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  5. NOA: What is your opinion of North American Construction Group (NOA)? [North American Construction Group Ltd.]
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Q: What is your opinion of North American Construction Group (NOA)? Results out last night indicated they are forecasting adjusted EBITDA of $450 million for the year, at the mid point of their guidance. Trading at only 1.7 times that, which looks quite cheap, although the debt does look a bit higher than you would like to see, at about 2 times the adjusted EBITDA forecast. I'm thinking the acquisition of McKellar should give them some good future growth.
Asked by Dan on May 03, 2024
5i Research Answer:

EPS of $0.39 missed estimates of $0.7145 and revenues of $297.03M missed estimates of $325.77M. Sales grew 7.3% year-over-year, gross profit margins expanded slightly, but part of its year-over-year net income decline is due to high interest expenses on its debt load from the acquisition of MacKellar. Net debt to EBITDA is 2.6X, which we consider to be acceptable, but the high interest expenses can begin to compress margins. But, it is trading at cheap levels of 6X forward earnings, and a low EV/EBITDA of 3X which should compress following this earnings release. The acquisition of MacKellar was significant, and we think this will help future growth, but investors may not like the high interest expenses and earnings miss. Overall, we think operationally the name is strong, but the market may not like the recent string of earnings misses.