North American Construction Group Ltd. Stock

Good morning, ladies and gentlemen. Welcome to the North American Construction Group Conference Call regarding the second quarter ended June 30, 2026. [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 turn the conference call over to Jason Veenstra, CFO.

Thanks, Jenny, and good morning, everyone. I'll 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'll conclude as per usual with Q&A. Starting on Slide 4. We delivered $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 $86 million from last year, with IMC contributing $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 $456 million of total combined revenue finished off a strong first half foundation of over $875 million, supporting our 2026 combined revenue midpoint of $1.7 billion.

Moving to Slide 5. 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 reflected disciplined project execution, improved internal maintenance capability, lower repair costs and the implementation of continued fleet efficiency initiatives, and importantly, are trending in the right direction heading into the second half of 2026.

Moving to Slide 6. 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 $15 million, or 3.8% of reported revenue, well below our 5% targeted threshold, demonstrating operating leverage on stronger revenue. 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 $0.32 was generated by solid operational performance. Interest expense increased to $18.9 million from $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%. Moving to Slide 7. The business produced $78 million of operating cash flow before working capital, generated by EBITDA performance, net of cash interest. Free cash flow generation was $23 million after a $13 million positive working capital change in the quarter. Moving to Slide 8. Net debt increased $191 million to $1.1 billion, reflecting the acquisition of IMC and growth capital equipment purchased during the quarter.

Trailing 12 net debt leverage is reported at 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 $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.

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 earnings visibility and more resilient operating profile. 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 3 strategic building blocks supporting our growth. First, scaling toward a national Tier 1 contractor platform in Australia; secondly, securing infrastructure awards across North America; and third, expanding mining services in Canada and the United States. These are distinct markets, but the underlying model is consistent. We established 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, and 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. 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 eight-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 30, our Australian operations had approximately $3.4 billion of contractual backlog and a further $3.9 billion bid pipeline, supported by approximately $278 billion of public infrastructure spending and a $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 to 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. The Yukon infrastructure award and 3 initial projects in Ontario established footholds from which we can pursue larger follow-on scopes. Our ability to safely deliver on time, on budget with 0 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. With approximately $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. 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 a 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 and the opportunity set. Our total bid pipeline exceeds $12 billion with approximately $3.6 billion currently in active tender and procurement. The active pipeline is balanced geographically with approximately $1.8 billion in Australia and $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 $3.8 billion as of June 30 underpins our full year expectations. 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 $1.6 billion to $1.8 billion. The new midpoint of $1.7 billion is $100 million above our prior midpoint and approximately 14% above our full year 2025 results. We are growing. We continue to expect adjusted EBITDA of $380 million to $420 million and free cash flow of $110 million to $130 million. At the midpoint, that represents $400 million of adjusted EBITDA and $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. 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'm 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 Instructions] Your first question is from Joseph Reagor from ROTH Capital Partners.

Congrats on a strong quarter. So on the increased revenue guide, is this -- like 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?

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. So yes, it's a cost conclusion there.

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

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

Your next question is from Adam Thalhimer from Thompson, Davis.

Congrats on a nice quarter. 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?

Yes, it's great. And I mean, that was a great win for us. I mean that business has been up till now solely servicing our own gear with odds and ends with different other contractors, truck here or there. And we've been looking to win something like that for a while. So that's very -- it was very exciting to win that. And 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 4, 5 years ago. And we're in a very good position to certainly take advantage of some of that. And we look forward to winning 1, 2 or maybe even 3 more of these as they come online.

And that was -- so that's not included in the Q2 backlog, correct?

Actually, it is, Adam. It is part of $3.8...

Okay. Well, still $5 million of spend for $135 million backlog is a pretty good trade.

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

And then 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?

Yes. I mean the IMC integration is going really well. I mean the beauty about IMC is they're so like-minded of how we do business here in Canada. They're very good operators. I mean, 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, very, 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.

And your next question is from Tim Monachello from ATB Cormark Capital Markets.

I'm just wondering if you can dig in a little bit more on the equipment optimization strategy in the oil sands. So you've identified 260 fleet assets. What are you doing with the remainder? And can you talk about some capital investments within that fleet? What type of investments need to be made there? And, I guess, how do you expect that in terms of CapEx in '26 and '27 coming through?

Yes. So on the fleet we've identified, and just to clarify, that's on multi-life assets. So that's the large assets. So 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 that 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 they're the smaller nature and actually put those things to work.

And if somebody come along and we didn't have a use for some of these units and they offer the right price, obviously, we'd look at taking advantage of that. And I mean, there is 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 and -- 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 $50 million range for 2026 to get us where we need to be.

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

Yes. I mean it's just -- I mean, 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 change-outs. And these aren't small dollar items. I mean it's -- 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 tiptop shape so that when we win work, we go in there and we execute as planned and we satisfy the clients' needs and meet our margin targets.

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

Yes, absolutely. I mean there's a lot of excitement in the oil sands. I mean there's -- we're getting more offers every day of can you do this, can you do that? There's this scope. And so we're pricing stuff every day out there right now, and it's an exciting time in the oil sands. I mean, look, I've been in the oil sands since the mid-80s, and this is one of these times where over the last couple of years, it's been kind of a bit of a lull and where there's in-sourcing and stuff, but it's full steam ahead, and there's capital projects going on in the sites and there's volume to be moved. And 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. So yes, I mean, we're extremely excited about the oil sands right now.

Okay. Fantastic. And then last one, just in Australia, I understand that it's pretty large and diverse market, but we did see a decline, a fairly meaningful decline in your stated bid pipeline quarter-over-quarter. So maybe you can talk a little bit about what's going on there?

Yes. So I mean, there was one large project on there that we missed on. And the funny thing is we still have opportunity on that. So it was -- we were shortlisted. It was between us and the incumbent. And I think the -- 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 we can see the possibility of putting a fleet or 2 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 couple of years ago or a year ago. So yes, we see great opportunity still there. And maybe it's a blessing in a way because it's not that -- that was a large amount of capital investment to get to win that work. So this will be less capital and yet still have 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. So we'll see where that goes.

Your next question is from Roman Pshenychnyi from National Bank of Canada.

Congrats on the very good quarter. I just had a quick question on the pro forma FCF profile. So you've rightsized 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?

Sorry, Roman, can you repeat that?

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

Yes. I think given IMC is 15% of our business, the conversion target of 30% remains. That's still where we think when our business is at a run rate that we can operate at. We've been there before, and we expect to be there this year when working capital is neutral. And so we don't think IMC will have a meaningful impact on that ratio target -- conversion target.

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

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

[Operator Instructions] And your next question is from Sean Jack from Raymond James.

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

No, I would say -- I don't know if it's more popular. I mean 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 hauls on place. It's more detailed type work. So that is pretty typical with that type of work anyway. I mean you'll see it also in some of the remediation on mine sites and stuff. But I would say it will kind of stay pretty much the status quo as it's been.

Okay. Perfect. Good to know. Next question for me would just be -- so obviously, nation building projects, et cetera, et cetera, like 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 like any other sort of commentary on levels of excitement, level of demand that's, kind of, swelling in Canada or in the United States? Anything beyond stuff that's already captured in your bid pipeline?

I don't know. I mean that's -- I mean 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 has -- I mean, just because of where they're positioned, how they're positioned, they've picked up some small wins over the last 3 to 6 months, and this puts us and them in very good light of follow-on projects that will be the bigger projects. And I mean this is scattered across Nunavut, Northern Quebec, Ontario, Northwest Territories. I mean it's exciting times for them. And it's -- 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.

Your next question is from Chris Thompson from CIBC.

Just a couple of 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?

Yes. 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 primarily IMC related.

Got it. Okay. And then I take 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?

No. I mean, the salaries are one thing, but the third-party rentals, the third-party rentals, that's 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 rental disappear and we get our own fleet actively engaged.

Okay. So is that primarily an Australia-driven increase then?

Yes.

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

Yes. Yes, that definitely -- so IMC acquired on April 7 came with the balance sheet as disclosed. And then growth at that lithium mine came through our growth capital spending.

Okay. Got it. And then just in terms of sustaining capital back late last year, you guys guided to $60 million, $70 million of sustaining in 2026. And H1 is already at $84 million, granted you've had some growth activity in the business. But how should we expect that sustaining number to trend through the balance of the year?

Yes. We're still just a little north of $200 million. As Barry alluded to on that, that oil sands 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's really why we're seeing going from, say, a little bit under $200 million to above $200 million for the year. Australia is exactly on track as we agreed on back in December with those operating teams. So the change is really a reflection in commitment to the oil sands and getting that operation running more efficiently.

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.

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

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 lines.

Good morning, ladies and gentlemen. Welcome to the North American Construction Group conference call regarding the first quarter ended March 31, 2026.

[Operator Instructions]

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 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 turn the conference over to Jason Veenstra, CFO.

Thanks, Joanna, and good morning, everyone. I'll start today's call with brief commentary on the financials, then pass the call to Barry for his operational and forward-looking remarks, and we'll conclude as per usual with Q&A.

Starting on Slide 4. We delivered $99 million of EBITDA in the first quarter, demonstrating sequential improvement in both earnings and margin performance. Australia produced a Q1 regional revenue record, excluding IMC, including an all-time monthly record in March. And IMC contributed $65 million of revenue as expected. Canada also grew sequentially despite the full quarter impact of the 797 divestiture. This $423 million start provides a solid foundation for our reaffirmed 2026 combined revenue midpoint of $1.6 billion.

Moving to Slide 5. The quarter's margin performance is an important indicator of operating execution. Australia delivered a 16.7% gross profit margin and Canada delivered 9.5% despite seasonal conditions in both regions. These results reflect disciplined project execution, improved internal maintenance capability, lower repair costs and the implementation of continued fleet efficiency initiatives.

Moving to Slide 6. Q1 EBITDA and EBIT were in line with the prior year quarter, but improved meaningfully on a sequential basis over Q4 2025, up 27% and 119%, respectively. Direct G&A was $14 million or 4.3% of reported revenue, below our 5% target, demonstrating operating leverage on stronger revenue. Depreciation remained within our expected range at approximately 15% of combined revenue. Adjusted EPS was $0.37. Interest expense, in particular, increased to $19.1 million from $17.8 million last year, reflecting the financing of our strategic expansion in Australia.

Moving to Slide 7. The business generated $63 million of operating cash flow before working capital, supported by EBITDA performance net of cash interest. Free cash flow was $4 million after a $34 million working capital investment in the quarter.

Moving to Slide 8. Net debt increased $18 million to $196 million, reflecting growth capital, share purchases and dividends. Net debt leverage remained consistent at 2.5x, while senior secured debt increased to 1.7x based on the payout of the convertible debentures. While IMC added $125 million of debt on April 7th, its EBITDA contribution and financing structure are expected to keep the presented leverage ratios broadly consistent.

Since commencement of our normal course issuer bid in November, we have returned approximately $30 million to our shareholders through the combination of share repurchases and dividends, demonstrating our commitment to shareholder returns while simultaneously growing our business and expanding our global presence.

With those comments on the financials, I'll pass the call to Barry.

Thanks, Jason, and good morning, everyone. As you're seeing in our Q1 report, our operations team on both sides of the Pacific performed ahead of expectations we had set entering the year. I'm encouraged by this performance, particularly in light of cautious outlook we communicated back in Q4 update as the quarter reflects disciplined execution, improved operating focus and with that, early progress against the priorities we established in 2026 in both our core regions of Australia and Canada. As heavy equipment and civil construction company at our core, consistent disciplined execution is what drives our business. And from my vantage point, that is what our teams delivered in the first quarter.

With that, let's dive into Slide 10. I'll start with some exciting updates regarding our previously announced acquisition of Iron Mine Contracting or IMC for short. We successfully closed on IMC on April 7, 2026, shortly after our Q1 wrapped up. This shifts our focus now on the integration of IMC into our Australian operations to establish a nationwide Tier 1 platform capable of executing large comprehensive scopes in both Eastern and Western Australia. Strategically, IMC is a strong fit. Culture, core values and maintenance capabilities align well with our existing platform in Australia and worldwide.

To remind everybody, IMC brings approximately 120 heavy equipment assets and roughly $840 million of contractual backlog. This also accelerates our objectives to expand lower capital unit rate work across Australia, where in times of geopolitical uncertainty, the Western world is increasingly looking for stable and predictable critical mineral supplies Having overseen our operations in Australia over the past couple of years, I'm incredibly excited about our opportunities on the continent and what that will mean for North American Construction Group overall.

Moving to Slide 11. As outlined in March, I want to share an update on our operational priorities and how we've been tracking since our last earnings call. I've been particularly encouraged by the increase of internal maintenance headcount during the quarter at MacKellar, which is a key driver in reducing the use of external subcontract labor and more efficient operations through improved equipment availability translating to improved utilization.

Moving to Slide 12. With my operational focus in mind, the next slide step back and look at the bigger picture and structural growth drivers we put in place over the past several years that will translate into visible traction in the back half of 2026 and beyond. At a high level, firstly, scaling into a Tier 1 contractor platform in Australia; secondly, securing infrastructure awards across North America; and third, expanding our mining services in Canada and the U.S. Diversified in scope, these are building blocks for an even stronger, more resilient operating profile and a deeper pipeline of opportunities across end markets.

Moving to Slide 13. Australia is our primary growth engine with operations across 18 sites with reasonably consistent conditions that support year-round equipment utilization. Our commodity exposure spans coal, gold, iron ore, lithium, copper and mining-related infrastructure. IMC strengthens our Western Australia position and accelerates our move towards nationwide Tier 1 scale, particularly on rare earth and critical minerals market.

And this is all in the context of a contractor market that is over $19 billion in size and of which our market share remains less than 10%. The support of 2026-'27 Australian federal budget, including major investments in critical minerals, fuel security and streamlined project approvals further reinforces our strong long-term outlook for mining activity and contract mining demand across that country.

Moving to Slide 14. Fargo-Moorhead advanced 5% in the quarter and has now moved beyond the 90% completion, further demonstrating our execution capability in large-scale civil earthworks. That track record supports our pursuit of major infrastructure opportunities and projects across Canada and the U.S. move from announcement towards execution. Our infrastructure bid pipeline is approximately $5 billion, including roughly $1.3 billion tied to the Ring of Fire, Northern Access and Northern Basing opportunities.

Moving to Slide 15. We operate across a broad geography from north of the Arctic Circle to the heart of Texas and being one of the most experienced operators in the Canadian oil sands with one of the largest fleets of haul trucks, shovels and mining equipment in North America in the Canadian oil sands. We have identified our primary heavy equipment fleet and are focused on improving the mechanical availability of those units to best support our clients. And while last year, the main theme was budget constraints, this year the focus is increased production and it is our responsibility to meet that demand in a cost-effective and efficient manner.

Moving to Slide 16. We are reintroducing an overview of our bid pipeline this quarter. Our global pipeline remains strong, and we are well positioned to convert some of these opportunities into meaningful growth. Operating throughout the regions, our global bid pipeline totals approximately $14.5 billion, of which $4.6 billion are in active tender and procurement phase.

While Australia has approximately $3.3 billion in its active pipeline, we continue to see strong opportunities for nation-building projects, defense contracting and critical mineral mining in Canada. I'd like to highlight that these opportunities are based on strong demand for our heavy assets, low obsolescence offering. While other industries may face downward pressure to their business due to the threat of AI, our pipeline opportunities are going nowhere as mining services and infrastructure demand continues to ramp without alternatives.

Turning to our 2026 financial outlook and guidance on Slide 17. Let me start with how I see our execution priorities and strategic growth drivers translate to our financials. We started 2026 with strong visibility supported by our contractual backlog and bidding activities. Currently, our contractual backlog sits at $3.9 billion with $1.5 billion of estimated annual revenue already secured for 2026, which is up $1.2 billion during our last earnings call. Beyond our backlog, our total bid pipeline and bids currently in active tender, both of these again up from last quarter's call.

Taken together, this provides improved visibility into the year ahead and supports our expectation for another year of growth for NACG. At the midpoint, we continue to expect combined revenue of $1.6 billion, adjusted EBITDA of $400 million and free cash flow of $120 million. An important point on the cadence and contour of our adjusted EBITDA. While we were pleased with our strong start of the year, our guidance continues to reflect our original outlook for Q2 performance due to the seasonal extended spring breakup in the oil sands, which historically corresponds to 15% revenue impact between Q1 and Q2.

Our clear focus under my leadership is to deliver to expectations, and I will make certain we remain focused on this objective. We, however, continue to expect meaningful improvements in the second half of 2026 as IMC synergies and opportunities are realized, newly acquired equipment is commissioned and seasonal activity strengthens.

Historically, from 2022 to 2025, second half revenue consistently exceeded the first half, averaging approximately 20% higher contribution. So this profile is consistent with how our business typically builds through the year.

That ends my prepared remarks, and we're happy to take any questions you have.

[Operator Instructions] First question comes from Adam Thalhimer from Thompson Davis.

Congrats on a solid Q1. I wanted to ask about -- I want to start on Slide 16, which as you mentioned, is kind of a new presentation of the bid pipeline. And the Q2 award outlook is strong, but the Q1 '27 is super strong. I was just wondering if you could provide some color on why so many awards are in that Q1 '27 bucket.

Yes, sure. I think what's happening is this stuff is coming out now. It's in the EOI stage. And some of the stuff, it takes quite a while to get it through the procurement stage to where it actually is put out for tender and then go through the stage of awards. So these are large projects, and it just takes that amount of time to get it through the process.

Can you maybe provide some color on geographically how that shakes out?

Yes. I would say, geographically, Adam, primarily, it's North America. That is the early 2027. That's more of the lag with the projects going through a process here early in Q3 through Q4 and then award in early '27. The Australian opportunities are more near term.

Okay. And then last one is on that comment. I was curious if you could update us on the Western Australia demand and for IMC, how their pipeline has evolved since you guys did the acquisition?

Yes. So they're trucking along pretty consistent with what we thought. I think, a couple of really good projects opportunities near term, which we're following very closely. And again, it's a busy, robust market over there, and they're poised in a good position to challenge for some of these bigger jobs now.

The next question comes from Joseph Reagor with ROTH Capital Partners.

Congrats on a strong start to the year. I guess first thing, as we look at your revenue guide, do you guys open to breaking out what part of that is top line revenue versus the combined revenue, including JVs?

Yes, Joe, I would say about $100 million full year is JVs. With how IMC was reported in Q1, it came through in the adjusted combined metric, but IMC moving forward will come through in reported revenue. And the JVs aren't a massive contributor in 2026. So about $100 million of the $1.6 billion is through the JVs.

Okay. And then as you pointed out, about $60 million or so in that Q1 number is really IMC, which moves up to the top line, right?

Correct. In Q2, that will all be reflected. We see about a 10% increase in Q2 from that $65 million, and that will be in reported "normal revenue" moving forward.

Okay. And then as you guys think about margins from IMC, should they be similar to other Australian operations? Or should we expect any movement there as that transitions in Q2?

Our gross profit margin is quite consistent with Eastern Australia in the mid- to high teens. With unit rate work, it can bring more variability, so there can be more upside. EBITDA margin is quite different because it's much less capital intensive. So where Eastern Australia could be north of 30% IMC will be in the kind of low 20s from an EBITDA percentage. So gross margin, very consistent EBITDA lower due to the less capital-intensive nature.

The next question comes from Sean Jack with Raymond James.

You kind of touched on it just earlier. Just a question on IMC. Thinking about how should we expect the year to kind of trend from a seasonality perspective? Are we going to see similar kind of behavior to the rest of Australia? Is there anything to point out?

Yes, it's pretty consistent with the East. The weather patterns are similar. So yes, I wouldn't see it being much different. And like I said, they're busy. They're looking at lots of opportunities. So I just see that being similar to the East.

Okay. Awesome. And then just wondering if you could give a little bit more color on the opportunities that you guys are seeing in the domestic market right now, like from an end market perspective. Like it looks like from the new updated bid pipeline, a lot of this opportunity hangs in mining. But yes, if you could just kind of speak specifically to the North American market and what sort of jobs are on your radar, et cetera, that would be great.

Well, I mean, yes, so it's quite expansive, but I mean, obviously, the recent announcement on the Ring of Fire, there's opportunities there. And they're not necessarily mining based because before they get into the mining, there's obviously all the infrastructure that's got to be built, whether it's roads, bridges, all that sort of stuff. So I mean, that's on our radar.

Critical minerals as well. A lot of that is -- there's infrastructure before that stuff goes ahead. So yes, I mean, that's really between the 2 of them, it's the mine site, that one, and it's the infrastructure to get to the mine as well as that stuff in the north with the likes of Grays Bay and opportunities there. A lot of road to build. There's deep ports. There's all kinds of things that we're tracking very closely.

Awesome. Last question would just be around with what we're seeing with energy prices right now, are you guys seeing a tonal shift or kind of a posturing shift at all from any of your oil sands relationships? Or are you guys expecting any sort of movement or change in how things are trending?

Yes. I think it's going to be very, very busy this year in the oil sands where that's everything we're hearing from our clients. I mean, we just met with them here, our 2 major clients last week. And by all accounts, it's full steam ahead, and there's ramping up on productions, and that just equates to more opportunity for us. And like I said earlier on in the call, we just need to be poised and ready to go and support them however we can in the most cost-efficient manner, and we will.

Next question comes from [ Akshato ] , an investor.

Net debt stands at about CAD 896 million, which is almost 2x the current market cap of the company. And yet, I don't see any commentary from the team on leverage or net debt. So in the past, team is to focus on reducing leverage post acquisitions, and there was a constant focus on bringing down net debt over the quarters and even in the quarterly calls and the presentations, which I don't see no more. So I guess my question is, is the team focused on leverage? Is that a priority for the team? And if so, can you comment on how you plan to reduce the absolute net debt levels? And keeping in mind, this is a business wherein the depreciation is real.

Yes. It remains a significant focus of our company. We have communicated that, and it remains a key focus. We're currently at about 2.5x. That $896 million, as you mentioned, equates to 2.5x. Our goal is to be 2.0 by the end of 2027 through the direction of free cash flow to net debt. We understand enterprise value and how it's profile between market cap and net debt right now. And we like market cap to be a bigger component of enterprise value. And so yes, we expect with the growth investments we've made and the free cash flow that's going to come from that to direct that to get that $900 million down on an absolute basis and on a ratio basis.

All of our opportunities that we look to moving forward need to be less than 2.0x as we invest in capital should opportunities arise. And over the past 8 years, as we've grown this company to the size it has been, it's all been done with debt financing. So that's where the $900 million has come from. But yes, it remains a focus. The Board has provided a longer-term target of 1.5x. That's the Board endorsed target. And so that will take longer than 2027, but that's where our ideal leverage ratio would be.

Okay. And then so a follow-up would be like of the free cash flow that is forecasted, $120 million, how much of that would you be moving towards reducing debt?

Anything -- dividends are the ones that we're looking to make sure that there's no disruption there. We may look to increase the dividend. That's an option to us. But outside of the dividend, free cash flow will be directed to debt repayment.

This concludes the Q&A section of the call. I will pass the call over to Barry Palmer, President and CEO, for closing comments.

Yes. Thanks again, everybody, for your time today hearing our news, and we look forward to talking again next quarter.

Thank you. This concludes the North American Construction Group conference call regarding the first quarter ended March 31, 2026. You may now disconnect.

Good morning, ladies and gentlemen. Welcome to the North American Construction Group conference call regarding the fourth quarter ended December 31, 2025. [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 the company's website at nacg.ca.

I will now turn the conference over to Jason Veenstra, CFO. Please go ahead.

Thanks, Joanna, and good morning, everyone. We've shortened the deck this quarter, and I'll start off with brief commentary on the financials and pass the call to Barry for his operational and forward-looking remarks.

Starting on Slide 4. The headline EBITDA number of $78 million was significantly impacted by a $13 million retroactive life-to-date adjustment for the Fargo project, which we'll discuss on the next slide. Australia revenue for the quarter of $176 million was a Q4 record for the region despite the wet weather. And the oil sands region also posted solid top line numbers for the quarter. In looking at the $344 million of combined revenue and when factoring out the volatility of Fargo in the quarter, we are trending in a positive way and on our way to the $1.6 billion midpoint for 2026, which will be another company record.

When looking at the $1.5 billion generated in 2025 of combined revenue, we can see that Australia and Canada are up on a combined net basis, 10%, with Australia up an impressive 17% and Canada up a modest 4%. When looking at our employee exposure hours, we can see that the 6.3 million hours in 2024 was eclipsed in 2025 by a correlated 15% and reached 7.1 million hours, representing a steadily growing workforce of 3,300 employees. These metrics showcase the baseload momentum we're currently experiencing and give us the historical context and confidence in the 2026 outlook, which Barry will close our prepared remarks with.

Moving to Slide 5. I've already touched on the revenue momentum, but we'll add that 2025 Q4 was impacted by the strategic divestiture we made of our ultra class fleet, which was effective December 1, 2025. Regarding gross profit, we were impacted by 2 significant factors in the quarter with the Fargo cost adjustment being the major factor. Based on an updated full project forecast, the Fargo team increased the estimated cost to complete of the structures, railroads and aqueduct.

On a gross basis, the increase to cost was approximately $50 million and on a net basis to us was a $13 million life-to-date adjustment given the late stage the project is at. With approximately 85% of the project complete, management is confident in the updated cost estimate and is looking forward to completing the project here in 2026 at the forecasted level.

The second impact in the quarter was the above-average rainfall in very late Q4 in Queensland and the financial effect it had on the results, primarily at the Carmichael mine. Excluding these isolated items, gross profit of approximately 15% is a reasonable run rate metric of where our combined business is currently operating and consistent with the more routine third quarter of 2025.

Moving to Slide 6. Q4 EBITDA and EBIT were down from their 2024 comparables as already discussed, with the 23% EBITDA margin being approximately 7% lower than the run rate metric of around 30% based on the 2 factors mentioned. Included in EBITDA is direct general and administrative expenses of $15 million in the quarter and equivalent to 4.9% of reported revenue.

Going from EBITDA to EBIT, we expensed depreciation equivalent to 18% of combined revenue, which is higher than the 14% to 16% run rate of the business based on the unique conditions in the quarter. Adjusted earnings per share was a loss for the quarter of $0.14 and reflects the EBIT generated by the business, net of interest and taxes. The average cash interest rate for Q4 remained consistent at 6.4%.

Moving to Slide 7. I'll briefly summarize our cash flow. Net cash provided by operations prior to working capital of $56 million was generated by the business, reflecting EBITDA performance net of cash interest. Free cash flow of $57 million was a highlight for the quarter based on EBITDA generation and disciplined sustaining capital maintenance. The $57 million in Q4 and $46 million in Q3 compiled to $103 million of free cash flow generated in the second half of 2025.

Moving to Slide 8. Net debt levels ended the quarter at $878 million, a decrease of $26 million in the quarter as free cash flow generation was used to pay down debt, but was also used on growth capital, share purchases and dividends. Net debt and senior secured debt leverage ended at 2.4x and 1.4x, respectively. As mentioned last quarter, senior unsecured debt or high-yield debt now accounts for approximately 40% of our overall net debt, and we've been pleased with the demand for that source of financing as it provides the ability to confidently grow our Australian and infrastructure businesses.

As shown on the slide, the $422 million of cash liquidity, up from $334 million at the end of September has positioned us for success. We expect to pay out the convertible debentures at the end of the month with this capacity, which will bring the credit facility net of cash up to around 15% of our overall debt.

With those comments on the financials, I'll pass the call to Barry.

Thanks, Jason, and good morning, everyone. This is my first earnings call as President and CEO, and after 44 years with North American Construction Group, my focus is on execution and operating discipline.

I'll start with some remarks on Slide 10 regarding our previously announced acquisition of Iron Mine Contracting or for short, IMC. We expect that transaction to close early in the second quarter of 2026, subject to customary closing conditions, including approval by the Australian Competition and Consumer Commission. Strategically, IMC is a strong fit. Their culture, core values and maintenance capabilities align well with our existing platform in Australia and across the globe. IMC brings roughly 120 heavy assets -- yes, 120 heavy assets and about $1 billion of contractual backlog, which increases our overall backlog by roughly 30% and Australian backlog by roughly 35%.

Most importantly, IMC and MacKellar together will create a national Tier 1 contractor platform in Australia, capable of executing large comprehensive scopes in both Eastern and Western Australia. This also accelerates our objective to expand lower capital unit rate work across Australia, where in times of geopolitical restrictions, the Western world is increasingly looking for critical mineral supply.

Having overseen our operations in Australia over the last 2 years, I'm incredibly excited about our opportunities on the continent and what it will mean to North American Construction Group overall. Before walking through the next couple of slides, I want to separate two things. First, our 2026 operational priorities, which are the actions we are focused on executing this year. Second, the structural growth drivers that expand our earnings power over time.

Moving to Slide 11, my operational priorities. As new CEO are straightforward, operational and aimed at sustainable growth that compounds long-term shareholder value. First and always, safety. Everybody gets home safe everywhere we operate. Second, in Australia, we're further optimizing our workforce mix based on the improvements we have already implemented in the second half of 2025, driving even stronger consistency, productivity and execution.

Third, after the major growth in Queensland over the last 2 years, we will review and optimize operating costs while fully maintaining customer requirements. Fourth, we'll integrate and commission the expanded IMC fleet following the transaction close in Western Australia to support growth and scale. Fifth, we will deliver the successful completion of Fargo Moorhead diversion project, reinforcing our civil execution credentials.

Lastly, we will continue improving mechanical availability and reliability in the oil sands through rightsizing the fleet, disciplined maintenance and operating fundamentals.

Moving to Slide 12. With that operational focus in mind, the next slide step back and look at the bigger picture, the structural growth drivers we have put in place over the past several years that will translate into visible traction in the back half of 2026 and beyond. At a high level, first, scaling into Tier 1 contractor platform in Australia; second, expanding mining services across Canada and the U.S.; and third, securing infrastructure awards across North America. Diversified in scope, these are building blocks for an even stronger and more resilient operating profile and a deeper pipeline of opportunities across end markets.

Let's dive into the first one. On Slide 13, Australia is our primary growth engine. We are operating across 18 sites with favorable consistent operating conditions that support year-round equipment utilization. Our platform is diversified across key commodities, including gold, coal, iron ore, lithium, copper and mining-related infrastructure. With IMC, we will expand to a national Tier 1 scale and we become even better positioned in Western Australia, particularly in rare earth and critical minerals, where Australia is increasingly a strategic hub for the West critical mineral supply chains.

Moving to Slide 14. In North American infrastructure, we are seeing nation-building projects across Canada and the U.S. now advancing from announcements to the bid stage and into execution. Fargo-Moorhead is a key proof point that sets us up to win more work. Our earthworks scopes representing approximately $600 million in total project volume for the company have been completed as planned. The execution record strengthens our credibility and expands the set of opportunities we are able to pursue. We're looking -- tracking a strong pipeline across Northern Canadian infrastructure, defense-related scopes and critical mineral infrastructure work with our partner, Nuna and mass civil earthworks and opportunities in the U.S. as a subcontractor. We're focused on winning work where we have a clear competitive advantage such as mine site civil scopes and subcontracted earthwork roles on large programs.

Moving to Slide 15. Mining services remain a core strength of North American built on decades of operating experience and a large specialized fleet. We operate across a broad geography from north of the Arctic Circle to the heart of Texas. And our track record, safety culture and equipment base support expansion in mining activity grows across this continent. We see tailwinds from increased focus on critical minerals and energy infrastructure and a reduction in regulatory hurdles, and we intend to earn that work by executing our fundamentals of safe operations, high equipment availability and disciplined maintenance.

Moving on to Slide 16. Let me start with how we see execution priorities and strategic growth drivers translate to our financials. We entered the year with strong visibility supported by our contractual backlog and bidding activity. Currently, our backlog is approximately $3.9 billion with $1.2 billion already secured for 2026. Beyond that backlog, we are tracking a total bid pipeline of approximately $12.6 billion, including roughly $4.6 billion currently in active tender and procurement processes.

Taken together, this provides strong visibility into the year ahead and supports our expectation for another year of growth for NACG. At the midpoint, we expect combined revenue of $1.6 billion, adjusted EBITDA of $400 million and free cash flow of $120 million. And an important point on the cadence for our adjusted EBITDA, our outlook reflects a stable first half performance broadly in line with the current Q4 run rate, excluding the Fargo impacts with meaningful improvements expected in the second half of 2026 as IMC synergies and opportunities are realized. New acquired equipment is commissioned and seasonal activity strengthens.

Historically, from 2022 to 2025, second half revenues consistently exceeded the first half, averaging approximately 20% higher contribution. So this profile is consistent with how our business typically builds through the year. We also ended 2025 with strong momentum in free cash flow, included $57 million in Q4 2025, which supports our confidence entering 2026. That ends the Q4 presentation, and we would be happy to take any questions you have. I'll now turn it back over to the operator.

[Operator Instructions]

The first question comes from Adam Thalhimer at Thompson, Davis.

Can you provide a little bit more color? The total bid pipeline is up $12.6 billion. And I think this is a new metric, this $4.6 billion in active tender value. What's in that kind of geographically? And when could that come into backlog?

It's kind of spread all over the place. It involves some of the defense spending. It involves some of the water projects in the U.S. It's some mining projects that are out there. It's kind of scattered all over there. It's roughly 40 projects within that number.

Okay. And as it relates to the Fargo job, is there any risk -- well, a couple of questions. Is there any risk to additional costs? And are those embedded in the 2026 guidance at all? And then can you remind us, I think that there's a tail of income from this project once the construction is complete. Just can you comment on that?

Yes, I can take that one, Adam. Yes, the -- we don't see a lot of risk in the remaining 15% of the project. This was a very detailed update done by the project team, and it's a limited amount that's left. So we see limited risk. Of the $400 million of EBITDA for this year, only about $5 million is contemplated from Fargo at these reduced margins. With the life-to-date adjustment that was made, that assumes that margin carries through to completion. So that's kind of the risk profile. And what was the second part of the question?

The second question was just -- I think that there's a...

Right. Yes, there is...

Revenue from that project going forward?

Yes, it's not a meaningful number, Adam. It's -- so we do own 15% of the special purpose vehicle that will do the operate and maintain portion of the contract but it's not a meaningful contributor moving forward. And so it's not worth modeling out, I would say.

Okay. And last one for me. Can you comment on the strategic review in the oil sands and what the outlook is for margins there this year?

Yes. Look, I mean, we see the oil sands as still a very strong market. There's lots of activity. I mean I've been in conversation with senior management in the oil sands and they're telling us they're focused on throughput this year, and there's opportunity for us. So we see a lot of good things there. I think as far as the margin improvement goes, that's on us. I think we put more of our gear to work and the availability of our equipment increases and our projects will just improve on margin. I think it's -- there's great opportunities not only for additional revenue, but margin improvements as well.

The next question comes from Joseph Reagor at ROTH Capital.

So my main question is could be around IMC. I think the original time line expectation was to close by late Q1 and now that's pushed to Q2, but I think the original guide hasn't changed. Is there something that's kind of come up to offset whatever was lost from IMC being delayed? Or should we expect that once it closes, you'll give updated guidance? Like how should we think about that? And then can you talk a little bit about why it shifted from Q1 to Q2?

Yes, Joe, I can take that one. It's purely this ACCC process, a regulatory review and it's taking a little longer than we had thought. We're being told there's no risk there. It's just getting through the administrative process. And with regards to the second question, probably two parts to that. One, Q1 is a lighter quarter for IMC. So it wasn't a big part of our guide. And two, the shareholder agreement does allow for retroactive earnings back to January 1. So it doesn't require us to update -- should this close in the normal course in early Q2, which we expect, it's of the same impact as what we issued in December when we announced it.

Okay. And on that retroactive item, if you closed in Q2, would there be like a catch-up in Q2 and Q1 would be a little lighter from a modeling standpoint? Or would...

No, we expect to allocate that to Q1 because that's when the economic activity would have happened. So that's our expectation.

The next question comes from Sean Jack from Raymond James.

First, just have a clarification question. I see that the EBITDA guidance for 2026 remains the same, but I'm not seeing in this quarter's materials like details on growth capital, EPS, et cetera. Just wondering, was this specifically left out? Have any expectations changed since the press release in late December? Or was it just not addressed?

Yes, I can take that one, Sean. It's intentional. We have -- with the changes that happened in the quarter here, you'll see, as was mentioned on even the bid pipeline, we've changed the approach on a few topics. And one of those is just guidance metrics that we are issuing. We're going to stick to the 3 that we think are the most important to shareholders, which are top line, operational margin, which is EBITDA margin.

And then ultimately, what shareholders care most about is free cash flow. And so we think that's a more simplistic approach to really stick to those 3. But just to answer the question, nothing has changed as far as the December metrics. It's just for the kind of public-facing guidance, we're going to stick with 3 just to kind of simplify the messaging and not get too caught up in trying to reconcile details.

So there still is a healthy amount of growth capital allocated for IMC, so they can hit their growth targets for Q2, Q3 and Q4. So about half of free cash flow, I would say, this year will be directed to growth and then the rest is dividends and debt paydown.

Okay. Perfect. That's good context. And then just thinking about the operational focus on Australian workforce and cost reduction. Do you mind kind of giving any sort of goalposts on how much you expect to save from these initiatives? Do you guys have a plan set out? Any color would be great.

Yes. Yes, we do. I mean it's -- we're looking for about a 3% to 5% savings there. I mean there's -- on that workforce, I mean, it's been talked about it reducing subcontractors. And look, we started that -- we engaged in that in Q3 of last year. And it's a process. It doesn't happen overnight. A lot of the projects that had kicked off, they took larger numbers of people to get started. So we're slowly weaning that down and rightsizing the manpower number and in-sourcing more of that manpower requirement as opposed to subcontractors that hired mercenaries that helped us through a tough time, I guess, just to get started.

Okay. Perfect. Last one, if I may. Just thinking about the bid pipeline across all these geographies. Wondering if you guys can comment on margins directionally. Should we be expecting improvements kind of embedded there?

Yes. I mean it's a tough question. It comes down to the margins vary by geography, obviously. I mean there's a lot of great opportunities in Australia that seem to generate higher margins. And as you get into the infrastructure jobs or when I say infrastructure, I'm meaning just large earthworks operations, it's a very competitive market. So I would say we'll get -- we'll bid these jobs and at a margin that we're comfortable with and that we know we can execute on. And so it's hard to say where that ends up, but we do see improved margins just through operational efficiencies and improvement in our equipment.

The next question comes from Tim Monachello from ATB Cormark Capital Markets.

Just given the operational issues that have happened with Fargo and cost. Changes and whatnot throughout the year and the fact that they were outside the scope of NOA's operational breadth, I guess, on those projects. And then looking at how your strategic plan to move into more of these infrastructure projects, which will probably be consortiums, how do you think about the risk profile of those -- of that strategy? And do you think that -- how do you manage these things that are outside of your operational scope and the impacts that they can have to your earnings as you go and have more exposure?

It's a great question, Tim, and I'm sure a lot of people want to know that. And look, we learned some valuable lessons on the Fargo project. And our expertise is in the earthworks side of the business, and it certainly isn't in structures and aqueducts and concrete. And to that point, I mean, I guess, for lack of a better term, we trusted our partners. They know their business as well. So we didn't have much line of sight into that.

But going forward, I can guarantee you this is with the lessons learned, unless we take on a project unless we're in total control of it, where we know all of the risks, we own all the risk, we sign up for that. We likely wouldn't go down that path other than to say that we will look more to -- on projects like that, where there's other major players with scopes that do not match our skill set, we will look to simply sub the work, sign up for a subcontract where we have terms and conditions in that subcontract that we're fully aware of, that we're fully on board with and we go forward that way.

So that's our focus on the infrastructure side of it is that if it's not a project that fits us well and we're suited for it, we will simply look to sub the earthworks that we're suited for.

Got it. And specific to Fargo, given these retroactive reforecastings that have happened throughout the year, is that project going to be cash generative overall?

Yes. Yes, it still is -- that's sort of the disappointing part of the narrative here is that it still is a profitable project. It's just -- it started off at a higher margin and then these retroactive hits, 3 of them now that we've taken have been really hard on current quarter earnings, but it's definitely free cash flow positive and still a success story overall. It just clearly had a massive impact, especially on this quarter.

That project wraps up here in 2026. I believe that the consortium is carrying some cash balances. What do you expect in terms of distributions to NOA when the project nears finalization? And is that included in your free cash flow guidance?

It's a good question. It's not included in our free cash flow guide. I would say to your comment, Tim, that the cash injection at the end will be modest in 2027. We get paid out a kind of fixed margin monthly. And so what would be left is the final margin that exceeds that. And so that number has shrunk. It's still -- if I had to guess a number, it'd be in the kind of $10 million range at the end of the project in 2027. So not the significant kind of cash injection that we had originally planned for, but it's still cash flow positive.

Okay. Switching gears. When you look at the Canadian fleet and opportunities you're looking at globally, can you just talk a little bit about where your utilization stands, the fleet that may be underutilized and the opportunities to redeploy that? And I guess, the strategy around optimizing that fleet, whether that be transfers to Australia or other infrastructure or civil -- or sorry, mining projects in Canada or the U.S. or dispositions in '26?

Yes. It's a good question. I mean, look, we're in the middle of rightsizing our fleet and identifying what we need to run successfully in the oil sands where we still meet all of our -- all of the client demands and opportunities that we see coming out there. With the remainder of that fleet, I mean, we're looking at Australia -- if there's an opportunity to place it in Australia, particularly in the West, where they execute more unit rate style work. The problem with some of that stuff in Australia is when you get on these big sites with the blue-chip operators is when you put equipment on their site, they demand it being fairly new or new or recently new. And so it makes it a little tougher to put some of our fleet in there, but there's lots of opportunity on the unit rate side of the business where it doesn't matter as long as the equipment runs well, it performs well, that's in our wheelhouse, and we can do that.

But again, in order to do that, it's got to make economic sense on both sides of the pond, whether it's IMC or MacKellar in the East, it still has to make economic sense for them. So we're looking at that in detail and there's certainly opportunities to do that.

So you haven't made any definitive decisions on equipment transfers or dispositions out of Canada as yet?

No. There's been inquiries, obviously, from IMC because there's a lot of growth opportunities. And like I said, they're more focused on unit rate style jobs. We've isolated the fleet right now. We're just doing the costing on it and getting shipping prices and looking at the economic viability of doing that.

Commodity price have been really strong across the Board in '26, both on the energy side and on sort of the precious metal side. Are you seeing increased opportunity across your business as a result?

Absolutely. Absolutely. There's -- in different commodities. I mean, we've got some in the bid pipeline. I mean, some we've already bid and even in uranium, for instance, in Saskatchewan. And like I said, Australia is our oyster. I mean there's so much opportunity down there. It's picking and choosing which we want to chase after. There is a limit to capital, right? There is a limit to capital. And so you can't go after everything that's out there. So we're being strategic when we chase after stuff.

I'm glad you mentioned that because that was my next question was when you look at the guidance for the year, capital is not included in there, but assuming free cash flow as at least the maintenance portion in there. What's the range on, I guess, the EBITDA range, what does that imply in terms of expectations for the year? And if you end up winning some of these awards across the really sort of diversified opportunities that you've outlined, what could be the range on CapEx that's required for growth?

Yes. It's a complex question, right, Tim, but the guidance doesn't include any material wins that would require significant growth CapEx. So that if we do win some of these active tenders that Barry has talked about, it seems to me with the mine site civil work, generally, growth CapEx is one for one with the top line revenue that's generated and then the margins are kind of specific to the job.

So yes, as we come up with opportunities, and I would say it's annual revenue. It's not full contract revenue. We're looking at 3- to 5-year type opportunities. And so that's kind of the growth CapEx that would be required. But with some of the unit rate work in Western Australia, that methodology doesn't work either because it comes with a lot more revenue without the fleet, the direct fleet utilization required and a lot more labor. So yes, it really depends on the actual job.

Got it. And then I guess the second part was just the guidance range for the year on the EBITDA. What's the bottom end contemplate relative to the top end?

Yes. Again, I know people hate hearing about it, but really, the range in our business is weather dependent. If the midpoint is assuming a pretty conservative worse-than-average kind of situation. If weather even is worse than that, then we're talking about the lower end. And if we get great operating conditions, we can exceed the top end. So weather does impact utilization of -- especially at certain sites. And so that's really why the range is there for 2026.

Got it. And then last one for me. I guess your -- from a strategic standpoint, free cash flow generation and like true deleveraging is, I think, something that investors are really interested in seeing here. But you're also facing a really robust opportunity set. So how are you thinking about, I guess, the ranges on how much you're willing to go out and spend and where -- how do you manage the balance sheet in a growth environment, I guess, is sort of a more succinct way to think about it?

Well, I think a simple way to answer that question, Tim, is opportunities need to be on balance, net improvement to our deleverage. So right now, we're at a 2.4x. We would only look at opportunities that with next 12 months EBITDA would bring that number down. And so that's a key criteria for us. And you are correct. It's something we're focused on. We're still committed to our medium-term target of 2.0x. We expect to get there with the free cash flow we can generate over the next 2 years, probably by the end of 2027.

And then the longer-term goal that our Board would like to see is 1.5x. So we see it, we agree with it. We've funded all this growth 100% with debt. So it's been well spent dollars, but it's been all debt funded. But I hope that answers the question. These opportunities are financeable. We have very good banking relationships in both Australia and Canada. And so it's not that we can't do it. It's just we need to make sure that our balance sheet stays in the low 2x multiple from a net debt leverage.

The next question comes from Yuri Lynk from Canaccord Genuity.

Well, after that barrage of questions, I'm quite proud to say I still have one on my own. Yes, just maybe a little more detail on your plan to get into infrastructure projects. A cynic could say you've got one of these projects and it hasn't performed as you wanted it to. What can you say about the contract structure of that job, in particular, vis-a-vis whether it's a lump sum turnkey or some kind of reimbursable? And more importantly, what -- are you seeing any shift in contract structure on some of the stuff that's up for bid? Because there's been a pretty broad shift in the industry towards more collaborative, more equitable type contracts. And I'm just wondering if the niche that you play in is kind of seeing the same thing.

Yes. I mean, looking at Fargo, again, were we somewhat naive, maybe. Look, we fashion ourselves as the earthworks experts. And just on that note, I feel, like I said in my shareholder letter, I'm very proud of the team, how they've executed that work. It's gone as planned. It's not without hiccups. I mean, understanding that if there's a delay on structures, that actually impacts earthworks and moves it around, which costs money. So there's some of that, but it's our first endeavor into the P3 side of the industry.

And like I said earlier, we learned some valuable lessons. And what we're chasing after in the infrastructure space beyond that is stuff that's more suited for us. There's a lot of big players out there that are used to these types of contracts. And we would look -- I mean, we've made some calls already on 2 larger projects where we're trying to team with them to the point where when I say team, where we're being considered as a subcontractor option for them and which would obviously come with a contract that's got terms and conditions in there that we would have to agree to.

So I mean, that puts us in a lot -- in a better light as far as knowing the risk, understanding the risk and executing towards that. And there's other projects where it's earthwork-centric, where we can be the GC and we can sub out smaller portions of the work if the lion's share of the work is earthworks, we can take on them jobs. And if the smaller portions are -- they involve concrete structures or whatever, we can sub that work out. I mean we're looking at a few of those right now. So I think that's pretty much what I would say on that side of it, Yuri.

So you're not -- you're trying to more insulate yourself by positioning yourself in the consortium a little differently and the overall contract structures are still all about pushing that risk down to the subcontractors, would you say? Or you -- it's not clear if you're seeing any change there in overall structure.

No, no, that's a fair comment. That would sum it up very well.

[Operator Instructions]

Next question comes from Maxim Sytchev from National Bank Capital Markets.

When we look at Canada and some of the nation building stuff, which is sort of floating around, I mean, I presume we shouldn't assume any contribution even if you are successful on some of the bid packages on these things in 2026. The contribution at the earliest would be 2027 and beyond. Is that a fair statement?

That's a fair statement for sure, Max.

Okay. And then in terms of -- maybe can you provide a bit of a blueprint in terms of where you guys are on sort of inventory integration, ERP implementation, et cetera, et cetera, post the IMC closing and just to make sure that everything is sort of like above board when it comes to inventory management on a going-forward basis?

Yes. We don't see a lot of integration risk with the IMC acquisition. They're a very well-run organization, and we're ready. With this regulatory approval, it's given us a little more time just to get really ready for day 1. But as far as integration risk goes, Max, there's not really much there. They'll manage their own inventories, their own fleet. We have some ideas on integrating with our subsidiary there, Western Plant Hire, they're right -- their neighbors. So there'll be a little bit of integration there, but not a lot of headline risk there.

Okay. And then especially, I guess, over the last 24 months, labor has been a bit of an issue in Australia. Can you maybe comment around the trends on sort of inflation there and how that's being managed?

Yes. I think Barry touched on it. It comes down to just effective recruiting. And I think we've seen a trend in the right direction. And yes, it's one thing that Barry highlighted as a top priority and is a key focus of us, and we'll be providing an update -- further update as part of the Q1 close.

Okay. Perfect. And then just one quick one in relation to Fargo. Correct me if I'm wrong, but all the equipment that was bought for that project that was structured into an SPV. And so I presume there's going to be some sort of -- I mean, I realize that you said that the cash out is not going to be sort of massive. But is there anything on the equipment side we should be keeping in mind?

Yes. Again, similar to the equity injection at the end or outflow, it won't be massive. I know there -- it will be disposed. You're exactly right. It was -- equipment was bought especially for that project and will be disposed of by that project, but it's not going to be a big number. And it will be all contained within that close out at the end of the project. And even though the project will be complete this year, financial closeout requires a bunch of certification. So that probably is 2027.

We have no further questions. I will turn the call back over to Barry Palmer for closing comments.

Thanks, Joanna, and thanks again, everyone, for joining us today. We look forward to providing the next update upon closing of the first quarter results.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the North American Construction Group conference call regarding the third quarter ended September 30, 2025. [Operator Instructions]

They are free to quote any member of the 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. 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 over to Jason Veenstra, CFO. Please go ahead.

Thanks, Joanna, and good morning, everyone. As we did last quarter, I'll start off with the financials and pass the call to Joe for the operational and forward-looking commentary.

Starting on Slide 4. The headline EBITDA numbers of $99 million and 14.6% gross margin were generated by a strong operational quarter and were much improved from the second quarter of 2025. We will discuss the specifics of the margin performance later, but in general, the operational teams were able to execute their plans effectively given steady weather conditions and consistent customer demand.

You can see from the graph that we continue to post continuous revenue growth as we posted $390 million of combined revenue, a 6% sequential increase from the second quarter, despite the seasonally lowest demand during the third quarter in the oil sands region.

Australia continued its consistent growth trajectory with a 12% sequential increase and an impressive growth of 26% compared to Q3 of 2024. To put our top line performance in perspective, this quarter's $188 million in revenue we generated in Australia is nearly 2.5 times the 2022 run rate, an increase achieved in just 3 years.

The MacKellar Group generated over $65 million in September alone and set another company record for monthly revenue as they continue to grow. September's strong top line bodes well heading into the fourth quarter, and this growth profile is indicative of the demand we see in Australia. The 26% year-over-year increase reflects 2 significant contracts secured in 2024: one expansion at an existing site; and one new project, as well as the growing production profile of our largest customer in Australia. Enabling and bolstering these increases are the units of fleet we transferred from Canada and are now operating in the region.

Moving to Slide 5 and our combined revenue and gross profit. As mentioned, Australia's margin of 19.6% benefited from both productive weather conditions, but also strong operational performances across the sites. And specific to last quarter, we actively increased maintenance headcount in early Q3 and subsequently were able to rely less on higher cost external maintenance service providers.

The oil sands region posted a solid quarter at 9.2%, up significantly from the challenging second quarter of 2025. Demand for our equipment was consistent through the quarter, which allowed our operators to properly plan and execute the scopes of work. Our share of revenue generated in the third quarter by the Fargo, Nuna and other joint ventures was $74 million in the quarter. Our Fargo team completed a strong quarter of work and progressed the project from 70% to approximately 80% at the end of the quarter.

Stepping back, combined gross profit margin of 14.6% reflected steady weather conditions, consistent demand, increased internal maintenance headcount and reduced reliance on third-party heavy-duty mechanics. Of note, the 8.9% posted in Q2 was restated from the 10.6% reported as certain expenses in the Fargo joint ventures had been classified as administrative when, in fact, should be included in the determination of gross margin.

Moving to Slide 6. Q3 EBITDA and EBIT were down from their 2024 comparables, as already indicated in our discussion, but importantly, in line with our guidance for the second half of 2025. The 25.3% margin we achieved is indicative of the commentary thus far and a significant improvement from the 21.6% posted in Q2.

Included in EBITDA is direct general and administrative expenses of $13 million in the quarter and equivalent to 4.1% of reported revenue, which is essentially at the target we've set for ourselves. Going from EBITDA to EBIT, we again expensed depreciation equivalent to approximately 14% of combined revenue, which is consistent with the 14% posted in 2024 Q3, consistent with our expected run rate moving forward, given historically we've been between 13% and 15%.

Adjusted earnings per share for the quarter of $0.67 reflects EBIT generated by the business, net of the expected interest and taxes. The average interest rate for Q3 remained consistent at 6.4%.

Moving to Slide 7. I'll briefly summarize our cash flow. Net cash provided by operations prior to working capital of $72 million was generated by the business, reflecting EBITDA performance net of cash interest paid. Free cash flow of $46 million for the quarter was based on EBITDA and the disciplined sustaining capital maintenance spend in the quarter.

Moving to Slide 8. Net debt levels ended the quarter at $904 million, a slight increase of $7 million in the quarter as free cash flow generation was used on growth capital, share purchases and dividends. Net debt and senior secured debt leverage ended at 2.3x and 1.6x, respectively. When taking into account the $125 million reopener we completed in October, senior secured leverage decreases to 1.3x with no change to net debt.

Senior unsecured debt now accounts for approximately 40% of our overall net debt, and we've been pleased with the demand for that source of financing as it provides the ability to confidently grow our Australian and infrastructure businesses.

With those comments, I'll pass the call to Joe.

Thanks, Jason, and good morning, everyone. I'll start on Slide 10, where our Q3 trailing 12-month recordable rate of 0.45 continues our almost decade-long trend of bettering our industry-leading target frequency of 0.50.

It has been particularly pleasing to see our safety management systems and processes remain successful as we have expanded and diversified our business across multiple commodities and into the U.S. and Australia. The exposure hours now exceeding 7 million is about 7 times our 2016 low and demonstrates the scalability of our safety systems and consistency of our safety culture regardless of the country or the commodity.

On Slide 11, I'd like to highlight the strong operational quarter and gross margin achieved about 15%. The continued high demand driven predominantly from the 30% year-over-year growth over 3 years in Australia and the result of $1.5 billion record top line over the last 12 months.

The 100% renewal rate, average 5-year contract terms and scope expansion opportunities continue in Australia and the $2 billion add to our backlog, provides the stability and visibility for several years to come. We also added another $125 million in liquidity from senior unsecured notes and believe we are well set up for growth opportunities we see in Australia and in infrastructure.

On Slide 12, we believe our H1 issues are truly behind us. We have a strong Q3 in the books, are in line with expectations and have a keen focus on delivering a safe and efficient end to the year.

On Slide 13, our equipment utilization, which jumped in late 2023 with the MacKellar acquisition, is expected to lift into the target zone in Q4 as our rapidly growing Australian demand is offsetting reductions in our Canadian demand. Fleet utilization drives our return on capital and our asset management team is keenly focused on a clear execution plan for putting assets back to work, transferring assets to higher demand markets and extracting the highest value from the consumption and sale of excess assets.

As we start to look forward, I would like to reiterate that similar to last year, we have a large amount of predominantly oil sands work scopes that remain in tender process, and we will await those results before providing our 2026 outlook, which we expect to provide in early to mid-December.

On Slide 15, we move into looking at the macro tailwinds that we believe will be driving all of the markets we operate in for the next few years. In Australia, we expect to see the continued growth in demand driven by the resource richness of the country and the speed at which new projects are built or existing mines are expanded.

We believe Queensland thermal metallurgical coal demand will remain strong with 5% to 10% annual growth potential and the biggest opportunities in Australia coming from gold and iron ore in Western Australia and copper opportunities in New South Wales. We likewise see growing civil opportunities in Australia with increasing new mine site development and expansions driving civil earthworks constructions, such as site access roads, tailing storage construction and facility expansions.

Western Australia is also rich in resources like nickel and lithium and has many mines on care and maintenance status due to current commodity pricing. Should those prices increase, Western Australia will be booming even more. Altogether, Australia has become the strategic hub for Western allies seeking to secure their critical mineral supply chains with demand for large-scale moving -- earthmoving ever increasing.

In the U.S., we see the biggest opportunities in the infrastructure markets with federal investments being streamlined for prompt construction of climate resiliency projects, like our Fargo-Moorhead flood diversion project. Energy transition projects like pump hydro and other major earthworks construction required for Western U.S. water conservation and transportation. Although mine development in the U.S. does not advance nearly as quickly as in Australia, we do expect to see increasing demand in U.S. mining and civil contracting, predominantly supporting the Western U.S. gold and copper markets.

In Canada, we see increasing resource development, defense projects and infrastructure work with major works planned in the far north, providing what we think will be a competitive advantage to our Nuna partnership with the Kitikmeot Inuit Association. As mentioned in my letter to shareholders, we believe these type of nation-building project opportunities will come to market quickly with the support of government leadership, and we are positioned to execute at scale.

Moving into Slide 16. We highlight our strategic priorities for closing out the year and heading into 2026. These priorities simply feed into the market assessments and opportunities we see by region, as discussed on the previous slide.

In summary, these priorities are growth in Australia led by Western Australia opportunities, advancing teaming agreements and subcontracting opportunities in our infrastructure business, targeting the 25% revenue contribution by 2028, leveraging our Nuna experience and indigenous ownership for expected increases in Arctic opportunities, rightsizing our Canadian equipment fleet to meet current run rate and increasing development and application of low-cost purpose-built technology to provide better data for asset and project management. We believe executing on our priorities will drive revenue diversification and margins.

Slide 17 simply provides more data and detail into what we see as fantastic opportunities for organic growth over the next couple of years, and Slide 18 identifies our top 10 infrastructure projects by name, location and proponent so we can track progress more specifically in what we believe will be an exciting next couple of years in the infrastructure market.

Slide 19 shows our bid pipeline of over $12 billion, which is a $2 billion increase since Q2 and includes increases in both the active tenders and 2026 opportunities. This record bid pipeline puts the revenue numbers to the opportunities previously identified and positions us well for growth and stability with material expected wins over the next couple of years.

Lastly, on Slide 20, we reiterate our H2 2025 outlook with nearly all metrics unchanged and strong free cash flow consistent with our historical profile.

That ends the Q3 presentation. We'd be happy to take any questions you may have.

[Operator Instructions] The first question comes from Aaron MacNeil at TD Cowen.

In the prior quarter, you had said that you were confident in securing 2 memorandums of understanding by the end of this year. How should we think about the progress there? I know you mentioned on Slide 19 that you had prequalified for a mining infrastructure project in Arizona. I assume that's one of the 2, but maybe you could just give us an update there?

Yes. We -- there's different levels of agreements we seek with different partners. Obviously, some of these that, we may be looking at doing on our own, we won't have that. But I think our progress has gone well. I think our discussions with other potential partners we target for, especially some of the projects up north, have gone well.

I'll probably provide that with our year-end exactly where we sit on those. It's really a first state step in the infrastructure side. And we're having the discussions with general contractors who have existing contracts to see if we can bring in some subcontracting opportunities sooner and hopefully in 2026, but certainly nothing inked on that right now.

Fair enough. And then, can you just remind us of the timing of when Fargo-Moorhead will wind down? And how should we think about the sequencing of sort of other infrastructure projects backfilling that revenue?

We see it reaching substantial completion next fall.

The next question comes from Adam Thalhimer at Thompson, Davis.

Congrats on putting the Q2 issues behind you so quickly. I wanted to ask first on the U.S. infrastructure opportunity. Does that potentially include work for private sector customers as well, such as data centers? Or are you just looking at large civil projects?

The ones we have targeted in the deck are all public projects. We certainly look at private ones. It's just a matter of getting on those bid lists and spending more time with the customers there.

And how near term -- you said you were positioning to support major GCs across North America who are at capacity. Just curious how near term that particular opportunity could be

That's pretty much the stuff we see in 2026 potentially being subcontracting work where there's -- yes, we -- there's -- the general contracting community is pretty full, and there's projects still rolling out. So we think that's going to open up some opportunities to support projects that are already in progress or soon to be.

All right. And the last one for me on Australia, the mechanics situation, are you where you need to be on that now? Or do you still need to hire more folks to fill those slots?

We're where we need to be. We'd still like to keep bringing on more. I mean we kind of budget a certain level of subcontractors in the business, and we do the same thing here. But we're certainly looking at opportunities to reduce costs further, but we're at our -- what I would call our historical levels. It's just upside potential or improvements that we can continue to make.

The next question comes from Maxim Sytchev at National Bank Capital Markets.

I was wondering if we can circle back to Australia just for a second. I mean, obviously, you're highlighting coal and iron ore opportunities. But I was wondering in terms of precious metals, I mean it seems to be like a very active space right now. Is there anything brewing on that front? Anything you can share with us in terms of potential pipeline there?

Yes. There's actually a massive pipeline in the Western Australia gold market as well, Max. That's a big area. The lithium is actually still being mined in Western Australia. It's probably the higher grade stuff. But certainly, with the lift of lithium and nickel, we'd see those commodity markets open up.

The biggest driver in Australia right now on the precious metal side is gold. And as you would expect with these gold prices, there's quite a few people that are doing expansions and opening up new mines there, which moves a lot faster than it does in North America.

Right. And I guess, I mean, like in terms of equipment, et cetera, like I mean, it's still the same process, similar contractual structure, et cetera, for those brownfields, right?

Yes. I would say that what we find slightly different in Western Australia is that there's a lot more unit rate work, very little rental, a lot more unit rate work down there. And that's really where we brought our systems and processes over and been able to -- we won the first one last year with that copper project and taking that unit rate model into Western Australia is what we would look to be doing.

Okay. That's good to hear. And then in terms of Canada, when we look at some of the critical mineral opportunity, the budget that just was released, I mean, it seems to be pretty constructive. I was wondering how do you think about potential timing of the inflection point here? And I don't know if you want to maybe attribute some stuff to Nuna, some to the core business, whichever way you think is -- makes the most sense?

I'd say we're a bit unclear on the timing. We've seen a lot of projects and there's a lot of talk of support. But yes, we're looking for once the shovel is going to be in the ground date. And I don't think we're expecting anything in 2026. I think it's probably more 2027, but I'd love to be wrong about that, and certainlyif they can speed these up and give us opportunity sooner.

But right now, we don't -- we haven't heard a lot of definitive dates. And so we're -- I'd say, we're being a bit more conservative in believing they're going to kick off in 2027.

Okay. Makes sense. And then lastly, in terms of Canada, in terms of the right sizing of the fleet, I mean, where are we in terms of that process? Are we kind of done or you're still waiting depending on the allocations on equipment for 2026 that you still have to make some adjustments? Or how do you feel from that perspective?

There's some of that fleet we know what we have to do with it. We're building strategies by each individual fleet. But yes, we're waiting to find out these last bids to figure out what the consumption of the remainder of the fleet is. And we'll have a much better idea of that come mid-December.

But we're executing -- I can tell you that there's -- we've got 3 more dozers we're looking to send over to Australia because they haven't been in high demand here, and they've been crazy demand down there. So that kind of stuff is going on every day. And we'll have more of a, again, a wholesome picture of the whole -- of the fleet probably in that mid-December discussion.

The next question comes from Sean Jack at Raymond James.

So just thinking about how Canada and Australia, are both seeing their own macro tailwinds split between nation building and critical minerals. Can you touch on the priorities for NOA and how we should expect the company to invest across either geography to get the best, most visible return?

Yes. For me, it's getting -- especially in the mining sector, it's getting the maximum out of the assets we have and creating the highest return. We think there's a lot of growth potential we can do in Western Australia, in particular, with very little growth capital. And that creates the highest returns for us. Those are our target markets.

I think we can walk and chew gum at the same time, too, is there's -- these infrastructure jobs tend to be very low capital intensity and they free cash flow very quickly. So certainly, we'll be pursuing all aspects of those along with the critical minerals and the commodity opportunities we see in Western Australia.

Right. Perfect. And flipping to Australia, I know it's already been asked, but just thinking about the contractor usage in the period. There's been 2 quarters now where they've impacted margins. It sounds like they were actually on 2 different functions. Wondering what the strategy is going forward to mitigate just overall impact from contractor usage going forward?

We've been through this more than once in -- both in Canada and down there. It's just building up your skilled trades workforce through apprentice programs and bench hands. We've done this. We're at the levels we budget to be, but certainly, we see more opportunities for continuing to increase the skilled trades in areas that have high demand, which Australia has been the biggest one right now. So it's following our HR programs and bringing in apprentices and building them up quicker.

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

Thanks, Joanna. Thanks again, everyone, for joining us today. We look forward to providing next update upon closing of our fourth quarter results.

Thank you. This concludes the North American Construction Group conference call regarding the third quarter ended September 30, 2025. You may now disconnect.