North American Construction Group Q2 2026 Earnings Report

North American Construction Group EPS Results

• Actual EPS: $0.23
• Consensus EPS: $0.23
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

North American Construction Group Revenue Results

• Actual Revenue: $321.22 million
• Expected Revenue: $246.65 million
• Beat/Miss: Beat by +$74.57 million
• YoY Revenue Growth: N/A

North American Construction Group Announcement Details

• Quarter: Q2 2026
• Date: 8/12/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 9:00AM ET

North American Construction Group (NYSE:NOA) Ltd (NYSE: NOA) is a Canadian industrial company headquartered in Edmonton, Alberta, that specializes in providing integrated heavy construction equipment solutions. Through its two core segments—Sales and Rentals—the company offers a comprehensive portfolio of new and used off-highway trucks, wheel loaders, hydraulic excavators, dozers and motor graders, along with aftermarket parts and maintenance services.

In its Sales division, North American Construction Group partners with leading global equipment manufacturers to distribute and support a broad range of heavy machinery across multiple industries. The Rentals segment maintains a diversified fleet of machines to support customers on short- and long-term projects, complemented by on-site maintenance, custom attachments and operator support programs. The company’s aftermarket services include parts distribution, refurbishment and rebuild capabilities designed to extend equipment life and optimize fleet performance.

North American Construction Group serves a variety of sectors including oil sands, mining, forestry, road building and general construction, with more than 30 branch locations across Western Canada, including Alberta, Saskatchewan, British Columbia and Manitoba. The company emphasizes safety, operational excellence and customer service, led by a management team with deep experience in heavy equipment and industrial services. Its regional footprint and diversified service offerings position it to support infrastructure and resource development projects across North America.

North American Construction Group Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue guidance was raised to CAD 1.6–1.8 billion, with a CAD 1.7 billion midpoint, about 14% above 2025, following record second-quarter revenue and stronger-than-expected first-half performance. Adjusted EBITDA guidance remains CAD 380–420 million and free cash flow guidance CAD 110–130 million.
• Positive Sentiment: Q2 EBITDA reached CAD 93 million, while adjusted EPS was CAD 0.32; margins improved despite challenging seasonal conditions, supported by better project execution, lower repair costs, and fleet-efficiency initiatives. Direct adjusted G&A was 3.8% of revenue, below the company’s 5% target.
• Positive Sentiment: Australia remains the primary growth engine, with revenue up 31% on a compound basis since the first half of 2024 and CAD 3.4 billion of contractual backlog. Management said IMC integration is progressing well and highlighted a CAD 135 million fuel-services contract that requires only about CAD 5 million of capital.
• Neutral Sentiment: Net debt increased by CAD 191 million to CAD 1.1 billion following the IMC acquisition and equipment purchases, lifting reported trailing leverage to 2.9x, although management expects leverage to decline from the second-half run rate of about 2.6x. Oil-sands fleet optimization will also require approximately CAD 50 million of 2026 investment, contributing to expected full-year sustaining capital above CAD 200 million.

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to the North American Construction Group conference call regarding the second quarter ended June 30, 2026. At this time, all participants are in a listen-only mode. Following management's prepared remarks, there will be an opportunity for analysts, shareholders, and bondholders to ask questions. The media may monitor this call in listen-only mode. 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. The company wishes to confirm that today's comments contain forward-looking information, and that actual results could differ materially from a conclusion, forecast, or projection contained in that forward-looking information. Certain material factors or assumptions were applied in drawing conclusions, or in making forecasts or projections that are reflected in the forward-looking information.

[Operator]

Additional information about those material factors is contained in the company's most recent management's discussion and analysis, which is available on SEDAR and EDGAR, as well as on the company's website at nacg.ca. I will now turn the conference call over to Jason Veenstra, CFO.

[Jason Veenstra, CFO at North American Construction Group]

Thanks, Jenny, and good morning, everyone. I will start today's call with brief commentary on the financials, then pass the call to Barry for his operational and forward-looking comments, and we will conclude, as per usual, with Q&A. Starting on slide four, we delivered CAD 93 million of EBITDA in the first quarter, translating into year-over-year improvements in both adjusted earnings and margin performance. Combined revenue was up CAD 86 million from last year, with IMC contributing CAD 91 million of revenue in the quarter. Excluding IMC, Australia was up organically 15% in the quarter on commission growth assets and strong execution. Offsetting these increases was the year-over-year impact of the divestiture of the ultra class haul trucks in Canada. The CAD 456 million of total combined revenue finished off a strong first-half foundation of over CAD 875 million, supporting our 2026 combined revenue midpoint of CAD 1.7 billion.

[Jason Veenstra, CFO at North American Construction Group]

Moving to slide five, Australia posted 13.6% gross profit margin and Canada delivered a combined adjusted margin of approximately 7%, despite difficult seasonal conditions early in the quarter in both regions. These results reflect a disciplined project execution, improved internal maintenance capability, lower repair costs, and the implementation of continued fleet efficiency initiatives. Importantly, are trending in the right direction heading into the second half of 2026. Moving to slide six, Q2 EBITDA and EBIT were both up meaningfully from the prior year quarter on the acquisition of IMC and a more typical quarter from the Fargo joint ventures. Direct adjusted G&A was CAD 15 million, or 3.8% of reported revenue, well below our 5% targeted threshold, demonstrating operating leverage on stronger revenue.

[Jason Veenstra, CFO at North American Construction Group]

Depreciation as a percent of combined revenue dropped to 13% from 16% last year, as IMC's lower capital intensity resulted in the combined number being lower than our expected range midpoint of 15%. All told, adjusted EPS of CAD 0.32 was generated by solid operational performance. Interest expense increased to CAD 18.9 million from CAD 14.1 million last year, reflecting the financing of our strategic expansions in Australia. Our average cost of debt for the quarter remained consistent at 6.4%.

[Jason Veenstra, CFO at North American Construction Group]

Moving to slide seven, the business produced CAD 78 million of operating cash flow before working capital, generated by EBITDA performance net of cash interest. Free cash flow generation was CAD 23 million after a CAD 13 million positive working capital change in the quarter. Moving to slide eight, net debt increased CAD 191 million to CAD 1.1 billion, reflecting the acquisition of IMC and growth capital equipment purchased during the quarter.

[Jason Veenstra, CFO at North American Construction Group]

Trailing 12 net debt leverage is reported as 2.9x, but importantly, is not yet benefiting from 12 months of IMC EBITDA. Based on our second half run rate, we are operating at a 2.6x leverage ratio, with the plan to decrease that moving forward. Senior secured debt remains steady at 1.7x based on the CAD 200 million of senior unsecured notes we raised in the quarter and the impact of unsecured debt that partially funded the IMC acquisition. With those comments on the financials, I'll pass the call to Barry.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Jason, and good morning, everyone. As Jason just outlined, our first half performance was stronger than expected entering the year and gives us the confidence to raise our full year revenue outlook. More importantly, the quarter reinforced that North American Construction Group is in an inflection point. The strategic groundwork we have put in place is increasingly translating to measurable growth, stronger earning visibility, and more resilient operating profiles. Our operating platform continues to evolve, and there's even more opportunity ahead of us. We are now seeing clear evidence that our broader geographic reach, expanded capabilities, and operating discipline are working together. Our focus is to convert that opportunity into quality earnings and free cash flow through consistent execution across all operations. On slide 11, summarizes the three strategic building blocks supporting our growth. First, scaling toward a national Tier 1 contractor platform in Australia.

[Barry Palmer, President and CEO at North American Construction Group]

Secondly, securing infrastructure awards across North America. Third, expanding mining services in Canada and the U.S. These are distinct markets, but the underlying model is consistent. We establish a position where our equipment, people, and execution capabilities create the right to win. We then deepen our customer relationship, expand the scope of work, and allocate capital where we can earn attractive returns. The regional updates that follow are proof that this strategy is gaining further traction. On slide 12, Australia remains our primary growth engine. Revenue has increased approximately 31% compound annual rate from the first half of 2024 through the first half of 2026. First half 2026 revenue was 14% above the second half of 2025. This momentum reflects the scale we have added through MacKellar and IMC, supported by favorable operating conditions and strong market demand.

[Barry Palmer, President and CEO at North American Construction Group]

Together, MacKellar and IMC give us a broader national presence and the capability to pursue larger, more comprehensive scopes across all of Australia. IMC's new 8-bay Muchea workshop is another important step. It expands our maintenance capacity and supports our equipment rebuild program, as well as the larger projects we expect to pursue over time. The strategic value extends beyond scale. We are increasing our exposure to lower capital unit rate work and diversifying across gold, lithium, iron ore, nickel, and other critical minerals. This combination will support more consistent utilization and a better balance of growth and returns. This integration is also benefiting from a close alignment in safety, culture, core values, and maintenance capabilities, which is critical to sustaining performance as the business expands. As of June 30th, our Australian operations had approximately CAD 3.4 billion of contractual backlog and a further CAD 3.9 billion bid pipeline.

[Barry Palmer, President and CEO at North American Construction Group]

Supported by approximately CAD 278 billion of public infrastructure spending and a CAD 242 billion major project pipeline. This gives us meaningful runway as we continue building the platform. Turning to slide 13. In northern Canada, where I want to focus on our infrastructure discussion for today's call. Our strategy is to position capital and capabilities where our operating experience provides a clear advantage. Nuna is a strong example, with a fleet of approximately 230 heavy equipment assets. New equipment is arriving in Nunavut during the third quarter, increasing capacity and mechanical availability at an established mine site. We expect that expansion to drive approximately 20% site-level revenue growth, with our ownership stake providing NACG exposure to Nuna's growing earnings contribution. At the same time, we are executing a land and expand strategy across priority mining regions.

[Barry Palmer, President and CEO at North American Construction Group]

The Yukon infrastructure award and three initial projects in Ontario establish footholds from which we can pursue larger follow-on scopes. Our ability to safely deliver on time, on budget, with zero deficiencies is how we earn the opportunity to do more for these customers. Nuna's deep remote operating expertise, established infrastructure, and indigenous partnerships are difficult to replicate. Those capabilities position us well as critical minerals, defense, and nation-building investment advances across northern Canada.

[Barry Palmer, President and CEO at North American Construction Group]

With approximately CAD 5 billion of opportunities in the regional pipeline, we see a significant pathway to long-term growth while remaining disciplined in how we pursue it. Turning to slide 14. In the oil sands, customer demand is shifting towards more equipment-intensive work as haul distances lengthen and operating requirements broaden. This creates an attractive opportunity for North American that can provide reliable fleet availability and consistent service, but it has also required a disciplined operating plan.

[Barry Palmer, President and CEO at North American Construction Group]

During the second quarter, we formally identified 260 multi-life heavy equipment assets as our target fleet and aligned our maintenance and operations team around clear objectives. Mechanical availability is the primary operating measure with a medium-term target of 70%. Improving reliability reduces downtime, provides greater schedule certainty, and allows us to capture visible demand more efficiently. This is not simply about increasing activity. It's about improving the quality of earnings. We are concentrating on investment for assets and scopes that meet our return thresholds with incremental investments targeting IRRs above 40% and a clear line of sight towards gross profit margins in the 15% range. Better fleet performance, selective capital allocation, and operating discipline are the levers that we will translate strong customer demand into resilient margins. Turning to slide 15. This shows the depth of our diversity in the opportunity set.

[Barry Palmer, President and CEO at North American Construction Group]

Our total bid pipeline exceeds CAD 12 billion, with approximately CAD 3.6 billion currently in active tender and procurement. The active pipeline is balanced geographically with approximately CAD 1.8 billion in Australia and CAD 1.8 billion in North America. It is also balanced by type, with 54% in mining services and 46% in infrastructure across 14 resource categories. Expected award timing is weighted across the second half of 2026 and into 2027, with additional opportunities beyond that period. We do not need every project to move forward to create meaningful growth. Our priority is to convert the opportunities where our capabilities provide a clear advantage and where the risk-adjusted returns meet our standards. Turning to slide 16, our outlook. Record contractual backlog of approximately CAD 3.8 billion as of June 30th underpins our full-year expectations.

[Barry Palmer, President and CEO at North American Construction Group]

Based on stronger than expected revenue in the first half, including a quarterly revenue record for Q2, we are raising our combined revenue guidance to a range of CAD 1.6 billion-CAD 1.8 billion. The new midpoint of CAD 1.7 billion is CAD 100 million above our prior midpoint and approximately 14% above our full-year 2025 result. We are growing. We continue to expect adjusted EBITDA of CAD 380 million-CAD 420 million, and free cash flow of CAD 110 million-CAD 130 million. At the midpoints, that represents CAD 400 million of adjusted EBITDA and CAD 120 million of free cash flow. In Australia, we expect optimal dry seasonal conditions in Queensland to support MacKellar, while IMC activity ramps up in Western Australia. In the oil sands, utilization should improve following the spring breakup, supported by fleet optimization and incremental project scopes.

[Barry Palmer, President and CEO at North American Construction Group]

At Nuna, we expect the seasonally strong third quarter to be followed by fourth quarter uplift from the Nunavut fleet expansion. Taken together, our first half performance, record backlog, and identifiable second half operating drivers support the raised revenue outlook and our continued confidence in the adjusted EBITDA and free cash flow ranges. Our job is now straightforward. Safely execute with discipline, improve the quality of earnings, and convert the opportunity embedded across the platform into sustainable shareholder value. Lastly, I am extremely pleased to announce that our Chairman, Martin Ferron, has confirmed that our CEO search is going very well, and we plan to announce our new CEO in the coming weeks. That concludes the Q2 presentation, and we would be happy to take any questions you may have.

[Operator]

Thank you. Ladies and gentlemen, to ask a question, please press star one on your touch-tone phone. If you wish to withdraw your question, you can press star two. Once you have completed your questions and would like to return to the queue, please press star one again. After a brief pause, we will begin the Q&A session. Your first question is from Joseph Reagor from Roth Capital Partners. Your line is now open.

[Joseph Reagor, Analyst at Roth Capital Partners]

Hey, guys. Thanks for taking the questions, and congrats on a strong quarter.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Joe.

[Jason Veenstra, CFO at North American Construction Group]

Thanks.

[Joseph Reagor, Analyst at Roth Capital Partners]

On the increased revenue guide, is part of it that there's some flow-through costs that have raised revenue but have also raised costs, which is why the EBITDA guide didn't change? Or is there something else we should read into there?

[Barry Palmer, President and CEO at North American Construction Group]

Joe, that's a good way to look at it. It's really a first half impact when we look at revenue and how strong it was in the first half, and then EBITDA being consistent with what we expected for the first half. Yeah, it's a cost conclusion there.

[Joseph Reagor, Analyst at Roth Capital Partners]

Okay. Then follow-up on that. With higher diesel costs right now, is that something that will flow through your model? It won't press too hard on your margins, but would potentially push you guys towards the higher end of the revenue guide?

[Barry Palmer, President and CEO at North American Construction Group]

No, there's no impact to us either on revenue or EBITDA guide margin. For the vast majority of our operations, it's a flow-through.

[Joseph Reagor, Analyst at Roth Capital Partners]

Okay. All right. Thanks for the clarity there. I'll turn it over.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks.

[Operator]

Thank you. Your next question is from Adam Thalhimer from Thompson Davis. Your line is now open.

[Adam Thalhimer, Analyst at Thompson Davis]

Hey, good morning, guys. Congrats on a nice quarter.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Adam.

[Adam Thalhimer, Analyst at Thompson Davis]

Hey, the fuel services contract that you won in July, can you give some more color on that and comment if you see additional opportunities similar to that award?

[Barry Palmer, President and CEO at North American Construction Group]

Yeah, it's great. That was a great win for us. That business has been, up till now, solely servicing our own gear with odds and ends with different other contractors, truck here or there. We've been looking to win something like that for a while, so it was very exciting to win that. What we see going forward is there's other opportunities coming up where some of these contracts are nearing the end of what was contracted out four or five years ago. We're in a very good position to certainly take advantage of some of that, and we look forward to winning one, two, or maybe even three more of these as they come online.

[Adam Thalhimer, Analyst at Thompson Davis]

So that is not included in the Q2 backlog, correct?

[Jason Veenstra, CFO at North American Construction Group]

Actually, it is, Adam.

[Adam Thalhimer, Analyst at Thompson Davis]

It is.

[Jason Veenstra, CFO at North American Construction Group]

Part of the 3.8.

[Adam Thalhimer, Analyst at Thompson Davis]

Okay. Still, CAD 5 million of spend for CAD 135 million of backlog is a pretty good trade.

[Jason Veenstra, CFO at North American Construction Group]

Excellent contract. As Barry mentioned, it definitely is opening doors for additional ones. It's a lot less capital-intensive, as you alluded, with the CAD 5 million.

[Adam Thalhimer, Analyst at Thompson Davis]

A quick update. Can you just give a quick update on IMC integration, how that's going, and how you think the margin profile of that business is going to trend over time?

[Barry Palmer, President and CEO at North American Construction Group]

Yeah. The IMC integration's going really well. The beauty about IMC is they're so like-minded of how we do business here in Canada. They're very good operators. I guess that's what attracted us to them, is that they're so much like us on how they view equipment rebuilds. They're very structured. They've been executing unit rate work for many, many years. As far as the margins go, they're not quite as high as what we would expect on the equipment rental side in the Queensland business, because a lot of the work that they do is unit rate work. However, there is opportunity to go higher because of the unit rate style contract. The better we perform, the better the margin is.

[Adam Thalhimer, Analyst at Thompson Davis]

Interesting. Okay. Perfect. Thanks, guys.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Adam.

[Operator]

Thank you. Your next question is from Tim Monachello from ATB Capital Markets. Your line is now open.

[Tim Monachello, Analyst at ATB Capital Markets]

Hey, good morning, guys.

[Jason Veenstra, CFO at North American Construction Group]

Morning, Tim.

[Barry Palmer, President and CEO at North American Construction Group]

Morning, Tim.

[Tim Monachello, Analyst at ATB Capital Markets]

I'm just wondering if you can dig in a little bit more on the equipment optimization strategy in the oil sands. You've identified 260 fleet assets. What are you doing with the remainder? You talked about some capital investments within that fleet. What type of investments need to be made there? I guess, how do you expect that in terms of CapEx in 2026 and 2027 coming through?

[Barry Palmer, President and CEO at North American Construction Group]

Yeah. On the fleet we've identified, and just to clarify, that's on multi-life assets. That's the large assets. That's the fleet that we see vision for active work in the oil sands where we can take advantage of some of this additional work that's coming out. As for the remainder of this, look, we're in no rush to say we're going to sell this stuff or whatever we're going to do. Some of these assets we've set aside are smaller assets or were underutilized. But with the activity that's going on in the oil sands, with some of this exciting opportunities that we're seeing through Nuna, we feel that we'll have the ability to bring some of those units back in because of their smaller nature and actually put those things to work.

[Barry Palmer, President and CEO at North American Construction Group]

If somebody came along and we didn't have a use for some of these units and they offered the right price, obviously we'd look at taking advantage of that. There are opportunities, too, I've said this in the past, with moving some units to Australia. It's not front and center, but because the way IMC is structured and their rebuild philosophy, it's something that we've already done. We've sent half a dozen units that way because it made good sense. As far as the capital spend, what's required this year, it's probably on the fleet that we want to focus on and get our availability up above that 70% range. We're probably in the CAD 50 million range for 2026 to get us where we need to be.

[Tim Monachello, Analyst at ATB Capital Markets]

Okay. What has to happen with those assets? I was under the impression that they're all in pretty good working condition, so a little bit surprised that you have to invest more in them. Just maybe if you could provide some context.

[Barry Palmer, President and CEO at North American Construction Group]

Yeah. Because they're multi-life assets, these things, we run them for. These things, they got 20-plus year lives, and they come up, when the schedule hits on component changeouts, and these aren't small dollar items. Some of these things are million-dollar items. So it's just in the cycle of where we're at with them, and we just need to focus and make sure that we're doing the proper thing here and replacing components as they need and making sure these things are in tip-top shape so that when we win work, we go in there and we execute as planned, and we satisfy the client's needs and to meet our margin targets.

[Tim Monachello, Analyst at ATB Capital Markets]

More generally in the oil sands, are you seeing an inflection in demand alongside higher crude prices?

[Barry Palmer, President and CEO at North American Construction Group]

Yeah, absolutely. There's a lot of excitement in the oil sands. We're getting more offers every day of, "Can you do this? Can you do that? There's this scope." We're pricing stuff every day out there right now, and it's an exciting time in the oil sands. Look, I've been in the oil sands since the mid-1980s, and this is one of these times where over the last couple of years, it's been a bit of a lull and where there's insourcing and stuff. It's full steam ahead, and there's capital projects going on in the sites, and there's volume to be moved. As we said in the deck, the haul distances are lengthening, which means you have to add more trucks to move the same amount of volume. Yeah, we're extremely excited about the oil sands right now.

[Tim Monachello, Analyst at ATB Capital Markets]

Okay, fantastic. Last one, just in Australia. Understand that it's a pretty large and diverse market, but we did see a decline, a fairly meaningful decline in your stated bid pipeline quarter-over-quarter. Maybe you can talk a little bit about what's going on there.

[Barry Palmer, President and CEO at North American Construction Group]

Yeah. There was one large project on there that we missed on, and the funny thing is we still have opportunity on that. We were shortlisted. It was between us and the incumbent. I think, obviously, the owner thought that replacing the incumbent was far too expensive at this point in time, so they went with the incumbent. That said, they've come back to us already asking if there's opportunity or if we can see the possibility of putting a fleet or two onto that site. So we still see opportunity there. We're actively working on that site, always have been. We won a fairly good contract there a year ago. So yeah, we see great opportunity still there, and maybe it's a blessing in a way because that was a large amount of capital investment to win that work.

[Barry Palmer, President and CEO at North American Construction Group]

This will be less capital, and yet still opportunity to increase our revenue and margins on that site. We also missed one in IMC on the west side. But we have another one right in our pipeline right now that we're shortlisted for, and again, we think that we have a very good opportunity at winning. We'll see where that goes.

[Tim Monachello, Analyst at ATB Capital Markets]

Okay. Appreciate it. I will turn it back.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Tim.

[Operator]

Thank you. Your next question is from Roman Pshenychnyi from National Bank of Canada. Your line is now open.

[Roman Pshenychnyi, Analyst at National Bank of Canada]

Good morning, Jason. Good morning, Barry. And congrats on the very good quarter.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Roman.

[Roman Pshenychnyi, Analyst at National Bank of Canada]

I just had a quick question on the pro forma FCF profile. You've right-sized the fleet. You bought a much less capital-intensive asset in IMC. Could you maybe give us some color on what the conversion looks like going forward?

[Jason Veenstra, CFO at North American Construction Group]

Sorry, Roman, can you repeat that?

[Roman Pshenychnyi, Analyst at National Bank of Canada]

Oh, sorry. Was just looking for more color on free cash flow generation and conversion going forward, given that IMC is a lower capital intensity asset.

[Jason Veenstra, CFO at North American Construction Group]

Oh, yeah. I think given IMC is 15% of our business, the conversion target of 30% remains. That is still where we think when our business is at a run rate that we can operate at. We have been there before, and we expect to be there this year when working capital is neutral. We do not think IMC will have a meaningful impact on that ratio target, conversion target.

[Roman Pshenychnyi, Analyst at National Bank of Canada]

Sorry, just as a follow-up, do you see the 30% conversion holding for next year as well? I know it is a bit hard to predict working capital, so just curious there.

[Jason Veenstra, CFO at North American Construction Group]

Yeah. There is no reason why we cannot. With our margin initiatives, we should hopefully be able to actually increase that ratio next year. But I think it is a good placeholder for your models.

[Roman Pshenychnyi, Analyst at National Bank of Canada]

Perfect. Thank you so much. Appreciate it.

[Jason Veenstra, CFO at North American Construction Group]

Thanks.

[Operator]

Thank you. Once again, that is star one should you wish to ask a question. Your next question is from Sean Jack from Raymond James. Your line is now open.

[Sean Jack, Analyst at Raymond James]

Hey, good morning, guys.

[Barry Palmer, President and CEO at North American Construction Group]

Hey, Sean.

[Sean Jack, Analyst at Raymond James]

Just wanted to ask a quick question for Australia. I am wondering, with this increase in unit rate work from IMC, should we be expecting that this type of contract might become more popular in the broader segment, or is this just going to be isolated in IMC?

[Barry Palmer, President and CEO at North American Construction Group]

No, I would say, I don't know if it's more popular. It's been very prevalent anyway in Western Australia for a lot of the work. The majority of the work that IMC does has been unit rate style work because a lot of their scopes are mine site civil. So, it's more than just load, haul, dump, place. It's more detailed type work. So that is pretty typical with that type of work anyway. You'll see it also in some of the remediation on mine sites and stuff, but I would say it'll stay pretty much the status quo as it's been.

[Sean Jack, Analyst at Raymond James]

Okay, perfect. Good to know. Next question from me would just be, so obviously, nation building projects, et cetera, there seems to be a big heat up of demand and especially sentiment in Canada. You guys have touched upon a growing bid pipeline in Canada, but I just wanted to hear from you guys, any other sort of commentary on levels of excitement, level of demand that's kind of swelling in Canada or in the U.S.? Anything beyond stuff that's already captured in your bid pipeline?

[Barry Palmer, President and CEO at North American Construction Group]

Oh, I don't know. We've captured most of what we see that excites us in the bid pipeline. What I would say, though, on that is I'm extremely excited about the opportunities that are in front of Nuna. Nuna, just because of where they're positioned, how they're positioned, they've picked up some small wins over the last three to six months, and this puts us and them in very good light of follow-on projects that'll be the bigger projects. And this is scattered across Nunavut, northern Quebec, Ontario, Northwest Territories. It's exciting times for them, and we just need these things to come to RFP the bigger projects and to be let out there so that we have the opportunity to win them, and then get in there and start executing.

[Sean Jack, Analyst at Raymond James]

Perfect. Okay. Yeah, that's all from me, guys. Congrats on the quarter. Thanks.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks again, Sean.

[Operator]

Thank you. Your next question is from Chris Thompson from CIBC. Your line is now open.

[Chris Thompson, Analyst at CIBC]

Hey, guys. Good morning. Just a couple questions here for you. On the salaries and wages quarter-over-quarter increase, could you provide a bit more color on what's behind that?

[Jason Veenstra, CFO at North American Construction Group]

Yeah. Primarily, that would be IMC. They have a G&A function. I'm assuming you're looking at G&A and cost of sales as well, but that's primary IMC related.

[Chris Thompson, Analyst at CIBC]

Got it. Okay. I take it the third-party rentals piece meaningfully higher in Q2 and both those and salaries and wages in your COGS, is that a run rate that we should expect going forward?

[Barry Palmer, President and CEO at North American Construction Group]

No. The salaries are one thing, but the third-party rentals, typically what that is, Chris, is some of the jobs we take on, they come to us quicker than anticipated, so we end up having third-party rentals to start out with as we bring our own fleet in, and then those costs somewhat disappear. So, that's where we get the margin improvement. You'll see on some jobs where we start out and the margin isn't exactly as stated, and as the project progresses along, those margins come back, and that's when that third-party rentals disappear and we get our own fleet actively engaged.

[Chris Thompson, Analyst at CIBC]

Okay. So was that primarily an Australia driven increase then?

[Barry Palmer, President and CEO at North American Construction Group]

Yes.

[Chris Thompson, Analyst at CIBC]

Got it. Okay. The capital spend in Australia on the growth side, does that include the IMC piece?

[Jason Veenstra, CFO at North American Construction Group]

Yes. That definitely. IMC acquired on April 7th, came with a balance sheet as disclosed. Growth at that lithium mine came through our growth capital spending.

[Chris Thompson, Analyst at CIBC]

Okay, got it. Just in terms of sustaining capital, back late last year, you guys guided to CAD 60 million-CAD 70 million of sustaining in 2026, and H1 is already at CAD 84 million. Granted, you have had some growth activity in the business, but how should we expect that sustaining number to trend through the balance of the year?

[Jason Veenstra, CFO at North American Construction Group]

Yeah, we are still just a little north of CAD 200 million. As Barry alluded to on that oil sand slide, given the inflection of demand and our strategy to really run efficiently in the oil sands with mechanical availability well north of 70% MA, that is really why we are seeing going from, say, a little bit under CAD 200 million to above CAD 200 million for the year. Australia is exactly on track as we agreed on back in December with those operating teams. The change is really a reflection in commitment to the oil sands and getting that operation running more efficiently.

[Chris Thompson, Analyst at CIBC]

Okay, thank you. I will hand it back.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks Chris.

[Operator]

Thank you. There are no further questions at this time. I will now pass the call back over to Barry Palmer, President and CEO, for closing comments.

[Barry Palmer, President and CEO at North American Construction Group]

Thanks, Jenny. Thanks again, everyone, for joining us today. As always, we remain focused on discipline execution and look forward to providing our next update with our third quarter results.

[Operator]

Thank you. This now concludes the North American Construction Group conference call regarding the second quarter ended June 30, 2026. You may now disconnect your line.

Participants

Executives

• Jason Veenstra, CFO
• Barry Palmer, President and CEO

Analysts

• Joseph Reagor, Analyst at Roth Capital Partners
• Adam Thalhimer, Analyst at Thompson Davis
• Tim Monachello, Analyst at ATB Capital Markets
• Roman Pshenychnyi, Analyst at National Bank of Canada
• Sean Jack, Analyst at Raymond James
• Chris Thompson, Analyst at CIBC