David Brunetta - Senior Financial Manager, IR David Blackley - Chief Financial Officer Martin Ferron - President and CEO.

Greg McLeish - GMP Securities Luke Folta - Jefferies Maxim Sytchev - Dundee Capital Markets Ben Cherniavsky - Raymond James.

Good morning ladies and gentlemen. Welcome to North American Energy Partners’ Earnings Call for the First Quarter ended March 31, 2014. 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 David Brunetta, Senior Financial Manager, Investor Relations of North American Energy Partners Incorporated. Please go ahead, sir..

Thanks Danielle. Good morning ladies and gentlemen and thank you for joining us. Welcome to the North American Energy Partners’ first quarter conference call.

I would like to remind everyone that today’s comments contain forward-looking information and our actual results may differ materially from expected results because of various risk factors uncertainties and assumptions.

For more about the information on these risks, uncertainties and assumptions please refer to our March 31, 2014 Management Discussion and Analysis, which is available on SEDAR and EDGAR.

On today's call, David Blackley, CFO will first review our results for the quarter and then he will hand the call over to Martin Ferron, President and CEO, for his remarks on our strategy and outlook. After prepared remarks, there will be a question-and-answer session. For your information, management will not provide financial guidance.

I will now turn the call over to David..

Thank you, David, and good morning everyone. I’m going to review consolidated results for the first quarter ended March 31, 2014 as compared to the quarter ended March 31, 2013. Revenue from continuing operations for the quarter was $107.7 million compared to $130.3 million in the same quarter last year.

Increased mine services and heavy construction volume at the Kearl, Fort Hills and Horizon mines will offset by declines and reclamation activity at the Base Plant and Millennium mines and overburden removal activity at the Millennium mines compared to the same quarter of last year.

Gross profit from continuing operations was 15.2% or 14.1% of revenue in the first quarter, up from $8.9 million or 6.9% of revenues for the same quarter of last year.

We experienced improved productivity on our mine services projects and also benefited from project close out activities on our large heavy several construction projects, more than a normal mix heavy temperatures in the oil sands eroded the game made in lowering equipment maintenance cost.

We recorded operating income from continuing operations of $3 million in the quarter compared to an operating loss of $6.5 million in the same quarter last year. General and administrative expense excluding stock based compensation was $7.3 million in the quarter down from $10.1 million in the same quarter last year.

This reduction in expense reflects the benefits from the simplifications of our business and the associates of restructuring activities initiated during the prior year. We recorded net income from continuing operations of $0.1 million in the quarter, up from a net loss of $9.2 million in the same quarter last year.

Basic and diluted income per share was zero compared to a basic and diluted loss of $0.26 per share in the same quarter last year. In the quarter, total interest expense were $2.8 million down from $5.9 million in the same quarter last year.

This reduction reflects the benefits of debt restructuring initiated in 2013 which included the partial redemption of our Series-1 debentures and the repayment of our term facility grown under our previous credit agreements earlier in 2013.

Interest expense in our Series-1 debentures was $1.7 million in the quarter compared to $3.8 million in the comparative quarter.

Looking at liquidity, as of March 31, 2014 we had approximately $82 million of borrowing availability to support working capital and as of credit need and a cash position of $24.9 million compared to a cash position of $13.7 million at the beginning of 2014.

Turning now to capital, total capital additions for continuing operations for the period amounted to $5.6 million with $4.9 million being allocated to sustaining capital. Several events took place also the end of the March quarter.

Preferably we completed a redemption of $10 million of our Series-1 debentures at a coal price of 103.042 on April 8, 2014. For the completion of this redemption in April, we now have $65 million of debentures outstanding.

Secondly, on May 1st, Standard & Poor's upgraded our corporate long-term debt rating to B with a stable rating from the previous rating of B minus with the stable rating. The improved credit rating will reduce the interest rate payable on borrowings under our credit agreement. That summarizes our fourth quarter results.

I will now turn the call over to Martin for his remarks..

Thanks David and good morning everyone. I’ll follow the number of first quarter news releases over the last few weeks and the common theme is being commentary on the negative impact of the worse winter on record of Polar Vortex et cetera, et cetera.

All of that has done a normal for us in Northern Alberta and so we just on with producing another solid quarter of operational performance with our leaner cost structure. The fact that David mentioned the worse effect of unusual whether on us was the one we got in mid- February that unfortunately followed the (inaudible) for activity.

As noted in my press release quote, I was particularly pleased that we were able to generate over $40 million of cash flow from operations net of investment activities during the quarter, which we have used to pay-off debt. The highlight of that effort was the retirement of another $10 million of expensive debentures.

Also we used the portion of those funds to pay down almost $4 million capital leases during the quarter. We therefore clearly demonstrated our ability to generate meaningful cash flow even at lower cycle revenue levels. Our forecast last time, I believe that our revenue is likely trough during the winter months.

And we hope to achieve steady top-line improvement from here driven by a modest uptick in bidding activities since the start of the year. Again our leaner cost structure has proven to be a significant advantage for securing work in the three segments we are targeting; existing oil sands mines, new oil sands mines and non-oil sands mining work.

Taking each of these in turn on the existing mine sites, bidding activity usually kicks off around this time for our new work. This year we encouraged quite potential work levels linked to production growth efforts and we recently secured a nice contract to build an MSE wall at the Horizon mine.

On the new mine site, Fort Hills, we have already won over $100 million of site development work for the current year and are still very significant work scope still to be awarded for this year and next. This will lead to a very active summer construction season for us.

Outside the oil sands mines, we have started building our twinning section of Highway 63 and we're in the prequalification process for participation in SAGD hydroelectric project in BC. Also we are targeting a couple of meaningful SAGD-related projects later in the year.

All in all, we are off to a very good start in our quest for revenue enhancement in 2014 and hope to land the right mix and timing of work to improve upon our recent EBITDA margin run rate.

On the last call, I also commented that I expect a 65% of our EBITDA this year to be earned in the middle two quarters, as I expected a robust construction season. I still stand by that statement, but realize that I’m may be doing a poor job of not providing guidance after our policy.

With Q1 now in the record books, it may be in -- that our annual EBITDA could exceed $65 million even with our sequential improvement in Q4 performance. Although I hate to (inaudible) but I must read the point that heavy rain in the spring break up could impact our performance in the current Q2.

Although I did not complaint about the cold winter conditions in Q1, you will hear about the effects of rain in Q2 as they approach being in [quarters] last year.

In closing I cannot resist remarking that I am very pleased with our credit rating agency recently raised our corporate credit rating to B after lately recognizing the clear business improvement efforts that the soft market has been given us credit for the last 18 months.

This upward rating adjustment will provide a welcome reduction in our cost of credit facility deck should we need it. For those remaining debenture holders out there will know that our recovery ratings left the full piece that come within the $10 million payment we made from just Q1 cash flow that I described earlier.

With that said I’d like to take the opportunity to turn the call back to Danielle for the Q&A session. Thank you..

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions) Our first question comes from Greg McLeish with GMP Securities. Please proceed with your question. Your line is live..

Hi guys, great quarter, just a quick question on margin here. Historically Martin, you’ve been guiding into the 10 -- you have been into the 10% EBITDA margin, the last two quarters you have done 13% I think 13.2% and 14.1%.

Is your margin improvement a combination of your linear cost structure and start to getting increased use of larger equipment?.

Yes, any improvement will be obviously is going to be doing the margins levels we are at the current level of business just $107 million of revenue in the quarter. I mentioned that the mix and volume of work are important.

The way we picked up for the summer season here is more favorable construction work that tends to be labor intensity that uses our smaller equipment so margin are not the best, but they are still reasonable.

So I think the trick in better margins is getting, as you say our heavy equipment up and running again and we certainly has a bit more opportunities to help you other things..

Can you comment on some of the near-term bidding opportunities? If we were to take a look at may be over the next year and half, do you think there is enough bidding opportunities to tighten up the market to improve overall pricing?.

Yes, you know I think we got the new Fort Hills mine, so that’s going to take capacity from the existing mines; some additional mining wasn’t around last year, so that’s great, no activity levels are going to be high for a while there.

Then I mention that slide 3, the prequalification exercise so that is underway, project goes ahead, it should take capacity out. Then you know we are hearing good things about a couple of LNG projects that might kick off next year and that should take about [year] or two.

So if you look across the all times plus other resource plays, I think the overcapacity should get sold out over the next year or so..

Great.

And just when you referenced your comments about 65% of your EBITDA coming in the middle two quarters, you sort of tempered that but are you just tempering that from the standpoint of if weather impacts you or are you sort of seeing weather impact already?.

Well, it is normal in the second quarter here to be having spring breakup downtime, right? I mean it's normal for us. And April is usually a quite month as we transition from winter to summer work. So, we're anticipating a big ramp up in the May, June in to July. So if, for example, we got the rainfall that we did last June that would impact us.

That’s all I am saying is that I still think we can do the 65% but it's more likely to be in Q3 than Q2, right?.

Right. I'll get back in to queue. Thanks guys..

Our next question comes from Luke Folta with Jefferies. Please proceed with your question..

Good morning gentlemen..

Good morning Luke..

I guess first question is just on revenues. Your comments suggest that you have already booked everything. You replaced what you burned in 2013 at that rate and it seems like you’ve got some nice growth on Fort Hills side. I guess, you are starting from a whole because first quarter was down year-on-year.

Should we be expecting revenues to be higher year-on-year now starting in Q2 to the remainder of the year and can you give us any sense of how much of the 100 million of Fort Hills awards you've got, we can think about as 2014 event..

Yes, the way I think about that is that we obviously had some construction work last year. So I think net-net we got about 50 million bucks more this year than last. So, I would about 50 to Q2 and Q3 is where I look at it..

Okay.

And then on the road project you've got, any sense of scale and timing there that you can provide?.

Yes, it's only a small project, only $160 million. But it’s the first project that is tightly gone in a wallet so it’s good [process] for other opportunities we see out there..

And there has been some change in the stock option practice.

So, can you just talk about it? Is the first quarter going to be sort of more loaded than the rest of the quarter or should we expect something similar in terms of the rate of expense throughout the course of the year?.

Yes, I think the way I would look at it, the rate of expense will be very similar. Obviously the biggest variable in that will be the movements in the share price, right. So, our share price continues to improve like it’s doing and clearly that expense will continue to increase..

Okay. Just a couple of quick one then. On the margin in the quarter, there was some project closeouts. Can you just give us some sense of what the impact there was and to the extent you can give us any color what you think the warm weather had in terms of the drag on the margin that would be helpful. Thanks..

Yes, I know, I would just like to say that project closeout, claim change orders are factor like for us every quarter, there is no puts and takes. I think the positive and the negative here net, net-net is kind of $1million..

Okay. And I guess one more. In your filing, looking at the CapEx table, it looks like total CapEx addition to assets was about $5.6 million. There's an offset in there on the cash flow statement for changes in non-working capital, I'm just not clear what that is exactly..

That's just the timing of when we actually paid the vendor for the equipment, so that would be the accounts payable..

Got it. Alright. Thank you very much..

Thank you..

Our next question comes from Maxim Sytchev with Dundee Capital Markets..

Good morning gentlemen..

Hey Max. .

Just wanted to clarify something you have said in your prepared remarks.

The contract for the MSE wall on the Horizon mine, has that been booked already or did you start doing work on this, any color on that project please?.

So, it’s just reasonable that -- with a lot of talks in the last couple of weeks. So, it's great to be on that for the next few..

Okay.

And I guess, because historically you've press released anything above 15 million sort of contribution , so we should assume that this is smaller but still material enough, right?.

50, yes, so it’s more than 15 yes. All the awards we have the Fort Hills 100 million is in about seven packages. So, we haven't had a single award about 50 to trigger in an individual press release yes..

Okay, I see.

And then actually, can you please comment in terms of how quickly those 7 packages on Fort Hills will actually translate into revenues? I mean is this a two year type project or is the timeframe a bit more compressed?.

Yes, it's definitely more compressed, this is all kind of summer season construction work with most of it finished by the end of Q3, maybe it will spill over bit in Q4. But, it's definitely the seasons work..

Okay. Thanks so much.

And then can you please comment in relation to the additional packages that could be coming from that site? Is it sort of in line with kind of the $100 million work that you won already or is it still larger packages coming in?.

Well, it’s a mix of smaller packages plus there is one large package for heavy civil work. The build of main haul road and the [started] up to two year job that is around $150 million. That involves heavy equipment, so it’s one where we’ve seen gap, we’ll see very competitive but we should hear about that in the next week or two..

Okay, excellent.

And then obviously we haven’t seen any sort of new data points from Keller but what’s your I guess comfort level in relation to the piling or announcement that we expect for the year and any incremental color relative to what you have disclosed in the prior conference call?.

No I’ve said right in the start here that our expectation is to get something and I’m still saying that today. They’re going into spring breakup through same of that and we’re seeing in years by that that can have an impact on that business. So I think it’s too early to say but we’re expecting something. .

Okay. Fair enough.

And then just briefly I mean obviously you’ve done just a tremendous turnaround in the business over the last 18 months and right now as you look out forward to addressing additional organic growth opportunities, is there something from an M&A perspective that might be of interest or are you starting to potentially consider some M&A and any color in relation to that would be much appreciated?.

Yes, sure. I am always interested in looking at M&A and also looking on it, but I don’t see anything on the near term horizon, I think we have got a fair way to go yet in terms of organic improvement.

I am very pleased by the opportunities that I see, and I would us just to quote on different projects different work force to what we have and get relatively stronger relation to potential M&A targets, so that would be again time for the next law here..

Okay. Actually that’s it from me. Thank you very much, gentlemen..

(Operator Instructions). Our next question comes from Ben Cherniavsky with Raymond James..

Hey, Ben..

Hi, Martin and David, well done. Good to see you..

Thank you..

Most of my questions have been asked. I am wondering if you are in any position at all to permit on the earn out on the piling business.

Is that I mean I think the first milestone would be this September, is that correct?.

Yes, that is correct. Is was the payment due, it will be made by the end of September. I just said that we maintained a little longer but we are expecting something. And we are looking at this last quarter here because it involves the spring breakup, as you know that can impact activity.

So we just think we will get something, I know you did a nice piece of kind of work on it and in terms of looking at financial statements et cetera and that was encouraging, but we will see how it [comes] out here..

That’s the best way to monitor it as just look at how the financial bar reporting I have told you?.

Sure..

So you don’t have any special insight beyond that than we do it? Just it’s take [Multiple speakers].

Well, at the division level that is putting a new enterprise system. So you know that can slow things down a little bit in terms of reporting and obviously they’re running the business slightly differently than we did. So we just decided a while ago just to wait and see how things pan out and we'll start looking at it at the end of period..

Okay, that's encouraging.

The Horizon contract, I believe expires in 2015, correct?.

Yes..

Are you currently -- are you starting negotiations or planning for how you deal with that contract yet, once it's expires? And what's your thought process on that?.

Yes, we certainly ended the dialog with the customer, it's actually tuning into June next year, but the contract expires in the first term.

And we're talking to the customer about what have next, if you look at the mine, they feel very kind of aggressive production targets going from about a 108,000 barrels a day presently to 250,000 barrels in Phase 1 and more demand in Phase 2. So sensibly they’re going to need a lot more the type of service we've rendering.

So, we’re hopeful of doing something with them either on a kind of extension basis or let's see, I think we've got over a year to kept things right and I'm sure we'll be on the mine beyond June next year..

Great, thank you..

Ladies and gentlemen, at this time I’d like to turn the floor back over to Martin Ferron for closing comments..

Well yes, just thanks everybody for calling in. We look forward to speaking with you next time. Thanks..

Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation..