North American Construction Group Ltd. · TSX:NOA
North American Construction — Q1 2023 Earnings Presentation
28 slides from North American Construction's earnings presentation, Apr 27, 2023
Slide 1: Q1 2023 Earnings Presentation
Q1 2023 EARNINGS PRESENTATION April 27, 2023
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 2023 expectations of North American Construction Group Lt
Slide 3: Everyone Gets Home Safe
Everyone Gets 4.8 4.9 5.0 Home Safe 4.2 3.4 3.4 3.1 2.7 Trailing twelve-month recordable injury rate below target 2.3 2.1 EARNINGS Q1 2023 consistent with positive trends in late 2022 & early 2023 1.6 Maintaining focus on health & safety through initiatives • Utilization of drone technology to impro
Slide 4: Celebrating Years in Business
Celebrating 70 Years in Business Company founded on April 13, 1953 EARNINGS Q1 2023 Thousands of projects completed over seven decades Since the 1950’s Since the 1970’s Since the 1980’s Since the 1990’s Infrastructure Fort McMurray Canadian Diamond mines projects oil sands region resource industry a
Slide 5: Proud History translates into Strong Future
Proud History translates into Strong Future SIGNIFICANT BARRIERS TO ENTRY IN PLACE Strong reputation in the heavy civil & mining industries from decades of strong project performance EARNINGS Q1 2023 Uncompromising commitment to safety with track record to prove it Commercial relationships wit
Slide 6: Low-Cost Operator (1 of 3)
Low-Cost Operator (1 of 3) Rebuilding Equipment & Components QUICK FACTS EARNINGS Q1 2023 • Components include engines, transmissions, final drives, torque converters, cylinders • Purchase price & subsequent major component replacements are 50% of total ownership costs NACG REBUILD PROGRAM • Individ
Slide 7: Low-Cost Operator (2 of 3)
Low-Cost Operator (2 of 3) In-house Maintenance Capacity • Focus on vertical integration has resulted in over 90% of maintenance activities completed internally EARNINGS Q1 2023 • Heavy equipment maintenance capacity in Acheson has quadrupled since 2015 • Capacity increases have allowed for overall
Slide 8: Low-Cost Operator (3 of 3)
Low-Cost Operator (3 of 3) Equipment Operating Costs • Rebuilding equipment & components and in-house maintenance have resulted in stable equipment operating costs EARNINGS Q1 2023 • Inflationary pressures & rising input costs have been largely mitigated • Stable equipment operating costs allow NACG
Slide 9: Equipment Utilization
Equipment Utilization1 100% EARNINGS Q1 2023 80% Target range of 75% to 85% 81% 79% 75% 74% 65% 65% 70% 63% 61% 60% 40% 20% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 2020 2021 2022 2023 Upward trend correlated with
Slide 10: 2023 Q1 Financial Overview
2023 a FINANCIAL. OVERVIEW 7 Rie he
Slide 11: 2023 Q1 Performance
2023 Q1 Performance $321M $85M 79% 14.3% EARNINGS Q1 2023 Combined Adjusted Equipment Return on revenue1 EBITDA1 utilization2 invested capital 2 $100 • Consecutive record set for combined Adjusted EBITDA1 revenue1 in quarter $90 $85 • Adjusted EBITDA of $85M matched Q4 $80 2022 but exceeded previous
Slide 12: Combined Results
Combined Results (figures in millions of Canadian dollars, except per share amounts) 2023 Q1 2022 Q1 Variance EARNINGS Q1 2023 Wholly-owned entities $243 $177 $66 Share of amounts from investments $78 $60 $18 TOTAL COMBINED REVENUE1 $321 $237 $84 Combined gross profit1 $56 17.4% $33 13.7% $23 Revenu
Slide 13: Adjusted EBITDA and EPS
Adjusted EBITDA1 and EPS (figures in millions of Canadian dollars, except per share amounts) 2023 Q1 2022 Q1 Variance EARNINGS Q1 2023 1,3 Adjusted EBITDA $85 26.4% $58 24.4% $27 1,3 Adjusted EBIT $43 13.4% $25 10.4% $18 1 Adjusted EPS $0.96 $0.51 $0.45 2 General & administrative expenses $8 3.4% $5
Slide 14: Cash Provided by Operating Activities
Cash Provided by Operating Activities (figures in millions of Canadian dollars unless otherwise stated) 2023 Q1 2022 Q1 Variance 1 Cash provided by operations prior to change in working capital $66 $45 $21 EARNINGS Q1 2023 Net changes in non-cash working capital (34) (21) (13) Cash provided by opera
Slide 15: Balance Sheet
Balance Sheet (figures in millions of Canadian dollars unless otherwise stated) March 31, 2023 December 31, 2022 December 31, 2021 Cash $16 $69 $17 1 172 212 233 EARNINGS Q1 2023 Total capital liquidity Property, plant & equipment 663 646 641 Total assets 950 980 869 Senior debt 1,2 $241 1.2x $266 1
Slide 16: Outlook
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Slide 17: Priorities for 2023
Priorities for 2023 EARNINGS Q1 2023 1 2 Drive safety performance Leverage technology & & expectations focused operational initiatives to on front-line supervision effect improved equipment & green-hand training utilization & lower costs 3 4 • Win regional tender opportunity Attract, develop & retai
Slide 18: Bid Pipeline
Bid Pipeline ESTIMATED PROJECT COMMENCEMENT TIMING EARNINGS Q1 2023 Q2 2023 H2 2023 2024 2025+ Preferred opportunities & extensions Projects in the active tender phase Projects in the pre- tender phase Diversified resources & geography • Bid pipeline1 contains ~$4.8 billion of specific scopes of wor
Slide 19: Contractual Backlog at $1.1 billion
Contractual Backlog1 at $1.1 billion Half of backlog1 contracted to established Indigenous partnerships EARNINGS Q1 2023 Natural drawdown of balance as we approach contract renewal dates DIVERSIFIED MINING, RESOURCE & CIVIL OIL SANDS REGION 60% of backlog1 40% of backlog1 Fargo–Moorhead flood di
Slide 20: 2023 Q1 performance increased expectations for the year
2023 Q1 performance increased expectations for the year Updated 2023 Outlook • Range based on continued & consistent increases in equipment utilization Financial measures PREVIOUS CURRENT • Leverages backlog1 and well- EARNINGS Q1 2023 Adjusted EBITDA1 $240 – $260 $255 – $275 maintained fleet that p
Slide 21: Supplemental Information
SUPPLEMENTAL INFORMATION 2023 Q1 EARNINGS PRESENTATION
Slide 22: Company Overview
Company Overview Premier provider of mining and heavy construction services • Established reputation with over 70 years in business EARNINGS Q1 2023 • Long-term contracts awarded based on safe cost-effective operations Mobile fleet of ~900 heavy equipment assets • Fully backed by support equipment &
Slide 23: Years in Business 1953–2023
70 Years in Business 1953 – 2023 1953 → North American Road Ltd. incorporated as a family business with a used Caterpillar dozer → started with road building in Alberta for government & industrial customers 1973 → entry into commercial development of the Fort McMurray region (land clearing, road bui
Slide 24: Diversified Business
Diversified Business Adjusted EBIT 1 Breakdown EARNINGS Q1 2023 Objective to continue to grow both business areas while maintaining 50-50 distribution • Project awards and acquisitions have established a clear path to maintain diversification 20% Mine management • Current backlog1 split between oil
Slide 25: Long Term Contracts
Long Term Contracts Owner Contract1,2 EARNINGS Q1 2023 Base Mine – Millennium Suncor Energy MUA 2023 2040 & North Steepbank Services Inc. with term MUC 2023 2059 Fort Hills Mine Fort Hills Energy LP with term Mildred Lake & MSA 2023 2046 Syncrude Canada Aurora mines with term MSA 2027 2060 Kearl Min
Slide 26: Heavy Equipment Fleet
Heavy Equipment Fleet • As at March 31, 2023, ~900 mobile heavy equipment assets provide EARNINGS Q1 2023 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 r
Slide 27: Maintenance Headcount
Maintenance Headcount Key driver for sustained equipment utilization EARNINGS Q1 2023 450 • Apprenticeship program Target NACG headcount level addressing persistent shortages 400 • Direct service providers & third- party vendors provide required 350 supplementary capacity 300 • Maintenance headcount
Slide 28: Summarized Free Cash Flow
Summarized Free Cash Flow1 Wholly- Joint Q1 Wholly- Joint Q1 EARNINGS Q1 2023 figures in C$ millions owned ventures 2023 owned ventures 2022 Adjusted EBITDA $72) $13) $85) $48) $10) $58) Sustaining capital 2 (47) (6) (51) (32) (7) (34) Interest & taxes 3 (8) (1) (11) (4) (2) (6) Free cash flow befor
North American Construction Group — Q1 2023 Earnings Presentation on 6ix