Q3 2024 North American Construction Group Ltd Earnings Call
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Speaker Change: Good morning, ladies and gentlemen. Welcome to the North American Construction Group Conference We're going to start the third quarter and the September 30, 2024.
Speaker Change: At this time, all participants are in a list in only mode. Following management for pair remarks, there will be an opportunity for analysts, share holders, and bondholders to ask questions.
Speaker Change: The media may monitor this call in listen only well. They are free to quote any member of management, but they are asked not to quote remarks from any other participant without that participant's permission.
Speaker Change: The company wishes to confirm that today's comments contain forward-looking information and that actual results could differ material reforma conclusion forecast or projection contained in that forward-looking information.
Speaker Change: Strict material factors are assumptions were applied and jolly conclusions are in making forecasts or projections that were reflected in the forward-looking information.
Speaker Change: Additional information about those material factors is contained in the company's most recent management discussion and analysis, which is available in theater and at Gord, as well as on the company's website at nacg.ca.
Speaker Change: I will now turn the conference over to Joe Lambert, President and CEO.
Joe Lambert: Thanks Laura.
Joe Lambert: Good morning everyone and thanks for joining our Coliseum. I'm going to start with our Q320-24 operational performance.
Joe Lambert: Before handing over to Jason for the financial overview, and then I'll conclude with the operational priorities, bid pipeline, Outlook for the Mandear 2020-24 and expectations for upcoming winter works in 2025 before taking your questions.
Joe Lambert: on slide three.
Joe Lambert: Our Q3 Trailing 12-month total recordable rate of 0.39 improves upon our Q2 results and remains below our industry leading target frequency of 0.5.
Joe Lambert: We continue to advance and improve our health and safety management systems with recent focus on hazard analysis, frontline supervision effectiveness and automatic testing.
Joe Lambert: Next, this time of year, we ramp up our winter preparedness in Alberta. Oddly enough, we're also be commencing preparation for our summer programs in Australia with heat, hydration and cyclone weather as recurring topics.
Joe Lambert: On Slight 4, we continue to be recognized with industry awards in both safety innovations and leadership.
Joe Lambert: Nothing makes me prouder than seeing our employees being recognized by our industry peers as being state leaders.
Joe Lambert: Across our business we consistently see employees dedicated and living our core value of getting everyone home safe.
Joe Lambert: on slide five. We highlight some of our major achievements of Q3.
Joe Lambert: Although having a record quarter for practically every financial metric we measure as a fantastic achievement, it was likewise pleasing to see all areas of the business performing at or above expectations.
Joe Lambert: Our Fargo and Nuna Joint Ventures finished off their busy summer season as expected. Our oil-fans business continue to plan and our Australia business continues to out before.
Joe Lambert: Australia also commenced the ERP rollout received the final equipment ship from Canada with expectations that have them all put to work by the end of the year and achieved record quarterly fleet utilization.
Joe Lambert: Our construction procurement team, we're also busy finalizing a parts of component supply agreement with Fending in Q3.
Joe Lambert: The new agreement re-establishes a strong vendor partnering structure which we believe will improve fleet reliability and lower costs while supporting our in-house maintenance program and growth plans.
Joe Lambert: We see funding as a strategic partner in LeFord and increasing our work together going forward.
Joe Lambert: Moving on to slide six.
Joe Lambert: You can see that the aforementioned Q3 record utilization of 84% in Australia was just a hair below our 85% target utilization.
Joe Lambert: Our Canadian fleet improved to 51% off the Q2 low 42% and we expect the Canadian fleet to be back in the 60s at year end and remain there for our busy winter season.
Joe Lambert: We remain on trend and confident in our ability to hit our target of 85% in Australia early in the next few months.
Joe Lambert: and Canada, we expect to achieve our target range of 75% by the end of next year.
Speaker Change: with that I'll hand over to Jason for the Q3 Finanials.
Jason: Thanks, Joe, good morning everyone.
Jason: We're starting with slide eight, the headline EBITDA numbers of 106 million and 29% margins were driven by another successful quarter from Australia. We have now posted four successful quarters in a row with growing quarter over quarter results.
Jason: Combined growth profit margin of 22% illustrates strong operational performance.
Jason: We included a common here about oil-sand business, which, although down from last year's talk line revenue,
Jason: is posting more consistent quarter to quarter results than in the past.
Jason: and generated a deep-percent increase.
Jason: from the second quarter on improved faith conditions and steady usage of the equipment.
Jason: The improved consistency is due to the nature of the contract in the OSTAN, which are now focused on more steady, time material and rental arrangements.
Jason: Moving to Florida now, and our combined revenue and growth profit.
Jason: As we will have for this last quarter now, McKellor provides step changes in quarter over quarter experiences.
Jason: Our whole-owned businesses were up $90 million, quarter-over-quarter, and improved variants from the second quarter when we were up $81 million.
Jason: McKellar and DGI, which we combine as Australia in our results, were up $134 million on a steady consistent quarter during which McKellar posted an impressive 84 percent equipment utilization, peaking in July at 88%.
Jason: This top line positive variance was offset by lower equipment utilization quarter over quarter in the oil-sand's region.
Jason: Our share of revenue generated in Q3, 2020, 4 by joining Benchers was consistent with Q3, 2020, 3.
Jason: The Farve Memorial Project has strong operational quarter, was up $12 million quarter over quarter and achieved the progress metrics and milestones required of the schedule.
Jason: Offsetting this positive variance was the variance impact of the completion of the construction project at the gold mine in Northern Ontario in Q3 20203 which led to lower quarter of recorded revenues within the new Nick Group of Companies.
Jason: Combined gross profit margin of 21.9% reflects strong operational excellence across our business.
Jason: Girls Profit Margins benefited both from the operations in Australia, which were higher than 20% in the quarter, which is normal course. And the Canadian operational personnel and fleet posting solid margins as they benefit from consistent and stable operating conditions.
Jason: Moving to slide 10, Q3 Eva Duff, beats the previous Q3 record by 75% as a result of the
Jason: As mentioned, the 29th percent margin we achieved reflects an effective offering quarter and is indicative of where we see our business offering at. With our trailing 12 months EBITDA margin now at 27% which covers a very eventful 12 months time frame.
Jason: Included in EBITDA is direct, general administrative expenses, which were $9.6 million in the quarter, and equivalent to 3.4% of reported revenue, which is below the 4% threshold we set for us out.
Jason: G&A caused in Canada in particular, have been decreased in light of lower revenue being generated in the oil-fans region.
Jason: Going from EBITDA to EBIT, we expand depreciation, equivalent to 12.1% of combined revenue.
Jason: which is exactly the same as the second quarter and reflects the depreciation rate of our entire business, including the equipment fleet at the Fargo Morning Project.
Jason: A just that earnings per share for the quarter of a dollar-17 reflects all the positive factors mentioned, a was offset by the impact of higher acquisition-related interest.
Jason: which reduced earnings by 54 cents.
Jason: compared to 22 cents in the prior quarter.
Jason: The average cash interest rate for Q3 was 6.5%.
Jason: Moving to fly to 11, net cash provided by operations prior to working capital was $80 million and generated by the business reflecting EBITDA, net of cash interest paid.
Jason: Free cash flow of $11 million was driven by another $32 million draw on working capital accounts and $12 million spent on capital work in progress.
Jason: Moving to slide 12.
Jason: Net debt levels ended the quarter at $883 million, an increase of $50 million in the quarter due to growth assets purchased as well as the change in the Australian exchange rate.
Jason: of the $883 million, $470 million or roughly half is denominated in Australian dollars, but it has naturally hedged with the heavier equipment assets we own in Australian.
Jason: Net, debt, and senior secured debt leverage ended at 2.3 times and 1.8 times respectively, and are expected to decrease in Q4 on free cash will generated in the quarter.
Speaker Change: With that, I'll pass the call back to Joe.
Joe Lambert: Thanks Jason.
Joe Lambert: On Slide 14, we highlight our progress in our 2024 goals.
Joe Lambert: Item's 1 and 4 have pretty much been completed with the turnaround at Nuna and the European rollout in Australia.
Joe Lambert: I am too, we still expect to achieve these contract wins in Q4.
Joe Lambert: and Item 3 is a bit of a mixed bag with our telemaps and sharing of best practices having progressed as plans and possibly achieving our Australian utilization targets early being positives and the negative being our Canadian utilization targets pushed off a year.
Joe Lambert: Looking at slide 15, this slide summarizes our priorities moving forward.
Joe Lambert: Our safety focus will be on further developing our frontline supervision and establishing consistency across our increasingly diversified business.
Joe Lambert: Although we have many very safety programs and policies for the differing environments we work in, we want to ensure certain aspects are consistent across all areas of the business.
Joe Lambert: To ensure that consistency, we perform both internal and external audits on the HSC management system in general and in field verification those plans are being followed.
Joe Lambert: I come to know circuit when utilization goals which I spoke about earlier in this segment.
Joe Lambert: In addition to our utilization targets, we also expect to have our telematics system for their advance and roll out on a few minutes in Australia with a more detailed plan for full implementation of Australia by the end of 2025.
Joe Lambert: Item 3 outlines are focused on prioritizing winning bids to grow our backlog and ensuring stability and consistency in both operations and financial projections.
Joe Lambert: This strategy also supports our ongoing diversification into commodities and regions that help reduce risk while enhancing as the returns or lowering capital intensity.
Joe Lambert: [inaudible]
Joe Lambert: As you may have seen with some of our press releases on contract awards early this year, some of our contracts have options for expanding or extending based on mutual agreement.
Joe Lambert: We believe these types of negotiated contractor agreements of high value as they demonstrate the strength of our customer relationships and can provide increased commitment over a longer term allowing us to better forecast our business performance.
Joe Lambert: I'm five as the logical extension from our goal to roll out our earpiener straight to this year.
Joe Lambert: as we have done these years if you roll off both internally and with Nuna.
Joe Lambert: We have seen how improved monitoring and reporting can help identify business improvements in lower costs.
Joe Lambert: The final area emphasizes our commitment to expanding our external maintenance business.
Joe Lambert: We believe our in-house component rebuilds, home machine rebuilds telematics, and strategic partnership with OEM dealer will provide increasing opportunity for extra maintenance sales.
Speaker Change: Slide 16, highlights a strong bid pipeline of over $10 billion, with quarterly increases in the act of tenders that is the top line, representing increased activity in Australia and diversified resources in Canada.
Speaker Change: The items on the middle line are the potential contract extensions and expansions in the oil stands. We expect to have concluded in Q4 and an early renewal opportunity in Australia.
Speaker Change: Moving this slide 17.
Speaker Change: With the Q3 contract wins combined with the typical quarterly backlog consumption, our pro-form of backlog now sits at 3.1 billion and is an increase of about 300 million from our Q2 ending backlog.
Speaker Change: With the previously mentioned contract discussions expected to be concluded in Q4, we expect our year-end backlog to mean healthily above $3 billion and demonstrate increasing geographic and resource diversification.
Speaker Change: on Sli18.
Speaker Change: We have provided our outlet for 2024 with unchanged key metrics from Q2 and updated capital allocation representing increased growth capital and debt supporting the Q3 contract wins in a straight.
Speaker Change: Once we have finalized contract terms in Scopes in our oil science business, we will provide our outlook for 2025.
Speaker Change: We expect a meaningful increase of year on year-friential metrics from the growth of our Australia business, consistent contributions from our JVs and the stable oil stands business.
Speaker Change: We anticipate the breakdown of our earnings generation. We'll be similar to what is shown on slide 19 with a straight producing over half of earnings and candidate about one quarter.
Speaker Change: Lastly, regarding cap-logication going forward, we have announced the 20th and dividend increase alongside a normal course issue we're bid. Clearly demonstrating our commitment to investing free cash flow and shareholder focused ways.
Speaker Change: We are also prioritizing debt management and maintaining liquidity to support the company's sustained growth.
Speaker Change: As I said in my letter to shareholders, this year has brought fluctuations in both our business and share price. I'd like to thank our shareholders for their continued support and patience as we position ourselves for a robust year-end, positive growth and profitability in 2025, and the free cash flow to drive further shareholder benefits.
Speaker Change: with that all up and up to any questions you may have.
Speaker Change: Thank you sir. Ladies and gentlemen, you will now begin the question and answer session.
Speaker Change: City have a question please press the star followed by the number one on your Dutch Don't phone. You will hear a prompt that your hand has been raised.
Speaker Change: should you as to the clients from the polling process please press the star, followed by the number two. If you are using a speaker phone, please lift the handset before pressing any key.
Speaker Change: One moment please for your first question.
Speaker Change: Our first question comes from the line of Aaron McNeill from TD Cowan. Go ahead, please.
Speaker Change: Good morning all. I'm Lorna. So, Joe, I can appreciate the use, you know, sort of push off the...
Speaker Change: Canadian utilization targets in the next year, but I think last quarter in your Clique Carage remarks he talked about, you know, total oil and market volumes being out here over year and the winter season and soon.
Speaker Change: You know, some discussion about additional smaller RFBs that you've received. So, you know, just setting sort of a bigger, re-contracting with some core side. You know, can you speak more broadly about some of the smaller opportunities in the all of the AMS?
Speaker Change: We don't announce those. We have probably 25% increase in the recommendation works.
Speaker Change: This winner over last winner, I think that's what you're referring to here.
Speaker Change: You know, that's a small portion, that's something where we've gone from 30 May and last year to 40 May in this year, kind of, in relative terms for winter, reclamation work.
So, you know, on the overall oil feds numbers, it's not really a huge impact.
Speaker Change: and we don't have the details until we get these.
Speaker Change: Contraction and...
Speaker Change: You know, this is the first time we've been in this position, Aaron. It's like, previous to this last year, we had five-year contracts with committed volumes, so we weren't waiting on contract awards.
Speaker Change: in September. We knew what those volumes are going to be. Last year was the first time. We had 80% of our oil-fans business because the consolidation under the one operator in one contract and we didn't have the award. We didn't get it until February.
Speaker Change: and we asked them, what we thought we were going to get without that and we did very poorly and that's why we pushed that off this year.
Speaker Change: in general we expect 2025 look in a well-sensitive look very much very similar 2024 but we really don't want to put kind of brackets around that range until we have these contracts signed off.
Speaker Change: and Joseph Lambert.
makes perfect sense. And then just on the big pipeline more generally, can you walk us through what some of the diversified bid opportunities are that are opening up this year and how we should think about replacing some of the bigger diversified projects like Fargo Morehead.
Speaker Change: the Coate Mind and I know Fargo is still going but just how you're thinking about that more generally.
Speaker Change: Yeah, I think most of the projects you see are...
Speaker Change: We've got some opportunities in Australia and in the...
We've had some magnetite iron or copper zinc.
Speaker Change: We're seeing a lot of different commodities and then on the infrastructure side we really got her.
I'm pre-clone for one major project right around the end of the year. Again, we're working with one of our same partners that we are in Fargo to qualify for those and as you know, those are some fairly long processes. The big process can be a couple of years on those.
We're seeing a lot of activity in Canada, other resources, so...
Speaker Change: in Opease.
Copper Gold, we've got some golden Ontario, you know, there's some...
I think probably our largest bedside line outside of oil sense that we've ever seen and we're just starting to scratch the surface on the Australian infrastructure world.
Speaker Change: with a bit of focus on integrating Maccaller there and getting our ERP rolled out. So that would be more of a 2025 focus is to really advance our business development on the infrastructure side there. And that's where some of those big dots in the bottom line and to the far right are so.
Speaker Change: I'll take you back.
Our next question comes from the line of a year-reeling from Canacoirchinuity. Go ahead, please.
How you good morning guys. Over here.
What drove the sequential recovery we saw in JV revenue?
Speaker Change: Good.
I think it worked. Yeah, I went from, you know, last quarter in Q2, it was 53 odd million and 80 million in Q3. It was a bit higher than I was expecting.
Yes, there was both big activity and some critical milestones across that there are pharbum or head project, which trigger payments. So the payments there are hour by hour, they come from my milestones of achievement and Q3.
Speaker Change: had more miles from the achievements. As the business quarter we've had at Fargo Moran so that'd be the big difference here.
Speaker Change: Okay.
Speaker Change: Okay.
and then when we think about your Canadian revenue, obviously been depressed this year.
some tough conts due to the Cote, but the base oil sense business does seem to be...
Speaker Change: You know, down. And what are your expectations for 25? I think you mentioned that it would be kind of similar in 25.
Speaker Change: I'm hearing that there's been some work delayed deferred, does that provide an opportunity for some upside? In 25, just any additional color on the outlook for oil fans would be helpful.
Yeah, you know, I think the oil stands is pretty much...
Ben Steady at these levels for several months. We expected to be this way. We expect 2020, I've looked very much like 2024. You know, I don't.
The downturn that we didn't anticipate was the change in scope and really that's why we've held off on the guidance here.
I don't think we'll find any big surprises this year but...
and I think the opportunity for upside is there, predominantly on if there's more.
Speaker Change: Civil Construction Activity. I think the bulk Earth works in large equipment is going to remain very consistent. I think we have an upside potential on civil construction, which...
Speaker Change: We're projecting similar to this year and then the last few years that's been very low. So I think we're projecting civil construction in some of the next year that's...
Speaker Change: Lower than our last 10 years average if you would say but it's consistent with where we are right now. So I do think upside is, they're still good upside and well-sense.
Speaker Change: When you talk about it, you're at Joseph's in and if you look at every producers, projections on barrels, they've all got increasing barrels.
and so, you know, increasing barrels is increasing material movements that's a pretty one-to-one correlation and so, you know, we think there could be up-type tension from that as well, but as of now, we really don't have the numbers that we can quantify that really, really tight for you.
Yeah, well, that's kind of what I'm getting at. I mean, when you talk about the scope changes, what exactly does that mean? Like, are your customers?
is the work going to other players, are they doing it themselves, are they not like where's the dirt going?
Speaker Change: Either they're moving at themselves, they're deferring it. We believe we can see all of our other contractors. We think this year we got...
What would the our normal kind of market share of that work? We just think the work was reduced.
You have to keep in mind, you know, the mining cycle in oil sand is very long. The material you're moving on the surface today is uncovering an orton that they're going to be putting through their process 6, 7 years from now.
Speaker Change: You know, any annual decrease doesn't necessarily reflect a long-term perspective. You can move quite a bit of volume from one year to another or spread it across five or six years.
and we're not privy to that level of detail in our clients planning it obviously. So, you know, my guess is it's being deferred and going to be made up over.
Future Years, but again I don't know those numbers.
You know, that's just my perspective. Yeah, understood.
Okay guys thanks for the color I'll turn it over.
Speaker Change: A next question comes from the line of Adam Salomon from Thumson Data. Go ahead, please.
Hey, good morning guys from Grapple on the Strong Quarter.
Speaker Change: Thanks, Adam.
Adam Salomon: Can you guys just give us a general update on the turnaround at Nuna, where we are, and your current thoughts on it?
Speaker Change: i
I think we've completed the turnaround. I think they're focused on their winter work programs. This is their slow time of the year. And then they're really focused on winning work for next year, which...
You know, over this winter and into Q1 is one of a lot of tenders happen in their business and you know, I'm very confident we have the operations team that can operate, you know, safe and effectively there.
and our intention is we've stabilized it, we're back to profitability. Now let's grow it back again. And our team is there as 100% focus on it. Then I think they've done an excellent job in turning this business around in the last year.
and you all really like to comment about the largest bid pipeline outside of the oil stands ever. I was curious if you could kind of flash out what you're seeing on the commodity side in the bidding.
Speaker Change: I think it's no surprise if you look at grass or commodity market.
Speaker Change: They only want really suffering are the EV medals at this time, the lithium and the nickel. Everything else is pretty strong in steady. When you look at resource rich countries like Australia and Canada,
and you know in Australia certainly the Metcoles, the Thermal Cold, the Iron Or the Gold, you know very strong copper and then you know cross-candidate we see the same things with Iron Or Gold.
and we think those commodity cycles are going to continue to do well and actually expect those EV medals to pick right back up again too. So I think we're in a strong long-term commodity market.
that's going to increase production in those commodities and increase contractor.
Demand, so long-term, any Korean really good spot. And even short-term with this bit-fight-blind, it's very strong. Especially the amount of work that's being, the amount of blue dots, if you look at our bit-fight-blind versus red, as grown tremendously, if you compare that to even a couple of years ago.
That's good color, Joe, and then just lastly, quickly on where are we? I'm moving truck-stop, Australia.
I would work complete, so we moved 25 units.
The last one are there and we actually expect all of them to be put to work and maintaining that high utilization by the end of the year. If there's some other opportunities that we're bidding on, if they could attract some resources from Canada, but there's nothing committed at this time beyond that.
Speaker Change: Great, I'll turn it over. Thank you. Thanks, Adam.
are an expression comes from the line of maximum picture of a from national bank financial. Go head please.
Hi, good morning, gentlemen.
What am I?
and maybe a couple of sort of finance related questions for Jason. If I may Jason, so when we think about free cash flow, you know, generation.
can maybe walk through the conversion from EBDAT to FCS, how we should be thinking about this as a time progresses and as you get more of your total power coming from Australia.
Yeah, I think we're still in that 30 to 35 percent conversion ratio. Max clearly working capital has...
Speaker Change: had a large impact this year with the decrease in revenue in the oil fans and moving trucks from Canada to Australia.
made for that conversion ratio isn't in place at the moment, but we see Australia more in the...
above 40% conversion ratio and then Canada in the 30% ratio.
Speaker Change: So...
Yeah, I think for 2020-25, when we provide guidance, I would expect that conversion ratio to be in place.
As is understood, we do expect a big working capital swing positively and Q4.
We expect 2025 to be much more consistent 2025 should be a year that we can...
Speaker Change: We can generate free cash flow more consistently from my perspective, there's no reason why we shouldn't be able to.
Yeah, that's the context I'm pretty careful.
Speaker Change: and then just one quick clarification around Fargo. So that project was structured as an FPV right and sort of old equipment that you have, it's kind of really fence within that. And obviously one of that project is finished. Like you're not sitting with Idle liquidment, I guess, like even in the worst kind of case scenario, right?
No, that equipment is actually fit to the time frame of the job. And when that job's done, that equipment will be disposed of. So we don't, they're all joint venture assets.
Basically, they run the life of the project and then they're exposed to the garbage ready.
Speaker Change: Okay, that's great. And you mentioned quickly some of the early discussions around opportunities in Australia on the infrastructure side. What was curious, Jason, terms of...
Speaker Change: You know how advanced are those discussions and what you might be, but that's really seeing on the 2025 progress.
They're pretty immature right now, Max. We really haven't got into details of them. Our team is fully consumed in the integration of the color and the CRP rollout.
All of that will kind of finish up before here and here. And then I think our rest rate team will have a lot more time and capacity to look at.
at Groath in both the infrastructure side and just look at other opportunities within the business. And same here even in Canada, we have a lot of people supporting that.
that integration in that rollout and then I think we'll have a lot more capacity.
We do have the one project I talked about that we want to pre-qual for is actually in the US with one of our partners at Fargo. We are seeing some other opportunities in North America, but they are at a really stage. I'd say...
Q1, stay tuned for that would be the timeframe and that Q1, Q2, timeframe that I'd expect to start digging in more delayed infrastructure work both in Australia and here.
Yeah, okay, excellent, that's it for me. Thank you, thanks so much, Sean. Thank you, man.
The first time I've seen this video, I've been watching this video for a long time.
Our next question comes from the line of Tim Manachillo from ATV Capital Market. Go ahead, please.
Thanks very much. A lot of my questions have been asked and answered. I'm curious to surround sort of the guis and taste for free catalogs on 2021.
Namely, what are your expectations for growth, CapEx, at this stage in the game? And how do we think about, I guess, distributing distributions out of the jv's when the 2020 5, particularly for a far go more head?
Speaker Change: Yeah, Tim, I could take that. As far as growth, I would say the contract win we had in Q3.
We announced, you know, not all that growth is shown in the growth range that we've provided for 2024. So whatever isn't in 2024 will fall into 2025.
So that's the amount of $40 million range. And that's all we have to find right now. So we, you know, right now we see a very busy 2025 without any growth.
will probably guide more specifically.
Speaker Change: when we announced guidance. That said in historical precedent, we provided growth ranges more in the February March timeframe.
but that's a place older for growth for next year. And then as far as the JV goes, Fargo is a big distribution. They continue to accumulate their earnings in those joint ventures.
We likely won't include a sizable distribution in 2025. My understanding is that is scheduled for 2022.
So that could be a delay piece of free cash flow, but Nuna will distribute the EpoDou as well as the menelch joint ventures.
and so yeah to the earlier question I would expect for you to have a good time.
To be more consistent and in that kind of 35% conversion ratio.
and Phil up on Master's Question on Fargo.
is a quickment. There's a lot of death that's carried in that JVG. Think that's a quickment.
Well, the dead obligations are more around just financing the project itself. So as the authority pays, their milestone payments that debt will come down. The equipment is a tiny piece of that debt. The debt will come down as the milestones are achieved.
and there will be very little deaths at the end of that project because it's all structured around completion of the project. So when they get to financial completion, they'll be no deaths associated with the project.
Okay, great. And that was a happy to see you guys seven in at the NCME. Can you talk a little about the cadence of person that you're planning?
I think this kind of share prices we plan to be active in the market. I don't think we wouldn't have since, yeah, it would be if we didn't have intention to buy a share.
Speaker Change: Okay.
Great way to look forward to getting some more color over the coming months on 20th October.
Speaker Change: That's you, you better.
Our next question comes from the line of Pram Kumar, Private Investor. Go head please.
Speaker Change: Hi!
I think good morning King, the morning geodation.
Congrats on the quarter, great to see a calendar utilization heading in the right direction and definitely appreciate the dividend as well as...
the NTIV looking forward to sharing what you've seen in the future.
I have a couple of questions, so first one is on the part in components of playing service agreement with training, pretty exciting how that is different from before and what are the main changes you know mine.
Speaker Change: I say um
Speaker Change: I guess the easiest way I say is we do a lot of our own components and a lot of our own maintenance in house. We had three partnerships, essentially three primary partnerships.
One of those partnerships we in house and we took it on all ourselves. So we just brought, you know, we've taken what was a 50-50 partnership and just taken it over and doing it all ourselves.
and the other two partnerships we swapped from the vendors we had to finish for the components that they were doing in that partnership and we've got...
from Confidence in Fending and in terms of they gave us as far as getting better life and out of our components and lowering our overall cost. And we've done a few initial partnering.
works on equipment rebuilds and I think it's a...
Speaker Change: It's a great partnership that's going to help us do more in cost less. So, you know, without getting into the details of it, we really just swapped a couple of partnerships from vendors in the US to our OEM dealer. And we took the other one in house ourselves.
and I appreciate the color and on revenues, like diversification of values.
in a recent presentation shows US that revenues are about 10% so curious, like what are some barriers to expand in the US for now? Any plans on increasing revenues from US? Thank you.
I just want to get a color on, you know, 10% now, but maybe maybe white 10% not more.
Speaker Change: I think the big opportunity is we see from in the US are the infrastructure works in particular larger works in infrastructure that are like a photo one that are climate resiliency projects.
Speaker Change: That is the big infrastructure project that we hope to pre-qual for and the end of this year beginning in next year. But there would be more longer term out there. I'd say, you know, we'd like to see one in place before.
Before the large construction years of Fargo End, which you know in the next three years.
and so we're going to get a lot more active in infrastructure market in the US here in the time to come but we will expect that to be affecting our US revenue until probably late 2026 or more likely 2027 kind of time frame.
Okay, but are there smaller opportunities like saying the copper space, the gold space anything?
Speaker Change: You'll be looking into it. We certainly look at it and we've seen some minor opportunities in copper, but we haven't seen any major contracts.
Come up and really, you know, you need something of reasonable size to be able to mobilize from far away in and to compete with local guys that don't have those mobilization costs.
and we just haven't seen that like in the US.
Resource Commodity, my kind of space as of yet.
But we certainly would monitor it and we would be active in those tenders.
Multiple U.S. entities now set up from Texas and Wyoming and North Dakota. Something comes up in Arizona or Nevada. We certainly would pursue it.
Speaker Change: and I'm on the cash flow, free cash flow. So, I'm a premier guidance, I think you four will be one of the...
David Cashlove, I think it's neat about 113 million are more true.
Speaker Change: Hit the lower end of the free cash flow range. And I understand there's some growth capital still left to think about 25 and then maybe. So with the remaining mostly moved word, reducing leverage.
Speaker Change: and NNM.
and in the long term what's kind of like the company's library started I know like the book, David is 2.14 year and but
Speaker Change: Over the long term, kind of like what's like a baseline that you'd be targeting.
Yeah, we've always wanted to keep at least one turn of EBITDA in our debt ratios and in pocket, but you know, I think
is depending on where the interest rates are, you know, getting down to one time.
You know, it would be great. You know, but if there's opportunities for investment in environmental and shares back like we're seeing right now, they're NCAA B's and those kind of returns.
Speaker Change: We're going to look at our cap ball all the cases like we always do as far as the risk versus return.
and although I think we'll get a substantial portion of that dead pay down this year in Q4 with this big cash flow that you rightly stated in the Q4. I also think we can still participate in our NCIB.
and what we see is an extremely high return on purchase.
Speaker Change: The End
Yes. That's all I had and thanks a lot. I appreciate the color. Thank you, bro.
Ladies and gentlemen, just a reminder, should you have a question please press the star, followed by the number one on your touchstone's phone.
Our next question comes from the line of Devon Shilling from Benzim Benential. Go ahead, please.
Devon Shilling: I'd like to then congratulate on the quarter here. Thanks, David.
Devon Shilling: Just in your shirt holder letters here, you guys talk about it talking your operational strategy, given some of the changing conditions in the oil-sense market. Maybe you can just elaborate on this a bit, like is this strictly about reallocating equipment or is there more to this? Thank you.
I'm a small-minded equipment, it's reallocation. I'm the bigger-ended, suggesting to change his scope, getting more into the rental market. Very similar to what we have in Australia.
Speaker Change: So, you know, it's really looking at how we track our cost and how we look at things. It's different from...
Speaker Change: Ranking at BCB equipment is different from unit rate works significantly and how you track your cost and compare. So it really is just adjusting our strategy so that we understand our cost and the business that much better. And it's changed from more unit rate work or time and material to these straight rentals.
Desan effect our strategies for what our expectations of margins are. It's changing some of the risk and then we...
We just need to look at our cost a little differently because, you know, some of them go away and it simplifies a lot in the rental market.
Yes, okay, that makes sense. And I guess just on a follow up on the 25 tracks that you guys skipped all of Scraily, maybe we can just comment on your expected incremental even a contribution from these tracks for the next year. Thank you.
Speaker Change: [inaudible]
Speaker Change: Yeah, you know, I just kind of rule the thumbs. I don't have a calculator specifically to the least because that fleet got split up and it's going six different directions even the 25 units. So I couldn't tell you exactly. I would expect that they're going to be somewhere.
I'd say 10 to 20 million dollar range of these bit of contribution to MacKeller next year.
and they were fully underutilized in 2024, correct?
Speaker Change: Correct. Yeah, yeah, you know for six months they were being torn down around the water. So yeah, and before that they were being parked and we've looked back to work by the end of the year.
Perfect, no, that's great to hear that's everything for me, thanks. Thanks again. George, thank you to him.
There are no further questions at this time. I'd now like to take a look back over the Joe Lambert, President and CEO of Scroozing Commons.
Joe Lambert: Thanks Laura. Thanks again everyone for going to stay. We look forward to providing the next update.
The End
Thank you. Ladies and gentlemen, this concludes the North American Construction Group Conference call on Q3 2024. We thank for participating and ask which you please disconnect your line.
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