Black Diamond Group Announces 2021 Gross Capital Spending Plan of Approximately $35 Million

December 09 2020
  • Capital plan of approximately $35 million on a gross basis; $25 to $30 million on a net basis.
  • Continued organic growth of Modular Space Solutions (“MSS”) with approximately $25 to $30 million of gross capital planned for this segment
  • Approximately $4.5 million for the Workforce Solutions (“WFS”) segment for project specific requirements, of which $2.5 is for growth in Australia
  • Roughly $1.5 million related to software development for LodgeLink

CALGARY, Alberta, Dec. 09, 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 Board of Directors has approved a 2021 gross capital budget of approximately $35 million. In the normal course of business, the Company will regularly buy and sell modular buildings into and out of our rental fleet. Proceeds from these sales have typically been in the range of $5 to $10 million per year and the Company expects this trend to generally hold steady in 2021. As such, Black Diamond’s net capital investment in 2021 is expected to be between $25 and $30 million on a net basis.

Most of the 2021 capital budget will be allocated towards continued growth of the MSS segment throughout North America, of which approximately $25 million will be earmarked specifically for growth and split roughly 35% and 65% in Canada and the U.S. respectively. This budget includes anticipated growth capital for the newly acquired Vanguard Modular rental fleet.

Among the $4.5 million being invested in the WFS business unit, roughly $2.5 million will be allocated towards the robust Australian division for education, space rentals, and workforce applications. The remaining WFS budget of $2.0 million will primarily be related to refurbishment of large format camp units on a project specific basis.

LodgeLink, the company’s digital platform for essential crew travel, will see approximately $1.5 million of capital investment related to software development to support the continued growth of this technology driven business.

The remaining capital will be for maintenance across the platform, which tends to average roughly 5% of rental revenue on an annual basis, as well as general corporate purposes (including real estate and leasehold improvements).

Black Diamond expects all capital investments to be expended in a generally non-speculative, project-specific basis. As of December 9th, the Company currently has capex commitments of approximately $3.5 million for Q1 of 2021. Other than maintenance and committed capex, the balance of the approved amount is discretionary and will be monitored and adjusted as business conditions require.

The current 2021 capital budget does not include any potential investment related to the Goldboro LNG Facility. Black Diamond, in partnership with Nova Scotia’s Mi’kmaq Communities, (“Partnership”) had previously announced a letter of award on October 1, 2020, valued at approximately $720 million. The Partnership has been granted the exclusive right to negotiate a final contract to construct and manage a lodge and associated amenities during the four-year construction phase of the Goldboro LNG Facility. Specific requirements for the project continue to be defined, and the project proponent expects a final investment decision by June 2021.

The Company believes that operating cash flows in 2021 will fund the current capital budget, meet all other cash costs (such as interest payments and lease expenses), and reduce total debt levels which have increased following the Company’s most recent acquisition. Black Diamond believes this combination of growth capex and debt reduction demonstrates the strong free cash flow generating capabilities of the Company’s growing rental platform and believes this will continue to drive shareholder value while de-risking the overall platform.

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, MPA, and Vanguard, 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.

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Cautionary Note Regarding Forward-Looking Statements
Certain information set forth in this news release contains “forward looking statements” as defined under applicable Canadian securities laws. Forward looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”, “plans” or similar terminology. Forward looking statements in this news release include, but are not limited to, statements with respect to the Company’s capital spending plan for 2021, expected debt reduction, expected used-fleet sales, expected cash generation, the continued growth of the Company’s MSS segment and potential projects that involve the Company and the timing of such 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.