NOA report for Q2 has a little bit of everything, and whether you like it depends on if you see the glass as half empty or half full. First, don't forget to convert all the numbers to USD (they report in Can $).
The guide is actually down from what they provided in Q1, but the 2H trend should show very strong growth in adj eps. The company had a lot of weather related issues in Q2 in Canada, but things are going very well in Australia (their recent acquisition):
"The second quarter brought more favorable weather in Australia but the oil sands region experienced both forest fires and heavy rains. Site access was initially restricted in May as forest fire protocols were put in place. Those eased as the rains came, but with rainfall at more than double the expected amount for May and June, site conditions deteriorated. Operating sites were inaccessible for fourteen days of May. These first half challenges, combined with the lengthy time involved in transporting and commissioning haul trucks from Canada to Australia, have unfortunately reduced our full year expectations. While clearly disappointing, I am encouraged by our underlying run-rate as the operations teams have been able to confirm that our second half projections remain exactly in line with original expectations. With a challenging first half behind us, we are building towards what I expect will be a very strong 2025."
Also, I caught something in the financials. The company uses the basic share count, not diluted when providing adjusted eps. So, I'd adjust for that too. (Probably has to do with different accounting standards/conventions; NOA is a 6K filer and has ops in Canada and Australia.)
Bottom line, the new guidance for FY24 would indicate fd eps at the midpoint of 3.27(CAN)/2.36 (US). That is up significantly from a year ago, which was 2.28 (CAN) /1.64 (US). And they are indicating that the 2H strength should continue into 2025. The 6K filing has some more details in the Q2 shareholder letter:
"We are bidding several active tenders which have scopes commencing later this year and early 2025 in a variety of projects: winter reclamation work in the oil sands region, early indications showing meaningful increases in volume; mine support work in Ontario; and copper and coal mines in New South Wales and Queensland. Specifically in the oil sands region, we are confident in the stabilized level of contracted work and see this business as solid, providing both growth potential and strong returns through operational excellence and cost reduction.
Our Australian operations continue to be a shining star in our business, with stable weather and the commissioning of certain growth assets resulting in an impressive 10% increase in overall volumes from the first to second quarter. We expect similar demand and results in Australia in the third quarter with another uptick in Q4 heading into an even better 2025 when growth capital and contract wins provide full year contributions. MacKellar, DGI Trading, and Western Plant Hire are operating in a market of strong demand, long-term commitments, and blue-chip clients. I recently toured our Australian operations and was impressed with the quality of our operations, the improvements being made in internal maintenance, the progress of ERP roll-out and systems improvements, and the overall skills, effort and commitment of the operations and administrative teams.
AI
