Dexterra earns $8.21M in Q2, hikes dividend by 16.7%
Great News! Dexterra earns $8.21M in Q2, hikes dividend by 16.7% 2021-08-10 17:14 ET - News Release Mr. Drew Knight reports DEXTERRA GROUP ANNOUNCES RESULTS FOR Q2 2021 AND INCREASES DIVIDEND Dexterra Group Inc. has released its financial results for the second quarter of 2021. Highlights Revenue of $173.6-million and EBITDA (earnings before interest, taxes, depreciation and amortization) of $22.5-million for the three months ended June 30, 2021, are 12 per cent and 26 per cent higher than Q1 2021. EBITDA was $22.5-million for Q2 showing strong results as the business starts to return to more normal activity levels. Net earnings of $8.2-million and basic EPS (earnings per share) of 13 cents were 84 per cent higher than Q1 2021 for the three months ended June 30, 2021. Generated free cash flow was $14.9-million in Q2 2021 and debt was reduced to $71.9-million at June 30, 2021, from $85.4-million at Dec. 31, 2020. Management has significant unused credit facilities and lower than normal levels of leverage to execute on its growth strategy. The NRB modular solutions plant in Cambridge is now fully operational; the plant opened on schedule, capital costs were under budget and the company has a strong pipeline of future projects. Dexterra Group increased its dividend by 16.7 per cent and declared a dividend for the third quarter of 2021 of 8.75 cents per share, for shareholders of record at Sept. 30, 2021, to be paid Oct. 15, 2021. The expected results over the back half of 2021 and into 2022 support the higher dividend to shareholders. Facilities management For Q2 2021, facilities management revenues were $38.8-million and increased by $9.2-million or 31 per cent from the $29.6-million in Q2 2020. The increase is mainly attributable to the better business conditions as certain COVID-19 restrictions eased. Management expects this upward trend to continue into the future as the population gets vaccinated and provincial COVID-19 restrictions are lifted which will have a positive impact on the company's airport and retail businesses that experienced revenue declines of approximately $9-million per quarter during the pandemic compared with historic levels. EBITDA margin increased to 11 per cent for Q2 2021 in comparison with 9 per cent in Q1 2021. The improved margins are mainly due to management's focus on margin improvements and successful integration of a prior acquisition. Year to date, facilities management revenues were $76.8-million and increased by $3.8-million or 5 per cent from the $73.0-million in 2020. The growth in the segment has been less than planned mainly due to the continuing reduction in operations at certain facilities and delayed proposal activity. Management expects the growth rate to increase as pandemic restrictions are lifted and as new business wins are fuelled by the current brisk bidding activity. Year-to-date EBITDA margin decreased to 10 per cent in comparison with 18 per cent for the same period in the prior year primarily due to lower wage subsidies when compared with 2020, which was partially offset by stronger project management and management delivering on operational improvements. The EBITDA margins for this segment increased to 9 per cent in YTD 2021 versus 4 per cent in YTD 2020 excluding the impact of CEWS. Work force accommodations, forestry and energy services (WAFES) WAFES comprises two revenue streams: (1) work force accommodations and (2) forestry and energy services. A significant portion of the company's WAFES business is support services which are not capital intensive and aligns closely with the company's facilities management business. WAFES revenue performance was strong despite Q2 2021 being negatively impacted by pandemic restrictions on some major projects. The forestry business had approximately $10-million of Q2 revenues and Q3 activity in this seasonal business is expected to be at a similar level. The company also won approximately $40-million of contract renewals during the first half of the year which is a testament to the company's strong service capability. B.C. pipeline camps rebounded strongly in June with good utilization, though the company's Kitimat open camp will likely continue to be closed for the remainder of 2021 due to scheduling of the LNG Canada project. Revenue from the WAFES segment for the three months ended June 30, 2021, was $87.5-million, an increase of $51.2-million compared with Q2 2020. The increase in segment revenues was primarily driven by the acquisition which added $41.4-million to revenue for Q2 2021 and also from increased business volumes. Revenue from the WAFES segment for the six months ended June 30, 2021, was $163.2-million, an increase of $109.9-million compared with Q2 2020. The increase in segment revenues was primarily driven by the acquisition which added $84.3-million to revenue reported year to date for Q2 2021 and increased business activities as described above. Year to date, EBITDA as a percentage of revenue was 20 per cent which is a decrease of 7 per cent compared with Q2 2020, for the reasons explained above. Excluding the impact of CEWS, the EBITDA margin improved by 4 per cent as compared with the six-month period ended June, 2020. This increase in margin is driven by strong utilization of support services and the addition of new contracts and business in Eastern Canada with the growth of infrastructure and mining projects. This margin is consistent with Q1 2021. WAFES business is expected to continue to be strong in the back half of 2021 and in 2022 with open camps operating at higher occupancy levels, including Kitimat in 2022. The previously announced new support services contracts with a significant oil sands customer will have a positive impact on Q3 and subsequent quarters. Also, clients have resumed activities in energy projects and the WAFES energy business will benefit from better pricing and higher volume of activity. Modular solutions Modular solutions segment revenues for Q2 2021 were $48.2-million, an increase of $6.3-million from Q1 2021. These revenues are primarily focused on rapid affordable housing and portable classrooms. The increased revenue relates to the company's improving pipeline and the company's increased capacity with the completion of the Cambridge plant in Q2 2021. EBITDA for Q2 2021 was $4.7-million, an increase of $1.8-million from Q1 2021. The results reflect the focus on rapid affordable housing projects where performance and execution have been strong. The company expects strong margins to continue despite raw materials price fluctuations and project delays as the shorter time between planning projects and completing them for modular is a clear benefit. Revenue from the modular segment for the six months ended June 30, 2021, was $90.2-million, an increase of $79.1-million compared with 2020 due to the timing of the acquisition. Year-to-date EBITDA was $7.6-million. A key metric for the modular solutions segment is the backlog of projects and timing of backlog execution. The focus for this business unit is to secure and increase backlog, which was $98.3-million for rapid affordable housing at the end of Q2 2021. Additionally, modular solutions has recurring modular business beyond affordable housing worth approximately $40-million per annum, which mainly consists of portable classrooms and retail stores and kiosks. Management is also currently finalizing contracts worth an additional $42-million with its two primary government customers which are not included in the backlog numbers. A key goal over time is also to diversify the company's modular product line. Liquidity and capital resources For the three months ended June 30, 2021, cash generated by operating activities was $20.2-million, compared with $13.5-million in the same period of 2020. The improvement was driven primarily by stronger working capital management. This cash was used to finance the capital expenditures for the Cambridge NRB plant as well as to repay debt and pay dividends. The corporation's financial position and liquidity are strong. The corporation generated free cash flow of $14.9-million and $27.3-million for the three and six months ended June 30, 2021, respectively. Debt was reduced even with the capital expenditures for the Cambridge plant during the quarter. In future quarters, principal sources of liquidity will include generated free cash flow and proceeds from the disposal of idle or underutilized assets across its operating segments. As at June 30, 2021, the corporation was in compliance with all financial and non-financial covenants related to the credit facility. Debt was $71.9-million and available borrowing capacity was $90.9-million at June 30, 2021. Additional information A copy of Dexterra Group's condensed consolidated interim financial statements for the three and six months ended June 30, 2021, and 2020 and related management's discussion and analysis (MD&A) have been filed with the Canadian securities regulatory authorities and are available on SEDAR and Dexterra Group's website. The consolidated financial statements have been prepared in accordance with international financial reporting standards and the reporting currency is in Canadian dollars. Conference call Dexterra Group will host a conference call and webcast to begin promptly at 8:30 a.m. ET on Aug. 11, 2021, to discuss Dexterra Group's second quarter results. To access the conference call by telephone the conference call dial-in number is 1-800-319-4610. A live webcast of the conference call will be accessible on Dexterra Group's website by selecting the webcast link. A PowerPoint presentation will be posted on Dexterra Group's website on Aug. 10, 2021, to be reviewed on the conference call. An archived recording of the conference call will be available approximately one hour after the completion of the call until Sept. 10, 2021, by dialling 1-855-669-9658, passcode 7310. About Dexterra Group Inc. Dexterra Group employs more than 6,000 people across Canada and delivers a range of support services for the creation, management and operation of infrastructure across Canada. Powered by people, Dexterra Group brings best-in-class regional expertise to every challenge and delivers innovative solutions, giving clients confidence in their day-to-day operations. Activities include a comprehensive range of facilities management services, industry leading work force accommodation solutions, innovative modular building capabilities, and other support services for diverse clients in the public and private sectors. We seek Safe Harbor. 2021 Canjex Publishing Ltd. All rights reserved. Mobile Old Site Home Daily Products Help Contact Us Your Account System Status GO AD FREE! Subscribe to Stockwatch *** Free 30-Day Trial *** Sign up for FREE Stockwatch Articles by email Read Stockwatch Daily Front Page News ANYTIME FOR FREE Advertise with us 2021 Canjex Publishing Ltd. All rights reserved. "Stockwatch" is a registered trademark of Canjex Publishing Ltd. Terms of Use, Privacy Policy Close Ad