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 ended March 31, 2019
(the "Quarter") compared with the three months ended March 31,
2018 (the "Comparative Quarter"). All financial figures are
expressed in Canadian dollars.
- Revenue for the Quarter was $45.4
million, up 11% or $4.5 million from the Comparative Quarter due to
an increase in custom sales in Modular Space Solutions
("MSS").
- MSS revenue increased to $22.5
million, a 60% increase from the Comparative Quarter, and
represented 50% of consolidated revenue for the Quarter.
- Adjusted EBITDA (see "Non-GAAP
Measures") for the Quarter was $8.1 million, a decrease of 6% or
$0.5 million from the Comparative Quarter primarily due a change in
revenue mix. Included in Adjusted EBITDA is a positive $1.0
million impact from the adoption of the IFRS 16 Leases accounting
standard.
- The Company's leverage position
remains substantially unchanged from December 31, 2018, as net debt
increased slightly to $88.0 million from $86.9 million at year-end.
The Company exited the Quarter with a Funded Debt to EBITDA ratio
of 2.84 (December 31, 2018 - 2.95) and a Funded Debt to Tangible
Book Value ratio of 0.44 (December 31, 2018 - 0.44).
- Subsequent to the Quarter, Black
Diamond announced a $20 million rental contract for the Company's
U.S. WFS business unit.
"We believe our first Quarter results are
indicative of Black Diamond's continued focus to diversify our
business as the MSS segment continues to show growth in rental
revenue supported by sequential quarter-over-quarter fleet growth
and healthy markets throughout our North American footprint," said
Trevor Haynes, CEO of Black Diamond Group. "Our MSS fleet is
expected to show growth of 10% as we continue to invest in the
fleet. The Workforce Solutions business remains well
positioned to capitalize on an improvement in sector activity
levels in Canada, with improving backlog and healthy bid logs being
seen throughout the system. Outside of Canada, the Workforce
Solutions business in Australia and the United States are strong
and expect to see modest capital investment this year. We
remain excited with respect to our LodgeLink platform and are
expecting to roll out an upgrade to the digital marketplace in the
coming months, which will support the ongoing growth of both
supply, customers and room night bookings."
Black Diamond's consolidated revenue in the
Quarter increased 11% to $45.4 million from $40.9 million in the
Comparative Quarter. Despite higher revenues, Adjusted EBITDA
decreased to $8.1 million from $8.6 million in the Comparative
Quarter, due primarily to lower margins. Lower margins for
the quarter were driven by an increase in contribution from sales
and non-rental revenue which generate lower margins compared to
rental revenue. Operating margins were also lower
year-over-year due to comparably strong sales margin performance in
the Comparative Quarter. Revenue derived from outside of western
Canadian energy sources increased to 63% in the Quarter, compared
to 45% in the Comparative Quarter.
In the MSS segment, revenue in the Quarter
increased to $22.5 million, up 60% from $14.1 million in the
Comparative Quarter. MSS utilization averaged 73% in the Quarter,
up from 66% in the Comparative Quarter, while average rental rates
remained consistent with the Comparative Quarter. MSS Adjusted
EBITDA of $4.9 million was higher than Adjusted EBITDA in the
Comparative Quarter of $3.8 million due to increased rental and
non-rental revenue. Adjusted EBITDA was also positively impacted by
IFRS 16 in the amount of approximately $0.6 million.
The Company's Workforce Solutions ("WFS")
segment generated revenue in the Quarter of $22.9 million, down 15%
from $26.8 million in the Comparative Quarter. WFS Adjusted EBITDA
in the Quarter declined to $6.0 million from $7.1 million in the
Comparative Quarter due to lower used-fleet sales in the Quarter,
offset by $0.4 million from the positive impact of adopting IFRS
16. Lodging occupancy in the Quarter was consistent at 33%.
Outlook
In our MSS business, we expect continued growth
in regions such as British Columbia, southern Ontario and the
United States ("U.S."); supported by a healthy economy and strong
activity levels in construction and infrastructure. The Company
continues to focus on MSS fleet growth of 10% this year, supported
by $25 to $30 million of capital investment in this segment
throughout 2019. We expect cash flow generation to out-pace fleet
growth due to continued increase in scale and additional product
offerings through Value Added Products and Services ("VAPS").
Longer term, over the next five years, the Company's goal is to
double the MSS fleet.
Within our WFS segment, we expect activity
levels in the U.S. and Australian markets to remain robust, and the
Canadian market has performed relatively in line with year-ago
levels. However, we are optimistic that the Canadian market
will show improved WFS performance into the second half of the
year. This optimism is supported by previously announced
contract wins related to a 908-bed turnkey project ("Sukunka") for
the Coastal Gas Link project and a separate, smaller rental project
in Kitimat, British Columbia. Install and transportation of
the 908-bed Sukunka camp has begun in the second quarter with rent
expected to begin in the third quarter. The smaller Kitimat rental
project was installed in late March and is currently on rent.
Our large WFS asset base continues to provide meaningful operating
leverage to a recovery in activity levels. Our ability to move
these WFS assets into diversified markets outside of the western
Canadian energy sector is evidenced by our recently-announced $20
million rental contract to supply 1,584 beds to support the
reconstruction of Paradise, California. Given our healthy bid log,
we believe the market for private dormitory assets could tighten
relatively quickly should a handful of infrastructure projects move
forward over the next several quarters. Amongst this
backdrop, we will remain disciplined with our pricing and capital
allocation decisions while continuing to optimize our fleet by
selling down underutilized assets.
LodgeLink, the Company's digital marketplace for
workforce accommodation, continued to gain traction with customers
and suppliers during the Quarter. LodgeLink now has over 520
properties listed, representing over 61,000 rooms of capacity
across North America. We've begun expanding into the U.S. in 2019,
with an increase in customers and listed properties. Our first U.S.
bookings were completed recently, and we continue to expect growth
in both customer and supplier volumes throughout the year.
Black Diamond exited the Quarter with net debt
of $88.0 million, up slightly from $86.9 million at the end of
2018. Black Diamond's capital budget for 2019 remains
unchanged. The Company expects to invest approximately $35
million of capital on a gross basis, which is expected to be funded
with internally generated cash flow. Any excess cash flows is
expected to be directed towards further debt repayment.
First Quarter 2019 Financial Highlights
|
Three months ended March 31, |
(in millions, except as noted) |
2019 |
|
2018 |
|
Change |
|
$ |
|
$ |
|
|
Revenue |
|
|
|
Modular Space Solutions |
22.5 |
|
14.1 |
|
60 |
% |
Workforce Solutions |
22.9 |
|
26.8 |
|
(15 |
)% |
Total
Revenue |
45.4 |
|
40.9 |
|
11 |
% |
|
|
|
|
Total Adjusted
EBITDA |
8.1 |
|
8.6 |
|
(6 |
)% |
|
|
|
|
Funds from Operations |
8.8 |
|
10.9 |
|
(19 |
)% |
Per share ($) |
0.16 |
|
0.20 |
|
(20 |
)% |
|
|
|
|
Loss |
(2.7 |
) |
(1.9 |
) |
42 |
% |
Loss per share - Basic and
diluted |
(0.05 |
) |
(0.03 |
) |
67 |
% |
|
|
|
|
Capital expenditures |
8.3 |
|
1.3 |
|
538 |
% |
|
|
|
|
Property & equipment
(NBV) |
336.6 |
|
362.2 |
|
(7 |
)% |
Total assets |
418.2 |
|
416.0 |
|
1 |
% |
Long-term
debt |
88.3 |
|
107.5 |
|
(18 |
)% |
Additional Information
A copy of the Company's unaudited interim
condensed consolidated financial statements for the three months
ended March 31, 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 Group rents and sells space rental
solutions and modular workforce accommodations to business
customers in Canada, the United States and Australia. The Company
also provides specialized field rentals to the oil and gas
industries of Canada and the United States. In addition, Black
Diamond Group provides turnkey lodging services, as well as a host
of related services that include transportation, installation,
dismantling, repairs, maintenance and ancillary field equipment
rentals. From twenty-two locations, the Company serves multiple
sectors including oil and gas, mining, power, construction,
engineering, military, government and education.
Black Diamond Group has two core business units:
Modular Space Solutions and Workforce Solutions. 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
StatementsCertain 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 MeasuresIn this news
release, the following terms have been referenced: Adjusted EBITDA,
Net Debt, Funded Debt, Tangible Book Value and Funds from
Operations. 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 month period
ended March 31, 2019 filed on SEDAR.
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