CALGARY, Alberta, May 05, 2020 (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 ended March 31, 2020 (the “Quarter”) compared with the three months ended March 31, 2019 (the “Comparative Quarter”). All financial figures are expressed in Canadian dollars.
In the first quarter of 2020, Black Diamond reported consolidated revenue of $45.1 million, Adjusted EBITDA of $9.9 million, and core rental revenue of $17.1 million.Consolidated rental revenue of $17.1 million increased 17% from the Comparative Quarter.
Adjusted EBITDA increased 22% from the Comparative Quarter to $9.9 million in the Quarter.
Modular Space Solutions (“MSS”) rental revenue of $8.9 million grew 17% from the Comparative Quarter.MSS rental fleet grew to 6,503 units, or 9% from the Comparative Quarter while utilization held steady and average rental rates increased 7%.
Workforce Solutions (“WFS”) rental revenue increased to $8.2 million, up 17% from the Comparative Quarter. Consolidated WFS revenue of $28.6 million improved by 25% versus the Comparative Quarter.
The Company closed the acquisition of Spectrum Modular (“Spectrum”), expanding the Company’s Southeast U.S. operating region to over 400 units. Key Highlights from the First Quarter of 2020In the MSS business unit, Adjusted EBITDA of $4.6 million was essentially flat versus the Comparative Quarter. MSS consolidated revenue of $16.5 million decreased 27% from $22.5 million due to lower sales and non-rental revenue in the Quarter. Sales and non-rental revenue can fluctuate quarter-to-quarter as the timing of certain custom sales projects can vary. Adjusted EBITDA margins of 28% improved from 22% due to the change in sales mix as rental revenue of $8.9 million grew 17% from the Comparative Quarter.Adjusted EBITDA in the WFS business unit was $7.8 million, 30% higher than the Comparative Quarter. Consolidated revenue of $28.6 million increased 25% due to an increase in rental and non-rental revenue of 17% and 167% respectively, slightly offset by a decrease of 41% in Lodging revenue.During the Quarter, the Company announced the acquisition of Spectrum, based in Gainesville, Georgia. Spectrum’s asset base includes 202 high-quality modular buildings backed by a high performing team with deep expertise and relationships in the region. Following the Spectrum acquisition, Black Diamond now has over 400 units in the area and expects to see continued growth in the U.S. Southeast as a result of ongoing economic development in the region.At the end of the Quarter, Net Debt increased to $110.6 million, compared to $98.1 million at December 31, 2019. The increase in debt during the quarter was driven by capital investments of approximately $19 million, including the acquisition of Spectrum, as well as a $5 million increase in working capital. The Company has deferred uncommitted or uncontracted capital which is expected to take effect in the second half of the year. As such, the pace of capital deployment is expected to slow until there is more end market certainty with respect to the COVID-19 pandemic.On January 15, 2020, Black Diamond announced TSX approval of a Normal Course Issuer Bid (“NCIB”). Over a 12-month period, the Company may, in normal course, purchase up to 4,180,249 common shares in the capital of the Company (“Common Shares”) (10% of the public float of Common Shares). Since the implementation of the NCIB, the Company has purchased 173,800 shares at an average price of $1.11 per Common Share.OutlookOn March 13, 2020, Black Diamond instituted elements of the Company’s Business Continuity Plan in response to the COVID-19 pandemic. This resulted in the suspension of all non-essential business travel and events, self-quarantine for any individuals that had recently traveled by air, and work from home options for any employees not required to be on site at the field level, among other initiatives. The safety and well-being of our employees and communities remains of highest priority and the Company will continue to monitor the situation and work with our customers and vendors to ensure interruption to essential business elements are minimized.Currently a little under two-thirds of the Company’s $35 million gross capital plan is spent or committed to contracts in place. While the Company’s financial and liquidity situation remains strong, with approximately $80 million of available liquidity, Black Diamond has elected to defer most uncommitted capital investments planned for the latter half of the year.Despite the near-term disruption to certain of the Company’s markets caused by the COVID-19 pandemic, the Company remains committed to executing on its long-term strategy of growth and diversification. The MSS business has remained stable to date. While the Company expects certain elements of the MSS business to soften due to deferral of a handful of custom sales projects, the core rental revenue driven by our MSS assets is expected to remain healthy owing to the diversified nature of our customers, geographies and end-markets. As a result of the pandemic and physical distancing measures, over the last month and a half, Black Diamond has seen an increase in demand for certain products and services both within the MSS and WFS segments. These products include testing or pre-screening facilities, hand-wash or sanitization stations, field hospitals, and quarantine centers, among others. The Company is also seeing increased demand for square footage at existing facilities to facilitate physical employee-distancing on site. Overall, MSS performance is expected to remain relatively stable in the near-term and as the global economy begins to re-start in the coming months, Management expects a resumption of steady growth in this segment.The WFS business unit has continued to diversify its operations with recent equipment having been mobilized into eastern Canada under contract. The Company’s Australian assets remain highly utilized and stable with healthy recurring rental revenue. However, given the usual seasonal slow-down in the second quarter, combined with the current disruption caused by COVID-19, the Company expects overall WFS segment performance to weaken in the near-term. The remaining revenue to be earned on the previously announced $46.8 million Sukunka Lodge contract is approximately $32 million. The medium-to-longer term opportunity set for the Company’s large-camp assets continues to see several outstanding bids and potential contracts throughout our operating regions being contemplated.LodgeLink, Black Diamond’s digital marketplace platform for workforce travel and accommodation, continues to scale, with 485 unique corporate customers and almost 1,400 properties, representing approximately 145,000 rooms of capacity listed at the end of the Quarter. While room bookings contracted year-over-year due to slowing travel and accommodation activity in March caused by COVID-19 related restrictions, gross booking revenue grew modestly due to the introduction of additional services and continued diversification of the customer base. While the Company is taking a modest pause on growth in hiring in this platform, we are redoubling our efforts to develop and improve the technology, operating processes, and user experience in anticipation of a resumption of the marketplace expansion when travel restrictions are eased.While recent macroeconomic shocks have presented near-term challenges in parts of our platform, Management believes the Company is well-equipped to weather any near-term or even prolonged weakness in end-markets. Our diversification strategy over the last several years, particularly in our MSS business unit, is expected to result in comparative stability throughout the current difficult operating environment. Further, the Company’s ABL credit facility provides ample flexibility and liquidity at attractive rates and is termed up until October 2023. Black Diamond’s longer-term focus and strategy is unchanged and the Company remains committed to creating a stable, diversified and growing platform to drive long-term value creation.First Quarter 2020 Financial Highlights
Additional InformationA copy of the Company’s unaudited interim condensed consolidated financial statements for the three month periods ended March 31, 2020 and 2019 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 GroupBlack 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 AdvisoryForward-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 2020 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 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, 2019 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 month periods ended March 31, 2020 filed on SEDAR.
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