Black Diamond Reports Fourth Quarter and Year-End Results and Declares Dividend

CALGARY, Alberta, March 02, 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 (the "Quarter") and twelve months ("2022" or the "YTD") ended December 31, 2022 compared with the three months (the "Comparative Quarter") and twelve months ("2021" or the "Prior YTD") ended December 31, 2021. All financial figures are expressed in Canadian dollars.

Key Highlights from 2022

• Generated consolidated revenue of $324.5 million and Adjusted EBITDA1 of $84.0 million for the YTD, down 4% and up 31% from Prior YTD, respectively.
  
  
• Consolidated rental revenue of $120.1 million was up 23% from the Prior YTD.
  
  
• Modular Space Solutions ("MSS") generated record rental revenue and Adjusted EBITDA of $72.1 million and $54.4 million, respectively, up 20% and 16% from the Prior YTD.
  
  
• Workforce Solutions ("WFS") rental revenue and Adjusted EBITDA were $48.0 million and $50.5 million, respectively, up 26% and 46% from the Prior YTD.
  
  
• LodgeLink continued to scale dramatically. Record net revenue of $6.6 million was up 74% from the Prior YTD and Gross Bookings1 of $58.9 million grew 66% from the Prior YTD. Total room nights sold for YTD were 356,328, up 60% from the Prior YTD.
  
  
• Diluted earnings per share for the year was $0.44 compared to $0.34 for the Prior YTD.
  
  
• Long term debt and Net Debt1 at the end of the Year were $226.9 million and $218.9 million, respectively. Free Cashflow1 for the YTD was $63.8 million, up 17% from the Prior YTD. Net Debt to trailing twelve month (“TTM”) Adjusted Leverage EBITDA1 was 2.4x, and available liquidity was $105.0 million at the end of the Year.
  
  
• Profit for the YTD was $26.4 million, up 29% from the Prior YTD and consolidated Return on Assets1 for the YTD was 19.0%, up 380 basis points from Prior YTD.
  
  
• Gross capital expenditures for the year was $108.6 million compared to $37.9 million in the Prior YTD. This included $54.4 million for acquisitions, $43.4 million for fleet growth, $3.2 million for LodgeLink software development, and $7.7 million for sustaining capital expenditures. Proceeds from fleet sales were $17.2 million.
  
  
• In 2022, the Company allocated an aggregate of $15.0 million to shareholder returns and the reduction of non-controlling interests, through a combination of $2.2 million of common shares repurchased under the Company's normal course issuer bid (“NCIB”), $3.9 million of dividends declared to holders of common shares, and the redemption of $8.9 million of preferred shares of a subsidiary company.
  

Key Highlights from the Quarter

• Consolidated rental revenue of $33.3 million and Adjusted EBITDA1 of $22.0 million were up 22% and 26% from the Comparative Quarter, respectively.
  
  
• MSS rental revenue was a quarterly record of $20.0 million and increased 24% from the Comparative Quarter. MSS Adjusted EBITDA of $14.3 million increased 8% from the Comparative Quarter.
  
  
• MSS average monthly rental rate per unit increased 9% from the Comparative Quarter (8% on a constant currency basis), while MSS contracted future rental revenue was $94.1 million at the end of the Quarter, up 76% from the Comparative Quarter.
  
  
• WFS rental revenue of $13.3 million increased 19% from the Comparative Quarter. WFS Adjusted EBITDA of $13.9 million increased 43% from the Comparative Quarter.
  
  
• LodgeLink recorded a quarterly record of 117,323 room nights sold in the Quarter, a 67% increase from the Comparative Quarter. LodgeLink net revenue of $2.4 million was also a quarterly record and increased 118% from the Comparative Quarter.
  
  
• On October 31, 2022, the Company closed the acquisition of an Ontario-based modular rental company with 1,851 units, with a primary focus in the education and government sectors (the "2022 Acquisition"). The purchase price of the 2022 Acquisition was $54.4 million, including the assumption of debt.
  
  
• During the Quarter, the Company recognized a non-cash impairment reversal of $6.3 million on its workforce accommodations cash generating unit in Australia. The reversal had an after-tax impact of $4.4 million, or $0.07 per share on a diluted basis.
  
  
• Return on Assets1 for the Quarter was 18.5%, up 200 basis points from the Comparative Quarter. Diluted earnings per share of $0.15 was down 17% after non-recurring adjustments from the Comparative Quarter.
  
  
• Capital investment into organic growth was $16.7 million, which includes maintenance capital of $2.6 million, while proceeds from fleet sales were $2.6 million.
  
  
• During the Quarter, the Company allocated an aggregate of $3.4 million to shareholder returns and the reduction of non-controlling interests, through a combination of $1.2 million of dividends declared to holders of common shares and the redemption of $2.2 million of preferred shares of a subsidiary company.
  
  
• Subsequent to the end of the Quarter, on March 2, 2023, the Company declared a first quarter dividend of $0.02 payable on or about April 15, 2023 to shareholders of record on March 31, 2023.

OUTLOOK

Black Diamond’s Quarter and YTD results highlight the benefits of a large and diverse specialty rental platform with steadily growing, predictable, rental revenues being generated across many industries and geographies. The robust rental revenue growth across the business has been driven by healthy utilization levels in MSS and the ongoing redeployment of previously idle WFS assets into varied customer segments. Management believes the current iteration of the rental platform is the most stable and diverse it has ever been and are optimistic about future growth opportunities throughout the business. Alongside the strong performance of the diversified asset rental business, LodgeLink, the Company’s digital workforce travel platform, has also continued to grow quickly with booking volumes scaling dramatically.

MSS continued to set quarterly records with respect to both rental revenue and Adjusted EBITDA1 through organic fleet growth and robust utilization and rates, further supplemented by continued inorganic growth as the Company closed the acquisition of a relatively large Ontario modular space business in the Quarter. Based on the continued growth of the segment's pipeline and backlog of opportunities, management expects continued growth in MSS rental revenues in coming quarters. Management also expects increases in average rental rates as longer duration contracts expire and are renewed at higher rental rates, combined with ongoing strength in utilization across regions and continued organic fleet growth.

Within the WFS business, management is similarly optimistic given the successful efforts to diversify the geography and industries served resulting in increased utilization in North America and ongoing strength in Australia. Consolidated utilization for the Quarter of 62% was the highest level observed in many years. While WFS has historically experienced higher variability in utilization levels, management believes a more diversified asset rental base among different customers, industries and geographies has led to a healthy and stable current pipeline of new opportunities. The pipeline includes both opportunities to deploy existing fleet as well as to grow certain parts of this fleet at attractive returns, particularly in the Australian market.

LodgeLink set yet another quarterly record in room nights sold, Gross Bookings1, and net revenues as it continued its rapid scale up across North America. Net revenue in the Quarter more than doubled versus the Comparative Quarter. Management remains confident in the continued growth of the LodgeLink platform into 2023. The Company expects that LodgeLink will continue to enhance the customer experience on the platform as well as further automate back-end workflows to support continued growth and transaction-level profitability.

The Company expects operating performance in 2023 to remain solid given the diverse nature of the existing asset rental business further supported by strong contract coverage. The Company’s liquidity position provides a high degree of optionality, with approximately $105.0 million of available liquidity with a debt facility maturing in October 2026, including approximately one third of debt at fixed rates. Free Cashflow1 of $63.8 million in the YTD has generally been reinvested into the growth of long-lived, cashflow producing assets at attractive rates of return. Management continues to closely monitor asset level returns and has been deploying organic capital investment primarily into new rental fleet assets that are signed to long-term contracts with customers. Management continues to see attractive organic and inorganic growth opportunities in a number of regions and expects to generate compounding returns and steady growth of its core, recurring rental-revenues. These strategies are expected to allow for significant flexibility in an environment of increasing interest rates and risk of a potential recession.

1 Adjusted EBITDA, Net Debt, Gross Bookings and Free Cashflow are non-GAAP financial measures. Return on Assets and Net Debt to TTM Adjusted Leverage EBITDA 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 ratio.

Fourth Quarter2022 Financial Highlights

Additional Information

A copy of the Company's audited consolidated financial statements for the years ended December 31, 2022 and 2021 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.

About Black Diamond Group

Black Diamond is a specialty rentals and industrial services company with two operating business units - MSS and WFS. We operate in Canada, the United States, and Australia.

MSS through its principal brands, BOXX Modular, Britco, MPA, Schiavi, and CL Martin, owns a large rental fleet of modular buildings of various types and sizes. Its network of local branches rent, sell, service, and provide ancillary products and services to a diverse customer base in the construction, industrial, education, financial, and government sectors.

WFS owns a large rental fleet of modular accommodation assets of various types and sizes and a fleet of liquid and solid containment assets. Its regional operating terminals rent, sell, service, and provide ancillary products and services including turnkey operated camps to a wide array of customers in the resource, infrastructure, construction, disaster recovery, and education sectors.

In addition, WFS includes LodgeLink which operates a digital marketplace for business-to-business crew accommodation, travel, and logistics services across North America. The LodgeLink proprietary digital platform enables customers to efficiently find, book, and manage their crew travel and accommodation needs through a rapidly growing network of hotel, remote lodge, and travel partners. LodgeLink exists to solve the unique challenges associated with crew travel and applies technology to eliminate inefficiencies at every step of the crew travel process from booking, to management, to payments, to cost reporting.

Learn more at www.blackdiamondgroup.com.

For investor inquiries please contact Jason Zhang at 403-206-4739 or investor@blackdiamondgroup.com.

Conference Call

Black Diamond will hold a conference call and webcast at 9:00 a.m. MT (11:00 a.m. ET) on Friday, March 3, 2023. CEO Trevor Haynes and CFO Toby LaBrie will discuss Black Diamond’s financial results for the quarter and then take questions from investors and analysts.

To access the conference call by telephone dial toll free 1-800-319-4610 or 1-416-915-3239. International toll free: 1-604-638-5340. Please connect approximately 10 minutes prior to the beginning of the call.

To access the call via webcast, please log into the webcast link 10 minutes before the start time at: https://www.gowebcasting.com/12470

Following the conference call, a replay will be available on the Investor Events section of the Company’s website at www.blackdiamondgroup.com.

Reader Advisory
Forward-Looking Statements
Certain information set forth in this news release contains forward-looking statements including, but not limited to, the amount of funds that will be expended on the 2023 capital plan, how such capital will be expended, expectations for asset sales, management's assessment of Black Diamond's future operations and what may have an impact on them, financial performance, business prospects and opportunities, changing operating environment including the amount of revenue anticipated to be derived from current contracts, anticipated debt levels, economic life of the Company's assets, future growth and profitability of the Company and realization of the anticipated benefits of acquisitions and sales. With respect to the forward-looking statements in the news release, Black Diamond has made assumptions regarding, among other things: future commodity prices, that Black Diamond will continue to conduct its operations in a manner consistent with past operations, that counter-parties to contracts will perform the contracts as written and that there will be no unforeseen material delays in contracted projects. Although Black Diamond believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made are reasonable, there can be no assurances that such expectations or assumptions will prove to be correct. Readers are cautioned that assumptions used in the preparation of such statements may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties and other factors, many of which are beyond the control of Black Diamond. These risks include, but are not limited to: volatility of industry conditions, dependence on agreements and contracts, competition, credit risk, information technology systems and cyber security, vulnerability to market changes, operating risks and insurance, weakness in industrial construction and infrastructure developments, weakness in natural resource industries, access to additional financing, dependence on suppliers and manufacturers, reliance on key personnel, and workforce availability. The risks outlined above should not be construed as exhaustive. Additional information on these and other factors that could affect Black Diamond's operations and financial results are included in Black Diamond's annual information form for the year ended December 31, 2022 and other reports on file with the Canadian Securities Regulatory Authorities which can be accessed on the Company's profile on SEDAR. Readers are cautioned not to place undue reliance on these forward-looking statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Black Diamond does not undertake any obligation to update or revise any of the forward-looking statements, except as may be required by applicable securities laws.

Non-GAAP Measures
In this news release, the following specified financial measures and ratios have been disclosed: Adjusted EBITDA, Net Debt, Net Debt to TTM Adjusted Leverage EBITDA, Gross Bookings, Return on Assets and Free Cashflow. These non-GAAP and other financial measures do not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other entities. Readers are cautioned that these non-GAAP measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator of the Company's performance or cash flows, a measure of liquidity or as a measure of actual return on the common shares of the Company. These non-GAAP measures should only be used in conjunction with the consolidated financial statements of the Company.

Adjusted EBITDA is not a measure recognized under IFRS and does not have standardized meanings prescribed by IFRS. Adjusted EBITDA refers to consolidated earnings before finance costs, tax expense, depreciation, amortization, accretion, foreign exchange, share-based compensation, acquisition costs, non-controlling interests, share of gains or losses of an associate, write-down of property and equipment, impairment, restructuring costs, and gains or losses on the sale of non-fleet assets in the normal course of business.

Black Diamond uses Adjusted EBITDA primarily as a measure of operating performance. Management believes that operating performance, as determined by Adjusted EBITDA, is meaningful because it presents the performance of the Company's operations on a basis which excludes the impact of certain non-cash items as well as how the operations have been financed. In addition, management presents Adjusted EBITDA because it considers it to be an important supplemental measure of the Company's performance and believes this measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in industries with similar capital structures.

Adjusted EBITDA has limitations as an analytical tool, and readers should not consider this item in isolation, or as a substitute for an analysis of the Company's results as reported under IFRS. Some of the limitations of Adjusted EBITDA are:

• Adjusted EBITDA excludes certain income tax payments and recoveries that may represent a reduction or increase in cash available to the Company;
• Adjusted EBITDA does not reflect the Company's cash expenditures, or future requirements, for capital expenditures or contractual commitments;
• Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs;
• Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest payments on the Company's debt;
• depreciation and amortization are non-cash charges, thus the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
• other companies in the industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to invest in the growth of the Company's business. The Company compensates for these limitations by relying primarily on the Company's IFRS results and using Adjusted EBITDA only on a supplementary basis. A reconciliation to profit, the most comparable GAAP measure, is provided below.

Return on Assets is calculated as annualized Adjusted EBITDA divided by average net book value of property and equipment. Annualized Adjusted EBITDA is calculated by multiplying Adjusted EBITDA for the Quarter and Comparative Quarter by an annualized multiplier. Management believes that Return on Assets is a useful financial measure for investors in evaluating operating performance for the periods presented. When read in conjunction with our profit (loss) and property and equipment, two GAAP measures, it provides investors with a useful tool to evaluate Black Diamonds ongoing operations and management of assets from period-to-period.

Reconciliation of Consolidated Profit to Adjusted EBITDA, Adjusted EBIT, Adjusted EBITDA as a % of Revenue and Return on Assets:

NetDebt to TTM Adjusted Leverage EBITDA is a non-GAAP financial ratio which is calculated as Net Debt divided by trailing twelve months Adjusted Leveraged EBITDA. Net Debt, a non-GAAP financial measure, is calculated as long-term debt minus cash and cash equivalents. A reconciliation to long-term debt, the most comparable GAAP measure, is provided below. Net Debt and Net Debt to TTM Adjusted Leverage EBITDA removes cash and cash equivalents from the Company's debt balance. Black Diamond uses this ratio primarily as a measure of operating performance. Management believes this ratio is an important supplemental measure of the Company's performance and believes this measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in industries with similar capital structures. In the June 30, 2022 Quarter, Net Debt to TTM Adjusted EBITDA was renamed Net Debt to TTM Adjusted Leverage EBITDA, to provide further clarity on the composition of the denominator to include pre-acquisition estimates of EBITDA from business combinations. Management believes including the additional information in this calculation helps provide information of the impact of trailing operations from business combinations on the Company's leverage position.

Reconciliation of Consolidated Profit to Adjusted EBITDA, Net Debt and Net Debt to TTM Adjusted Leverage EBITDA:

Funds from Operations is calculated as the cash flow from operating activities, the most comparable GAAP measure, excluding the changes in non-cash working capital. Management believes that Funds from Operations is a useful measure as it provides an indication of the funds generated by the operations before working capital adjustments. Changes in long-term accounts receivables and non-cash working capital items have been excluded as such changes are financed using the operating line of Black Diamond's credit facilities. A reconciliation to cash flow from operating activities, the most comparable GAAP measure, is provided below.

Free Cashflow is calculated as Funds from Operations minus maintenance capital, net interest paid (including lease interest), payment of lease liabilities, net current income tax expense (recovery), distributions declared to non-controlling interest, dividends paid on common shares and dividends paid on preferred shares plus net current income taxes received (paid). Management believes that Free Cashflow is a useful measure as it provides an indication of the funds generated by the operations before working capital adjustments and other items noted above. Management believes this metric is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in industries with similar capital structures. A reconciliation to cash flow from operating activities, the most comparable GAAP measure, is provided below.

Reconciliation of Cash Flow From Operating Activities to Funds from Operations and Free Cashflow: