North American Construction Group Secures Major Contract
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North American Construction Group Announces Major Five-Year Contract
North American Construction Group Ltd. (“NACG” or “the Company”) (TSX:NOA/NYSE:NOA) has revealed that the MacKellar Group has secured a significant five-year contract with an existing client, a prominent metallurgical coal producer in Queensland, Australia. This new contract builds upon a prior agreement, shifting from a dry rental fleet to a fully maintained fleet.
Contract Details and Financial Impact
The newly awarded five-year contract comes with a minimum hour commitment, qualifying as a part of the contractual backlog. The scopes awarded for fully maintained equipment and related services are projected to yield a total value of around $375 million. It is anticipated that the contract scopes will be fully ramped up by mid-2025, leading to an increase in operational scale and efficiency.
Growth Strategy and Investment
In order to fulfill the increased commitments associated with this contract, an on-site maintenance facility will be required, along with twenty additional units. This growth will necessitate a capital investment ranging from $50 to $55 million, predominantly slated for construction and purchases by MacKellar in the fourth quarter of 2024.
Leadership Insight
Joe Lambert, President and CEO of NACG, expressed gratitude towards the client for their continuous trust and confidence. He stated, “We are committed to being their preferred, safe, low-cost contractor for decades to come.” Lambert highlighted that about one-third of the additional fleet necessary for this contract will be sourced from Canada, showcasing the collaborative efforts of NACG’s teams to efficiently provide solutions for their client.
Market Demand and Strategic Relationships
This contract marks the second significant long-term award for NACG in Australia during the year, underscoring the high demand for equipment in the region. It also reflects MacKellar’s strong client relationships and the compelling value proposition offered by NACG's Australian team and fleet. With this agreement, NACG's total contractual backlog now exceeds $3.0 billion, equipping operations personnel with the consistency needed to operate efficiently.
About the MacKellar Group
Established in 1966 and a wholly owned subsidiary of NACG since 2023, MacKellar has built a stellar reputation in Australia for performance and reliability. The company specializes in heavy earthmoving equipment solutions and has a distinguished history of involvement in significant mining and civil earthwork projects.
About North American Construction Group
NACG stands as one of the largest providers of heavy construction and mining services across Canada and Australia. With over 70 years of experience, NACG has consistently delivered services to the mining, resource, and infrastructure construction industries.
Contact Information
For further details, interested parties can reach out to Jason Veenstra, CPA, CA, Chief Financial Officer via phone at 780.960.7171 or through email at ir@nacg.ca.
Frequently Asked Questions
What is the value of the new contract awarded to NACG?
The new five-year contract awarded to North American Construction Group is valued at approximately $375 million.
Who is the client for the contract awarded to MacKellar?
The client is a leading metallurgical coal producer in Queensland, Australia, with whom MacKellar has an existing relationship.
When is the new contract expected to ramp up?
The contract scopes are expected to be fully ramped up by mid-2025.
How much capital investment is required for the contract?
The growth capital required for the contract is estimated to be between $50 million and $55 million.
What is NACG's current contractual backlog?
NACG's total contractual backlog now exceeds $3.0 billion following this contract award.
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