North American Construction (NOA) Wins 5-Year Extension Deal

North American Construction Group Ltd. NOA, or NACG’s MacKellar Group, has received a five-year contract extension from a major metallurgical coal producer regarding a mine in the state of Queensland, Australia.

The new deal extends the expiry date from Jun 6, 2025, to Jun 30, 2030, and qualifies as a contractual backlog given the agreement’s minimum hour commitments. Rental scopes are estimated to be $100 million per year, resulting in a total value of $500 million.

The contract requires two additional loading units and one service truck, which will cost between $20 and $25 million. This will be purchased in fourth-quarter 2024 and bring the total dedicated fleet at this site to approximately 70 heavy equipment units.

NACG acquired MacKellar Group for a total expected consideration of $395 million in October 2023.

Share Price Performance

Shares of this heavy equipment and mining contractor gained 23.1% in the past three months compared with the Zacks Building Products - Heavy Construction industry’s 36.7% growth.

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NACG provides equipment maintenance and mining and heavy construction services to the resource development and industrial construction markets in Canada, the United States and Australia. Its range of services includes constructability reviews, budgetary cost estimates, design-build construction, project management, contract mining and equipment maintenance.

NOA’s 2024 earnings estimate increased to $3.27 per share from $3.22 in the past seven days, indicating 47.3% year-over-year growth.

Zacks Rank & Some Recent Construction Releases

NACG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MasTec, Inc. MTZ reported impressive results in fourth-quarter 2023, with earnings and revenues beating the Zacks Consensus Estimate. Earnings declined on a year-over-year basis, but revenues increased on the back of strong contributions from the Oil and Gas segment.

MTZ's fourth-quarter results aligned with its expectations following a challenging 2023. The company is poised to capitalize on the opportunities and aims to achieve record levels of revenue and adjusted EBITDA in 2024. The robust demand for MTZ's services suggests the potential for double-digit revenues and earnings growth in 2025 and beyond.

Sterling Infrastructure, Inc. STRL reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. Both the top and the bottom lines increased year over year.

The upside was driven by strong contributions from the Transportation and Building Solutions segments, along with its strategic emphasis on higher margins.

Dycom Industries Inc. DY reported tepid results for fourth-quarter fiscal 2024 (ended Jan 27, 2024).

Both the top and bottom lines missed their respective Zacks Consensus Estimate. Contract revenues increased, but earnings declined on a year-over-year basis.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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