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Good morning, ladies and gentlemen. Welcome to the North American Construction Group Earnings Call for the Third Quarter ending September 30, 2019. [Operator Instructions] The company wishes to confirm that today's comments contain forward-looking information and that actual results could differ materially from a conclusion, forecast or projection contained in that forward-looking information. Certain material factors or assumptions were applied in drawing conclusions or in making forecasts or projections that are reflected in the 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 and EDGAR as well as on the company's website at nacg.ca. I will now turn the conference over to Martin Ferron, Chairman and CEO.
Thanks, and very good morning to everyone. Well overall, we had another strong quarter despite very wet ground conditions for much of the time. In making our projections, we always consider average weather patterns. For example, in August, we would normally expect to have around 10 days of rain that would interrupt our productivity. This year, we had 22 rainy days, and as such, just could not get really going that month, resulting in only around $4 million of EBITDA generation, with much of that coming from Nuna Logistics. In general, though, we continue to be extremely busy when site conditions permit, with customers having more work than we can execute even with our much expanded fleet. In terms of the rest of the call today, we're going to continue the practice introduced last time of covering our purpose-made deck of slides for the quarter that illustrate and enumerate our current performance and outlook. The slide deck can be found at our website, nacg.ca. Joe Lambert, our President and COO, will firstly talk about Slides 2 and 3, which cover the operational highlights of the quarter. Then Jason Veenstra, our CFO, is going to comment on Slides 4 to 7, which cover financial highlights. Finally, I will talk about our outlook and current thinking on capital allocation, with the help of Slides 8 to 10, before the usual Q&A session. So over to you, Joe?
Thanks, Martin. Starting with Slide 2 on our deck, I'd like to thank all of our employees for continuing to focus on our foremost business goal of making sure everyone gets home safe. These leading industry safety results should be pleasing to all the stakeholders in our company. I personally am even more pleased that our operating teams maintain a chronic sense of unease so that we prevent complacency and maintain our continued diligence towards 0 harm. Moving on to our business highlights on Slide 3. There's a lot of information to take in here, and I'd like to expand on a couple of areas, in particular. First, it was a tough quarter for our business because of weather, and as a business culture that relishes beating expectations, it was tough on our personal pride. However, I was impressed with the way our team picked itself back up and finished September strong to minimize the negative impacts from the July and August rains. It was also great to see our sister company, Nuna, give us a hand up when we needed it the most and delivered their best quarterly results in company history. The Nuna team also achieved these results by simultaneously taking on major synergy projects, such as integration with the NACG ERP system. My sincere thanks to all the Nuna team for their efforts to continued exceptional performance. Secondly, I'd like to highlight the significant accomplishment of our maintenance teams. Between the purchase of competitor assets and addition of ultra-class fleet, we started the year with over 200 more heavy assets to be maintained and brought up to our operating standards. Our maintenance teams absorbed the impact of the fleet additions along with an additional $20 million of onetime catch-up work in sustaining capital, rebuilt $13 million of growth assets, saving more than 50% off the new purchase costs and is still projected to exceed our annual target for external maintenance revenue. They are likewise keeping their pedal to the metal in Q4 with the completion and startup of our new component rebuild facility in Acheson adjacent to the current maintenance facility. The Acheson facility has continued to ramp up for both internal and external services, and we estimate an additional 50% growth in manpower in 2020. In closing, I'd just like to say it is my experience that adversity often exposes the tenacity or lack thereof of a business culture. When I see such skilled employees that take great pride in their work, combined with quality assets maintained to the highest standards, I have great confidence in our tenacity and business future. With that, I'll hand it over to Jason.
Thanks, Joe. Good morning, everyone. Getting into the financials, I'll provide high-level commentary for Slides 4 to 7. Starting with our top line on Slide 4. Revenue for the quarter of $166 million was $81 million above 2018 and consistent with the recurring theme of Q3 2019 key performance measures being 2x that of Q3 2018. This quarter will be the last quarter where the year-over-year comparable includes the step change we made in mid-Q4 2018, and the 2x theme in actual posted results validates the financial projections we made of the Q4 2018 acquisitions. The rain days in July and August, 40 in total, severely impacted operations, and we estimate these days, when compared to the average, took $20 million off the top line, which, had we been able to operate the equipment, would have yielded the same revenue level as Q1 2019. The posted year-over-year growth of 96% is due to the acquired fleet, which provided new work at the Fort Hills and Aurora mines as well as significant incremental work at the Millennium mine. Scope at the Kearl mine remained strong in the quarter as we continued to benefit from the expanded presence at that mine site. Our share of revenue from the Nuna Group of Companies was more significant in the period as their busy season ran throughout the quarter. Including the equity accounted portion of nearly $13 million, incremental Nuna top line of $25 million in the quarter represents 14% of the total and was an encouraging first busy season to what we see as strong demand in Northern Canada. Lastly, on revenue, and for clarity, revenue is stated net of the legacy loss of $1.2 million. Gross profit for the quarter was $18.3 million and an 11% margin, up from the gross profit of $14.3 million, but down from 16.9% margin last year. The higher gross numbers were, of course, a function of the higher revenue. The lower margin was driven by the wet ground conditions in July and August, which required continued and significant site cleanup costs, which are not billable to the client. In addition to this, the conditions required a larger proportion of low-margin subcontractor work. Depreciation, as a percentage of revenue, was 13.2% and reflects another strong quarter of component performance and availability when the fleet was operating. Below gross profit, general and administrative expense, excluding stock-based compensation, was $5 million or 3.0% of revenue. This percentage level is another quarterly low for us and generally exceeds our 4% run rate. This performance measure indicates the operating leverage in our heavy equipment business, which requires minimal incremental G&A when adding capacity to our fleet. Before we look at net income and EPS, I'll touch on gross adjusted EBITDA of $37.2 million. The adjusted EBITDA margin of 22.4% in the quarter was, as mentioned, heavily impacted by the rain in July and August. As included in the slide deck, we estimate that adjusted EBITDA was impacted by a total of about $12 million in the quarter. That said, the 22.4% margin compares reasonably to 2018 as higher EBITDA margins achieved by Nuna and stable G&A costs offset the operating challenges of Q3. Below EBITDA, interest expense of $5.5 million for the quarter includes $500,000 of noncash expense for implied and deferred expenses. The $5 million of cash expenses relate to the debt financings we've put in place over the past year. We remain very happy with the credit facility and the capital lease financing rates, given we are operating at an overall cost of debt well under 5%. Below interest, we have income taxes, which benefited from the tax rate reductions implemented by the Alberta government. Given the deferred position of our tax obligations, we updated our projections in Q3 and the associated staged reductions, and our tax expense in the quarter was a benefit of $1.9 million. This is a $3.1 million improvement in the quarter had the tax reductions not been put in place. That gets us to adjusted net earnings of $10.5 million compared to $4.6 million last year. The $6 million year-over-year improvement can be quickly summarized by the $7 million increase in adjusted EBIT plus the $3 million improvement in taxes, offset by the $4 million increase in interest. Adjusted EPS of $0.41 is the compilation of all the commentary provided and is 2.2x the comparable earnings last year of $0.19. Moving to Slide 5. Cash generated from operations in the quarter, prior to working capital, was $30 million compared to the $18 million last year. It is important to pause on this metric as the business generated this $30 million, which reflects adjusted EBITDA of $37 million and is net of the $5.5 million interest expense. We understand that attention will be paid to free cash flow, but wanted to highlight the routine cash generation that occurred in such a challenging quarter. Sustaining net capital expenditures totaled $22 million. The majority of the quarterly spending was on the acquired fleet as we prepared the fleet for the upcoming busy winter season. Moving to the net changes in working capital of $35 million, which was the largest quarterly working capital swing we've had and reflects the size of our balance sheet, which now has total assets of approximately $800 million, up from $400 million at this time last year. As reflected in the financial statement notes, the working capital change of $35 million occurred mostly in the conventional accounts of receivables, payables and parts inventory. First, on receivables. Given the nature of the quarter, September was a very busy month, which led to the $91 million receivable on the balance sheet. Second, on payables. This was simply a product of timing as certain payables related to large capital and operating expenditures were due prior to month end. Given the nature of the net change, we expect balances to normalize in Q4, as we collect the September AR balance, consume parts inventory in the normal course and close out both capital and external maintenance projects, which are currently in progress. Moving to our balance sheet on Slide 6. Liquidity reflects the growth in working capital needs through the first 9 months. And on a trailing 12-month basis, our senior leverage ratio, as calculated by our credit facility, has decreased to 2.2x, well below our Q3 covenant of 3.5x. As Martin will touch on, using our 2020 outlook, which is based on investments we've made, senior leverage is 1.7x and well below our stated threshold of 2.0x. To close out, I'll briefly touch on the capital and equity returns that our business is generating, which are shown on Slide 7. Moving forward into 2020, we will be reporting ROIC and ROE on a more routine basis as they are important performance measures for our business. As of September 30, return on invested capital was 8.8%. Invested capital of $696 million is a doubling from 12 months ago and likely will represent a near-term high watermark as we monetize working capital in Q4. Return on equity is expected to have a more pronounced increase in Q4 as full run rate earnings in that quarter are expected to overrate modest earnings we recorded in Q4 2018. As the 2019 range shows, we expect to be above 21% by year-end. And with those financial comments, I'll pass the call back to Martin.
Thanks, Jason. And we will now turn to Slide 8 to talk about our outlook for the remainder of 2019 and 2020. Our initial projections for 2019 EBITDA and basic EPS, made in October last year, were $160 million and $1.60, respectively. After the better-than-expected outcome for the first half of this year, we introduced an EBITDA range of $175 million to $190 million for the full year. Now after a loss of around $12 million of EBITDA due to the unfavorable weather conditions in Q3, we have adjusted the full year EBITDA range to $170 million to $180 million, while tightening the EPS range to an improved $1.65 to $1.85. These changes maintain a very meaningful improvement to our initial projections. We actually have a shorter recovery in much of the EBITDA lost in Q3 during Q4. But as mentioned earlier, we expect to be working at full throttle anyway. Also, our performance in Q4 will be impacted by the timing of the arrival of winter and the mix of earthworks that we undertake, hence, the $10 million residual range for our EBITDA projection. Total CapEx spend for the year will now be in the range of $155 million to $165 million. With this taking into account one-off incremental sustaining capital spend of around $20 million on the fleet acquired from a competitor late last year. Growth capital will be around $45 million as we continue to take advantage of compelling growth opportunities, such as the ultra-class trucks being bought from a customer. Turning now to 2020. Based on our backlog, other expected work and 2019 growth CapEx, we maintain our initial EBITDA and adjusted EPS ranges of $190 million to $215 million and $1.90 to $2.30 of EPS. Sustaining capital will be lower as we will not have the one-off spend mentioned above. And this is one of the key factors shown on Slide 9, which should lead to a much improved year of free cash flow generation. On that Slide 9, we bridged 2019 free cash flow to that expected in 2020, showing the impact of other onetime events not expected to reoccur next year as well as the anticipated improvement from the growth capital spent this year. At the midpoint of the range for free cash flow, it could be $85 million with no reason to believe that it would be any lower in 2021. We, therefore, retain our posture that we have a clear line of sight to $150 million of deleveraging by the end of 2021 if we choose that capital allocation option. In all my career as a CEO of various capital-intensive and cyclical businesses, I've always set a maximum senior debt to current year EBITDA target of less than 2x. As shown on Slide 8, we expect to be in the range of 1.3% to 1.7% by the end of the year and 1% to 1.2% in 2020, if most free cash flow was applied to deleveraging. This is also the first time in my career that I've had firm work backlog to provide further confidence in our leverage position. Now I saw a comment this morning that a decline in our backlog was maybe a slight negative for the quarter, but I'd just like to remind everyone that our backlog is based on term contracts rather than a pipeline of projects. So the backlog will decline over time before those term contracts are renewed. Back to deleveraging, in all likelihood, we will allocate considerable free cash flow to deleveraging in both 2020 and 2021. But we will also consider taking some growth opportunities if they continue to be supported by term commitments. Additionally, we will think about NCIBs as well as further hikes to our dividend. This takes me to Slide 10, which shows the recent trends in our EPS and EBITDA multiples, both continue to have an almost inverse correlation to our strong growth performance. This is clearly disappointing, with our current market capitalization being only around 4x our expected free cash flow for just next year, with much of that cash flow supported by backlog. On that striking note, I will now turn the call back over to Kenzie, the operator, for any questions. Thank you.
Your first question comes from the line of Yuri Lynk with Canaccord Genuity.
Martin, obviously, it's been the overall macro mood out of your ways is pretty bad at present. Just before we get into the specifics of your business, just any change in the types of conversations you're having with your customers or any of the prospects that you're chasing? Is anyone getting more cautious in terms of their capital spending outlook that might impact your prospects going forward?
No. Clearly, the mood out of West here is gloomy. But our customers seem bound and determined to continue with their presence of production rates, which will yield good work opportunities for us. I think we're seeing them offer us, as a preferred contractor, good opportunities to invest in new equipment, if we choose to take those. So despite all the doom and bloom, things are really robust. As I mentioned, we've got more work than we can actually do even with the expanded fleet. So it's business as usual. Obviously, we're hoping that we've got a pipeline or 2 to help the oilsands. So we'll see.
Okay. On your MSA work, are you in discussions with the couple of customers you have that haven't signed up term with you? Is that something we should think as a possibility next year more term contracts?
The only customer that we haven't signed a term contract with, we're the only contractor on their sites, and we're doing the bulk of their work. So neither of us really see term contract as being an essential because we've been working this way now for several years. So I don't expect any change there. But obviously, as term contracts start to get near the finish line within a year of finishing, we'll be talking to the customers about new volume commitments and further term arrangements. So I think that's the way it will work.
Okay. If I could just squeeze one last one in. Just on your maintenance CapEx outlook for 2020, you're guiding $95 million to $115 million. I mean, that just strikes me as kind of high when you think that you thought your maintenance spending this year would be $80 million, and I get why you had to spend more than that, but why aren't we closer to that $80 million of maintenance spending in next year?
Yes. So I mentioned last time, the ultra-class fleet that we're buying from a customer, the initial purchase price was very reasonable, but we have to spend additional capital to rebuild those assets, which are near the end of their lives, right? So I mentioned that just that ultra-class fleet would add almost $15 million of incremental annual capital to the budget, but we'd produce something like $35 million of EBITDA from those assets once they're fully utilized in our fleet. So that's the reason for the pickup. I think I covered it last time more than this time.
Your next question comes from the line of Ben Cherniavsky with Raymond James.
Can I start by asking if there's a way to discern the organic growth rate in the quarter, stripping out the acquisitions?
I'm sure we could do that, but not off the top of my head. Obviously, the acquisitions are by far the biggest driver, but you're right, we have spent capital on organic opportunities, which are kind of kicking in as the year progresses. So we can come up with that, but not immediately, I'm afraid.
That's fine. If you could circle back, that would be helpful. You mentioned in the commentary, I just wanted to be clear about the working capital, you expect that -- some of that to release in the fourth quarter?
Yes, that's correct, Ben. Yes.
Could you help us quantify how much?
Well, I think that we guided a free cash flow of $20 million to $40 million on Slide 8, and that really accommodates for that working capital fluctuations. So we see accounts receivable if December is a lighter month than September coming down and payables should be at a more normal level for year-end. And one thing we didn't touch on as much in the public comments was parts inventory. We do expect those to be consumed throughout Q4, and that should have a good working capital impact.
Okay. And just to -- just so I'm clear going forward on the adjustments line, the tax rate -- or the benefit of the tax rate going down, would that -- why was that not something that you would sort of strip out of core -- of reported earnings for an adjusted number? How are you thinking about what you put in and what you don't put into adjustments?
Yes. We actually had to look at that for the legacy claim that we added back this quarter. So we talked to our advisers. It's essentially items that get adjusted for our non-routine in nature that we don't expect to occur again in the future. So we do have this preferred tax rate moving forward. So we felt it was appropriate to leave that in adjusted net earnings. It's -- we adjust for things that we don't expect to repeat themselves.
But wasn't there like a $3 million onetime benefit from that reduction?
There is. It's a catch-up, but -- so we expect that preferred rate to stick with us moving forward. So it's a gray area. I get what you're saying, but our advisers told us we could -- we'd leave it in.
Okay. And Martin, just on the capital allocation. As you know, the narrative around North America and after you had acquired Nuna and the Aecon fleet and leveraged up the balance sheet was clearly a one-off deleveraging. It's a narrative you continue to emphasize in your commentary, but there's -- it sounds like you're leaving room for optionality on that, which is fine, I understand. I'm not trying to box you in here, but the last couple of quarters, the leverage has been going up instead of down. How committed are you to bringing the debt down over the next few quarters and into next year? And from our perspective, how much do you want to be held accountable for that as a sort of milestone in the way the story is unfolding on script?
Yes. As I mentioned in my prepared remarks, Ben, in all likelihood, we will allocate considerable free cash flow to deleveraging in 2020 and 2021, right? We could take the $150 million off the debt, but I am leaving the door open to take some growth opportunities, which just have compelling economics. These are adding considerable EBITDA, which help our debt metrics. So I'm committed to staying within 2x senior debt to current year EBITDA. That's what I've done all my career, 20 years currently, right? This always kept me safe, and that's what you can be certain of.
Well, okay. That's helpful. I guess, another way of asking it, though, is -- have you got -- are you looking at things right now that you might act on? Or are you just sort of leaving that optionality open in case something comes up where you don't want to not be able to do it because you're 100% committed to this -- to a target?
No, there will be some growth capital next year. I'm pretty certain of that in speaking to customers. It used to be they had 3 contractors to spread growth opportunities over, right? Now there's basically just us. And as a preferred contractor for them, they're expecting us to step up and do certain things. And as long as the economics are there, the term is there, I think we would be crazy not to take those opportunities. So there's a balance. I get it. You will see leverage come down and us continue to grow. I mean, that's a great combination, no?
Yes. No, it's -- well, I think at the end of the day, it's the ROIC that is going to be key. So I'm glad you guys would be including that more routinely. There's no point growing without returns. I don't need to tell you that. But I guess, it's just -- trying to making sure that we're not setting -- framing expectations around a narrative that is inconsistent with what management has in mind with respect to the balance sheet.
Understood, Ben.
Your next question comes from the line of Daine Biluk with CIBC Capital Markets.
So you guys talked a little bit about it on your opening comments, but could you just maybe describe how September activity shook out? And maybe anything you can share for October? Just trying to get a sense if the team was able to catch up on delayed work in the month? And how much, if any, of that catch-up work bleed into Q4?
September actually still started out pretty wet also. So we were concerned for a few days there, but we finished, as Joe said, extremely strongly. I was so proud of the people in the field for doing that. It was a mammoth effort to achieve it. October has been normal, I would say. So we've got a lot of work, a lot of work, and that volume will increase as winter comes, and it's coming pretty fast. So we're encouraged. But as I mentioned, it's hard to pick up $12 million of EBITDA lost in Q3 when you're flat out busy anyway, right? So we would rather be more conservative. We don't know exactly when winter's going to come. We don't know the exact mix of the earthworks that will be undertaken right now. And that impacts the outcome.
Okay. That's helpful. And then maybe just thinking on more of the cost side of the equation in the quarter. So certainly, there was headwinds from the lower fixed cost absorption, but when it comes to more of your variable expenses, such as labor, did you see those expenses still come through in the quarter, given it's more of a short notice nature of the weather impacts?
Yes, it's very hard to manage. We have to try and assess whether it's going to rain on a certain day and give employees notice of whether to turn up or not. So sometimes we get it right, sometimes we don't. So I would say it was quite inefficient in late July and August. We have more labor costs as a proportion of our revenues than we normally would. But that's just the nature of the operations there.
Got you. Okay. Switching gears, a strong quarter for Nuna. Could you maybe expand on some of the tailwinds and whether that included any large project wins that were fully executed within the quarter?
I wouldn't say anything significant in terms of awards. It was just the -- obviously, in the north, very strong in this quarter 3, and that was one of the attractions to add them to our team. So I think just work they had in backlog, and they're executing extremely well. I'm very happy with them and the way we've integrated on top of synergies.
Okay. Okay. That's helpful. And then, again, sticking with Nuna, how is the outlook for large project opportunities in 2020?
Yes. So we've been talking about 1 for a couple of quarters, and I probably notice, I didn't mention it this time, but we're still expecting Nuna to pick up -- it's the largest contract in their history. There's been some design changes, which have had to be repriced. And also, that project is going through final permitting. So we're working on a large notice to proceed right now. So Nuna are preparing to do that job, and we fully expect the whole contract to come through here in the coming months. So that's something exciting to look forward to.
Great. Yes, that's very encouraging. Last one for me. In the recent past, you've talked about the possibility of taking over the overhauling side of the operations. Could you give a bit of an update on how those conversations are progressing? And whether you see any chance -- the likelihood of that opportunity coming to the table? Has it changed at all in the past 3 months?
No, I don't think there's been much change in the last quarter. We've always said it's kind of a medium to long-term objective. One of the customers that maybe is a potential target for that initiative has to go through a top-level management change. So we're waiting for the dust to settle there and the new person to get in place before entering discussions.
Understood. Okay. Great. That's very helpful. Congrats on the good quarter considering all the weather issues you guys had to deal with.
Your next question comes from the line of Devin Schilling with PI Financial.
Yes. Just to clarify on Nuna. It looks like the revenue was equity accounted, so not included in that $166 million top line, correct?
Actually, about half of it is. So $13 million is in and $13 million is out. So we have a bit of a hybrid accounting for Nuna at the moment. Some of the -- it's a group of companies, and some of them qualify for a proportionate consolidation, and some of them are equity accounted. So about $13 million of that $166 million is Nuna, and then the equity portion is another $13 million and it rounds down to about $25 million for the quarter.
Okay. So $25 million consolidated from -- at the Nuna level?
Right.
Okay. How should we be looking at this business going into Q4 here with, I guess, the busy summer season kind of ramping up? How should we be looking at work there for Q4?
Clearly, all things are going to climb down substantially in Q4. Q3 was great, but Q4 is going to be slower just in the normal course.
Okay. No, that's great. And I guess, lastly here. Can we get a bit of an update on the external maintenance business? And I guess, when should we be really starting to see this initiative ramping up?
Devin, this is Joe. Our Q4 is actually our biggest output in the year. We were -- our external maintenance was kind of pushed back in the beginning of the year because of all the additional work we are doing on our own fleet. But we've had great response from industry, and we're completing our first 2 whole machine rebuilds of 240 ton trucks, and they'll be completed in Q4. And on progressing to our target of $30 million of annual revenue, we can still see that and get there within the next few years.
Your next question comes from the line of Maxim Sytchev with National Bank Financial.
I guess most of the questions have been answered, but just a couple of quick ones for me. Martin, you made a comment around $12 million EBITDA kind of as an opportunity lost in Q3. Do you mind just -- is that the number that you mentioned? And how did you come up to that?
Yes. So 2 impacts, Jason mentioned, there was $20 million of revenue that was lost, right? We also had additional costs. So the $12 million takes into account both of those factors.
Okay. Okay, I see. And then do you mind maybe commenting, right now, on the winter work outlook? I mean, obviously, your guidance still stipulates very robust growth, but maybe any specific color on the winter, how that's shaping up?
We're going to be totally busy. As soon as winter really comes, we'll be swinging into full action. I did mention in my comments that the mix of work does impact the outcome somewhat. I think this year, we'll have less MFT and more overburden than last year. So that's what the customers would like us to execute at this time. So we'll be getting on with that and have a great quarter, hopefully.
Right. And then in terms of -- on that change in mix, Martin, how should we think about the margin impact on that front as a result?
The overburden margin is slightly lower than MFT. So maybe a couple of points, I would think.
Okay. That's very helpful.
It's just on a piece of work, not on all of it, right?
Yes. Yes. Yes. Okay, fair enough. And then maybe just last one for Jason. Given the noncash working capital swings, I mean, like there are a bit more pronounced just because, as you mentioned, the asset base is much larger. How should we think about it on an annualized basis for 2020? Do you still think that you're going to be able to have a positive contribution on noncash working capital? Or how should we be thinking about this from a modeling perspective? Or if you haven't done your kind of budget that's fine, but any color would be helpful.
Yes. So we've contemplated that in the free cash flow of $70 million to $100 million for 2020. I think there will be a slight working capital need in 2020, given our expanding component business. The component facility that we're building will require some inventory, and so that will be a year-over-year increase I would expect in inventory. But it won't be, as you said, as pronounced as what we went through here in Q3. I expect us to get to a pretty normal level by the end of this year, December 31 of this year and then probably a slight maybe a $5 million need year-over-year for 2020, but not a large number like we've seen here in Q3.
Your next question comes from the line of Richard Dearnley with Longport Partners.
Could you frame Nuna with the compares for the quarter and the 9 months from '18?
Want to take a shot on that, Jason?
Yes. So just to be clear, Richard, Nuna had a 0 contribution for 2018?
Yes. So relative to what they were when you weren't involved? I just want to get a feel for comp store sales.
Yes. So when we announced the acquisition, we said that we were expecting around $14 million of EBITDA from Nuna. Round numbers, they made $8 million in Q3, right? So I think that should provide sufficient color to show that impact. Does that help, Richard?
Yes. Yes. Then on Slide 15, where you're talking about the replacement value, the availability restraints on used equipment requires new equipment values. What are you trying to say on the requires new equipment values?
So yes, thanks for the question, Jason here. So we got asked the question on why we -- why our fleet management group calculated the replacement value on a new basis as opposed to sourcing used. And so we put that bullet in and maybe it's a bit of a mouthful, but it's meant to say, the likelihood of getting this type of fleet into Northern Canada or Fort McMurray, on a used basis, is really not feasible. So we compiled the value on a new basis. So where we say requires there, it's really from a methodology perspective. The methodology required us to use new.
What is the -- how available is that kind of CAD equipment these days.
It would take somebody years to assemble that fleet. So it's not only value, it's time. So it just shows the extent of our barrier to entry.
Right. And then on Slide 9, the onetime payment of $5 million to -- for a director retirement is -- am I reading that correctly? And if there's a vacancy, could I apply at $5 million?
So let me explain there, Richard. So we had a board member, an original board member, he's been on the board for 16 years, okay? He didn't take a dime in cash fees. He took all his fees in DSUs. So after 16 years, you had quite a few DSUs, and you got cashed out, right? So that's why we see it as a kind of onetime, but good question.
[Operator Instruction] Your next question comes from the line of Thomas Horan with Acorn Capital Partners.
I was just wondering what your thoughts were on stock buybacks versus reducing leverage and dividend increases. It seems like with -- based on your cash flow projections, with about a 30% cash flow yield versus your market cap and, say, 15% versus your enterprise value, that's where you might get the best bank for your book, but...
Yes, we went through a phase when we were very aggressive buyers of our own shares. We've since committed to a growth strategy, which we think is paying off. So we're always looking at alternative ways of deploying our capital. It's what I do, right? So we're looking at NCIBs every board meeting. I'm not saying it's out of the question. We'll do one. It just depends where the stock goes. I've been disappointed that the growth in our performance hasn't led to proportionate growth in our stock price granted. So NCIBs is still very much in the picture. That's why I said to an earlier questioner that I wasn't going to commit totally to deleveraging because I like to keep the other options open.
Okay. Congratulations on a great quarter.
Thank you. Appreciate it.
This concludes today's Q&A session. I will now turn the call back over to Martin.
Okay, Kensie, thanks. So thank you all for joining us today. We look forward to talking to you again in the near future. Thanks.
Thank you. This concludes the North American Construction Group conference call.