North American Energy Partners Inc.

North American Energy Partners Inc.

January 13, 2006 23:59 ET

North American Energy Partners Announces Second Quarter Results and Restated First Quarter Results

ACHESON, ALBERTA--(CCNMatthews - Jan. 13, 2006) - North American Energy Partners Inc. ("NAEPI" or the "Company") announced financial results today for the second fiscal quarter ended September 30, 2005 with revenue of $124 million, a record for the Company and a 50% increase from the same period in the previous year. This increase is primarily attributable to the site grading and overburden removal contracts for Canadian Natural Resources Ltd., higher volume of work for Grande Cache Coal Corporation and more activity in the Company's piling division.

EBITDA for the second quarter increased to $21 million, more than double the level achieved in the second quarter of the previous year and only $1 million short of our March quarter, which is traditionally our best. The increase is brought about by higher revenue, higher margin contracts and lower relative equipment costs but partially offset by higher operating lease and general and administrative expenses. "The second quarter results are very encouraging," stated President and CEO, Rod Ruston. "We have maintained excellence in our field while working through the performance issues of late 2004 and early 2005. We now have the Company to a new level of performance and with continued effort we believe that these positive results will only continue in the future." The cash balance for the quarter was nearly $18 million, which is similar to the balance at the March 2005 fiscal year end.



Second Quarter Highlights (in $CDN millions)

Three months ended Six months ended
September 30 September 30
2005 2004 2005 2004
Revenue $ 124.0 $ 82.7 $ 228.4 $ 153.5
EBITDA(1) $ 21.2 $ 10.1 $ 32.2 $ 18.0
Capital Expenditures $ 7.5 $ 3.0 $ 13.3 $ 14.4
(1) see note 1


For complete details on the second quarter results refer to the Company's Form 6-K filing, made on January, 13, 2006 on the U.S. Securities and Exchange Commission website, www.sec.gov.

Restated First Quarter

Below is a summary of the effect of the restatements on net income for the first fiscal quarter ended June 30, 2005. Note that none of these changes affected cash flow, EBITDA or any covenants under the Company's revolving credit facility.



Impact on Net Income Increase (decrease) - in $CDN millions

Elimination of Hedge Accounting $ (3.7)
Series A Preferred Shares $ 0.7
Series B Preferred Shares $ (41.4)
Financing Costs $ 5.2
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Change in Net Income $ (39.2)
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The most significant adjustment, a decrease of $41.4 million, relates to the Company's series B preferred shares. These shares were issued in May 2005 for cash consideration of $7.5 million and valued at that same amount. The Company has now determined that these shares, classified as debt for accounting purposes, should be valued at the maximum amount that would be paid if the redemption of these shares occurred at the reporting date. For further information see note 3 to the restated June 30, 2005 financial statements, filed on Form 6-K/A on January 13, 2006 with the U.S. Securities and Exchange Commission.

For over 50 years NAEPI has been one of the largest providers of mining and site preparation, piling and pipeline installation services in western Canada. NAEPI provides services primarily to major oil and natural gas, petrochemical and other natural resource companies within western Canada and maintains one of the largest independently owned equipment fleets in the region.

Note 1:

EBITDA is defined as earnings before interest, income tax, depreciation and amortization, with adjustments for other non-cash items including, stock-based compensation expense, unrealized foreign exchange gain on senior notes, realized and unrealized loss on derivative financial instruments, write-off of deferred financing costs and the (gain) loss on disposal of property, plant and equipment.



Reconciliation of net income to EBITDA (in $CDN millions):

Three months ended Six months ended
September 30 September 30
2005 2004 2005 2004
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Net income $ 11.5 $ (4.7) $ (37.7) $ (9.8)
Interest expense 3.3 7.9 53.5 15.2
Income taxes 0.1 (1.6) 0.2 (4.2)
Depreciation 5.5 5.1 10.5 9.7
Amortization of intangible assets 0.2 1.1 0.4 2.5
Stock-based compensation expense 0.1 0.1 0.3 0.2
Unrealized foreign exchange gain on senior notes (16.4) (14.1) (15.3) (9.4)
Realized and unrealized loss on derivative financial
instruments 17.5 16.1 18.8 13.5
Write-off of deferred financing costs - - 1.8 -
(Gain) loss on disposal of property, plant and
equipment (0.6) 0.2 (0.3) 0.3
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EBITDA $ 21.2 $ 10.1 $ 32.2 $ 18.0
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This news release contains forward-looking statements. Actual results could differ materially from those contemplated by such forward-looking statements as a result of any number of factors and uncertainties, many of which factors may be beyond our control. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in NAEPI's periodic reports filed with the United States Securities and Exchange Commission. Undue reliance should not be placed upon forward-looking statements and we undertake no obligation to update those statements.

North American Energy Partners Inc. will be reviewing its second quarter results and the restated first quarter results via conference call on:



Date: Wednesday, January 18, 2006
Time: 2:00 p.m. MST (4:00 p.m. EST)
Dial In #: 1-888-458-1598
Pass Code: 9984534#

A playback of the call will be available until midnight February 18, 2006 at:

Phone #: 1-877-653-0545
Pass Code: 303475# (follow prompts)

Contact Information

  • North American Energy Partners Inc.
    Vincent J. Gallant
    Vice President, Corporate
    (780) 960-2255
    (780) 960-7167
    Email: vgallant@nacg.ca