgage(i) | 27,175 | 27,388 | 27,600 | |||||||||
| Total debt(ii) | 920,962 | 890,697 | 804,949 | |||||||||
| Convertible debentures(i) | 55,000 | 55,000 | 129,106 | |||||||||
| Cash | (79,025 | ) | (78,241 | ) | (77,875 | ) | ||||||
| Net debt(ii) | $ | 896,937 | $ | 867,456 | $ | 856,180 | ||||||
(i)Includes current portion.
(ii)See “Non-GAAP Financial Measures”.
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