Good morning ladies and gentlemen. Welcome to North American Energy Partners’ Fourth Quarter Fiscal 2013 Earnings call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, there will be an opportunity for analysts, shareholders and bondholders to ask questions. The media may monitor this call in listen-only mode. They are free to quote any member of management but they are asked not to quote remarks from any other participant without that participant’s permission. I advise participants that this call is also being webcast concurrently on the company’s website at nacg.ca. I will now turn the conference over to Kevin Rowand, Director of Strategic Planning, Investor Relations of North American Energy Partners. Please go ahead, sir.

Good morning ladies and gentlemen and thank you for joining us. On this morning’s call we will discuss our financial results for the three months ended March 31, 2013, which represents the fourth quarter of our 2013 fiscal year. All amounts are in Canadian dollars. I would like to remind everyone that statements made during our prepared remarks or in the Q&A portion of the conference call with reference to management’s expectations or our predictions of the future are forward-looking statements. All statements made today which are not statements of historical fact are considered to be forward-looking statements. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection, as reflected in the forward-looking information. The business prospects of North American Energy Partners are subject to a number of risks and uncertainties that may cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information. For more information about these risks, uncertainties and assumptions, please refer to our March 31, 2013 management discussion and analysis which is available on SEDAR and EDGAR. As previously mentioned, management will not provide financial guidance. I’ll now turn the call over to Martin Ferron, President and CEO.

Thanks Kevin and good morning everyone. We have a lot to cover today and so my formal remarks will be as succinct as possible, leaving plenty of time for questions. Firstly, I will make summary comments about our Q4 performance and fiscal ’13 highlights, then I will take you through the rationale for the sale of our piling business together with my views on our future as a focused, pure play heavy construction and mining contractor. On the last call, I was cautious about our Q4 outlook as I did not expect performance to be as good as achieved in Q3. This was the way it turned out as January was extremely slow for all of our activities and we made most of the 18 million of consolidated EBITDA for the quarter in February and March. As anticipated, winter weather led to a seasonal decline in piling activity and demand for mining work stayed pretty flat with Q3 levels. G&A costs were almost $3 million higher sequentially due to increased stock-based compensation and short term incentive program costs. We incurred about 1.3 million of additional costs to close out legacy pipeline projects. Also, mining and equipment costs were higher as we ramped up for the Kearl contract. Without these sequential impacts, consolidated EBITDA would have come in around 23 million. Profitability was impacted by a $3 million impairment charge related to certain underperforming older equipment. In conclusion on Q4, we did the best we could with the work available to us in a tough winter, and our cost-cutting initiatives along with good risk management allowed us to produce $10 million more EBITDA than in the corresponding quarter last year from 40% less consolidated revenue. In regards to full year fiscal ’13 performance, I was here for just under 10 months…

Thank you. We will now be conducting a question and answer session. [Operator instructions]. Thank you. Our first question comes from the line of Chirag Patel with Jefferies. Please proceed with your question.

Thanks. First, I was reading through the press release and I saw that you guys are looking to also expand the support services of that business. Kind of wanting to get a feel for how much the capital allocation would be to that.

The support side of the business? I’m not sure what you’re referring to there, to be honest.

I was looking through the outlook section and one of the things you guys had commented on was – I think in the second paragraph – NAEP anticipates an increase in operating support services to help offset the potential reduction to construction services. So in doing so, it sounded as if you were going to expand that business operationally.

It’s different areas of the same work, kind of like project work versus operations, so it’s the same fleet of equipment that could service either of those areas.

So there wouldn’t be any need for additional fleet?

No.

No.

All right. And then also on the equipment side of things, I was looking for—how much was the under-absorption in this quarter? I think it was about 2.1 million last quarter.

It was around 7 this quarter, mainly because of the ramp up in equipment costs for the project that I mentioned.

Okay. And if we’re looking at about 7 million for the last quarter, how can we think of the overall fleet as it stands in the region? Is there a significant amount that needs to still come out of the overall pasture, I guess?

Yeah, you know, we’re gradually getting better at this under-utilization cost. You saw a gradual progression, too, last year and I expect that to continue. We do have other mining assets that are for sale if we choose to pursue that, so we’re on the same path as far as gross size in our fleet is concerned.

All right, and then just one final one if I could just sneak it in. You said the timing of the transaction was in the fiscal second quarter, so are we talking next year or are we talking this July right here?

This July right here. It’s subject to shareholder approval on the purchaser side, but that vote is at the end of June. They raised some equity to help fund the deal this morning, so hopefully we can get it done by mid-July.

The other piece, Chirag, is we’re working on getting Competition Bureau approval. We don’t believe that that’s going to be an issue because Keller has a small presence in Canada, but we do need to go through that process.

And you would be paying down debt almost immediately then?

Correct.

Perfect. That’s it for me right now. Thank you guys.

Thank you.

Our next question comes from the line of Greg McLeish with GMP Securities. Please proceed with your question.

Good morning guys. I’m a little confused with what’s going to happen next year, just related to EBITDA. I think you said that if you normalized, it was 98 million—

Ninety-five, yeah.

Or 95. So if I take a look at it, you had EBITDA from continuing of about 28, so to normalize that I’d add probably another 20, so you’d be at about 48. And then you’re going to have G&A savings of, I think, 6 from 44?

No, I think you’re going a little bit high there. So if you use the first approach that I mentioned, take the continuing operations EBITDA from the 95, it kind of gives you a good indication, I believe.

Okay, but it looks like you’d still generate a loss at that point, wouldn’t you, from continuing? I mean, you did have a large loss in continuing this year.

Yeah, I guess it depends on how quickly we can get rid of these interest payments.

Okay, but to get rid of the interest payments, would you have to do anything on the long term facility, the 225 million due in 2013—sorry, 2017?

Yeah, we’re looking at all of the options to use these proceeds in the most effective way right now. I mean, clearly those debentures are very expensive and we’re looking to possibly do something there.

Okay, all right. I’ll get back in the queue. Thanks, guys.

Our next question comes from the line of Ben Cherniavsky with Raymond James. Please proceed with your question.

Morning guys. I wonder if you can elaborate on the SG&A savings that you see from the business through this divestiture – sounds like a fairly substantial amount. Is that just corporate overhead, or how do you reduce the SG&A? How is that reduction related to the divestiture here specifically?

Well, I want us to be a much simpler and leaner organization going forward, so we did make significant G&A savings last year upon my arrival. I’ve had time to scrutinize what we need going forward as a pure play heavy construction and mining contractor. We’re a lot simpler now than we were. We’re not in pipeline anymore and we’re going to be out of piling shortly, so that enables me to simplify the structure considerably and therefore leads to this additional $6 million round number reduction in G&A going forward.

So is this a physical footprint reduction in terms of branch infrastructure? I mean, some of that goes presumably with the piling business, as well as the human resources – like, some of the people and support staff? I’m just trying to get an idea where specific savings are identified on that line item.

It’s a combination of facilities savings plus personnel. You know, the G&A that goes with the piling transaction is shown on the continuing operations table, and off the top of my head is around 12 million, so those are the numbers.

Okay. The gross margins now for the mining business, we can see what they were in the quarter and the year on your continuing operations statements. What do you see as the potential margins there? What would be target margins for that operation?

You know, the initial target here—you know, demand is still a challenge obviously, but I am hopeful that with further direct cost savings and other indirect savings, we can get to around 10% EBITDA margins.

Ten percent EBITDA – okay. That’s helpful. Thanks very much.

Our next question comes from the line of Jeremy Lucas with Scotia Capital. Please proceed with your question.

Good morning. Just want to go through the waterfall of the asset sales covenant in the indenture for the notes. If I’m reading it correctly, your first step would be to take out some of the term debt and perhaps credit facilities. Following that, with any excess proceeds if you were to not apply them to capital expenditures, you would then think an offer to purchase the notes at par. Is that correct?

Right, so obviously in terms of the indenture agreement, we have up to 365 days to redeploy or reinvest those proceeds back into the business, either through an acquisition or debt pay down or something else that we invest it back into the business. We do have a requirement in the indenture agreement that if we are not going to do that or we don’t do that within that time frame, that we have to offer those proceeds back to the banker holders. They have the option to accept that offer and it will be offered at par if we were to follow that route.

Okay. And just listening to some of the dialogue, if you’re leaning one way or the other versus acquisition CAPEX or debt pay down, it feels like you are leaning towards addressing leverage as a priority. Is that a correct way to a characterize that?

Yes.

Okay. And as a part of the transaction, was there any tax implications associated with this – cash taxes?

We’ve been able to with some very good tax planning from our tax advisors and our internal tax crew, we’ve been able to use a lot of our losses that we have on the books right now and mitigate any tax risk, so we don’t expect to pay very much in the way of tax on the deal.

Okay, that’s good to hear. Just a little bit of housekeeping – Martin, I think you mentioned that the capital leases would be reduced by 20 million in 2014 as a result of the transaction and through future cash payments. How much of that 20 million was related to the transaction?

Around about 5.6.

Yeah, it will be somewhere between 5.5 and $6 million.

So 5.5 to $6 million of capital leases go to Keller, I guess?

Yeah, correct.

And then your other sort of 15 or 14 million was with cash payments that would happen through ’14?

Yes.

Okay, great. Thanks very much, I’ll pass it on. Thank you.

As a reminder, ladies and gentlemen, if you would like to ask a question press star, one on your telephone keypad at this time. Our next question comes from the line of Maxim Sytchev with Dundee Capital Markets. Please proceed with your question.

Hi, good morning. Obviously right now the priority is addressing the balance sheet, but I was wondering if strategically you can maybe think out loud in terms of where you want to be positioned in the next 24 to 36 months, whether it’s an all-out bet on the oil sands dynamic or if you feel that there are additional resource-based industries where you feel you can make inroads. If you could just maybe address that, that would be very helpful for us.

Yeah, sure. You know, it wouldn’t be sensible to have an all-out bet on just the oil sands market, although I do think that we will see increased activity there over the next two to three years. Even this year, we’ve already started to bid in other areas, other resource plays, other activities. Any source of utilization for our fleet would be welcome right now, and we have stepped up our business development activities in order to improve our utilization.

Okay. And then on utilization, do you still feel that there is some excess fleet that you have on the balance sheet, or you feel that right now you’re sort of right-sized for the opportunities that are available right now and also on a prospective basis?

You know, we still have some excess assets for the demand we see over the next year or two, but after this piling transaction we’re not compelled or—you know, we’re not going to sell them at perhaps what the market will pay right now. We’ll see on that one.

But can you put a number? Is there maybe 10% of excess capacity left and away that maybe you can kind of wring out over the next 12 to 18 months?

Yeah, it’s around that number.

Around that number – okay, that’s great. Okay, that’s very helpful. In terms of—again, hypothetically speaking, if the revenue run rate remains where it is on the legacy operations, what CAPEX should we be thinking about as a reasonable number?

Gross 40, net 25.

Net 25 – okay. That’s great. And then can you just repeat also what you said in terms of the interest rate savings, because you said if you were to deal with the term debt credit facility and I guess also the publicly traded debentures, that it was a $60 million saving over a three-year time frame – is that correct?

Yeah, round numbers, applying 210 million.

Okay, excellent. All right, well that’s it for me, and congrats. I think that cleaning up the structure of the firm will definitely position you for the future.

Well, thank you Max. I appreciate the comments.

Our next question comes from the line of AJ Strasser with Cooper Creek. Please proceed with your question.

Hey guys. Good morning and congrats on an excellent sale here. I guess first just a small detail on the quarter – did you say that the 18.5 million or so of EBITDA was impacted by a $3 million impairment in Q4?

Not EBITDA. That was profitability. What I mentioned on EBITDA was we had some one-time sequential increases in costs over Q3, so part of that was 1.3 for some close-out costs on pipeline projects and also our G&A was almost $3 million higher due to increased stock-based compensation with the stock price actually going up, plus short-term incentive program costs.

Okay, so there was sort of about 4 million or so of one-time costs that hit EBITDA.

Yeah, 4 or 5 million.

Okay. All right, this actually would have been a pretty decent quarter. Then the other question is just to make sure I heard you right. Did you say the run rate business that’s remaining, the mining business, you think the target here is a 10% EBITDA margin?

That’s the target, yeah.

Okay. And do you think you could achieve that target possibly or get close to it in fiscal ’14? Is it within reason?

We’re going to try as hard as we can. We might not get there in the first quarter or two, but in the third and fourth hope to get there.

Okay. Lastly here, maybe if you can just kind of dig us through – you’re a shareholder yourself. You’ve been accumulating stock all the way up to, I think, the $4.50 range, and it’s great to have you as a co-shareholder. Could you maybe talk about your view here on value creation, because based on my numbers it looks like you were able to sell a business on certain metrics that are seven times BV to EBITDA multiple when the stock was trading at roughly 4.5 times off trough numbers. So I’m just curious to kind of—maybe just walk us through that this was in your opinion certainly a value-creating exercise, and again just we’d love any kind of back story analysis that you can give us here.

Yeah, sure. You know, the piling business is a very good one. It generated around $45 million of EBITDA last year. But as a company, we paid over $30 million in interest and the capital requirements of that business were going to be $10 million-plus going forward, plus it was going to take up increasing room in our revolver. So using those numbers, based on the price we were able to achieve, especially as I think we’re going to get at least some of these contingent payments – I’m pretty convinced of that – then I think to pay down on most of our debt and go forward as a focused heavy construction and mining company is a compelling story for me. We still have a fleet that’s capable, as I mentioned on the call, of generating $700 million of revenue as we’ve done in the past. Also, the EBITDA margins will be a lot higher than 10% at that point. You know, I’m a patient, long-term shareholder who will wait for those conditions to come around and position us as strongly as possible for when they do.

Great. Just by our math, it looks like you created $2, $3 of shareholder value here, so phenomenal job. And then, did you say correctly that you were keeping 80% of the book value of the company pro forma post the sale here?

Equipment assets, yes. Again, that makes it a pretty nice deal for us, I believe.

That’s great. Well, congratulations again, and again a phenomenal year here of turnaround. Thank you again.

Thank you AJ.

As a final reminder ladies and gentlemen, if you would like to ask a question press star, one on your telephone keypad. Our next question comes from the line of Greg McLeish with GMP Securities. Please proceed with your question.

Hi guys, just a couple follow-up questions. Just looking at the EBITDA from discontinued, it was 49.5 million, so if you’re saying that piling did about 45, does that mean that pipeline did have some positive EBITDA?

Yeah, pipeline did have some positive EBITDA but piling did better than 45 – it’s around 47.

Okay.

But there were some one-offs in there, maybe a couple of million dollars of one-off benefits in there.

Perfect. And just in Q3, you mentioned that you had $33 million of working capital tied up in the pipeline business and that you were expecting to receive a reasonable amount at the end of Q4. Did you receive any of that money?

Yeah, we got probably 60% of it. I mentioned on the last call that some of it is tied up in dispute resolution, so I think—

Do you think that there’s potential to get any more of that money?

Oh yeah, yeah. We certainly are going to follow this resolution as best we can and are hopeful of the outcome.

Great. Okay, that’s it for me, guys. Thanks a lot.

Mr. Ferron, it appears we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

Well, I appreciate everybody listening in this morning. As I mentioned, I’m super excited now. I think we’re in a great place. Okay – demand for mining services is still a little slow, but it’s going to get better. I’m starting to see that, I’m becoming more confident in it, and we’re going to be very well positioned when that happens. So thank you for your interest in North American and we’ll speak to you next time. Thanks.

Ladies and gentlemen, this does conclude today’s teleconference. You may now disconnect.