North American Construction Group Ltd. · TSX:NOA
North American Construction — Q3 2021 Earnings Presentation
34 slides from North American Construction's earnings presentation, Oct 28, 2021
Slide 1: 2021 Q3 Earnings Presentation
2021 Q3 EARNINGS PRESENTATION October 28, 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 EARNINGS Q3 2021 expectations of North American Construction Group Lt
Slide 3: Agenda
EARNINGS Q3 2021 Operational performance Financial overview AGENDA Operational priorities Remainder of 2021 Looking out to 2022 3
Slide 4: Everyone Gets Home Safe
Everyone Gets Home Safe Total Recordable Injury Frequency • Continued commitment to COVID-19 EARNINGS Q3 2021 measures & protocols to ensure everyone gets home safe • Mandatory vaccination status policy to be in effect November 30, 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q3 • Consiste
Slide 5: Operational Performance
EARNINGS Q3 2021 OPERATIONAL PERFORMANCE 5
Slide 6: 2021 Q3 Performance
2021 Q3 Performance $209m $48m +28% 16% EARNINGS Q3 2021 Total combined Adjusted EBITDA1 EBITDA1 increase from Combined gross revenue1 comparable Q3 2019 profit margin1 • Record quarter for combined revenue1 $70 Adjusted EBITDA1 • Record Q3 for adjusted EBITDA 1 $60 • Effective performance at major
Slide 7: Operational Excellence
Operational Excellence 2021 Q3 viewed as a transition quarter from an operational perspective EARNINGS Q3 2021 • Operational excellence remains the sole focus on achieving expected margins and shareholder returns • Financial close of Fargo-Moorhead project allows for focus on operational execution •
Slide 8: Equipment Operating Hours
Equipment Operating Hours NACG operating hours consistent with demand and performance from prior quarter EARNINGS Q3 2021 • Q3 impacted by mobilization to reposition equipment between sites for new contract awards • Operator shortages & COVID-19 protocols continue to have noticeable impacts on gross
Slide 9: 2021 Q3 Financial Overview
EARNINGS Q3 2021 2021 Q3 FINANCIAL OVERVIEW 9
Slide 10: Combined Results
Combined Results (figures in millio ns o f Canadian do llars, except per share amo unts) 2021 Q3 2020 Q3 2021 Q3 YTD 2020 Q3 YTD EARNINGS Q3 2021 Wholly-owned entities $166 $94 $473 $362 Share of amounts from investments $43 $25 $104 $51 TOTAL COMBINED REVENUE 1 $209 $119 $577 $413 Combined gross pr
Slide 11: Adjusted EBITDA and EPS
Adjusted EBITDA1 and EPS (figures in millio ns o f Canadian do llars, except per share amo unts) 2021 Q3 2020 Q3 2021 Q3 YTD 2020 Q3 YTD EARNINGS Q3 2021 1,3 Adjusted EBITDA $48 22.7% $37 31.2% $151 26.2% $129 31.2% 1,3 Adjusted EBIT $24 11.5% $16 13.8% $68 11.7% $64 15.4% Adjusted EPS1 $0.50 $0.26
Slide 12: Cash Provided by Operating Activities
Cash Provided by Operating Activities (figures in millio ns o f Canadian do llars unless o therwise stated) 2021 Q3 2020 Q3 2021 Q3 YTD 2020 Q3 YTD EARNINGS Q3 2021 Cash provided by operations prior to change in working capital 1 $32 $27) $120) $105) Net changes in non-cash working capital - (25) (2
Slide 13: Balance Sheet
Balance Sheet (figures in millio ns o f Canadian do llars unless o therwise stated) September 30, 2021 June 30, 2021 December 31, 2020 December 31, 2019 EARNINGS Q3 2021 Cash $15 $16 $43 $5 1 Liquidity 190 210 148 114 Property, plant & equipment 646 639 632 586 Total assets 875 817 839 791 Senior de
Slide 14: Debt Structure
Debt Structure $0 Annual Cost Current Net debt1 of $409 million as at September 30, 2021 10.0% of Debt Composition EARNINGS Q3 2021 $0 8.9% • Split between three primary debt instruments $0 30% • Overall liquidity1 of $190 million based on $175 million $0 of capacity combined with $15 million of cas
Slide 15: Remainder of 2021
EARNINGS Q3 2021 REMAINDER OF 2021 15
Slide 16: Priorities for 2021 Q4
Priorities for 2021 Q4 EARNINGS Q3 2021 1 2 3 Maintain pandemic Maximize operating Staff, plan, procure & protocols, uphold zero harm utilization of heavy mobilize for successful safety culture; achieve equipment fleet Fargo-Moorhead sustainability goals earthworks commencement 4 5 6 Capitalize on b
Slide 17: Improved 2021 Guidance
Improved 2021 Guidance Key Measures EARNINGS Q3 2021 Adjusted EBITDA1 $80 $205 - $215 $250 Sustaining capital1 $80 $95 - $105 $210 Adjusted EPS1 $1.00 $1.95 - $2.15 $3.00 Free cash flow1 nil $65 - $85 $120 Capital Allocation Measures Deleverage nil $15 - $35 $40 Share purchases nil $17 - $35 $40 Gro
Slide 18: Looking Out to 2022
EARNINGS Q3 2021 LOOKING OUT TO 2022 18
Slide 19: Equipment Utilization is a Key Driver
Equipment Utilization is a Key Driver 2021 Q2 & Q3 strong quarters but reflect impacts that will alleviate moving forward EARNINGS Q3 2021 1. Down time required for mobilization to Fort Hills mine and Aurora mine for upcoming winter scopes 2. Unavoidable operator shortages due to COVID-19 through is
Slide 20: Fargo-Moorhead Project
Fargo-Moorhead Project ~$650M 6-year construction project EARNINGS Q3 2021 NACG share of revenue plus a 29-year O&M contract • As the largest infrastructure project in NACG’s history, the success of this project is considered critical for our continued diversification strategy • Project award levera
Slide 21: Targets for Diversification Unchanged
Targets for Diversification Unchanged Outlook for 2021 remains on track EARNINGS Q3 2021 • Momentum generated from the Ontario gold mine project, U.S. mine management contracts and external maintenance • Partial year contributions from Fargo-Moorhead flood diversion project and DGI Trading acquisiti
Slide 22: Record Contractual Backlog at $1.9 billion
Record Contractual Backlog1 at $1.9 billion • Fargo–Moorhead flood diversion project provides EARNINGS Q3 2021 diversified backlog1 and geographically enhances work in the United States • Contractual backlog provides stability which, in turn, provides significant benefits throughout the organization
Slide 23: Bid Pipeline
Bid Pipeline ESTIMATED PROJECT COMMENCEMENT TIMING Size = $100m scope EARNINGS Q3 2021 2021 2022 2023 onward Preferred opportunities & extensions Projects in the active tender phase Projects in the pre- tender phase Diversified resources & geography • Bid pipeline1 contains ~$2.9 billion of specific
Slide 24: ESG Update – Operational Initiatives
ESG Update – Operational Initiatives EARNINGS Q3 2021 HYDROGEN PROJECT SOLAR ARRAY Hydrogen dual fuel project progressing, expecting Full rooftop solar panels installed with the maintenance feasibility study completion in 2022 Q1 with decision for facility expansion, now totaling +400,000 kWh annual
Slide 25: Inclusivity & Diversity
Inclusivity & Diversity • Indigenous awareness training course developed, EARNINGS Q3 2021 implemented, and added to required staff training. +1,100 employees completed the training in 2021 Q3 • All-female crew established at oil sands mine site with about twenty haul truck, shovel, and support equi
Slide 26: Indigenous Partners
Indigenous Partners ➔ Kitikmeot Corporation We take great pride & EARNINGS Q3 2021 2021 Q3 TTM increase vs prior year +50% Majority partner in Nuna, Kitikmeot Corporation is a responsibility in our First Nation & Inuit partnerships wholly-owned business of • Our partners enable us to work Kitikmeot
Slide 27: 2022 Outlook
2022 Outlook Current line of sight and assumption of EARNINGS Q3 2021 Adjusted EBITDA1 $100m $215m - $245m $250m steady site access restrictions offer ability to provide outlook for 2022 Sustaining capital1 $100m $110m - $120m $250m • Adjusted EPS1 is built on EBITDA1 range, Adjusted EPS 1 $1.00/sha
Slide 28: Supplemental Information
EARNINGS Q3 2021 SUPPLEMENTAL INFORMATION Q3 2021 EARNINGS PRESENTATION 28
Slide 29: Company Overview
Company Overview Premier provider of mining and heavy construction services EARNINGS Q3 2021 • 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 30: Nuna Group of Companies
Nuna Group of Companies Nuna Group of Companies is the premier mining EARNINGS Q3 2021 contractor in northern Canada Formed in 1993, Nuna is the established incumbent contractor on the mine sites in Nunavut and the Northwest Territories • 2021 Q3 represented strongest quarter on record • Proudly Inu
Slide 31: Long Term Contracts
Long Term Contracts Owner Contract1,2 Base Mine – Millennium Suncor Energy MUA EARNINGS Q3 2021 & 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 Aurora mines with term Kearl Mine Imperial Oil
Slide 32: Heavy Equipment Fleet
Heavy Equipment Fleet • As at September 30, 2021, ~900 mobile heavy equipment assets provide operational flexibility EARNINGS Q3 2021 • Managed on an individual asset basis and deployed with sole objective of maximum operating utilization • ~280 assets operated within the Nuna Group of Companies • N
Slide 33: Expanding Maintenance Capacity
Expanding Maintenance Capacity EARNINGS Q2 2021 Expanded Maintenance Facility Expanded Component Rebuild Facility Commissioned in mid-October 2021 Targeted Completion in 2022 Q2 Completed expansion adds four bays & Expansion to add 30-foot bay & 60-foot bay to heated storage facility existing rebuil
Slide 34: Acquisition of DGI Trading
Acquisition of DGI Trading • On July 1, 2021, acquisition of DGI Trading formally closed EARNINGS Q3 2021 • Seamless integration and first quarter of operations posted strong results • Based in Australia, provides NACG global reach to acquire applicable mining and construction equipment and componen
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