North American Construction Group Ltd. (“NACG”) today announced
results for the third quarter ended September 30, 2022. Unless
otherwise indicated, financial figures are expressed in Canadian
dollars, and comparisons are to the prior period ended
September 30, 2021.
Third Quarter 2022
Highlights:
-
Strong consistent operating performance & equipment utilization
resulted in third quarter records for combined revenue and adjusted
EBITDA, EBIT and earnings per share.
-
Revenue was $191.4 million, up from $166.0 million in the same
period last year. Revenue generated by NACG’s core heavy equipment
fleet was up 18% quarter over quarter, with the driver of this
increase being equitable contributions from updated equipment and
unit rates as well as improved utilization (62% compared to 52% in
Q3 2021). Equipment and unit rates were contractually adjusted in
the quarter to reflect the specific inflationary cost pressures
being experienced in the Fort McMurray region.
-
Combined revenue of $269.6 million represented a $60.4 million (or
29%) increase as our share of revenue generated in Q3 2022 by joint
ventures and affiliates was $78.2 million compared to $43.3 million
in Q3 2021. Nuna Group of Companies had its best financial quarter
on record driven by the activity at the gold mine in Northern
Ontario and the core businesses operating at better than historical
levels. The joint ventures dedicated to the Fargo-Moorhead flood
diversion project were secondary drivers of quarter-over-quarter
improvements.
-
Adjusted EBITDA of $60.1 million represents a $12.6 million
increase over the prior year. The adjusted EBITDA margin of 22.3%
reflected strong operational performance supported by predictable
and productive weather conditions in the Fort McMurray, Northern
Canada, and Northern Ontario regions as well as the updated
equipment and unit rates allowed for operating margins to trend
towards historical precedents.
-
Free cash flow ("FCF") in the quarter was positive $3.4 million as
adjusted EBITDA of $60.1 million netted against sustaining capital
additions ($30.6 million) and cash interest paid ($6.9 million)
produced positive cash of $22.6 million but was heavily impacted by
cash flow timing which is expected to reverse in the fourth
quarter.
- On
April 6, 2022, we announced a Normal Course Issuer Bid ("NCIB") to
purchase, for cancellation, up to 2,113,054 common shares. This
NCIB commenced on April 11, 2022 and was completed in September
2022 with the maximum number of shares purchased and
cancelled.
- On
September 20, 2022, we announced an amendment and extension of our
senior secured credit facility (the “Credit Facility”) to October
8, 2025. In addition to the extension of existing favourable terms,
the overall capacity has been allocated to provide greater
flexibility in operating the Company’s joint ventures.
- On
October 1, 2022, we acquired a privately-owned company specializing
in mobile fuel, lube, and steaming services for an estimated
purchase price of $15.0 million. The acquisition was premised on
our continued drive to lower operating costs by maximizing our
internal maintenance capabilities.
- On
October 4, 2022, we entered into a total return swap agreement for
up to 1,000,000 of NACG's common shares with a notional value of
$15.0 million for a twelve-month period. This agreement provides an
opportunity to capitalize on what we believe is a current share
price that does not properly reflect underlying value.
NACG President and CEO, Joe Lambert, commented:
"Operating performance was very encouraging in Q3 with equipment
utilization trending in the right direction and the Nuna Group of
Companies executing the largest scopes of work they've ever
completed in three months. The Fargo-Moorhead project is
progressing as expected and our various diversified initiatives
remain profitable and on target. We are excited about the recent
momentum we've generated and are proud to be able to share a 2023
financial outlook which is based on contracts in place and reflects
our commitment to steady diversified growth."
Consolidated Financial
Highlights
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
(dollars in thousands, except per share amounts) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
$ |
191,383 |
|
|
$ |
165,962 |
|
|
$ |
536,122 |
|
|
$ |
473,142 |
|
Total combined revenue(i) |
|
|
269,617 |
|
|
|
209,236 |
|
|
|
734,157 |
|
|
|
577,328 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
24,567 |
|
|
|
21,711 |
|
|
|
58,958 |
|
|
|
67,353 |
|
Gross profit margin |
|
|
12.8 |
% |
|
|
13.1 |
% |
|
|
11.0 |
% |
|
|
14.2 |
% |
|
|
|
|
|
|
|
|
|
Combined gross profit(i) |
|
|
39,651 |
|
|
|
32,644 |
|
|
|
93,998 |
|
|
|
91,807 |
|
Combined gross profit margin(i)(ii) |
|
|
14.7 |
% |
|
|
15.6 |
% |
|
|
12.8 |
% |
|
|
15.9 |
% |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
17,649 |
|
|
|
14,373 |
|
|
|
39,592 |
|
|
|
37,664 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(i) |
|
|
60,110 |
|
|
|
47,538 |
|
|
|
159,499 |
|
|
|
151,049 |
|
Adjusted EBITDA margin(i)(iii) |
|
|
22.3 |
% |
|
|
22.7 |
% |
|
|
21.7 |
% |
|
|
26.2 |
% |
|
|
|
|
|
|
|
|
|
Net income |
|
|
20,220 |
|
|
|
13,973 |
|
|
|
41,291 |
|
|
|
36,100 |
|
Adjusted net earnings(i) |
|
|
17,558 |
|
|
|
14,127 |
|
|
|
36,875 |
|
|
|
41,467 |
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
31,432 |
|
|
|
32,185 |
|
|
|
91,102 |
|
|
|
99,285 |
|
Cash provided by operating activities prior to change in working
capital(i) |
|
|
39,810 |
|
|
|
31,516 |
|
|
|
118,037 |
|
|
|
119,637 |
|
|
|
|
|
|
|
|
|
|
Free cash flow(i) |
|
|
3,390 |
|
|
|
9,985 |
|
|
|
2,462 |
|
|
|
18,903 |
|
|
|
|
|
|
|
|
|
|
Purchase of PPE |
|
|
31,205 |
|
|
|
28,557 |
|
|
|
83,591 |
|
|
|
86,626 |
|
Sustaining capital additions(i) |
|
|
30,578 |
|
|
|
19,763 |
|
|
|
87,158 |
|
|
|
81,991 |
|
Growth capital additions(i) |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.75 |
|
|
$ |
0.49 |
|
|
$ |
1.49 |
|
|
$ |
1.28 |
|
Adjusted EPS(i) |
|
$ |
0.65 |
|
|
$ |
0.50 |
|
|
$ |
1.33 |
|
|
$ |
1.47 |
|
(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.
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
(dollars in thousands) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash provided by operating activities |
|
$ |
31,432 |
|
|
$ |
32,185 |
|
|
$ |
91,102 |
|
|
$ |
99,285 |
|
Cash used in investing activities |
|
|
(28,042 |
) |
|
|
(31,762 |
) |
|
|
(79,945 |
) |
|
|
(74,968 |
) |
Capital additions financed by leases |
|
|
— |
|
|
|
(4,175 |
) |
|
|
(8,695 |
) |
|
|
(19,198 |
) |
Add back: |
|
|
|
|
|
|
|
|
Growth capital additions |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
60 |
|
Acquisition of DGI Trading Pty Limited |
|
|
— |
|
|
|
13,724 |
|
|
|
— |
|
|
|
13,724 |
|
Free cash flow(i) |
|
$ |
3,390 |
|
|
$ |
9,985 |
|
|
$ |
2,462 |
|
|
$ |
18,903 |
|
(i)See "Non-GAAP Financial Measures".
Declaration of Quarterly
Dividend
On October 25th, 2022, the NACG Board of
Directors declared a regular quarterly dividend (the “Dividend”) of
eight Canadian cents ($0.08) per common share, payable to common
shareholders of record at the close of business on November 30,
2022. The Dividend will be paid on January 6, 2023 and is an
eligible dividend for Canadian income tax purposes.
Financial Results for the Three Months
Ended September 30, 2022
Revenue of $191.4 million represented a $25.4
million (or 15%) increase from Q3 2021. Revenue generated by NACG’s
core heavy equipment fleet was up 18% quarter over quarter, with
the driver of this increase being equitable contributions from
higher equipment and unit rates as well as improved utilization.
Equipment and unit rates were updated in the quarter to reflect the
specific inflationary cost pressures being experienced in the Fort
McMurray region. Equipment operating hours and the associated
operational headcount were both up 10% in the quarter and yielded
utilization of 62% which was significantly higher than Q3 2021
utilization of 52% and was particularly strong in the month of
September. Vacancy rates of heavy equipment technician roles have
lowered with net new hires of 50 heavy equipment technicians in the
past three months which was a key factor in the overall equipment
utilization achieved. The other wholly-owned business lines,
primarily being DGI Trading Pty Ltd. and the external sales of
rebuilt haul trucks, each posted strong revenue quarters consistent
with Q3 2021.
Combined revenue of $269.6 million represented a
$60.4 million (or 29%) increase from Q3 2021. Our share of revenue
generated in Q3 2022 by joint ventures and affiliates was $78.2
million compared to $43.3 million in Q3 2021 (an increase of 81%).
Nuna Group of Companies had its best financial quarter on record
driven by the activity at the gold mine in Northern Ontario and the
core businesses operating at better than historical levels.
Secondary drivers of the increase in combined revenue include: i)
the continued growth of top-line revenue from rebuilt ultra-class
haul trucks now being owned by MNALP, ii) increasing throughput of
the component rebuild programs managed and performed by the Brake
Supply North American joint venture, and lastly iii) the
increasingly important impact of the joint ventures dedicated to
the Fargo-Moorhead flood diversion project. The ground-breaking
ceremony and official start of construction occurred in the quarter
and ramp-up of activities is underway with the project currently at
less than 5% of being complete and remaining on budget and schedule
in this early phase of the project.
Adjusted EBITDA of $60.1 million represented an
increase of $12.6 million (or 27%) from the Q3 2021 result of $47.5
million as the combined revenue increase of 29% was supported by
stable margins. The adjusted EBITDA margin of 22.3% reflected
strong operational performance in the quarter as operations in the
Fort McMurray, Northern Canada, and Northern Ontario regions
experienced predictable and productive weather conditions for the
majority of the quarter. The equipment and unit rates which were
updated during the quarter allowed Fort McMurray operations to
return to historical margin performance. Margins realized from
parts and component sales made by DGI Trading contributed to margin
stability when comparing to Q3 2021 given the acquisition occurred
on July 1, 2021. The second-life rebuild program commissioned and
sold two 240-ton haul trucks and one ultra-class 400-ton haul truck
during the quarter. Lastly, the Canadian Emergency Wage Subsidy
("CEWS") program, which concluded in Q4 2021, was a modest factor
in quarter-over-quarter comparisons with Q3 2021 being the last
quarter for which we qualified.
General and administrative expenses (excluding
stock-based compensation) were $6.6 million, or 3.4% of revenue,
compared to $7.1 million, or 4.3% of revenue and were stable for
the quarter. Cash related interest expense for the quarter was $6.3
million at an average cost of debt of 5.8% compared to 4.3% in Q3
2021 as posted interest rates have increased noticeably over the
past twelve-month period.
Adjusted EPS of $0.65 on adjusted net earnings
of $17.6 million is 31% up from the prior year figure of $0.50
primarily from adjusted EBIT with a lower share count also
contributing to the overall increase. Weighted-average common
shares outstanding for the third quarters of 2022 and 2021 were
26,836,133 and 28,436,974, respectively, representing a decrease of
1,600,841 as the existing NCIB was completed in September. For
reference, the quarter ended with 26,428,661 common shares issued
and outstanding. Offsetting these positive drivers was a higher
interest expense which on a per share basis was up $0.07 per share
as similar debt levels attracted an overall cost of debt of 5.8%
compared to 4.3% in Q3 2021.
Free cash flow was $3.4 million in the quarter
as adjusted EBITDA generated $60.1 million, detailed above, and
when netted against sustaining capital additions ($30.6 million)
and cash interest paid ($6.9 million) produced positive cash of
$22.6 million and translated well into overall free cash flow.
However, routine fluctuations in working capital balances which
required cash in the quarter ($8.3 million) and cash managed within
the various joint ventures both had similar and significant impact
on free cash flow in the quarter. For reference, both of these
factors have historically reversed in the fourth quarter. Similar
to Q3 2021, the ultra-class rebuild program reduced
work-in-progress inventories in the quarter as the commissioning
and sale of certain units to MNALP occurred in September.
BUSINESS UPDATES
Business Objectives
Safety - Focus on people and
relationships, maintain an uncompromising commitment to health and
safety while elevating the standard of excellence in the field.
Sustainability - Commitment to the
continued development of sustainability targets and constant
measurement of progress to those targets.
Diversification - Continue to
pursue diversification of customer, resource and geography through
acquisition and/or strategic partnerships, industry expertise and
our investment in Nuna.
Execution - Enhancement of
operational excellence in fleet utilization and maintenance through
reliability programs and technical improvements. We continue to
specifically prioritize the sourcing and staffing of our critical
heavy equipment technician roles.
Total Return Swap Agreement
On October 4, 2022, we entered into a total return
swap agreement in relation to up to 1,000,000 of NACG's common
shares with a notional value of approximately $15.0 million for a
twelve-month period. Subject to certain conditions, the agreement
may be unwound prior to its maturity, either in whole or in part.
The counterparty to this agreement is a highly rated Canadian
financial institution. This agreement provides an opportunity to
capitalize on our belief that our current share price does not
reflect our underlying value.
Acquisition of ML Northern Services
Ltd.
On October 1, 2022, we acquired a privately-owned
heavy equipment servicing company specializing in mobile fuel,
lube, and steaming services based in Fort McMurray, Alberta, for an
estimated purchase price of $15.0 million, net of cash acquired and
funded through existing debt facilities. The purchase price is
approximately equal to the net tangible assets, comprised primarily
of approximately twenty mobile fuel, lube and steaming trucks but
also includes the required supporting light equipment fleet. We are
in the process of evaluating the appropriate accounting treatment
and valuing amounts for the major classes of assets and liabilities
acquired, intangible assets and preacquisition contingencies in
order to allocate the purchase price. The acquisition was premised
on our continued drive to lower operating costs by maximizing our
internal maintenance capabilities.
Credit Facility Amended and
Extended
On September 20, 2022, we announced an amendment
and extension of our senior secured credit facility (the “Credit
Facility”). The facility maturity date has been extended by one
year with a new maturity date of October 8, 2025. In addition to
the extension of existing favourable terms, the overall capacity
has been allocated to provide greater flexibility in operating the
Company’s joint ventures.
Normal Course Issuer Bid
On April 6, 2022, we announced a Normal Course
Issuer Bid ("NCIB") to purchase, for cancellation, up to 2,113,054
of our voting common shares, representing 10.0% of our public float
and 7.1% of our issued and outstanding common shares as of March
31, 2022 (with no more than 1,498,716 common shares, being
approximately 5.0% of issued and outstanding voting common shares,
to be purchased on the NYSE and alternative trading systems). This
NCIB commenced on April 11, 2022 and was completed in September
with the maximum number of shares purchased and cancelled.
Liquidity
|
|
September 30,2022 |
|
December 31,2021 |
Credit Facility limit |
|
$ |
300,000 |
|
|
$ |
325,000 |
|
Finance lease borrowing limit |
|
|
175,000 |
|
|
|
150,000 |
|
Other debt borrowing limit |
|
|
20,000 |
|
|
|
20,000 |
|
Total borrowing limit |
|
$ |
495,000 |
|
|
$ |
495,000 |
|
Senior debt(i) |
|
|
(272,169 |
) |
|
|
(225,876 |
) |
Letters of credit |
|
|
(32,413 |
) |
|
|
(33,884 |
) |
Joint venture guarantee |
|
|
(51,956 |
) |
|
|
(18,719 |
) |
Cash |
|
|
23,187 |
|
|
|
16,601 |
|
Total capital liquidity |
|
$ |
161,649 |
|
|
$ |
233,122 |
|
(i)See "Non-GAAP Financial Measures".
NACG’s Outlook for 2022 &
2023
Given our backlog and visibility through 2023,
management has decided to provide stakeholders with guidance
through 2022 and initial key measures for 2023. This guidance is
predicated on contracts currently in place and the heavy equipment
fleet that we own and operate.
Key measures |
|
2022 |
|
2023 |
Adjusted EBITDA |
|
$220 - $235M |
|
$235 - $260M |
Adjusted EPS |
|
$1.90 - $2.10 |
|
$2.05 - $2.25 |
Sustaining capital |
|
$105 - $110M |
|
$120 - $130M |
Free cash flow |
|
$65 - $75M |
|
$85 - $105M |
|
|
|
|
|
Capital allocation |
|
|
|
|
Deleverage |
|
$5 - $15M |
|
|
Shareholder activity (dividends, NCIB, trust purchases) |
|
~$45M |
|
|
Growth spending |
|
~$15M |
|
|
Share count reduction |
|
~7% |
|
|
|
|
|
|
|
Leverage ratios |
|
|
|
|
Senior debt |
|
1.1x - 1.5x |
|
|
Net debt |
|
1.4x - 1.8x |
|
|
Conference Call and Webcast
Management will hold a conference call and
webcast to discuss our financial results for the quarter ended
September 30, 2022 tomorrow, Thursday, October 27, 2022
at 7:00 am Mountain Time (9:00 am Eastern Time).
The call can be accessed by dialing: Toll free:
1-888-886-7786Conference ID: 62963278
A replay will be available through November 24,
2022, by dialing: Toll Free: 1-877-674-7070 Conference ID:
62963278Playback Passcode: 963278
The Q3 2022 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://app.webinar.net/pjd8EG3E0z6
A replay will be available until November 24, 2022
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, 2022 for further detail on
the matters discussed in this release. In addition to the MD&A,
please reference the dedicated Q3 2022 Results Presentation for
more information on our results and projections which can be found
on our website under Investors - Presentations.
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 for 2022 & 2023".
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, 2022. 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.sedar.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
"gross profit", "adjusted net earnings", "adjusted EBIT", "equity
investment EBIT", "adjusted EBITDA", "adjusted EBITDA margin",
"equity investment depreciation and amortization", "adjusted EPS",
"margin", "liquidity", "net debt", "senior debt", "sustaining
capital", "growth capital", "cash provided by operating activities
prior to change in working capital", "combined gross profit",
"combined gross profit margin", and "free cash flow". 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 |
|
|
September 30, |
(dollars in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Revenue from wholly-owned entities per financial statements |
|
$ |
191,383 |
|
|
$ |
165,962 |
|
Share of revenue from investments in affiliates and joint
ventures |
|
|
161,823 |
|
|
|
88,531 |
|
Adjustments for joint ventures |
|
|
(83,589 |
) |
|
|
(45,257 |
) |
Total combined revenue(i) |
|
$ |
269,617 |
|
|
$ |
209,236 |
|
(i)See "Non-GAAP Financial Measures".
A reconciliation of net income to adjusted
net earnings, adjusted EBIT and adjusted EBITDA is as
follows:
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
(dollars in thousands) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income |
|
$ |
20,220 |
|
|
$ |
13,973 |
|
|
$ |
41,291 |
|
|
$ |
36,100 |
|
Adjustments: |
|
|
|
|
|
|
|
|
(Gain) loss on disposal of property, plant and equipment |
|
|
(95 |
) |
|
|
264 |
|
|
|
1,069 |
|
|
|
(348 |
) |
Stock-based compensation expense (benefit) |
|
|
437 |
|
|
|
(62 |
) |
|
|
(129 |
) |
|
|
9,963 |
|
Net realized and unrealized gain on derivative financial
instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,737 |
) |
Write-down on assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
700 |
|
Equity investment net realized and unrealized gain on derivative
financial instruments |
|
|
(2,925 |
) |
|
|
— |
|
|
|
(5,140 |
) |
|
|
— |
|
Tax effect of the above items |
|
|
(79 |
) |
|
|
(48 |
) |
|
|
(216 |
) |
|
|
(2,211 |
) |
Adjusted net earnings(i) |
|
|
17,558 |
|
|
|
14,127 |
|
|
|
36,875 |
|
|
|
41,467 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Tax effect of the above items |
|
|
79 |
|
|
|
48 |
|
|
|
216 |
|
|
|
2,211 |
|
Interest expense, net |
|
|
6,522 |
|
|
|
4,845 |
|
|
|
16,769 |
|
|
|
13,782 |
|
Income tax (benefit) expense |
|
|
4,983 |
|
|
|
2,388 |
|
|
|
10,184 |
|
|
|
6,798 |
|
Equity earnings in affiliates and joint ventures(i) |
|
|
(14,076 |
) |
|
|
(6,833 |
) |
|
|
(28,652 |
) |
|
|
(16,279 |
) |
Equity investment EBIT(i) |
|
|
15,676 |
|
|
|
9,489 |
|
|
|
32,785 |
|
|
|
19,544 |
|
Adjusted EBIT(i) |
|
|
30,742 |
|
|
|
24,064 |
|
|
|
68,177 |
|
|
|
67,523 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
26,592 |
|
|
|
21,617 |
|
|
|
84,051 |
|
|
|
79,092 |
|
Write-down on assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(700 |
) |
Equity investment depreciation and amortization(i) |
|
|
2,776 |
|
|
|
1,857 |
|
|
|
7,271 |
|
|
|
5,134 |
|
Adjusted EBITDA(i) |
|
$ |
60,110 |
|
|
$ |
47,538 |
|
|
$ |
159,499 |
|
|
$ |
151,049 |
|
(i)See "Non-GAAP Financial Measures".
A reconciliation of equity earnings in
affiliates and joint ventures to equity investment EBIT and
depreciation and amortization is as follows:
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
(dollars in thousands) |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
Equity earnings in affiliates and joint ventures |
|
$ |
14,076 |
|
$ |
6,833 |
|
|
$ |
28,652 |
|
$ |
16,279 |
Adjustments: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
589 |
|
|
(94 |
) |
|
|
1,901 |
|
|
70 |
Income tax expense |
|
|
997 |
|
|
2,768 |
|
|
|
2,167 |
|
|
3,081 |
Gain on disposal of property, plant and equipment |
|
|
14 |
|
|
(18 |
) |
|
|
65 |
|
|
114 |
Equity investment EBIT(i) |
|
$ |
15,676 |
|
$ |
9,489 |
|
|
$ |
32,785 |
|
$ |
19,544 |
Depreciation |
|
$ |
2,600 |
|
$ |
1,812 |
|
|
$ |
6,743 |
|
$ |
4,915 |
Amortization of intangible assets |
|
|
176 |
|
|
45 |
|
|
|
528 |
|
|
219 |
Equity investment depreciation and
amortization(i) |
|
$ |
2,776 |
|
$ |
1,857 |
|
|
$ |
7,271 |
|
$ |
5,134 |
(i)See "Non-GAAP Financial Measures".
About the Company
North American Construction Group Ltd.
(www.nacg.ca) is one of Canada’s largest providers of heavy civil
construction and mining contractors. For more than 65 years, NACG
has provided services to large oil, natural gas and resource
companies.
For further information contact:
Jason Veenstra, CPA, CAChief Financial OfficerNorth
American Construction Group Ltd.(780)
960-7171IR@nacg.cawww.nacg.ca
Interim Consolidated Balance Sheets
(Expressed in thousands of Canadian
Dollars)(Unaudited)
|
Note |
|
September 30,2022 |
|
December 31,2021 |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash |
|
|
$ |
23,187 |
|
|
$ |
16,601 |
|
Accounts receivable |
4 |
|
|
87,192 |
|
|
|
68,787 |
|
Contract assets |
5(b) |
|
|
10,938 |
|
|
|
9,759 |
|
Inventories |
6 |
|
|
44,142 |
|
|
|
44,544 |
|
Prepaid expenses and deposits |
|
|
|
11,150 |
|
|
|
6,828 |
|
Assets held for sale |
|
|
|
384 |
|
|
|
660 |
|
|
|
|
|
176,993 |
|
|
|
147,179 |
|
Property, plant and equipment, net of accumulated depreciation of
$372,973 (December 31, 2021 – $339,505) |
|
|
|
645,454 |
|
|
|
640,950 |
|
Operating lease right-of-use assets |
|
|
|
15,540 |
|
|
|
14,768 |
|
Investments in affiliates and joint ventures |
7 |
|
|
69,363 |
|
|
|
55,974 |
|
Other assets |
|
|
|
2,602 |
|
|
|
6,000 |
|
Goodwill and intangible assets |
|
|
|
7,043 |
|
|
|
4,407 |
|
Deferred tax assets |
|
|
|
374 |
|
|
|
— |
|
Total assets |
|
|
$ |
917,369 |
|
|
$ |
869,278 |
|
Liabilities and shareholders’ equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
|
|
$ |
85,116 |
|
|
$ |
76,251 |
|
Accrued liabilities |
|
|
|
23,440 |
|
|
|
33,389 |
|
Contract liabilities |
5(b) |
|
|
157 |
|
|
|
3,349 |
|
Current portion of long-term debt |
8 |
|
|
20,557 |
|
|
|
19,693 |
|
Current portion of finance lease obligations |
|
|
|
21,285 |
|
|
|
25,035 |
|
Current portion of operating lease liabilities |
|
|
|
2,971 |
|
|
|
3,317 |
|
|
|
|
|
153,526 |
|
|
|
161,034 |
|
Long-term debt |
8 |
|
|
363,237 |
|
|
|
306,034 |
|
Finance lease obligations |
|
|
|
21,690 |
|
|
|
29,686 |
|
Operating lease liabilities |
|
|
|
12,730 |
|
|
|
11,461 |
|
Other long-term obligations |
|
|
|
19,917 |
|
|
|
26,400 |
|
Deferred tax liabilities |
|
|
|
65,210 |
|
|
|
56,200 |
|
|
|
|
|
636,310 |
|
|
|
590,815 |
|
Shareholders' equity |
|
|
|
|
|
Common shares (authorized – unlimited number of voting common
shares; issued and outstanding – September 30, 2022 - 27,827,282
(December 31, 2021 – 30,022,928)) |
9(a) |
|
|
229,455 |
|
|
|
246,944 |
|
Treasury shares (September 30, 2022 - 1,398,621 (December 31, 2021
- 1,564,813)) |
9(a) |
|
|
(16,324 |
) |
|
|
(17,802 |
) |
Additional paid-in capital |
|
|
|
21,046 |
|
|
|
37,456 |
|
Retained earnings |
|
|
|
46,482 |
|
|
|
11,863 |
|
Accumulated other comprehensive income |
|
|
|
400 |
|
|
|
2 |
|
Shareholders' equity |
|
|
|
281,059 |
|
|
|
278,463 |
|
Total liabilities and shareholders’ equity |
|
|
$ |
917,369 |
|
|
$ |
869,278 |
|
See accompanying notes to interim consolidated
financial statements.
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, |
|
Note |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
5 |
|
$ |
191,383 |
|
|
$ |
165,962 |
|
|
$ |
536,122 |
|
|
$ |
473,142 |
|
Cost of sales |
10(b) |
|
|
140,440 |
|
|
|
122,825 |
|
|
|
393,756 |
|
|
|
326,823 |
|
Depreciation |
|
|
|
26,376 |
|
|
|
21,426 |
|
|
|
83,408 |
|
|
|
78,966 |
|
Gross profit |
|
|
|
24,567 |
|
|
|
21,711 |
|
|
|
58,958 |
|
|
|
67,353 |
|
General and administrative expenses |
10(b) |
|
|
7,013 |
|
|
|
7,074 |
|
|
|
18,297 |
|
|
|
30,037 |
|
(Gain) loss on disposal of property, plant and equipment |
|
|
|
(95 |
) |
|
|
264 |
|
|
|
1,069 |
|
|
|
(348 |
) |
Operating income |
|
|
|
17,649 |
|
|
|
14,373 |
|
|
|
39,592 |
|
|
|
37,664 |
|
Interest expense, net |
11 |
|
|
6,522 |
|
|
|
4,845 |
|
|
|
16,769 |
|
|
|
13,782 |
|
Equity earnings in affiliates and joint ventures |
7 |
|
|
(14,076 |
) |
|
|
(6,833 |
) |
|
|
(28,652 |
) |
|
|
(16,279 |
) |
Net realized and unrealized gain on derivative financial
instruments |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,737 |
) |
Income before income taxes |
|
|
|
25,203 |
|
|
|
16,361 |
|
|
|
51,475 |
|
|
|
42,898 |
|
Current income tax expense |
|
|
|
701 |
|
|
|
572 |
|
|
|
1,198 |
|
|
|
572 |
|
Deferred income tax expense |
|
|
|
4,282 |
|
|
|
1,816 |
|
|
|
8,986 |
|
|
|
6,226 |
|
Net income |
|
|
$ |
20,220 |
|
|
$ |
13,973 |
|
|
$ |
41,291 |
|
|
$ |
36,100 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation gain (loss) |
|
|
|
382 |
|
|
|
(6 |
) |
|
|
398 |
|
|
|
(6 |
) |
Comprehensive income |
|
|
$ |
20,602 |
|
|
$ |
13,967 |
|
|
$ |
41,689 |
|
|
$ |
36,094 |
|
Per share information |
|
|
|
|
|
|
|
|
|
Basic net income per share |
9(b) |
|
$ |
0.75 |
|
|
$ |
0.49 |
|
|
$ |
1.49 |
|
|
$ |
1.28 |
|
Diluted net income per share |
9(b) |
|
$ |
0.65 |
|
|
$ |
0.44 |
|
|
$ |
1.33 |
|
|
$ |
1.16 |
|
See accompanying notes to interim consolidated
financial statements.
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