North American Construction Group Ltd. · TSX:NOA
North American Construction — Q4 2023 Earnings Presentation
27 slides from North American Construction's earnings presentation, Mar 14, 2024
Slide 1: Q4 2023 Earnings Presentation
Q4 2023 EARNINGS PRESENTATION March 14, 2024
Slide 2: Forward-looking statements & non-GAAP financial measures
Forward-looking statements & NOA TSX - NYSE non-GAAP financial measures This presentation contains forward-looking information which reflects the current plans management believes that they may be useful to investors in analyzing our business and expectations of North American Construction Group Ltd
Slide 3: Everyone Gets Home Safe
Exposure Hours1,2 4.8 4.9 4.9 NOA TSX - NYSE Everyone Gets Home Safe 3.4 4.2 3.4 3.1 2.7 UNWAVERING COMMITMENT TO SAFETY THROUGH 2.3 2.1 CONTINOUS IMPROVEMENTS 1.6 HEALTH & SAFETY FOCUSED MAINTAINED THROUGH THE IMPLEMENTATION OF SPECIFIC INITIATIVES: 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Slide 4: 2023 Accomplishments
NOA TSX - NYSE 2023 Accomplishments • Acquired MacKellar Group, providing a large-scale operating platform in Australia with the region now at 50% of the overall business • Driven by the acquisition, achieved full year financial records across the board for revenue, EBITDA, earnings per share & free
Slide 5: 2023 Financial Highlights
2023 Financial Highlights Combined Adjusted Revenue1 EBITDA1 $1.3B $297M 21% on 2022 21% on 2022 Adjusted Free cash EPS1 flow1 $2.83 $90M 17% on 2022 28% on 2022 1 See Slide 2 or 2023 Annual Report for Non-GAAP Financial Measures 5
Slide 6: Five Year Review
NOA TSX - NYSE Five Year Review Adjusted EBITDA1 ($m) Adjusted EPS1 $350 $3.00 $2.83 +10% CAGR2 $297 1.6x increase $300 $2.50 $250 $2.00 Q4 2023 $200 $1.50 $150 $1.00 $100 $0.50 $50 $- $- 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2023 financial performance continues growth trend with diversi
Slide 7: Equipment Utilization
NOA TSX - NYSE Equipment Utilization1 • Updated methodology allows for comparison between Canadian and Australian fleets 90% Target for Australia • Denominator for targeted utilization is 80% consistent for both regions Target for Canada 76% • Utilization metrics weighted for fleet 65% 70% profile a
Slide 8: 2023 Q4 Financial Overview
2023 Q4 FINANCIAL OVERVIEW = ae 6 “ As pat i NORTH ‘®) AMERICAN CONSTRUCTION GROUP
Slide 9: 2023 Q4 Performance
NOA 2023 Q4 Performance TSX - NYSE $403M $101M 71% $111M Combined revenue1 Adjusted Equipment Free Cash Flow1 EBITDA1 Utilization2 • Record combined revenue1 achieved bringing annual total to $1.3 billion $120 Adjusted EBITDA1 $101 Q4 2023 • Adjusted Q4 2023 EBITDA1 of $101 million $100 exceeds prev
Slide 10: Combined Results
NOA TSX - NYSE Combined Results (figures in millions of Canadian dollars, except per share amounts) Q4 2023 Q4 2022 Variance 2023 2022 Variance Wholly-owned entities $326 $233 $93 $957 $770 $188 Share of amounts from investments $77 $87 ($10) $316 $285 $32 TOTAL COMBINED REVENUE1 $403 $320 $83 $1,27
Slide 11: Adjusted EBITDA and EPS
NOA TSX - NYSE Adjusted EBITDA1 and EPS 1 (figures in millions of Canadian dollars, except per share amounts) Q4 2023 Q4 2022 Variance 2023 2022 Variance Adjusted EBITDA1,3 $101 25.1% $86 26.8% $15 $297 23.3% $245 23.3% $52 Adjusted EBIT1,3 $54 13.3% $46 14.3% $8 $145 11.4% $114 10.8% $31 1 Adjusted
Slide 12: Cash Provided by Operating Activities
NOA TSX - NYSE Cash Provided by Operating Activities (figures in millions of Canadian dollars unless otherwise stated) Q4 2023 Q4 2022 Variance 2023 2022 Variance Cash provided by operations prior to WC1 $85 $64 $20 $219 $183 $36 Net changes in non-cash working capital 76 14 63 $51 (13) 64 Cash prov
Slide 13: Balance Sheet
NOA TSX - NYSE Balance Sheet Q4 2023 Net Debt Composition Net Debt Leverage 1,2 31% 2.4x 2.2x 1.8x 1.7x Credit facility, net 1.5x 32% Equipment financing Convertible debentures 18% Vendor-provided financing 2019 2020 2021 2022 2023 16% 1 See Slide 2 or 2023 Annual Report for Non-GAAP Financial Measu
Slide 14: 2024 Outlook
2024 OUTLOOK AMERICAN CONSTRUCTION GROUP
Slide 15: Priorities for 2024
Priorities for 2024 1 2 Integration & growth of Win large-scale mining or MacKellar with ERP and stronger civil construction project systems & processes in place Qualify for major earthworks for second half of the year infrastructure tender 3 4 Achieve fleet utilization Re-establish operational targ
Slide 16: Integration of MacKellar Group
NOA TSX - NYSE Integration of MacKellar Group Drive growth through practical integration and implementations Go Live September 1 2024 Optimize Implement NACG ERP Adopt low-cost system to standardized operations Q4 2023 add reporting for fleet scalability & performance management Transition team in
Slide 17: Bid Pipeline
NOA TSX - NYSE Bid Pipeline ESTIMATED PROJECT COMMENCEMENT 2024 2025 2026+ TIMING Preferred opportunities & extensions Q4 2023 Projects in the active tender phase Projects in the pre-tender phase Diversified resources & infrastructure BID PIPELINE1 CONTAINS OVER $9 BILLION OF SPECIFIC SCOPES OF WORK
Slide 18: Contractual backlog now over $3.0 billion
NOA TSX - NYSE Contractual backlog1 now over $3.0 billion 2024 Q1 awards plus December 31, 2023 position, proforma contractual backlog at $3.3 billion MINING, RESOURCE & CIVIL CANADIAN OIL SANDS REGION QUEENSLAND & WESTERN AUSTRALIA • Strategic partnerships with the Backlog provides stability & sign
Slide 19: 2024 Outlook
NOA TSX - NYSE 2024 Outlook Guidance for revenue, EBITDA & EPS remain unchanged from November 2023 expectations • Ranges based on strong demand Updated November 2023 and consistent increases in mechanical availability • Fleet mobilized to maximize Combined revenue 1 $1.5B - $1.7B no change equipment
Slide 20: Disciplined Capital Allocation
NOA Disciplined Capital Allocation TSX - NYSE Net Debt Leverage1,2 Focus for 2024 2.4x 2.2x Debt repayment Acquisitions 1.8x 1.7x 1.5x 1.5x Lowering leverage Assessing bolt-on viewed as prudent use acquisitions & of capital transformative targets 2019 2020 2021 2022 2023 2024E Q4 2023 $160-$185m Ran
Slide 21: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 22: Company Overview
Head office & maintenance facilities in Acheson, Alberta NOA TSX - NYSE Company Overview MacKellar Group – Corporate office & maintenance facilities Sites with significant current operations Fleet of ~1,200 heavy equipment assets • Backed by support equipment & infrastructure Current workforce of ~4
Slide 23: Full Year 2023
NOA TSX - NYSE Full Year 2023 GUIDANCE ACTUAL TARGETS RESULTS 1 Combined revenue $1.2B - $1.3B $1.3B 1 Adjusted EBITDA $295M - $310M $297M 1 Sustaining capital $150M - $170M $169 Q4 2023 1 Adjusted EPS $2.80 - $3.00 $2.83 1 Free cash flow $90M - $110M $90M Leverage Ratios: 1, 2 Net debt leverage < 1
Slide 24: North American Construction Group
NOA North American Construction Group TSX - NYSE Australian contractor of civil earthmoving, mining services, and large-scale equipment rentals Provider of fully-maintained high-quality heavy equipment in Western Australia LARGE SCALE Majority Inuit-owned contract mining, heavy civil LOW-COST OP
Slide 25: Diversification Update
NOA TSX - NYSE Diversification Update 5% 5% Canadian oil sands region 5% 30% Civil construction & project management Q4 2023 Queensland metallurgical coal 15% Queensland thermal coal Western Australia 15% Equipment & component sales 25% Canadian resources 1 See Slide 2 or 2023 Annual Report for Non-
Slide 26: Long-Term Contracts
NOA TSX - NYSE Long-Term Contracts Owner Contract1,2 Regional Heavy Civil MUA 2027 2059 Various Earthworks with term Imperial Oil MSA Kearl Mine 2027 2060 Limited with term Fargo- Moorhead Flood Metro Flood Design & Diversion Project Diversion Authority build Construction - 2027 O&M - 2056 Wyoming t
Slide 27: Heavy Equipment Fleet
NOA TSX - NYSE Heavy Equipment Fleet • As at December 31, 2023, 1,160 mobile heavy equipment assets provide operational flexibility • Managed on an individual asset basis and deployed with sole objective of maximum operating utilization • ~300 assets operated within the Nuna Group of Companies • New
North American Construction Group — Q4 2023 Earnings Presentation on 6ix