CALGARY, Alberta, Nov. 03, 2022 (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, 2022 (the "Quarter") compared with the three and nine months ended September 30, 2021 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.
Key Highlights from the Third Quarter of 2022
- Consolidated rental revenue of $31.5 million and Adjusted EBITDA1 of $26.0 million were up 21% and 32% from the Comparative Quarter, respectively.
- Diluted earnings per share of $0.15, was up 50% from the Comparative Quarter. Return on Assets1 for the Quarter was 24%, up five percentage points from the Comparative Quarter.
- Long term debt at the end of the Quarter was $160.6 million or $148.3 million of Net Debt1. Free Cashflow1 for the Quarter of $23.9 million, up 40% from the Comparative Quarter. Net Debt to trailing twelve month ("TTM") Adjusted Leverage EBITDA1 was 1.9x, and available liquidity was $124.7 million at the end of the Quarter.
- Modular Space Solutions ("MSS") rental revenue was a quarterly record of $18.5 million and increased 21% from the Comparative Quarter. Adjusted EBITDA of $17.0 million was also a quarterly record and increased 36% from the Comparative Quarter.
- MSS average monthly rental rate per unit increased 13% from the Comparative Quarter (8% on a constant currency basis), while MSS contracted future rental revenue was $64.6 million at the end of the Quarter, up 21% from the Comparative Quarter.
- Workforce Solutions ("WFS") rental revenue of 13.0 million, increased 21% from the Comparative Quarter. Adjusted EBITDA of $14.6 million increased 16% year-over-year.
- LodgeLink recorded a new quarterly record of 94,640 room nights sold in the Quarter, a 57% increase from the Comparative Quarter.
- During the Quarter, the Company allocated $4.3 million to shareholder returns and the reduction of non-controlling interests, through a combination of $1.2 million of common shares repurchased under the normal course issuer bid ("NCIB"), $0.9 million of dividends declared to common shareholders, and the redemption of $2.2 million of preferred shares of a subsidiary company.
- Subsequent to the Quarter, 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 purchase price of the acquisition was $54.5 million, including the assumption of debt.
- On November 3, 2022, the Board of Directors approved an increase of 33% to the Company's annual dividend per share payout from $0.06 to $0.08. The Company also declared a fourth quarter dividend of $0.02 payable on or about January 15, 2023 to shareholders of record on December 31, 2022.
Outlook
Third Quarter results reflect the Company's growth of its core, high margin, diversified rental revenue stream across various industries and geographies. The outlook for the remainder of 2022 and into 2023 remains constructive owing to contracted rental revenue in place, continued strength in utilization and rates among our core asset rental business units, as well as the continued rapid scaling of the Company’s digital crew-travel platform.
MSS business performance continues to track well with the segment reporting a quarterly record in both core rental revenue and Adjusted EBITDA. Management expects the rental revenue run rate into the fourth quarter to remain robust, and expects ongoing year-over-year growth in core, recurring, rental revenue into future quarters. Sales and non-rental revenues are expected to moderate from third quarter levels, but remain above the levels experienced in the first half of 2022.
The WFS segment remains underpinned by existing contracts related to a number of mining projects in eastern Canada and energy infrastructure activity in western Canada. The segment also experienced strong levels of demand for field-related activity in the third quarter and expects this momentum to continue. WFS Australia has remained among the best performing geographies within the rental platform and continues to see strong demand for additional equipment at attractive returns into 2023 and beyond.
LodgeLink set a quarterly record high in booking volumes during the Quarter and continues to experience growing momentum from both new and existing corporate customers. During the Quarter, the Company made additional improvements to customer experience through enhanced functionality and improved back-office technologies, while also continuing to enhance its existing mobile-app. The Company remains highly optimistic on the future growth potential of LodgeLink.
Management expects operating performance heading into 2023 to remain robust given the strength of the current rental platform, diverse customer base, and existing contracts in place. The Company also remains in a strong liquidity position, with a healthy balance sheet, and growing Free Cashflow. In combination, these characteristics are expected to allow for significant flexibility in a rising interest rate and possible recessionary environment. While the Company’s growth capex remains fully discretionary (and could be allocated towards shareholder returns or accelerated debt repayment in a scenario where growth becomes muted), Management continues to see several attractive organic and inorganic growth opportunities across its platform, which should result in compounding returns and steady growth in core, recurring, rental-revenues.
1 Adjusted EBITDA, Net Debt, 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 MD&A for more information on each non-GAAP financial measure and ratio.
Third Quarter 2022 Financial Highlights
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions, except where noted) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
| $ | $ | $ | $ | |||||||||
| Revenue | ||||||||||||
| Modular Space Solutions | 51.7 | 50.2 | 3 | % | 123.2 | 122.6 | — | % | ||||
| Workforce Solutions | 44.2 | 58.6 | (25 | )% | 112.3 | 120.8 | (7 | )% | ||||
| Total Revenue | 95.9 | 108.8 | (12 | )% | 235.5 | 243.4 | (3 | )% | ||||
| Total Adjusted EBITDA(1) | 26.0 | 19.7 | 32 | % | 62.1 | 46.5 | 34 | % | ||||
| Funds from Operations(1) | 30.7 | 23.4 | 31 | % | 70.0 | 55.0 | 27 | % | ||||
| Per share ($) | 0.52 | 0.40 | 30 | % | 1.18 | 0.96 | 23 | % | ||||
| Profit | 9.0 | 5.7 | 58 | % | 17.0 | 9.7 | 75 | % | ||||
| Earnings per share ($) | ||||||||||||
| - Basic | 0.15 | 0.10 | 50 | % | 0.29 | 0.17 | 71 | % | ||||
| - Diluted | 0.15 | 0.10 | 50 | % | 0.28 | 0.16 | 75 | % | ||||
| Capital expenditures | 15.1 | 12.0 | 26 | % | 37.5 | 25.8 | 45 | % | ||||
| Property & equipment | 423.7 | 404.6 | 5 | % | 423.7 | 404.6 | 5 | % | ||||
| Total assets | 566.9 | 548.6 | 3 | % | 566.9 | 548.6 | 3 | % | ||||
| Long-term debt | 160.6 | 164.6 | (2 | )% | 160.6 | 164.6 | (2 | )% | ||||
| Cash and cash equivalents | 12.3 | 5.1 | 141 | % | 12.3 | 5.1 | 141 | % | ||||
| Return on Assets(1) (%) | 24 | % | 19 | % | 5 | 19 | % | 15 | % | 4 | ||
| Free Cashflow(1) | 23.9 | 17.1 | 40 | % | 52.0 | 38.8 | 34 | % | ||||
(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 and nine months ended September 30, 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 – 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, and Schiavi, 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 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.
Conference Call
Black Diamond will hold a conference call and webcast at 9:30 a.m. MT (11:30 a.m. ET) on Friday, November 4, 2022. 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 1-800-898-3989 or 1-416-641-6104 and use participant passcode: 2439118#. International dial-in numbers can be found at the following link: https://www.confsolutions.ca/ILT?oss=7P1R8008983989. 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/12375
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 2022 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 impact of COVID-19, 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 impact of the COVID-19 pandemic, 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, inflationary price pressure 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, 2021 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 have been disclosed: Adjusted EBITDA, Net Debt, Net Debt to TTM Adjusted Leverage EBITDA, Funds from Operations, 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 (loss), 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 (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 and Return on Assets:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| ($ millions, except as noted) | 2022 | 2021 | Change % | 2022 | 2021 | Change % | ||||||
| Profit (1) | 9.0 | 5.7 | 58 | % | 17.0 | 9.7 | 75 | % | ||||
| Add: | ||||||||||||
| Depreciation and amortization (1) | 9.2 | 9.4 | (2 | )% | 26.6 | 26.2 | 2 | % | ||||
| Finance costs (1) | 2.1 | 1.5 | 40 | % | 5.3 | 4.4 | 20 | % | ||||
| Share-based compensation (1) | 1.3 | 1.0 | 30 | % | 3.6 | 2.4 | 50 | % | ||||
| Non-controlling interest (1) | 0.5 | 0.4 | 25 | % | 1.5 | 1.0 | 50 | % | ||||
| Current income taxes (1) | — | — | — | % | 0.4 | — | 100 | % | ||||
| Deferred income taxes (1) | 3.9 | 1.7 | 129 | % | 7.7 | 2.8 | 175 | % | ||||
| Adjusted EBITDA (1) | 26.0 | 19.7 | 32 | % | 62.1 | 46.5 | 34 | % | ||||
| Annualized multiplier | 4 | 4 | 1.3 | 1.3 | ||||||||
| Annualized adjusted EBITDA | 104.0 | 78.8 | 32 | % | 80.7 | 60.5 | 33 | % | ||||
| Average net book value of property and equipment | 431.3 | 421.4 | 2 | % | 426.3 | 422.6 | 1 | % | ||||
| Return on Assets | 24 | % | 19 | % | 5 | 19 | % | 15 | % | 4 | ||
(1) Sourced from the Company's unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2022 and 2021.
Net Debt 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:
| ($ millions, except as noted) | 2022 | 2022 | 2022 | 2021 | 2021 | 2021 | 2021 | 2020 | Change | |||
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||
| Profit (loss) | 9.0 | 4.0 | 4.0 | 10.7 | 5.7 | 1.3 | 2.7 | (2.2 | ) | |||
| Add: | ||||||||||||
| Depreciation and amortization | 9.2 | 8.8 | 8.6 | 8.9 | 9.4 | 8.8 | 8.1 | 9.0 | ||||
| Acquisition costs | — | — | — | — | — | — | — | 1.9 | ||||
| Finance costs | 2.1 | 1.7 | 1.5 | 1.7 | 1.5 | 1.6 | 1.3 | 1.6 | ||||
| Share-based compensation | 1.3 | 1.1 | 1.2 | 1.0 | 1.0 | 0.8 | 0.6 | 0.8 | ||||
| Non-controlling interest | 0.5 | 0.5 | 0.5 | 0.4 | 0.4 | 0.4 | 0.2 | 0.3 | ||||
| Current income taxes | — | 0.4 | — | 0.1 | — | — | — | 0.4 | ||||
| Gain on sale of real estate assets | — | — | — | (0.7 | ) | — | — | — | — | |||
| Deferred income taxes | 3.9 | 1.7 | 2.1 | (4.6 | ) | 1.7 | 0.6 | 0.4 | (0.7 | ) | ||
| Adjusted EBITDA | 26.0 | 18.2 | 17.9 | 17.5 | 19.7 | 13.5 | 13.3 | 11.1 | ||||
| Acquisition pro-forma adjustments(1) | — | — | — | — | — | — | — | 2.1 | ||||
| Adjusted Leveraged EBITDA | 26.0 | 18.2 | 17.9 | 17.5 | 19.7 | 13.5 | 13.3 | 13.2 | ||||
| TTM Adjusted Leverage EBITDA | 79.6 | 59.7 | 33 | % | ||||||||
| Long-term debt | 160.6 | 164.6 | (2 | )% | ||||||||
| Cash and cash equivalents | 12.3 | 5.1 | 141 | % | ||||||||
| Net Debt | 148.3 | 159.5 | (7 | )% | ||||||||
| Net Debt to TTM Adjusted Leverage EBITDA | 1.9 | 2.7 | (30 | )% | ||||||||
(1) Includes pro-forma pre-acquisition EBITDA estimates as if the acquisition during the YTD and Prior YTD occurred on July 1, 2021.
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:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| ($ millions, except as noted) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
| Cash flow from Operating Activities (1) | 27.3 | 17.5 | 56 | % | 64.4 | 50.7 | 27 | % | ||||
| Add/(Deduct): | ||||||||||||
| Change in long-term accounts receivable (1) | (2.5 | ) | 0.1 | (2,600 | )% | (0.7 | ) | (0.5 | ) | (40 | )% | |
| Changes in non-cash operating working capital(1) | 5.9 | 5.8 | 2 | % | 6.3 | 4.8 | 31 | % | ||||
| Funds from Operations | 30.7 | 23.4 | 31 | % | 70.0 | 55.0 | 27 | % | ||||
| Add/(deduct): | ||||||||||||
| Maintenance capital | (1.9 | ) | (3.1 | ) | 39 | % | (5.0 | ) | (6.9 | ) | 28 | % |
| Payment for lease liabilities | (1.7 | ) | (1.6 | ) | (6 | )% | (4.9 | ) | (4.7 | ) | (4 | )% |
| Interest paid (including lease interest) | (2.1 | ) | (1.4 | ) | (50 | )% | (5.1 | ) | (4.2 | ) | (21 | )% |
| Net current income tax expense (recovery) | — | — | — | % | 0.4 | — | 100 | % | ||||
| Dividends paid on common shares | (0.9 | ) | — | (100 | )% | (2.5 | ) | — | (100 | )% | ||
| Distributions declared to non-controlling interest | (0.1 | ) | — | (100 | )% | (0.5 | ) | — | (100 | )% | ||
| Dividends paid on preferred shares | (0.1 | ) | (0.2 | ) | 50 | % | (0.4 | ) | (0.4 | ) | — | % |
| Free Cashflow | 23.9 | 17.1 | 40 | % | 52.0 | 38.8 | 34 | % | ||||
(1) Sourced from the Company's unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2022 and 2021.
