North American Construction Group Ltd. · TSX:NOA
North American Construction — Investor Presentation (May 2019)
22 slides from North American Construction's investor presentation, May 2019
Slide 1: Investor Presentation
Investor Presentation May 2019
Slide 2: Company Overview
Company Overview ▪ Premier provider of heavy construction and mining services in Mining Mining western Canada ▪ Provide comprehensive & integrated approach to customer needs from consultation to completion ▪ Over 65 years in business ▪ TSX and NYSE listings: “NOA” ▪ Share price: $18.28 (1) ▪ 52-week
Slide 3: World Class Safety
World Class Safety Health, Safety and Environment are recognized as an integral part of our business ▪ Process & practices based on conviction that ALL workplace incidents are preventable ▪ Ongoing safety excellence through continuous development of process and culture ▪ Promote active participation
Slide 4: Strategic Focus
Strategic Focus ▪ Fleet of over 675 heavy construction assets supported by ancillary equipment fleet ▪ Long-term customer relationships driven by reliable and on-time delivery of projects Dominant Position ▪ More than 40 years of experience operating in northern Alberta’s harsh environment in Niche
Slide 5: Operational Excellence
Operational Excellence ▪ Relentless approach to low-cost operations on $700 30% customer mine sites ▪ Focus on customer needs and operational 25% excellence initiatives resulted in significant $600 24% improvement in margins from 2012 to 2018 23% 25% ▪ Focused effort on securing ongoing operations $
Slide 6: Balance Sheet Management
Balance Sheet Management Enterprise Value (1) $1,000 $839 $739 $800 $600 $510 $338 $400 $253 $282 $234 $158 $200 $0 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Debt, net of cash Market capitalization Share Price over Tangible Book Value Senior Debt Leverage (2) 2.9x 3.0x 2.6x 2.4x 2.4x 2.5x 1.9x 1.9x
Slide 7: Strong Organic Opportunities
Strong Organic Opportunities Core Market Upside – Oil Sands Expand Equipment Maintenance Grow support services through term contracts on Leverage expertise to secure market share of existing and new mines third party repair & maintenance services Additional Resource Markets Civil & Construction Proj
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 (30-50 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 (1 of 2)
Oil Sands Customers (1 of 2) ▪ NACG has a long & proud history with all customers in the Fort McMurray oil sands region ▪ Consolidation of heavy equipment contractors has positioned NACG as the prime heavy equipment contractor in the region Suncor Energy Inc. ▪ Four uninterrupted decades of heavy co
Slide 10: Oil Sands Customers (2 of 2)
Oil Sands Customers (2 of 2) ▪ 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 com
Slide 11: Best-in-Class Maintenance
Best-in-Class Maintenance Facilities ▪ Acheson – major fleet repairs & overhauls ▪ Fort McMurray – major inspections & repairs ▪ Site – maintain machine health and utilization Maintenance Strategy ▪ Planning – improved wrench time productivity ▪ Reliability – reduced downtime ▪ Suppliers – partnersh
Slide 12: Acheson Facility
Acheson Facility ▪ 10-bay maintenance and rebuild facility on 20 acres with integrated office ▪ Located immediately west of Edmonton, 8-month build time, fully operational November 2018 ▪ Owned facility with estimated payback of 5 years ▪ Purpose-built for North American Construction Group ▪ Combine
Slide 13: Transformational Acquisitions
Transformational Acquisitions November 1, 2018 – NACG acquired a 49% ownership interest in Nuna Group of Companies, a civil construction and mining contractor based in Edmonton ▪ Final purchase price of $42.8 million represents a transaction multiple of ~1.0x tangible book value ▪ Diversification op
Slide 14: Nuna Group of Companies
Nuna Group of Companies ▪ 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 Territ
Slide 15: Nuna – Major Projects
Nuna – Major Projects Diavik Diamond Mine early Mary River site services, early earthworks, site development, earthworks and ad hoc labour Canyon Creek access road dikes and other contracts supply contracts Gahcho Kué’s ongoing Winter Giant Mine care & maintenance Gunnar Uranium Mine roads contracts
Slide 16: Outlook for Revenue Growth
Outlook for Revenue Growth Incremental 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 La
Slide 17: Current Financing
Current Financing Net debt of $385 million as at March 31, 2019 18.4% ▪ Senior debt of $290 million represents a $410 20.0% NTM leverage ratio of 1.8 $360 $405 $385 $310 15.0% ▪ Next significant maturity date of 10.0% November 23, 2021 $260 8.9% 10.0% $210 5.7% 5.0% 4.7% 4.8% $160 Cost of debt remai
Slide 18: Appendix
NORTH AMERICAN CONSTRUCTION GROUP 0 APPENDIX
Slide 19: Shareholder Activity
Shareholder Activity Share Purchase Program ▪ Since October 2013, 10.7 million shares purchased at an average price below $5 per share through NCIB activity ▪ Represents more than 98% of approved limit and 30% of total shares available in October 2013 Dividend Payment ▪ Annual aggregate dividend of
Slide 20: Heavy Equipment Fleet
Heavy Equipment Fleet ▪ Operating fleet of ~700 assets provides operational flexibility ▪ 625 owned, 75 on short-term rental arrangements ▪ Step change in November 2018 with purchase of +200 units ▪ Fleet utilization in 2018 reflects five-year high ▪ Half of operating hours generated from haul truck
Slide 21: 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
Slide 22: North American Construction Group
NORTH AMERICAN CONSTRUCTION GROUP
North American Construction Group — Investor Presentation (May 2019) on 6ix