North American Construction Group Ltd. · TSX:NOA
North American Construction — Q2 2021 Earnings Presentation
31 slides from North American Construction's earnings presentation, Jul 29, 2021
Slide 1: Q2 2021 Earnings Presentation
Q2 2 0 2 1 EARNINGS PRESENTATION July 29, 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 Q2 2021 EARNINGS expectations of North American Construction Group Lt
Slide 3: Agenda
Q2 2021 EARNINGS AGENDA Opening comments Q2 2021 performance Financial overview Operational priorities Outlook for 2021 3
Slide 4: Everyone Gets Home Safe
Everyone Gets Home Safe Q2 2021 EARNINGS Exposure Hours1 4.2 Total Recordable 4.1 Injury Frequency 3.4 3.4 3.1 2.7 2.3 2.1 0.5 1.6 2013 2014 2015 2016 2017 2018 2019 2020 Q2 2021 2013 2014 2015 2016 2017 2018 2019 2020 Q2 2021 TTM TTM • Exposure hours returning to pre-pandemic levels as demand incre
Slide 5: Q2 2021 Performance
Q2 2021 EARNINGS Q2 2021 PERFORMANCE 5
Slide 6: 2021 Q2 Performance
2021 Q2 Performance $0.32 $42.4M 10.9% +98% Q2 2021 EARNINGS Adjusted EPS1 Adjusted EBITDA1 Gross profit margin1 Revenue increase from Q2 2020 $70 • Record Q2 adjusted EBITDA1 Adjusted EBITDA1 achieved as demand for services $60 rebounded from recent lows in 2020 • Early Q2 staffing shortages in the
Slide 7: Heavy Equipment Operating Hours
Heavy Equipment Operating Hours Overall gross decrease of 8% in equipment hours from Q1 2021 but up 10% from Q2 2019 • Operator shortages in April and May resulted in certain equipment remaining inactive due to the COVID-19 situation in Fort McMurray Q2 2021 EARNINGS • Modest Q2 reduction reflects l
Slide 8: Q2 2021 Financial Overview
Q2 2021 EARNINGS Q2 2021 FINANCIAL OVERVIEW 8
Slide 9: Adjusted EBITDA and EPS
Adjusted EBITDA1 and EPS (figures in millio ns o f Canadian do llars, except per share amo unts) Q2 2021 Q2 2020 Q2 2021 YTD Q2 2020 YTD Q2 2021 EARNINGS Revenue $140 $71 $309 $270 1 Gross profit 15 10.9% 21 29.8% 47 15.3% 56 20.7% 2 General & administrative expenses 6 4.3% 4 5.1% 13 4.2% 13 4.7% Ne
Slide 10: Equity Accounted Joint Ventures
Equity Accounted Joint Ventures (figures in millio ns o f Canadian do llars, except per share amo unts) Q2 2021 Q2 2020 Q2 2021 YTD Q2 2020 YTD Q2 2021 EARNINGS Revenues $38 $11 $63 $22 1 Gross profit $7 17.4% $3 30.4% $12 18.8% $6 26.4% General & administrative expenses $2 4.2% $1 12.5% $3 5.4% $4
Slide 11: Cash Provided by Operating Activities
Cash Provided by Operating Activities (figures in millio ns o f Canadian do llars unless o therwise stated) Q2 2021 Q2 2020 Q2 2021 YTD Q2 2020 YTD Q2 2021 EARNINGS Cash provided by operations prior to change in working capital 1 $29) $25 $89) $79 Net changes in non-cash working capital (3) 9 (21) 4
Slide 12: Balance Sheet
Balance Sheet (figures in millio ns o f Canadian do llars unless o therwise stated) June 30, 2021 March 31, 2021 December 31, 2020 December 31, 2019 Q2 2021 EARNINGS Cash $17 $32 $44 $6 1 Liquidity 211 151 148 115 Property, plant & equipment 641 644 634 588 Total assets 817 842 839 793 Senior debt 1
Slide 13: Debt Structure
Current Composition 33% Debt Structure $0 10.0% Annual 31% $0 Cost of Debt 8.9% Net debt1 of $398 million as at June 30, 2021 $0 Q2 2021 EARNINGS $0 • Evenly split between three primary debt instruments 31% 5.7% $0 • Overall liquidity1 of $211 million based on $194 5.0% 4.8% 4.7% million of capacity
Slide 14: Outlook for 2021
OUTLOOK FOR 2021 Q2 2021 EARNINGS 14
Slide 15: Priorities for the Remainder of 2021
Priorities for the Remainder of 2021 Q2 2021 EARNINGS 1 2 3 Maintain pandemic Maximize operating Staff, plan & mobilize for protocols, uphold zero utilization of heavy successful Fargo-Moorhead harm safety culture; achieve equipment fleet project commencement sustainability goals 4 5 6 Capitalize on
Slide 16: Milestone Fargo-Moorhead Award
Milestone Fargo-Moorhead Award $650M+ 6-year construction project Q2 2021 EARNINGS NACG share of revenue plus a 29-year O&M contract • Red River Valley Alliance composed of NACG, Acciona, Shikun & Binui were selected as successful proponent of the landmark flood diversion project • Marks the largest
Slide 17: Acquisition of DGI Trading
Acquisition of DGI Trading • On July 1, 2021, acquisition of DGI Trading successfully closed Q2 2021 EARNINGS • Seamless integration and first month of operations posted strong results • Located in Australia, provides NACG global reach to acquire applicable mining and construction equipment and comp
Slide 18: Improved Visibility for Diversification
Improved Visibility for Diversification Outlook for 2021 remains on track Q2 2021 EARNINGS • Momentum generated by the Ontario gold mine project, US mine management contracts and external maintenance • Partial year contributions from Fargo-Moorhead flood diversion project and DGI Trading acquisition
Slide 19: Contractual Backlog now at $1.7 billion
Contractual Backlog1 now at $1.7 billion Q2 2021 EARNINGS Majority of backlog1 outside of Canadian oil sands region • Including contract amendment in July 2021 to a multiple Backlog by use agreement with existing oil sands producer, backlog1 Market is now at $1.7 billion 55% • Fargo–Moorhead flood d
Slide 20: Bid Pipeline
Bid Pipeline ESTIMATED PROJECT COMMENCEMENT TIMING Short-term 6 months 12-18 months 2+ years Q2 2021 EARNINGS Preferred opportunities & extensions Projects in the active tender phase Projects in the pre- tender phase Size = $100m scope Diversified resources & geography • Bid pipeline1 contains ~$2.6
Slide 21: Equipment Utilization
Equipment Utilization Operating utilization of 53% in Q2 2021 reflects a decrease from Q1 2021 utilization of 66% Q2 2021 EARNINGS • Driven partially by operator shortages due to the third wave of COVID-19 through increased isolation requirement and interprovincial travel restrictions • Winter work
Slide 22: ESG Update
ESG Update Key Operational Initiatives • HYDROGEN PROJECT - established project team with internal and external experts to commence feasibility Q2 2021 EARNINGS studies for the blending of hydrogen and diesel fuels in high horsepower combustion engines. The team will establish support with hydrogen
Slide 23: 2021 Outlook
2021 Outlook Key Measures: Q2 2021 EARNINGS $80 $190 - $210 $210 Current line of sight and assumption of steady Adjusted EBITDA1 site access restrictions offer ability to provide $80 $95 - $105 $210 tighter outlook for 2021 Sustaining capital1 • Adjusted EPS1 is built on EBITDA1 $1.00 $1.70 - $1.95
Slide 24: Supplemental Information Presentation
SUPPLEMENTAL INFORMATION Q2 2021 EARNINGS PRESENTATION 24
Slide 25: Company Overview
Company Overview Premier provider of mining and heavy construction services Q2 2021 EARNINGS • 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 26: First Nation & Inuit Partnerships
First Nation & Inuit Partnerships ➔ Kitikmeot Corporation We take great pride & responsibility in our First Nation & Inuit Q2 2021 EARNINGS partnerships • Majority partner in Nuna, Kitikmeot Corporation is a wholly- owned business of Kitikmeot Inuit Association • Our partners enable us to work effec
Slide 27: Nuna Group of Companies
Nuna Group of Companies Nuna Group of Companies is the premier mining Q2 2021 EARNINGS contractor in northern Canada Formed in 1993, Nuna is the established incumbent contractor on the mine sites in Nunavut and the Northwest Territories • H1 2021 represented strongest first half of activity on recor
Slide 28: Increasing Revenue Through Indigenous Partners
Increasing Revenue Through Indigenous Partners Revenue generated through Q2 2021 TTM increase vs prior year Q2 2021 EARNINGS Indigenous partnerships 120 +33% Steady quarter over quarter increases in revenue through our 100 partnerships with Nuna Group of Companies, Mikisew North American Limited Par
Slide 29: Long Term Contracts
Long Term Contracts Owner Contract1,2 2000 2010 2020 2030 2040 2050 2060 Q2 2021 EARNINGS Base Mine – Millennium Suncor Energy MUA BM 2023 2040 & North Steepbank Services Inc. with term Contract term Expected mine life MUC FH 2023 2059 Fort Hills Mine Fort Hills Energy LP with term Mildred Lake & MS
Slide 30: Heavy Equipment Fleet
Heavy Equipment Fleet • As at June 30, 2021, ~900 mobile heavy equipment assets provide operational flexibility Q2 2021 EARNINGS • Managed on an individual asset basis and deployed with sole objective of maximum operating utilization • Fleet includes ~280 assets within Nuna Group of Companies • New
Slide 31: Expansion of Acheson Maintenance Facility
Expansion of Acheson Maintenance Facility 50% complete; on budget and on schedule for October opening Existing ten-bay facility at capacity Expansion to add four bays and a cold storage facility Q2 2021 EARNINGS • Demand for maintenance has • Will provide over 14,000 additional square feet of additi
North American Construction Group — Q2 2021 Earnings Presentation on 6ix