North American Construction Group Ltd. announced its financial results for the second quarter ended June 30, 2025, on August 13, 2025. Combined revenue increased by 12% year-over-year to $370.6 million, driven by strong performance in both the Heavy Equipment - Australia and Heavy Equipment - Canada segments. MacKellar Group, part of Australian operations, generated a record $60 million in June alone.
Despite revenue growth, profitability metrics fell short of expectations. Adjusted EBITDA decreased by 12% to $80.1 million, and the adjusted EBITDA margin dropped to 21.6% from 27.6% in Q2 2024. This decline was attributed to a constrained labor market in Australia, an abrupt and unplanned demand reduction at a major Canadian oil sands site, and a $7.7 million cumulative catch-up reduction in equity earnings from the Fargo joint venture due to a claim settlement.
Adjusted EPS for Q2 2025 was $0.02, significantly lower than $0.80 in Q2 2024, reflecting the impact of these operational inefficiencies. Free cash flow for the quarter was a use of cash of $0.4 million, primarily due to adjusted EBITDA generation offset by sustaining capital additions, cash interest expense, and current income tax expense.
The company updated its guidance for the second half of 2025. While combined revenue guidance remains unchanged at $700 million to $750 million, adjusted EBITDA was revised down to $190 million to $210 million (from $205 million to $225 million), and adjusted EPS was revised down to $1.40 to $1.60 (from $1.95 to $2.15). Free cash flow guidance remains unchanged at $95 million to $105 million.
The net debt leverage target was revised to 2.1x from 1.7x, reflecting debenture conversions in Q1 2025. The company also noted a material weakness in internal control over financial reporting related to inventory count controls within the MacKellar entities, which remained unremediated as of June 30, 2025.
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