NOA

To the tune of a Men At Work song

Who is digging on Australia’s floor

MacKellar Group must be growing more

Checking NOA stock late at night

It’s too bad the quarters don’t feel right

All I wish is to be aloneI

NOA shorts please stay outside

The Chairman’s back, so go run and hide

Martin come back now?

Ferron come back now?

Martin come back now?

Ferron come back now?

Who is knocking on Suncor oil’s door

Make no sound, oil sand spills on the floor

Execute on the contract each day

Or be trapped in Edmonton, no play

Let’s move some equipment to the States

Improve utilization and go out on dates

I like it here with Chairman Ferron

Here they come those feelings again

Martin come back now?

Ferron come back now?

Martin come back now?

Ferron come back now?

Investment committee come take me away

Why do they follow me?

NACG is the future that I can see

It’s real not fantasy

YEAH

Oh, Martin come back now?

Ferron come back now?

Martin come back now?

Martin Ferron joined North American Construction Group on June 7, 2012 (one day prior to the birthday of a certain stock pawnstar). At that time the company had a bad balance sheet and operational issues. The new leader improved operations, reduced debt, and the stock price along with its bonds moved higher. Over time, NOA became the largest operator of Caterpillar equipment in the oil sands region.

Fast forward to October 1, 2023 when the company closed on a transformative acquisition of Australia’s MacKellar Group a provider of heavy equipment and civil earthworks solutions. At the time, Mr. Ferron acted as Executive Chairman of The Board while Joe Lambert was/is the firms Chief Executive Officer. Investors liked the deal because it diversified the firms geography and customer base. The stock ran to around $30 per share from roughly $2.50 when MF took the helm.

A series of recent earnings misses has sent the stock down to under $13 per share. We think the management team can make the needed operational corrections to improve free cash flow to $100 million. The main issue in Australia is that the business is growing so fast that more expensive outsourced labor is needed to satisfy demand. In Canada, contracts should be restructured so the next time a customer decides to delay work, it should reimburse NOA for its scheduled labor.

There is a great deal of asset value at North American Construction Group. There is an internal repair and refurbish team at the company that can strip down a big yellow machine and put it back together again. A new Caterpillar monster truck costs over ten million dollars, thus the replacement value of NOA’s fleet is roughly $4 billion. Being conservative, we take 50% of that value and it equates to a stock price north of thirty dollars per share.

There has been recent insider buying of the stock and Mr. Ferron is one of the buyers. The StockPawnShop is attracted to cold, hard assets. NOA addresses coal, copper, oil, and even lithium mining. Their backlog is huge and growing. All management needs to do is execute on what is in the hopper and investors should have a 50% gain within eighteen months.