North American Construction Group Ltd. · TSX:NOA

North American Construction — FY2019 Earnings Presentation

23 slides from North American Construction's earnings presentation, Feb 19, 2020

  1. Slide 1: 2019 Annual Results

    CORPORATE PRESENTATION - 2019 ANNUAL RESULTS - FEBRUARY 19, 2020

  2. Slide 2: Everyone Gets Home Safe

    EVERYONE GETS HOME SAFE Health, Safety and Environment are recognized as an integral part of our business  Process & practices based on conviction that ALL workplace incidents are preventable  Promote active participation at all levels starting with focus on front line leadership  Consistent reci

  3. Slide 3: Q4 2019 – Business Highlights

    Q4 2019 – Business Highlights  Strong finish to 2019 with Q4 revenue of $189 million bringing full year-over-year increase to 75%  Organic growth of 15% provided upside to the 60% achieved through growth capital1 and the 2018 acquisitions  Record external maintenance deliveries in Q4 bolstered or

  4. Slide 4: 2020 Outlook – Focus on Execution

    2020 Outlook – Focus on Execution In 2019, we integrated two acquisitions, commenced operations at a coal mine in Wyoming, incorporated the ultra-class fleet, and expanded our maintenance capabilities; all while maintaining a world class safety culture Focus in 2020 is low-cost safe customer service

  5. Slide 5: Adjusted EBITDA and EPS

    Adjusted EBITDA1 and EPS (figures in millions of Canadian dollars, except per share amounts) Q4 2019 Q4 2018 2019 2018 Revenue $189 $131 $719 $410 1 Gross profit 25 13.2% 18 14.0% 96 13.4% 69 16.8% General & administrative expenses2 8 4.0% 8 6.1% 27 3.8% 26 6.2% Net income 8 3 37 15 Earnings per Sha

  6. Slide 6: Cash Provided by Operating Activities

    Cash Provided by Operating Activities (figures in millio ns o f Canadian do llars unless otherwise stated) Q4 2019 Q4 2018 2019 2018 Cash provided by operations prior to change in working capital 1 $45) $27) $149) $95) Net changes in non-cash working capital 37) 10) 9) 14) Cash provided by operating

  7. Slide 7: Balance Sheet

    Balance Sheet (figures in millions o f Canadian do llars unless o therwise stated) December 31, 2019 December 31, 2018 December 31, 2017 Cash $6 $20 $8 Liquidity 1 115 116 115 Property, plant & equipment 588 528 279 Total assets 793 690 384 Senior debt 1,2 $296 1.5x $322 2.9x $100 1.6x Net debt 1,2

  8. Slide 8: Returns on Capital & Equity

    Returns on Capital & Equity Return on Invested Capital1 – continuation of upward trend is currently at 9.6%  Invested capital1 of $587 million represents increase of over 200% from end of 2017  Revenue, adjusted EPS1 and adjusted EBITDA1 all up +1.7x in 2019 validating 2018 acquisitions 26.4% Retu

  9. Slide 9: 2020 Outlook

    2020 Outlook (figures in millions of Canadian dollars, except per share amounts) 2017 2018 2019 2020 Outlook KEY MEASURES Adjusted EBITDA1 63 102 174 $190 – $215 Adjusted EPS 1 $0.31 $0.99 $1.72 $1.90 – $2.30 Sustaining capital 1 30 55 124 $95 – $115 1 Free cash flow 19 61 26 $70 – $100 OTHER MEASUR

  10. Slide 10: 2020 Free Cash Flow Outlook

    2020 Free Cash Flow1 Outlook (figures in millions of Canadian dollars) $10 to $20 $70 to $100 $10 to $20 nil to $10 $5 $12 $20 $26 2019 Deferred capital Q3 2019 wet Director Higher revenue Capital Operational 2020 free free requirement weather retirement - spending excellence cash flow 1 cash - - pa

  11. Slide 11: Enterprise Value & Trading Multiples

    Enterprise Value1 & Trading Multiples Enterprise Value1 $812 (figures in millions of Canadian dollars) $669 $510 $338 $253 $291 $234 $158 2012 2013 2014 2015 2016 2017 2018 2019 Net debt Market capitalization 1 12.0x NTM Adjusted EPS Price Multiple1,2 6.0x EV / NTM EBITDA Multiple1,2 10.0x 5.0x 8.0x

  12. Slide 12: Drive for Diversification (1 of 2)

    Drive for Diversification (1 of 2) Diversification 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 Wyoming coa

  13. Slide 13: Drive for Diversification (2 of 2)

    Drive for Diversification (2 of 2) Organic diversification leverages existing platform and mining expertise  Our reputation as a trusted operator in the harsh Canadian oil sands is a significant competitive advantage  Competence in heavy equipment maintenance is also a differentiator  Systems & i

  14. Slide 14: Appendix

    Appendix ©) aan can CONSTRUCTION GROUP

  15. Slide 15: Company Overview

    Company Overview  Premier provider of mining services and heavy construction in western Canada with over 65 years in business Mining Mining Services  49% interest in Nuna Group of Companies, the premier mining contractor in northern Canada for more than 25 years  Mobile fleet of over 775 heavy as

  16. Slide 16: Long Term Oil Sands Contracts

    Long Term Oil Sands Contracts  Long-term contracts in place at major oil sands sites with run-of-mine projections averaging 30+ years of remaining life  Major barriers to entry given up-front capital required to assemble and deploy a fleet of heavy equipment on site  Historical production from co

  17. Slide 17: Heavy Equipment Fleet

    Heavy Equipment Fleet  Over 775 heavy equipment assets provide operational flexibility  Fleet count includes Nuna equipment (~160 assets)  Step change in Q4 2018 with purchase of over 300 units  17 Caterpillar 797B trucks commissioned in 2019  New replacement value1 of fleet calculated at $1.8

  18. Slide 18: Nuna Group of Companies

    Nuna Group of Companies  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 with momentum

  19. Slide 19: First Nation & Inuit Partnerships

    First Nation & Inuit Partnerships 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 effectively in bringin

  20. Slide 20: Shareholder Friendly Activity

    Shareholder Friendly Activity NCIB Purchase Track Record  11 million shares purchased at cost of ~$5.00 per share; represents 98% of limit & 31% of shares available in 2013 Long Term Incentive Hedging Plan  4 million shares purchased by the Company into the trust since 2013 has avoided over 15% di

  21. Slide 21: Notes

    Notes 21

  22. 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 expec

  23. Slide 23: Non-GAAP Financial Measures

    Non-GAAP Financial Measures A non-GAAP financial measure is generally defined by the Canadian regulatory authorities as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be adjusted in the most c

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