First Quarter 2024 Highlights:
- Combined revenue of
$345.7 million compared favorably to$322.3 million in the same period last year, is a first quarter record and reflected a second consecutive strong operational quarter from the Australian fleet of theMacKellar Group which was acquired onOctober 1, 2023 . - Reported revenue of
$297.0 million , compared to$244.3 million in the same period last year, was primarily generated by strong equipment utilization inAustralia but was offset by lower equipment operating hours in the oil sands region due to remobilizing and repositioning of the heavy equipment fleet. - Our net share of revenue from equity consolidated joint ventures was
$48.7 million in Q1 2024 and compared to$78.0 million in the same period last year as the prior period included significant project scopes related to the gold mine inNorthern Ontario which was completed in Q3 2023. - Adjusted EBITDA of
$93.3 million and margin of 27.0% compared favorably to the prior period operating metrics of$84.6 million and 26.3%, respectively, as revenue increases drove higher gross EBITDA with margin improvements driven by operating performances inAustralia . - Combined gross profit of
$62.2 million and margin of 18.0% compared favorably to the$55.9 million and 17.3% metrics posted in the same period last year. The margin increases reflect strategic diversification efforts as all growth segments contributed to posting a higher overall combined margin in the quarter. - Cash flows generated from operating activities of
$11.9 million was lower than the$31.8 million posted in the prior period as higher cash generation from the strong EBITDA was more than offset by the temporary impact of changes to working capital in the quarter. - Free cash flow used in the quarter was
$36.4 million . Free cash flow prior to working capital changes and joint venture cash management was over$20 million , resulting from strong revenues and margins offset by our front-loaded annual capital maintenance program. - Net debt was
$781.4 million atMarch 31, 2024 , an increase of$58.0 million fromDecember 31, 2023 , as free cash flow usage required debt financing. The cash-related interest rate during the quarter on our debt was 9.1% due toBank of Canada posted rates and the correlated impact on equipment financing rates. - Additional highlights during the quarter: i) contractual backlog increased
$294 million to over$3.0 billion for the first time in company history; ii) based on contractual volumes inAustralia , transport of approximately 20 haul trucks commenced with commissioning expected in late Q3; ii) steady progress on the ERP implementation inAustralia with a targeted go-live ofSeptember 1 ; and iii) the telematics project implemented operational tracking, which supplements maintenance monitoring, and began work on installations inAustralia .
"Our first quarter performance was in line with our EBITDA guidance, slightly exceeding 20% of our annual estimate. Our operations teams continue working diligently to optimize the utilization of and returns on our heavy equipment assets through an increased bid pipeline overall and, more specifically, some fantastic Australian opportunities with long-term commitments and blue-chip customers,” said
"This year's quarterly results will vary significantly from historical averages with a ramp up from now to Q3 peak EBITDA and an expected approximate 45/55 split between first and second half of the year, but we remain confident and committed in delivering into our guidance range and setting ourselves up for improving utilization and return on our assets for many years to come.”
Consolidated Financial Highlights
Three months ended | ||||||||||||
(dollars in thousands, except per share amounts) | 2024 | 2023(iii) | Change | |||||||||
Revenue | $ | 297,026 | $ | 244,329 | $ | 52,697 | ||||||
Cost of sales | 199,795 | 166,844 | 32,951 | |||||||||
Depreciation | 43,941 | 36,385 | 7,556 | |||||||||
Gross profit | $ | 53,290 | $ | 41,100 | $ | 12,190 | ||||||
Gross profit margin(i) | 17.9 | % | 16.8 | % | 1.1 | % | ||||||
General and administrative expenses (excluding stock-based compensation)(i) | 11,145 | 8,243 | 2,902 | |||||||||
Stock-based compensation expense | 3,608 | 5,936 | (2,328 | ) | ||||||||
Operating income | 38,276 | 25,708 | 12,568 | |||||||||
Interest expense, net | 15,597 | 7,311 | 8,286 | |||||||||
Net income | 11,369 | 21,846 | (10,477 | ) | ||||||||
Adjusted EBITDA(i) | 93,251 | 84,622 | 8,629 | |||||||||
Adjusted EBITDA margin(i)(iii) | 27.0 | % | 26.3 | % | 0.7 | % | ||||||
Per share information | ||||||||||||
Basic net income per share | $ | 0.43 | $ | 0.83 | $ | (0.40 | ) | |||||
Diluted net income per share | $ | 0.39 | $ | 0.71 | $ | (0.32 | ) | |||||
Adjusted EPS(i) | $ | 0.78 | $ | 0.96 | $ | (0.18 | ) |
(i)See "Non-GAAP Financial Measures".
(ii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.
(iii)The prior year amounts are adjusted to reflect a change in accounting policy. See "Accounting Estimates, Pronouncements and Measures".
Three months ended | ||||||||
(dollars in thousands) | 2024 | 2023 | ||||||
Consolidated Statements of Cash Flows | ||||||||
Cash provided by operating activities | $ | 11,866 | $ | 31,824 | ||||
Cash used in investing activities | (56,733 | ) | (40,917 | ) | ||||
Effect of exchange rate on changes in cash | (2,368 | ) | 55 | |||||
Add back of growth and non-cash items included in the above figures: | ||||||||
Growth capital additions(i) | 19,607 | — | ||||||
Non-cash changes in fair value of contingent obligations | 5,393 | — | ||||||
Capital additions financed by leases(i) | (14,156 | ) | (17,020 | ) | ||||
Free cash flow(i) | $ | (36,391 | ) | $ | (26,058 | ) |
(i)See "Non-GAAP Financial Measures".
Declaration of Quarterly Dividend
On
2024 Sustainability Report
On
Results for the Three Months Ended
Revenue of
Equipment utilization in the oil sands region, within the Heavy Equipment -
Combined revenue of
Adjusted EBITDA of
Margins in the Heavy Equipment -
Restructuring efforts within the
Depreciation of our equipment fleet was 14.8% of revenue in the quarter, compared to 14.9% in Q1 2023. The Heavy Equipment -
General and administrative expenses (excluding stock-based compensation) were
Cash related interest expense incurred on our debt for the quarter was
Adjusted earnings per share ("EPS") of
Weighted-average common shares outstanding for the first quarters of 2024 and 2023 are comparable at 26,733,473 and 26,415,004, respectively, and were not a factor in the earnings per share variance.
Free cash flow was a use of cash of
Business Updates
2024 Strategic Focus Areas
- Safety - now on an international basis, maintain our uncompromising commitment to health and safety while elevating the standard of excellence in the field;
- Execution - enhance equipment availability in
Canada andAustralia 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 inAustralia ; - 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.
Liquidity
Our current liquidity positions us well moving forward to fund organic growth and the required correlated working capital investments. Including equipment financing availability and factoring in the amended Credit Facility agreement, total available capital liquidity of
2024 | 2023 | |||||||
Cash | $ | 80,095 | $ | 88,614 | ||||
Credit Facility borrowing limit | 474,260 | 478,022 | ||||||
Credit Facility drawn | (364,260 | ) | (317,488 | ) | ||||
Letters of credit outstanding | (32,045 | ) | (31,272 | ) | ||||
Cash liquidity(i) | $ | 158,050 | $ | 217,876 | ||||
Finance lease borrowing limit | 350,000 | 350,000 | ||||||
Other debt borrowing limit | 20,000 | 20,000 | ||||||
Equipment financing drawn | (220,187 | ) | (220,466 | ) | ||||
Guarantees provided to joint ventures | (71,600 | ) | (74,831 | ) | ||||
Total capital liquidity(i) | $ | 236,263 | $ | 292,579 |
(i)See "Non-GAAP Financial Measures".
NACG’s outlook for 2024
The following table provides projected key measures for 2024. These measures are predicated on contracts currently in place, including expected renewals, and the heavy equipment fleet that we own and operate.
Key measures | 2024 | |
Combined revenue(i) | ||
Adjusted EBITDA(i) | ||
Sustaining capital(i) | ||
Adjusted EPS(i) | ||
Free cash flow(i) | ||
Capital allocation | ||
Growth spending(i) | ||
Net debt leverage(i) | Targeting 1.5x |
(i)See “Non-GAAP Financial Measures”.
Conference Call and Webcast
Management will hold a conference call and webcast to discuss our financial results for the quarter ended
The call can be accessed by dialing:
Toll free: 1-800-717-1738
Conference ID: 92465
A replay will be available through
Toll Free: 1-888-660-6264
Conference ID: 92465
Playback Passcode: 92465
The Q1 2024 earnings presentation for the webcast will be available for download on the company’s website at https://nacg.ca/presentations/
The live presentation and webcast can be accessed at:
A replay will be available until
Basis of Presentation
We have prepared our consolidated financial statements in conformity with accounting principles generally accepted in
Change in significant accounting policy - Basis of presentation
During the first quarter of 2024, we changed our accounting policy for the elimination of our proportionate share of profit from downstream sales to affiliates and joint ventures to record through equity earnings in affiliates and joint ventures on the Consolidated Statements of Operations and Comprehensive Income. Prior to this change, we eliminated our proportionate share of profit on downstream sales to affiliates and joint ventures through revenue and cost of sales. The change in accounting policy simplifies the presentation for downstream profit eliminations and has no cumulative impact on retained earnings. We have accounted for the change retrospectively in accordance with the requirements of US GAAP Accounting Standards Codification ("ASC") 250 by restating the comparative period. For details of retrospective changes, refer to note 16 in the 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.
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
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 "adjusted EBIT", "adjusted EBITDA", "adjusted EBITDA margin", "adjusted EPS", "adjusted net earnings", "capital additions", "capital work in progress", "cash provided by operating activities prior to change in working capital", "combined gross profit", "combined gross profit margin", "equity investment EBIT", "free cash flow", "general and administrative expenses (excluding stock-based compensation)", "gross profit margin", "growth capital", "margin", "net debt", "sustaining capital", "total capital liquidity", "total combined revenue", and "total debt". 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.
Reconciliation of total reported revenue to total combined revenue
Three months ended | ||||||||
(dollars in thousands) | 2024 | 2023(ii) | ||||||
Revenue from wholly-owned entities per financial statements | $ | 297,026 | $ | 244,329 | ||||
Share of revenue from investments in affiliates and joint ventures | 125,838 | 189,485 | ||||||
Elimination of joint venture subcontract revenue | (77,151 | ) | (111,473 | ) | ||||
Total combined revenue(i) | $ | 345,713 | $ | 322,341 |
(i)See "Non-GAAP Financial Measures".
(ii)The prior year amounts are adjusted to reflect a change in accounting policy. See "Accounting Estimates, Pronouncements and Measures".
Reconciliation of reported gross profit to combined gross profit
Three months ended | ||||||||
(dollars in thousands) | 2024 | 2023(ii) | ||||||
Gross profit from wholly-owned entities per financial statements | $ | 53,290 | $ | 41,100 | ||||
Share of gross profit from investments in affiliates and joint ventures | 8,935 | 14,819 | ||||||
Combined gross profit(i) | $ | 62,225 | $ | 55,919 |
(i)See "Non-GAAP Financial Measures".
(ii)The prior year amounts are adjusted to reflect a change in accounting policy. See "Accounting Estimates, Pronouncements and Measures".
Reconciliation of net income to adjusted net earnings, adjusted EBIT and adjusted EBITDA
Three months ended | ||||||||
(dollars in thousands) | 2024 | 2023 | ||||||
Net income | $ | 11,369 | $ | 21,846 | ||||
Adjustments: | ||||||||
Loss on disposal of property, plant and equipment | 261 | 1,213 | ||||||
Stock-based compensation expense | 3,608 | 5,936 | ||||||
Change in fair value of contingent obligations | 1,438 | — | ||||||
Restructuring costs | 4,517 | — | ||||||
Gain on derivative financial instruments | — | (2,509 | ) | |||||
Net unrealized loss on derivative financial instruments included in equity earnings in affiliates and joint ventures | 1,954 | 434 | ||||||
Tax effect of the above items | (2,260 | ) | (1,644 | ) | ||||
Adjusted net earnings(i) | 20,887 | 25,276 | ||||||
Adjustments: | ||||||||
Tax effect of the above items | 2,260 | 1,644 | ||||||
Amortization of fair value of contingent obligations | 3,955 | — | ||||||
Interest expense, net | 15,597 | 7,311 | ||||||
Income tax expense | 4,405 | 8,402 | ||||||
Equity loss (earnings) in affiliates and joint ventures(i)(iii) | 1,512 | (9,342 | ) | |||||
Equity investment EBIT(i)(iii) | (3,768 | ) | 9,783 | |||||
Adjusted EBIT(i) | 44,848 | 43,074 | ||||||
Adjustments: | ||||||||
Depreciation and amortization | 44,241 | 36,691 | ||||||
Equity investment depreciation and amortization | 4,162 | 4,857 | ||||||
Adjusted EBITDA(i) | $ | 93,251 | $ | 84,622 | ||||
Adjusted EBITDA margin(ii) | 27.0 | % | 26.3 | % |
(i)See "Non-GAAP Financial Measures".
(ii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue.
(iii)The prior year amounts are adjusted to reflect a change in accounting policy. See "Accounting Estimates, Pronouncements and Measures".
Reconciliation of equity earnings in affiliates and joint ventures to equity investment EBIT
Three months ended | ||||||||
(dollars in thousands) | 2024 | 2023(ii) | ||||||
Equity (loss) earnings in affiliates and joint ventures | $ | (1,512 | ) | $ | 9,342 | |||
Adjustments: | ||||||||
Interest (income) expense, net | (573 | ) | 357 | |||||
Income tax (benefit) expense | (1,508 | ) | 124 | |||||
Gain on disposal of property, plant and equipment | (175 | ) | (40 | ) | ||||
Equity investment EBIT(i) | $ | (3,768 | ) | $ | 9,783 |
(i)See "Non-GAAP Financial Measures".
(ii)The prior year amounts are adjusted to reflect a change in accounting policy. See "Accounting Estimates, Pronouncements and Measures".
About the Company
For further information contact:
Chief Financial Officer
(780) 960-7171
IR@nacg.ca
www.nacg.ca
Interim Consolidated Balance Sheets
(Expressed in thousands of Canadian Dollars)
(Unaudited)
2024 | 2023 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 80,095 | $ | 88,614 | ||||
Accounts receivable | 138,451 | 97,855 | ||||||
Contract assets | 15,874 | 35,027 | ||||||
Inventories | 68,876 | 64,962 | ||||||
Prepaid expenses and deposits | 7,946 | 7,402 | ||||||
Assets held for sale | 1,257 | 1,340 | ||||||
312,499 | 295,200 | |||||||
Property, plant and equipment, net of accumulated depreciation of | 1,165,183 | 1,142,946 | ||||||
Operating lease right-of-use assets | 14,402 | 12,782 | ||||||
Intangible assets | 7,614 | 6,971 | ||||||
Investments in affiliates and joint ventures | 74,498 | 81,435 | ||||||
Other assets | 6,015 | 7,144 | ||||||
Total assets | $ | 1,580,211 | $ | 1,546,478 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 124,017 | $ | 146,190 | ||||
Accrued liabilities | 61,502 | 72,225 | ||||||
Contract liabilities | 1,366 | 59 | ||||||
Current portion of long-term debt | 84,178 | 81,306 | ||||||
Current portion of contingent obligations | 27,258 | 22,501 | ||||||
Current portion of operating lease liabilities | 1,891 | 1,742 | ||||||
300,212 | 324,023 | |||||||
Long-term debt | 654,953 | 611,313 | ||||||
Long-term portion of contingent obligations | 91,834 | 93,356 | ||||||
Operating lease liabilities | 12,868 | 11,307 | ||||||
Other long-term obligations | 45,738 | 41,001 | ||||||
Deferred tax liabilities | 108,661 | 108,824 | ||||||
1,214,266 | 1,189,824 | |||||||
Shareholders' equity | ||||||||
Common shares (authorized – unlimited number of voting common shares; issued and outstanding – | 229,455 | 229,455 | ||||||
(16,277 | ) | (16,165 | ) | |||||
Additional paid-in capital | 22,140 | 20,739 | ||||||
Retained earnings | 131,727 | 123,032 | ||||||
Accumulated other comprehensive income | (1,100 | ) | (407 | ) | ||||
Shareholders' equity | 365,945 | 356,654 | ||||||
Total liabilities and shareholders’ equity | $ | 1,580,211 | $ | 1,546,478 |
Interim Consolidated Statements of Operations and Comprehensive Income
(Expressed in thousands of Canadian Dollars, except per share amounts)
(Unaudited)
Three months ended | ||||||||
2024 | 2023(i) | |||||||
Revenue | $ | 297,026 | $ | 244,329 | ||||
Cost of sales | 199,795 | 166,844 | ||||||
Depreciation | 43,941 | 36,385 | ||||||
Gross profit | 53,290 | 41,100 | ||||||
General and administrative expenses | 14,753 | 14,179 | ||||||
Loss on disposal of property, plant and equipment | 261 | 1,213 | ||||||
Operating income | 38,276 | 25,708 | ||||||
Equity loss (earnings) in affiliates and joint ventures | 1,512 | (9,342 | ) | |||||
Interest expense, net | 15,597 | 7,311 | ||||||
Change in fair value of contingent obligations | 5,393 | — | ||||||
Gain on derivative financial instruments | — | (2,509 | ) | |||||
Income before income taxes | 15,774 | 30,248 | ||||||
Current income tax expense | 4,234 | 1,136 | ||||||
Deferred income tax expense | 171 | 7,266 | ||||||
Net income | $ | 11,369 | $ | 21,846 | ||||
Other comprehensive income | ||||||||
Unrealized foreign currency translation loss (gain) | 693 | (55 | ) | |||||
Comprehensive income | $ | 10,676 | $ | 21,901 | ||||
Per share information | ||||||||
Basic net income per share | $ | 0.43 | $ | 0.83 | ||||
Diluted net income per share | $ | 0.39 | $ | 0.71 |
(i)The prior year amounts are adjusted to reflect a change in accounting policy. See "Accounting Estimates, Pronouncements and Measures".
Source:
2024 GlobeNewswire, Inc., source