North American Construction Group Ltd. Q4 FY2025 earnings call

• Acquisition of Ironmine Contracting (IMC) expected to close early Q2 2026, strategic fit with existing platform, increases backlog. - Operational priorities: safety, optimizing workforce mix in Australia, reviewing and optimizing operating costs in Queensland, integrating and commissioning IMC fleet, completing Fargo Moorhead Diversion Project, improving mechanical availability and reliability in oil sands. - Structural growth drivers: scaling into Tier 1 contractor platform in Australia, expanding mining services across Canada and US, securing infrastructure awards across North America. - Backlog approximately $3.9 billion, bid pipeline $12.6 billion, including $4.6 billion in active tender, expecting combined revenue $1.6 billion, adjusted EBITDA $400 million, free cash flow $120 million in 2026.

In Q4 2025, Australia revenue was $176 million, a Q4 record despite wet weather. Canada also had revenue growth. Combined revenue in 2025 was $1.5 billion, with Australia up 17% and Canada up 4% on a combined net basis. EBITDA was $78 million, impacted by a $13 million retroactive life-to-date adjustment for the Fargo project. Gross profit was impacted by the Fargo cost adjustment and above average rainfall in late Q4 in Queensland. Q4 EBITDA and EBIT were down from 2024 comparables. Net cash provided by operations prior to working capital was $56 million, free cash flow was $57 million in Q4. Net debt ended the quarter at $878 million, cash liquidity was $422 million.

• Midpoint expectation for 2026: combined revenue $1.6 billion, adjusted EBITDA $400 million, free cash flow $120 million. - Outlook reflects stable first half performance, meaningful improvements expected in second half with IMC synergies, new equipment commissioning, seasonal activity. - IMC acquisition closing in Q2, shareholder agreement allows retroactive earnings back to January 1. - Free cash flow half directed to growth, rest to dividends and debt pay down. - Weather impacts EBITDA range, midpoint assumes conservative situation, better/worse weather can affect range.

• Fargo project had retroactive cost adjustments, limited risk remaining but margin impact on current quarter. - ACCC regulatory process caused delay in IMC acquisition closing. - Weather in Queensland affected results at Carmichael Mine. - Infrastructure projects may have contract structures with risks that need to be managed, equipment for Fargo project disposed of by the project with limited cash outflow impact.

Q: Can you provide more color on the total bid pipeline, geographically and when it could come into backlog?

A: The bid pipeline includes various projects like defense spending, water projects in US, mining projects, roughly 40 projects. It's spread geographically.

Q: Is there risk to the remaining Fargo project?

A: Limited risk, remaining 15% of project, $400 million EBITDA for 2026 has about $5 being from Fargo at reduced margins.

Q: Recurring revenue from Fargo?

A: Not a meaningful number, own 15% of SPV for operate and maintain but not significant.

Q: Strategic review in oil sands and margin outlook?

A: Oil sands is strong market, focus on throughputs, opportunity for margin improvement by increasing equipment availability.

Q: IMC acquisition delay from Q1 to Q2?

A: Purely ACCC regulatory process, no risk, shareholder agreement allows retroactive earnings, expected impact same as announced.

Q: EBITDA guidance and EPS, etc. not addressed?

A: Intentional to stick to top line, EBITDA margin, free cash flow as key metrics.

Q: Operational focus on Australian workforce cost reduction goal?

A: Expect 3% to 5% savings, reducing subcontractors, right-sizing manpower.

Q: Bid pipeline margins directionally?

A: Vary by geography, Australia has higher margins, infrastructure jobs competitive but will take jobs at comfortable margin.

Q: Risk profile of moving into infrastructure projects?

A: Learned lessons on Fargo, will sub work if not in control, focus on suited projects.

Q: Fargo project cash generative?

A: Still cash generative, free cash flow positive, cash injection at end in 2027 modest.

Q: Canadian fleet utilization and redeployment?

A: Right-sizing fleet, looking at Australia for unit rate work, economic viability considered.

Q: Commodity price impact on opportunity?

A: Increased opportunity in various commodities, strategic in chasing.

Q: EBITDA range and capex for growth?

A: Range due to weather, growth capex depends on job, opportunities have different methodologies.

Q: Free cash flow and deleveraging?

A: Opportunities need to be net improvement to deleverage, target 2.0 times net debt leverage by end of 2027, longer term 1.5 times.

Q: Infrastructure project contract structure and shift?

A: Fashioned as Earthworks experts, learned from Fargo, team with others as subcontractor, look at earthwork-centric jobs.

Q: Canada nation-building contribution?

A: Contribution at earliest 2027 and beyond.

Q: IMC integration risk?

A: Little integration risk, IMC well-run.

Q: Australia labor trends and inflation management?

A: Effective recruiting, trend in right direction, update in Q1 close.

Q: Fargo equipment disposal?

A: Equipment bought for Fargo project disposed of by project, limited cash outflow impact.