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 six months ended June 30, 2019
(the "Quarter") compared with the three and six months ended June
30, 2018 (the "Comparative Quarter"). All financial figures are
expressed in Canadian dollars.
- Revenue for the Quarter was $47.3
million, up 11% or $4.6 million from the Comparative Quarter.
- Approximately 66% of revenue was generated from outside of the
western Canadian energy resource sector, compared to 58% in the
Comparative Quarter.
- Revenue generated outside of Canada accounts for 52% of total
revenue in the Quarter, compared to 25% in the Comparative
Quarter.
- Increased consolidated rental revenue to $15.9 million, up 30%
from the Comparative Quarter.
- Adjusted EBITDA for the Quarter was
$10.0 million, an increase of 5% or $0.5 million from the
Comparative Quarter, primarily due to the adoption of the IFRS 16
accounting standard, which had a positive impact on Adjusted EBITDA
of $1.0 million.
- The Company exited the Quarter with
a Funded Debt to Adjusted EBITDA ratio of 3.11 (December 31, 2018 -
2.95) and a Funded Debt to Tangible Book Value ratio of 0.48
(December 31, 2018 - 0.44).
- The Modular Space Solutions
("MSS") fleet increased to 6,126 units in the Quarter, over 5% from
5,813 units at December 31, 2018.
- Workforce Solutions
("WFS") rental revenue increased 57% from the Comparative
Quarter, to $7.7 million.
- The Company’s previously announced $20 million rental project
in California was fully installed in late April.
- Subsequent to the Quarter, Black Diamond began mobilization and
installation of the Sukunka River Lodge, a $42 million full turnkey
project to service the construction of the Coastal GasLink
Pipeline.
- LodgeLink bookings grew to ~16,500
room nights in the Quarter, more than a two-fold increase from
prior year.
Revenue in the MSS business segment increased 2%
to $20.6 million, compared to $20.1 million in the Comparative
Quarter. MSS Adjusted EBITDA for the Quarter increased to $6.0
million, up 13% from the Comparative Quarter. Increased activity
and average rental rates in Canada and increased non-rental revenue
in the U.S. contributed to the increase in revenue. Adjusted EBITDA
increased in the Quarter due to continued growth in rental revenue
and an IFRS 16 impact of $0.6 million, partially offset by lower
Adjusted EBITDA margins.
In the WFS segment, revenue increased by 19%
from the Comparative Quarter to $26.8 million, and rental revenue
grew to $7.7 million, up 57%. For the Quarter, WFS Adjusted EBITDA
was $6.6 million, lower than the Comparative Quarter, primarily due
to a larger project positively impacting the Comparative Quarter
results, and a decrease in lodging activity in the Quarter. The
impact from IFRS 16 in the WFS segment amounted to $0.4 million in
the Quarter.
Net Debt at the end of the Quarter increased
from $88.0 million as at March 31, 2019 to $93.5 million,
primarily due to a $4.2 million build in working capital during the
Quarter. The Company expended $10.0 million of gross capital
expenditures during the Quarter, and $18.2 million YTD. The
Company’s 2019 gross capital plan of $35 million is unchanged and
is expected to continue to be funded from internally generated cash
flow.
Outlook
Management's continuing long-term business
objectives are to grow the MSS fleet by 10% per year while
maintaining target rates of return, unlock operating leverage in
the WFS asset base, and drive continued growth and awareness of our
online digital marketplace, LodgeLink. Year-to-date results, and
our current outlook for the remainder of the year, leads us to
believe that the Company is on track to achieve these objectives
while improving balance sheet metrics.
The Company expects to see ongoing growth in its
MSS business, supported by continued pull through of organic
capital investment throughout our North American footprint. Year to
date, MSS has added 313 net units to the fleet and is on track to
meet or exceed the segment's goal of growing the fleet by 10% per
annum. Over time, management expects Adjusted EBITDA growth within
the segment to outpace fleet growth as certain regions benefit from
added scale, and project teams continue to focus on driving
additional rental revenue streams through Value Added Products and
Services (VAPS).
The WFS segment is also expected to show
improvement in the second half of the year as installation on the
previously announced Sukunka camp (to service construction of the
Coastal GasLink pipeline) began early in the third quarter. This
coupled with the full impact of rental contribution from the
previously announced California contract should result in continued
sequential increases in WFS asset utilization levels. Management
believes there is a strengthening in momentum and bidding activity
within its Canadian WFS business and expects this to translate into
additional improvement in asset utilization into next year. Lodging
activity, however, is expected to remain fairly soft throughout the
third quarter, but improve in the fourth quarter due to customer
contract commitments. Utilization rates throughout our U.S.
business remains healthy, with the Company seeing no deleterious
effects on utilization from the slight softening in U.S. rig
counts. In Australia, our business has seen meaningful strength YTD
and the Company anticipates positive market conditions to persist
in the region.
The Company's online digital marketplace,
LodgeLink continues to gain traction. Total room nights booked grew
to roughly 16,500 throughout the Quarter, more than a two-fold
increase to the Comparative Quarter. With the recent launch of an
enhanced version of the digital marketplace, the Company expects
ongoing momentum on the platform through supplier base growth and
signing up new customers.
Second Quarter 2019 Financial
Highlights
|
Three months ended June 30, |
(in millions, except where noted) |
2019$ |
|
2018 $ |
|
Change |
Revenue |
|
|
|
|
|
Modular Space Solutions |
20.6 |
|
20.1 |
|
2% |
Workforce Solutions |
26.8 |
|
22.6 |
|
19% |
Total
Revenue |
47.3 |
|
42.7 |
|
11% |
Total
Adjusted EBITDA |
10.0 |
|
9.5 |
|
5% |
Funds
from Operations |
11.7 |
|
12.3 |
|
(5)% |
Per
share ($) |
0.21 |
|
0.22 |
|
(5)% |
Loss |
(2.0) |
|
(0.9) |
|
122% |
Loss per share - Basic
and diluted |
(0.04) |
|
(0.02) |
|
100% |
Capital
expenditures |
10.0 |
|
3.6 |
|
178% |
Property
& equipment (NBV) |
334.1 |
|
352.1 |
|
(5)% |
Total
assets |
419.1 |
|
402.4 |
|
4% |
Long-term debt |
94.0 |
|
86.5 |
|
9% |
Additional Information
A copy of the Company's unaudited interim
condensed consolidated financial statements for the three and six
months ended June 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 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:
Workforce Solutions and Modular Space 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 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, Funded
Debt, Net Debt, Tangible Book Value and Working Capital. 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 six month periods ended
June 30, 2019 filed on SEDAR.
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