North American Construction Group(US:NOA)2023-02-15 22:13Financial Performance - Revenue for the year ended December 31, 2022, was $769.5 million, representing an increase of $115.4 million (or 18%) compared to 2021[63]. - Total combined revenue reached $1,054.3 million in 2022, a year-over-year increase of $242.0 million (or 30%)[64]. - Gross profit was $101.5 million, with a gross profit margin of 13.2%, down from 13.8% in the previous year[65]. - Adjusted EBITDA for 2022 was $245.4 million, an 18% increase from $207.3 million in 2021, with an adjusted EBITDA margin of 23.3%[68]. - Net income for the year was $67.4 million, resulting in a basic net income per share of $2.46, up from $1.81 in 2021[61]. - Free cash flow amounted to $70.0 million, driven by adjusted EBITDA less sustaining capital additions and cash interest paid[70]. - The company's share of revenue from joint ventures and affiliates was $596.0 million, a significant increase of 79% compared to $332.4 million in 2021[64]. - Adjusted EBITDA for the year ended December 31, 2022, was $245,352,000, representing a margin of 23.3%[72]. - Net income for the year ended December 31, 2022, was $67,372,000, up from $51,408,000 in 2021, reflecting a growth of 31.0%[75]. - Basic net income per share increased to $2.46 in 2022 from $1.81 in 2021, marking a rise of 36.0%[75]. - Total combined revenue for the year ended December 31, 2022, reached $1,054,265,000, a significant increase from $812,226,000 in 2021[77]. - Gross profit for the year ended December 31, 2022, was $101,548,000, compared to $90,417,000 in 2021, indicating a growth of 12.3%[75]. Cash Flow and Liquidity - Cash provided by operating activities for Q4 2022 was $78.1 million, an increase from $65.9 million in Q4 2021, and for the full year 2022, it was $169.2 million compared to $165.2 million in 2021[127]. - Cash used in investing activities for Q4 2022 was $17.5 million, down from $24.3 million in Q4 2021, primarily due to $27.9 million spent on property, plant, and equipment[130]. - For the full year 2022, cash used in investing activities was $97.5 million, slightly down from $99.3 million in 2021, with $111.5 million allocated for property, plant, and equipment purchases[131]. - Cash reserves rose significantly to CAD 69,144,000 in 2022, up from CAD 16,601,000 in 2021, marking an increase of about 316%[256]. - The company reported a total capital liquidity of $212.4 million as of December 31, 2022, down from $233.1 million in 2021, a decrease of 8.8%[110]. Debt and Obligations - Total debt as of December 31, 2022, was $424,912,000, an increase from $385,626,000 in 2021, indicating a rise of 10.2%[72]. - The company’s total debt outstanding as of December 31, 2022, was $424.9 million, which may limit its ability to obtain additional financing and increase vulnerability to interest rate changes[216]. - Total contractual obligations increased to $537.5 million as of December 31, 2022, up from $471.9 million in 2021, primarily due to a $95.3 million increase in the Credit Facility[143]. - As of December 31, 2022, the company had $180.0 million borrowed against its Credit Facility, with $32.0 million in issued letters of credit, compared to $110.0 million and $33.9 million, respectively, in 2021[148]. Operational Metrics - Equipment utilization improved to 69% in the second half of 2022, compared to 58% in the same period of 2021[63]. - The company aims to enhance operational excellence through improved fleet maintenance and utilization[167]. - The equipment fleet is currently composed of 62% owned, 32% finance leased, and 6% rented equipment[121]. Shareholder and Equity Information - Cash dividend declared per share increased to $0.32 in 2022 from $0.16 in 2021, representing a 100% increase[72]. - The company completed a Normal-Course Issuer Bid (NCIB) in 2022, purchasing and canceling 2,113,054 shares at an average price of $15.45, resulting in a total reduction of $16.8 million in common shares[159]. - As of December 31, 2022, the company had 27,827,282 total voting common shares outstanding, including 1,412,502 shares classified as treasury shares[152]. Risks and Challenges - The company faces significant inflationary pressures, particularly in skilled labor and equipment parts, which may impact profitability if future inflation rates are not accurately predicted[221]. - The company relies on skilled labor, facing challenges in attracting and retaining workers, particularly in remote locations[216]. - Labour disputes could adversely affect operations, as the majority of hourly employees are subject to collective bargaining agreements[223]. - The company acknowledges that actual results may differ materially from forward-looking statements due to various risks and uncertainties[212]. - Climate change regulations may increase operational costs and impact business models, necessitating compliance with new environmental standards[226]. - Extreme weather conditions and natural disasters pose risks to project timelines and could lead to revenue losses while incurring ongoing costs[228]. Future Outlook - Adjusted EBITDA for 2022 was $245 million, with a 2023 outlook of $240 million to $260 million[169]. - Adjusted EPS for 2022 was $2.41, with a projected range of $2.15 to $2.35 for 2023[169]. - Free cash flow for 2022 was $70 million, with a forecast of $85 million to $105 million for 2023[169]. - Sustaining capital expenditures for 2022 were $113 million, expected to rise to $120 million to $130 million in 2023[169]. - The company anticipates that $498.6 million of its backlog will be performed over 2023[213]. Internal Controls and Audit - The independent auditor, KPMG LLP, confirmed that the company maintained effective internal control over financial reporting as of December 31, 2022[208]. - Management concluded that the internal control system was effective based on the criteria set forth in the COSO framework[232]. - The audit included testing the operating effectiveness of internal controls related to revenue recognition processes[252]. - KPMG LLP expressed an unqualified opinion on the consolidated financial statements for the years ended December 31, 2022, and 2021[244].