Good morning, ladies and gentlemen. Welcome to the North American Construction Group Conference Call regarding the Third Quarter ended September 30, 2023. At this time, all participants are in listen-only mode. Following the management's prepared remarks, there will be an opportunity for analysts, shareholders, and bondholders to ask questions. 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 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 the company's website at nacg.ca. I will now turn the conference over to Joe Lambert, President and CEO. Please proceed.

Thanks, Joanna. Good morning, everyone, and thanks for joining our call today. I'm going to start with our Q3 2023 operational performance before handing it over to Jason for the financial overview. And then I'll conclude with the operational priorities, bid pipeline, outlook for 2023 and our first look at 2024 before taking your questions. On Slide 3, our Q3 trailing 12 months total recordable rate of 0.30 is less than half of what it was at this time last year and remains below our industry-leading target frequency of 0.5. We will continue to focus our efforts on further advancing our training programs, communicating and promoting safe behaviors, flu shots, and audiometric testing, and our winter hazard awareness programs as we enter our busy winter season and continue to add to our workforce. On Slide 4, we highlight some major achievements of Q3. I'll discuss McKellar later, but wanted to highlight the ramp-up of our Fargo-Moorhead flood diversion project, which had its most active earthworks summer that will be followed by its busiest winter as this major infrastructure project progresses into the core of its multiyear construction schedule. Our telematics programs are exceeding expectations, and we continue to expand our capabilities and support to the operations and maintenance teams. Our Mikisew joint venture is progressing nicely and continues to add low-cost second-life rebuilds to its fleet of heavy haul trucks. We see strong long-term demand for the Mikisew fleet and are actively looking for additional core assets to rebuild and continue to grow the joint venture assets. In Northern Ontario, we successfully completed our gold mine construction project joint venture with Nuna and have several active bids in the Ontario and Quebec regions. We also completed a major overburden fleet relocation in oil sands to support changes in customer demand and mine plans during the quarter. We believe the current fleet allocations will fit well with future overburden demand and contract awards, so no meaningful fleet moves will be required over the winter. Moving on to Slide 5, you can see that the aforementioned Q3 fleet mobilizations negatively impacted our fleet utilizations. And although it was a better than average Q3, it was below expectations. However, we remain on trend and confident in our ability to hit our target range of 75% to 85% by the end of next year. Moving on to Slide 6, we highlight some key attributes of the MacKellar transaction. First and foremost, we have cultural alignment, shared core values and maintain a focus on operational excellence, especially in the area of heavy equipment maintenance. We believe these common characteristics and a well-planned transition, which is already underway, will make for a smooth integration into the overall business over the coming year. Financial highlights include a purchase price below book value of assets and a favorable purchasing structure. Additionally, our strong underlying business has allowed us to finance the acquisition with debt rather than equity, resulting in exceptional accretion. The vendor-provided financing and earn-outs align management teams and mutually incentivize performance. Although fully debt financed, leverage is expected to be less than 1.4x by the end of 2024, which is about where we were immediately prior to the transaction closing. Last but certainly not least, MacKellar adds $2 billion in incremental backlog, providing predictability and sustainability for the business that allows for longer-term investments for future efficiency and growth. Measured on all metrics, this deal was a rare opportunity, and we're eager to execute the transition plan and set up MacKellar for long-term sustainable success. Slide 7 lists both our currently wholly-owned operating entities as well as our strategic partnerships. These acquisitions and partnerships have all been formed over the last five years and are the main drivers of our success, growth, diversification, profitability, and lowering our costs. These acquisitions and partnerships have made us stronger and more stable, and that means we change our business for the better. I think one of our major shareholders said it best while observing our assets and facilities when he stated 'this is not your father's NOA.' With that, I'll hand it over to Jason for the Q3 financials.

Thanks, Joe, and good morning, everyone. To start, I'll provide brief context regarding the MacKellar transaction which closed effective October 1. As disclosed in the Q3 report, a final purchase price for the MacKellar Group will be based on audited financial statements as of September 30, 2023. And as such, we continue to disclose the estimated full consideration of $395 million. We look forward to providing full purchase price allocation details in the year-end financials and are encouraged to see strong operating results leading up to and continuing through the closed date. Similar to the other equipment-related transactions we've completed over the past few years, there was zero interruption to MacKellar's operations upon close, and we anticipate a strong fourth quarter from their fleet. The senior secured equipment debt assumed at close, along with the upsized credit facility, both transacted at levels disclosed in the July announcement, gives us overall confidence in the estimate provided. Integrating and reporting on this transformative step change is front and center for a variety of our corporate groups and remains on track for full inclusion in our year-end reporting. Our teams have been in constant dialogue with their Australian counterparts, with weekly and monthly routines taking shape. Moving to the historical financials and some brief commentary. On Slide 5, you'll see effective performance in the oil sands and progress on the Fargo-Moorhead project drove adjusted EBITDA of $59 million, which essentially matches the record-setting Q3 we achieved last year. Return on invested capital of 14.7% remains stable, as the company goal we had set for ourselves was 15%, as trailing 12 EBIT of $137 million was generated by the invested capital, which now sits at $735 million, just prior to the MacKellar acquisition, which will add, as mentioned, $395 million to invested capital. On a total combined basis, on Slide 10, revenue was slightly up from Q3 2022. Reported revenue increased from Ml Northern acquired on October 1, 2022, providing another full quarter of operations and a strong quarter from DGI trading. These increases were offset by lower equipment utilization achieved in the quarter as we moved equipment into Fort Hills, as mentioned by Joe. Our share of revenue generated in Q3 by joint ventures was $78 million, which was the same as Q3 2022. The Fargo-Moorhead project had an excellent operational quarter and achieved the progress metrics and project milestones they were targeting. In addition, we had positive contributions from the continued growth of top-line revenue from rebuilt ultra-class haul trucks and excavators directly owned by our joint venture with Mikisew. Offsetting these positives, the Nuna Group of Companies did not have the typical busy Q3 they are accustomed to. Permitting delays and the impacts of wildfires in northern Canada, particularly the evacuation of Yellowknife, had significant impacts on Nuna's ability to carry out their assigned scopes. Combined gross profit margin of 13.9% was a quarterly improvement from the 13.1% we posted last quarter, despite the challenges experienced by Nuna and again reflects the strength of a diversified business. Margins benefited from the ML Northern acquisition from both lower internal costs as well as strong margins from services provided to external customers. Moving to Slide 11, adjusted EBITDA was consistent and reflective of the revenue commentary. Included in EBITDA are direct general and administrative expenses, which were $6.9 million in the quarter, equivalent to 3.5% of revenue, and remained under the 4% threshold we set for ourselves. Going from EBITDA to EBIT, we expensed depreciation equivalent to 12.8% of combined revenue, which reflected the depreciation rate of our entire business, including the very active equipment fleet at the Fargo-Moorhead project. When looking at just the wholly-owned entities and our heavy equipment, the depreciation percentage for the quarter was 14.7% of revenue and reflected the challenging utilization quarter. Adjusted earnings per share for the quarter of $0.54 was $0.11 down from Q3 2022, as the impacts of higher depreciation and interest rates are factored in with EPS. The average interest rate for Q3 was 7.1%, up from the Q3 2022 effective rate of 5.8% due to well-known interest rate increases. Excluding the upcoming impact of the MacKellar acquisition on Q4 results, the gross interest expense of $8.1 million is expected to be the high watermark as free cash flow is generated in Q4, allowing for the paydown of debt with the expectation of stable rates moving forward. Moving to the final financial Slide 13, net debt levels remain stable at $395 million in the quarter as the $10 million of free cash flow was used for growth asset purchases, dividend payments, and trust purchases. The correlated net debt and senior debt leverage remained steady at 1.4x and 1.3x, respectively. And with that, I'll pass the call back to Joe.

Thanks, Jason. Looking at Slide 15. This slide summarizes our priorities moving forward. The MacKellar integration is obvious, and I'll touch on that in the next slide or so. And I'll rightfully start with safety. This area of focus, being core to our culture and values, is our ongoing effort to ensure each and every one of our employees returns home safely at the end of every workday. As I've stated before, although we have an extensive health and safety management system and multiple initiatives for improvement, we continue to feel our growing workforce requiring increased new hires and an industry supply lowering in experience. Our focus on further developing our frontline supervision and expanding our green-hand training programs will be key as we expand. Item three describes our prioritizing winning bids to continue to build our backlog, which provides consistency and stability in our operations and financial projections and continue to drive our diversification into commodities and geographies that reduce our risk profile while improving return on assets or lowering capital intensity. The final area prioritizes continued expansion of our operational maintenance expertise. We will prioritize new technologies, such as our telematics system, and continue to in-house and vertically integrate our maintenance services and supply, including a near-term focus on identifying and sharing best practices between our Canadian and Australian businesses. We believe this prioritization and focus will continue to lower costs and improve equipment utilization, resulting in increased competitiveness and likelihood of winning the tenders mentioned in the previous item. Slide 16 shows some key milestones in our MacKellar integration plans, much of which I have discussed previously. What I would like to highlight is just like any project in North America, we know a project well-planned that starts strong tends to run smoothly. As such, we have had our transition ERP teams including our internal systems experts, expert consultants, who we have had prior experience and success, and MacKellar executives and senior management, developing our execution plan far before this deal closed. Within the first week after close, we had MacKellar executives in Canada reviewing and providing input on those plans. Before the end of October, we will have boots on the ground in Australia executing the plan as we speak. We believe strongly that the system stability and increased management information that our transition here between teams can bring to support the MacKellar team will provide a robust, well-tested foundation for the future growth and increased profitability of the business. Slide 17 highlights a net increase of around $1.5 billion to our already strong bid pipeline with large increases from long-term non-oil sands contract tenders. One change of note to the bid pipeline has been our regional oil sands tender. Unlike the original submission, which was for a five-year term with committed overburden volumes for all five years, the client has told us they're pivoting to a three-year term with committed overburden volumes for one year. The change to a master services type agreement with annual commitments isn't new and is a return to the same structure of agreement we operated under for many years prior to this current agreement. Although no formal reason was provided for the change in term and commitment, we believe the client is looking to optimize their longer-term mining plans and focus on operational opportunities as communicated by their leadership team. We believe oil sands demand for heavy equipment, especially for the larger ultra-class size equipment, will remain strong for the foreseeable future, and our fleet will be fully engaged for 2024 and beyond. The shorter-term commitment has some positives, as pricing is only firm for one year, and we have low risk for cost inflation that can occur outside of contract escalation indices, such as we had in the last couple of years. Lastly, although we truly believe our oil sands demand will remain strong for many years to come, we also see those big diversified dots and continued strong heavy equipment demand in Australia as opportunities to further diversify and reduce consolidation risks. Lastly, on backlog, in Q3, we were awarded winter projects in oil sands totaling about $30 million, and Nuna was awarded a $30 million mine remediation project. On Slide 18, our pro forma backlog sits at a record $2.8 billion, with our additional MacKellar adding about $2 billion, and our expectations for year-end are to have backlog in excess of $3 billion with the award of the regional oil sands tender offset by our normal quarterly drawdown from executed work. On Slide 19, we have provided a revised outlook for 2023. With MacKellar closed, Q3 in the books and a focus on a safe and efficient close to the year, we've been able to increase the midpoint and tighten the range for EBITDA with an encouraging uplift for EPS as well. Sustaining capital increased due to some remanufactured component quality issues which we have isolated and resolved and a slight increase from MacKellar, free cash flow is also reduced due to the previously mentioned sustaining capital increase, combined with joint venture distributions deferred into the new year and slightly offset by the increased EBITDA projections. On Slide 20, we have provided our initial outlook for what is projected to be a record-setting year. This is a slide I've been eager to get to. Outpacing our 50% accretive acquisition, adjusted EBITDA and EPS midpoints are more than 80% increases over any previous year-end result. Free cash flow is more than double any previous year-end result. If directed to debt repayment, our net debt leverage at the end of next year will be less than 1.4x, which is a level lower than any previous year-end. This slide more than any other shows what this business and this team can produce, and I'm so excited to close out this year strong and achieve these 2024 targets while continuing to challenge our team to advance this business beyond expectations for years to come. In my 15-year tenure within NOA, these are by far the strongest projections we have issued. Lastly, regarding capital allocation, as always, we continue to assess our options in light of market and other macro conditions outside of our control, and we'll provide our expected allocation in more detail on our next call. With that, I'll open it up for any questions you may have.

Thank you. Your first question comes from Yuri Lynk of Canaccord Genuity. Your line is open.

Good morning, guys.

Good morning, Yuri.

Joe, just wondering how your 2024 expectations for MacKellar have evolved since you announced the deal back in July.

I think we probably have a bit more information and that we're probably a bit more optimistic on what we put out as the annual contributions. It's probably slightly more than what we had in that July 27 deck. So we brought them up, and I think we have more confidence in those numbers.

Okay. And does that imply the legacy business is kind of flat to modestly up on EBITDA in 2024?

I think it's fairly significant. I believe we're likely experiencing a year-on-year increase of around 10% to 15%. I'll need to ask Jason to calculate the exact numbers for me.

Yes, that's correct. We're expecting a really strong year from Fargo, and then strong, probably 10% up on the legacy business from an EBITDA perspective.

Okay. And Jason, just while I have you, on the guidance, a pretty significant increase at the low end of EPS guidance for 2024 based from what I was expecting anyway. Was there anything in D&A or interest expense that played into EPS beyond what the EBITDA would have implied?

No. It's all in the EBITDA rate. Depreciation, taxes and interest all are at run rates that would have been in previous guidance. So, yes, the uptick you're seeing would be stronger than expected. Run rate at MacKellar, as Joe alluded to, clarity with Fargo, and then strong utilization from oil sands assets.

Okay. That's it for me, guys. Thanks.

Thank you.

Your next question comes from Aaron MacNeil of TD Cowen. Your line is already open.

Hi. Good morning, and thanks for taking my questions. I think I'll stick with the guidance as well. If I look at the midpoint of the revised 2023 guidance, I think sustaining capital shakes out to about 12.8% of revenue. Next year, that bumps up to 14.5%. And I'm just asking the question, because you highlight the relatively new or fleet of MacKellar. All other things being equal, you expect that introducing newer equipment in the fleet would bring that ratio down. And so I'm just wondering, is that increase a function of your conservatism or are there other factors at play that we should be thinking about?

There is some conservatism in that because we haven't done the detail of the component scheduling at MacKellar that we do here. We're in the process of doing that. So there's more of an assumption of sustaining capital being at the depreciation levels. So yes, our expectation would be that we could actually improve upon that with the MacKellar site. But there's always risks too, right.

Got it. So in terms of the legacy business, there's no major changes. Is that the right way to think about the sustaining capital?

Yes, I think that's fair. Jason here from the financial side. I think, as Joe alluded to, the component issues in 2023 here would be a factor in that percentage as well. And we'll just take a look as we go through 2024.

Makes sense. I know you already spoke to this a bit, but can you walk us through next steps with that regional oil sands contract that you're chasing? And specifically, I'm wondering how much of that contract is extending existing work scopes versus new work scopes? How might things work if your contract expires but you haven't signed a new one yet? And just kind of like what you expect the timeline to be?

We expect to finalize it before the end of this month and are in communication with them almost daily. We discussed some terms and conditions with them yesterday. Changes like this aren't uncommon. You may recall from our last oil sands contract renewal, which we announced in March 2022, that we were informed about the award in September of the previous year. The contract expired on December 31, and we had to have a bridging contract until we signed off on March 17. Complex contracts can take time to execute, so we anticipate this will be completed by the end of November. We expect to receive a level of work that aligns with our activities this year to keep our fleet fully utilized, as we believe the demand is strong. I understand there's some concern because we indicated we would secure this contract last year, but it was deferred to this year, and now we're projecting a November completion. This process can be frustrating, but it's typical for contracts of this size, especially after significant changes in our client’s senior leadership. Our budgeting and forecasting rely on fundamental factors like supply, demand, competition, and pricing. We are confident we will be awarded work that will keep our oil sands fleet engaged for the next year and beyond. The structural change is simply a return to an older format, driven by the need for flexibility in their operational plans. While it is frustrating, we do not foresee any significant impact on our business.

The bridging contract is exactly what I was referring to. If there are further delays and the contract is not signed until the spring, we anticipate having a similar type of arrangement.

We would have some amendment with the existing contract that extends it until whenever they are ready, similar to what we did with the last one.

Yes.

Just an amendment that extended the term of the previous agreement until we had all the terms and conditions signed out on the previous one.

I appreciate the color. I'll turn it over.

Yes, no worries.

Your next question comes from Maxim Sytchev of National Bank Financial. Your line is already open.

Hi. Good morning, gentlemen.

Good morning, Max.

Joe, I was wondering if you don't mind maybe commenting in a bit more granular detail around some of the Australian business, because I think some of the local peers are sort of calling out flattish 2024. And maybe if you don't mind how met coal is different from thermal and maybe some of the puts and takes that you're seeing kind of like on the ground as you get more comfortable with the asset? Thanks.

Yes, Max, I would say we continue to observe a strong market across all commodities that seems to be lasting. This applies to our oil sands business as well as met coal, thermal coal, and other commodities where we see significant demand. Our bid pipeline reflects this, particularly in our Canadian operations. Although it's not shown in the graphs, the same trend is evident in Australia. We've received numerous inquiries and are aware of about six different infrastructure projects we will be involved in there, which MacKellar has not pursued before. I don't believe we've encountered any negative surprises in our efforts up to this point or regarding our future expectations. Our projections for 2024 show an increase compared to our July 27 presentation, and we base this on fundamental principles. This outlook is not overly optimistic; we fully intend to meet or exceed these targets. I believe we can achieve a growth rate of 5% to 15% annually in our business, which applies whether we are discussing Canadian resources, Australian operations, or the lumpier infrastructure sector. Overall, I would say we are reaffirming our confidence in the market moving forward.

For sure. Thank you for that. And I guess on the interest side of things, Joe, so are you at the point right now evaluating sort of these opportunities? And would you have hypothetically the ability to participate in those if some of them sort of come to fruition in Australia I'm talking about?

Yes. We're really early stage as in expressing interest to receive tender packages, and then talking to potential partners like our partners that we're using in Fargo. But there's a significant amount of work that we're already aware of that we have to engage in. We're just looking at ones that have meaningful earthworks to them. And I think we've already identified five different jobs. There were solar farms, wind farms, there's a desalination plant, harbor bypass, and an inland rail that we're looking at down there that we would just be expressing interest in and then looking at partners. These things don't move real fast. They tend to be years in the process. But we do see great opportunity down there to expand our MacKellar business into that. And our COO, Barry, is down there right now talking to them.

Okay, it's good to hear it. Thank you. And then do you mind maybe just kind of, because you mentioned Fargo, maybe kind of discussing sort of the political path of this project. And where it stands in terms of the execution dynamic and partners and so forth, just maybe an incremental color on that? Thanks.

Yes. I think we had a really good summer and looking to finish it up with a strong winter there. Last winter, we weren't real busy, but this winter is going to be much busier. And then next summer, not only is the earthworks high, but we start into the roads and bridges side of things. So we really get into the teeth of this project over the next four years. I think we had a six-year construction schedule altogether or something like that. And there's really the meat of it that we're just getting into. And from the earthworks side, we were pretty much meeting and beating our plans, at least we did this year and we will hopefully continue to do that. So our expectations remain high for that project.

I think we are mostly past the challenges related to the supply chain and certain materials, and I assume labor is in a similar position, specifically regarding that project.

Yes. We've primarily been focused on the earthworks. Overall, our equipment, labor supply, and maintenance have been performing well. Initially, there was some uncertainty, but we have successfully adhered to our plans and exceeded several production forecasts. As we transition to the bridge and roadwork, I estimate that we will finish the year at around 25% completion on the earthworks. However, progress on the bridge and roadwork is still limited. By the end of next year, as everything reaches that 25% completion mark or beyond, it will provide a good milestone to better gauge the overall progress of the project.

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

Thank you, Max.

Your next question comes from Jacob Bout of CIBC. Your line is already open.

Hi. Good morning, Joe and Jason. This is Rahul on for Jacob.

Hi, Rahul.

Good morning.

I had a couple of questions on guidance as well. I believe this slide deck mentions that 2024 revenue guidance assumes MacKellar's current run rate operations, so not much growth being baked in there if I'm reading that right. Would you say there is a degree of conservatism being built in here given integration has just started and the broader macro environment?

I think that's reasonable. But we're going with what we have in hand. This is still first principles budgeting, but we're not assuming any big growth opportunities or expansions.

I think I can elaborate on that. The current run rate is the Q4 run rate. MacKellar is at a tick above even their Q3 prior to our acquisition. So the comment is really meant to say, the range for MacKellar is consistent with where they're running here in Q4. So, obviously, the upper end would be a bit of an increase for them, and the lower is kind of where they're at right now.

Right. That's helpful. And then in regards to the 2023 EBITDA and EPS guidance swing, just wanted to clarify. Is that just a factor of the timing of the MacKellar acquisition close or expectation for better performance in the legacy business as well, or both?

Yes, of course it's both. But the primary is MacKellar. We had MacKellar closing in mid-November here as far as the July 27 guidance. The ability to close it effective October 1 gave us some upside there. But we have a slightly improved outlook for our base business as well. So that's what gets the midpoint of $2.90 for EPS.

Okay, very helpful. Thank you very much. I'll pass it over.

Your next question comes from Adam Thalhimer of Thompson Davis. Your line is already open.

Hi. Good morning, guys. Nice quarter.

Hi, Adam.

The revenue you lost within Nuna in Q3, does that come back in Q4, or is that just a deferral?

We're making efforts, but it largely depends on the weather. Many of the locations are likely to experience snowfall soon, if they haven't already. Unfortunately, we can't always postpone those delays beyond a certain point due to working in high snowfall areas on some of these projects. As a result, some of the work gets pushed to next year. In cases where there are deferrals with Nuna in Q3, it's not always possible to recover that within the same year. If I had to estimate, I would say it's about a mix of half and half.

Okay. I also wanted to ask about the bid pipeline. Did your bid pipeline increase from $5 billion to $6.5 billion? Is the jump due to the inclusion of MacKellar?

No. Actually, there are several significant mining projects that we have which span multiple years and are not related to oil sands, that have emerged in the last quarter. I believe we've added over $2 billion in pre-tender phased projects in that area. We continue to see good opportunities for long-term mining contracts in the resource industry in Canada, and I expect similar prospects in Australia. However, these projects currently represent only our core business.

Good news. And then your largest oil sands customer, the change in terms and commitments, if you were in our shoes, would that at all change the way that we should be modeling your oil sands business?

No, I wouldn't change it at all. It's unfortunate that we have to revise our timing of things, but it's not unusual. As I said, the exact same thing happened on our last contract with the other oil sands producer. Unfortunately, this one's even bigger than that one was. So I can understand how it may create some anxiety, but it wouldn't change our basis of prediction of how we're going to perform. Our budgeting and forecasting is done purely on first principles, and hopefully with a little bit of conservatism in them. So, no, we fully expect that we will replace that work and hopefully do more through an increase in utilization, which is what our plans are.

Great. And just lastly, Jason, do you have the depreciation numbers for Q4 and for 2024?

Not right in front of me. I think we're running right around 15% combined revenue for those years, and it's all reflected in EPS. So we're giving ourselves a little cushion with MacKellar as the common had their capital for next year. So a little difficult to predict MacKellar’s depreciation rate at this point, but we're right around that percentage.

Okay. Thanks, guys.

Thanks, Adam.

Thank you.

Your next question comes from Tim Monachello of ATB Capital Markets. Your line is already open.

Hi, guys.

Are you Tim's brother?

Yes, his evil twin. I guess just around the Suncor contract you guys are negotiating, is that still going to incorporate all the sites into one?

It will be one form of contract for all three sites. I guess technically, there's five different mine sites on three different locations. But each one will have their own scope.

And you'll be able to discern that. Is that still the idea, or has that changed as well?

No. I believe our contract specifically, I don't believe that will be in every base contract. I believe we will have that provision in ours, where we allow movements of committed volume between sites.

Okay. And I appreciate all the commentary around sort of your view of how it may or may not affect activity, at least over the near term. The optics of it might suggest that the long-term positioning for the way that they're thinking about contractor usage has changed and that would align with some of the commentary that you said publicly, although I think there's a number of structural reasons why that's difficult. I'm wondering if you can kind of elaborate on why you think your positioning in the oil sands is defensive over a longer period of time.

The key factors driving our business include our status as a low-cost provider and the unique nature of the mining equipment sector. Unlike the automotive industry, which produces hundreds of thousands of vehicles, mining equipment manufacturers typically produce only a few dozen units annually for a global mining market. This creates a straightforward supply and demand scenario. While there may be concerns about contract timing, our forecasts are based on solid principles rather than emotions. Every new truck or piece of equipment arriving in Fort McMurray is tracked closely due to the area's limited access. We have insights into the manufacturers' production capabilities and timelines. For instance, some of the largest hydraulic shovels can have a lead time of two years, and not all of them meet the necessary compliance standards for sale in Canada. We also have a clear understanding of the required volumes based on communications with our clients regarding contractor needs and haul distances. Our analysis is rooted in actual supply and demand metrics concerning equipment availability and delivery timelines. Furthermore, we believe that as a reliable low-cost provider, we are well-positioned to endure market fluctuations, although we remain optimistic that a downturn is unlikely. Additionally, we are exploring various opportunities beyond the oil sands sector in other commodities.

Okay. I appreciate all that. If in a worst-case scenario, you did start to see declining demand, how early do you think you would start to see signals in the market, customers buying equipment or contractors being laid off? Like, is that something that you would see with relatively good lead time that you could move equipment to better opportunities? Do you think that could be a sudden shift?

No, I believe we would notice it. I think our customers would let us know, especially considering our strong relationship with the Mikisew, who have made significant investments in our capital assets. They are also partners with our producers on projects like the tank farm, which highlights our longstanding relationship. We are not going to abruptly leave the oil sands and leave our customers in a difficult position, and I don't think they would do that to us either. So in my view, Tim, I believe we would have years of advance notice.

Okay, that's helpful. Second, one question here. Just to follow up on the bid pipeline question. You not only did expand, but you have some pretty large blue circles probably $3 billion or so worth that have come into that preferred opportunities and extensions category. Wondering if you can speak to those and what makes those preferred.

What makes them preferred is that we have existing relationships with the client. And the two biggest ones are the regional tender and working Baffinland, which we'd look at with Nuna, if you're looking at the preferred opportunities.

Yes, but there's like three sort of larger blue circles in the 2025 area.

Yes, there's a major mining reclamation for a diamond mine with the relationship that we've had in the past through Nuna. There's Baffinland iron stuff for Nuna and then there's the regional health tender.

Okay. And then as it relates to the Northern Ontario gold mine, the contract just ended for Nuna, do you think you're going to be able to find work for that out east, or is that being immobilized back to the oil sands now?

I think we will be moving some operations back to the oil sands. We are currently evaluating the tenders available in Ontario and Quebec for the excavators and trucks we have. Additionally, Barry is exploring opportunities in Australia, particularly whether we should consider shipping some resources there to meet the demand in the Western Australian market, which is more suited for those smaller trucks.

Okay, that's really helpful. I'll turn it back. Look forward for an exciting 2024.

Thanks, Tim.

Your next question comes from Sean Jack of Raymond James. Your line is already open.

Hi. Good morning, guys. Just really quickly wanted to look back at Slide 16 and just ask, how sensitive is the guidance for 2024 to some of the key steps shown here? And would there be a critical step that you would highlight as the most influential to your guidance success in hitting the midpoint?

I'd share in this integration I think the key for us would be in the ERP implementation. But I don't think that prevents anything from happening. As Jason said, they're on this burn rate right now in Q4. Obviously, we haven't done anything yet. So we see most of this as being upside opportunities and sharing best practices. And that's really where we see the synergy of the deal. It's really not shown in it right now.

Okay, perfect. And just quickly, I know that you've spoken a lot about transition metals and the market there in Australia when the deal was originally announced. Just for context, when you guys are now kind of looking a bit more closely at the bid pipeline down in Australia, are you seeing many immediate options in that space right now?

Certainly, the lithium market is very active in that region because it involves hard rock extraction, which is different from the brine methods used in South America. There is an uptick in the copper and iron ore sectors, and whether that falls under the category of transition metals is uncertain. Additionally, there are some zinc opportunities, although I don't have the specifics of their bid pipeline yet. Overall, the marketplace for metals in Western Australia is quite active, as well as in the thermal and metallurgical coal markets in Eastern Australia.

Yes. Okay. Perfect. That's all really helpful. Thanks.

You bet.

Your next question comes from Aaron Kumar, investor. Your line is already open.

Hi, team. Congratulations on closing the acquisition. I have two questions. One is on capital allocation with regard to share repurchases, especially if the stock is trading well below 10x our estimated future earnings. I understand as we look forward, want to pay down the debt first, but I'm trying to understand if the shares are still trading at low valuations, how does the team look at capital allocation? And then I'll come back to the second question. Thank you.

Yes, Aaron, we looked at capital allocation the same all the time. We're always evaluating return opportunities and risks and appreciate you highlighting the bargain that our share price is right now, I agree. We'll be having those discussions with our Board here in the next couple of weeks, and looking where we put the significant cash flow we're going to generate in 2024 to work. So I agree with our current PE. It starts with a 6 with today's opening price. I think you were mentioning less than 10x. I think there are some opportunities there. But we'll be evaluating that. Certainly, debt repayment, I think we're over 7% interest rate this last quarter. And obviously, that has zero risk. So there's going to be competition for capital. We also have done very well with some bolt-on acquisitions in the past and vertical in-housing. So if those opportunities come up, it's really just a competition of risk and return.

Thank you. My other question's more on the longer term opportunities in Australia, like the acquisition you made with MacKellar and thoughts on deploying cash at good returns over the next 5 to 10 years if there are other regions around the world that would be of interest. How are you thinking about allocating capital? Thank you.

Yes, Aaron, I think whether it's Australia or here, we're going to look at the return on assets. Just like I was talking about these trucks that are in northern Ontario, we're going to put equipment where it gets the best return. If that's in Western Australia, we'll put them in Western Australia. If it's in Canada, it will be in Canada. I think, historically, the marketplaces that we've thought were best for us would be North America, Australia and South America. Obviously, we're in North America and Australia right now. Most recently, South America has had a lot more turbidity in governments and royalty regimes. So it's kind of suppressed investment dollars from the mining world. But obviously, that could change. If we're looking longer term, we would certainly be looking back in South America again. But for sure, the North American and Australian opportunities in the near term, even 5 to 10 years we think are going to be tremendous. I think that's all the questions, unless you have any more, Aaron.

No. That would be it. Thank you.

Thank you, Aaron.

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

Thanks, Joanna. And thanks everyone for attending today's call. I hope you all have a safe and festive holiday season. I look forward to sharing our year-end results and business updates with you in the new year.

Thank you. This concludes North American Construction Group conference call on the third quarter of 2023. You may now disconnect.