Good morning, ladies and gentlemen. Welcome to the North American Construction Group Earnings Call for the Fourth Quarter and Year Ended December 31, 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 a 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 participant’s permission.

Thanks, Kinsey and good morning to everyone. Well, after almost 25 years of doing quarterly and annual earnings calls, this will be my last one. I could not be happier that our great team of employees marks my final quarter as CEO with solid performance. In particular, they impressively met or exceeded all of our important goals in relation to safety, free cash flow and diversification. 2020 was a really challenging year and I'm very proud that we were one of the very few companies so in control of our business, to reset and beat financial guidance in an operating environment dominated by the COVID-19 pandemic. Without brief introduction, I will hand these quarterly calls over to Joe but we'll remain on today to answer any questions directed at me. Beyond that, I will be actively supporting the executive team for the balance of the year. Jason will start us off here today with financials and then Joe will provide his outlook for the future.

Thanks for those comments, Martin. And good morning, everyone. Given a unique call here today, I'll start us on the safety content on Slide 5. As is often stated here in North American, no financial outcome is worth celebrating if our safety, culture, or safety performance has been compromised. Although yet again, we did achieve industry benchmarks for safety excellence for the sixth year in a row, we did see an uptick in incident frequency in 2020. And are refocusing our efforts as a macro environment and operating protocols stabilized. As Joe will touch on later with our 2021 priorities, we will be doing everything in our power to make sure everyone gets home safe. Slide 6 to 11 provided provide a summarized view of 2020 but as of past protocol, these prepared remarks will focus on the quarter to avoid repeating commentary from previous quarters. And as such, we'll begin the financial review on Slide 12. Revenue for the quarter of $137 million was $53 million below last year's Q4 as we continue to recover from the widespread impacts of COVID-19. The majority of the $53 million variants relates to the strong quarter we had in 2019 at the four hills mine prior to their decision to temporarily reduce the operators capacity at that mine.

Thanks, Jason. On Slide 18, you'll find our operational priorities for 2021. This slide summarizes our 2021 objectives, and I will walk through the objectives at a high level, get in some brief detail on the slides to follow and finish up with our outlook, which has a spoiler alert remains unchanged from what was presented back in October. Our number one priority is always is the health and safety of our workforce. We continue to maintain rigor in our COVID protocols and have made these a part of our standard Safe Work procedures, including social distancing, masks, and other personal protective equipment. Likewise, we're always looking to target zero harm in all areas of the business. And as outlined in our recently released sustainability report, we'll prioritize the progress and achievements of our ESG goals. Our equipment utilization priority links closely to our diversification objective, as we seek gains and utilization of the smaller end of the fleet, which is unpermitted, and underutilized in oil sands. The diversification objective is reflected in item four, where we expect to continue the momentum of synergies of our new group of companies, as evidenced by the recent contract win at the Ontario goldmine. With this diversification focus, we expect to continue to meet our oil sands customer needs with high utilization of our large fleet while at the same time, improving utilization of smaller fleet outside of oil sands and reduce the consolidation risk by having more customers and more commodity markets and geographic regions. We will also continue to pursue diversification in low capital intensity growth areas, such as the US mine management contracts, and major earthworks infrastructure projects. These contracts generally have fleets provided, and as such don't affect our utilization calculations. But they do offer low to no capital entry and diversification into other commodities and regions. The operational priority items three and five, relate to our continued push to vertically integrate equipment maintenance and expand on our external maintenance services.

Thank you. Our first question comes from the line of Aaron McNeil with TD securities. Please go ahead, your line is open.

Hey. Good morning, everybody. Joe, it looks like you've introduced the 2021 revenue diversification goal and bumped your goal in 2022. So, I guess I'm wondering, can you hit these targets with what you have in hand? Or do these targets imply new contract awards ? I ask the question because it looks like your bid pipeline only starts to contemplate diversified projects in 2022 and beyond -- that would be Slide 22 -- and your newly introduced 2021 figure is higher than your old 2022 figure, if that makes sense. So, I'm just trying to get a sense of what might have changed over the last quarter, given that the overall 2021 guidance is essentially the same.

All right. What you see for 2021 is what we have in our forecasting right now. So, there's no anticipation in that 45 of being awarded anything new or quickly. And the increase to 50% in 2022 is based on our expectation of winning some of those external or other area awards that we have highlighted on that bidding pipeline page.

Okay. Maybe you can also walk us through how these diversified projects in the bid pipeline will ultimately be fulfilled? You mentioned the new joint bid in your prepared remarks just a minute ago, but I guess we've got a couple of questions. First, will the majority of these projects flow through Nuna? Or through a Nuna-North American joint venture? And then if that's the case, do the project sizes contemplated on the slide, are they total revenues for the project or just North American share? And then second, my understanding is that you've essentially fully committed on your current own fleet. So how do you plan to finance, or bid, or operate these new projects?

I'll try. There was a lot of questions in there. I'll try and follow on and so. As far as the bullets on the bid pipeline -- just catch me if I missed any of them -- so those are representative of our share, or our share of Nuna. I'd say roughly a third of them are what Nuna looks at individually. There's only one or two of those that have us looking at together with Nuna and the rest of them are by ourselves or with other partners. So, we do have other partners and especially in the larger infrastructure work in that and then as far as how we fulfill these, most of the infrastructure and mine management work has their own fleets as I mentioned before. In general, the commodity areas we look at, be it iron, ore, gold, diamonds coal -- in other in other regions are predominantly are smaller fleet, which kind of 150 ton trucks and smaller. And those have been underutilized. We have in roughly 160 of those size trucks alone and they've been significantly underutilized in oil sands over the last several years. So, there likely would be some add-ons here and there, but we don't expect a significant amount of capital to pursue any of these at this point. The bid pipeline, they don't all even go forward to these jobs. They get deferred, the major infrastructure job we're bidding, we actually started four years ago and it's pushed back twice. So, they have different levels of success in going forward. They may run into permitting hurdles. But one of the things that I spoke to in the presentation that I was excited about is that the satellite mining and resources in other resource areas, when you have an existing mine site where permitting is already in place, and they want to do an expansion, or you have an underground mine, that has a surface deposit that they contract mine, those have great success going forward. Because they really have very low barriers. The land disturbance is usually in place. We're confident that the normal amount will flow forward through out of this, but also, there'll be a little extra because of those types of bids that have satellite deposits in that. Did I cover them all up Aaron? Or did I miss any?

No, that's great. That's perfect. So that's all for me. Martin, as you know, I used to cover this company before you took the helm and the way you've transformed this company is nothing short of incredible. So, wishing you all the best in the future, and Joe, congrats again on the new gig. So that's all for me. I'll turn it over. Thanks.

Thanks, man.

Our next question comes from the line of Tim Monachello with ATB Capital Markets. Please, go ahead. Your line is open.

Hey, good morning, everyone. Maybe I'll follow up on Aaron's question, first. I'm just curious on the satellite mine opportunities. What percentage of the bid book would be those types of opportunities and would also be the lower capital intensity mine operating contracts?

I'd say we're somewhere in -- there's probably 400 million or 500 million of that we have that we're looking at right now that our satellite mines have existing operations. And they're more of the nearer term projects.

Okay, that's great. And then in past quarters, I guess through the downturn, it seemed like there was a number of projects in the oil sands that had been deferred out of 2020 and into 2021. Obviously, commodity prices are a lot more constructive today than they were for most of the year. So, are you starting to see those opportunities return?

We haven't seen a lot right now, Tim, But that's not unusual. We usually don't see summer construction tenders until late February, even up to end of April. Because there's usually May, June starts. So, depending on the scope and that often we don't hear about much until that kind of timeframe, end of Q1 beginning of Q2.

Okay, I guess the upper end of your guidance for 2021, would that contemplate that work returning this year?

Not to any significant increase of what we've seen in the past. It's pretty much based on normalized 2019.

Okay, got it. And then just last one for me. You guys talked a little bit about that at the Acheson expansion this year. Is that contemplated within the $5 million to $10 million growth CapEx?

Yes, that's right in the middle of that, I'd say.

Okay. If you guys win some of these other awards, do you think there's upside to that CapEx guidance for the year?

Yes, certainly. Some of these major bids that required, they might have some support equipment or maybe a unique piece of equipment that's associated with it. So yes, there could be, but it would also be associated with an increase in revenue.

Right. Okay. Great. That's fantastic color. I appreciate it. I'll turn it back.

Our next question comes from the line of Bryan Fast with Raymond James. Please, go ahead. Your line is open.

Thanks. Good morning, everybody. Just on the component rebuild facility. The chart in the presentation, I guess really illustrates well the value adds that you're achieving with that initiative. Are you now operating at full capacity at the facility? And are the savings in average component costs exceeding your expectations?

We are operating at our full capacity. What we expect to do, we've ramped up from when we started in February last year. We have more capacity if we wanted to put through it, but we'd have to get more external requests if we wanted to push more through. And as far as what it's saving us and what it's doing, I think it has met or exceeded those expectations.

Okay, good. Thanks, Joe. And then I guess now that we hopefully have the worst of the pandemic behind us, are you starting to see those M&A channels open up? Or is that something that's on the radar right now?

We're seeing some interesting activity. Obviously, it's very hard to do anything when it deals with hard assets like ours and traveling to see things or putting your hands on them is pretty important. I think we've seen some smaller stuff and we keep our eyes open. We're always looking for something that's accretive and interesting and fits kind of our diversification strategy.

Okay, thanks. That's it for me and Congrats, Martin, on the retirement and Joe with the new equipment.

Thanks, Bryan.

Our next question comes from the line of Maxim Sytchev with National Bank Financial. Please go ahead, your line is open.

Hi, good morning.

Good morning, Max.

I was wondering, going back to the shop expansion, is it possible to talk a little bit about how you think about payback terms on these investments in terms of like percentages, like ROIC or time horizons? Maybe any color on that front?

The compelling economics I was talking about, Max -- and this is very similar to what we saw in the remanufacturing facility when we built it -- the paybacks are like three years. So, it's pretty fast and I think because of the -- we've had great success and filling our shop and getting skilled maintenance labor here to increase the hours and the throughput here. So, we have high competence will achieve that three-year kind of payback in this expansion.

Yes, absolutely. Okay. That's helpful. And then, do you mind maybe just commenting around the ramp up on the gold project? How that's going? That you have conversations with the client in the early issues in your learnings ? Any color on that, please.

As far as the Ontario goldmine? Is that what you're talking about, Max?

Yes, exactly. Yes.

I think typical of most ramp ups we've seen, especially given the parameters with COVID and that, there's always a little disruption of upfront -- getting camp, set up, getting lay down areas. There's always a bit of a scheduling but nothing unusual. It wasn't high activity levels upfront, so the real high activity levels start up in kind of the April-May timeframe. So, we still fully expect to be hitting those project milestones at the same time as we had originally.

Okay, that's helpful. And do you mind maybe just commenting a little bit around how we should be thinking about this winter work program versus maybe last year? Are the clients back to sort of almost the same level of production activity levels? Or are we 10% to 15% below? Maybe just any granular directional color you might provide on that?

I'd say our level of activity is probably almost the same or maybe slightly lower, but not much. I'd say it's very similar to what we saw last year. I think the overall marketplace, the small truck side is about the same. The big truck marketplace is less, but we have more of it.

Okay. So, is it the way that we should be thinking about this as greater market share? Is that how you see this?

I think there's probably a little less overall being done, especially on the big dirt side and the overburden, but we're doing more of that. So, our numbers are very slimmer, slightly below I'd say.

Great. And obviously, given the fact that the underlying commodity rebounded pretty aggressively, are you seeing any body language changes from the customer perspective? Desire to outsource to a greater extent? Or maybe not just -- again, maybe anything from that perspective?

I haven't had a lot of tangible feedback from the clients. I think we'll probably hear and see more of that as we go into the summer because that's usually when you see capital project work. It's starting up in the summer. So, like I said before, I think we'll have more insight into that, Max, in the next few weeks, couple months. Overall, I'd say there's a long-term drive. I think overburden volumes will continue to increase. Obviously, the one mine that had closed down is reopening, is producing. So, we think that's going to start to create some demand in the future. And overall, I think that the barrels slowing are higher. It's typically more barrels you're going to produce, the more material you get to move.

Right. Okay, that's very helpful. And then just last question, in terms of M&A, and maybe that's the question to Joe and Martin. In terms of the type of potentially assets that you're looking at, obviously, NOI has performed extremely well and in a resilient fashion throughout the crisis. The type of situations you're looking at right now, is there a bit more of sort of a distress component attached to it? Or how should we think about what's potentially on the horizon, if anything from an acquisition perspective?

I'll let Martin comment for himself. In my point of view, Max, is we're looking for similar businesses that fit our skillset. We're not indifferent in diverse areas for commodity and geography. So, I think anything that fits that that's accretive is something we would look at. We're going to be capital-conscious, too. But those be the areas that we'd look at? I don't think there's a huge amount of distress out there that I've seen anyways. I don't know if you have anything you'd add, Martin.

Yes. I'll just say that the strong demand for every single natural resource right now, that takes away distressed assets pretty much because only assets are needed for projects. So, I think our M&A will be focused upon geographic diversification maybe, I could say that, but that's all I'll add at this point.

Okay, that's very helpful. Thank you very much, gentlemen. And again, Martin, amazing job and Joe, congrats.

Thanks, man.

Thanks for the kind words from everybody. I appreciate it.

Our next question comes from the line of Richard Dearnley with Longport Partners. Please go ahead, your line is open.

Good morning. On Slide 19, the question is with Nuna, how does Nuna change the fourth quarter utilization perspective? It would seem like you don't get the same kind of highs. You get higher second and third quarter utilization, but lower fourth quarter.

This is all just our own fleet, Richard. So, this doesn't have Nuna's fleet utilization. But you are correct; you are correct, they're typically countercyclical to us. So, if we had their fleet in here, you would probably see more highs in Q2s and Q3 for them.

And we'll still be looking at Nuna into this, Richard.

Right. And their fleet is the 270 that you mentioned?

That's right.

Right. Okay. And then I'm curious on the solar-only part of the Acheson expansion, how much does the solar of that size cost these days?

We're doing a full rooftop on the shop side of the facility. I think it's roughly in there at about $0.5 million. The economics of it are pretty good and I guess it's fairly breakeven or slightly favorable at today's rates. But if you expect future power rates increase, which I think is a pretty safe bet, that it will actually be a positive for us going forward. Along with obviously the reduction in emissions by producing your own solar power.

Sure. Are you going to own that or are you going to lease that?

We'll own it. We did the same thing on our Dreamland facility last year, Richard, and it's performed very well.

I see. Thank you. Okay, thank you. And Martin, sorry, I'm going to miss your colorful commentary on stock price and other things. But thank you for the past.

Well, I'll miss your great questions, too, Richard. So, all of us do, too. Thanks.

This concludes the Q&A section of the call and I will pass the call over to Joe Lambert, President and CEO closing remarks.

Thanks, Candy. My thanks to all of you for joining us today and for your continued interest in our growth and diversification journey. I'm very excited about our opportunities to advance our business in 2021 and what we all hope is a much healthier and more stable environment.

Thank you. This concludes the North American Construction Group's Q4 2020 conference call.