North American Construction Group Ltd. Announces Results for the Second Quarter Ended June 30, 2025

ACHESON, Alberta, Aug. 13, 2025 (GLOBE NEWSWIRE) -- North American Construction Group Ltd. (“NACG”) (TSX:NOA/NYSE:NOA) today announced results for the second quarter ended June 30, 2025. Unless otherwise indicated, financial figures are expressed in Canadian dollars, and comparisons are to the prior second quarter ended June 30, 2024. Second Quarter 2025 Financial Highlights: Combined revenue was $370.6 million and increased 12% (reported revenue of $320.6 million, increased 16%) Combined gross profit was $39.8 million (11%) and decreased 37% (reported gross profit of $35.8 million (11%), decreased 29%) Adjusted EPS was $0.02 and decreased 98% (basic earnings per share of $0.35, decreased 35%) Adjusted EBITDA was $80.1 million and decreased 12% (net income of $10.3 million, decreased 29%) Free cash flow was a use of cash of $0.4 million and increased $10.2 million Net debt was $896.9 million and increased $29.5 million Second Quarter 2025 Operational Highlights: Revenue and combined revenue for the second quarter increased, driven by global equipment utilization of 74%, consistent with 74% in the prior year, as well as strong performance in the both the Heavy Equipment - Australia and Heavy Equipment - Canada segments. Heavy Equipment - Australia revenue increased 14% to $168.1 million from $147.2 million due to their expanded heavy equipment fleet and ongoing production at a new copper mine project. Heavy Equipment - Canada revenue increased 20% to $147.4 million from $122.8 million due to increased reclamation activities and the ramp-up of the stream diversion project. Revenue generated by joint ventures and affiliates decreased 6% to $50.0 million from $53.4 million primarily due to lower revenue contributions by the Nuna joint venture. Our portion of revenue generated by the civil-infrastructure Fargo project remained strong this year, comparable to the prior year, as the project continued strong production momentum through the quarter. Gross profit for the quarter was negatively impacted by one-time or infrequent disruptions. We have taken targeted actions to mitigate certain issues, and we do not expect them to affect future performance. A temporary over-reliance on subcontractor labour in Australia increased costs and impacted margins. We are now focused on hiring and training internal labour to minimize this going forward. An abrupt, customer-requested shut-down of work, followed by a ramp back up later in the quarter, impacted margin efficiency for the Heavy Equipment - Canada segment. Adjusted EPS for the second quarter fell short of expectations largely due to the same issues impacting gross profit, along with a $7.7 million cumulative catch-up reduction in equity earnings. This adjustment is a one-time item arising from the settlement of a claim and a subsequent forecast revision for the Fargo project, resulting in a true-up to the forecast margin percentage. The Q2 adjusted EBITDA was lower year-over-year due to the same factors that impacted gross profit. Free cash flow for the quarter was a use of cash of $0.4 million. This use of cash was primarily based on adjusted EBITDA generation of $80.1 million offset by sustaining capital additions ($68.2 million), cash interest expense ($13.4 million), and current income tax expense ($0.8 million). Our net debt increase in the current quarter was primarily driven by growth capital of $24.5 million. Joe Lambert, President and CEO stated "Our outlook for the second half remains positive. We remain confident in delivering second half year results consistent with our original expectations aside from our oil sands business. While we expect revenue in the remainder of 2025 in the oil sands consistent with original expectations, we now expect increased costs due to demand volatility and near-term costs on our largest truck fleets. Beyond 2025, our long-term growth targets remain intact, with anticipated organic revenue growth of 5% to 10% annually, underpinned by ongoing Australian growth and new infrastructure projects that will further enhance operational diversification." Declaration of Quarterly Dividend On August 12th, 2025, the NACG Board of Directors declared a regular quarterly dividend (the “Dividend”) of twelve Canadian cents ($0.12) per common share, payable to common shareholders of record at the close of business on August 29, 2025. The Dividend will be paid on October 3, 2025, and is an eligible dividend for Canadian income tax purposes. NACG’s outlook for 2025 The following table provides projected key measures for 2025. While our revenue guidance remains unchanged, supported by our backlog, our EBITDA and EPS guidance for the second half of 2025 have been adjusted to reflect increased near-term costs related to demand volatility and higher maintenance requirements. Guidance on sustaining and growth capital spending and free cash flow remain unchanged. Our updated debt leverage target reflects the debenture conversions in the first quarter of 2025.     Actual results for the six months ended   Outlook for the six months ended     June 30, 2024   December 31, 2024   June 30, 2025   December 31, 2025         Current   Previous Key measures                     Combined revenue(i)   $675M   $740M   $762M   $700 - $750M   No Change Adjusted EBITDA(i)   $188M   $202M   $180M   $190 - $210M   $205 - $225M Adjusted EPS(i)   $1.58   $2.15   $0.54   $1.40 - $1.60   $1.95 - $2.15 Sustaining capital(i)   $138M   $69M   $158M   $60 - $70M   No Change Free cash flow(i)   ($50M)   $68M   ($42M)   $95 - $105M   No Change                       Capital allocation                     Growth spending(i)   $40M   $45M   $53M   Approx. $25M   No Change Net debt leverage(i)   2.2x   2.2x   2.2x   Targeting 2.1x   1.7x                       (i)See “Non-GAAP Financial Measures”. Results for the three and six months ended June 30, 2025 Consolidated Financial Highlights     Three months ended   Six months ended     June 30,   June 30, (dollars in thousands, except per share amounts)   2025   2024   2025   2024 Revenue   $ 320,634     $ 276,314     $ 661,467     $ 573,340   Cost of sales(i)     230,293       182,804       472,521       378,474   Depreciation(i)     54,511       43,151       115,225       91,013   Gross profit(i)   $ 35,830     $ 50,359     $ 73,721     $ 103,853   Gross profit margin(i)(ii)     11.2 %     18.2 %     11.1 %     18.1 % General and administrative expenses (excluding stock-based compensation)(ii)     11,698       12,483       22,788       23,318   Stock-based compensation expense (benefit)     964       (1,859 )     (2,444 )     1,749   Operating income(i)     22,789       39,395       53,371       77,875   Interest expense, net     14,123       14,339       27,639       29,936   Net income(i)     10,250       14,503       16,413       26,014   Comprehensive income(i)     9,691       15,834       16,332       26,652                     Adjusted EBITDA(i)(ii)     80,113       91,089       180,045       188,475   Adjusted EBITDA margin(i)(ii)(iii)     21.6 %     27.6 %     23.6 %     27.9 %                   Per share information                 Basic net income per share   $ 0.35     $ 0.54     $ 0.57     $ 0.97   Diluted net income per share   $ 0.33     $ 0.48     $ 0.55     $ 0.88   Adjusted EPS(ii)   $ 0.02     $ 0.80     $ 0.54     $ 1.58                                     (i)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy". (ii)See "Non-GAAP Financial Measures". (iii)Adjusted EBITDA margin is calculated using adjusted EBITDA over total combined revenue. Free cash flow     Three months ended   Six months ended     June 30,   June 30, (dollars in thousands)   2025   2024   2025   2024 Consolidated Statements of Cash Flows                 Cash provided by operating activities(i)   $ 64,674     $ 66,431     $ 116,092     $ 85,390   Cash used in investing activities(i)     (71,823 )     (87,017 )     (165,604 )     (153,112 ) Effect of exchange rate on changes in cash     915       (875 )     (160 )     (974 ) Add back of growth and non-cash items included in the above figures:                 Growth capital additions(ii)     24,463       19,943       52,529       39,550   Capital additions financed by leases(ii)     (18,605 )     (9,031 )     (44,808 )     (21,069 ) Free cash flow(i)   $ (376 )   $ (10,549 )   $ (41,951 )   $ (50,215 )                                   (i)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy". (ii)See "Non-GAAP Financial Measures". Net debt (dollars in thousands)   June 30, 2025   March 31, 2025   December 31, 2024 Credit Facility(i)   $          257,536     $          421,702     $          395,844   Equipment financing(i)                 314,414                   310,361                   253,639   Contingent obligations(i)                   96,837                   131,246                   127,866   Senior debt(ii)                 668,787                   863,309                   777,349   Senior unsecured notes                 225,000                             —                             —   Mortgage(i)                   27,175                     27,388                     27,600   Total debt(ii)                 920,962                   890,697                   804,949   Convertible debentures(i)                   55,000                     55,000                   129,106   Cash                 (79,025 )                 (78,241 )                 (77,875 ) Net debt(ii)   $          896,937     $          867,456     $          856,180                             (i)Includes current portion. (ii)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 June 30, 2025, tomorrow, Thursday, August 14, 2025, at 7:00 am Mountain Time (9:00 am Eastern Time). The call can be accessed by dialing: Toll Free: 1-800-717-1738 Conference ID: 53211 A replay will be available through September 15, 2025, by dialing: Toll Free: 1-888-660-6264 Conference ID: 53211 Playback Passcode: 53211 The 2025 Q2 earnings presentation for the webcast will be available for download on the company’s website at www.nacg.ca/presentations/ The live presentation and webcast can be accessed at: https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=87347F42-2D6F-4E06-867A-B96665B437F5 A replay will be available until September 15, 2025, using the link provided. About the Company North American Construction Group Ltd. is a premier provider of heavy civil construction and mining services in Australia, Canada, and the U.S. For over 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 [email protected] www.nacg.ca 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 quarter ended June 30, 2025, for further detail on the matters discussed in this release. In addition to the MD&A, please reference the dedicated 2025 Q2 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 - Classification of heavy equipment tires Effective in the first quarter of 2025, we have changed our accounting policy for the classification of heavy equipment tires. These tires are now recognized as property, plant, and equipment on the Consolidated Balance Sheets and are amortized through depreciation on the Consolidated Statements of Operations and Comprehensive Income. Previously, all tires were classified as inventories and expensed through cost of sales when placed into service. This change in accounting policy provides a more accurate reflection of the role of tires as components of the heavy equipment in which they are utilized, aligning the accounting treatment with the economic substance of their use. We have applied this change retrospectively in accordance with Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections, by restating the comparative period. For further details regarding the retrospective adjustments, refer to Note 16 in the consolidated financial statements for the period ended June 30, 2025. 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 and six months ended June 30, 2025. 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 www.sec.gov or on the CSA website at www.sedarplus.com. 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 liquidity", "cash provided by operating activities prior to change in working capital", "cash related interest expense", "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 margin", "growth capital", "margin", "net debt", "net debt leverage", "senior 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 net income to adjusted net earnings, adjusted EBIT and adjusted EBITDA     Three months ended   Six months ended     June 30,   June 30, (dollars in thousands)   2025   2024   2025   2024 Net income(i)   $ 10,250     $ 14,503     $ 16,413     $ 26,014   Adjustments:                 Stock-based compensation expense (benefit)     964       (1,859 )     (2,444 )     1,749   (Gain) loss on disposal of property, plant and equipment     (110 )     32       (1,084 )     293   Change in fair value of contingent obligations from adjustments to estimates     (17,485 )     7,420       (18,802 )     8,858   Loss on derivative financial instruments     750       273       7,662       273   Equity investment loss (gain) on derivative financial instruments     892       (984 )     1,911       970   Equity investment restructuring costs     —       —       —       4,517   Depreciation expense relating to early component failures     —       —       4,274       —   Post-acquisition asset relocation and integration costs     —       —       1,640       —   Write-down on assets held for sale     —       4,181       —       4,181   Tax effect of the above items     5,426       (2,248 )     5,726       (4,507 ) Adjusted net earnings(i)(ii)     687       21,318       15,296       42,348   Adjustments:                 Tax effect of the above items     (5,426 )     2,248       (5,726 )     4,507   Interest expense, net     14,123       14,339       27,639       29,936   Equity investment EBIT(ii)     (5,057 )     6,555       (1,747 )     2,787   Equity loss (earnings) in affiliates and joint ventures     5,133       (6,629 )     1,850       (5,117 ) Change in fair value of contingent obligations     4,247       4,143       8,594       8,098   Income tax expense     5,771       5,346       10,015       9,813   Adjusted EBIT(i)(ii)     19,478       47,320       55,921       92,372   Adjustments:                 Depreciation(i)     54,511       43,151       115,225       91,013   Amortization of intangible assets     489       308       1,090       618   Depreciation expense relating to early component failures     —       —       (4,274 )     —   Write-down on assets held for sale     —       (4,181 )     —       (4,181 ) Equity investment depreciation and amortization(ii)     5,635       4,491       12,083       8,653   Adjusted EBITDA(i)(ii)   $ 80,113     $ 91,089     $ 180,045     $ 188,475   Adjusted EBITDA margin(i)(ii)(iii)     21.6 %     27.6 %     23.6 %     27.9 %                                   (i)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy". (ii)See "Non-GAAP Financial Measures". (iii)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   Six months ended     June 30,   June 30, (dollars in thousands)    2025     2024     2025     2024  Equity (loss) earnings in affiliates and joint ventures   $             (5,133 )   $               6,629     $             (1,850 )   $               5,117   Adjustments:                 Loss (gain) on disposal of property, plant and equipment                         155                             —                           157                         (175 ) Interest (income) expense                         183                         (146 )                         154                         (719 ) Income tax expense (benefit)                       (262 )                           72                         (208 )                   (1,436 ) Equity investment EBIT(i)   $             (5,057 )   $               6,555     $             (1,747 )   $               2,787                                     (i)See "Non-GAAP Financial Measures". Reconciliation of total reported revenue to total combined revenue     Three months ended   Six months ended     June 30,   June 30, (dollars in thousands)    2025     2024     2025     2024  Revenue from wholly-owned entities per financial statements   $          320,634     $          276,314     $          661,467     $          573,340   Share of revenue from investments in affiliates and joint ventures                 121,843                   112,377                   257,740                   238,215   Elimination of joint venture subcontract revenue                 (71,849 )                 (58,968 )               (157,415 )               (136,119 ) Total combined revenue(i)   $          370,628     $          329,723     $          761,792     $          675,436                                     (i)See "Non-GAAP Financial Measures". Reconciliation of reported gross profit to combined gross profit     Three months ended   Six months ended     June 30,   June 30, (dollars in thousands)    2025    2024    2025    2024 Gross profit from wholly-owned entities per financial statements   $             35,830   $             50,359   $             73,721   $          103,853 Share of gross (loss) profit from investments in affiliates and joint ventures                     3,947                   12,920                   17,284                   21,855 Combined gross profit(i)(ii)   $             39,777   $             63,279   $             91,005   $          125,708                           (i)See "Non-GAAP Financial Measures". (ii)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy". Reconciliation of basic net income per share to adjusted EPS     Three months ended   Six months ended     June 30,   June 30, (dollars in thousands)    2025    2024    2025    2024 Net income(i)   $             10,250   $             14,503   $             16,413   $             26,014 Interest from convertible debentures (after tax)                         616                     1,489                     1,728                     2,981 Diluted net income available to common shareholders(i)   $             10,866   $             15,992   $             18,141   $             28,995                   Adjusted net earnings(i)(ii)   $                  687   $             21,318   $             15,296   $             42,348                   Weighted-average number of common shares           29,354,387           26,730,049           28,611,557           26,731,762 Weighted-average number of diluted common shares           32,562,639           33,026,740           32,743,696           33,026,740                   Basic net income per share   $                 0.35   $                 0.54   $                 0.57   $                 0.97 Diluted net income per share   $                 0.33   $                 0.48   $                 0.55   $                 0.88 Adjusted EPS(ii)   $                 0.02   $                 0.80   $                 0.54   $                 1.58                           (i)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy". (ii)See "Non-GAAP Financial Measures". Interim Consolidated Balance Sheets (Expressed in thousands of Canadian Dollars) (Unaudited)     June 30, 2025   December 31, 2024(i) Assets         Current assets         Cash   $             79,025     $             77,875   Accounts receivable                 195,313                   166,070   Contract assets                   15,670                       4,135   Inventories                   74,217                     69,027   Prepaid expenses and deposits                     5,540                       7,676   Assets held for sale                         683                           683                     370,448                   325,466   Property, plant and equipment, net of accumulated depreciation of $539,496 (December 31, 2024 – $500,303)             1,350,451               1,251,874   Operating lease right-of-use assets                   11,181                     12,722   Investments in affiliates and joint ventures                   79,181                     84,692   Intangible assets                   10,159                       9,901   Other assets                     5,795                       9,845   Total assets   $       1,827,215     $       1,694,500   Liabilities and shareholders’ equity         Current liabilities         Accounts payable   $          143,044     $          110,750   Accrued liabilities                   60,966                     78,010   Contract liabilities                     6,444                       1,944   Current portion of long-term debt                 149,539                     84,194   Current portion of contingent obligations                   33,021                     39,290   Current portion of operating lease liabilities                     1,488                       1,771                     394,502                   315,959   Long-term debt                 723,061                   719,399   Contingent obligations                   63,816                     88,576   Operating lease liabilities                   10,279                     11,441   Other long-term obligations                   42,910                     44,711   Deferred tax liabilities                 132,431                   125,378                 1,366,999               1,305,464   Shareholders' equity         Common shares (authorized – unlimited number of voting common shares; issued and outstanding – June 30, 2025 - 30,176,981 (December 31, 2024 – 27,704,450))                 295,074                   228,961   Treasury shares (June 30, 2025 - 1,010,022 (December 31, 2024 - 1,000,328))                 (16,156 )                 (15,913 ) Additional paid-in capital                   16,783                     20,819   Retained earnings                 165,698                   156,271   Accumulated other comprehensive loss                   (1,183 )                   (1,102 ) Shareholders' equity                 460,216                   389,036   Total liabilities and shareholders’ equity   $       1,827,215     $       1,694,500                     (i)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy". Interim Consolidated Statements of Operations and Comprehensive Income (Expressed in thousands of Canadian Dollars, except per share amounts) (Unaudited)      Three months ended   Six months ended     June 30,   June 30,     2025   2024(i)   2025   2024(i) Revenue   $ 320,634     $ 276,314     $ 661,467     $ 573,340   Cost of sales     230,293       182,804       472,521       378,474   Depreciation     54,511       43,151       115,225       91,013   Gross profit     35,830       50,359       73,721       103,853   General and administrative expenses     12,662       10,624       20,344       25,067   Amortization of intangible assets     489       308       1,090       618   (Gain) loss on disposal of property, plant and equipment     (110 )     32       (1,084 )     293   Operating income     22,789       39,395       53,371       77,875   Interest expense, net     14,123       14,339       27,639       29,936   Equity loss (earnings) in affiliates and joint ventures     5,133       (6,629 )     1,850       (5,117 ) Loss on derivative financial instruments     750       273       7,662       273   Change in fair value of contingent obligations     (13,238 )     11,563       (10,208 )     16,956   Income before income taxes     16,021       19,849       26,428       35,827   Current income tax expense (benefit)     798       (1,275 )     2,575       3,021   Deferred income tax expense     4,973       6,621       7,440       6,792   Net income   $ 10,250     $ 14,503     $ 16,413     $ 26,014   Other comprehensive income                 Unrealized foreign currency translation loss (gain)     559       (1,331 )     81       (638 ) Comprehensive income   $ 9,691     $ 15,834     $ 16,332     $ 26,652   Per share information                 Basic net income per share   $ 0.35     $ 0.54     $ 0.57     $ 0.97   Diluted net income per share   $ 0.33     $ 0.48     $ 0.55     $ 0.88                                     (i)The prior year amounts are adjusted to reflect a change in policy. See "Change in significant accounting policy".