Good morning, ladies and gentlemen. Welcome to the North American Construction Group’s Earnings Call for the First Quarter ending March 31st, 2020. At this time, all participants are in listen-only mode. Following management’s prepared remarks, there will be an opportunity for analysts, shareholders and bond holders to ask questions. The media may monitor this call in listen-only. They are free to quote any member of management, but they are asked not to quote remarks from any other participant without participant’s permission.The company wishes to confirm that today’s comments contains forward-looking information, 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 this forward-looking information. Additional information about these material factors is contained in the company’s most recent Management Discussion and Analysis which is available on SEDAR and EDGAR, as well as the company’s website at nacg.ca.I will now turn the conference over to Martin Ferron, Chairman and CEO. Please go ahead, sir.

Thanks and very good morning to everyone. Following on from three years of solid growth from 2017 to 2019, we entered 2020 full of optimism and enthusiasm. We were looking forward to another successful year based on plenty of work in hand and a strong backlog for the medium-term.We expended our growth capital in January on new assets to support a key customer of the Kearl mine on firm contractual terms. We pressed on with our front end loaded sustaining capital plan for the year and decided to call a convertible debenture which had been deeply in the money for many months. Then, around March 15th, the gravity of the COVID-19 virus outbreak, combined with an oil price war, began to weigh heavily on our business.It would be easy to consign our Q1 performance to the record books with a, who cares, that was then, and this is now attitude. However, I will look back on it as a quarter when firing on all cylinders, my amazing team of employees, put up numbers that I always be – will be immensely proud of. In fact, if not for the deteriorating business conditions towards the end of the quarter, we would likely have put up an adjusted EBITDA number in the mid-60s and adjusted EPS close to $1 dollar.I will now hand the call over to Joseph Lambert, our President and Chief Operating Officer, to take us through the safety and other operational highlights shown on Slides 2 to 4. Jason Veenstra, our CFO, will then cover financial highlights from Slides 5 to 8, before I talk about our outlook using Slide 9.Over to you, Joe.

Thanks, Martin. Looking at Slide 2. Our unwavering commitment to safety continued through Q1 and into the onset of the virus, where we further demonstrate that even with increasing workforce hours and winter conditions, we can maintain our industry-leading safety results.Starting March and continuing into Q2, our business has naturally felt the impact of this pandemic, and is demonstrating our commitment to the health of our employees physically, emotionally and financially. Physical health is protected with our policies and procedures, ensuring workplace hygiene and accommodating physical distancing and work from home.Emotional health has been bolstered through strong support from both our internal human resources team and external assistance programs. And finally, financially, through doing everything in our control to minimize the layoffs during this pandemic. If there is anything positive to draw from this experience, is the heightened awareness and commitment to continuously improving employee health.Moving on to Slide 3 with our business update. We have quite the contrast of a Q1 demonstration of what we can achieve in a stable market and normal weather pattern to that of an unanticipated, unusual Q2 opportunity to show our business resilience and ability to adjust quickly to the most volatile markets.In boxing terms, we certainly prefer to show our ring prowess and punching power like we did during the majority of Q1, to that of demonstrating our ability to take a punch here in Q2. But in an inherently cyclical commodity business, both skills are required for sustainable business success.Moving on from the bottom of Slide 3 and into Slide 4, you’ll see what we believe to be characteristics of a strong corporate culture, and that our core strategy remains intact, and we have adjusted the priority on objectives to match current business climate. We expect our customer-first mentality, safe low-cost provider…

Thanks, Joe and good morning, everyone. So I’m starting on Slide 5 here with our top line. Revenues for the quarter of $199 million was $12 million above last year’s Q1 despite the impact we realized at our mine sites in the latter half of March. As Joe mentioned, we started the year strong, which was a continuation of the momentum we had from Q4 2019. All business lines were positive year-over-year, with incremental organic growth being the dominant factor for the first time in a while.The posted quarter-over-quarter organic growth of 10% was primarily achieved through higher equipment availability and utilization. The 10% increase is inclusive of the COVID-19 revenue step down in the latter half of March. Further contributors to the year-over-year revenue increase were the partial quarter contribution of growth capital equipment purchased early in the quarter, as well as the coal mine management contract which commenced in late Q2 2019.Offsetting these revenue growth factors was the change in method of reporting for Nuna, which now classifies its revenue and equity earnings and the Q4 2019 completion of work at the Highland Valley Copper mine. Our share of Nuna revenue during a fairly quiet quarter was $10 million, and is disclosed in the notes to the financial statements.Gross profit margin of 17.4% reflected a strong operating quarter as standard weather conditions and scopes of work provided for favorable operating conditions. Furthermore, the now fully integrated fleet lowered overall equipment idle time during this year’s winter season, and equipment maintenance costs were consistent with expectation.Offsetting these positives, the posted margin includes the impact of COVID-19, which started affecting operations in mid-March and resulted in reduced volumes and certain demobilization costs, as well as restricted site access, changes in operating protocols and increased frequency of workforce health monitoring.Excluding the…

Okay. Thanks, Jason and now turning to Slide 9 to talk about our outlook, which for the time being is only shown for quarter 2. We are close to being able to provide a full year outlook, but need to conclude some discussions with our key oil sands customers first.Now, the COVID-19 pandemic is having two main impacts on our oil sands related business, which accounted for 75% of our EBIT in 2019. Firstly, this causing a serious health threat to be managed very carefully, with usually thousands of workers on each of the mine sites where we operate.Therefore, the best way for our customers to deal with this is to reduce workforce levels to the absolute minimum. This allows a better social distancing and cuts back dramatically on crew changes that can bring the virus on to sites. This situation has meant that we’ve been excluded from one mine site since mid-March, which has disrupted our overburden operations there. We currently expect though to resume those operations by mid-to-late May and continue as normal.The second major impact of the pandemic is that it has caused a worldwide demand collapse for oil at a time when Saudi Arabia and Russia decided to provide a supply surge. The time-honored mantra that the best cure for a low oil price is a low oil price, cannot work unless demand begins to normalize and recently announced supply cuts kick in. For the first time we’ve seen production shut in at an oil sands mine as producers simply run out of physical storage for the product. While that mine operates with just one production train, the need for our services is limited.However, our contract structure contemplated these types of occurrences, and the customer has the ability to move the committed volumes between operations. Should…

Thank you. [Operator Instructions] Your first question comes from Aaron MacNeil from TD Securities.

Hey, good morning guys. Hope you and your families are doing well. Syncrude has announced that it’s going to shut in some production. I believe that some of this relates to turnaround activity. But I guess the question for me is, does this positively or negatively impact your ability to renew the MSA that expires in 2021?

You know I don’t honestly think that it will make any difference. You know, we’re going back to work on that site shortly. We’ve got committed volumes for the rest of the year. And we plan to continue discussions about extending our MSA and volume commitments going forward. I don’t see it as maintenance turnaround impacting that, to be honest.

Okay. You mentioned in your prepared remarks that Nuna will be less impacted. But as we look towards Q3, and obviously without getting into any specifics, can you maybe expand on that and give us an update on maybe some of the projects Nuna has been bidding on and at least on an anecdotal basis maybe talk about what we might expect for a seasonally strongest quarter of the year?

Yeah, I’ll comment in general. And maybe Joe can comment on specific projects. But we are expecting Nuna to have a similar year to last year. And as you recall, their biggest quarter is always Q3 due to seasonality the progress in the north. So we expect a very similar year from them in 2020, as I just mentioned. Joe, any specific projects you like to comment on or?

We’ve had success with Nuna in gold projects in Ontario already for summer construction, and we’re actively bidding more. So the gold marketplace is actually very active. Lot of summer work including like tail dam raises, and there is some new mine site opportunities coming up that Nuna is pursuing, and believe they’ll have great opportunity. And we’re actually partnering with them on one of them.

Great, thanks guys. I’ll leave it there.

Thank you.

[Operator Instructions] The next question comes from Daine Biluk from CIBC Markets. Your line is open.

Good morning, everyone.

Good morning, Daine.

So I guess maybe just starting off, and you kind of talked about in your prepared remarks that a lot of these client conversations are still ongoing. But in those conversations, can you share if there have been any sort of talk of pricing discounts, especially on contracted work at this stage?

Yeah, yeah, of course you know, our customers are being through the shredder between the virus and the oil prices. So you know they’re looking for help from us. And our business model is all about providing low-cost solutions, no matter you know the environment. So we’re trying to help. You know we’re trying to reduce our costs, pass that on to them, do things differently, all the usual things that we normally do. And I think you know they really appreciate our supports. And you know we’ll continue to help them as best we can, because it’s tough time for them, for sure.

Understood. I guess moving over to, for some of the mine operators that have curtailed production. Have you seen them do redeploy any of their excess ore hauling equipment or overburdened activities?

Joe, can you comment on that?

I didn’t hear the question very well, Daine. Would you repeat it?

Yeah, for sure, absolutely. Just for some of the mine operators that have curtailed production, have any of them redeployed excess ore hauling equipment to overburdened removal?

I’m assuming that some of them might be moving overburdened. I don’t – for the most part we haven’t seen any equipment leaving sites or moving anywhere. But they are running their existing mine sites in places where they’ve reduced their ore feed. I believe they would switch and move a bit more overburdened.But I think it’s a timing issue, Daine, where these are predominantly maintenance turnarounds being brought forward. So in their overall annual mine plan, these volumes of overburdened and movement now, they would have been doing next quarter. And so, I don’t think it changes their overall overburden plans for the year. I think it changes what it was going to be in Q2 versus Q3.

Understood. Okay. That’s very helpful. Thank you.

Yeah, Daine, we have committed volumes on many of these sites also, right, so we expect to complete those volumes this year.

Right, okay. Got it, and good, thank you. That’s helpful. Beyond Q2, how are you thinking about the rate of share buybacks? And would dialing that allocation up or down largely be a function of underlying free cash flow?

You know, so as of today, Daine, we’re close to 50% through the NICB. So depending on what happens to the rest of the quarter here, we could finish it. So it just depends on price and you know obviously we’re buying everyday at present with the stock in the 6s. So glad to be doing that and you know we’ll keep going until the NCIB limit is reached.

Understood, okay that’s helpful. Thank you. And then last question for me, which is probably for Jason, how should we be thinking about changes in working capital specific to Q2 as well as for the balance of the year?

We should be pretty flat working capital-wise. Given when the pandemic kind of hit us middle of March, we kind of did collect a lot of accounts receivable. We have a pretty quick turnaround. And so, I think if this hit would have been later in March, it might have been a more pronounced change. But I see a slight pickup in working capital in Q2, and then pretty flat coming out.And obviously, if we have a big Q4, you know we could see a bit of a build in accounts receivable. But I really don’t see much from an accounts receivable and payables perspective given the timing. A benefit we will see which will contribute to the slight improvement in Q2 is, we will see a reduction in inventory, parts inventory, just with the natural flow of the business with top line coming down.

Understood. Okay, great. That’s all for me. I appreciate the color, guys. Congrats on the good quarter and hope everyone is staying safe.

Likewise, Daine. Thank you.

[Operator Instructions] Your next question comes from Devin Schilling from PI. Your line is open.

Hi guys. First off, congrats on the strong quarter here despite the challenging situation we’re in right now.

Thanks, Devin.

Yeah, I was hoping if you guys could provide a bit of color here on – you’re talking about this one particular mine site, where you’re going to be entering some discussions of possibly redeploying some equipment. If talks there, I guess fail to realize, you guys being able to redeploy all the capital, all the equipment that you’re originally expecting, what’s kind of the opportunity here to potentially redeploy some of this equipment to go work with Nuna here? I see you guys added some equipments in Q1 for this whole project, so just trying to get a bit more color there on the opportunity.

Yeah. So we’re always looking at sharing equipment with Nuna, Devin. Their needs are smaller than ours in terms of size. So you know the opportunity is somewhat limited but we’re always looking at it. And they’re bidding some projects that require incremental equipment. So of course it will make sense for us to try and supply that from our fleet. So we’ll be doing that in the normal course. And I’m sure it will help us as the year progresses.

Okay. No, that’s great. I guess on another note here, it’s safe to assume that the growth CapEx plans that were originally in place for this year, are they – is that mapped up, there is nothing left in the rest of the year outside of this sustaining capital that you’ve just recently mentioned?

Yeah, I think that’s correct. We expanded the growth capital very early in the year as planned. And we bought a shovel and some excavators which are still operating on very favorable terms to us. So it’s a good investment.

Okay, great. I’ll jump back in the queue for now. Thanks.

Thank you, Devin.

Your next question comes from Richard Dearnley from Longport Partners. Your line is open.

Good morning. What percent of sales came from backlog? And I didn’t get a chance to go into the queue and see what backlog is. What is – what was the exiting backlog?

Jason?

Yeah. So we’re at $1 billion still just under around $2 billion. And it was about half of revenue in the first quarter, just off the top of my head, was related to backlog. We do have it in our MD&A, but –

Right. And do you expect because of the virus and the lagging effects that more of ‘20’s revenues will come out of backlog versus normal, whatever normal is these days?

Yeah, that makes sense, doesn’t it? You know I think you know the spot work that we do to make up the other 50% of normal effort will increase. So our backlog will you know account for a large portion of our revenues.

And then, same way you know with the second quarter being the slow quarter, and adjusting for that. Your equipment utilization now you’ll also have to adjust for how fast break up is and all that, but again, just you know a feel for where you are relative to normal in equipment utilization?

Joe, you want to take a shot at that?

Yeah. I think obviously our – I mentioned in my comments, yeah that Q1 we are higher than normal. Obviously Q1 is going to be low. For the remainder of the year, what I’d say is that it’ll be less than what we previously experienced. One thing I’d say is that, it’s more weighted towards the larger equipment.So when Martin was talking about backlog, most of the backlog is related to our larger trucks and shovels. And so even with – you’ll have a lower utilization, but it will be – you know I don’t like to put the numbers to that, but it’s the equipment that is running is the larger equipment, so the higher revenue generating per hour equipment.

Right that’s okay. That makes sense. And when you mentioned your committed volumes will get finished this year, from what you were just saying, it sounds like you’ll be using them up somewhat faster than you maybe, you know what then was the plan for ‘20, do I have –

The committed volumes are annual commitments, Richard. So there is – the contracts don’t have an ability, they can overproduce the committed volume in 2020, but there is not an ability to do 2021 volumes in 2020. They’re distinctly separated into annual committed volumes.

Oh, I see. Okay. Good, thank you very much.

Thank you, Richie.

Thank you, Richard.

There are no further questions at this time. I’ll turn the call back over to your presenters.

Okay. Thanks, Jacqueline. And thanks to everybody else for joining us today. We look forward to talking to you again in the near future. All the best. Stay safe.

Thank you. This concludes the North American Construction Group conference call. You may now disconnect.