North American Energy Partners Inc.

North American Energy Partners Inc.

August 29, 2005 23:59 ET

North American Energy Partners Inc. announces fiscal first quarter financial results

ACHESON, ALBERTA--(CCNMatthews - Aug. 29, 2005) - North American Energy Partners Inc. ("NAEPI") today announced financial results for the first fiscal quarter ended June 30, 2005 stating that revenue in this quarter has increased by $33.5 million compared to the quarter ended June 30, 2004, giving a result of $104.4 million. "We are very pleased with our progress to date at the Canadian Natural Resources Ltd. ("CNRL") Horizon project site and at the Grande Cache Coal Corp. ("Grande Cache") site both of which have contributed positively to our first fiscal quarter," reported Rod Ruston, President & Chief Executive Officer. "Revenue from these projects as well as increased activity in the piling division more than offset the decline in revenue from EnCana and from the Syncrude UE1 project which nears completion."

Gross profit for the quarter ended June 30, 2005 was $12.9 million, an increase of $4.8 million compared to the quarter ended June 30, 2004. The higher revenue as well as lower relative project costs accounted for the improved results. Operating lease expense totaled $2.9 million for the quarter, up significantly from the comparable period last year.

Operating income was $5.2 million for the quarter ended June 30, 2005, an increase of $3.6 million from the quarter ended June 30, 2004, primarily as a result of higher revenues net of higher general & administrative costs.

This quarter the company issued US$60.5 million of 9% senior secured notes and $8.5 million of preferred shares. The proceeds of this refinancing were used to repay the amount outstanding under our senior secured credit facility and to pay the fees and expenses related to the refinancing. Financing costs related to the issuance were $8.1million which includes $1.8 million of deferred financing costs related to the previous senior secured credit facility that were written off in the period.

Divisional Summary

Mining and Site Preparation

Mining and site preparation revenue for the quarter ended June 30, 2005 increased by $35.9 million to $82.7 million compared to $46.8 million for the quarter ended June 30, 2004. The increase is due primarily to new project work on the CNRL and Grande Cache sites, offset by decreased activity on the Syncrude UE1 project as this contract nears completion. Revenue of $5.3 million related to claims from certain site grading projects was recognized in the quarter ended June 30, 2005. The company has recognized revenue related to claims when the evidence supporting the claim is objective and verifiable and is otherwise determined in accordance with generally accepted accounting principles.

Mining and site preparation operating profits increased by $8.2 million for the quarter ended June 30, 2005 to $11.7 million compared to $3.5 million for the quarter ended June 30, 2004, primarily due to the higher volume of work in the quarter. Segment profit, as a percentage of revenue, increased from 7.5% to 14.1% due mainly to a lower proportion of low margin cost plus contracts in the current period and the impact of high costs on a single large project last year.

Piling

Piling revenue for the quarter ended June 30, 2005 increased by $6.7 million to $20.0 million as compared to the quarter ended June 30, 2004. This increase was primarily due to higher activity levels in most operating regions. However, for the same year-on-year comparison, operating profit for this segment decreased by $0.2 million to $2.8 million because the higher volume of work was offset by a higher proportion of lower margin driven pile work.

Pipeline

Revenue from the pipeline segment decreased significantly from $10.8 million in the quarter ended June 30, 2004 to $1.7 million in the quarter ended June 30, 2005 due to lower demand from the company's major pipeline customer.

Pipeline segment operating profits decreased by $1.3 million for the quarter ended June 30, 2005 to $0.3 million as compared to $1.6 million for the quarter ended June 30, 2004 due to the decreased volume of work.

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

Wednesday, August 31, 2005 1 p.m. MDT (3 p.m. EDT)

Dial In #: 1-888-458-1598 Passcode: 42068#

A playback of the conference call will be available until September 30, 2005 at:

#1-877-653-0545
290912# (Follow prompts)

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 (unaudited)
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($ in thousands)
Year on
Quarter ended Quarter ended Year
June 30, 2005 June 30, 2004 Change
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Revenue % of Revenue % of Revenue
Mining and Site Preparation $ 82,637 79.2% $ 46,764 66.0% $ 35,873
Piling 20,030 19.2% 13,257 18.7% 6,773
Pipeline 1,692 1.6% 10,839 15.3% (9,147)
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Total Revenue 104,359 100.0% 70,860 100.0% 33,499
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Project costs 66,546 63.8% 46,038 65.0% 20,508
Equipment costs 17,014 16.3% 11,483 16.2% 5,531
Operating lease expense 2,898 2.8% 719 1.0% 2,179
Depreciation 4,989 4.8% 4,519 6.4% 470
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Gross Profit 12,912 12.4% 8,101 11.4% 4,811
General and administrative 7,248 6.9% 5,040 7.1% 2,208
Loss (gain) on disposal of capital assets 272 0.3% (6) 0.0% 278
Amortization of intangibles 183 0.2% 1,430 2.0% (1,247)
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Operating income (loss) 5,209 5.0% 1,637 2.3% 3,572
Interest expense 9,093 8.7% 7,986 11.3% 1,107
Foreign exchange (gain) loss (1,939) -1.9% 154 0.2% (2,093)
Other income (200) -0.2% (146) -0.2% (54)
Financing costs 8,084 7.7% - 0.0% 8,084
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Income (loss) before income taxes $ (9,829) -9.4% $ (6,357) -9.0% $ (3,472)
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Additional Information
Capital expenditures $ 5,693 $ 11,369 $ (5,676)
Stock based compensation expense $ 188 $ 112 $ 76
Equipment hours
Mining and Site Preparation 187,951 112,417 75,534
Piling 9,707 15,063 (5,356)
Pipeline 4,669 9,954 (5,285)
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202,327 137,434 64,893
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Consolidated Balance Sheet (unaudited)
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($ in thousands)

June 30, 2005 March 31, 2005
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Assets
Current assets:
Cash and cash equivalents $ 13,612 $ 17,922
Accounts receivable 54,349 57,745
Unbilled revenue 48,151 41,411
Inventory 108 134
Prepaid expenses 2,819 1,862
Future income taxes 9,200 15,100
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128,239 134,174
Capital assets 178,114 177,089
Goodwill 198,549 198,549
Intangible assets 1,319 1,502
Deferred financing costs 15,068 15,354
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$ 521,289 $ 526,668
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Liabilities & Shareholder's Equity
Current liabilities:
Accounts payable $ 55,457 $ 59,090
Accrued liabilities 7,959 15,201
Billings in excess of costs and estimated earnings 478 1,325
Current portion of capital lease obligations 1,999 1,771
Future income taxes 9,200 15,100
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75,093 92,487
Senior secured credit facility - 61,257
Capital lease obligations 5,773 5,454
Senior notes 319,193 241,920
Derivative financial instruments 17,920 21,080
Redeemable preferred shares 8,500 -
Dividends payable on redeemable preferred shares 131 -
Advances from parent company 288 288

Shareholder's Equity
Share capital 127,500 127,500
Contributed surplus 822 634
Retained earnings (deficit) (33,931) (23,952)
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94,391 104,182
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$ 521,289 $ 526,668
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Letters of credit outstanding $ 20,000 $ 20,000

Contact Information

  • Bernie Robert
    North American Energy Partners Inc.
    (780) 960-2266
    Email: brobert@nacg.ca