NA Construction (NOA) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Chief Financial Officer - Jason Veenstra
• President and Chief Executive Officer - Barry Palmer

TAKEAWAYS

• Combined Revenue -- $438.1 million, representing a 12% increase driven by the acquisition of Iron Mine Contracting and organic growth in the Australian and Canadian segments.
• Reported Revenue -- $413.3 million, increasing 30% year over year due to the inclusion of $73.6 million from the newly acquired Iron Mine Contracting business.
• Adjusted EBITDA -- $100.1 million, reflecting a 1% increase as contributions from Iron Mine Contracting were offset by operational challenges in Australia.
• Adjusted EPS -- $0.25, down from $0.66 in the prior year, primarily due to higher interest expense and increased general and administrative costs.
• Fargo Project Impact -- $50 million pre-tax earnings hit, resulting from a 9% increase in total project costs that placed the joint venture in a contract loss position.
• Australia Revenue Growth -- $267.8 million, a 42% increase fueled by the Iron Mine Contracting acquisition and 5% organic growth from commissioned assets.
• Australia Gross Profit Margin -- 11.9%, decreasing from 14% in the previous quarter due to $15 million in extra costs from equipment maintenance and a pit wall failure.
• Canada Revenue Growth -- $141.2 million, up 12% reflecting a like-for-like increase of over 20% on improved mechanical availability and strong oil sands demand.
• Canada Gross Profit Margin -- 10.5%, representing a sequential increase from 7% in the second quarter through disciplined project execution and fleet efficiency.
• 2026 Revenue Guidance -- $1.7 billion to $1.8 billion, raised from the previous range midpoint of $1.7 billion based on strong top-line performance year-to-date.
• 2026 Adjusted EBITDA Guidance -- $370 million to $400 million, narrowed from the previous midpoint of $400 million to reflect third-quarter operational setbacks.
• Contractual Backlog -- $3.2 billion, providing visibility into the fourth quarter and 2027 across the Canadian and Australian platforms.
• Total Bid Pipeline -- Over $15 billion, including approximately $4.5 billion in active tender and procurement across 14 resource categories.
• Net Debt -- $1.1 billion, remaining consistent sequentially with a trailing 12-month leverage ratio reported at 3.0x.
• Interest Expense -- $21.3 million, increasing from $15.3 million last year due to the financing of the strategic expansion in Australia.
• Operating Cash Flow -- $52 million, generated before working capital changes and supported by consistent EBITDA performance.
• Free Cash Flow -- Outflow of $28.3 million, reflecting intentional capital investment in the Canadian fleet and $23.6 million in working capital changes.
• Maintenance Services Contract -- $135 million, representing a new five-year award that expands the heavy equipment maintenance business with modest growth capital requirements.
• Australia Q4 Margin Target -- 13.5%, expected as maintenance costs normalize and the Iron Mine Contracting integration continues.
• Canada Q4 Margin Target -- 12%, forecasted based on a busy winter season and improved fleet optimization.
• Canadian Fleet Utilization -- 55%, with management targeting an aspirational level of 70% through improved physical availability.
• 2026 Capital Expenditures -- $225 million to $230 million, inclusive of lease finance additions and maintenance capital to support strong demand.
• Depreciation -- 16% of combined revenue, coming in slightly higher than the 15% range midpoint due to component depreciation.

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RISKS

• Veenstra stated, "In Western Australia, a pit wall failure at our largest site in that region caused various operational inefficiencies," noting the impact on overall mine production and haul road accessibility.
• Veenstra reported that the Fargo construction project "is now in a contract loss position, which requires 100% of the loss to be booked," following a $50 million pre-tax earnings adjustment.

SUMMARY

North American Construction Group Ltd. (NYSE:NOA) reported that quarterly revenue growth was driven by the integration of the Iron Mine Contracting acquisition and sustained demand for operational support in the Canadian oil sands. Management reported a significant pre-tax loss related to a cost escalation at the Fargo construction project but indicated the project is approaching physical completion. The company is transitioning its executive leadership while focusing on improving equipment availability and reducing debt leverage from its current 3.0x level. Barry Palmer stated that the identification of a $15 billion bid pipeline allows the company to remain selective in project awards to prioritize margin expansion and cash generation.

• Brad Rogers will join the company as President, Chief Executive Officer, and Director effective Dec. 1, 2026.
• Management expects organic revenue growth of approximately 10% in 2027, excluding the impact of the legacy Fargo project.
• Palmer stated, "Our role is to position the business carefully and continue earning customer confidence through execution," regarding the pursuit of infrastructure awards in Northern Canada.
• The Australian platform holds $2.6 billion of the total contractual backlog and an $8.2 billion bid pipeline focused on copper, gold, lithium, and iron ore.
• Nuna is pursuing large infrastructure opportunities, including a four-way partnership for Northern Corridor developments and defense infrastructure projects.
• Management stated the goal is to reach a net debt leverage ratio of 2.0x in the medium term by directing free cash flow toward debt reduction.

INDUSTRY GLOSSARY

• Contractual Backlog: The total estimated value of work that has been formally awarded to a company but not yet performed or recognized as revenue.
• IMC: Iron Mine Contracting, an Australian mining services provider acquired by North American Construction Group in the second quarter of 2026.
• Oil Sands: Large deposits of bitumen, a heavy and viscous form of crude oil, typically recovered through open-pit mining or specialized wells.
• Overburden: The layer of earth, rock, and other material that must be removed to expose a mineral or ore deposit.
• Pit Wall Failure: A structural collapse of the side of an open-pit mine, which can block access to ore or equipment.
• Tier 1 Contractor: A large-scale construction or mining firm capable of managing complex, high-value projects and providing comprehensive services to major resource companies.

Full Conference Call Transcript

Operator: Good morning, ladies and gentlemen. Welcome to the North American Construction Group conference call regarding the third quarter ended September 30, 2026. [Operator Instructions]. They are free to quote any member of management, but they are asked not 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 our actual results could differ materially from the conclusion, forecast or projection contained in the forward-looking information. Certain material factors or assumptions were applied in drawing conclusions or in making forecasts or projections that are reflected in 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 SEDAR or EDGAR as well as on the company's website at nacg.ca. I will now turn the conference over to Jason Veenstra, CFO.

Jason Veenstra: Thanks, Ray, and good morning, everyone. I'll start today's call with brief commentary on the financials, then pass the call to Barry for his operational and forward-looking remarks and will conclude as per usual with Q&A. Starting on Slide 4. We delivered a consistent $100 million of EBITDA in the third quarter on combined revenue of $438 million, which was $47 million, up from last year's third quarter. IMC, which was acquired in the second quarter, contributed $74 million of revenue and drove the year-over-year increase. Excluding IMC, Australia was up organically 5% in the quarter on commissioned growth assets.

Canada was up over 20% on a like-for-like basis on much improved mechanical availability and strong demand in the oil sands region. Year-to-date, we've generated solid and expected combined revenue of $1.3 billion which has allowed us to increase our revenue guidance for the year to a midpoint of $1.75 billion. From a top line perspective, the business is exceeding revenue generation expectations. Unfortunately, during the quarter, we also booked a significant life-to-date project adjustment for Fargo, which I'll outline in detail on Slide 6. Moving to Slide 5. Australia posted a gross profit margin of 11.9%, down from 14% we posted in Q2 and below expectations of between 15% and 20% for the region.

Two primary events drove this approximate $15 million cost increase. In Queensland, we incurred approximately $10 million in additional parts and labor to both improve and sustain equipment utilization at our largest site in that region. In Western Australia, a pit wall failure at our largest site in that region caused various operational inefficiencies given the impact to overall mine production as well as the reconstruction of and inaccessibility to mine site haul roads. Canada posted a 10.5% gross profit margin, which was in line with expectation and a solid increase from the 7% posted in Q2, reflecting disciplined project execution, improved maintenance capability, lower repair costs and the implementation of continued fleet efficiency initiatives. Moving to Slide 6.

Q3 EBITDA was consistent with prior year, but EBIT was down given higher depreciation on higher revenue. Depreciation as a percentage of combined revenue came in at 16%, being a little higher than our expected range midpoint of 15%, primarily on MacKellar component depreciation. Looking at G&A and when removing the Fargo and acquisition impacts, direct adjusted administrative costs were $20 million or 4.6% of combined revenue, in line with our 5% targeted threshold and demonstrating operating leverage and discipline on stronger revenue. All told, adjusted EPS was $0.25 for the quarter. Interest expense increased to $21.3 million from $15.3 million last year. reflecting the financing of our strategic expansion in Australia.

Regarding the aforementioned impact of the Fargo project, we received a revised forecast in early October from the joint venture executive committee, which included a 9% increase in total project costs, which had a follow-on impact to us of approximately $50 million to earnings before tax. This is represented in our financials as a $30 million increase in G&A and a $20 million impact in equity loss. The project is now in a contract loss position, which requires 100% of the loss to be booked. The project is approaching physical completion and the estimate we've received is not expected to have a further downward revision.

We have added back the loss for adjusted purposes as this type of project is considered noncore in nature. And as we've discussed previously, we will only enter arrangements in the future, which provide operational control, consistent with the other joint ventures in which we are partners. Moving to Slide 7. The business generated $52 million of operating cash flow before working capital, supported by EBITDA performance net of cash interest. Free cash flow was an outflow of $28 million due to the intentional capital spending investment in Canada and an approximate $24 million impact from changes to working capital balances in our core businesses. Moving to Slide 8. Net debt remained consistent at $1.1 billion.

Trailing 12 net debt leverage is reported at 3.0x but is not yet benefiting from a full 12 months of IMC EBITDA. Based on the Q3 run rate, we are operating at a 2.8x leverage ratio with the plan to decrease that moving forward. Slide 9 provides context on our debt structure. We are focused on debt reduction through free cash flow generation over the short term and medium term. And during that time, the majority of our debt is at fixed rates and not subject to changes in posted interest rates. In addition, the majority of our maturities are 2029 and later giving us the stability and flexibility we need during this phase after significant growth.

With those brief comments on the financials, I'll pass the call to Barry.

Barry Palmer: Thanks, Jason, and good morning, everyone. As Jason just outlined, our third quarter performance highlights both the growth across our platform with a record for Q3 combined revenue and the work we need to do to translate that growth into more consistent earnings. We have a broader Australian platform with IMC continuing on its growth trajectory during Q3. Our priority is to convert that activity into improved margins and cash generation as operational challenges in Australia affected the quarter. We also saw our Canadian fleet gain early traction with improved mechanical availability and utilization. New awards in Northern Canada and stronger equipment demand in the oil sands were a true highlight of Q3.

Unfortunately, the Fargo project had a major negative impact on the quarter with delayed completions, schedule impacts, rework and last-minute cost to complete escalation, leading to a financial loss. Thankfully, this project is in the final completion stages and one not to be repeated in the future. Moving to Slide 11. Now looking forward to what's to come. The opportunity has remained significant. On Slide 12, it sets out our priorities for the remainder of the year. Our focus is on execution and delivering the operating improvements that support the fourth quarter expectations. Safety comes first as it always does. Across all operations, our objective remains the same, everyone gets home safe.

In Australia, we are further optimizing our workforce mix, building on improvements we recently implemented. Following significant growth in Queensland, we are also reducing discretionary operating costs while fully maintaining customer requirements. In Western Australia, our focus is on integrating IMC and commissioning its expanded fleet to support the work ahead. In the oil sands, improving mechanical availability and fleet reliability remains central to our operating plan and to our ability to capitalize on the growing momentum we see in the region. We are also preparing for an orderly CEO transition with continuity in our strategy, customer relationships and capital allocation. These are practical priorities, and our teams are focused on carrying them through into the day-to-day performance.

Moving on to Slide 13. Our 3 strategic building blocks are central to our growth ambitions. First, scaling our Tier 1 contractor platform in Australia. Second, securing infrastructure awards in Northern Canada. And third, expanding our mining services in Canada and the United States. Across our 23 global operating sites, the approach is consistent. We position our people and equipment where our capabilities give us an advantage, deliver for the customer and earn the opportunity to take on additional work. Growth creates value when we execute it well and achieve an appropriate return on the capital we commit. Moving to Slide 14. Australia remains our largest growth opportunity.

Revenue has grown at a compound annual rate of 36% from the first quarter of 2024 through the third quarter of 2026. As of September 30, the Australian platform had approximately $2.6 billion of contractual backlog and an $8.2 billion bid pipeline. MacKellar and IMC give us scale and capabilities to execute larger, more comprehensive scopes across Eastern and Western Australia. They also broadened our exposure to copper, gold, lithium, iron ore and nickel while increasing our participation in lower capital unit rate projects. That opportunity is supported by a substantial market, including approximately AUD 280 billion of public infrastructure spending and the AUD 240 billion major project pipeline over the next 5 years.

Our incoming CEO brings deep Australian and international mining experience to help us build on this position. Further strengthen our Australian leadership, our incoming Managing Director in MacKellar brings significant market experience and relationships. The immediate task is to improve operating performance as the platform grows. Workforce efficiency, cost control and the continued ramp-up of IMC are central to our expectation for a stronger fourth quarter. We need to demonstrate that the scale we have built can deliver more consistent margins and cash returns. Moving to Slide 15. Turning to Northern Canada. Nuna continues to demonstrate the value of delivering well on an initial scope and earning follow-on work.

In Ontario's successful completion of earlier work led to an additional award that extends our site presence from the fourth quarter of 2026 well into the second quarter of 2027. Nuna also secured a multiyear extension at a project in Nunavut as well as a new project in the Yukon. Our indigenous partnerships remain fundamental to this business. A new Yukon community collaboration agreement supports training, employment and business opportunities adding to Nuna's established relationships across the region. With over 250 heavy equipment assets and a $4.6 billion pipeline, Nuna is also pursuing larger infrastructure opportunities.

These include dedicated subcontractor roles on teams pursuing a port and road projects and defense infrastructure as well as a 4-way partnership advancing in Northern Corridor opportunities. These remain pursuits with procurement, government and First Nations processes still to advance. Our role is to position the business carefully and continue earning customer confidence through execution. Moving to Slide 16. In the oil sands, longer haul distances and broader customer requirements continue to support equipment demand. Canadian utilization increased 30% year-over-year in the third quarter. The priority is to translate that activity into improved operating margins through reliable fleet, availability and disciplined project execution.

Our plan remains centered on our vast multi-life heavy equipment assets with clear objectives for maintenance and operations. Improved availability reduces schedule risk allows us to serve visible demand more effectively. We will continue to be selective about work and investment with returns guiding those decisions. We are now expanding our heavy equipment maintenance and services business. The recent $135 million 5-year contract creates additional near-term service opportunities with modest growth capital of approximately $5 million for 25 on-highway units and support equipment alongside our existing fleet. This is a useful example of how we can grow by extending our capabilities without a proportionate increase in capital requirements. Moving on to Slide 17.

Our bid pipeline shows a total of more than $15 billion, including approximately $4.5 billion in active tender and procurement. The opportunity span 14 resource categories, providing a broad range of potential work across our markets. The size of the pipeline gives us options. Our focus is on converting bids where the scope fits our area of expertise, the risks are understood and the expected returns meet our standards. We do not need to win every opportunity. We will remain disciplined as projects move through the award process. On Slide 18, I'm excited to welcome Brad Rogers, who will join us as President and Chief Executive Officer and a Director effective December 1.

Brad brings more than 30 years of experience across mining services, infrastructure and finance, including as CEO of Jupiter Mines and Bis Industries. He's also a Chartered Accountant and former CFO with extensive commercial and corporate development experience. I know Brad is very eager to get started in his new role. His priorities outlined here build on the platform already in place, advancing North American growth opportunities, embedding operational excellence in daily performance and maximizing the value of our Australian investment. Progress will be measured through contract awards and backlog conversion, fleet availability, margins, cash conversion and returns on invested capital. The objective is clear, stronger cash generation to support deleveraging and total shareholder returns.

Our focus through this transition is to maintain operating momentum and continuity for our customers and teams. Moving to Slide 19. Turning now to our outlook. Contractual backlog of approximately $3.2 billion on September 30 underpins our full year guidance. We now expect combined revenue of $1.7 billion to $1.8 billion with a midpoint of $1.75 billion compared to our prior midpoint of $1.7 billion. We have also narrowed adjusted EBITDA guidance to $370 million to $400 million lowering the midpoint from $400 million to $385 million. This reflects the operational challenges in the third quarter while retaining expectations for a strong fourth quarter. Delivering that outlook requires the operating improvements that we have discussed today.

Our updated guidance is focused on revenue and adjusted EBITDA, which we believe provides a clearest view of our operating performance and execution. Free cash flow can be difficult to forecast consistently given the timing of customer receipts and project expenditures. We remain focused on disciplined cash management, and we'll continue to report our cash flow as part of our quarterly results. The principal drivers in Australia, where we expect the continued ramp-up of IMC activity in Western Australia and a return to historical profit margins. In the oil sands, we anticipate a busy winter season supported by improved utilization, fleet optimization and incremental project scopes. At Nuna, fleet expansion in Nunavut is expected to provide fourth quarter uplift.

We have clear priorities to finish the year. Our responsibility is to execute safely, improve margins and convert the growth across our platform into cash generation and sustainable shareholder value. That concludes our Q3 presentation, we would be happy to take your questions.

Operator: [Operator Instructions]. The first question is from Adam Thalhimer of Thompson Davis.

Adam Thalhimer: Barry, I just wanted to say it's been nice working with you during this interim period. Hoping you guys could expand a little bit on Slide 17, and it's a pretty decent size increase, $900 million increase in the pipeline and then the total opportunity went up a couple of billion dollars. Hoping you could just comment on where that strength is coming from.

Jason Veenstra: Well, thanks, Adam. Jason here to take that question. Yes, we see the bid pipeline is very strong, just like you, primarily coming out of Australia but also good momentum in the oil sands.

Barry Palmer: Yes. I would just jump on that as well, Adam. I mean there's all kinds of opportunity in the oil sands. I mean, our fleet is getting fully engaged and with work in front of us. And we see great things coming there. There's all kinds of reclamation programs. There's pit expansions, increased overburden movement demand. Yes, I mean we just see that as being a great spot. To Jason's point in Australia, there are some big projects we're looking at with some existing customers as well as new customers, both in the East and the West that give us great opportunity into the future.

Adam Thalhimer: It feels like there's enough there to possibly drive a record backlog in the coming quarters. Is that fair?

Barry Palmer: Yes, I think that's fair.

Jason Veenstra: Absolutely.

Adam Thalhimer: And then real quick on Australia, the issues you had in the quarter. I'm just wondering how much those are contained and the gross margin preferred range of 15% to 20% if you can get back there in Q4? Or is that a '27 event?

Barry Palmer: Yes. I mean the increased cost, obviously, that was on one of our big, big sites in Australia and Queensland. And what that is, is that's a bunch of maintenance costs that were brought forward in the period that will likely extend into the end of the year. Its component change-outs defect elimination on a large fleet on our largest site there. And that's what drove those costs. So I mean, we see that likely lapping into the end of the year here. And beyond that, we should be caught up with that, and things should normalize to work where our margins get back to where they belong.

Jason Veenstra: And just to clarify, Adam, our expectation implied in the guidance is that we get to about 13.5% in Q4, leading into getting back into that 15% to 20% range for 27 when we issue guidance on '27.

Adam Thalhimer: Okay. Perfect. And well, since you had the number, do you have the number for Canada in Q4?

Jason Veenstra: That's at 12%.

Barry Palmer: Correct.

Operator: The next question is from Yuri Lynk of Canaccord Genuity.

Yuri Lynk: Just wanted to pick up on your -- the comments around debt reduction and trying to get a gauge as to how committed you are to debt reduction. So how do -- how is management thinking about balancing some of these growth opportunities, which likely require some growth capital to pursue them with the stated objective of paying down debt?

Jason Veenstra: Yes, I can take that one, Yuri. We're fully committed. Given the statements we've made in some of the slides here, you can see the conviction on debt reduction. As it relates to the bid pipeline, given we don't need to invest in platforms anymore in G&A, it's all incremental. Our #1 threshold and looking at opportunities now is the debt leverage impact they have. So the criteria is less than 2.0x. And so we think we can accomplish debt reduction through leveraging our platforms in the 3 key regions Western and Eastern Australia and Canada. And then at the same time, directing free cash flow towards debt.

So the goal remains to get into the low 2s, and to get to 2.0x in the medium term.

Yuri Lynk: Okay. That's helpful. I understand the pipeline for Nuna is improving. But the fact remains, we've got a situation here where the Fargo revenues rolled off. How do we think about some of the revenue puts and takes over the next couple of quarters given that's a big chunk of revenue that's rolling off and hasn't been replaced yet?

Jason Veenstra: Yes. So we see Nuna barring a big win, which we're bidding on some 3 quite large wins in Nuna, which would be step changes back to the Côté level revenues out of Nuna. But we see about a 10% year-over-year increase in '27 on revenues and similar type increases in the other 3 regions. So we'll be providing 2027 guidance with Brad in the coming months, but I'd expect organically without step-change wins us to be up kind of 10% year-over-year in revenue.

Yuri Lynk: And that's just on...

Jason Veenstra: That's excluding the Fargo impact. And yes, that's on organic wins and just the ramp-up that we're having still in Australia and benefiting from that on a year-over-year basis.

Operator: Our next question is from Sean Jack of Raymond James Limited.

Sean Jack: I just wanted to drill into the maintenance overage with the Queensland client a little bit more. Wondering if there's any intention to maybe adjust contract structures there or just maybe change, go back to the client and change how things are done just to see -- kind of mitigate the potential for something like this happening in the future? Or are you guys pretty locked into your obligations?

Barry Palmer: No, it's a good point, Sean. And yes, absolutely, we're looking at that at how we can, I guess, better smooth that sort of thing out. I mean with our -- with the new Managing Director, we have coming into MacKellar, that will be his main task. Obviously, it's our biggest client is where we're dealing with this cost increase. And just the way we do business with them. So yes, that's absolutely something that's on our radar and that we're in the midst of putting the plan together to do so.

Sean Jack: Okay. Perfect. That's good color. And then just on the Canada side, and I apologize if this is stated somewhere in the deck. But would you guys be able to kind of give us some color of like where theoretically Canada utilization sits today and potentially given with what you guys are seeing, where we could kind of see utilization rates return to?

Barry Palmer: Yes. I mean, presently, I think we're in that 55% range. I mean, obviously, we'd like to get our aspirations are to get to 70%. And that's what we're focused on with our fleet as far as focusing on that physical availability and making sure that our units are available to run and utilize to the utmost. So yes, that's really where we're trying to get to, but we're presently around that 55% range.

Operator: Our next question is from John Gibson of BMO Capital Markets.

John Gibson: Most of have been answered. I just had a few follow-ups. Wondering, you typically put out '27 guidance, I believe, towards year-end, will this still be the case this year? Or are you still kind of gathering all the pieces to -- especially based on your strong bid pipeline or guidance maybe early next year?

Jason Veenstra: Well, with Brad starting on December 1, clearly going to flow through that role. I would expect potentially early in 2027, John.

John Gibson: Okay. Appreciate it. And then can you maybe just expand on some of the infrastructure projects in Canada outside of the oil sands that you're bidding on, maybe end markets, geographies, that's sort of thing.

Barry Palmer: Yes. I mean they're scattered kind of all over the place and Ring of Fire is one we're really keyed in on up in the Mackenzie Valley area. Yes, they're pretty much coast to coast in Canada.

Operator: Our next question is from Tim Monachello of ATB Cormark Home Capital Markets.

Tim Monachello: Quickly on just the backlog. We saw a pretty meaningful decline quarter-over-quarter. And in the financials, it shows, I think, $775-ish million came out of the backlog, which was higher than the combined revenue estimate. And then there was a contract in Western Australia that came off the board in the slide deck. So there's some rescoping or contract eliminations between Q3 and Q2?

Barry Palmer: Yes. I mean, obviously, the one project that come off in IMC is one that we had hoped to win, and then we didn't win. So that's come off there. There's others that we hope to replace it with, obviously. But yes, that was the major hit in Australia.

Jason Veenstra: And just on the backlog, Tim, we did have 1 contract which we had an early mutual agreement to exit, and we reflected that through backlog. That was just a the mine site conditions were different than what was originally expected, and there was just an agreement to part ways. So that kind of drove that mismatch that you're seeing there.

Tim Monachello: Got it. Okay. And the capital spending year-to-date and in Q3 was higher than I expected. Can you provide maybe some bookends on where you think total capital spending for 2026 will land and how you're thinking about '27?

Jason Veenstra: Yes. We expect to be in the kind of $225 million, $230 million range for 2026 for all in CapEx. I would say, we are looking at 2027 being very similar to depreciation. If you see our depreciation run rate of 15%, 16% of combined revenue. So that's where I would expect. As you identified, we made a very intentional decision in Canada to really support the fleet heading into a very busy winter season and what we think will be very busy years ahead. So Q3 will be the high watermark of the year for CapEx.

Tim Monachello: Got it. And then just to qualify your comments on the CapEx range, is that excluding, I guess, lease finance CapEx?

Jason Veenstra: No, that includes lease finance additions. I don't have that number in front of me, but we -- we just include that as a regular run rate. If we bring in something on a lease basis, we bring it into our sustaining CapEx. So that is inclusive of that.

Tim Monachello: Okay. And then just to follow up on Yuri's comment. Like when you think about deleveraging and the scale of growth that you have in your opportunity set, like are you -- when you think about deploying capital towards some of these growth opportunities, is there an upper end that you would say like we're not going to spend more than x in '27? Or is that just a function of the cash flows that will come off these projects or expected cash flows?

Jason Veenstra: No. It's really the ratios. Obviously, the larger the opportunity, the bigger impact it can actually have on our objectives. So we haven't given our business development functions, a maximum they can look for. It's more about the ratio and the predictability of the EBITDA that comes with the opportunity. So again, to the response we gave Yuri, we really are focused on that ratio and what it can do for our business. We want to leverage the platforms we have. And to do that, if the scale is bigger, the math just gets better.

Tim Monachello: Okay. And then can you just talk a little bit about, I guess, the changes demand that you're seeing in the oil sands and what your expectations are for growth in oil sands in '27 versus '26?

Barry Palmer: Yes. I think that -- I mean, if you heard what Suncor put out. I mean you can tell there's great excitement in capital spending on the way. And I mean we've seen this since early in the year where they're looking at just upping their throughput in the plant. And as I said, their haul roads are -- or their haul lengths are getting longer. So it just means more demand for overburden to be moved and the capital projects that support the line. So we're seeing that.

I mean that's been ongoing, and we're just going to maximize that with making sure our fleet is fully available, ready to be put into work and bid and win these opportunities. And we see more of the same into the new year. I mean 2027 looks like a great year from everything we're hearing from our clients in the oil sands, there's -- it's blue skies ahead for opportunities for us.

Tim Monachello: Got it. And then as you think about growth in the oil sands and deploying more capital there, in the context of returns being sort of below where your thresholds have been over the last little while in the oil sands and the fact that you still have MSAs outstanding that sort of dictate pricing. How do you -- like I guess maybe you could talk a little bit about the strategic initiatives you're doing to improve returns within sort of a constrained pricing environment or maybe you're seeing improving pricing on the margin?

Barry Palmer: Yes. I mean, first of all, what I would say is that we're -- we wouldn't look at bringing in more units into the oil sands unless we could sign something that was longer term. I mean we don't want to bring in -- go out and spend a bunch of capital and bring in fleet to the oil sands and 2 years down the track, we're trying to look for spots to put that equipment. I think the way we improve our position in the oil sands is to try and do more unit rate work, where the better we perform, the margin increases with it, and we control that.

So that's kind of what we would see is you take more risk, but at the same time, we understand the scope, and we feel that we can probably do better than we would if we're on simple time and material. So that's where we see the growth and the margin opportunities.

Tim Monachello: Okay. I appreciate it. I'll turn it back.

Operator: [Operator Instructions]. There are no more questions on the line. So this concludes the Q&A section of the call, and I'll pass the call over to Barry Palmer, President and CEO, for closing remarks.

Barry Palmer: Thanks, Ray. Today will be my final call as President and CEO, and I'm proud of the capabilities our team has built and the company that North American Construction Group has grown into over my almost 45 years with the company. I can say with confidence that our company is being left in good hands with our existing executive team under the leadership of our incoming President and CEO, Brad Rogers. Our teams remain focused on continued disciplined execution, disciplined growth and ensuring that everyone gets home safe. Thanks again, everyone, for joining us today.

Operator: Thank you. This concludes the North American Construction Group conference call regarding the third quarter ended September 30, 2026.

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