CALGARY, Alberta, Nov. 05, 2019 (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 nine months ended September 30, 2019 (the "Quarter") compared with the three and nine months ended September 30, 2018 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.
- Consolidated rental revenue increased to $17.4 million, up 35% from the Comparative Quarter.
- Modular Space Solutions ("MSS") revenue increased by 36% to $22.2 million, with rental revenue up 19% from the Comparative Quarter.
- Workforce Solutions ("WFS") revenue increased to $23.7 million, up 16% from the Comparative Quarter. Rental revenue increased 56% in the Quarter, from the Comparative Quarter.
- On October 31, 2019, Black Diamond closed a new $200 million four-year secured asset-based credit facility ("ABL Credit Facility").
In the third quarter of 2019, Black Diamond reported revenue of $45.9 million, up 25% from the Comparative Quarter. Revenue generated from outside of the western Canadian energy resource sector remained consistent at approximately 65% in the Quarter. Adjusted EBITDA of $10.5 million increased 128% from Comparative Quarter Adjusted EBITDA of $4.6 million. Adjusted EBITDA was positively impacted by $1.2 million due to the adoption of IFRS 16.
Key Highlights from the Third Quarter of 2019
For the Quarter, MSS Adjusted EBITDA of $7.3 million increased 74% from $4.2 million in the Comparative Quarter. The increase in EBITDA is attributed to the business unit's growing rental and non-rental revenue along with a positive $0.7 million impact from IFRS 16. As of September 30, 2019, the MSS fleet increased to 6,122 units, up approximately 5% from 5,813 units at December 31, 2018.
In the WFS business unit, Adjusted EBITDA for the Quarter was $6.1 million, up 110% from the Comparative Quarter due to changes in revenue mix and stronger rental margins attributed to higher fleet utilization. Adjusted EBITDA was also positively impacted by $0.5 million from IFRS 16. Subsequent to the Quarter, the Company completed mobilization of just over half of the assets related to the Sukunka River Lodge, a $45 million full turnkey project which will support construction of the Coastal GasLink Pipeline.
At the end of the Quarter, Net Debt was consistent at $93.8 million as compared to $93.5 million at June 30, 2019. Black Diamond spent $7.5 million on capital expenditures for the Quarter, up from $4.1 million in the Comparative Quarter. With $25.8 million spent on capital for the YTD and planned expenditures for the fourth quarter of 2019, the Company is trending towards its $35 million gross capital plan.
Subsequent to the Quarter, Black Diamond announced a new $200 million ABL Credit Facility which replaced the Company's current debt structure. The ABL Credit Facility provides the Company with increased liquidity and financial flexibility to continue to invest in the growth of the MSS business, while also lowering borrowing costs. As part of the ABL Credit Facility set-up process, an independent third-party appraisal of the MSS and Energy Services assets was commissioned. The assets were appraised at a Net Orderly Liquidation Value ("NOLV") of $180 million. This NOLV is approximately equal to the current net book value of these assets on the Company's balance sheet, and represents approximately half of Black Diamond’s total capital assets by net book value.
Outlook
Third quarter results reflect continued strong growth in the Company's MSS business unit, with increasing rental revenue and robust utilization rates throughout all regions. During the Quarter, the MSS segment sold 77 units from the rental fleet due mostly to a project opportunity, and therefore, net fleet growth during the Quarter was lower than anticipated. In the Quarter, capital spending for MSS reflects increased refurbishment capital to put previously idle units to work at higher returns than purchasing new units. While the outlook for the balance of the year remains constructive, the Company expects some typical annual seasonality to affect certain of the northern MSS geographies. On an annual basis, the Company expects to deliver significant MSS EBITDA growth as well as continued growth in the MSS fleet. With the addition of the ABL Credit Facility, the Company expects to achieve its long-term growth strategy of increasing the fleet count on average by 10% per year.
In the WFS business unit, rental revenue increased in the Quarter from a variety of projects, providing Black Diamond with customer and geographical diversification. We expect this trend to continue into the fourth quarter. During the Quarter, as part of the phased project plan, just over half of the contracted assets were installed at the Sukunka River Lodge, while the Company also realized full rental contribution from the previously announced California project. However, lodging activity remained muted in the Quarter and is anticipated to remain so through the fourth quarter. In Australia, year-to-date revenue and activity levels continue to remain strong and management expects this momentum to continue into the fourth quarter as the region puts new and existing capital to work. Utilization in the Energy Services business, in both Canada and the US has held steady but macro-economic conditions remain challenging.
The Company's digital marketplace for workforce accommodation, LodgeLink, continued to gain traction with customers and suppliers during the Quarter. LodgeLink now has approximately 900 properties listed, representing over 100,000 rooms of capacity within workforce lodges and hotels across Canada and the US. LodgeLink has over 400 unique corporate customers and is experiencing the most success with small crews of highly transient workers.
The Company is continuing to execute on its long-range vision of growth in its diversified MSS operations, while remaining disciplined with capital allocation to ensure return on asset hurdles are being met. The WFS business, while somewhat challenged in some areas, has also continued to evolve throughout 2019 with more diverse cash flow streams coming from different geographies, customers, and product lines. WFS utilization levels have improved modestly from historically lows, and could improve further as a number of sizable infrastructure projects could change the supply/demand fundamentals in the Company's camps rental business. With the recently announced ABL Credit Facility in place, the Company is well-positioned to advance its long-term growth strategies, while lowering borrowing costs and maintaining conservative debt levels.
Third Quarter 2019 Financial Highlights
| Three months ended September 30, | ||||
| (in millions, except where noted) | 2019 | 2018 | Change | |
| $ | $ | |||
| Revenue | ||||
| Modular Space Solutions | 22.2 | 16.3 | 36 | % |
| Workforce Solutions | 23.7 | 20.5 | 16 | % |
| Total Revenue | 45.9 | 36.8 | 25 | % |
| Total Adjusted EBITDA | 10.5 | 4.6 | 128 | % |
| Funds from Operations | 13.3 | 9.5 | 40 | % |
| Per share ($) | 0.24 | 0.17 | 41 | % |
| Loss | (0.3) | (4.7) | (94 | )% |
| Loss per share - Basic and diluted | — | (0.09) | (100 | )% |
| Capital expenditures | 7.5 | 4.1 | 83 | % |
| Property & equipment (NBV) | 331.2 | 340.5 | (3 | )% |
| Total assets | 419.7 | 390.5 | 7 | % |
| Long-term debt | 96.8 | 83.6 | 16 | % |
Additional Information
A copy of the Company's unaudited interim condensed consolidated financial statements for the three and nine month periods ended September 30, 2019 and 2018 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 - 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, and MPA, 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 and a fleet of liquid and solid containment assets. 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.
Learn more at www.blackdiamondgroup.com.
For investor inquiries please contact Jason Zhang at 403-206-4739 or investor@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 2019 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 increased activity levels, 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: the impact of general economic conditions, industry conditions, fluctuation of commodity prices, the Company's ability to attract new customers, failure of counterparties to perform on contracts, industry competition, availability of qualified personnel and management, timely and cost effective access to sufficient capital from internal and external sources, political conditions, dependence on suppliers and stock market volatility. 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, 2018 and other reports on file with the Canadian Securities Regulatory Authorities which can be accessed 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 terms have been referenced: Adjusted EBITDA, Funds from Operations and Net Debt. Readers are cautioned that these measures are not defined under International Financial Reporting Standards ("IFRS"). 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. A reconciliation between these measures and measures defined under IFRS is included in management's discussion and analysis for the three and nine month periods ended September 30, 2019 filed on SEDAR.