Workflow
North American Construction Group Ltd. Announces Regional Services Contract and Outlook for 2025
NOANorth American Construction Group(NOA) GlobeNewswire News Room·2024-12-05 13:00

Core Viewpoint - North American Construction Group Ltd. (NACG) has secured an extended and amended regional services contract in the Canadian oil sands region, which is expected to enhance its operational capabilities and financial outlook for 2025 [1][2]. Contract Details - The amended contract will commence on January 1, 2025, and will now expire on January 31, 2029, extending the original term by two years [2]. - The contract includes a committed spend of 500million,primarilyforheavyequipmentrentalsandbulkunitrateearthworkscopes,representingaboutone−thirdofthetotalexpectedworkacrossvariousminesites[3].ManagementCommentary−NACG′sPresidentandCEOemphasizedtheimportanceofthismulti−yearcommitment,highlightingthecompany′sfocusonefficiencyandcost−effectivenessindeliveringservices[4].−TheInterimCEOofMikisewGroupnotedthatthecontractextensionstrengthenstheirpartnershipandcommitmenttoeconomicdevelopmentfortheMikisewCreeFirstNation[4].FinancialOutlook−ForQ42024,NACGestimatescombinedrevenuebetween500 million, primarily for heavy equipment rentals and bulk unit rate earthwork scopes, representing about one-third of the total expected work across various mine sites [3]. Management Commentary - NACG's President and CEO emphasized the importance of this multi-year commitment, highlighting the company's focus on efficiency and cost-effectiveness in delivering services [4]. - The Interim CEO of Mikisew Group noted that the contract extension strengthens their partnership and commitment to economic development for the Mikisew Cree First Nation [4]. Financial Outlook - For Q4 2024, NACG estimates combined revenue between 350 million and 375million,withadjustedEBITDAprojectedat375 million, with adjusted EBITDA projected at 100 million to 110million[7].−Forthefullyear2025,combinedrevenueisexpectedtorangefrom110 million [7]. - For the full year 2025, combined revenue is expected to range from 1.4 billion to 1.6billion,withadjustedEBITDAbetween1.6 billion, with adjusted EBITDA between 415 million and 445million[7].−Thecompanyanticipatessustainingcapitalexpendituresof445 million [7]. - The company anticipates sustaining capital expenditures of 55 million to 65millionforQ42024and65 million for Q4 2024 and 180 million to 200millionforthefullyear2025[7].CapitalAllocation−Growthspendingisprojectedtobe200 million for the full year 2025 [7]. Capital Allocation - Growth spending is projected to be 30 million to 40millioninearly2025,withatargetof40 million in early 2025, with a target of 45 million to 55millionforthefullyear[9].−Thecompanyaimstoachieveanetdebtleverageof1.8xbytheendof2025,excludingpotentialdebentureconversion[9].OperationalContext−NACGhasaproformacontractualbacklogof55 million for the full year [9]. - The company aims to achieve a net debt leverage of 1.8x by the end of 2025, excluding potential debenture conversion [9]. Operational Context - NACG has a proforma contractual backlog of 3.6 billion, which positions the company well for executing projects across Canada, Australia, and the United States [5][9].