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North American Construction Group Ltd. Announces Results for the Fourth Quarter and Year Ended December 31, 2023

ACHESON, Alberta, March 13, 2024 (GLOBE NEWSWIRE) -- North American Construction Group Ltd. ("NACG") (TSX:NOA/NYSE:NOA) today announced results for the fourth quarter and year ended December 31, 2023. Unless otherwise indicated, figures are expressed in Canadian dollars with comparisons to prior periods ended December 31, 2022.

Fourth Quarter 2023 Highlights:

  • Closure of the MacKellar Group ("MacKellar") acquisition on October 1, 2023, a seamless change in control, and three months of strong equipment utilization provided a full quarter of operating results in Australia, and a step change in geographic diversification.
  • The allocated purchase price of MacKellar was $369.7 million, net of cash acquired, along with growth capital spending of $35.9 million incurred in the quarter was fully funded with senior and vendor-provided debt and establishes a strong platform for opportunities in Australia.
  • Combined revenue of $403.4 million is a company quarterly record based on the transformative acquisition of MacKellar. Revenue of $326.3 million, compared to $233.4 million in the same period last year, includes this step-change increase along with steady and consistent operations in the Fort McMurray region.
  • Our net share of revenue from equity consolidated joint ventures was $77.1 million, compared to $86.7 million in the same period last year. Quarter-over-quarter increases at the Fargo-Moorhead project were offset by the successful 2023 Q3 completion of the construction project at the gold mine in Northern Ontario.
  • Adjusted EBITDA of $101.1 million, also a company record, and EBITDA margin of 25.1% compared to the prior period metrics of $85.9 million and 26.8%, respectively. Margins were impacted by project losses posted by the Nuna Group of Companies; restructuring efforts are well underway to resolve temporary challenges.
  • Cash flows generated from operating activities of $160.9 million in the quarter, compared to $78.1 million in the prior year quarter, resulting from higher earnings and changes in working capital balances when comparing to the same period in the prior year.
  • Free cash flow ("FCF") of $110.6 million in the quarter was the result of strong revenues, steady and consistent margins, modest capital spending, and positive changes in working capital balances.
  • Net debt was $720.9 million at December 31, 2023, an increase of $325.6 million from September 30, 2023, resulting from the debt-funded purchase price and growth spending in Australia offset by free cash flow directed to debt reduction during the quarter.

NACG President and CEO, Joseph Lambert, commented: "The acquisition of the MacKellar Group is a milestone moment for our company and I'd like to thank all the employees for the hard work that has been put in to make these first few months in Australia such a success. In both Queensland and Western Australia, we are excited by the many prospects we have in front of us and look forward to sharing best practices and in-house maintenance expertise, as well as equipment where appropriate, to facilitate these growth opportunities.

As we've geographically diversified, I continue to closely monitor our various regions. In North Dakota and based on a recent trip there, construction at Fargo-Moorhead is progressing well into this most important period for the project. In northern Canada, we are undergoing a restructuring initiative within the Nuna Group of Companies which will return it to its legacy of operational excellence. In Fort McMurray, our fleet continues to operate day-in day-out as we work with our customers in their goal to achieve low-cost operations in the oil sands region. 2024 will be a busy year for us and we are looking forward to executing and delivering another record year."

Consolidated Financial Highlights

  Three months ended Year ended
  December 31, December 31,
(dollars in thousands, except per share amounts)  2023   2022   2023   2022 
Revenue $326,298  $233,417  $957,220  $769,539 
Cost of sales  218,853   154,967   671,684   548,723 
Depreciation  41,990   35,860   131,319   119,268 
Gross profit $65,455  $42,590  $154,217  $101,548 
Gross profit margin  20.1%  18.2%  16.1%  13.2%
General and administrative expenses (excluding stock-based compensation)(i)  18,702   6,648   41,016   25,075 
Stock-based compensation expense  (496)  4,910   15,828   4,780 
Operating income  45,779   31,565   95,714   71,157 
Interest expense, net  14,007   7,774   36,948   24,543 
Net income  17,646   26,081   63,141   67,372 
Adjusted EBITDA(i)  101,136   85,875   296,963   245,352 
Adjusted EBITDA margin(i)(ii)  25.1%  26.8%  23.3%  23.3%
Per share information        
Basic net income per share $0.66  $0.99  $2.38  $2.46 
Diluted net income per share $0.58  $0.84  $2.09  $2.15 
Adjusted EPS(i) $0.87  $1.10  $2.83  $2.41 

(i) See "Non-GAAP Financial Measures".
(ii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.

  Three months ended Year ended
  December 31, December 31,
(dollars in thousands)  2023   2022   2023   2022 
Consolidated Statements of Cash Flows        
Cash provided by operating activities $160,870  $78,099  $270,391  $169,201 
Cash used in investing activities  (137,756)  (17,524)  (244,879)  (97,469)
Effect of exchange rate on changes in cash  3,167   (94)  1,705   304 
Add back of growth and non-cash items included in the above figures:        
Acquisition of MacKellar(i)  51,671      51,671    
Acquisition costs  5,934      7,095    
Growth capital additions(ii)  35,941      40,416    
Acquisition of ML Northern(iii)     7,207      7,207 
Non-cash changes in fair value of contingent consideration  (8,268)     (8,268)   
Capital additions financed by leases(ii)  (931)  (236)  (28,159)  (8,931)
Free cash flow(i) $110,628  $67,452  $89,972  $70,312 

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

Results for the Three Months Ended December 31, 2023

Combined revenue of $403.4 million, compared to $320.1 million in the same period last year, and revenue from wholly-owned entities was $326.3 million, up from $233.4 million in the same period last year. The majority of the quarter-over-quarter increase in revenue was driven by the October 2023 acquisition of MacKellar. MacKellar generated a full quarter of revenue totaling $122.5 million. Aside from MacKellar, revenue was down over the same period in 2022 as a result of changes in timing of reclamation projects beginning later than the previous year and certain construction scopes concluding earlier in 2023, relative to the same period in 2022.

Combined gross profit margin of 18.4% was up from 17.8% in the prior year. The improvement in combined gross profit in the current period was driven by the acquisition of MacKellar. MacKellar generated gross profit of 23.7% in the quarter.

General and administrative expenses (excluding stock-based compensation expense) were $18.7 million, or 5.7% of revenue for the three months ended December 31, 2023, up from $6.6 million, or 2.8% of revenue in the same period last year. General and administrative expenses in the quarter include one-time costs of $5.9 million related to the acquisition of MacKellar. MacKellar's administrative cost profile is similar to the Canadian and U.S. operations.

Cash related interest expense of $13.2 million represents an average cost of debt of 8.8% (compared to $7.5 million and 7.1%, respectively, for the three months ended December 31, 2022). The increase in interest expense is primarily attributed to the higher balance on the Credit Facility and increases in the variable rate.

Net income of $17.6 million in Q4 2023 compared to $26.1 million in the same period last year as higher gross profit was more than offset by increased interest expense, increased general and administrative expenses from the one-time acquisition costs, and lower equity earnings from our joint ventures.

Free cash flow in the quarter was $110.6 million driven primarily by adjusted EBITDA of $101.1 million less sustaining capital spending of $40.8 million and cash interest paid of $13.2 million.


Including equipment financing availability and factoring in the amended Credit Facility agreement, total available capital liquidity of $292.6 million includes total liquidity of $217.9 million, $60.1 million of unused finance lease borrowing availability, and $14.6 million of unused other borrowing availability as at December 31, 2023. Liquidity is primarily provided by the terms of our $478.0 million credit facility which allows for funds availability based on a trailing twelve-month EBITDA as defined in the agreement, and is now scheduled to expire in October 2026.

Business Updates

Strategic Focus Areas for 2024

  • Safety - now on a global basis, maintain our uncompromising commitment to health and safety while elevating the standard of excellence in the field;
  • Execution - enhance equipment availability in Canada and Australia through in-house fleet maintenance, reliability programs, technical improvements, and management systems;
  • Operational excellence - with a specific focus on Nuna Group of Companies, put into action practical and experienced-based protocols to ensure predictable high-quality project execution;
  • Integration - implement ERP and best practices at MacKellar, including identification of opportunities to better utilize our capital and equipment in Australia;
  • Diversification - pursue diversification of customers and resources through strategic partnerships, industry expertise and investment in Indigenous joint ventures; and
  • Sustainability - further develop and deliver into our environmental, social, and governance targets as disclosed and committed to in our annual reporting.

Outlook for 2024

The following table provides projected key measures for 2024 and actual results of 2023 and 2022. The measures for 2024 are predicated on contracts currently in place, including expected renewals and the heavy equipment fleet that we own and operate.

Key measures 2022 Actual 2023 Actual 2024 Outlook
Combined revenue $1.1B $1.3B $1.5 - $1.7B
Adjusted EBITDA(i) $245M $297M $430 - $470M
Sustaining capital(i) $113M $169M $170 - $190M
Adjusted EPS(i) $2.41 $2.83 $4.25 - $4.75
Free cash flow(i) $70M $90M $160 - $185M
Capital allocation      
Growth spending $13M $40M $55 - $70M
Net debt leverage(i) 1.5x 1.7x Targeting 1.5x

(i)See "Non-GAAP Financial Measures".
(ii)Shareholder activity includes common shares purchased under a NCIB, dividends paid and the purchase of treasury shares.

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, 2023, tomorrow, Thursday, March 14, 2024, at 9:00 am Eastern Time (7:00 am Mountain Time).

The call can be accessed by dialing:

Toll free: 1-888-886-7786
Conference ID: 29416987

A replay will be available through April 12, 2024, by dialing:

Toll Free: 1-877-674-7070
Conference ID: 29416987
Playback Passcode: 416987

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:;F:QS!10100&ShowUUID=E7B12076-0168-45B4-8211-E024A0E31C5D

A replay will be available until April 12, 2024, 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, 2023, for further detail on the matters discussed in this release. In addition to the MD&A, please reference the dedicated Q4 2023 Results Presentation for more information on our results and projections which can be found on our website under Investors - Presentations.

Change in significant accounting policy - Basis of presentation

During the first quarter of 2023, the Company updated the presentation of finance lease obligations within the Consolidated Balance Sheets to be included in long-term debt. Within the long-term debt note, finance lease obligations, financing obligations, and promissory notes have been combined as equipment financing. Finance lease obligations are the finance lease liabilities recognized in accordance with the Company's lease policy which is disclosed in our Annual Report. Financing obligations arise when the Company finances its owned equipment. There has been no change in the Company’s accounting policy for finance lease obligations or change in the recognition or measurement of the related balances now recognized within long-term debt. The change in presentation had no effect on the reported results of operations. The comparative period has been updated to reflect this presentation change.

Recent accounting pronouncements not yet adopted

Joint venture formations

In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Venture Formations. This accounting standard update was issued to create new requirements for valuing contributions made to a joint venture upon formation. This standard is effective January 1, 2025, with early adoption permitted. We are assessing the impact the adoption of this standard may have on its consolidated financial statements.

Segment reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. This accounting standard update was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This standard is effective for the fiscal year beginning January 1, 2024. We are assessing the impact the adoption of this standard may have on its consolidated financial statements.

Income taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures. This accounting standard update was issued to increase transparency by improving income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard is effective for the fiscal year beginning January 1, 2025, with early adoption permitted. We are assessing the impact the adoption of this standard may have on its consolidated financial statements.

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 and include guidance with respect to financial metrics provided in our outlook for 2024.

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, 2023. 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 and on our company website at

Non-GAAP Financial Measures

This press release presents certain non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures that may be useful to investors in analyzing our business performance, leverage, and liquidity. 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. A "non-GAAP ratio" is a ratio, fraction, percentage or similar expression that has a non-GAAP financial measure as one or more of its components. Non-GAAP financial measures and ratios do not have standardized meanings under GAAP and therefore may not be comparable to similar measures presented by other issuers. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. A "supplementary financial measure" is a financial measure disclosed, or intended to be disclosed, on a periodic basis to depict historical or future financial performance, financial position or cash flows that does not fall within the definition of a non-GAAP financial measure or non-GAAP ratio. The non-GAAP financial measures and ratios we present include, "adjusted EBIT", "adjusted EBITDA", "adjusted EBITDA margin" "adjusted EPS", "adjusted net earnings", "backlog", "capital additions", "capital expenditures, net", "capital inventory", "capital work in progress", "cash provided by operating activities prior to change in working capital", "combined gross profit", "combined gross profit margin", "equity investment depreciation and amortization", "equity investment EBIT", "free cash flow", "general and administrative expenses (excluding stock-based compensation)", "gross profit", "growth capital", "invested capital", "net debt", "sustaining capital", "total capital liquidity", "total combined revenue", and "total debt". We also use supplementary financial measures such as "gross profit margin" and "total net working capital (excluding cash and current portion of long-term debt)" in our MD&A. Each non-GAAP financial measure used in this press release is defined under "Financial Measures" in our Management's Discussion and Analysis filed on EDGAR on the SEC website at or on the CSA website at and on our company website at

Reconciliation of total reported revenue to total combined revenue

  Three months ended Year ended
  December 31, December 31,
(dollars in thousands)  2023   2022   2023   2022 
Revenue from wholly-owned entities per financial statements $326,298  $233,417  $957,220  $769,539 
Share of revenue from investments in affiliates and joint ventures  169,662   183,006   686,299   596,033 
Elimination of joint venture subcontract revenue  (92,522)  (96,315)  (369,891)  (311,307)
Total combined revenue(i) $403,438  $320,108  $1,273,628  $1,054,265 

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

Reconciliation of reported gross profit to combined gross profit

  Three months ended Year ended
  December 31, December 31,
(dollars in thousands)  2023  2022  2023  2022
Gross profit from wholly-owned entities per financial statements $65,455 $42,590 $154,217 $101,548
Share of gross profit from investments in affiliates and joint ventures  8,670  14,541  49,638  49,581
Combined gross profit(i) $74,125 $57,131 $203,855 $151,129

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

Reconciliation of net income to adjusted net earnings, adjusted EBIT and adjusted EBITDA

  Three months ended Year ended
  December 31, December 31,
(dollars in thousands)  2023   2022   2023   2022 
Net income $17,646  $26,081  $63,141  $67,372 
Loss (gain) on disposal of property, plant and equipment  1,470   (533)  1,659   536 
Stock-based compensation (benefit) expense  (496)  4,910   15,828   4,780 
Acquisition costs  5,934      7,095    
Loss on equity investment customer bankruptcy claim settlement        759    
Loss (gain) on derivative financial instruments  916   (778)  (6,063)  (778)
Equity investment (gain) loss on derivative financial instruments  (713)  364   (1,362)  (4,776)
Tax effect of the above items  (1,589)  (1,006)  (5,829)  (1,222)
Adjusted net earnings(i) $23,168  $29,038  $75,228  $65,912 
Tax effect of the above items  1,589   1,006   5,829   1,222 
Change in fair value of contingent consideration  4,681      4,681    
Interest expense, net  14,007   7,774   36,948   24,543 
Income tax expense  10,930   6,889   22,822   17,073 
Equity earnings in affiliates and joint ventures(i)  (2,401)  (8,401)  (25,815)  (37,053)
Equity investment EBIT(i)  1,787   9,363   25,545   42,148 
Adjusted EBIT(i) $53,761  $45,669  $145,238  $113,845 
Depreciation and amortization  42,277   36,094   132,516   120,124 
Equity investment depreciation and amortization(i)  5,098   4,112   19,209   11,383 
Adjusted EBITDA(i) $101,136  $85,875  $296,963  $245,352 
Adjusted EBITDA margin(i)(ii)  25.1%  26.8%  23.3%  23.3%

(i) See "Non-GAAP Financial Measures".
(ii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.

Reconciliation of equity earnings in affiliates and joint ventures to equity investment EBIT

  Three months ended Year ended
  December 31, December 31,
(dollars in thousands)  2023   2022   2023   2022
Equity (earnings) loss in affiliates and joint ventures $2,401  $8,401  $25,815  $37,053
Interest expense, net  (268)  688   (1,183)  2,589
Income tax expense  (324)  275   970   2,442
(Gain) loss on disposal of property, plant and equipment  (22)  (1)  (57)  64
Equity investment EBIT(i) $1,787  $9,363  $25,545  $42,148
Depreciation  4,983   3,936   18,555   10,679
Amortization of intangible assets  115   176   654   704
Equity investment depreciation and amortization(i) $5,098  $4,112  $19,209  $11,383

(i) See "Non-GAAP Financial Measures"

About the Company

North American Construction Group Ltd. is a premier provider of heavy civil construction and mining services in Canada, the U.S. and Australia. For 70 years, NACG has provided services to the mining, resource and infrastructure construction markets.

For further information contact:

Jason Veenstra, CPA, CA
Chief Financial Officer
North American Construction Group Ltd.
(780) 960.7171

Consolidated Balance Sheets

As at December 31
(Expressed in thousands of Canadian Dollars)

   2023   2022 
Current assets    
Cash $88,614  $69,144 
Accounts receivable  97,855   83,811 
Contract assets  35,027   15,802 
Inventories  64,962   49,898 
Prepaid expenses and deposits  7,402   10,587 
Assets held for sale  1,340   1,117 
   295,200   230,359 
Property, plant and equipment  1,142,946   645,810 
Operating lease right-of-use assets  12,782   14,739 
Intangible assets  6,971   6,773 
Investments in affiliates and joint ventures  81,435   75,637 
Other assets  7,144   5,808 
Deferred tax assets     387 
Total assets $1,546,478  $979,513 
Liabilities and shareholders' equity    
Current liabilities    
Accounts payable $146,190  $102,549 
Accrued liabilities  94,726   43,784 
Contract liabilities  59   1,411 
Current portion of long-term debt  81,306   42,089 
Current portion of operating lease liabilities  1,742   2,470 
   324,023   192,303 
Long-term debt  611,313   378,452 
Operating lease liabilities  11,307   12,376 
Other long-term obligations  134,357   18,576 
Deferred tax liabilities  108,824   71,887 
   1,189,824   673,594 
Shareholders' equity    
Common shares (authorized – unlimited number of voting common shares; issued and outstanding – December 31, 2023 - 27,827,282 (December 31, 2022 – 27,827,282))  229,455   229,455 
Treasury shares (December 31, 2023 - 1,090,187 (December 31, 2022 - 1,406,461))  (16,165)  (16,438)
Additional paid-in capital  20,739   22,095 
Retained earnings  123,032   70,501 
Accumulated other comprehensive (loss) income  (407)  306 
Shareholders' equity  356,654   305,919 
Total liabilities and shareholders' equity $1,546,478  $979,513 

Consolidated Statements of Operations and Comprehensive Income

For the years ended December 31
(Expressed in thousands of Canadian Dollars, except per share amounts)

   2023   2022 
Revenue $957,220  $769,539 
Cost of sales  671,684   548,723 
Depreciation  131,319   119,268 
Gross profit  154,217   101,548 
General and administrative expenses  56,844   29,855 
Loss on disposal of property, plant and equipment  1,659   536 
Operating income  95,714   71,157 
Equity earnings in affiliates and joint ventures  (25,815)  (37,053)
Interest expense, net  36,948   24,543 
Change in fair value of contingent consideration  4,681    
Gain on derivative financial instruments  (6,063)  (778)
Income before income taxes  85,963   84,445 
Current income tax expense  6,841   1,627 
Deferred income tax expense  15,981   15,446 
Net income  63,141   67,372 
Other comprehensive income    
Unrealized foreign currency translation loss (gain)  713   (304)
Comprehensive income $62,428  $67,676 
Per share information    
Basic net income per share $2.38  $2.46 
Diluted net income per share $2.09  $2.15