Black Diamond Reports Third Quarter 2024 Results and Increases Dividend by 17%
Press Release
CALGARY, Alberta, Oct. 31, 2024 — 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, 2024 (the “Quarter”) compared with the three and nine months ended September 30, 2023 (the “Comparative Quarter”). All financial figures are expressed in Canadian dollars.
Key Highlights from the Third Quarter of 2024
- Consolidated rental revenue of $37.9 million decreased a modest 4% as compared to the Comparative Quarter and was up 7% from the second quarter of 2024. Modular Space Solutions (“MSS”) rental revenue of $24.5 million, was another quarterly record and increased 11% from $22.0 million in the Comparative Quarter, while Workforce Solutions (“WFS”) rental revenue was down 23% to $13.4 million due to the completion of two large pipeline projects at the end of 2023.
- Adjusted EBITDA1 of $28.8 million was down 21% from the Comparative Quarter primarily due to lower contribution from WFS, a positive settlement recognized in the Comparative Quarter of $2.1 million related to a customer dispute from a prior year related to one project (“2023 Settlement”), as well as slightly lower custom sales contribution from MSS.
- Consolidated contracted future rental revenue at the end of the Quarter continued to grow and was up 27% from $128.6 million at the end of the Comparative Quarter to $163.8 million.
- Total capital expenditures for the Quarter and Year of $23.8 million and $94.5 million is up 18% and 71% respectively and highlights the organic growth opportunities Management continues to see across the platform to drive growing contracted future rental revenue.
- Return on Assets1 of 19% for the Quarter continues to represent an attractive return profile given the long-life and low maintenance characteristics of the Company’s rental assets.
- MSS average monthly rental rate per unit increased 10% from the Comparative Quarter (or 9% on a constant currency basis), while contracted future rental revenue increased 28% to $127.6 million at the end of the Quarter from $99.7 million at the end of the Comparative Quarter.
- WFS contracted future rental revenue from contracts in place was $36.2 million, an increase of 25% from the Comparative Quarter.
- LodgeLink net revenue was a record $3.4 million, an increase of 26% from $2.7 million in the Comparative Quarter. Total room nights sold increased 34% from the Comparative Quarter, to a record of 147,560.
- Long term debt and Net Debt1 at the end of the Quarter increased 28% and 24% since December 31, 2023, to $243.2 million and $228.4 million, respectively. The increase is primarily attributable to growth capital expenditure during the year. Net Debt to trailing twelve month (“TTM”) Adjusted Leverage EBITDA1 of 2.2x is at the low-end of the Company’s target range of 2.0x to 3.0x, while available liquidity was $98.4 million at the end of the Quarter.
- Given continued strength across the rental platform, subsequent to the end of the Quarter, the Company announced a 17% increase to its quarterly dividend from $0.03 to $0.035 per quarter. The fourth quarter dividend of $0.035 is payable on or about January 15, 2025 to shareholders of record on December 31, 2024.
Outlook
The Company remains well-positioned for continued growth for the remainder of 2024 and into 2025. The positive outlook for the business is driven in-part by over $163.8 million of contracted future rental revenue, up 27% from the end of the Comparative Quarter. The meaningful growth in future contracted rental revenues has been driven by the Company’s disciplined organic growth initiatives this year with $94.5 million of gross capital expenditures for the Year, as well as renewals of existing contracts.
During the Quarter, MSS generated a record $24.5 million in rental revenue, up 11% from the Comparative Quarter, driven by increased average rental rates and ongoing organic fleet investment, slightly offset by a moderate decline in utilization. Current utilization remains at healthy levels for the MSS platform in the context of long-term industry trends. Sales revenue declined 25% from a historically strong Comparative Quarter, but increased from the first half of 2024 as previously delayed projects reach completion. Non-rental revenue in the Quarter was up 24% from the Comparative Quarter, as installation activity remained robust for both the rental fleet and custom sales. MSS contracted future rental revenue continues to grow and ended the Quarter at $127.6 million, up 28% or $27.9 million from the Comparative Quarter, with an average rental duration of 51 months. Demand remains strong in key infrastructure and education verticals which continues to support ongoing deployment of organic fleet growth into 2025.
For the Year, WFS performance is modestly below the Prior Year with revenue and Adjusted EBITDA down 12% and 6%, respectively, despite the completion of two large projects at the end of 2023. For the Quarter, revenue and Adjusted EBITDA was down 31% and 39%, respectively, primarily due to a high degree of contribution from these aforementioned projects in the Comparative Quarter. Management continues to focus on growing rental revenues through improving utilization across our WFS geographies amidst a generally higher rate environment. The WFS sales pipeline and opportunity set remain robust with contracted future rental revenue increasing 25% to $36.2 million.
LodgeLink performance continued to set quarterly records as Gross Bookings1 for the Quarter were up 31% to $27.2 million and net revenue grew 26% from the Comparative Quarter to a record $3.4 million. Total room nights sold in the Quarter rose 34% from the Comparative Quarter to a record 147,560. The LodgeLink supply network also continues to scale with over 1.7 million rooms of capacity in over 17,000 North American properties. Management remains focused on efficiently growing LodgeLink net revenue and based on current trends, expects modest positive EBITDA contribution from LodgeLink in 2025.
With respect to the Company’s ongoing ERP upgrade and implementation project, the Company has set a remaining budget of $11.9 million for the ERP upgrade related to Black Diamond’s MSS and Corporate segments with anticipated implementation in early 2026.
Black Diamond remains focused on driving profitable growth while compounding the Company’s high-margin, recurring rental revenue streams in both North America and Australia. The Company is well positioned to fund continued organic and inorganic growth with liquidity of $98.4 million, and Net Debt to TTM Adjusted Leverage EBITDA1 of 2.2x, which is at the low end of the Company’s targeted range of 2.0x to 3.0x. The outlook to close out calendar 2024 remains positive and the Company maintains strong momentum into 2025 supported by healthy contracted rental revenues, a growing fleet of long-lived assets, a robust sales pipeline, and the continued scaling of LodgeLink.
1 Adjusted EBITDA, Net Debt and Gross Bookings are non-GAAP financial measures. Return on Assets, Net Revenue Margin and Net Debt to TTM Adjusted Leverage EBITDA are non-GAAP ratios. Refer to the Non-GAAP Measures section of this news release for more information on each non-GAAP financial measure and ratio.
| Third Quarter 2024 Financial Highlights | ||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||
| ($ millions, except as noted) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Financial Highlights | $ | $ | % | $ | $ | % |
| Total revenue | 101.2 | 117.5 | (14)% | 270.3 | 290.1 | (7)% |
| Gross profit | 46.7 | 54.2 | (14)% | 128.5 | 130.9 | (2)% |
| Administrative expenses | 18.2 | 17.5 | 4% | 55.0 | 50.3 | 9% |
| Adjusted EBITDA(1) | 28.8 | 36.6 | (21)% | 76.2 | 80.5 | (5)% |
| Adjusted EBIT(1) | 16.2 | 24.0 | (33)% | 41.7 | 47.5 | (12)% |
| Funds from Operations(1) | 31.2 | 39.2 | (20)% | 80.5 | 86.7 | (7)% |
| Per share ($) | 0.51 | 0.65 | (22)% | 1.32 | 1.44 | (8)% |
| Profit before income taxes | 10.3 | 18.7 | (45)% | 22.6 | 32.0 | (29)% |
| Profit | 7.4 | 13.6 | (46)% | 16.3 | 22.5 | (28)% |
| Earnings per share – Basic ($) | 0.12 | 0.22 | (45)% | 0.27 | 0.37 | (27)% |
| Earnings per share – Diluted ($) | 0.12 | 0.22 | (45)% | 0.26 | 0.37 | (30)% |
| Capital expenditures | 23.8 | 20.1 | 18% | 94.5 | 55.2 | 71% |
| Property & equipment | 571.1 | 510.1 | 12% | 571.1 | 510.1 | 12% |
| Total assets | 745.5 | 669.3 | 11% | 745.5 | 669.3 | 11% |
| Long-term debt | 243.2 | 206.1 | 18% | 243.2 | 206.1 | 18% |
| Cash and cash equivalents | 15.1 | 5.6 | 170% | 15.1 | 5.6 | 170% |
| Return on Assets (%)(1) | 19.3% | 27.3% | (800) bps | 17.5% | 20.2% | (270) bps |
| Free Cashflow(1) | 19.6 | 30.6 | (36)% | 47.2 | 60.8 | (22)% |
| (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 Measures section of this news 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, 2024 and 2023 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.ca) 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, 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, November 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 1-844-763-8274. International callers should use 1-647-484-8814. 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/13707
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.
https://www.gowebcasting.com/13707
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