Black Diamond Reports Improved First Quarter 2018 Results
CALGARY, Alberta, May 03, 2018 (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 its operating and financial results for the three months ended March 31, 2018 (the "Quarter") compared with the three months ended March 31, 2017 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.
Black Diamond continued to demonstrate strong progress in the Quarter against its core strategies of diversification and debt reduction. The sale of underutilized assets to fund diversified fleet growth, combined with aggressive debt reduction should continue to optimize the capital employed in the business and provide attractive cash flow returns. This is reducing the risk on the overall business, while increasing the ability for the Company to grow its base of recurring cash flow.
- The Company generated $8.6 million of Adjusted EBITDA see "Non-GAAP Measures") in the Quarter, an increase of 87% over the Comparative Quarter.
- The Modular Space Solutions ("MSS") business unit's Adjusted EBITDA for the Quarter was up 73% from the Comparative Quarter primarily due to a full quarter effect from the acquisition of Britco, organic fleet growth, and an increase in asset utilization to 66% from 64% in the Comparative Quarter.
- The Workforce Solutions ("WFS") business unit's Adjusted EBITDA for the Quarter was up 25% due to significantly stronger occupancy at Sunday Creek Lodge, Smoky River Lodge and a newly opened camp, Little Prairie Lodge. The lodges are in key strategic areas and have attracted large customers. Additionally, there was a 70% increase in utilization of the wellsite accommodations in the United States ("US").
- The Modular Space Solutions ("MSS") business unit's Adjusted EBITDA for the Quarter was up 73% from the Comparative Quarter primarily due to a full quarter effect from the acquisition of Britco, organic fleet growth, and an increase in asset utilization to 66% from 64% in the Comparative Quarter.
- The Company continues to generate meaningful free cash flow, including proceeds of $3.2 million from the sale of used fleet.
- Net Debt was reduced by 8% to $103.7 million in the Quarter from $112.9 million at Q4 2017.
- Subsequent to March 31, 2018, Black Diamond signed a letter of intent to assume the lease and ongoing operations of Sunset Prairie Lodge, a 1,244-room camp in the Montney region. This asset will be converted from dedicated rental to an open lodge and is expected to generate lodging revenue for the balance of the year and beyond. The agreement is expected to close in Q2 2018 and generate net cash inflow of $11.2 million in exchange for the assumption by the Company of the long term remediation and reclamation obligation for the lands, with a remaining term of eight years on the crown lease on which Sunset Prairie Lodge is situated.
First Quarter 2018 Financial Highlights
| Three months ended March 31, | ||||||
| (in millions, except where noted) | 2018 | 2017 | Change | |||
| $ | $ | |||||
| Revenue | ||||||
| Modular Space Solutions | 14.1 | 10.1 | 40 | % | ||
| Workforce Solutions | 26.8 | 28.1 | (5 | )% | ||
| Total Revenue | 40.9 | 38.2 | 7 | % | ||
| Total Adjusted EBITDA | 8.6 | 4.6 | 87 | % | ||
| Funds from Operations | 10.9 | 14.1 | (23 | )% | ||
| Per share ($) | 0.20 | 0.30 | (33 | )% | ||
| Loss | (1.9 | ) | (5.5 | ) | (65 | )% |
| Loss per share - Basic and diluted | (0.03 | ) | (0.12 | ) | (75 | )% |
| Capital expenditures | 1.3 | 5.0 | (74 | )% | ||
| Property & equipment (NBV) | 362.2 | 465.3 | (22 | )% | ||
| Total assets | 416.0 | 546.7 | (24 | )% | ||
| Long-term debt | 107.5 | 113.0 | (5 | )% | ||
Financial Review
- Revenue for the Quarter was $40.9 million, up 7% or $2.7 million from the Comparative Quarter due to increased MSS fleet size and utilizations and increased utilization in WFS. This is partially offset by a reduction in WFS sales revenue due to a large sale in the Comparative Quarter. Normalizing for this sale, revenue for the Quarter is up 45% from the Comparative Quarter.
- Administrative expenses for the Quarter were $9.1 million, down 8% or $0.8 million from the Comparative Quarter primarily due to savings generated by the previously announced restructuring in 2017.
- Adjusted EBITDA (see "Non-GAAP Measures") for the Quarter was $8.6 million, up 87% or $4.0 million from the Comparative Quarter primarily due to fleet growth and increases in utilization in MSS, higher accommodation unit utilization in WFS, and cost savings generated by the restructuring completed in 2017.
Outlook
- In Q1 2018, the Company saw a drop in utilization in its Alberta MSS fleet. This utilization has since increased in the Quarter and is expected to gradually improve in subsequent quarters. Furthermore, strong markets in British Columbia, Ontario, and the southern US are driving increased utilization and rental revenue in MSS, which is expected to continue.
- Field level activity in the Montney and Duvernay regions is showing noticeable improvement and is expected to support demand for occupancy in the Company’s 2,500 rooms in operation in the area.
- Improvement in utilization and rates in wellsites in our US markets is expected to continue due to continued high levels of oil and gas development activity.
- Higher and more stabilized commodity prices in Australia are leading to increased development and capital spending in the mining and natural resource sectors. Greater spending is expected to continue to contribute to higher levels of utilization for accommodations assets while increased government expenditure in infrastructure and education is expected to lead to ongoing strong demand for the Company's space rentals assets in Australia.
- Debt reduction for Q2 is expected to be achieved due to the expected $11.2 million Sunset Prairie Lodge transaction, the expected sale of approximately $5 million of real estate assets, and cash flows from operations. Proceeds from used fleet sales are expected to exceed capital expenditures for new fleet and capital maintenance, leaving most cash flow from operations available for debt repayment. Management believes that a lower leverage position should create immediate shareholder value and provide added financial flexibility to pursue future growth opportunities.
2018 Capital Plan
The 2018 gross capital spending plan is generally linked to proceeds from asset sales, debt levels and cash flows. This approach will allow the Company to use the proceeds from the sale of assets with low demand to fund the acquisition of new assets in our MSS business unit in high growth areas. The results of fleet sales to date and current opportunities suggest strong used fleet sale activity for the year. The capital plan should support management's overarching strategy of diversifying the Company's asset base and cash flows.
Despite the sale of underutilized assets, the Company remains very well positioned to benefit from any increase in resource and infrastructure activity in western Canada.
Capital expenditures for the Quarter were $1.3 million and Capital commitments were $1.2 million as at March 31, 2018. This is compared with capital expenditures of $5.0 million and capital commitments of $3.2 million in the Comparative Quarter. Capital expenditures for the Quarter included maintenance capital of $0.1 million, compared to $0.3 million in the Comparative Quarter.
Proceeds from used fleet asset sales in the Quarter were $3.2 million, compared with $0.6 million in the Comparative Quarter.
Additional Information
A copy of the Company's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2018 and 2017 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.
Conference Call
Black Diamond will hold a conference call and webcast tomorrow, May 4, 2018, at 8:00 a.m. MT (10:00 a.m. ET)
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 1-855-435-1153. International callers should use (210) 229-8824 (Conference ID: 3985397). Please connect approximately 10 minutes prior to the beginning of the call.
Please log into the webcast 10 minutes before the start time at: https://edge.media-server.com/m6/p/wtkda7au
Following the conference call, an audio archive will be available in the Investor Events section of the Company's website at www.blackdiamondgroup.com
About Black Diamond
Black Diamond 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 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 has two core business units: Workforce Solutions and Modular Space Solutions. Learn more at www.blackdiamondgroup.com.
For investor inquiries please contact Keenan Killackey at 587-293-3410 or kkillackey@blackdiamondgroup.com
For media inquiries, please contact Elaine Mazurick at 587-233-7461or emazurick@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 2018 capital plan, how such capital will be expended, expectations for land 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 and the anticipated reduction thereof, 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, 2017 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 and Net Debt. 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 month period ended March 31, 2018 filed on SEDAR.
