North American Construction Group(NOA) - 2023 Q1 - Quarterly Report

Financial Performance - Revenue for Q1 2023 was CAD 242.6 million, a CAD 65.9 million (or 37%) increase from Q1 2022, driven by equipment utilization of 79% compared to 65% in Q1 2022 [19]. - Total combined revenue reached CAD 320.6 million, representing a CAD 84.0 million (or 36%) increase from Q1 2022, with joint ventures contributing CAD 78.0 million, up 30% year-over-year [20]. - Adjusted EBITDA for Q1 2023 was CAD 84.6 million, a significant increase from CAD 57.7 million in Q1 2022, with an adjusted EBITDA margin of 26.4% [22]. - Gross profit for the quarter was CAD 40.9 million, with a gross profit margin of 16.9%, up from 12.4% in Q1 2022 [19]. - Net income for Q1 2023 was CAD 21.8 million, compared to CAD 13.6 million in Q1 2022, reflecting an increase of CAD 8.3 million [19]. - Adjusted EPS of $0.96 on adjusted net earnings of $25.3 million, up 88.2% from the prior year figure of $0.51 [26]. - Operating income increased to $25.5 million, up from $15.6 million in the same period last year [38]. - For the three months ended March 31, 2023, net income and comprehensive income was $21.9 million, an increase from $13.5 million in the same period last year, representing a 62.2% growth [44]. Cash Flow and Liquidity - Cash provided by operating activities was CAD 31.8 million, an increase of CAD 7.6 million from CAD 24.2 million in Q1 2022 [19]. - Free cash flow was a use of cash of $26.1 million, resulting from adjusted EBITDA of $84.6 million offset by sustaining capital additions of $47.2 million [27]. - Cash position decreased to $15.7 million as of March 31, 2023, down from $69.1 million at the end of 2022, a decline of 77.3% [48]. - Total capital liquidity as of March 31, 2023, was $172.2 million, down from $212.4 million at the end of 2022, a decrease of 18.9% [50]. - Cash used in investing activities rose to $40.9 million in Q1 2023, compared to $26.8 million in Q1 2022, primarily due to $36.5 million spent on property, plant, and equipment [59]. - Cash used in financing activities was $44.4 million in Q1 2023, including $42.2 million for long-term debt repayments [61]. Debt and Financing - Total debt as of March 31, 2023, was $129,750,000, which includes 5.50% and 5.00% convertible debentures [74]. - The average cost of debt increased to 6.7% in Q1 2023 from 4.5% in Q1 2022, reflecting higher interest rates on the Credit Facility [39]. - Total interest expense for the three months ended March 31, 2023, was $7.3 million, up from $4.7 million in Q1 2022, marking a 55.9% increase [39]. - The company’s credit facility had borrowings of $150.0 million as of March 31, 2023, down from $180.0 million at the end of 2022 [67]. - The company maintained compliance with its financial covenants as of March 31, 2023, and expects to continue compliance in the next twelve months [69]. Operational Efficiency - The company is focused on achieving or exceeding utilization targets and improving operational efficiency in the upcoming quarters [13]. - The company achieved a significant milestone by completing the construction of its remanufacturing facility and expanding its main maintenance shop [14]. - The company has integrated DGI Trading Pty Ltd and ML Northern Services Ltd., enhancing its in-house maintenance capabilities [14]. - The equipment fleet is currently composed of 65% owned, 31% finance leased, and 4% rented equipment [52]. Employee and Workforce - The company had 206 salaried employees and 1,719 hourly employees as of March 31, 2023, compared to 196 salaried and 1,657 hourly employees a year earlier [114]. - The company has maintained a stable hourly workforce ranging from approximately 700 to 1,800 employees depending on seasonal demands [114]. Backlog and Future Projections - The company's backlog as of March 31, 2023, was $1,129,786,000, a decrease of $123.6 million from the previous quarter [82]. - Revenue generated from backlog during the three months ended March 31, 2023, was $215.1 million, with an estimated $378.1 million expected to be performed over the remainder of 2023 [82]. - Adjusted EBITDA is projected to be between $255 million and $275 million for 2023 [117]. - Adjusted EPS is expected to be in the range of $2.40 to $2.60 for 2023 [117]. - Projected free cash flows for the full year 2023 are expected to be in the range of $100 to $115 million, an increase from previous reporting, improving liquidity position [116]. Internal Controls and Governance - The CEO confirmed that the interim financial report fairly presents the financial condition and performance of the company as of March 31, 2023 [194]. - The company has established disclosure controls and procedures to ensure the reliability of financial reporting [197]. - No material weaknesses in internal control over financial reporting were reported for the period ending March 31, 2023 [200]. - The control framework used for internal control design is based on the COSO framework, ensuring robust financial governance [199].