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Highlights

  • NOA's Q1 2024 revenue rose 21.6% to CAD 297.0mn on strong Australian equipment utilization
  • Despite higher revenue, NOA's net income decreased to CAD 11.3mn compared to CAD 21.8mn in pcp due to increased expenses
  • NOA is expected to pay a regular quarterly dividend of CAD 0.10 per common share on 05 July 2024

North American Construction Group Ltd. (TSX: NOA) offers a variety of heavy construction and mining services to customers in the industrial construction and resource development sectors. The Canada-based company also has its operations in the United States and Australia. The company has a market capitalisation of CAD 789.70 million.

In the first quarter of 2024, NOA reported a 21.6% increase in revenue to CAD 297.0 million compared to pcp. This growth was driven primarily by strong equipment utilization in Australia. As a result of higher revenue, the company experienced a 29.4% rise in gross profit, which was partially offset by increased depreciation expenses. However, NOA's income before tax declined to CAD 15.7 million, primarily due to higher interest expenses and changes in the fair value of contingent obligations. Overall, the company reported a net income of CAD 11.3 million for the quarter, down from CAD 21.8 million in pcp.

Additionally, NOA had a higher EBITDA margin of 27.8% and a higher operating margin of 12.9% in Q1 2024, compared to the industry median of 21.8% and 10.5%, respectively.

Recent business update

On 01 May 2024, the company’s board of directors announced a regular quarterly dividend of CAD 0.10 per common share. It is scheduled for payment on 05 July 2024.

Company outlook

NOA forecasts total revenue between CAD 1.5 billion and CAD 1.7 billion for FY 2024, with adjusted EBITDA expected to range from CAD 430 million to CAD 470 million. Additionally, the company expects annual free cash flow in FY 2024 to be between CAD 160 million and CAD 185 million.

Top 10 shareholders

Around 53.42% % of the total shareholdings in NOA are held by its top 10 shareholders. Mawer Investment Management Ltd. holds the maximum stake in the company at approximately 10.20%, followed by Ferron (Martin R) which holds around 7.60%.

Stock performance

The stock price of NOA has witnessed a decline of about 4.14% over the last week and a surge of about 2.47% over the last month. Furthermore, the stock is trading below the average of its 52-week high price of CAD 34.87 and 52-week low price of CAD 24.18.

Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is June 17, 2024. The reference data in this report has been partly sourced from EODHD/Others.