North American Construction Group Ltd. · TSX:NOA
North American Construction — Q4 2020 Earnings Presentation
31 slides from North American Construction's earnings presentation, Feb 18, 2021
Slide 1: Q4 2020 Earnings Presentation
Q4 2020 EARNINGS PRESENTATION February 18, 2021 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
Q4 2020 EARNINGS AGENDA Martin Ferron Opening comments 2020 performance Jason Veenstra Financial overview Joe Lambert Operational priorities Outlook for 2021 3
Slide 4: Everyone Gets Home Safe
Q4 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 Q4 2020 EARNINGS Exposure Hours 1 4.2 Total Recordable Injury Frequency 3.4 3.4 3.1 2.7 2.3 2.1 0.5 1.6 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2020 • Exposure hours lower in 2020 due to impact of site access restrictions and safety protocol
Slide 6: 2020 Performance
Q4 2020 EARNINGS 2020 PERFORMANCE 6
Slide 7: 2020 Q4 Performance
2020 Q4 Performance $0.36 $46.2M 17.0% +93% Q4 2020 EARNINGS Adjusted EPS1 Adjusted EBITDA1 Gross profit margin1 Revenue improvement from Q2 2020 $70 • Steady operations during the start Adjusted EBITDA1 of the winter season as weather $60 was generally standard and customers continued to ramp-up $5
Slide 8: Full Year 2020 results versus targets
Full Year 2020 Key measures: Actual results Stated targets Q4 2020 EARNINGS Adjusted EBITDA1 $175 $155 – $170 Exceeded due to stronger than expected demand for equipment Sustaining capital1 $99 $80 – $90 Additional capital maintenance required to meet strong demand Adjusted EPS1 $1.73 $1.60 – $1.70
Slide 9: Milestones Accomplished
Milestones Accomplished Heavy equipment fleet fully integrated Other corporate & operational milestones ▪ January & February 2020 – record start to a calendar year • Equipment required significant upgrades but Q1 2019 – successful ramp up of new Q4 2020 EARNINGS ▪ available earnings potential realiz
Slide 10: Gold Mine Construction Contract
Gold Mine Construction Contract October 2020: Two-year major earthworks Q4 2020 EARNINGS construction contract at a gold mining project in Northern Ontario valued at over $250 million • Awarded to newly formed joint venture owned and operated equally by NACG and Nuna • Combination of NACG’s fleet, i
Slide 11: Q4 2020 Financial Overview
Q4 2020 EARNINGS Q4 2020 FINANCIAL OVERVIEW 11
Slide 12: Adjusted EBITDA and EPS
Adjusted EBITDA1 and EPS (figures in millio ns o f Canadian do llars, except per share amo unts) Q4 2020 Q4 2019 2020 2019 Q4 2020 EARNINGS Revenue $137 $189 $500 $719 1 Gross profit 23 17.0% 25 13.2% 94 18.9% 96 13.4% 2 General & administrative expenses 6 4.6% 8 4.0% 22 4.4% 27 3.8% Net income and
Slide 13: Canada Emergency Wage Subsidy
Canada Emergency Wage Subsidy Revenue Impacts $70 Effective CEWS1 program has allowed for retention of employees through Q4 2020 EARNINGS $60 50% reduction immediate impacts of the pandemic in monthly $50 revenues • Program supported the re-hire of workers, minimized job losses $40 and better positi
Slide 14: Cash provided by operating activities
Cash provided by operating activities (figures in millio ns o f Canadian do llars unless o therwise stated) Q4 2020 Q4 2019 2020 2019 Q4 2020 EARNINGS Cash provided by operations prior to change in working capital 1 $45 $45 $150) $149 Net changes in non-cash working capital 18 37 (3) 9 Cash provided
Slide 15: Balance sheet
Balance sheet (figures in millio ns o f Canadian do llars unless o therwise stated) December 31, 2020 December 31, 2019 December 31, 2018 Q4 2020 EARNINGS Cash $44 $6 $20 1 Liquidity 148 115 116 Property, plant & equipment 634 588 528 Total assets 839 793 690 Senior debt 1,2 $353 2.0x $296 1.7x $322
Slide 16: Debt structure
Current Composition 51% Debt Structure $0 10.0% 8.9% Annual $0 Cost of Debt 31% $0 Net debt1 of $386 million as at December 31, 2020 Q4 2020 EARNINGS $0 • Credit facility provides overall liquidity1 of $148 13% 5.7% million based on $104 million of capacity $0 5.0% 4.8% combined with $44 million of
Slide 17: Outlook for 2021
Q4 2020 EARNINGS OUTLOOK FOR 2021 17
Slide 18: Operational Priorities for 2021
Operational Priorities for 2021 Q4 2020 EARNINGS 1 2 3 Maintain pandemic Maximize utilization of available Accelerate use of lower cost protocols, uphold zero heavy equipment fleet; component rebuild facility; harm safety culture; achieve geographic & commodity on time on budget shop sustainability
Slide 19: Equipment Utilization
Equipment Utilization • Utilization of our equipment fleet is a key driver of profitability and continuation of upward trend is a focus for 2021 Q4 2020 EARNINGS • Internal maintenance programs have kept equipment operating minimizing down time through preventative initiatives • Committed term contr
Slide 20: Cost of Components
Cost of Components Range of total average component cost savings for various equipment types Cost of components & parts are the majority of our sustaining capital program (~75%) 20% to 40% Q4 2020 EARNINGS and a significant portion of the cost of operating our equipment (~35%) • Increases in product
Slide 21: Accelerated Drive for Diversification
Accelerated Drive for Diversification Significant award in Northern Ontario has accelerated the drive for diversification Q4 2020 EARNINGS • Further providing geographic and commodity diversification outside of the Canadian oil sands Increased organic diversification seen in project pipeline opportu
Slide 22: Bid Pipeline
Bid Pipeline ESTIMATED PROJECT COMMENCEMENT TIMING Short-term 12-18 Months 2-3 Years Q4 2020 EARNINGS Preferred opportunities & extensions Projects in the active tender phase Projects in the pre- tender phase Diversified resources & geography Size = $100m scope Canadian oil sands region • Bid pipeli
Slide 23: Environment, Social, Governance
Environment, Social, Governance • Inaugural 2021 Sustainability Report issued February 2, 2021 Q4 2020 EARNINGS • Provides structured framework for accountability moving forward Three key focus areas for 2021 Reclamation and Environmental Services 1. Inclusivity & Diversity in Operations • Salvaged
Slide 24: 2021 Outlook
2021 Outlook Key Measures: Q4 2020 EARNINGS $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 outlook for 2021 Sustaining capital1 • Adjusted EPS1 is built on EBITDA1 $1.00 $1.60 - $
Slide 25: Supplemental Information
SUPPLEMENTAL INFORMATION Q4 2020 EARNINGS PRESENTATION 25
Slide 26: Company Overview
Company Overview Premier provider of mining and heavy construction services Q4 2020 EARNINGS • Established reputation with over 65 years in business • Long-term contracts awarded based on safe cost-effective operations Mobile fleet of ~900 heavy equipment assets • Fully backed by support equipment &
Slide 27: First Nation & Inuit Partnerships
First Nation & Inuit Partnerships 1. Kitikmeot Corporation We take great pride & responsibility in our First Nation & Inuit Q4 2020 EARNINGS partnerships • Majority partner in Nuna, Kitikmeot Corporation is a wholly- owned business of Kitikmeot Inuit Association • Our partners enable us to work effe
Slide 28: Nuna Group of Companies
Nuna Group of Companies Nuna Group of Companies is the premier mining Q4 2020 EARNINGS 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 29: Heavy Equipment Fleet
Heavy Equipment Fleet • As at December 31, 2020, ~900 mobile heavy equipment assets Q4 2020 EARNINGS provide operational flexibility • Managed on an individual asset basis and deployed with sole objective of maximum utilization • Fleet count includes ~270 assets operated within Nuna Group of Compani
Slide 30: Acheson Facilities
Acheson Facilities 1. 10-bay maintenance facility with integrated office Q4 2020 EARNINGS • 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 31: Long Term Contracts
Long Term Contracts • Long-term contracts remain in place with run-of-mine projections averaging 30+ years of remaining life Q4 2020 EARNINGS • Oil sands production resiliency through the pandemic is a testament to the operating model of mining operations Owner Contract1,2 2000 2010 2020 2030 2040 2
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