North American Construction Group Ltd. · TSX:NOA
North American Construction — Q1 2022 Earnings Presentation
31 slides from North American Construction's earnings presentation, Apr 28, 2022
Slide 1: 2022 Q1 Earnings Presentation
2022 Q1 EARNINGS PRESENTATION April 28, 2022 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 EARNINGS Q1 2022 expectations of North American Construction Group Lt
Slide 3: Agenda
AGENDA Operational performance Financial overview Operational priorities Remainder of 2022
Slide 4: Everyone Gets Home Safe
Everyone Gets Total Recordable Injury Frequency Home Safe 0.50 • Life Saving Rules replacing • New Operator EARNINGS Q1 2022 Cardinal Safety Rules to Development training 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 align with Energy Safety designed for haul truck 2022 TTM Canada operators n
Slide 5: Diversified Business
Diversified Business 2022E Adjusted EBIT 1 Breakdown EARNINGS Q1 2022 2022 objective to grow both business areas while maintaining 50-50 distribution • Project awards and acquisitions have established a clear path to maintain diversification for 2022 20% Mine management • Current backlog1 split even
Slide 6: Operational Performance
OPERATIONAL PERFORMANCE
Slide 7: 2022 Q1 Performance
2022 Q1 Performance $237m $58m 65% 14% EARNINGS Q1 2022 Total combined Adjusted EBITDA1 Operating utilization Combined gross revenue1 profit margin1 • Record quarter for combined revenue1 $70 Adjusted EBITDA1 • Effective performance at major sites through challenging conditions $60 $57.7 • Demand fo
Slide 8: Equipment Utilization
Equipment Utilization EARNINGS Q1 2022 Q1 2022 resilient despite higher than anticipated demand for heavy equipment technicians • Operator shortages due to the Omicron variant early in the quarter negatively impacted utilization • Soft on-site conditions throughout March also hampered utilization as
Slide 9: Operational Excellence
Operational Excellence Incremental growth of margins & shareholder returns via EBIT1 margin & gross EPS EARNINGS Q1 2022 • Largely organic incremental growth since step change acquired growth in 2018 & 2019 (below) • Key operational focuses for remainder of 2022 are: • Sourcing & retaining critical
Slide 10: Equipment Operating Hours
Equipment Operating Hours NACG operating hours largely consistent with Q1 2021 EARNINGS Q1 2022 • Limited mechanical availability due to workforce availability and challenging weather constrained what was possible • Stability of quarterly operating hours showcasing reduction in seasonality Nuna oper
Slide 11: 2022 Q1 Financial Overview
2022 Q1 FINANCIAL 11 OVERVIEW
Slide 12: Combined Results
Combined Results (figures in millio ns o f Canadian do llars, except per share amo unts) 2022 Q1 2021 Q1 Variance EARNINGS Q1 2022 Wholly-owned entities $177 $168 $9) Share of amounts from investments $60 $24 $36) TOTAL COMBINED REVENUE 1 $237 $192 $45) Combined gross profit1 $33 13.7% $37 19.4% ($5
Slide 13: Adjusted EBITDA and EPS
Adjusted EBITDA1 and EPS (figures in millio ns o f Canadian do llars, except per share amo unts) 2022 Q1 2021 Q1 Variance EARNINGS Q1 2022 1,3 Adjusted EBITDA $58 24.4% $61 31.8% ($3) -7.4% 1,3 Adjusted EBIT $25 10.4% $29 14.9% ($4) -4.5% Adjusted EPS1 $0.51 $0.65 ($0.14) 2 General & administrative
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) 2022 Q1 2021 Q1 Variance EARNINGS Q1 2022 Cash provided by operations prior to change in working capital 1 $45) $60) ($15) Net changes in non-cash working capital (21) (18) (3) Cash provided b
Slide 15: Balance Sheet
Balance Sheet (figures in millio ns o f Canadian do llars unless o therwise stated) March 31, 2022 December 31, 2021 December 31, 2020 EARNINGS Q1 2022 Cash $20 $17 $43 1 Total capital liquidity 225 233 178 Property, plant & equipment 644 641 632 Total assets 880 869 839 1,2 Senior debt $243 1.5x $2
Slide 16: Debt Structure
Debt Structure $0 Annual Current $0 8.9% Cost of Debt Composition EARNINGS Q1 2022 Net debt1 of $382 million as at March 31, 2022 $0 28% • Split between three primary debt instruments $0 Q1 cash cost of debt was 4.5% based on changes in mix $0 32% • Credit Facility – Q1 rate of ~3.25% $0 4.5% 32% •
Slide 17: 2022 Outlook
17 2022 OUTLOOK
Slide 18: Priorities for Remainder of 2022
Priorities for Remainder of 2022 EARNINGS Q1 2022 1 2 3 Maintain focus on Maximize operating Staff, procure & mobilize safety efforts & prevent utilization via sourcing & for successful Fargo- serious injuries retaining critical heavy Moorhead earthworks equipment technicians commencement 4 5 6 Impl
Slide 19: Fargo-Moorhead Project Update
Fargo-Moorhead Project Update ~$650M 6-year construction project EARNINGS Q1 2022 NACG share of revenue plus a 29-year O&M contract • Proximo Infra named the project North American Water Deal of the Year and IJ Global recognized the project as the top Public Sector project in North America for 2021
Slide 20: Bid Pipeline
Bid Pipeline ESTIMATED PROJECT COMMENCEMENT TIMING EARNINGS Q1 2022 2022 2023 onward Preferred opportunities & extensions Projects in the active tender phase Projects in the pre- tender phase Diversified resources & geography • Bid pipeline1 contains ~$4.0 billion of specific scopes of work Canadian
Slide 21: Contractual Backlog
Contractual Backlog1 at $1.6 billion Backlog1 supports 50% adjusted EBIT1 diversification target EARNINGS Q1 2022 Contracts in place with major oil sands producers Backlog1 amount includes NACG’s share of joint continue to provide line of sight for core business venture contracts in place • Addition
Slide 22: Environmental & Sustainability Initiatives
Environmental & Sustainability Initiatives EARNINGS Q1 2022 HYDROGEN PROJECT ELECTRIC VEHICLE (EV) CHARGING & SOLAR PANELS Hydrogen dual fuel project progressing, feasibility study under review with decision for advancing to proof of Planned installation of four charging concept in Q2/Q3 & go / no g
Slide 23: People & Diversity
People & Diversity • All-female crew established at oil sands mine site with about twenty haul truck, shovel, and support equipment EARNINGS Q1 2022 operators. Women in Heavy Equipment training being offered to introduce new candidates to the industry • Over 1,600 hours of inclusion and diversity tr
Slide 24: Strong Indigenous Partnerships
Strong Indigenous Partnerships Annual amounts paid $12 EARNINGS Q1 2022 $10 +$30 million $8 North American Construction Group along with our partnerships Nuna Group of Companies, Mikisew North American Limited $6 Partnership and Dene North Site Services provide economic benefits to Indigenous owners
Slide 25: 2022 Outlook Unchanged
Current line of sight and assumption of steady site 2022 Outlook Unchanged access restrictions offer ability to provide outlook for 2022 • Adjusted EPS1 is built on EBITDA1 range, current run- EARNINGS Q1 2022 Key Measures rate depreciation and stable Adjusted EBITDA1 $100 $215 - $245 $250 tax & int
Slide 26: Peer ROIC Comparison
Peer ROIC 1 Adjusted EBIT Comparison margin 1, 2 Since Q4 2018 step change, 10.4% consistent outperformance of 10.7% peer group returns on capital & EARNINGS Q1 2022 operating margins 4.7% 8.2% • ROIC – averaging over 11% with peers well below 10% • EBIT margin – steadily over 2018 2019 2020 2021 20
Slide 27: Supplemental Information
SUPPLEMENTAL INFORMATION 2022 Q1 EARNINGS PRESENTATION 27
Slide 28: Company Overview
Company Overview EARNINGS Q1 2022 Premier provider of mining and heavy construction services • 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 29: Nuna Group of Companies
Nuna Group of Companies EARNINGS Q1 2022 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 • Proudly Inuit-owned through the Kitikmeot Corporation, Nuna i
Slide 30: Long Term Contracts
Long Term Contracts • Kearl extension announced on March 17, 2022 EARNINGS Q1 2022 Owner Contract1,2 Base Mine – Millennium Suncor Energy MUA & North Steepbank Services Inc. with term 2023 2040 MUC Fort Hills Mine Fort Hills Energy LP 2023 2059 with term Mildred Lake & MSA Syncrude Canada 2023 2046
Slide 31: Heavy Equipment Fleet
Heavy Equipment Fleet • As at March 31, 2022, ~900 mobile heavy equipment assets provide EARNINGS Q1 2022 operational flexibility • Managed on an individual asset basis and deployed with sole objective of maximum operating utilization • ~280 assets operated within the Nuna Group of Companies • New r
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