Black Diamond Reports Second Quarter 2019 Results
CALGARY, Alberta, Aug. 08, 2019 (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 and six months ended June 30, 2019 (the "Quarter") compared with the three and six months ended June 30, 2018 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.
- Revenue for the Quarter was $47.3 million, up 11% or $4.6 million from the Comparative Quarter.
- Approximately 66% of revenue was generated from outside of the western Canadian energy resource sector, compared to 58% in the Comparative Quarter.
- Revenue generated outside of Canada accounts for 52% of total revenue in the Quarter, compared to 25% in the Comparative Quarter.
- Increased consolidated rental revenue to $15.9 million, up 30% from the Comparative Quarter.
- Adjusted EBITDA for the Quarter was $10.0 million, an increase of 5% or $0.5 million from the Comparative Quarter, primarily due to the adoption of the IFRS 16 accounting standard, which had a positive impact on Adjusted EBITDA of $1.0 million.
- The Company exited the Quarter with a Funded Debt to Adjusted EBITDA ratio of 3.11 (December 31, 2018 - 2.95) and a Funded Debt to Tangible Book Value ratio of 0.48 (December 31, 2018 - 0.44).
- The Modular Space Solutions ("MSS") fleet increased to 6,126 units in the Quarter, over 5% from 5,813 units at December 31, 2018.
- Workforce Solutions ("WFS") rental revenue increased 57% from the Comparative Quarter, to $7.7 million.
- The Company’s previously announced $20 million rental project in California was fully installed in late April.
- Subsequent to the Quarter, Black Diamond began mobilization and installation of the Sukunka River Lodge, a $42 million full turnkey project to service the construction of the Coastal GasLink Pipeline.
- LodgeLink bookings grew to ~16,500 room nights in the Quarter, more than a two-fold increase from prior year.
Revenue in the MSS business segment increased 2% to $20.6 million, compared to $20.1 million in the Comparative Quarter. MSS Adjusted EBITDA for the Quarter increased to $6.0 million, up 13% from the Comparative Quarter. Increased activity and average rental rates in Canada and increased non-rental revenue in the U.S. contributed to the increase in revenue. Adjusted EBITDA increased in the Quarter due to continued growth in rental revenue and an IFRS 16 impact of $0.6 million, partially offset by lower Adjusted EBITDA margins.
In the WFS segment, revenue increased by 19% from the Comparative Quarter to $26.8 million, and rental revenue grew to $7.7 million, up 57%. For the Quarter, WFS Adjusted EBITDA was $6.6 million, lower than the Comparative Quarter, primarily due to a larger project positively impacting the Comparative Quarter results, and a decrease in lodging activity in the Quarter. The impact from IFRS 16 in the WFS segment amounted to $0.4 million in the Quarter.
Net Debt at the end of the Quarter increased from $88.0 million as at March 31, 2019 to $93.5 million, primarily due to a $4.2 million build in working capital during the Quarter. The Company expended $10.0 million of gross capital expenditures during the Quarter, and $18.2 million YTD. The Company’s 2019 gross capital plan of $35 million is unchanged and is expected to continue to be funded from internally generated cash flow.
Outlook
Management's continuing long-term business objectives are to grow the MSS fleet by 10% per year while maintaining target rates of return, unlock operating leverage in the WFS asset base, and drive continued growth and awareness of our online digital marketplace, LodgeLink. Year-to-date results, and our current outlook for the remainder of the year, leads us to believe that the Company is on track to achieve these objectives while improving balance sheet metrics.
The Company expects to see ongoing growth in its MSS business, supported by continued pull through of organic capital investment throughout our North American footprint. Year to date, MSS has added 313 net units to the fleet and is on track to meet or exceed the segment's goal of growing the fleet by 10% per annum. Over time, management expects Adjusted EBITDA growth within the segment to outpace fleet growth as certain regions benefit from added scale, and project teams continue to focus on driving additional rental revenue streams through Value Added Products and Services (VAPS).
The WFS segment is also expected to show improvement in the second half of the year as installation on the previously announced Sukunka camp (to service construction of the Coastal GasLink pipeline) began early in the third quarter. This coupled with the full impact of rental contribution from the previously announced California contract should result in continued sequential increases in WFS asset utilization levels. Management believes there is a strengthening in momentum and bidding activity within its Canadian WFS business and expects this to translate into additional improvement in asset utilization into next year. Lodging activity, however, is expected to remain fairly soft throughout the third quarter, but improve in the fourth quarter due to customer contract commitments. Utilization rates throughout our U.S. business remains healthy, with the Company seeing no deleterious effects on utilization from the slight softening in U.S. rig counts. In Australia, our business has seen meaningful strength YTD and the Company anticipates positive market conditions to persist in the region.
The Company's online digital marketplace, LodgeLink continues to gain traction. Total room nights booked grew to roughly 16,500 throughout the Quarter, more than a two-fold increase to the Comparative Quarter. With the recent launch of an enhanced version of the digital marketplace, the Company expects ongoing momentum on the platform through supplier base growth and signing up new customers.
Second Quarter 2019 Financial Highlights
| Three months ended June 30, | |||||
| (in millions, except where noted) | 2019 $ | 2018 $ | Change | ||
| Revenue | |||||
| Modular Space Solutions | 20.6 | 20.1 | 2% | ||
| Workforce Solutions | 26.8 | 22.6 | 19% | ||
| Total Revenue | 47.3 | 42.7 | 11% | ||
| Total Adjusted EBITDA | 10.0 | 9.5 | 5% | ||
| Funds from Operations | 11.7 | 12.3 | (5)% | ||
| Per share ($) | 0.21 | 0.22 | (5)% | ||
| Loss | (2.0) | (0.9) | 122% | ||
| Loss per share - Basic and diluted | (0.04) | (0.02) | 100% | ||
| Capital expenditures | 10.0 | 3.6 | 178% | ||
| Property & equipment (NBV) | 334.1 | 352.1 | (5)% | ||
| Total assets | 419.1 | 402.4 | 4% | ||
| Long-term debt | 94.0 | 86.5 | 9% | ||
Additional Information
A copy of the Company's unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2019 and 2018 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.
About Black Diamond Group
Black Diamond Group 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 Group 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 Group has two core business units: Workforce Solutions and Modular Space Solutions. Learn more at www.blackdiamondgroup.com.
For investor inquiries please contact Jason Zhang at 403-206-4739 or investor@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 2019 capital plan, how such capital will be expended, expectations for asset 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, 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, 2018 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, Funds from Operations, Funded Debt, Net Debt, Tangible Book Value and Working Capital. 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 and six month periods ended June 30, 2019 filed on SEDAR.
