Black Diamond Reports Second Quarter 2023 Results And Declares Dividend

CALGARY, Alberta, Aug. 03, 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 and six months ended June 30, 2023 (the "Quarter") compared with the three and six months ended June 30, 2022 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.

Key Highlights from the Second Quarter of 2023

• Consolidated rental revenue of $35.2 million and Adjusted EBITDA1 of $22.5 million were each up 24% from the Comparative Quarter.
  
• The Company’s consolidated contracted future rental revenue at the end of the Quarter was $120.1 million. Modular Space Solutions ("MSS") contracted future rental revenue for units on rent was $85.4 million at the end of the Quarter, up 56% from the Comparative Quarter. Workforce Solutions ("WFS") contracted future rental revenue for contracts in place was $34.7 million at the end of the Quarter, up 102% from the Comparative Quarter.
  
• MSS rental revenue and Adjusted EBITDA for the Quarter were both all-time record highs of $21.0 million and $17.1 million, up 20% and 34% respectively from the Comparative Quarter.
  
• MSS average monthly rental rate per unit (excluding the impact from acquisitions made in 2022) increased 13% from the Comparative Quarter (or 10% on a constant currency basis).
  
• WFS rental revenue of $14.1 million, increased 29% from the Comparative Quarter. WFS consolidated utilization of 65% continues to trend higher and it remains at the highest level observed in over half a decade.
  
• LodgeLink net revenue of $2.3 million grew 92% from the Comparative Quarter. LodgeLink also reported 101,746 room nights sold in the Quarter, a 49% increase from the Comparative Quarter.
  
• Return on Assets1 for the Quarter of 16.9% represents a meaningful premium over the Company's cost of capital and is relatively consistent with the Comparative Quarter.
  
• Capital investment into organic growth was $17.3 million, while maintenance capital for the Quarter was $2.0 million. Rental asset additions have been primarily deployed on projects with long-term contracts at rental rates that meet or exceed the Company’s hurdle rates.
  
• Funds from Operations1 of $26.0 million increased 30% while Free Cashflow1 for the Quarter of $17.0 million was up 17% from the Comparative Quarter.
  
• Long term debt and Net Debt were $219.2 million and $204.1 million respectively at the end of the Quarter. Continued positive Free Cashflow1 decreased Long term debt and Net Debt by $7.7 million and $14.8 million respectively since December 31, 2022. Net Debt to trailing twelve month ("TTM") Adjusted Leverage EBITDA1 of 2.2x remains at the lower end of the Company's target range of 2.0x to 3.0x while available liquidity was $122.7 million at the end of the Quarter.
  
• Profit for the Quarter of $4.6 million increased 15% from the Comparative Quarter.
  
• Subsequent to the end of the Quarter, the Company also declared a third quarter dividend of $0.02 payable on or about October 15, 2023, to shareholders of record on September 30, 2023. Dividends are designated as "eligible dividends" for Canadian income tax purposes.

Outlook

Results for the Quarter reflect a continuation of the Company’s growing rental platform which is underpinned by over $120.1 million of forward rental revenue and remains highly diverse across numerous customers and industries. The Company continues to see opportunities to invest and compound shareholder capital throughout the business and anticipates ongoing year-over-year growth throughout the back half of 2023 and into 2024.

The MSS segment set an all-time record high in both rental revenue and Adjusted EBITDA1. The Company continues to actively invest in additional fleet growth and expects ongoing improvement in average rental rate per unit as contracts expire and are renewed in a higher rate environment. While rental revenues continue to benefit from contract-backed fleet and rate growth, MSS continues to see consistent utilization levels across regions due to the diversified nature of the customer end-markets that are serviced. The MSS project pipeline remains robust and continues to track ahead of levels experienced at the same time last year with particular strength being experienced in education and civil infrastructure.

The WFS segment continues to see highest levels of rental revenue and Adjusted EBITDA observed in over half a decade and continues to see an active pipeline across several industries and geographies. Management expects WFS revenues to continue building into the back half of 2023 and remains optimistic regarding future opportunities into 2024 as we continue to expand into more diversified end-markets in mining, industrial infrastructure, and government-related projects. Core rental revenues should continue to improve in the back half of the year before taking a modest pause in year-over-year growth in early 2024 as certain assets return from existing contracts before being redeployed onto new project sites. WFS Australia performance remains strong and utilization is expected to remain stable as the Company adds additional assets in response to demand which in turn is driving continued rental revenue growth.

LodgeLink net revenues nearly doubled year-over-year as Net Revenue Margin1 improved to 11.8%. Total room nights sold for the Quarter of 101,746 was a 49% improvement from year-ago levels. Both sides of the digital marketplace continue to scale with over 800 cumulative corporate customers transacting across a supply network of over 12,000 properties or 1.2 million rooms. LodgeLink is expected to see continued momentum as the business begins to track annualized net revenue in excess of $10 million, with transportation and resource sectors contributing to recent growth.

Black Diamond expects ongoing growth into the back half of 2023 as all parts of the platform continue to operate well. The growth outlook is primarily based on contracts in place, deployment of new rental assets with long-term contracts, re-deployment of previously idle assets in WFS, and ongoing momentum in average rental rates per unit. The Company’s liquidity position remains strong with over $122.7 million of available liquidity, primarily from the Company's asset-based revolving credit facility (the "ABL Facility") that is not up for renewal until October 2026. The strong cash flow characteristics of the growing diversified rental business, combined with ample liquidity on the balance sheet positions the Company well into 2024. Overall, the Company continues to see a robust pipeline of growth opportunities.

1 Adjusted EBITDA, Net Debt, Funds from Operations 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.

Second Quarter 2023 Financial Highlights

Additional Information

A copy of the Company's unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 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.sedarplus.ca) and www.blackdiamondgroup.com.

About Black Diamond Group

Black Diamond is a specialty rentals and industrial services Company with two operating business units - Modular Space Solutions (MSS) and Workforce Solutions (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, through its principal brands, Black Diamond Camps and Black Diamond Energy Services, owns a large rental fleet of modular accommodation assets of all types and sizes. Its regional operating terminals rent, sell, service, and provide ancillary products and services including turn-key operated camps to a wide array of customers in the resource, infrastructure, construction, disaster recovery, and education sectors.

The WFS business unit also includes the Company’s wholly owned subsidiary, LodgeLink, which operates a digital marketplace for business-to-business crew accommodation, travel, and logistics in 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, August 4, 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. International callers should use 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/12639

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

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, timing and payment of the Company's quarterly dividend, management's assessment of Black Diamond's future operations and what may have an impact on them, opportunities and effect of deploying investment capital, financial performance, business prospects and opportunities, changing operating environment including changing activity levels, effects on demand and performance based on the changing operating environment, amount of revenue anticipated to be derived from current contracts, anticipated debt levels, liquidity sources and needs, 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 this news release, Black Diamond has made assumptions regarding, among other things: future commodity prices, that Black Diamond will continue to raise sufficient capital to fund its business plans in a manner consistent with past operations, that counterparties 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, Funds from Operations, Net Debt, Net Debt to TTM Adjusted Leverage EBITDA, Return on Assets, Net Revenue Margin 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 ROA is a useful financial measure for investors in evaluating operating performance for the periods presented. When read in conjunction with our profit 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 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 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:

Gross Bookings, a non-GAAP measure, is total revenue billed to the customer which includes all fees and charges. Net revenue, a GAAP measure, is Gross Bookings less costs paid to suppliers. Revenue from bookings at third party lodges and hotels through LodgeLink are recognized on a net revenue basis. LodgeLink is an agent in the transaction as it is not responsible for providing the service to the customer and does not control the service provided by a supplier. Management believes this ratio is an important supplemental measure of LodgeLink's performance and cash generation and believes this ratio is frequently used by interested parties in the evaluation of companies in industries with similar forms of revenue generation.

Net Revenue Margin is calculated by dividing net revenue by Gross Bookings for the period. Management believes this ratio is an important supplemental measure of LodgeLink's performance and profitability and believes this ratio is frequently used by interested parties in the evaluation of companies in industries with similar forms revenue generation where companies act as agents in transactions.

Reconciliation of Net Revenue to Gross Bookings and Net Revenue Margin:

Readers are cautioned that the non-GAAP measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator of Black Diamond's performance or cash flows, a measure of liquidity or as a measure of actual return on the shares of Black Diamond. These non-GAAP measures should only be used in conjunction with the consolidated financial statements of Black Diamond.