ACHESON, Alberta, Oct. 30, 2024 (GLOBE NEWSWIRE) -- North American Construction Group Ltd. ("NACG") (TSX:NOA.TO/NYSE:NOA) today announced results for the third quarter ended September 30, 2024. Unless otherwise indicated, financial figures are expressed in Canadian dollars and compared to the prior period ended September 30, 2023.
Third Quarter 2024 Highlights:
- Combined revenue of $367.2 million compared favorably to $274.8 million in the same period last year, is a third quarter record, and reflected the best operational quarter to date from the Australian fleet of the MacKellar Group which was acquired on October 1, 2023.
- Reported revenue of $286.9 million, compared to $196.9 million in the same period last year, was primarily driven by strong equipment utilization of 84% in Australia but was also supported by the Canadian heavy equipment fleet which posted an increase from 2024 Q2.
- Our net share of revenue from equity consolidated joint ventures was $80.3 million in 2024 Q3 and compared to $77.9 million in the same period last year as the increases at the Fargo project in the current quarter were offset by gold mine project scopes in Northern Ontario completed in the prior quarter.
- Adjusted EBITDA of $106.4 million and margin of 29.0% compared favorably to the prior period operating metrics of $59.4 million and 21.6%, respectively, as revenue increases resulted in higher gross EBITDA with margin improvements driven by effective operations in Australia and Canada.
- Combined gross profit of $80.4 million and margin of 21.9% compares favorably to the 13.8% posted in the same period last year as both diversification efforts and effective operations during steady and consistent months contributed to improved margins in the quarter.
- Cash flows generated from operating activities of $48.2 million was higher than the $37.5 million generated in the prior period as higher cash generation from the strong EBITDA was offset by the temporary impact of changes to working capital in the quarter.
- Free cash flow generated in the quarter was $10.8 million. Free cash flow prior to working capital changes and increases in capital work in progress was over $55 million resulting from strong revenues and margins offset by our routine capital maintenance programs.
- Net debt was $882.5 million at September 30, 2024, an increase of $159.1 million from December 31, 2023, as year-to-date free cash flow usage and growth asset purchases required debt financing. The cash-related interest rate was 6.5% driven by Bank of Canada posted rates and corresponding equipment financing rates.
- On October 29, 2024, the Board of Directors declared a regular quarterly dividend of twelve cents which represents a 20% increase from the previous rate of ten cents per quarter.
- Additional highlights include: i) in August, signed a $375 million five-year contract for fully maintained equipment fleet in Queensland; ii) in September, surpassed the 50% completion mark at the Fargo-Moorhead flood diversion project, iii) in October, completed delivery to site of twenty-five haul trucks from Canada to Australia; iv) commenced go-live activities for the Company's ERP system in Australia phased integration ongoing through early November and iv) extended the credit facility agreement through to October 2027.
Consolidated Financial Highlights
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (dollars in thousands, except per share amounts) | 2024 | 2023(iv) | 2024 | 2023(iv) | ||||||||||||
| Revenue | $ | 286,857 | $ | 196,881 | $ | 860,197 | $ | 636,398 | ||||||||
| Total combined revenue(i) | 367,155 | 274,757 | 1,042,591 | 875,666 | ||||||||||||
| Gross profit | 65,098 | 26,518 | 168,057 | 89,213 | ||||||||||||
| Gross profit margin(i) | 22.7 | % | 13.5 | % | 19.5 | % | 14.0 | % | ||||||||
| Combined gross profit(i) | 80,415 | 38,004 | 205,229 | 130,181 | ||||||||||||
| Combined gross profit margin(i)(ii) | 21.9 | % | 13.8 | % | 19.7 | % | 14.9 | % | ||||||||
| Operating income | 53,805 | 14,344 | 130,786 | 50,386 | ||||||||||||
| Adjusted EBITDA(i)(iii) | 106,384 | 59,371 | 286,516 | 195,827 | ||||||||||||
| Adjusted EBITDA margin(i)(iii) | 29.0 | % | 21.6 | % | 27.5 | % | 22.4 | % | ||||||||
| Net income | 13,901 | 11,387 | 39,277 | 45,495 | ||||||||||||
| Adjusted net earnings(i) | 31,253 | 14,295 | 72,961 | 52,060 | ||||||||||||
| Cash provided by operating activities | 48,184 | 37,512 | 119,063 | 109,521 | ||||||||||||
| Cash provided by operating activities prior to change in working capital(i) | 79,838 | 41,666 | 222,641 | 134,646 | ||||||||||||
| Free cash flow(i) | 10,785 | 8,940 | (32,518 | ) | (21,817 | ) | ||||||||||
| Purchase of PPE | 61,812 | 39,295 | 203,772 | 114,210 | ||||||||||||
| Sustaining capital additions(i) | 21,127 | 42,290 | 118,317 | 127,792 | ||||||||||||
| Growth capital additions(i) | 21,437 | 1,727 | 60,987 | 4,475 | ||||||||||||
| Basic net income per share | $ | 0.52 | $ | 0.43 | $ | 1.47 | $ | 1.72 | ||||||||
| Adjusted EPS(i) | $ | 1.17 | $ | 0.54 | $ | 2.73 | $ | 1.96 | ||||||||
(ii)Combined gross profit margin is calculated using combined gross profit over total combined revenue.
(iii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.
(iv)The prior year amounts are adjusted to reflect a change in accounting policy. See "Change in significant accounting policy - Basis of presentation".
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||
| Cash provided by operating activities | $ | 48,184 | $ | 37,512 | $ | 119,063 | $ | 109,521 | ||||||||
| Cash used in investing activities | (60,221 | ) | (26,970 | ) | (198,919 | ) | (107,123 | ) | ||||||||
| Effect of exchange rate on changes in cash | 1,385 | (1,100 | ) | 508 | (1,462 | ) | ||||||||||
| Add back of growth and non-cash items included in the above figures: | ||||||||||||||||
| Growth capital additions(i)(ii) | 21,437 | 1,727 | 60,987 | 4,475 | ||||||||||||
| Capital additions financed by leases(i) | - | (2,229 | ) | (14,157 | ) | (27,228 | ) | |||||||||
| Free cash flow(i) | $ | 10,785 | $ | 8,940 | $ | (32,518 | ) | $ | (21,817 | ) | ||||||
(ii)Included above in Cash used in investing activities.
Declaration of Quarterly Dividend
On October 29, 2024, the NACG Board of Directors declared a regular quarterly dividend (the "Dividend") of twelve Canadian cents ($0.12) per common share, payable to common shareholders of record at the close of business on November 27, 2024. The Dividend will be paid on January 3, 2025, and is an eligible dividend for Canadian income tax purposes.
Financial Results for the Three Months Ended September 30, 2024
Revenue for 2024 Q3 of $286.9 million represented an increase of approximately $90.0 million (or 46%) from 2023 Q3. The increase is primarily due to the inclusion of results from the MacKellar Group ("MacKellar") following our acquisition on October 1, 2023.
The Heavy Equipment - Australia segment showed strong performance, driven by MacKellar's Q3 results generated from stable operating conditions during the quarter. Equipment utilization of the MacKellar fleet for the quarter of 84% was similar to 2024 Q2 but generated higher revenue as growth assets commissioned late in the second quarter in Western Australia and Queensland provided full quarter contributions. The month of July was particularly strong with utilization being above the target of 85% while August and September averaged 82%. DGI Trading Pty Ltd. ("DGI") posted lower revenue in the quarter due to timing of large component sales but continues to benefit from international demand for low-cost used components and major parts required by heavy equipment fleets in the mining industry.
The Heavy Equipment - Canada segment posted a decline in revenue compared to the prior year as equipment utilization was 51% for the quarter in comparison to 56% in 2023 Q3. Quarter over quarter, the decrease in revenue represented a 23% decrease and was primarily driven by changes in work scopes at the Fort Hills and Syncrude mines offset by increases in operating hours at the Millennium mine. Additionally, the prior year's quarter benefited from higher utilization rates from NACG assets being operated at the gold mine in northern Ontario, a project that concluded in 2023 Q3. When comparing to 2024 Q2, top-line revenue achieved in the quarter was 8% higher on consistent operating conditions from July to September as well as increased work scopes at the Millennium mine.
Combined revenue of $367.2 million represented a $92.4 million (or 34%) increase from 2023 Q3. Our share of revenue generated in 2024 Q3 by joint ventures and affiliates was $80.3 million, compared to $77.9 million in 2023 Q3. The Fargo-Moorhead flood diversion project, which completed another strong operational quarter, posted a 32% increase from scopes completed in the prior quarter and surpassed the 50% completion mark during the quarter. Mostly offsetting this variance was the completion of the gold mine project in northern Ontario which occurred in 2023 Q3.
Combined gross profit and margin of $80.4 million and 21.9% compares favorably to the $38.0 million and 13.8% posted in the prior quarter and was the compilation of strong operations across all business lines. In particular, consistent weather conditions in Australia resulted in productive operations and a 24.6% gross margin over the three m