Good morning, ladies and gentlemen. And welcome to the North American Construction Group Earnings Call for the Third Quarter Ended in September 30, 2022. [Operator Instructions] 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. 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 like to turn the conference over to Joe Lambert, President and CEO. Please go ahead.

Thanks, Sergio [ph]. Good morning, everyone. And thanks for joining our call today. I'm going to start with our Q3 2022 operational performance before handing it over to Jason for the financial overview. And then I will conclude with the operational priorities, bid pipeline outlook for 2022 and our first look at 2023 before taking your questions. On Slide 3, our Q3 trailing 12-month total recordable rate of 0.67 is the same as it was after Q2, but remains above our industry leading target frequency of 0.5. And we will be focusing our efforts on further advancing our green hand new hire training programs, prevention of high potential injury events and our wet winter hazard awareness programs as we enter our busy winter season and continue to add to our workforce. On Slide 4, we highlight some of the major achievements of Q3. Most of these topics are discussed and other slides later in the deck. So I would simply summarize that we resolved our Q2 issues executed well and are now focused on our winter work program a safe and efficient closeout of the year. Moving on to Slide 5, we've added a new slide showing how we have moved away from vendor supported maintenance and continue to develop, attract and retain our skilled maintenance trades people to improve fleet utilization. NACG has an extensive and comprehensive program to expand both our action and field based maintenance workforce. We had some slight setbacks in our programs earlier in the year, as we tried to resist unusual and high skilled trades, wage increases, but we're back on track and expect to continue the hiring trend. As this slide clearly shows, we know how to grow our maintenance workforce. And we have been doing this for a long time. We have…

Thanks, Joe. This quarter’s financial review begins on slide 10 with a few of our key performance indicators. Combined revenue of $270 million represented the highest level of revenue this company has ever had in a quarter, and as a noticeable increase from last the last three quarters revenue which were each around $235 million. This revenue has culminated with trailing 12 combined revenue now exceeding $950 million and is closing in on a target we set of exceeding $1 billion. From a gross margin perspective, we realized 14.7% based on the improved context that Joe touched on, and as much discussed throughout this quarters materials. Getting started with Slide 11 on a total combined basis, revenue was 30% ahead of Q3 2021, which is a recurring variance percentage throughout our financial metrics. Revenue generated by our core heavy equipment fleet was up 18% quarter-over-quarter, with the driver of this increase being equitable contributions from higher equipment and unit rates, as well as improved equipment utilization. Equipment and unit rates were updated in the quarter to reflect the specific inflationary cost pressures being experienced in the Fort McMurray region. Equipment operating hours and the associated operational headcount were both up 10% in the quarter, and yield and utilization of 62% which was significantly higher than Q3 2021 utilization of 52%. The month of September it was particularly strong and provides good momentum heading into the fourth quarter. Vacancy rates related to the Heavy Equipment Technician roles have lowered with net new hires of approximately 50 in the past three months, which was the primary factor in the overall equipment utilization achieved. The other wholly owned business lines primarily being DGI Trading, and the external sale of rebuilt haul trucks, each posted strong revenue in the quarter consistent with Q3 2021.…

Thanks, Jason. Looking at Slide 16, this slide summarizes our priorities for 2023. I have previously discussed our commitments to increase our skilled trades shown in item four, but wanted to highlight the other three areas that will be particularly important to progress in 2023. The first area of focus on core to our culture and values is our on-going efforts to ensure each and every one of our employees returns home safely at the end of every workday. Although we have an extensive health and safety management system, and multiple initiatives for improvements, far too extensive doing the depth here today, we feel our growing workforce requiring increased new hires and an industry supply lower inexperience will be best served with an increased focus on further developing our frontline supervision, expanding our green hand training programs. The second area prioritizes continued expansion of our operational and maintenance expertise. We will prioritize new technologies such as our telematics system, which is now installed on half of the fleet with the remaining fleet installed scheduled for 2023. And continuing the in-house and vertically integrate our maintenance services and supply, such as a previously mentioned ML Northern acquisition and our component remanufacturing business with the newly expanded facility and added large hydraulic cylinder rebuild capabilities. We believe this prioritization and focus will continue to lower costs and improve equipment availability and utilization. Last but not least, item three describes our prioritizing of winning bids and achieving our target of greater than 2 billion in backlog by end of next year, which is a great transition to our next slide 17. Slide 17 highlights the net increase around 600 million to our already strong bid pipeline. In Q3 we also received RFPs bid and were awarded several winter projects in oil sands, totaling…

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

Hey, morning, guys. I know, Joe, you just said you'd speak to it on the next call, but now at a high level in terms of where your head's at, on capital allocation next year, I mean, you've already blown through the NCIB pretty quickly, leverage ratios are pretty good. You're guiding to a good chunk of free cash flow next year. So I guess I'm wondering, what, what are going to be the priorities? Like, have you considered a dividend increase to make the yield a bit more competitive in the context of rising interest rates, special dividends, more acquisitions, organic growth? That reduction SIB's like I know, it's a broad question, but I guess I'm trying to just gauge where, where your head's at?

Yeah, I appreciate the question, Aaron. I agree that our dividends are probably less meaningful in this high interest rate environment, and what we think should be an increasing share price environment. And we'll certainly be reviewing that. We have two board meetings between now and our next call, actually. When it comes to M&A or growth, we're always just looking at what that accretion of return is, versus other opportunities, our share price relative to our value assessment is going to drive whether we look at NCIB's or SIB's or, or otherwise. And, and then looking at those dividends as far as whether we think it's meaningful and what we need to do to adjust them itself. So I don't have a direct answer. I tell you that when we have these discussions with our board, we try and be very tangible about how we measure it, and not be emotional and compare what opportunities are there at the time, or that we see coming, be an M&A growth, or looking at dividend or other shareholder friendly activities. So I know it's not a direct answer to you but that's probably the best that I can do right now. And this, this quarter is a big one for us. Because this is, this is where we get our cash flow. So getting all that cash flow in and then figuring out what to do with it. That's, that's our focus over the next couple of months here.

Fair enough, as about a good as answer as I was expecting. So maybe I'll ask something a bit more tangible. As it relates to the on-going inflationary pressures and your increased equipment and unit rates? It's obviously great to see that you were able to resolve those issues with your customers in an equitable way. But I guess I'm wondering, where's your head at in terms of inflationary pressures today? Like, are they still there? And what levers do you have now with those amendments to prevent future margin contraction that we saw earlier this year?

I think the inflationary pressures we're seeing now and what we would expect to see over the next six months or a year, I think will be captured in our escalation clauses in our normal indices. And if we see something unusual, like we saw in wage escalations in Fort McMurray, we now have a precedent and a template to address it be it escalation or de-escalation. So I think we're in a very good spot. I think, just having clear, open honest communications with clients where no one's trying to hide things or trying to benefit off of something, then I'd feel very comfortable going forward, regardless of whether, future inflation is covered under indices or not. So I think we're in a great spot for that.

Fair enough. Maybe I'll sneak one more in. I know, you covered the Fargo-Moorhead margin expectations in your prepared remarks. But like do you think we'll start to see or will it be a material enough that you'll be able to prove out your expectation in Q4? Or do you think we have to wait for Q1 or Q2 to really see kind of the full run rate impact and that project is kind of backing as you expected?

Yes, typical for us would be, we have to be kind of in that 10% to 20%, complete range before we even start looking at re-analyzing or going into real depth of re forecasting. Just because, you don't have right right now we're less than 5%. And I don't even I don't even think we get much beyond that before the end of the year. So I, I doubt we'll see any updates until likely this time next year.

Okay. No, that's fair. Great. Well, I will turn it over. Thanks for taking the questions.

Thanks, Aaron.

Thank you. Your next question comes from Yuri Lynk from Canaccord Genuity. Please go ahead.

Good morning, guys.

Good morning, Yuri.

Joe, did the updated rates impact the full quarter or just the tail end?

It's the full quarter. Without getting into details of it, it's -- there is going back to when we submitted things, we had adjustments, but we had accrued some of that. So, it affected the whole quarter regardless of how they met in the workshop, technically.

Okay. And just on the bid pipeline, can you provide any more detail on the large blue dot that is going to be awarded sometime this this winter? And just in terms of is that? Is it another mine? Or is it on the construction infrastructure side?

It’s a North American Goldmine contract.

Okay. And last one, just for Jason, I did have some trouble getting to 2023 EPS from the midpoint of EBITDA, can you just share with me what your interest expense assumption is, for next year? And also, if you're going to be paying cash taxes next year?

Yes, so we're right around 6% of cost of capital assumption for next year all in. So that should be, with our debt coming down in this quarter, and then similarly, the next year that Q4 would be the quarter to pay down debt, and no cash taxes next year yet. We're projecting 2024 for cash taxes at this point, and continue to manage that. But free cash flow is not impacted by any cash taxes next year.

The 6%, you're saying that's going to be your effective?

Yes, effective rate overall of our debt. Yes, that's right, which includes the convertible debentures and Capital Leasing and the credit facility.

Okay, maybe I'll follow up with you offline. Seems a bit low. Yes, otherwise, good quarter, and I'll get back in the queue. Thanks.

Thanks, Yuri.

Thanks Yuri.

Thank you. Your next question comes from Tim Monachello from ATB Capital Markets. Please go ahead.

Hey, hey, good morning guys.

Good morning, Tim.

The implied guidance for 2022 implies a pretty wide range for Q4. I'm just wondering what you could, if you could describe the levers that could get you to the upper end, what gets to the bottom end of that range?

Mostly it's weather and operational. It's, the sooner it freezes, the better way off, usually. So typically, by the end of the first week or so, November, you start freezing day and night. So the weather plays a lot to do with it, because our dance card is full, it's just a matter of whether we get started earlier, or run later kind of thing. So it's no different than kind of spring break up. The earliest that actually freezes and stays frozen, and we don't have freestyle events, the better off we are. So that's really what drives a lot of it more than anything else, Tim.

Okay. And I guess same question for 2023 the guidance there.

As far as what's what's driving the – I think…

Like what do I take it to the top end or to take it the bottom end?

A lot of it is our equipment utilization and mechanical availability, if we're looking at. And the opportunity side of it, we also have fleet coming out of our Ontario coal mine joint venture with Nuna. We just assumed a pretty modest amount of hours on that fleet and remobilization There's some upside in that, especially with one of those big blue dots would fit that really well. So the upper end of the range, everything is driven by utilization. The upper end of the range is winning more work that has better utilization on the smaller fleet and getting better mechanical availability out of our fleet.

Okay, so the upper end of the range would include winning some of these bigger projects on slide 17? Is that correct?

No, it’s kind of a more of a, that those assets return to lower utilization of oil sands use if we get one of the bigger blue dots, and we'd actually improve on that.

Okay, got it. Sorry, go ahead.

It's more driven by the fleet utilization and mechanical availability, that we see extremely strong demand. So it's keeping the equipment running to feed that demand.

Okay. It's a good segway into my next question, which is just around slide 17, you got a big blue dot active tender phase, which looks like it could commence before year end. And that I don't think that showed up in the last presentation from the previous quarter. Can you talk a little bit about I guess, your near term opportunities that we might be well positioned for?

Actually that blue dot is the gold mine I’m speaking of in that, that has a spring of 2023 Start? What we're anticipating in that I'm pretty sure this chart shows when we expect the award not necessarily running the start date of the project is. We should probably look at how we represent that because it's difficult to do both. And this has actually been rescoped and retendered a couple of times. So we think this is the final one. And we expect to know in the next few months, with a kind of April May kind of start in 2023.

Okay, got it. Good quarter guys. I’ll turn it back.

Thanks.

Thank you. Your next question comes from Maxim Sytchev from National Bank Financial. Please go ahead.

Hi, good morning, gentlemen.

Good morning, Max.

I had a quick question in terms of the unit rates. And I know you've addressed that it's sort of impacted the full quarter, but there was no catch up dynamic, I guess. Right, like so the margin that we're seeing, it's not like you didn't benefit from the previous two quarters, sort of low rates that materialize in Q3. Is that an accurate way to think about it or?

Yes, yes, there was no recognition in Q3 beyond what we did in Q3.

Okay, okay. Okay. Perfect. Thanks for clarifying. And then the other question I had just around, I suppose the needs for the guidance sort of soaps are early. And for 2023 I mean, and I guess, in terms of the level of confidence in having these numbers out so early, do you mind maybe just providing a bit of sort of the rationale in terms of how you and the board approached the budgeting process for 2023?

Yes, actually, we we've done this at this time, for the last few years, Max. So I don't think it's unusual for us to provider, our initial outlook, we are we do actually, this is our budgeting season, our next board meeting will be to review that budget, and these numbers reflect that work that we've done. So this is really just part of our normally scheduled reviews that we do. And once we get our kind of 2023 budget in the range, we believe it's accurate, we put it out with our Q3 results. So these, these are what we expect to be in our budget documents that we bring our board here in about three weeks.

Right? No, I guess I mean, it is a, perhaps a bit more of a fluid environment, maybe relative to what we would have seen in the past. But yes, just was curious to see what was the thought process there?

Yes, we have a lot more kind of, in the books kind of work than we used to have years ago. So I think the fact that we can see that backlog and we know this work very well gives us a lot more comfort in doing this. I'd say really the only kind of estimating or we're doing here was in that fleet coming out of Ontario and whether we get a nice big blue.to roll directly into or not. And, generally we're fairly conservative on those assumptions.

That's -- that's helpful. And then, last quick question, just in terms of the labor costs, I mean, should we assume that we're seeing some moderation in terms of wages as you ramp up hiring. I don't know, if you can quantify or maybe directionally speaking, like, if we're probably up versus last year, still kind of on a rolling basis, but probably kind of down versus the peak, maybe just in any directionality there? Thanks.

Yes, we really haven't seen any unusual wage increases outside of what we saw for maintenance personnel in Fort McMurray. I think we're still in those typical, 2% to kind of 4% years, maybe inflation will push a push us to the higher end of that. Our operator wages and our normal wages are really never an issue in our, because our escalation clauses tied directly to our union contracts, where we had issues where and maintenance wages, because they're actually covered off and equipment costs, not in your normal operating wages. So and we believe that's pretty much, come to a head and we got a pretty good idea where that's going. So, I don't think we see anything unusual. As far as wage escalations going forward, more just looking at availability of people and focusing on the fact that in our training side, and the fact that we're probably going to have more, more less experienced people than we've had in the past, so that we need to really focus on our training and development of that frontline supervision and those new hires.

Okay, excellent. Thank you so much. That's it for me.

Thanks, Max.

Thank you. [Operator Instructions] Your next question comes from Bryan Fast from Raymond James. Please go ahead.

Yeah, thanks. Good morning, guys.

Good morning, Bryan.

Just what were some of the key drivers in attracting talent in the quarter? I mean, that's a pretty large step up? And maybe are those technicians coming from outside of the region? Or is it just a matter of shifting from some of your competitors?

We're getting quite a bit of outside where we, we've got a pretty innovative process, especially when it comes to maintenance personnel. We've attracted a premises at all levels from entry level, to guys that were like vehicle or medium duty kind of mechanics, and getting them back to get their heavy duty certifications. And so, I'm extremely pleased and proud of our HR efforts in bringing in mechanics and bringing in apprentices bringing in what we call direct service providers, which are kind of individual contractors that we hire into the business, it's a mechanic and a truck. We, even our vendors, we've added a significant amount to our vendors, we’re historically our, our OEM dealers haven't been able to, to adjust much. We've brought in 30 odd people from outside vendors, talking about my shareholder letter, from as far away as Australia. So both building our own, attracting others, looking in new new places, we’ll continue doing all that, and I believe we'll be successful. Really, what held us back was we didn't, we didn't feel a need to wait, raise wages back in the earlier part of the year, because we know it doesn't increase people by just ways of raising wages. And but unfortunately, at some point, you start losing people to those higher wages, and you need to adjust. So our adjustment was, we adjust our wages to where the market was at the time. We couldn't resist that any longer. And we don't try and pay over market, we pay market rates and we try and attract based on the quality of our programs and what we can do for our employees.

Thanks. That’s good color. And I just wanted to get some more color on the rebuild program. Have you now completed the order for MNALP? And maybe could you talk about the level of interests you're seeing from maybe some of your clients on rebuilds and remanufacturing?

I, we've completed today, I think we have one more truck that we're doing for MNALP our joint venture. We continue to look at their great opportunities for us when we can find these core machines and rebuild them for 40% less than the new ones are. They're great value coming out. They'd be great value if we could market them externally. I think our kind of limiting factor on this is we want to make sure we do our own maintenance first. There is high value to us in that utilization when our demand is high. So, it's a real balance to make sure we get all of our own gear running before we start fixing or building somebody else's.

Okay, thanks. Appreciate it. That's it for me.

Thanks, Bryan.

Thanks Bryan.

It looks like there are no further questions. I would like to turn the conference over to you again Mr. Joe Lambert, President and CEO for closing remarks.

Thanks, Sergio [ph]. And thanks, everyone for joining us today. Really appreciate your time. Look forward to talking to you next time.

Thank you. This concludes the North American Construction Group Q3 2022 Conference Call.