Dexterra Group Announces Results for the Fourth Quarter and year ended December 31, 2020

Press Release

Highlights

Revenue of $164.4 million and $477.8 million for the three months and year ended December 31, 2020, respectively;
Adjusted EBITDA of $17.5 million and $71.1 million, for the three months and year ended December 31, 2020, respectively;
Net earnings of $0.03 million and $64.5 million and basic EPS of nil and $1.25 for the three months and year ended December 31, 2020, respectively. Net earnings for the year includes a non-cash bargain purchase gain of $29.9 million (three months ended December 31, 2020 – $4.2 million loss);
EBITDA for Q4 2020 and the year ended December 31, 2020 was positively impacted by Canada Emergency Wage Subsidies (“CEWS”) of $4.2 million and $32.9 million, respectively;
Net debt reduced by $53 million from $138 million to $85 million since the merger;
Dexterra Group declared a dividend of $0.075 per share for shareholders of record at March 31, 2021, to be paid April 15, 2021; and
The Corporation has leased a facility in Cambridge, Ontario for NRB Modular Solutions. The capital cost of the plant is estimated to be $7 million and it will provide incremental annual production capacity in excess of $100 million. The facility will be operational by the end of the second quarter of 2021 and will ramp-up production through the remainder of 2021.

Toronto, Ontario, Canada, March 10, 2021 – TSX Symbol: DXT

Dexterra Group Inc. (“Dexterra Group” or the “Corporation”) reported its financial and operating results for the three months and year ended December 31, 2020 and 2019. In addition, Dexterra Group announced a quarterly dividend of $0.075 per common share which will be paid on April 15, 2021 to shareholders of record on March 31, 2021. The dividend is an “eligible dividend” in accordance with the income tax act of Canada.

Fourth Quarter and Annual Financial Summary

Fourth Quarter Operations Analysis

Facilities Management

Facilities Management revenues in Q4 2020 were $38.5 million, which represents a decrease of $6.2 million or 14% from the $44.7 million in Q4 2019. Facilities Management revenue decreased primarily due to lower aviation and retail revenue, which decreased by $8.4 million compared to Q4 2019. This was partially offset by new business.

EBITDA as a percentage of revenue was consistent at 7% in both Q4 2020 and Q4 2019 due to the inclusion of $1.0 million in Canada Emergency Wage Subsidy (“CEWS”) in Q4 2020 which offset the decrease in revenue from Q4 2019. When adjusting for wage subsidies, EBITDA margin was 4% for Q4 2020 or 3% lower than Q4 2019, due to a restructuring and reorganization in Q4 2020, the increased costs in the healthcare and defense sector, and other costs associated with operating in a COVID-19 environment. See “Non-GAAP measures” below for the definition of “EBITDA as a percentage of revenue”.

Workforce Accommodations, Forestry and Energy Services (“WAFES”)

Revenues from the WAFES segment for Q4 2020 were $78.2 million, an increase of $58.8 million compared to Q4 2019. The increase in Q4 2020 segment revenues was primarily driven by the Acquisition which added $49.6 million of revenue growth in catering and infrastructure install and rental activities.

EBITDA as a percentage of revenue increased to 18% in Q4 2020 from 9% in Q4 2019 mainly due to the inclusion of $2.8 million CEWS and stronger occupancy at higher margin camps. When adjusting for wage subsidies, EBITDA as a percentage of revenue is 15% which is an increase of 6% compared to Q4 2019. This increase in margin is related to stronger occupancy at higher margin camps.

Modular Solutions

The Modular Solutions business was part of the Acquisition which closed on May 29, 2020. Modular Solutions segment revenues for Q4 2020 were $48.2 million. These revenues are primarily focused on social and affordable housing, industrial projects and portable classrooms.

EBITDA for Q4 2020 was $4.4 million, which included $0.4 million of CEWS impact. The results reflect the focus on social and affordable housing projects where performance and execution have been strong as well as the positive impact of cost reductions and improved efficiencies in our western Canada operations combined with continued strong performance from eastern Canada as we improved resource utilization.

A key metric for the Modular Solutions segment is the backlog^[1] of projects and timing of backlog execution. The focus for this business unit will be to secure and increase backlog, which was $61.2 million for social housing at the end of Q4 2020. Additionally, Modular Solutions has recurring modular business beyond social housing worth approximately $40 million per annum.

Liquidity and Capital Resources

The Corporation’s financial position and liquidity are strong. The Corporation generated Free Cash Flow of $64.0 million in 2020. In future quarters, principal sources of liquidity include generated Free Cash Flow and proceeds from the disposal of idle or underutilized assets across its operating segments. See “Non-GAAP measures“ below for the definition of “Free Cash Flow“.

The Corporation significantly improved its leverage and liquidity position subsequent to the Acquisition as well as increased its available capital by negotiating the amended and extended credit facility with an increased limit to $175 million. Since the Acquisition, approximately $53 million on its credit facility has been repaid. As at December 31, 2020, the Corporation had $81.6 million of available liquidity which provides it with significant financial flexibility. Debt reduction will pause in the first quarter of 2021 due to an increased COVID-19 impact on our WAFES business in British Columbia, and the NRB Modular Solutions plant expansion.

Additional Information

A copy of the Corporation’s Consolidated Financial Statements for the years ended December 31, 2020 and 2019 and related Management’s Discussion and Analysis (“MD&A”) have been filed with the Canadian securities regulatory authorities and are available on SEDAR at sedar.com and the Corporation’s website at dexterra.com. The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards and the reporting currency is in Canadian dollars.

Conference Call

Dexterra Group will host a conference call and webcast to begin promptly at 8:30 Eastern time on March 11, 2021 to discuss Dexterra Group’s fourth quarter results.

To access the conference call by telephone the conference call dial in number is 1-800-319-4610.

A live webcast of the conference call will be accessible on Dexterra Group’s website at dexterra.com/investor-presentations-events/ by selecting the webcast link. A PowerPoint presentation will be posted on Dexterra Group’s website at dexterra.com on March 10, 2021 to be reviewed on the conference call.

An archived recording of the conference call will be available approximately one hour after the completion of the call until March 25, 2021 by dialing 1-855-669-9658, passcode 6248.

About Dexterra Group

Dexterra Group employs more than 6,000 people across Canada and delivers a range of support services for the creation, management, and operation of infrastructure across Canada.

Powered by people, Dexterra Group brings best-in-class regional expertise to every challenge and delivers innovative solutions, giving clients confidence in their day-to-day operations. Activities include a comprehensive range of facilities management services, industry leading workforce accommodation solutions, innovative modular building capabilities, and other support services for diverse clients in the public and private sectors.

For further information contact:

Drew Knight, CFO
Head office: Airway Centre, 5915 Airport Rd., 4th Floor Mississauga, Ontario L4V 1T1
Telephone: (416) 767-1148

IBF4