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

CALGARY, Alberta, Feb. 29, 2024 (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 (“2023” or the “Year”) ended December 31, 2023 compared with the three months (the “Comparative Quarter”) and twelve months (“2022” or the “Prior Year”) ended December 31, 2022. All financial figures are expressed in Canadian dollars.

Key Highlights from 2023

Generated consolidated revenue of $393.5 million and Adjusted EBITDA¹ of $106.6 million for the Year, up 21% and up 27% from Prior Year, respectively.
Consolidated rental revenue of $145.0 million was up 21% from the Prior Year.
The Company’s consolidated contracted future rental revenue at the end of the Year was $136.4 million, up $20.1 million or 17% from the Prior Year. Modular Space Solutions (“MSS”) contracted future rental revenue for units on rent was $101.8 million at the end of the Year, up 8% from the Prior Year. Workforce Solutions (“WFS”) contracted future rental revenue for contracts in place was $34.6 million at the end of the Year, up 56% from the Prior Year.
MSS generated record rental revenue and Adjusted EBITDA of $85.4 million and $72.7 million, respectively, up 18% and 34% from the Prior Year.
WFS rental revenue and Adjusted EBITDA were $59.6 million and $59.1 million, respectively, up 24% and 17% from the Prior Year.
LodgeLink continued to scale and generated record net revenue of $9.8 million, up 48% from the Prior Year. Gross Bookings¹ of $78.4 million grew 33% from the Prior Year while total room nights sold for the Year were up 18% from the Prior Year.
Gross capital expenditures for the Year were $69.1 million compared to $54.2 million in the Prior Year. This included $56.9 million of capital investment into organic growth, $3.9 million for LodgeLink software development, and $8.3 million for sustaining capital expenditures. Proceeds from fleet sales were $22.5 million.
Long-term debt and Net Debt¹ were $190.4 million and $184.2 million, respectively, at the end of the Year. Continued positive Free Cashflow¹ decreased long-term debt and Net Debt by $36.5 million and $34.7 million, respectively, from December 31, 2022. Net Debt to trailing twelve month (“TTM”) Adjusted Leverage EBITDA¹ of 1.7x is now just below the Company’s target range of 2.0x to 3.0x while available liquidity was $142.6 million at the end of the Year.
Profit for the Year was $30.4 million, up 15% from the Prior Year and consolidated Return on Assets¹ for the Year was 19.6%, up 60 basis points from Prior Year.
Diluted earnings per share for the Year was $0.49, up 11% compared to $0.44 for the Prior Year. The Prior Year included a one-time non-cash impairment reversal related to Australian assets of $6.3 million, or $4.4 million and $0.07 per share after tax. Excluding the impact of that reversal, 2023 diluted earnings per share of $0.49 is up nearly 32%.
Since re-instating the dividend in 2021, the Company has announced three dividend increases, with the most recent occurring in the fourth quarter of 2023. In the Year, Black Diamond returned over $4.8 million dollars to shareholders in the form of dividends, which accounted for approximately 4% of Funds from Operations, leaving ample financial flexibility for continued growth.

Key Highlights from the Quarter

Consolidated rental revenue of $36.0 million and Adjusted EBITDA¹ of $26.1 million were up 8% and 19% from the Comparative Quarter, respectively.
MSS rental revenue for the Quarter of $22.0 million was up 10% from the Comparative Quarter. MSS Adjusted EBITDA¹ of $17.3 million, increased 21% from the Comparative Quarter.
MSS average monthly rental rate per unit (excluding the impact from acquisitions made in 2022) increased 9% from the Comparative Quarter.
WFS rental revenue and WFS Adjusted EBITDA¹ for the Quarter were $14.0 million and $14.7 million, up 5% and 6% respectively from the Comparative Quarter despite the conclusion of two large-scale pipeline contracts, with those assets being off rent for most of the Quarter.
LodgeLink net revenue grew 8% from the Comparative Quarter, to $2.6 million, generating Net Revenue Margins¹ of 13.3%. LodgeLink also reported 101,726 room nights sold in the Quarter, a 13% decrease from the Comparative Quarter.
Capital investment into organic growth was $11.7 million, while maintenance capital for the Quarter was $2.2 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 $30.1 million and Free Cashflow¹ of $20.5 million for the Quarter were up 43% and 68%, respectively from the Comparative Quarter.
Profit for the Quarter of $7.8 million decreased 17% from the Comparative Quarter.
Subsequent to the end of the Quarter, the Company declared a first quarter dividend of $0.03 payable on or about April 15, 2024 to shareholders of record on March 31, 2024.

Outlook

Black Diamond’s diversified, specialty rental platform continues to benefit from strong contract coverage, supportive macro tailwinds, and a pipeline of attractive growth opportunities in North America and Australia. Management remains focused on growing the Company’s high margin, recurring rental revenue while reinvesting strong organically generated cashflows to further compound shareholder value.

MSS rental revenue of $22.0 million was up 10% from the Comparative Quarter. Strong results were driven by robust utilization, targeted fleet growth and a supportive rate environment. The Company continues to see healthy demand and additional opportunities in its core education and infrastructure customer segments which have driven MSS contracted future rental revenue to reach $101.8 million with an average duration of 51.9 months at the end of the Quarter. Management continues to expect healthy demand for rental assets across the platform to drive continued rental and ancillary revenue growth in 2024 and beyond.

WFS continues to generate strong returns, with Return on Assets¹ of 39% for the Quarter, as the Company benefits from successful efforts to right-size the fleet and diversify its customer base by both geography and end-market. Despite the conclusion of two large-scale pipeline projects during the Quarter, which drove utilization down to 60% from 70% in the Comparative Quarter, Adjusted EBITDA of $14.7 million for the Quarter was 6% higher from the Comparative Quarter, driven by a 5% increase in rental revenue as average realized rates improve. The WFS segment also ended the Quarter with $34.6 million of contracted future rental revenue, a 56% increase from the Comparative Quarter. The sales pipeline and opportunity set remain healthy and management expects a resumption of year-over-year growth in WFS in late 2024 as assets are redeployed in today’s generally more constructive rate environment when compared to rental rates several years ago.

The Company continues to see positive momentum in LodgeLink, with Gross Bookings¹ and net revenue for the Year growing 33% and 48% from the Prior Year levels, respectively. Net Revenue Margins¹ have also continued to improve and are up 120 basis points year over year, reaching 12.4% in the Year and 13.3% in the Quarter as additional revenue streams have been introduced. Management continues to believe that LodgeLink is well-positioned for ongoing growth to service a significant North American addressable market for workforce travel. Today, LodgeLink services an expanding base of corporate customers with the support of our supply partners that represent over 1.4 million rooms of capacity across North America.

Given the strong growth rates experienced over the last several years across the platform, management began and largely completed work around a corporate structure reorganization during the Quarter, in preparation for an Enterprise Resource Planning (“ERP”) system implementation. The Company expects to transition LodgeLink onto a new ERP system during the second quarter of 2024 and is working towards a planned transition for its asset rental businesses into 2025. Management remains focused on growing and compounding the Company’s high-margin, recurring rental revenue streams. We believe the outlook for 2024 remains constructive and is supported by a strong sales and opportunity pipeline in both MSS and WFS, with LodgeLink expected to continue on its path of rapid scaling.

¹ Adjusted EBITDA, Net Debt, Funds from Operations, Gross Bookings 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.

Fourth Quarter 2023 Financial Highlights

 

 
Three months ended December 31,
Twelve months ended December 31,

($ millions, except as noted)
2023
2022
Change
2023
2022
Change

Financial Highlights
$
$
%
$
$
%

Total revenue
103.4
89.0
16%
393.5
324.5
21%

Gross profit
43.6
38.2
14%
174.4
140.1
24%

Administrative expenses
19.1
16.3
17%
69.3
56.1
24%

Adjusted EBITDA (1)
26.1
22.0
19%
106.6
84.0
27%

Adjusted EBIT (1)
14.9
13.4
11%
62.4
48.8
28%

Funds from Operations (1)
30.1
21.0
43%
116.8
91.0
28%

Per share ($)
0.50
0.35
43%
1.94
1.54
26%

Profit before income taxes
8.6
13.6
(37)%
40.6
40.2
1%

Profit
7.8
9.4
(17)%
30.4
26.4
15%

Earnings per share – Basic ($)
0.13
0.16
(19)%
0.50
0.45
11%

Earnings per share – Diluted ($)
0.13
0.15
(13)%
0.49
0.44
11%

Capital expenditures
13.9
16.7
(17)%
69.1
54.2
27%

Business acquisition
—
54.4
(100)%
—
54.4
(100)%

Property & equipment
506.5
491.4
3%
506.5
491.4
3%

Total assets
647.6
649.4
—%
647.6
649.4
—%

Long-term debt
190.4
226.9
(16)%
190.4
226.9
(16)%

Cash and cash equivalents
6.5
8.3
(22)%
6.5
8.3
(22)%

Return on Assets (%) (1)
18.1%
18.5%
(40) bps
19.6%
19.0%
60 bps

Free Cashflow (1)
20.5
12.2
68%
81.3
63.8
27%

(1) Adjusted EBITDA, Adjusted EBIT, 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 audited consolidated financial statements for the years ended December 31, 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.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, CLM, MPA Systems, 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 various types. 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 1, 2024. 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/13162

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, opportunities in different geographic areas, opportunities for organic investment and debt repayment, the sales and opportunity pipeline, payment of the Company’s quarterly dividends, 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 changing activity levels, effects on demand and performance based on the changing operating environment, expectations for demand and growth in the Company’s operating and customer segments, the expected rate environment, amount of revenue anticipated to …

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