North American Energy Partners Inc.

North American Energy Partners Inc.

July 29, 2005 23:59 ET

North American Energy Partners Inc. announces 2005 fiscal year-end financial results

ACHESON, ALBERTA--(CCNMatthews - July 29, 2005) - North American Energy Partners Inc. ("NAEPI") today announced financial results for its fiscal year and fourth quarter ended March 31, 2005. The company reported record revenues, gross profit and operating profit for the fourth quarter amounting to $122.8 million, $24.0 million and $16.1 million, respectively. For the full fiscal year, NAEPI recorded a decrease in revenue of $21.0 million, a $19.5 million decrease in gross profit and a decrease in operating income of $19.4 million. "This past year, as a whole, was disappointing but we are very pleased with our fourth quarter results," reported Rod Ruston, President and CEO. "Now that we have completed our refinancing we can focus our full attention on operations."

Year over Year Results

Revenue for the year ended March 31, 2005 decreased by $21.0 million to $357.3 million, as compared to $378.3 million for the year ended March 31, 2004. Gross profit for the year decreased by $19.5 million to $36.2 million and operating income was $9.4 million for the fiscal year ended March 31, 2005, a decrease of $19.4 million from the prior year. This decrease was primarily a result of lower revenues and higher general and administrative costs. Project costs as a percent of revenue increased to 67% for the year ended March 31, 2005 as compared to 64% for the comparable prior year due mainly to the loss on the OPTI project. Equipment costs decreased by $9.6 million to $59.5 million due primarily to lower lease expense resulting from the buy-out of leased equipment at the closing of the acquisition on November 26, 2003. The results by segment are summarized below:

- Mining and site preparation revenue for the year ended March 31, 2005 increased by $29.0 million to $264.8 million. Contributing to this increase was revenue from new projects such as CNRL site grading and Grande Cache Coal as well as increases in revenue year over year for the OPTI / Nexen project and Syncrude Reclamation. Offsetting these increases were decreases in the Syncrude UE-1 project revenue as this contract nears completion, decreases in Syncrude Aurora II as this contract was completed and decreases on the Albian site as they lowered their demand for contract services.

Mining and site preparation gross profit decreased by $24.4 million in the year ended March 31, 2005 to $11.6 million. The decrease was primarily a result of the loss on the OPTI / Nexen project.

- Piling segment revenue for the year ended March 31, 2005 increased by $12.0 million to $61.0 million as compared to last year's level of $49.0 million. This increase was primarily due to higher activity levels particularly in the oil sands region. The Calgary and Vancouver regions also experienced growth in revenue year over year.

Piling segment gross profit increased by $2.5 million for the year ended March 31, 2005 to $13.3 million. This increase was primarily due to the higher levels of revenue as described above.

- Revenue from the pipeline segment decreased to $31.5 million for the year ended March 31, 2005, down from the record $93.5 million for the prior year. The decrease in volume was primarily due to our client repositioning its efforts in the region and drilling a much lower number of gas wells. The annual revenue over the four years ended March 31, 2003 averaged $31.6 million.

Pipeline segment gross profit was $4.9 million for the year ended March 31, 2005, a decrease of $13.0 million over the prior year. The decrease in gross profit was attributable to the decreased revenue in this segment as discussed above.

Quarter over Quarter Results

Revenue for the quarter ended March 31, 2005 increased by $20.4 million to $122.8 million while gross profit for the same quarter increased by $4.3 million to $24.0 million. Operating income was $16.1 million for the quarter ended March 31, 2005 compared to $3.6 million from the fourth quarter of 2004. The increase in both gross profit and operating income was primarily a result of higher revenues and lower amortization expense on intangible assets. This was partially offset by higher equipment costs in the current quarter, relative to the same quarter in the prior year, due to higher equipment usage and lease costs.

- Mining and site preparation revenue increased to $91.6 million the quarter ended March 31, 2005 from $42.5 million for the fourth quarter ended March 31, 2004. The increase is largely attributable to the same projects that resulted in the increase in revenue for the whole fiscal year as explained earlier.

Gross profit for mining and site preparation increased to $11.7 million for the quarter ended March 31, 2005 as compared to $7.6 million for the same quarter last year. The increase was primarily attributable to higher revenues as noted above.

- Piling revenue for the quarter ended March 31, 2005 increased to $17.0 million compared to $6.5 million for the quarter ended March 31, 2004. This increase was primarily due to higher activity levels in most regions.

Gross profit for the piling segment increased to $4.2 million for the quarter ended March 31, 2005 as compared to $1.7 million for the quarter ended March 31, 2004. The increase was primarily attributable to higher revenues as noted above.

- Revenue from the pipeline segment decreased to $14.2 million in the quarter ended March 31, 2005 from $53.5 million in the fourth quarter of 2004. The decrease is due to the same reasons that influenced the whole fiscal year's revenue for this division.

Pipeline segment gross profit decreased to $2.5 million for the quarter ended March 31, 2005 compared to $10.8 million for the comparable period in fiscal 2004. This was due primarily to lower revenues as described above.

North American Energy Partners Inc. will be reviewing its year end and fourth quarter results via conference call on:



Wednesday, August 3, 2005
1 p.m. MDT (3 p.m. EDT)
Dial In #: 1-888-458-1598
Pass-code: 9984534#
A playback of the conference call will be available until September 3, 2005 at:
#1-877-653-0545
288427# (Follow prompts)


All dollar amounts in the release are in Canadian dollars.

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 registration statement 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.



Results of Operations
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($ in thousands) Twelve Twelve
Quarter ended Quarter ended months ended months ended
March 31, 2005 March 31, 2004 March 31, 2005 March 31, 2004
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Revenue
Mining and Site Preparation $ 91,585 75% $ 42,547 42% $ 264,835 74% $ 235,772 62%
Piling 17,049 14% 6,540 6% 61,006 17% 48,982 13%
Pipeline 14,157 12% 53,321 52% 31,482 9% 93,509 25%
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Total Revenue 122,791 100% 102,408 100% 357,323 100% 378,263 100%
----------------------------------------------------------------------
----------------------------------------------------------------------
Project costs 73,275 60% 65,820 64% 240,919 67% 240,232 64%
Equipment costs 19,735 16% 11,552 11% 59,476 17% 69,102 18%
Depreciation 5,816 5% 5,310 5% 20,762 6% 13,240 4%
----------------------------------------------------------------------
----------------------------------------------------------------------
Gross Profit 23,965 20% 19,726 19% 36,166 10% 55,689 15%
General and administrative 7,514 6% 5,000 5% 22,863 6% 13,848 4%
Loss (gain) on disposal of capital assets (15) 0% 131 0% 494 0% 82 0%
Amortization of intangibles 397 0% 10,960 11% 3,368 1% 12,928 3%
----------------------------------------------------------------------
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Operating income 16,069 13% 3,635 4% 9,441 3% 28,831 8%
Interest expense 8,986 7% 7,919 8% 33,797 9% 13,475 4%
Foreign exchange (gain) loss 9 0% 67 0% 525 0% 72 0%
Other income (160) 0% (179) 0% (421) 0% (597) 0%
Management fees - 0% - 0% - 0% 41,070 11%
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Income (loss) before income taxes $ 7,234 6% $ (4,172) -4% $ (24,460) -7% $ (25,189) -7%
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Additional Information
Capital expenditures $ 5,185 $ 1,767 $ 25,679 $ 7,735
Stock based compensation expense 190 137 497 137
Equipment hours
Mining and Site Preparation 212,722 106,751 673,613 511,479
Piling 10,531 6,562 56,460 57,569
Pipeline 18,474 75,205 33,848 126,033
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241,726 188,518 763,920 695,081
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Consolidated Balance Sheet
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($ in thousands)

March 31, 2005 March 31, 2004
--------------------------------
Assets
Current assets:
Cash and cash equivalents $ 17,922 $ 36,595
Accounts receivable 57,745 33,647
Unbilled revenue 41,411 27,676
Inventory 134 1,609
Prepaid expenses 1,862 1,272
--------------------------------
119,074 100,799
Capital assets 177,089 167,905
Goodwill 198,549 198,549
Intangible assets 1,502 4,870
Deferred financing costs 15,354 17,266
Future income taxes 15,100 -
--------------------------------
$ 526,668 $ 489,389
--------------------------------
--------------------------------
Liabilities & Shareholder's Equity
Current liabilities:
Accounts payable $ 59,090 $ 29,301
Accrued liabilities 15,201 14,694
Billings in excess of costs and estimated earnings 1,325 -
Current portion of senior secured credit facility - 7,250
Current portion of capital lease obligations 1,771 787
Future income taxes 15,100 5,260
--------------------------------
92,487 57,292
Senior secured credit facility 61,257 41,250
Capital lease obligations 5,454 2,251
Senior notes 241,920 262,260
Derivative financial instruments 21,080 740
Future income taxes - 2,515
Advances from parent company 288 -
Shareholder's Equity
Share capital 127,500 127,500
Contributed surplus 634 137
Retained earnings (deficit) (23,952) (4,556)
--------------------------------
104,182 123,081
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$ 526,668 $ 489,389
--------------------------------
--------------------------------


Letters of credit outstanding $ 20,000 $ 10,000

Contact Information

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