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North American Construction (TSE:NOA)
:NOA
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North American Construction Group
(NYSE:NOA)
65Neutral
Positive Factors
Company Rating
Analyst reiterates an Outperform rating on North American Construction Group.
Contract Extensions
Recent contract extensions and wins provide greater visibility for 2025 results.
Growth Potential
The recent acquisition of Australia-based MacKellar Group further improves NOA's growth potential through its diversification into metals/mining and other earthwork construction projects.
Negative Factors
Lagging Results
Results from Nuna continue to lag, although stronger work from Fargo-Moorhead is helping overall JV results.
Margin Decrease
Total combined revenue rose 2% Q/Q while margins decreased by 120bps to 28%.
North American Construction Group (NOA) vs. S&P 500 (SPY)
Market Cap
C$602.86M
Dividend Yield2.21%
Average Volume (3M)106.92K
Price to Earnings (P/E)12.3
Beta (1Y)0.74
Revenue Growth21.79%
EPS Growth-30.74%
CountryCA
Employees1,825
SectorEnergy
Sector Strength61
IndustryOil & Gas Equipment & Services
Share Statistics
EPS (TTM)1.65
Shares Outstanding29,697,605
10 Day Avg. Volume94,466
30 Day Avg. Volume106,922
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.59
Price to Cash Flow (P/CF)2.70
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$38.00Price Target Upside91.61% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
North American Construction Group Business Overview & Revenue Model
Company DescriptionNorth American Construction Group (NOA) is a leading provider of mining and heavy construction services, specializing in the development and maintenance of resource-based infrastructure. Operating primarily in Canada, the company offers a comprehensive range of services including earthworks, piling, industrial site construction, and mine support services. With decades of experience, NOA serves major players in the oil sands, mining, and construction sectors, offering solutions that enhance operational efficiency and project execution.
How the Company Makes MoneyNorth American Construction Group generates revenue primarily through contracts with mining and resource companies, providing essential services such as earthworks, heavy equipment fleet maintenance, and project management. The company earns money by executing large-scale infrastructure projects and maintenance services, often through long-term agreements or short-term contracts tied to specific projects. NOA leverages its extensive fleet of heavy machinery and skilled workforce to deliver these services. Significant partnerships with major mining companies and a robust reputation for reliability and expertise contribute to its steady revenue stream. Additionally, NOA may engage in joint ventures and strategic alliances to expand its service offerings and market reach, further enhancing its revenue potential.
North American Construction Group Financial Statement Overview
Summary
North American Construction Group shows robust revenue growth and operational efficiency; however, the declining net profit margins and rising debt levels pose concerns. The company must manage its debt and capital expenditures to improve free cash flow and enhance financial stability.Income Statement
The company demonstrates strong revenue growth with a significant increase from $500.37M in 2020 to $1.17B in 2024. The gross profit margin has remained relatively stable, reflecting efficient cost management. However, net profit margin has been inconsistent, with a decrease from 10.6% in 2020 to 3.8% in 2024. This indicates challenges in converting revenue into net income despite revenue growth.72
Positive
Balance Sheet
The balance sheet highlights a high debt-to-equity ratio, increasing from 1.74 in 2020 to 2.12 in 2024, suggesting a reliance on debt financing. Return on equity has decreased from 19.8% in 2020 to 11.3% in 2024, indicating declining efficiency in generating returns on equity. The equity ratio has improved, reflecting a better capital structure over the years.65
Positive
Cash Flow
Operating cash flow remains strong, though free cash flow has turned negative in 2024, indicating increased capital expenditures. The operating cash flow to net income ratio is robust, but the free cash flow to net income ratio has deteriorated, highlighting potential liquidity pressures.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.17B | 957.22M | 769.54M | 654.14M | 500.37M | Gross Profit |
| 210.05M | 154.22M | 101.55M | 90.42M | 94.38M | EBIT |
| 153.33M | 95.71M | 107.69M | 75.90M | 68.94M | EBITDA |
| 283.06M | 228.69M | 191.06M | 149.81M | 160.35M | Net Income Common Stockholders |
| 44.09M | 63.14M | 67.37M | 51.41M | 49.21M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 77.88M | 88.61M | 69.14M | 16.60M | 43.91M | Total Assets |
| 1.69B | 1.55B | 979.51M | 869.28M | 838.93M | Total Debt |
| 825.10M | 717.05M | 435.39M | 395.23M | 446.18M | Net Debt |
| 747.23M | 628.44M | 366.24M | 378.63M | 402.26M | Total Liabilities |
| 1.31B | 1.19B | 673.59M | 590.82M | 590.49M | Stockholders Equity |
| 388.90M | 356.65M | 305.92M | 278.46M | 248.44M |
| Cash Flow | Free Cash Flow | |||
| -66.74M | 66.90M | 53.94M | 51.39M | 29.70M | Operating Cash Flow |
| 217.61M | 270.39M | 169.20M | 165.18M | 147.27M | Investing Cash Flow |
| -274.68M | -244.88M | -97.47M | -99.27M | -113.57M | Financing Cash Flow |
| 45.98M | -7.75M | -19.49M | -92.76M | 4.67M |
North American Construction Group Technical Analysis
Negative
19.83
Price Trends
24.93
Negative
27.04
Negative
26.29
Negative
Market Momentum
-0.71
Negative
38.02
Neutral
31.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:NOA, the sentiment is Negative. The current price of 19.83 is below the 20-day moving average (MA) of 23.07, below the 50-day MA of 24.93, and below the 200-day MA of 26.29, indicating a bearish trend. The MACD of -0.71 indicates Negative momentum. The RSI at 38.02 is Neutral, neither overbought nor oversold. The STOCH value of 31.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:NOA.
North American Construction Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | C$3.01B | 5.69 | 52.24% | 3.08% | 28.30% | 227.26% | |
73 Outperform | C$511.25M | 19.63 | 8.37% | 1.57% | 2.41% | -16.76% | |
70 Outperform | $1.38B | 7.45 | 26.23% | 2.22% | 8.79% | 31.76% | |
65 Neutral | C$602.86M | 12.33 | 11.94% | 2.21% | 21.79% | -30.74% | |
57 Neutral | C$302.33M | 26.90 | 1.34% | ― | -15.92% | -94.84% | |
57 Neutral | $7.71B | 4.16 | -3.52% | 8.32% | 0.35% | -64.68% |
* Energy Sector Average
Performance Comparison
TSE:NOA
North American Construction Group
19.16
-10.53
-35.47%
TSE:CEU
CES Energy Solutions
6.08
0.72
13.48%
TSE:BDI
Black Diamond
7.87
-0.75
-8.70%
TSE:CFW
Calfrac Well Services
3.26
-1.19
-26.74%
TSE:SES
Secure Energy Services
12.63
1.39
12.37%
North American Construction Group Earnings Call Summary
Earnings Call Date: Mar 19, 2025 | % Change Since: -20.27% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth and operational performance, particularly in Australia, with record backlog and positive free cash flow. However, challenges in the Canadian oil sands, weather impacts in Australia, and slower-than-expected progress in non-oil sands mining in Canada were noted as concerns.Highlights
Record Annual Revenue in 2024
The company achieved record annual revenue, driven by strong growth in Australia. The MacKellar Group achieved its highest revenue quarter ever in Q4.
Significant Backlog Growth
The year ended with a record backlog of $3.5 billion after major contract wins, including a four-year $500 million regional contract extension in the Canadian oil sands and other significant projects.
Strong EBITDA and Margin Performance
Q4 EBITDA was $104 million with a 27.8% margin, demonstrating strong operational performance in both Australia and Canada.
Australian Business Exceeds Expectations
The MacKellar acquisition in Australia drove 2024 growth, with high utilization and positive returns on capital, positioning the company well for future growth.
Improvement in Canadian Fleet Utilization
Canadian fleet utilization improved to 54% in Q4, with expectations to reach a target range of 75% by the end of 2025.
Strong Free Cash Flow and Debt Reduction
Free cash flow of $50 million was reported, contributing to a reduction in net debt, which ended the quarter at $856 million.
Lowlights
Challenges in Canadian Oil Sands
The oil sands business experienced a 30% drop from previous levels, attributed to uncertain factors such as deferred work or in-sourcing.
Weather Impact in Australia
Rain in February and cyclone Alfred affected operations in Australia during Q1, impacting short-term performance.
Uncertain Non-Oil Sands Mining Awards in Canada
Despite expectations, success in non-oil sands mining awards in Canada has been slower than anticipated.
Higher General and Administrative Expenses
Q4 general and administrative expenses were slightly above the target at 4.5% of revenue, impacted by lower revenue in the oil sands.
Company Guidance
During the North American Construction Group's fourth-quarter 2024 conference call, management provided detailed guidance and metrics for the upcoming year. The company reported a record annual revenue, bolstered by strong growth in Australia, and ended the year with a record backlog of $3.5 billion. Major contract expansions included a four-year $500 million regional contract in the Canadian oil sands and a $100 million mining project in New South Wales. The Australian operations were highlighted as a key growth driver, maintaining an 82% utilization rate and contributing significantly to the company's 27.8% EBITDA margin. For 2025, the company expects combined revenue between $1.4 billion to $1.6 billion, with adjusted EBITDA projected between $415 million to $445 million. Additionally, the company aims for a net debt leverage target of 1.7 and plans to expand its infrastructure projects to 25% of its business, with a strong focus on U.S. and Australian markets.North American Construction Group Corporate Events
Business Operations and StrategyFinancial Disclosures
North American Construction Group Reports Q4 2024 Results Amid New Contract Wins
Neutral
Mar 19, 2025
North American Construction Group Ltd. reported a decrease in revenue for the fourth quarter of 2024 compared to the same period in 2023, primarily due to lower demand for its Canadian heavy equipment fleet. Despite this, the company achieved improved adjusted EBITDA margins, driven by operational excellence in both Australia and Canada. Significant contract awards in Australia and Canada, including a $125 million heavy civil construction project and a $500 million regional services contract, highlight the company’s strong market position and potential for future growth.
Business Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
NACG Reschedules Q4 Results Release and Conference Call
Neutral
Mar 3, 2025
North American Construction Group Ltd. has rescheduled its fourth-quarter financial results release and conference call to March 12 and March 13, 2025, respectively. The delay is due to the need for additional time to complete year-end reporting processes in its Heavy Equipment – Australia segment, influenced by first-year SOX reporting requirements, high activity levels, and a new ERP system implementation.
Private Placements and FinancingBusiness Operations and Strategy
NACG Completes Redemption of Convertible Debentures
Positive
Feb 28, 2025
North American Construction Group Ltd. has completed the redemption of its 5.5% Convertible Debentures due in 2028, with a significant portion being converted into common shares. This strategic financial move may enhance the company’s equity base and potentially improve its financial flexibility, impacting its operations and market positioning positively.
Dividends
North American Construction Group Declares Quarterly Dividend
Positive
Feb 26, 2025
North American Construction Group Ltd. announced a regular quarterly dividend of twelve Canadian cents per common share, payable to shareholders on April 9, 2025. This decision reflects the company’s ongoing commitment to delivering value to its shareholders and maintaining a stable financial strategy.
Financial Disclosures
North American Construction Group to Announce Q4 2024 Financial Results
Neutral
Feb 4, 2025
North American Construction Group Ltd. has announced the release of its fourth-quarter financial results for 2024, scheduled for March 5, 2025, following market close. The company will also host a conference call and webcast on March 6, 2025, to discuss the results, potentially impacting stakeholders by providing insights into the company’s performance and future positioning in the industry.
Delistings and Listing ChangesPrivate Placements and FinancingBusiness Operations and Strategy
North American Construction Group Announces Early Debenture Redemption
Positive
Jan 30, 2025
North American Construction Group Ltd. announced the early redemption of its 5.5% convertible unsecured subordinated debentures due June 30, 2028, effective February 28, 2025. This strategic financial move allows debenture holders to convert their securities into common shares at a discounted rate, aligning with the company’s intent to de-list the debentures from the Toronto Stock Exchange, subject to regulatory approval. This decision reflects NACG’s proactive approach in managing its financial obligations and potentially enhances its market positioning by streamlining its debt structure.
Delistings and Listing ChangesBusiness Operations and Strategy
NACG Announces Early Redemption of 5.5% Debentures
Neutral
Jan 29, 2025
North American Construction Group Ltd. announced the early redemption of its 5.5% convertible unsecured subordinated debentures due in 2028, effective February 28, 2025. The redemption allows debenture holders to convert their holdings into common shares at a discounted rate, with the company planning to delist the debentures from the Toronto Stock Exchange post-redemption. This move reflects NACG’s strategic financial management and may impact its debt structure and market operations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.