Black Diamond Accelerates Modular Space Solutions Growth with Strategic U.S. Acquisition

November 30 2020
  • Acquires Vanguard Modular Building Systems for US$58.7 million plus US$3 million for deferred receivables for total purchase price consideration of US$61.7 million
  • Grows Black Diamond’s diversified MSS Segment
  • Doubles Black Diamond’s U.S. MSS platform and adds critical scale in the attractive education rentals vertical
  • Modular Space Solutions (“MSS”) segment grows to 8,856 units representing more than two-thirds of Black Diamond’s consolidated rental revenue for the nine months ended September 30, 2020
  • Purchase price consists of US$50 million of cash, the issuance of US$8.7 million of preferred shares, and US$3.0 million of common shares of Black Diamond
  • Expands existing, secured, asset-based revolving credit facility (the “Facility”) to C$300 million from C$200 million with an additional uncommitted C$50 million accordion
  • Webcast and Conference Call scheduled for December 1, 2020 at 12 PM MT / 2 PM ET

CALGARY, Alberta and FORT WORTH, Texas, Nov. 30, 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 that its U.S. subsidiary, BOXX Modular Inc. has acquired Exton, PA-based Vanguard Modular Building Systems (“Vanguard”) for US$58.7 million (approximately C$76.3 million) plus deferred receivables of US$3 million (approximately C$3.9 million).

“With the addition of Vanguard, more than two-thirds of our pro forma consolidated rental revenue for the nine months ended September 30, 2020 is attributable to the MSS segment, up from 59% previously,” said Trevor Haynes, Black Diamond’s Chairman and CEO. “Over the last several years, we have continued to focus on growing our diversified MSS segment in light of the stable, recurring rental revenue being generated by our MSS assets. Vanguard doubles the size of our U.S. MSS platform and adds critical scale in the attractive education rentals market where Vanguard has built a robust business and solid reputation.”

Continued Mr. Haynes, “With the addition of 2,196 rental units from Vanguard, our MSS fleet has grown to 8,856 units across North America and we are well on track to achieve our longer-term goal of doubling our MSS rental units to approximately 11,000 by 2024 compared with 2019.”

Vanguard is a leader in the classroom rentals vertical and is well-positioned in key U.S. markets

Vanguard provides relocatable modular classrooms and commercial complexes in key markets in the eastern and southern U.S. By state, Vanguard’s largest markets are Virginia, North and South Carolina, and Texas. The acquisition provides Black Diamond with greater scale in the U.S. and strong customer relationships, especially among local school districts through which the Company expects to generate stable recurring revenues and steady growth.

Vanguard’s modular classrooms business is especially well-developed, representing over 70% of Vanguard’s total rental revenue. The classroom business generates stable demand and is generally uncorrelated with broader economic cycles. It has significant growth potential in a number of markets but especially in the U.S. southeast and Texas due to increasing enrollment, state education spending and rising attendance in charter and post-secondary schools.

Vanguard’s modular classrooms have the benefit of being cost-effective and quick to install compared with permanent school buildings. Modular classrooms are well-suited to meet regulatory requirements and community-driven demand for lower class sizes.

Increasing the relative size of Modular Space Solutions

Had the combination been in effect for the first nine months of 2020, Black Diamond’s pro forma revenue from MSS would have been approximately C$104 million, 67% higher than the reported MSS revenue of C$62.3 million for the same period.

For rental revenue alone, for the first nine months of 2020, MSS segment pro forma would have been C$40.4 million or 45% higher than the reported C$27.9 million. For all of Black Diamond during the same nine-month period in 2020, pro forma rental revenue would have been C$59.7 million, of which MSS rental revenue would have represented 67%.

The future revenue profile of Vanguard’s rental portfolio is supported by contracted rental revenue in place of over US$23 million.

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) from MSS would have been approximately C$28.4 million on a pro forma basis, 46% higher than the reported Adjusted EBITDA of C$19.4 million for the MSS segment in the first nine months of 2020. Adjusted EBITDA for MSS on a pro forma basis would have been 59% higher than the reported Adjusted EBITDA of C$17.9 million for the Workforce Solutions segment in the first nine months of 2020.

Similar to Black Diamond’s MSS business, Vanguard has not seen significant negative impacts to revenue or demand for its services following the onset of the COVID-19 pandemic.

Increasing Black Diamond’s scale in the U.S.

With the acquisition of Vanguard, Black Diamond has added:

  • Significant U.S. revenue, bringing U.S. revenue to approximately 50% of year-to-date 2020 pro forma revenue
  • 2,196 rental units to the MSS segment, bringing the U.S. total to 4,220 and the MSS total to 8,856
  • An additional 1.7 million square feet of rentable space to the existing 3.4 million square feet in the MSS segment currently. This brings the total MSS businesses rentable square footage to 5.1 million square feet.

Black Diamond expects virtually all of Vanguard’s team to continue as employees of the Company given the relative lack of overlap between Black Diamond’s existing U.S. MSS business and Vanguard. Among other things, Vanguard has sophisticated in-house engineering capabilities that will benefit Black Diamond’s existing custom sales platform.

“We are excited to welcome the highly experienced and proven team at Vanguard to Black Diamond and are looking forward to continuing to build this platform with our new colleagues,” said Trevor Haynes, Black Diamond’s Chairman and CEO.

Highly Accretive Transaction

The acquisition of Vanguard is highly accretive to Black Diamond on an earnings per share basis and pro forma would have resulted in accretion of approximately C$0.07 per share over the 12-month period ending in September 2020. Management expects the combination of Vanguard with Black Diamond’s existing U.S. business to yield moderate synergies over time, primarily related to yard and storage related costs. Management believes annual synergies of approximately US$0.5 million can be achieved over the next 12 to 18 months.

The US$58.7 million base purchase price, plus an additional US$3 million for deferred receivables has been funded by:

  • US$50 million in cash, drawn from available liquidity on the Company’s concurrently expanded Facility
  • US$8.7 million in preferred shares, being issued to the former majority owners of Vanguard
  • 2,230,728 common shares of Black Diamond, being issued to the former majority owners of Vanguard, bringing the total Black Diamond shares outstanding post-acquisition to 56.9 million.

The preferred shares will pay a quarterly dividend at a rate of 7% per annum for the first two years. On the third anniversary of the issuance of the shares, the annual dividend rate will increase to 8% and will continue to increase 1% per year thereafter. The preferred shares are fully redeemable at face value at Black Diamond’s option and do not carry any conversion rights to common shares.

With strong free cash flow generation expected following the acquisition, Black Diamond plans to reduce debt levels throughout 2021 and expects to return to a target leverage range of 2.0 to 3.0 times debt to Adjusted EBITDA in 2022.

The Company’s borrowing base at close is approximately C$255 million, providing over C$70 million of available liquidity under the expanded Facility. Aside from the increase in size from C$200 million to C$300 million and the inclusion of a fifth lender to the lending syndicate, all other material terms and conditions related to the Facility remain unchanged.

Transaction Advisors

Raymond James Ltd. acted as Black Diamond’s financial advisor. Torys LLP and Kilpatrick Townsend Stockton LLP acted as Black Diamond’s legal counsel. Longview Communications & Public Affairs acted as Black Diamond’s communications advisor.

Oppenheimer & Co., Inc acted as Vanguard’s financial advisor. Stevens & Lee acted as Vanguard’s legal counsel.

Note on non-GAAP measure

Adjusted EBITDA is a supplemental non-GAAP measurement and does not have a standardized meaning prescribed by IFRS. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers.

Webcast and Conference Call Access

Investors, analysts, stakeholders and other interested parties are invited to attend the Company’s webcast and conference call to discuss the Vanguard transaction:

Date: Tuesday, December 1, 2020
Time: 12:00 pm MT / 2:00 pm ET
Webcast and Replay: Black Diamond’s Investor Relations web page at:


Live call:
US/Canada Participant Toll Free Number: (855) 435-1153
US/Canada Participant International Dial-In Number: (210) 229-8824
Conference ID: 7597669

About Black Diamond Group
Black 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

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Cautionary Note Regarding Forward-Looking Statements
Certain information set forth in this news release contains forward-looking statements including, but not limited to, the effects of the acquisition Vanguard on Black Diamond’s business and operations, the expected future size of the Modular Space Solutions division, anticipated revenues as a result of the acquisition of Vanguard, expected debt reduction in future years, expected free cash flow generation in future years and the expected excess capacity available to the Company pursuant to the Facility. 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.