CALGARY, Alberta, May 04, 2023 (GLOBE NEWSWIRE) -- Black Diamond Group Limited ("Black Diamond", the "Company" or "we"), (TSX:BDI), a leading provider of space rental and workforce accommodation solutions, today announced its operating and financial results for the three months ended March 31, 2023 (the "Quarter") compared with the three months ended March 31, 2022 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.
Key Highlights from the First Quarter of 2023
- Consolidated rental revenue of $34.4 million and Adjusted EBITDA1 of $21.4 million were up 28% and 20% from the Comparative Quarter, respectively.
- Modular Space Solutions ("MSS") rental revenue set another quarterly record of $20.4 million and increased 27% from the Comparative Quarter. MSS Adjusted EBITDA of $16.1 million was also a quarterly record and increased 55% from the Comparative Quarter.
- MSS average monthly rental rate per unit (excluding the impact from acquisitions made in 2022) increased 15% from the Comparative Quarter (or 11% on a constant currency basis).
- MSS contracted future rental revenue for units on rent was $97.9 million at the end of the Quarter, up 73% from the Comparative Quarter. Workforce Solutions ("WFS") contracted future rental revenue for contracts in place was $32.8 million at the end of the Quarter, up 62% from the Comparative Quarter.
- WFS rental revenue of $14.0 million, increased 30% from the Comparative Quarter. WFS consolidated utilization of 65% is the highest level observed in over five years.
- LodgeLink net revenue of $2.2 million grew 69% from the Comparative Quarter, while the business also reported 105,958 room nights sold in the Quarter, a 39% increase from the prior year. LodgeLink U.S. volumes more than doubled from the Comparative Quarter and continues to see an accelerated pace of growth.
- Return on Assets1 for the Quarter of 16.3% represents a meaningful premium over the Company's cost of capital and is consistent with the Comparative Quarter.
- Capital investment into organic growth was $13.5 million, while maintenance capital for the Quarter was $2.3 million. Rental asset additions have been primarily non-speculative in that contracts are in place before the asset is built.
- Funds from Operations of $21.4 million increased 11% while Free Cashflow1 for the Quarter of $13.0 million was down 4% from the Comparative Quarter due to higher interest costs and capitalized maintenance.
- Long term debt and Net Debt1 at the end of the Quarter declined $12.1 million and $10.3 million from the fourth quarter 2022 respectively to $214.8 million and $208.6 million. Net Debt to trailing twelve month ("TTM") Adjusted Leverage EBITDA1 of 2.3x remains at the lower end of the Company's target range of 2.0x to 3.0x while available liquidity was $115.9 million at the end of the Quarter.
- Profit for the Quarter of $4.4 million increased 10% from the Comparative Quarter. Profit growth for the Quarter was half of the 20% increase in Adjusted EBITDA due to higher share-based compensation driven by strong operating performance and increased share prices, as well as higher interest expenses due to rising interest rates.
- Administrative costs as a percentage of Gross Profit remained consistent with the Comparative Quarter despite inflationary pressures.
- Subsequent to the end of the Quarter, the Company also declared a second quarter dividend of $0.02 payable on or about July 15, 2023, to shareholders of record on June 30, 2023.
Outlook
The Company’s diverse and sizable rental platform has continued to grow its core, recurring rental revenue and management believes the outlook into 2023 remains positive. Contributing factors to ongoing rental revenue growth include continued increases in average rental rates across the MSS portfolio of assets as units are re-contracted in today’s higher-rate environment, deployment of contract-backed organic growth capital in MSS, ongoing potential for improving utilization in WFS, and continued rapid scaling of LodgeLink, particularly in the U.S. market.
The MSS segment set another quarterly record in both rental revenue and Adjusted EBITDA1. The Company expects continued growth in MSS rental revenues throughout 2023 driven by ongoing increases in average rental rate per unit as contracts expire and are renewed in a higher rate environment, robust utilization levels across regions, and continued fleet growth. MSS' opportunity pipeline and backlog remains strong and continues to be ahead of levels experienced at the same time last year.
The Company’s outlook for the WFS segment is also constructive. The WFS segment is more project oriented than the MSS segment, resulting in more variability to rental revenues. However, the strategies put in place several years ago to diversify the WFS customer base continues to support deployment of previously idled assets into increasingly diversified geographies and customer industries. Consolidated utilization in the WFS segment was 65% for the Quarter, the highest level observed in many years. This has resulted in continued growth in core rental revenues, which were up 30% year-over-year. Management has continued to invest growth capital into Australia, where its asset base is effectively fully utilized while also opportunistically right-sizing parts of the North American WFS asset base. Management expects this to continue to provide high levels of Free Cashflow1 for reinvestment.
LodgeLink net revenues grew 69% year-over-year as Net Revenue Margin1 improved to 11.9%. While room nights sold were down modestly on a sequential basis from the fourth quarter of 2022, which had high levels of booking volumes driven by natural disaster-related work, the platform continues to see strong uptake from both new and existing customers. Volumes during this Quarter also reached a record high in the U.S. which remains as a large and significant addressable market. Supply has also continued to grow at a strong pace with over 11,000 properties listed, representing over 1.1 million rooms.
The Company expects operating performance in 2023 to remain strong given the diverse nature of the existing asset rental business, further supported by a strong level of contract coverage. The Company’s liquidity position provides a high degree of optionality, with $115.9 million of available liquidity on its debt facility which is not up for renewal until October 2026. While interest rates are significantly higher than a year ago, approximately one third of debt is hedged at fixed rates. Management believes the Company can continue to compound returns through reinvestment in high-return, long-lived rental assets with attractive contract terms and economics. That said, the Company’s growth capital expenditures remain fully discretionary. If the Company encounters an environment where macro-economic events begin impacting asset-level returns, the Company’s platform allows for the flexibility to re-allocate high levels of Free Cashflow towards accelerated debt repayment or shareholder returns. Management continues to see a healthy bid volume and backlog of projects with a diversified customer base focused on longer-term infrastructure, education and government-related services, which provides the confidence that there is ample opportunity to deploy investment capital exceeding internal hurdle rates, while maintaining a conservative balance sheet.
1 Adjusted EBITDA, Net Debt, and Free Cashflow are non-GAAP financial measures. Return on Assets, Net Debt to TTM Adjusted Leverage EBITDA, and Net Revenue Margin are non-GAAP ratios. Refer to the Non-GAAP Financial Measures section of this press release for more information on each non-GAAP financial measure and ratios.
First Quarter 2023 Financial Highlights
| | Three months ended March 31, |
| ($ millions, except as noted) | 2023 | 2022 | Change |
| Financial Highlights | $ | $ | % |
| Total revenue | 81.5 | 70.2 | 16% |
| Gross profit | 37.3 | 30.7 | 21% |
| Administrative expenses | 16.0 | 12.8 | 25% |
| Adjusted EBITDA(1) | 21.4 | 17.9 | 20% |
| Adjusted EBIT(1) | 11.6 | 9.3 | 25% |
| Funds from Operations(1) | 21.4 | 19.2 | 11% |
| Per share ($) | 0.36 | 0.33 | 9% |
| Profit before income taxes | 6.5 | 6.6 | (2)% |
| Profit | 4.4 | 4.0 | 10% |
| Earnings per share - Basic and Diluted ($) | 0.07 | 0.07 | —% |
| Capital expenditures | 15.8 | 6.7 | 136% |
| Property & equipment | 497.5 | 399.2 | 25% |
| Total assets | 644.4 | 528.1 | 22% |
| Long-term debt | 214.8 | 160.5 | 34% |
| Cash and cash equivalents | 6.5 | 3.9 | 67% |
| Return on Assets (%)(1) | 16.3% | 16.9% | (60 bps) |
| Free Cashflow(1) | 13.0 | 13.5 | (4)% |
| (1) Adjusted EBITDA, Funds from Operations and Free Cashflow are non-GAAP financial measures. Return on Assets is a non-GAAP ratio. Refer to the Non-GAAP Financial Measures section of this press release for more information on each non-GAAP financial measure and ratio. |
Additional Information
A copy of the Company's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2023 and 2022 and related management's discussion and analysis have been filed with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and www.blackdiamondgroup.com.