Martin Ferron – President, Chief Executive Officer David Blackley – Chief Financial Officer David Brunetta – Director of Investor Relations.

Chris Lalor – GMP Securities Luke Folta – Jefferies Ben Cherniavsky – Raymond James Maxim Sytchev – Dundee Capital Markets.

Good morning ladies and gentlemen. Welcome to the North American Energy Partners earning call for the third quarter ended September 30, 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 bond holders to ask a question.

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, Director of Investor Relations at North American Energy Partners Inc. Please go ahead, sir..

Thank you. Good morning ladies and gentlemen and thank you for joining us. 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 information about these risks, uncertainties and assumptions, please refer to our September 30, 2014 management’s 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 the 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 third quarter ended September 30, 2014 as compared to the quarter ended September 30, 2013. Revenue from continuing operations for the quarter was $134.7 million compared to $116.2 million in the same quarter last year.

Our current quarter revenue benefited from mechanically stabilized earthen walls construction at the Horizon and Fort Hills mines in addition to heavy civil construction at Fort Hills.

The increased focus on project work combined with steady growth in mine support services at Kearl offset the decline in project work at Syncrude and the lower revenue from the Horizon mine that resulted from the customer assuming maintenance cost spend for the overburden contract work.

Activity levels slowly increased at the Millennium mine during the quarter. The effects of the revenue decline at the Millennium mine were lessened by the ongoing work on Highway 63. We commenced project completion activities at the Joslyn mine and this work is expected to wrap up in the fourth quarter of 2014.

Gross profit for the current quarter was $16.8 million or 12.5% of revenue, up from $11.6 million or 10.0% of revenue in the same period last year. The improvement in both gross profit and margin was primarily driven by the higher margin project work.

Favorable productivity on lump sum projects combined with an ongoing focus on managing equipment costs led to the improved margins. Higher than expected rain on the Highway 63 project and additional costs related to the shutdown at the Millennium mine eroded some of the gains experienced by higher margin work.

Operating income for the current quarter was $9.7 million, an increase from an operating income of $0.6 million for the same period last year. G&A expense, excluding stock-based compensation, was $6.9 million for the quarter, down from $7.3 million for the same period last year.

Liability-classified stock-based compensation costs decreased $3 million largely due to a decrease in share price during the quarter, which equity-classified stock-based compensation costs increased $0.4 million due to this year’s implementation of an equity-classified RSU and DSU awards.

We recorded $0.1 million loss from the sale of both plant and equipment and assets held for sale in the period compared to $1 million loss recorded for the same activity last year.

We recorded $4.8 million net income from continuing operations in the current quarter, an improvement from the $8.7 million net loss from continuing operations for the same period last year.

The current quarter basic income per share of $0.14 and diluted and income per share of $0.13 compared favorably to the basic and diluted loss per share of $0.24 for the same period last year. Total interest expense was $3.2 million during the current quarter, down from $6.9 million in the prior year.

Our debt restructuring, including the redemption of $150 million of our Series 1 debentures in the third quarter of last year and the $10 million redemption completed early in the second quarter of this year resulted in reduced interest expense on our debentures to $1.5 million during the current quarter from $3.1 million in the corresponding period last year.

The $0.3 million interest expense on our credit facility for the current quarter is comparable to the interest expense in the prior year. Turning now to capital, total capital additions for continuing operations for the period amounted to $7.6 million, mainly allocated to sustaining capital. That summarizes our third quarter results.

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

Thanks David, and good morning everyone. Back in February on the Q4 2013 conference call, I predicted the 65% of 2014 EBITDA would occur in Q2 and Q3 driven by a strong construction season. After we announced $10 million of Q2 EBITDA in August, I could sense that many doubted my earlier prediction.

Now in November, it appears that I was out by about a month with around 65% of EBITDA likely to occur in the May through October timeframe. The weather-related delays in the spring offset by the warmer weather in the fall pushed the timing of the earnings into this period.

I tell this tale because I want to reassure listeners that I do what I say (indiscernible). My predictions are rarely wrong, but I can sometimes be a little out on timing.

I’ll take my tongue out of my cheek now and stress that I am extremely pleased at our Q3 results as the whole investment premise related to our story is that our enhanced cost structure will generate superior EBITDA returns when we can take improved revenue opportunities.

Comparing Q3 to the same quarter last year, as David did, EBITDA was up nearly 110% on a 16% increase in revenue. EBITDA margins improved to 16% despite the forecast depressed activity level at the Millennium mine.

So where do we go from here, given the recent decline in oil prices and the substantial impact on standing plans of our customers? Well, in the near term we are encouraged by the continuation of mine activity levels into November on the seasonal construction work.

Also, it appears from bidding activity that potential volumes of winter earthworks will be higher this year than last with most of that kicking in late this quarter. Additionally, I’m delighted that we have recently been awarded over $100 million of secured work on two existing mine sites, which will be largely performed in 2015.

These awards give us good visibility into the coming quarters, which is pretty unusual for this time of the year.

Beyond that, it’s important to remember that most of our revenues are derived from committed growth capex and sustaining capex and opex on very long-life projects; therefore, short-term oil price swings in either direction do not impact project economics very much, and it would take a prolonged and more dramatic fall in oil prices for customers to alter their spending plans greatly.

I was pleased to hear that way of thinking confirmed by one of our major customers on an earnings call last week. Even before the recent oil price-linked uncertainty in our main marketplace, we continued to target non-oil sands mining jobs to ensure diversification and stability of revenue.

With this in mind, we are delighted to have prequalified to bid for the main civil works package associated with the Site C hydro project in British Columbia as part of a contract consortium. The European company who will lead our team has already demonstrated both the appetite and ability to win similar work in Canada.

As well as the main package, which mostly involves earthworks for us, we will likely bid on an early works job on our own, possibly as early as this quarter, with work expected to start early next year.

Staying on the topic of revenue diversification, we’ve also been encouraged lately on the more positive news related to potential LNG project activity, and we are engaged in some constructability support work for E&C and pipeline companies.

I’d now like to address the situation that our customer at the Horizon mine has indicated that they will take over the equipment ownership and maintenance activities associated with the overburden contract in mid-December.

I must emphasize that this is not a surprising in-sourcing step by the customer but rather the slightly earlier than expected culmination of a plan agreed with them early in 2012.

This has been a stable but lower range margin work for us for almost a decade with very little return on capital or free cash flow earned over the last periods; however, the contract has enabled us to develop a very strong relationship with the customer and hopefully this will translate into the orders and project-based work to partially offset the lower revenue from the term contract.

We have certainly recently seen an uptick in project activity at the mine linked to production growth plans and have secured more than usual project work there this year.

Net-net compared with 2014, we will drop around $80 million of revenue at about 10% EBITDA margin, but we’ll receive approximately $35 million of cash related to the transfer of owned and leased equipment. If that cash is used to pay debt, annual interest payments will be reduced by around $3 million.

Alternatively, we will look to take organic growth through acquisition opportunities if an adequate return on capital can be generated. Obviously, part of the cash could also be used to fund another NTIB for our stock. All in all, it will be an interesting exercise to decide what best to do with the cash.

We will be much better placed to provide (indiscernible) 2015 performance on the February conference call to discuss full-year 2014 results, following the full round of bidding for winter work and the start of tendering for summer construction work.

Overall, while it’s too early to provide one of my predictions, I’m cautiously optimistic despite the more uncertain times in oil price-driven marketplaces. This considered optimism is based on a strong balance sheet and much improved cost structure that will allow us to weather a marketplace storm, should one come.

Just with the normal flow of working capital, we expect to have cash and be out of the credit facility in Q1 of 2015, even before receiving the cash from the completion of the Horizon contract.

Finally to provide an update on potential first year contingent payments from the sale of our plowing business, we are presently scrutinizing the performance numbers provided by the buyer with the help of third party auditors and hope to complete this work over the coming weeks.

I’d now like to turn the call back over to the operator, Adam, for the Q&A session. Thanks, Adam..

[Operator instructions] Our first question comes from the line of Chris Lalor with GMP Securities. Please go ahead with your question..

Hi guys, great quarter. Just wondering if I could get a little bit more color on the Horizon contract, just with respect to how the negotiations proceeded, what were some of the deciding factors that led CNRL to in-source this work, and how you’d characterize the outcome versus what your expectations were, say, six months ago..

Yes, sure. You know, the negotiations that led to this outcome occurred in the months before my arrival in 2012, so as you recall we had some things to discuss with CNRL at that time and this was part of the overall outcome. I think it’s an outcome that we’re all happy with – I think they’re happy, we’re happy.

I think it makes sense for them to have the capital for the equipment in our net balance sheet rather than in their opex. I think that was a big driving factor for them in making this decision.

For the first six months, we’ll continue to operate the equipment, providing supervision and operators to run the gear because I think the customer is extremely happy with the way we do that, and we’ll talk to them about that activity continuing.

So you know, it’s an outcome that’s been long in the understanding, and as I say, we’re all happy with it..

Okay, great. Just as a follow-up, could you just talk about your plans to replace some of this work, maybe how much of this revenue you think you can replace over the next year, and maybe just a bit on the margin of that work versus the margins on the Horizon contract..

Yes, so the loss of this work is about $80 million on an annual basis. We were going to lose 40 of it anyway because the contract was due to finish at the end of June, right, so I think the impact you’ll see next year will be seen in Q1 and Q2 because that’s a short time for us to replace all of that revenue.

Hopefully by the middle of the year and the end of the year, we’ll report maybe half of it up, is kind of the way we’re thinking, and given that this was kind of lower end of the margin range for us, hopefully we can replace it at better margins.

So if we can replace this with, say, 15% margin work, then that’s equivalent to—then it’s recorded (indiscernible) half, right? So that’s kind of the way we’re thinking right now..

Okay, thank you..

Thank you. Our next question comes from the line of Luke Folta with Jefferies. Please go ahead with your question..

Hi, good morning. First question I had was just on the outlook for 2015. Obviously there’s quite a bit concern around oil prices being lower and potential higher cost operations, such as the oil sands production, being cut at some point as a result of this.

I just wanted to make very clear, your outlook for 2015 revenues being lower is strictly related to the Horizon—the end of the Horizon contract, as you just discussed.

Is there anything else in terms of push-outs or reductions in your initial expectations relative to how you see ’15 sort of unfolding?.

No, it’s quite the opposite right now, actually. I’m more encouraged today than I was this time last year. That might sound odd in the circumstances, but based on recent awards, bidding activity, talking to customers, I’m more bullish than I was this time last year.

Now of course, things might change if the oil price goes a lot lower, but as I mentioned in my prepared remarks, operating a brownfield mine can be done for 30, $35 a barrel, so as long as that oil price is covered, then I see the activity continuing because it costs a lot of money to switch activity on-off.

So I think before my time, that was seen in 2009 and ’10, and it should transpire this time..

Okay, great. Just as a follow-up, when you think about the two incremental opportunities beyond $100 million of contracts that you’ve won just this quarter, Fort Hills seems like there’s a good amount of opportunity out there, and then there’s a number of non-oil sands mining related projects that you’re looking at.

Is there anything you can tell us to help us understand what the scale of the Fort Hills opportunity could be for you in terms of bookings in the near term, as well as on the non-oil sands related stuff—non-mining related stuff, I should say..

I’d have to be a little cautious there. You might recall that the work we won for Fort Hills this year, we bid in January, so it’s kind of very short fuse bidding and winning the work. So we’re hopeful that we’ll see more bidding activity when we get back from the Christmas break and that we’ll win our share.

I think we’re going to see more activity at Kearl next year – you know, we’ve already won $60 million worth of work there that we didn’t have last year. You mentioned the non-oil sands activity.

I’m fully aware that Site C hasn’t been sanctioned economically yet, but all indications are that that will happen, so we’re pretty hopeful; and again, things will happen on a short fuse.

The site preparation job, which could be 30, 40, $50 million – we don’t yet because we haven’t seen the full scope, that could bid this quarter in December with a start early next year, and then the main civil work, 4, $500 million worth of work maybe over a few years could be bid in the summer, so we’re pretty excited about that because that’s an opportunity that, again, we didn’t have this time last year.

So you can be assured that that cost structure, we’re going to be competitive on that and we’re going to try and win it..

Okay. If I could just ask one more quick one, just on SG&A. We’ve seen a favorable trend there continue to play out.

Obviously stock compensation expense helped that this quarter, but when we think about sort of base SG&A expense moving forward, should we be thinking about it sort of in the range that we’re seeing for 3Q, roughly $7 million or so a quarter?.

Yes, that would be a reasonable number to use, but we do have some more cost saving opportunities related to real estate. We’re subleasing a part of our office here, and we’re trying to sublease our office in Fort McMurray. Any success there will help us reduce our real estate costs..

Great, thank you very much..

Thank you. Ladies and gentlemen, once again if you would like to ask a question, please push star, one on your telephone keypad. Our next question comes from the line of Ben Cherniavsky of Raymond James. Please go ahead with your question..

Good morning, guys.

First of all, just on the Keller Group cash, or potential cash, pardon me if I missed it but do you have a timeline for when you might be able to get a definitive ruling on that or answer, or does this become a legal issue that could be prolonged?.

Yes, I think Ben, we’ll have an answer here over the next couple of weeks. We’re not in a legal process at this stage if that’s your following question..

So you’re following sort of a predefined appeal procedure, if you will, as to how you deal with any kind of potential disagreements on the contract? Is that—is there something in the original agreement that allows you to take a closer look at the numbers in these circumstances?.

Yes, we do have the right to audit, and obviously if we identify adjustments that significantly changes whatever number they’ve given us, or there’s big variances, then we would have to work through that with them. I think going down the legal route would be a last resort.

I’m pretty confident that we can work something out here with them if we have differences..

Okay. Going back to the first question, just about the implications of the Horizon contract, I get that they have a lower cost of capital and they’ll have new assets on their balance sheet.

What does it say, though, from the operating side about your operating costs? My understanding was always that your biggest competition in a lot of respects were your customers, and if you couldn’t do the work cheaply or well enough for them, they would do it themselves.

I’m not necessarily saying that that was the case here – I mean, look, I think it’s good that you guys were willing to walk away from a contract that wasn’t going to earn your cost of capital.

But on the operating cost side, what does it tell us about the whole outsourcing framework?.

I don’t think any real change, Ben. You know, this was a one-off contract that was agreed upon 10 years ago under different circumstances. I think the thinking of the operator and ourselves has moved on since. I think there will be no change in the way we have other opportunities on a project basis, just as we do for all the other customers right now.

As you say, it didn’t make any sense for them to have us provide capital at 9 or 10% cost. They’ve got a much better cost of capital than us, so it’s a sensible decision. .

Isn’t that the same for a lot of the players up there? How is that different?.

Some of the larger contractors hopefully (indiscernible) cost of capital than us. We’re heading in the right direction, but for steady-state work I think the customer is probably going to do a lot of it and we’ll do—you know, stay with construction contracting and other project-based earth moving that we do today..

Okay, fair enough. Thanks. It was a good quarter..

Ben, just the other thing that we should always keep in mind is the balance sheet impact on this. We are going to see $35 million of cash coming in. We’ll see a small amount of our fixed assets going away, roughly $24 million if you think of it on a net value basis, and then we’ll see roughly $11 million coming out on the unbilled side..

Okay, that’s helpful. Thanks very much..

Thank you. Our next question comes from the line of Maxim Sytchev with Dundee Capital Markets. Please go ahead with your question..

Hi, good morning gentlemen. Actually maybe just a couple of small questions for David, if you don’t mind.

Can you please comment on the changes in the WIP this particular quarter? How should we think about Q4 and going forward, because I think accounts receivables went down this Q, so I was wondering if something is going on there and how should we think about it on a going forward basis..

What you actually see is most of the growth in our overall working capital is coming out of the unbilled section, so that’s really just timing with respect to when we can invoice for work, so the natural flow would be we record the revenues, if you will, on the balance sheet side on unbilled is step one, and then based on the contract when we’ve got approval to issue an invoice to the customer, that then translates into receivables and we collect the cash at that point.

So I think what you’re seeing in the quarter is just a timing issue with respect to projects, and some of it, I think comes back to what Martin referenced earlier where we saw our season effectively moved into that May to October time frame.

But my expectation this year is that as we go through October-November, that unbilled is translating into receivables, which is translating to cash hopefully by December or into early January. Again, it’s just a timing issue for us..

Okay, that’s helpful. Then how should we think about the equipment cost right now, because again the maintenance was going to be done now by the client.

Is this, what we saw in Q3, the run rate that we could be using on a going forward basis, or how should we think about it?.

I think outside of normal seasonal or volume fluctuations, right, or mix or work (indiscernible), I think that that would be a reasonable run rate..

Okay, and another small one.

In relation to the MIC wall that you were doing on Horizon, did you complete that entire project in Q3 or is there still some spillover into Q4?.

On (indiscernible) project, actually there is still some spillover into Q4, again because of that timing issue that we saw work rolling into October. .

Okay, that’s helpful. Then in terms of—I mean, obviously right now the cost structure is dramatically more attractive.

Maybe a question for Martin, then – how should we think on a sort of steady-state, going forward basis in terms of the EBITDA margin generation of this business right now, that the lower contract work that pertained to Horizon is off the books, is 14, 16% something that you believe is doable, given what you have at hand right now?.

Yes, that’s certainly doable, Max. We’d like to think we can replace some or all of the lost revenue at higher margin, but it will take a little bit of time, so think about 2015 on that basis..

No, absolutely. Okay.

Then in terms of—Martin, when you were talking about potentially looking at some M&A, any additional thoughts that maybe you could share with us in terms of what potentially you could be looking at, or is the bid-ask spread narrowed a little bit? What are you seeing in the marketplace right now?.

Well, it’s been an interesting few weeks since we started our blackout period. About four or five weeks ago, our stock’s gone from $7.20 to $5.50 on Toronto. I’ve seen the stock price for potential M&A candidates do the same or even worse than that, so on a relative basis it might be a better time to do it.

We’ll see how things pan out over the next few weeks. .

Okay, well thanks a lot. That’s it for me..

Thanks Max..

Thank you. Ladies and gentlemen, there are no further questions at this time. I would now like to turn the floor back over to Mr. Martin Ferron for further remarks. .

Good, thanks Adam, and thanks to all our listeners. Look forward to speaking to you again in February. Thanks..

Ladies and gentlemen, this concludes the North American Energy Partners conference call. You may now disconnect your lines at this time. Thank you and have a wonderful day..