Skip to the content

Recent News

North American Construction Group Ltd. Announces Results for the First Quarter Ended March 31, 2021

ACHESON, Alberta, April 28, 2021 (GLOBE NEWSWIRE) -- North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA) today announced results for the first quarter ended March 31, 2021. Unless otherwise indicated, financial figures are expressed in Canadian dollars, and comparisons are to the prior period ended March 31, 2020.

First Quarter 2021 Highlights:

  • Adjusted EBITDA of $61.1 million represents a $1.2 million increase over the prior year, reflecting a strong operational quarter and the continued recovery of operating hours towards pre-pandemic levels.
  • Gross profit margin of 19.0% compared to 17.4% in prior year reflecting relatively standard winter season operating conditions allowing for efficient and effective execution of volume commitments.
  • COVID-19 related safety protocols and mine site access restrictions continue impacting all aspects of operations but are becoming more routine and less disruptive in nature.
  • Nuna Group of Companies ("Nuna") achieved a record first quarter, which has historically been the slowest quarter of the year. Our share of Nuna revenue was $25.2 million in the quarter compared to $10.4 million in Q1 2020. This quarter over quarter increase of 142% was achieved due to the strong ramp-up of work being completed by the joint venture owned by Nuna and North American at a gold mine project in Northern Ontario.
  • Free cash flow ("FCF") in the quarter was $5.5 million was generated by strong adjusted EBITDA offset by our front-weighted capital maintenance program. Furthermore, the timing of working capital balances resulted in use of cash of $18.5 million which is expected to reverse during the remainder of the year.
  • Net debt was $397.2 million at March 31, 2021. The increase of $11.5 million from the December 31, 2020 balance of $385.6 million was primarily driven by the share purchase program, through which we purchased and cancelled 1.1 million shares during the quarter.
  • 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 various business areas.
  • In mid-February 2021 and effective January 1, 2021, Barry Palmer was appointed Chief Operating Officer.
  • On April 6, 2021, we announced our intention to commence a normal course issuer bid ("NCIB") to purchase for cancellation up to 2,000,000 common shares. This represented approximately 6.7% of the issued and outstanding common shares as of April 6, 2021. The NCIB commenced on April 9, 2021 and will terminate no later than April 8, 2022.

NACG President and CEO, Joe Lambert, commented: "It is always very pleasing to start a new year beating expectations. My thanks to the NACG team for their continued dedication to operational excellence during the start of 2021 which continued our positive trend of recovery from the Q2 2020 pandemic influenced lows."

Mr. Lambert added: "The next few months will provide opportunity to showcase our excellence in execution and potentially win some tenders that could accelerate our strategic plans for 2021 and several years to come. We are proud of our Q1 results and the team continues to work hard in delivering safe, low-cost, diversified and sustainable growth going forward."

Consolidated Financial Highlights

 Three months ended  
 March 31,  
(dollars in thousands, except per share amounts)2021 2020 Change
Revenue$168,408  $198,817  $(30,409)
Project costs50,162  60,117  (9,955)
Equipment costs54,985  71,741  (16,756)
Depreciation31,198  32,308  (1,110)
Gross profit(i)$32,063  $34,651  $(2,588)
Gross profit margin(i)19.0% 17.4% 1.6%
General and administrative expenses (excluding stock-based compensation)7,022  9,050  (2,028)
Stock-based compensation expense (benefit)2,374  (6,863) 9,237 
Operating income22,925  32,307  (9,382)
Interest expense, net4,542  5,528  (986)
Net income and comprehensive income19,386  19,035  351 
Adjusted EBITDA(i)61,138  59,933  1,205 
Adjusted EBITDA margin(i)36.3% 30.1% 6.2%
Per share information     
Basic net income per share$0.68  $0.74  $(0.06)
Diluted net income per share$0.62  $0.67  $(0.05)
Adjusted EPS(i)$0.65  $0.70  $(0.05)

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

  Three months ended
  March 31,
(dollars in thousands) 2021 2020
Cash provided by operating activities $41,938   $48,935  
Cash used in investing activities (21,431)  (41,633) 
Capital additions financed by leases (15,023)  (26,618) 
Add back:    
Growth capital additions    28,743  
Free cash flow(i) $5,484   $9,427  

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

Declaration of Quarterly Dividend

On April 27th, 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 May 28, 2021. The Dividend will be paid on July 9, 2021 and is an eligible dividend for Canadian income tax purposes.

Financial Results for the Three Months Ended March 31, 2021

Revenue was $168.4 million, down from $198.8 million in the same period last year. The decrease in revenue is driven by the continued delay of several large projects due to the uncertainty and variability of the COVID-19 pandemic. Our overall performance continues to be affected by the impacts of the COVID-19 pandemic and the various risk mitigation measures that both we and our customers have implemented in response. We have seen an upward trend in demand for our services over the past several quarters, however. This is reflected in revenue of $168.4 million in Q1 2021, which was a 23% increase from Q4 2020 and continues a trend of quarterly increases of 45% and 33%, in Q4 2020 and Q3 2020, respectively, from the low experienced in Q2 2020. This was further reflected in productive operating hours from our heavy equipment fleet which were up 14% in Q1 2021 when comparing to Q4 2020. While not consolidated in our revenue, the Nuna Group of Companies ("Nuna"), in which we have a 49% ownership interest, achieved a record first quarter. Our share of Nuna's revenue, which is consolidated in equity earnings, was $25.2 million in Q1 2021 and was achieved during a typically slow quarter for Nuna due to the strong ramp-up of work being completed by the joint venture owned by Nuna and North American at a gold mine project in Northern Ontario.

Gross profit margin of 19.0% benefited from continued discipline in cost management as customer-imposed volume reductions are still in place. The gross margin achieved was the result of strong operational execution across all sites and was aided by the Canada Emergency Wage Subsidy. Operations support contracts at the coal mines in Texas and Wyoming also added to the higher gross profit margin.

Direct general and administrative expenses (excluding stock-based compensation) were $7.0 million, equivalent to 4.2% of revenue, lower than Q1 2020 spending of $9.1 million and 4.6% of revenue based on a combination of cost control initiatives and lower discretionary and non-essential spending.

Cash related interest expense for the quarter of $4.3 million represents an average interest rate of 4.0% as we continue to benefit from both reductions in posted rates as well as the competitive rates in equipment financing.

Free cash flow in the quarter was $5.5 million generated by the adjusted EBITDA of $61.1 million offset by sustaining capital of $42.5 million and cash interest paid of $4.6 million. Sustaining maintenance capital is in alignment with the 2021 capital maintenance plan reflecting both the typical heavy first quarter we experience during our busy winter season and the purchase of smaller support equipment in advance of the year ahead. FCF was impacted by timing of cash collection and spending as working capital balances consumed $18.5 million.

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.


Total liquidity of $150.8 million as at March 31, 2021 represents a $2.8 million increase over the December 31, 2020 balance. 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 scheduled to expire in October 2023.

Normal Course Issuer Bid ("NCIB")

On April 6, 2021, we announced our intention to commence a NCIB to purchase up to 2,000,000 common shares for cancellation. We believe that the current market price of our common shares does not fully reflect their underlying value. While remaining mindful of cash liquidity during the COVID-19 crisis, modest repurchases increase share liquidity for holders seeking to sell and provides a proportionate increase of shareholders wishing to maintain their positions.

Canada Emergency Wage Subsidy (“CEWS”)

Our Q1 2021 results include $5.8 million of salary and wage subsidies presented as reductions in project costs, equipment costs and general and administrative expenses of $3.8 million, $1.7 million and $0.3 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 2021.

NACG’s outlook for 2021

Given our visibility into the remainder of 2021 management has decided to provide 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 2021
Adjusted EBITDA $180 - $210M
Sustaining capital $95 - $105M
Adjusted EPS $1.60 - $1.90
Free cash flow $65 - $85M
Capital allocation measures  
Deleverage $30 - $40M
Share purchases $20 - $35M
Growth capital $5 - $10M
Leverage ratios  
Senior debt 1.5x - 1.9x
Net debt 1.8x - 2.2x

Conference Call and Webcast

Management will hold a conference call and webcast to discuss our financial results for the quarter ended March 31, 2021 tomorrow, Thursday, April 29, 2021 at 7:00 am Mountain Time (9:00 am Eastern Time).

The call can be accessed by dialing:

Toll free: 1-844-248-9143
International: 1-216-539-8612
Conference ID: 6266913

A replay will be available through May 27, 2021, by dialing:

Toll Free: 1-855-859-2056
International: 1-404-537-3406
Conference ID: 6266913

The Q1 2021 earnings presentation for the webcast will be available for download on the company’s website at

The live presentation and webcast can be accessed at:

A replay will be available until May 27, 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 quarter ended March 31, 2021 for further detail on the matters discussed in this release. In addition to the MD&A, please reference the dedicated Q1 2021 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 ended March 31, 2021. 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", "liquidity", "net debt", "senior debt", "sustaining capital", "growth capital", "cash provided by operating activities prior to change in working 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 to adjusted net earnings, adjusted EBIT and adjusted EBITDA is as follows:

 Three months ended
 March 31,
(dollars in thousands)2021 2020
Net income and comprehensive income$19,386  $19,035 
(Gain) loss on disposal of property, plant and equipment(258) 157 
Stock-based compensation expense (benefit)2,374  (6,863)
Net realized and unrealized (gain) loss on derivative financial instruments(2,484) 2,210 
Write-down on assets held for sale  1,800 
Tax effect of the above items(487) 1,677 
Adjusted net earnings(i)18,531  18,016 
Tax effect of the above items487  (1,677)
Interest expense, net4,542  5,528 
Income tax expense4,950  5,994 
Equity earnings in affiliates and joint ventures(i)(3,469) (460)
Equity investment EBIT(i)3,568  560 
Adjusted EBIT(i)28,609  27,961 
Depreciation and amortization31,078  32,750 
Write-down on assets held for sale  (1,800)
Equity investment depreciation and amortization(i)1,451  1,022 
Adjusted EBITDA(i)$61,138  $59,933 

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

A reconciliation of equity earnings in affiliates and joint ventures to equity investment EBIT is as follows:

 Three months ended
 March 31,
(dollars in thousands)2021 2020
Equity earnings in affiliates and joint ventures$3,469  $460 
Interest expense, net78  52 
Income tax expense74  48 
Gain on disposal of property, plant and equipment(53)  
Equity investment EBIT(i)$3,568  $560 

(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.
(780) 948-2009

Interim Consolidated Balance Sheets

(Expressed in thousands of Canadian Dollars)

 Note March 31,
 December 31,
Current assets     
Cash  $31,733  $43,915 
Accounts receivable 65,266  36,373 
Contract assets5(b) 5,609  7,034 
Inventories  21,735  19,174 
Prepaid expenses and deposits  3,942  4,999 
Assets held for sale  5,006  4,129 
Derivative financial instruments  607  4,334 
   133,898  119,958 
Property, plant and equipment, net of accumulated depreciation of $320,043 (December 31, 2020 – $302,682)  644,220  633,704 
Operating lease right-of-use assets  17,055  18,192 
Investments in affiliates and joint ventures 38,859  44,050 
Other assets  7,515  6,617 
Deferred tax assets    16,407 
Total assets  $841,547  $838,928 
Liabilities and shareholders’ equity     
Current liabilities     
Accounts payable  $49,379  $41,369 
Accrued liabilities12  18,410  19,111 
Contract liabilities5(b) 5,571  1,512 
Current portion of long-term debt 18,338  16,307 
Current portion of finance lease obligations  28,905  26,895 
Current portion of operating lease liabilities  3,701  4,004 
   124,304  109,198 
Long-term debt 332,095  341,547 
Finance lease obligations  47,436  42,577 
Operating lease liabilities  13,302  14,118 
Other long-term obligations  19,784  18,850 
Deferred tax liabilities  52,738  64,195 
   589,659  590,485 
Shareholders' equity     
Common shares (authorized – unlimited number of voting common shares; issued and outstanding – March 31, 2021 - 29,949,528 (December 31, 2020 – 31,011,831))9(a) 246,545  255,064 
Treasury shares (March 31, 2021 - 1,850,826 (December 31, 2020 - 1,845,201))9(a) (18,080) (18,002)
Additional paid-in capital  40,188  46,536 
Deficit  (16,765) (35,155)
Shareholders' equity  251,888  248,443 
Total liabilities and shareholders’ equity  $841,547  $838,928 

See accompanying notes to interim consolidated financial statements.

Interim Consolidated Statements of Operations and Comprehensive Income

(Expressed in thousands of Canadian Dollars, except per share amounts)

   Three months ended
   March 31,
 Note 2021 2020
Revenue  $168,408  $198,817 
Project costs  50,162  60,117 
Equipment costs  54,985  71,741 
Depreciation  31,198  32,308 
Gross profit  32,063  34,651 
General and administrative expenses  9,396  2,187 
(Gain) loss on disposal of property, plant and equipment  (258) 157 
Operating income  22,925  32,307 
Interest expense, net10  4,542  5,528 
Equity earnings in affiliates and joint ventures (3,469) (460)
Net realized and unrealized (gain) loss on derivative financial instruments6(b) (2,484) 2,210 
Income before income taxes  24,336  25,029 
Current income tax expense  —   17 
Deferred income tax expense  4,950  5,977 
Net income and comprehensive income  $19,386  $19,035 
Per share information     
Basic net income per share9(b) $0.68  $0.74 
Diluted net income per share9(b) $0.62  $0.67 

See accompanying notes to interim consolidated financial statements.