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

1. Combined revenue rose 12% to $370.6 million in Q2 2025. 2. Adjusted EPS dropped 98% to $0.02, disappointing expectations. 3. Net debt increased by $29.5 million, now at $896.9 million. 4. Management remains optimistic for the second half of 2025. 5. A quarterly dividend of $0.12 per share was declared.

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Why Bearish?

The significant drop in adjusted EPS and a rise in net debt may instill concern among investors, as it indicates operational inefficiencies and financial strain. Market reactions often follow negative earnings reports, as seen historically with similar companies reacting sharply to adverse financial disclosures.

How important is it?

The article provides critical financial insights that directly relate to NOA's operational performance and investor confidence. The changes in profitability and increased debt present significant considerations for stakeholders, ultimately driving decision-making.

Why Short Term?

Market focus typically reacts swiftly to earnings results, including EPS and cash flow metrics. The immediate investor sentiment based on the latest results will likely affect NOA's stock price in the upcoming trading sessions.

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NACGBHPTRPCNR
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 millionNet 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 PreviousKey measures          Combined revenue(i) $675M $740M $762M $700 - $750M No ChangeAdjusted EBITDA(i) $188M $202M $180M $190 - $210M $205 - $225MAdjusted EPS(i) $1.58 $2.15 $0.54 $1.40 - $1.60 $1.95 - $2.15Sustaining capital(i) $138M $69M $158M $60 - $70M No ChangeFree cash flow(i) ($50M) $68M ($42M) $95 - $105M No Change           Capital allocation          Growth spending(i) $40M $45M $53M Approx. $25M No ChangeNet 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 2024Revenue $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 2024Consolidated 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, 2024Credit 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: 1-800-717-1738Conference ID: 53211 A replay will be available through September 15, 2025, by dialing: Toll Free: 1-888-660-6264Conference ID: 53211Playback 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, CAChief Financial OfficerNorth American Construction Group Ltd.(780) 960-7171IR@nacg.cawww.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 2024Net 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  2024Gross profit from wholly-owned entities per financial statements $            35,830  $            50,359 $            73,721  $         103,853Share of gross (loss) profit from investments in affiliates and joint ventures                  3,947                 12,920                17,284                 21,855Combined 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  2024Net income(i) $            10,250  $            14,503 $            16,413  $            26,014Interest from convertible debentures (after tax)                      616                   1,489                  1,728                   2,981Diluted 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         26,731,762Weighted-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  $                0.97Diluted net income per share $                0.33  $                0.48 $                0.55  $                0.88Adjusted 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 andComprehensive 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".

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