North American Construction Group Ltd. · TSX:NOA
North American Construction — Investor Presentation (October 2018)
22 slides from North American Construction's investor presentation, October 2018
Slide 1: Investor Presentation
Investor Presentation October 2018
Slide 2: Company Overview
Company Overview ▪ Premier provider of heavy construction and mining services Mining Mining in western Canada ▪ Provide comprehensive & integrated approach to customer needs from consultation to completion ▪ 65 years in business ▪ TSX and NYSE listings: “NOA” ▪ Share price: $13.90 (1) ▪ 52-week low/
Slide 3: Strategic Focus
Strategic Focus ▪ 40+ years in Northern Alberta’s harsh operating environment Dominant Position ▪ Knowledge to determine optimal solutions for customers in Niche Market ▪ Operational excellence in safety, cost structure, productivity & customer satisfaction ▪ Long-term customer relationships driven
Slide 4: Operational Excellence
Operational Excellence $700 23% 25% 22% $595 21% $600 20% $500 $470 $472 17% 15% $400 $350 14% $281 $293 $300 9% 10% $213 $200 5% 5% $100 $0 0% 2012 2013 2014 2015 2016 2017 LTM Q2 2018 Revenue Adjusted EBITDA Margin Sustained margin improvements during significant economic downturn 4
Slide 5: Shareholder Activity
Shareholder Activity Share Purchase Program ▪ Since October 2013, NCIB activity has resulted in over 10.7 million shares being purchased through the TSX & NYSE facilities ▪ Represents more than 98% of approved limit and approximately 30% of total shares available in October 2013 Dividend Payment ▪ A
Slide 6: Balance Sheet Management
Balance Sheet Management Period Ending December 31, June 30, 2012 2013 2014 2015 2016 2017 2018 Net Debt ($ million) 390.13 123.32 128.60 78.73 88.13 131.61 131.04 Equity ($ million) 120.35 215.43 126.35 78.78 146.62 151.44 190.53 Enterprise Value ($ million) 510.49 338.75 254.95 157.51 234.75 283.0
Slide 7: Strong Organic Opportunities
Strong Organic Opportunities Core Market Upside – Oil Sands Expand Equipment Maintenance Leverage expertise to secure share of a large Grow support services through term contracts on market for third party repair and maintenance existing and new mines services Additional Resource Markets Infrastruct
Slide 8: Mine Site Presence – First On, Last Off
Mine Site Presence – First On, Last Off Project Development Phase (3-4 years) Ongoing Operations Phase (30-40 years) ▪ Initial mine site development, project site ▪ Overburden removal, mine infrastructure development, development, airstrips, piping reclamation, tailing ponds remediation, equipment a
Slide 9: Oil Sands Customers
Oil Sands Customers ▪ Master services agreement at Mildred Lake and Aurora mines, expires August 2022 ▪ 5-year Multiple Use Agreement covering mining services SUNCOR & construction, expires December 2020 FORT HILLS CANADIAN ▪ Extended to cover Fort Hills mine and SAGD (Steam NATURAL IMPERIAL HORIZON
Slide 10: New Acheson Facility
New Acheson Facility ▪ $28 million Facility Project – 10-bay shop on 20 acres with integrated office ▪ Located immediately west of Edmonton ▪ Estimated payback of 5 years ▪ Move-in ready Q4 2018 ▪ Purpose-built for North American replacing existing Acheson facility ▪ 3-times more functional service
Slide 11: Best-in-Class Maintenance
Best-in-Class Maintenance Facilities ▪ New Acheson facility - Major fleet repairs and overhauls ▪ Ruth Lake facility (Fort McMurray) - Major inspections & repairs ▪ Site - Maintain unit health and utilization Maintenance Strategy ▪ Planning – improved wrench time productivity ▪ Reliability – increas
Slide 12: Two Transformational Acquisitions
Two Transformational Acquisitions 1. On September 20th 2018, NACG entered into a definitive agreement to acquire a 49% ownership interest in Nuna Logistics Limited (“Nuna”), a civil construction and contract mining company based in Edmonton, Alberta ▪ Expected purchase price of $42.5M (1) ▪ Purchase
Slide 13: Nuna - Transaction Rationale
Nuna - Transaction Rationale ✓ Enhances access to resource and infrastructure market in northern Canada ✓ Further diversification of customer base and end-market exposures outside of Alberta oil sands ✓ Double-digit free cash flow accretion for NACG shareholders including expected synergies ▪ Aligne
Slide 14: Nuna – Business Overview
Nuna – Business Overview Formed in 1993, Nuna provides construction, logistics, contract mining and support services to the resource Office Locations: industry primarily in northern Canada Headquarters ▪ Involved in virtually every major mining project in Operations Nunavut and the Northwest Terri
Slide 15: Nuna – Existing Customers
Nuna – Existing Customers Mining Services Oil & Gas / Chemicals Government 15
Slide 16: Nuna – Major Projects
Nuna – Major Projects Diavik Diamond Mine early Mary River site services, early earthworks, site development, earthworks & ad hoc labour supply Canyon Creek access road dikes, and other contracts contracts Gahcho Kué’s ongoing Winter Giant Mine care & maintenance Gunnar Uranium Mine roads contracts
Slide 17: Aecon Mining - Transaction Rationale
Aecon Mining - Transaction Rationale ✓ Value based opportunity with equipment priced consistent with the book value of comparable property and equipment already owned by NACG ✓ Provides immediate operational synergies given same work and same customers, with the ability to leverage existing operatio
Slide 18: Aecon Mining - Overview
Aecon Mining - Overview ▪ Transaction includes the purchase of Aecon’s fleet of heavy earth-moving assets together with lighter construction assets, support equipment and maintenance facilities ▪ Existing contractual commitments will be assigned to NACG, subject to customer and partner consents ▪ In
Slide 19: Outlook for Revenue Growth
Outlook for Revenue Growth Continued growth in mine support volumes and heavy construction activity on existing oil sands mine sites as owners grow production ▪ Securing our core business by signing long-term agreements with four major customers ▪ Supporting production efforts at Kearl, Mildred Lake
Slide 20: Debt ($ Millions)
Financing Impact $400 $120 $350 $100 $300 Debt ($ Millions) $250 $80 $200 $60 $150 $40 $100 $22 $12 $10 $20 $50 $6 $7 $7 $0 $0 2013 2014 2015 2016 2017 LTM Q2 2018 2018 Proforma Capital leases Series 1 Debentures Credit Facility Convertible Debentures Credit Facility - Nuna Credit Facility - Aecon I
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Slide 22: Forward-Looking Statements
Forward-Looking Statements The information provided in this presentation contains forward-looking statements and information which reflect the current view of North American Construction Group Ltd. (the “Company”) with respect to future events and financial performance, including the Company’s abili
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