Bullboard - Stock Discussion Forum North American Construction Group Ltd T.NOA

Alternate Symbol(s): NOA | T.NOA.DB.A | T.NOA.DB.B

North American Construction Group Ltd. is a Canada-based company. The Company provides a range of mining and heavy civil construction services to customer in the resource development and industrial construction sectors within Canada, the United States, and Australia. Its segments are Heavy Equipment - Canada, Heavy Equipment - Australia, and Other. Heavy Equipment - Canada and Heavy Equipment -... see more

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TSX:NOA - Post Discussion

North American Construction Group Ltd > TD

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Post by retiredcf on Feb 17, 2022 8:31am

TD

North American Construction Group Ltd.

(NOA-T, NOA-N) C$19.09 | US$15.08

Q4/21 Results

Event

North American Construction Group (NACG) reported Q4/21 results.

Impact: NEUTRAL

Q4/21 Results: NACG reported Q4/21 Adjusted EBITDAS of $55.7 million, slightly below our recently increased estimate of $58.7 million and consensus of $58.1 million. The slight miss was a function of lower-than-expected gross margins (26.5% vs. our estimate of 30.0%), partially offset by lower-than-expected G&A. Details on page 2.

Dividend Doubled; Implied Yield of 1.7%: With the quarter, NACG increased the dividend to $0.32/share annually (from $0.16/share previously), equating to a 1.7% yield at yesterday's closing price. In our Q4/21 preview (full report), we highlighted NACG as a potential candidate for a dividend increase and view this announcement as broadly in line with our expectations. That said, we note that the revised dividend commitment now stands at ~$9.0 million, a relatively small portion of management's 2022E free-cash-flow guidance range of $95 million-$115 million. As a result of the relatively low payout ratio, contracted/recurring revenue profile, and in light of its current leverage (2022E ND/EBITDA of 1.5x), we view this increase as conservative and believe that NACG has capacity to move the dividend higher over time.

2022 Guidance Reiterated; No Material Changes in Our Estimates: Our 2022 EBITDAS estimate of $241.7 million remains at the high end of management's guidance range ($215.0 million to $245.0 million) and note that NACG has a long history of meeting and exceeding published guidance targets. Details on page 3.

Conference Call: Management will host a conference call at 9:00 a.m. ET; dial:1-844-248-9143; Conference ID: 4046629.

TD Investment Conclusion

With a relatively in-line quarter and no changes to guidance, our view on NACG remains unchanged. We continue to have high confidence in the management team's ability to execute on both its core oil-sands operations and diversification strategy. To this end, we are reiterating our BUY rating and maintaining our $25.00 target price.

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