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North American Construction Group Ltd. Announces Results for the Fourth Quarter and Year Ended December 31, 2020

ACHESON, Alberta, Feb. 17, 2021 (GLOBE NEWSWIRE) -- North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA) today announced results for the fourth quarter and year ended December 31, 2020. Unless otherwise indicated, financial figures are expressed in Canadian dollars, and comparisons are to the prior period ended December 31, 2019.

Fourth Quarter and Year Ended 2020 Highlights:

  • Adjusted EBITDA of $46.2 million resulted in full year adjusted EBITDA of $175.5 million. Both are consistent with prior year, reflecting a continued recovery to pre-pandemic levels as the year progressed and a demonstrated ability to react quickly and implement cost discipline when required.
  • Gross profit margin of 17.0% in Q4 2020 compared to 13.2% in prior period reflected positive operating conditions through the start of the winter season of work.
  • COVID-19 related safety protocols and mine site access restrictions remained consistent with mid-year conditions and continue to have pervasive temporary impacts on all aspects of operations.
  • Free cash flow ("FCF") of $40.5 million resulted in full year FCF of $43.5 million. In addition to strong adjusted EBITDA in the quarter, FCF was positively impacted by the typical Q4 changes in capital work in process, capital inventory and working capital balances.
  • Net debt was $385.6 million at December 31, 2020, reduced $21.0 million from the prior year balance of $406.6 million. Deleveraging was achieved through free cash flow generation and capital allocation prioritization in Q4.
  • Diversification efforts led to 35% of adjusted EBIT being generated outside of the Fort McMurray region. Realized progress towards the diversification goal and the strength of the active bid pipeline have led to an increase of our 2022 diversification target to 50%.
  • On October 8, 2020, we extended our credit facility agreement to October 8, 2023 and increased the available borrowings permitted under our revolving facility by $25.0 million to $325.0 million.
  • On October 22, 2020, we announced the award of a two-year major earthworks contract in Northern Ontario. The contract was awarded to a joint venture owned and operated equally by us and Nuna. Valued at over $250 million, the project has begun to ramp up with peak volumes expected in Q3 2021 and completion in fall 2022.
  • On December 16, 2020, we announced the appointment of Joe Lambert as President and Chief Executive Officer, effective January 1, 2021. Effective on the same date, Joe was also appointed to the Board.
  • On February 2, 2021, we issued our inaugural sustainability report. The annual report provides structured framework for environmental, social and governance initiatives moving forward and will allow for measurement of progress towards our goals in a various business areas.
  • In mid-February 2021 and effective January 1, 2021, Barry Palmer was appointed Chief Operating Officer.

NACG Executive Chairman, Martin Ferron, commented: “I am very pleased that our exceptional team of employees marked my final quarter as CEO with strong operating and financial performance. In particular, we met our safety target, despite the distractions, restrictions and anxiety caused by the ongoing pandemic. Also, we achieved our free cash flow objective, allowing good debt reduction from the prior quarter and made significant progress towards our diversification goal, with the award of a major construction project on a gold mine in Ontario.”

NACG President and CEO, Joseph Lambert, added: “Looking forward, I am excited for the opportunity to lead North American Construction Group through the next stage of our long and storied history. It is reassuring to inherit a strategy that can withstand the challenges experienced in 2020. I have been intimately involved in the development and execution of this proven strategy and am committed to progressing it further."

Consolidated Financial Highlights

 Three months ended Year ended
 December 31, December 31,
(dollars in thousands, except per share amounts)2020 2019 2020 2019
Revenue$136,771  $189,455  $500,374  $719,067 
Project costs39,419  66,091  139,452  277,646 
Equipment costs47,809  69,960  177,532  243,427 
Depreciation26,273  28,327  89,008  101,582 
Gross profit(i)$23,270  $25,077  $94,382  $96,412 
Gross profit margin(i)17.0% 13.2% 18.9% 13.4%
General and administrative expenses (excluding stock-based compensation)6,264  7,656  22,158  27,455 
Stock-based compensation expense4,839  1,754  1,944  9,443 
Operating income11,987  15,332  68,945  58,834 
Interest expense, net4,441  5,498  18,681  21,623 
Net income and comprehensive income available to shareholders$10,044  $8,242  $49,208  $36,878 
Adjusted EBITDA(i)(ii)$46,243  $47,789  $175,450  $174,229 
Adjusted EBITDA margin(i)33.8% 25.2% 35.1% 24.2%
Per share information       
Basic net income per share$0.34  $0.32  $1.75  $1.45 
Diluted net income per share$0.32  $0.28  $1.60  $1.23 
Adjusted EPS(i)$0.36  $0.38  $1.73  $1.72 

(i) See "Non-GAAP Financial Measures".
(ii)In the three months ended December 31, 2019 we changed the calculation of adjusted EBITDA. This change has not been reflected in results prior to the three months ended December 31, 2019. Applying this change to previously reported periods would result in increases in adjusted EBITDA of $0.2 million for the year-ended December 31, 2019.

  Year ended
  December 31,
(dollars in thousands) 2020 2019
Cash provided by operating activities $147,272  $157,944 
Cash used in investing activities (113,573) (160,678)
Capital additions financed by leases (27,882) (28,107)
Add back:    
Growth capital additions 37,665  45,803 
Cash reclassification to investments in affiliates and joint ventures from change in presentation of NL Partnership   10,630 
Free cash flow(i) $43,482  $25,592 

(i)See "Non-GAAP Financial Measures".

Declaration of Quarterly Dividend

On February 16, 2021, the NACG Board of Directors declared a regular quarterly dividend (the “Dividend”) of four Canadian cents ($0.04) per common share, payable to common shareholders of record at the close of business on March 4, 2021. The Dividend will be paid on April 9, 2021 and is an eligible dividend for Canadian income tax purposes.

Results for the Three Months December 31, 2020

Revenue was $136.8 million, down from $189.5 million in the same period last year. While operations are steadily returning to pre-pandemic levels, the delay of several large projects impacted revenue in in Q4. There was little activity at the Fort Hills mine in Q4 2020, whereas operations at Fort Hills contributed significantly to revenue in Q4 2019. A significant decrease in revenue was also seen in the external maintenance program, as prior year included the completion and delivery of rebuilt and refurbished haul trucks. Offsetting these decreases was additional reclamation volume at the Aurora Mine, revenue generated from the operations support contract at the coal mine in southern Texas and increased demand for equipment rental support at the Millennium Mine.

Gross profit of 17.0% was up from 13.2% in the prior year. The increase was the result of an effectively operated fleet and was bolstered by the Canada Emergency Wage Subsidy program. Operations support contracts from both the coal mines in Texas and Wyoming also allowed for the higher gross profit margin.

Direct general and administrative expenses (excluding stock based compensation benefit) were $6.3 million, or 4.6% of revenue, lower than Q4 2019 spending of $7.7 million but higher than the 4.0% of revenue as a result of the continued limiting of discretionary and non-essential spending.

Cash related interest expense of $4.2 million represents an average cost of debt of 3.7% as we continue to benefit from low posted rates on our credit facility and competitive rates in equipment financing.

Free cash flow in the quarter was $40.5 million and was impacted by typical Q4 positive timing changes of capital work in process, capital inventory and working capital balances. Primary routine drivers of free cash flow were adjusted EBITDA of $46.2 million less sustaining capital spending of $26.7 million and cash interest paid of $4.0 million. Sustaining capital spending was escalated and increased in the quarter in response to the stronger than expected demand for the upcoming busy winter season.

Canada Emergency Wage Subsidy (“CEWS”)

Our Q4 2020 results include $6.6 million of salary and wage subsidies presented as reductions in project costs, equipment costs and general and administrative expenses of $4.0 million, $2.0 million and $0.5 million, respectively. These amounts were received under the CEWS program which reimbursed us for a portion of wages paid to employees and greatly helped us protect jobs through retention and rehiring. Should we continue to qualify, we plan to seek assistance from this program for the remainder of 2020 and onward.

Business Updates

2021 Focus & Priorities

  • Safety - focus on people and relationships, maintain an uncompromising commitment to health and safety while elevating the standard of excellence in the field.
  • Sustainability - commitment to the continued development of sustainability targets and constant measurement of progress to those targets.
  • Diversification - continue to pursue diversification of customer, resource and geography through strategic partnerships, industry expertise and our investment in Nuna.
  • Execution - enhance our record of operational excellence with respect to fleet maintenance, availability and utilization through leverage of our reliability programs, technical improvements and management systems.


Liquidity is critical during times of uncertainty and cash conservation is a key priority for management in weathering this crisis. Including equipment financing availability and factoring in the amended credit facility agreement, total available capital liquidity of $177.4 million includes total liquidity of $148.0 million as at December 31, 2020. Liquidity is primarily provided by the terms of our $325.0 million credit facility which allows for funds availability based on a trailing twelve-month EBITDA and is now scheduled to expire in October 2023.

Achievement against 2020 targets and outlook for 2021

Given our visibility into 2021 and the assumption of continued easing of site access restrictions, management has provided stakeholders with guidance through 2021. This guidance is predicated on contracts currently in place and the heavy equipment fleet that we own and operate.

Key measures 2020 Actual 2020 Stated Targets 2021 Outlook
Adjusted EBITDA $175M $155 - $170M $165 - $205M
Adjusted EPS $1.73 $1.60 - $1.70 $1.60 - $1.90
Sustaining capital $99M $80 - $90M $90 - $105M
Free cash flow $43M $40 - $55M $60 - $80M
Capital allocation measures      
Deleverage $21M $10 - $15M $35 - $45M
Growth capital $38M $35 - $40M $5 - $10M
Share purchases $19M $20 - $30M $10 - $25M
Leverage ratios      
Senior debt 2.0x 2.1x - 2.3x 1.6x - 2.0x
Net debt 2.2x 2.3x - 2.5x 1.8x - 2.2x

Conference Call and Webcast

Management will hold a conference call and webcast to discuss our financial results for the three months and year ended December 31, 2020 tomorrow, Thursday, February 18, 2021 at 9:00 am Eastern Time (7:00 am Mountain Time).

The call can be accessed by dialing:

Toll free: 1-833-900-2285
International: 1-236-714-2745
Conference ID: 8197967

A replay will be available through March 18, 2021, by dialing:

Toll Free: 1-800-585-8367
International: 1-416-621-4642
Conference ID: 8197967

A slide deck for the webcast will be available for download the evening prior to the call and will be found on the company’s website at

The live presentation and webcast can be accessed at:

A replay will be available until March 18, 2021 using the link provided.

Basis of Presentation

We have prepared our consolidated financial statements in conformity with accounting principles generally accepted in the United States ("US GAAP"). Unless otherwise specified, all dollar amounts discussed are in Canadian dollars. Please see the Management’s Discussion and Analysis (“MD&A”) for the three months and year ended December 31, 2020 for further detail on the matters discussed in this release. In addition to the MD&A, please reference the dedicated Q4 2020 Results Presentation for more information on our results and projections which can be found on our website under Investors - Presentations.

Forward-Looking Information

The information provided in this release contains forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words “anticipate”, “believe”, “expect”, “should” or similar expressions.

The material factors or assumptions used to develop the above forward-looking statements include, and the risks and uncertainties to which such forward-looking statements are subject, are highlighted in the MD&A for the three months and year ended December 31, 2020. Actual results could differ materially from those contemplated by such forward-looking statements because of any number of factors and uncertainties, many of which are beyond NACG’s control. Undue reliance should not be placed upon forward-looking statements and NACG undertakes no obligation, other than those required by applicable law, to update or revise those statements. For more complete information about NACG, please read our disclosure documents filed with the SEC and the CSA. These free documents can be obtained by visiting EDGAR on the SEC website at or on the CSA website at

Non-GAAP Financial Measures

This press release presents certain non-GAAP financial measures because management believes that they may be useful to investors in analyzing our business performance, leverage and liquidity. The non-GAAP financial measures we present include "gross profit", "adjusted net earnings", "adjusted EBIT", "equity investment EBIT", "adjusted EBITDA", "equity investment depreciation and amortization", "adjusted EPS", "margin", "senior debt", "net debt" "cash provided by operating activities prior to change in working capital", "sustaining capital", "growth capital" and "free cash flow". A non-GAAP financial measure is defined by relevant regulatory authorities as a numerical measure of an issuer's historical or future financial performance, financial position or cash flow that is not specified, defined or determined under the issuer’s GAAP and that is not presented in an issuer’s financial statements. These non-GAAP measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Each non-GAAP financial measure used in this press release is defined and reconciled to its most directly comparable GAAP measure in the “Non-GAAP Financial Measures” section of our Management’s Discussion and Analysis filed concurrently with this press release.

A reconciliation of net income and comprehensive income available to shareholders to adjusted net earnings, adjusted EBIT and adjusted EBITDA is as follows:

 Three months ended Year ended
 December 31, December 31,
(dollars in thousands)2020 2019 2020 2019
Net income and comprehensive income available to shareholders$10,044  $8,242  $49,208  $36,878 
Loss (gain) on disposal of property, plant and equipment122  259  757  (31)
Stock-based compensation expense4,839  1,754  1,944  9,443 
Restructuring costs      1,442 
Net realized and unrealized gain on derivative financial(3,429)   (4,266)  
Write-down on asset held for sale    1,800   
Pre-2019 inventory correction      (2,775)
Loss on legacy claim settlement      1,235 
Tax effect of the above items(1,141) (534) (621) (2,468)
Adjusted net earnings(i)$10,435  $9,721  $48,822  $43,724 
Tax effect of the above items1,141  534  621  2,468 
Interest expense, net4,441  5,498  18,681  21,623 
Income tax expense319  2,370  11,264  2,858 
Equity loss (earnings) in affiliates and joint ventures(ii)612  (795) (5,942) (795)
Equity investment EBIT(i)644  1,143  8,043  1,143 
Adjusted EBIT(i)(ii)$17,592  $18,471  $81,489  $71,021 
Depreciation26,273  28,327  89,008  101,582 
Write-down on asset held for sale    (1,800)  
Amortization of intangible assets1,248  76  2,291  711 
Equity investment depreciation and amortization(i)(ii)1,130  915  4,462  915 
Adjusted EBITDA(i)(ii)$46,243  $47,789  $175,450  $174,229 

(i) See "Non-GAAP Financial Measures".
(ii) In the three months ended December 31, 2019 we changed the calculation of adjusted EBITDA. This change has not been reflected in results prior to the three months ended December 31, 2019. Applying this change to previously reported periods would result in respective increases in adjusted EBIT and adjusted EBITDA of $0.9 million and $0.2 million for the year-ended December 31, 2019.

We included equity investment EBITDA in the calculation of adjusted EBITDA beginning in the fourth quarter of 2019. Below is a reconciliation of the amount included in adjusted EBITDA for the three months and year ended December 31, 2020.

 Three months ended Year ended
 December 31, December 31,
(dollars in thousands)2020 2019 2020 2019
Equity (earnings) loss in affiliates and joint ventures$(612) $795  $5,942  $795 
Interest expense, net106  44  376  44 
Income tax expense1,124  316  1,373  316 
Gain on disposal of property, plant and equipment26  (12) 352  (12)
Equity investment EBIT(i)$644  $1,143  $8,043  $1,143 
Depreciation$1,096  $836  $4,329  $836 
Amortization of intangible assets34  79  133  79 
Equity investment depreciation and amortization(i)$1,130  $915  $4,462  $915 

(i) See "Non-GAAP Financial Measures"

About the Company

North American Construction Group Ltd. ( is one of Canada’s largest providers of heavy civil construction and mining contractors. For more than 65 years, NACG has provided services to large oil, natural gas and resource companies.

For further information contact:

Jason Veenstra, CPA, CA
Chief Financial Officer
North American Construction Group Ltd.
Phone: (780) 948-2009

Consolidated Balance Sheets     
As at December 31
(Expressed in thousands of Canadian Dollars)
 Note 2020 2019
Current assets     
Cash  $43,915  $5,544 
Accounts receivable5 36,373  66,746 
Contract assets6(b) 7,034  19,193 
Inventories2(k) 19,174  21,649 
Prepaid expenses and deposits  4,999  4,245 
Assets held for sale  4,129  424 
Derivative financial instruments7(b) 4,334   
   119,958  117,801 
Property, plant and equipment, net of accumulated depreciation $302,682 (2019 –$276,185)8 633,704  587,729 
Operating lease right-of-use assets9 18,192  21,841 
Investments in affiliates and joint ventures10 44,050  42,908 
Other assets  6,617  6,718 
Deferred tax assets11 16,407  15,655 
Total assets  $838,928  $792,652 
Liabilities and shareholders' equity     
Current liabilities     
Accounts payable  $41,369  $88,201 
Accrued liabilities12 19,111  17,560 
Contract liabilities6(b) 1,512  23 
Current portion of long-term debt7 16,307  18,514 
Current portion of finance lease obligations9 26,895  29,206 
Current portion of operating lease liabilities9 4,004  3,799 
   109,198  157,303 
Long-term debt7 341,547  313,443 
Finance lease obligations9 42,577  47,072 
Operating lease liabilities9 14,118  17,710 
Other long-term obligations13 18,850  24,504 
Deferred tax liabilities11 64,195  52,501 
   590,485  612,533 
Shareholders' equity     
Common shares (authorized – unlimited number of voting common shares; issued and outstanding – December 31, 2020 - 31,011,831 (December 31, 2019 – 27,502,912))15(a) 255,064  225,966 
Treasury shares (December 31, 2020 - 1,845,201 (December 31, 2019 - 1,725,467))15(a) (18,002) (15,911)
Additional paid-in capital  46,536  49,919 
Deficit  (35,155) (79,855)
Shareholders' equity  248,443  180,119 
Total liabilities and shareholders' equity  $838,928  $792,652 
Subsequent event15(b)    

See accompanying notes to interim consolidated financial statements.

Consolidated Statements of Operations and Comprehensive Income     
For the years ended December 31
(Expressed in thousands of Canadian Dollars, except per share amounts)
 Note 2020 2019
Revenue 6 $500,374  $719,067 
Project costs14(b) 139,452  277,646 
Equipment costs2(k),14(b) 177,532  243,427 
Depreciation  89,008  101,582 
Gross profit  94,382  96,412 
General and administrative expenses14(b),17 24,102  36,898 
Loss (gain) on disposal of property, plant and equipment  757  (31)
Amortization of intangible assets  578  711 
Operating income  68,945  58,834 
Interest expense, net16 18,681  21,623 
Equity earnings in affiliates and joint ventures10 (5,942) (2,780)
Net realized and unrealized gain on derivative financial instruments7(b) (4,266)  
Income before income taxes  60,472  39,991 
Current income tax expense11   13 
Deferred income tax expense11 11,264  2,845 
Net income and comprehensive income  49,208  37,133 
Net income attributable to noncontrolling interest10   (255)
Net income and comprehensive income available to shareholders  $49,208  $36,878 
Per share information     
Basic net income per share15(b) $1.75  $1.45 
Diluted net income per share15(b) $1.60  $1.23 

See accompanying notes to consolidated financial statements.