North American Construction Group Ltd. · TSX:NOA
North American Construction — Q3 2020 Earnings Presentation
29 slides from North American Construction's earnings presentation, Oct 29, 2020
Slide 1: Q3 2020 Earnings Presentation
Q3 2020 EARNINGS PRESENTATION October 29, 2020 1
Slide 2: Forward-looking statements & Non-GAAP financial measures
Forward-looking statements & Non-GAAP financial measures This presentation contains forward-looking information which reflects the current plans and This presentation presents certain non-GAAP financial measures because management expectations of North American Construction Group Ltd. (the “Company”
Slide 3: Agenda
AGENDA Q3 2020 EARNINGS Martin Ferron Opening comments Joe Lambert Q3 20 Overview & Operational Highlights Jason Veenstra Financial Performance Martin Ferron Outlook for Q4 2020 & 2021 3
Slide 4: Everyone Gets Home Safe
Q3 2020 EARNINGS Everyone Gets • Health, Safety and Environment are integral to our business • Execution of safe work practices matters above all else Home Safe • COVID-19 pandemic reinforced • Strict quarantine & isolation protocols culture and conviction of keeping remain in place for employees sa
Slide 5: Everyone Gets Home Safe
Everyone Gets Home Safe Q3 2020 EARNINGS Exposure Hours 1 4.2 Total Recordable Injury Frequency 3.4 3.1 3.2 2.7 2.3 2.1 0.5 1.6 2013 2014 2015 2016 2017 2018 2019 2020 Q3 2013 2014 2015 2016 2017 2018 2019 2020 Q3 TTM TTM • Exposure hours dropped in Q3 due to impact of site access restrictions and s
Slide 6: Q3 2020 Overview & Operational Highlights
Q3 2020 EARNINGS Q3 2020 Overview & Operational Highlights 6
Slide 7: Q3 2020 Overview
Q3 2020 Overview Q3 2020 EARNINGS $0.26 $37.1M 16.3% +32.8% Adjusted EPS1 Adjusted EBITDA1 Gross profit margin1 Revenue improvement from Q2 2020 • Access restrictions and safety Heavy Equipment Operating Hours protocols had less of an operational 180,000 impact than in Q2 but still hampered ability
Slide 8: Milestone Quarter
Milestone Quarter Heavy equipment fleet fully integrated Other corporate & operational milestones • Equipment required significant upgrades but ▪ Q1 2019 – successful ramp up of new ▪ January & February 2020 – record start available earnings potential realized in early Q3 2020 EARNINGS maintenance f
Slide 9: Priorities to close out 2020 heading into 2021
Priorities to close out 2020 heading into 2021 In response to the impact COVID-19 has had on our customers Q3 2020 EARNINGS & operations, we will maintain our six identified priorities 1 2 3 Urgent attention paid to Maximize utilization of Accelerate use of hygiene and physical available heavy equip
Slide 10: Drive for Diversification
Drive for Diversification Q3 2020 EARNINGS Organic diversification is preferred as it leverages existing platform and mining expertise • Our reputation as a trusted operator in the Canadian oil sands and northern Canada is a significant competitive advantage • Competence in heavy equipment maintenan
Slide 11: Drive for Diversification
Drive for Diversification Diversification Q3 2020 EARNINGS ACCOMPLISHMENTS TO DATE Geographic Customer Resource / Service Line Diamonds, precious 1. November 1, 2018 – ownership interest in Nuna Group of Companies ✓ ✓ ✓ metals, base metals 2. June 21, 2019 – 5-year mine management contract for Wyomi
Slide 12: Award of Gold Mine Construction Contract
Award of Gold Mine Construction Contract • Newly formed joint venture owned and operated Q3 2020 EARNINGS equally by NACG and Nuna • Combination of NACG’s fleet, in particular the high capacity assets, and Nuna’s strong reputation and engagement with the local Indigenous communities was a competitiv
Slide 13: Q3 Financial Highlights
Q3 2020 EARNINGS Q3 20 Financial Highlights 13
Slide 14: Adjusted EBITDA and EPS
Adjusted EBITDA1 and EPS (figures in millio ns o f Canadian do llars, except per share amo unts) Q3 2020 Q3 2019 Q3 2020 YTD Q3 2019 YTD Q3 2020 EARNINGS Revenue $94 $166 $364 $530 1 Gross profit 15 16.3% 18 11.0% 71 19.6% 71 13.5% 2 General & administrative expenses 4 3.9% 5 3.0% 16 4.3% 20 3.7% Ne
Slide 15: Canada Emergency Wage Subsidy Revenue Impacts
Canada Emergency Wage Subsidy Revenue Impacts $70 Q3 2020 EARNINGS Effective CEWS1 program has allowed for retention of employees through immediate impacts of the pandemic $60 57% reduction • Program is supporting the re-hire of workers, minimizing job losses $50 in monthly revenues and better posit
Slide 16: Cash provided by operating activities
Cash provided by operating activities (figures in millio ns o f Canadian do llars unless o therwise stated) Q3 2020 Q3 2019 Q3 2020 YTD Q3 2019 YTD Q3 2020 EARNINGS Cash provided by operations prior to change in working capital 1 $26) $30) $105) $104) Net changes in non-cash working capital (24) (35
Slide 17: Balance sheet
Balance sheet (figures in millio ns o f Canadian do llars unless o therwise stated) September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Q3 2020 EARNINGS Cash $40 $41 $39 $6 1,3 Liquidity 99 135 108 115 Property, plant & equipment 634 629 617 588 Total assets 844 816 837 793 Senior debt
Slide 18: Composition Debt Structure
Composition Debt Structure 47% Net debt1 of $422 million as at September 30, 2020 Q3 2020 EARNINGS 35% 10.0% • Amended credit facility provides overall liquidity $0 1 Cost of Debt of $124 million based on $84 million of capacity 8.9% combined with $40 million of cash $0 Run-rate cost of debt now 3.6
Slide 19: 2020 & 2021 Outlook
Q3 2020 EARNINGS 2020 & 2021 Outlook 19
Slide 20: Progress Towards 2020 Targets
Progress Towards 2020 Targets Full year targets Q3 2020 EARNINGS Key measures: Year-to-date Adjusted EBITDA1 $129 $155 – $170 Range based on continued recovery from lows in mid-Q2 Sustaining capital1 $72 $80 – $90 Lower Q4 capital spending as fleet operating hours increase Adjusted EPS1 $1.38 $1.60
Slide 21: 2021 Targets and Outlook
2021 Targets and Outlook Q3 2020 EARNINGS Key Measures: $80 $165 - $205 $210 Current line of sight and assumption of Adjusted EBITDA1 continued easing of site access restrictions $80 $90 - $105 $210 offer ability to provide 2021 outlook Sustaining capital1 • Adjusted EPS1 is built on EBITDA1 $1.00 $
Slide 22: Q&A
22 Q3 2020 EARNINGS Q&A
Slide 23: Supplemental Information Presentation
SUPPLEMENTAL INFORMATION Q3 2020 EARNINGS PRESENTATION 23
Slide 24: Mining Company Overview
Mining Company Overview • Q3 2020 EARNINGS Premier provider of mining services and heavy construction with over 65 years in business • 49% interest in Nuna Group of Companies, the leading mining contractor in northern Canada for more than 25 years • Mobile fleet of over 900 heavy equipment assets pr
Slide 25: Heavy Equipment Fleet
Heavy Equipment Fleet • Q3 2020 EARNINGS As at September 30, 2020, over 900 mobile heavy equipment assets provide operational flexibility • Managed on an individual asset basis and deployed with sole objective of maximum utilization • Fleet count includes ~285 assets operated within Nuna Group of Co
Slide 26: Acheson Facilities
Acheson Facilities Q3 2020 EARNINGS 1. 10-bay maintenance facility with integrated office • Purpose-built for North American Construction Group • Larger cranes and wash bay sized to handle all heavy equipment fleet • Fits ultra class mining trucks (>300t payload) and large shovels (>600t) • Low cost
Slide 27: Nuna Group of Companies
Nuna Group of Companies Q3 2020 EARNINGS Nuna Group of Companies is the premier mining contractor in northern Canada Formed in 1993, Nuna is the established incumbent contractor on the mine sites in Nunavut and the Northwest Territories • Q3 2019 represented strongest quarter of activity on record w
Slide 28: First Nation & Inuit Partnerships
First Nation & Inuit Partnerships Q3 2020 EARNINGS 1. Kitikmeot Corporation We take great pride & responsibility in our First Nation & Inuit partnerships • Majority partner in Nuna, Kitikmeot Corporation is a wholly- owned business of Kitikmeot Inuit Association • Our partners enable us to work effe
Slide 29: Long Term Oil Sands Contracts
Long Term Oil Sands Contracts • Q3 2020 EARNINGS Long-term contracts remain in place with run-of-mine projections averaging 30+ years of remaining life • Oil sands production resiliency through the crisis is a testament to the operating model of mining operations Owner Contract1,2 2000 2010 2020 203
North American Construction Group — Q3 2020 Earnings Presentation on 6ix