North American Construction Group NYSE: NOA reported a stronger start to 2026, with management saying first-quarter results showed sequential improvement in earnings, margins and operating execution across its Canadian and Australian businesses.
Jason Veenstra, executive vice president and chief financial officer, said the company delivered CAD 99 million of EBITDA in the quarter ended March 31, 2026. Revenue totaled CAD 423 million on a combined basis, which management said provides a foundation for its reaffirmed 2026 combined revenue midpoint of CAD 1.6 billion.
Veenstra said Australia produced a first-quarter regional revenue record excluding Iron Mine Contracting, including an all-time monthly record in March. IMC, which North American Construction Group closed on shortly after the quarter ended, contributed CAD 65 million of revenue as expected. Canada also grew sequentially, despite the full-quarter effect of the company’s 797 truck divestiture.
Margins Improve as Maintenance and Fleet Initiatives Take Hold
Management highlighted margin performance as a key indicator of execution in the quarter. Veenstra said Australia delivered a 16.7% gross profit margin, while Canada delivered a 9.5% gross profit margin despite seasonal conditions in both regions.
He attributed the performance to “disciplined project execution, improved internal maintenance capability, lower repair costs, and the implementation of continued fleet efficiency initiatives.”
First-quarter EBITDA and EBIT were in line with the prior-year period but improved significantly from the fourth quarter of 2025. EBITDA rose 27% sequentially, while EBIT increased 119%. Direct general and administrative expenses were CAD 14 million, or 4.3% of reported revenue, below the company’s 5% target. Adjusted earnings per share were CAD 0.37.
Interest expense increased to CAD 19.1 million from CAD 17.8 million a year earlier, which Veenstra said reflected financing tied to the company’s strategic expansion in Australia.
Operating cash flow before working capital was CAD 63 million. Free cash flow was CAD 4 million after a CAD 34 million working capital investment during the quarter.
IMC Acquisition Expands Australian Platform
President and CEO Barry Palmer said the company closed its acquisition of Iron Mine Contracting on April 7, 2026, shifting attention to integrating IMC into North American Construction Group’s Australian operations.
Palmer said IMC strengthens the company’s effort to build a nationwide Tier 1 platform in Australia, particularly in Western Australia. He said IMC brings roughly 120 heavy equipment assets and about CAD 840 million of contractual backlog.
“Strategically, IMC is a strong fit,” Palmer said, citing alignment in culture, core values and maintenance capabilities.
Management said IMC also supports expansion into lower-capital unit-rate work in Australia, where Palmer said Western countries are increasingly seeking stable and predictable supplies of critical minerals amid geopolitical uncertainty.
In response to an analyst question, Veenstra said IMC’s gross profit margin is expected to be consistent with the company’s eastern Australian operations, in the mid- to high-teens range. However, EBITDA margin is expected to be lower because the business is less capital intensive. Veenstra said eastern Australia could be north of 30% EBITDA margin, while IMC is expected to be in the low 20% range.
Guidance Reaffirmed for 2026
North American Construction Group reaffirmed its 2026 outlook, with management continuing to expect:
- Combined revenue of CAD 1.6 billion at the midpoint;
- Adjusted EBITDA of CAD 400 million;
- Free cash flow of CAD 120 million.
Palmer said the company’s contractual backlog stands at CAD 3.9 billion, with CAD 1.5 billion of estimated annual revenue already secured for 2026. He said that is up from CAD 1.2 billion at the time of the company’s previous earnings call.
Management cautioned that second-quarter performance is expected to reflect the normal seasonal spring break-up in the oil sands. Palmer said the company historically sees a 15% revenue impact between the first and second quarters tied to those conditions.
However, he said North American Construction Group continues to expect meaningful improvement in the second half of 2026 as IMC synergies and opportunities are realized, newly acquired equipment is commissioned and seasonal activity strengthens. Palmer said that from 2022 to 2025, second-half revenue consistently exceeded first-half revenue, averaging roughly 20% higher contribution.
Bid Pipeline Remains a Focus
Palmer said the company’s global bid pipeline totals approximately CAD 14.5 billion, including CAD 4.6 billion in active tender and procurement. Australia accounts for about CAD 3.3 billion of the active pipeline.
He pointed to three strategic growth drivers: scaling into a Tier 1 contractor platform in Australia, securing infrastructure awards across North America and expanding mining services in Canada and the United States.
In North America, Palmer cited opportunities related to the Ring of Fire, Northern Access and Northern Basin, along with other infrastructure projects. The company’s infrastructure bid pipeline is approximately CAD 5 billion, including about CAD 1.3 billion tied to those three opportunities.
Palmer said the Fargo-Moorhead project advanced 5% in the quarter and is now more than 90% complete, which he said demonstrates the company’s execution capabilities in large-scale civil earthworks.
Asked about the timing of potential project awards, Palmer said many opportunities expected in early 2027 are in North America and are moving through expression-of-interest and procurement processes. He said Australian opportunities are more near term.
Leverage and Debt Reduction Plans
During the question-and-answer session, Veenstra said leverage remains a significant focus for the company. In response to an investor question referencing net debt of about CAD 896 million, Veenstra said that level equates to approximately 2.5 times leverage.
He said the company’s goal is to reduce leverage to 2.0 times by the end of 2027 by directing free cash flow toward net debt repayment. Veenstra added that the board has endorsed a longer-term target of 1.5 times, though he said that would take longer than 2027 to achieve.
Veenstra said the company may consider increasing its dividend, but outside of dividends, free cash flow is expected to be directed toward debt repayment.
Palmer said activity in the oil sands is expected to be “very, very busy” this year, based on discussions with major clients. He said clients are ramping production, creating additional opportunities for North American Construction Group if it can support them efficiently and cost-effectively.
About North American Construction Group NYSE: NOA
North American Construction Group 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.
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