North American Construction Group (NOA) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 results with combined revenue up to $367.2M, a 34%–46% year-over-year increase, driven by the MacKellar Group acquisition and strong Australian operations.

• Adjusted EBITDA reached $106.4M (29.0% margin), more than doubling year-over-year, reflecting operational improvements and diversification.

• Net income was $13.9M, with adjusted EPS of $1.17, up 117% year-over-year.

• Backlog remains strong at $3.1B–$3.15B, with a bid pipeline exceeding $10B and significant new contract wins.

• Announced a 20% dividend increase and a new normal course issuer bid, reflecting a focus on shareholder returns.

Financial highlights

• Combined revenue rose to $367.2M, up from $275M–$196.9M in Q3 2023, mainly due to MacKellar's contribution.

• Adjusted EBITDA reached $106.4M (29.0% margin), up from $59M–$59.4M (21.6%) in Q3 2023.

• Free cash flow for Q3 was $10.8M–$11M, with cash from operations before working capital at $80M.

• Net debt ended at $882.5M–$883M, up due to asset purchases and MacKellar financing; leverage ratios at 2.3x net debt/EBITDA.

• Adjusted EPS for the quarter was $1.17, more than double the prior year period.

Outlook and guidance

• 2024 guidance: combined revenue of $1.4–$1.5B, adjusted EBITDA of $395M–$415M, adjusted EPS of $3.95–$4.15, free cash flow $100M–$120M, growth capital $85M–$95M, sustaining capital $150M–$170M, net debt leverage targeting 2.1x.

• Year-end backlog expected to remain above $3B, with increasing geographic and resource diversification.

• 2025 priorities include enhancing safety, increasing equipment utilization, and leveraging ERP systems for efficiency.

• Free cash flow conversion expected to normalize at 35% in 2025, with Australia above 40% and Canada at 30%.

• Capital allocation priorities include a 20% dividend increase, active share repurchases, and debt reduction.