Black Diamond Group Announces 2020 Capital Spending Plan and Approval of Normal Course Issuer Bid
CALGARY, Alberta, Jan. 13, 2020 (GLOBE NEWSWIRE) -- Black Diamond Group Limited (“Black Diamond” or “the Company”) (TSX: BDI) announced that the Board of Directors has approved the 2020 capital budget of $35 million. Black Diamond also announced that it has obtained approval from the Toronto Stock Exchange (the "TSX") to commence a normal course issuer bid (the "NCIB"). The Company expects that the 2020 net capital budget, as well as any potential purchases under the NCIB, will generally be funded from internally generated operating cash flow on a full-year basis.
Highlights of 2020 Budget
- Capital plan of $35 million on a gross basis; approximately $25 to $30 million on a net basis
- Continued focus on growing Modular Space Solutions (“MSS”) with approximately $25 million of gross capital planned for this segment
- Approximately $8 million of capital earmarked for WorkForce Solutions (“WFS”)
- Remaining $2 million of capital for leasehold improvements, infrastructure, and a new terminal/yard location
In 2020, approximately $25 million is expected to be invested into the MSS business unit, primarily to drive organic growth across the Company’s North American MSS footprint. The Company will remain disciplined with respect to its capital allocation decisions and ensure capital investments continue to meet or exceed internal hurdle rates within each region.
For the WFS business unit, Black Diamond expects to invest approximately $8 million to drive continued growth of our Australian business while also selectively targeting growth initiatives within our U.S. Energy Services business and to continue to develop the LodgeLink platform.
In Black Diamond’s normal course trade of business, we regularly buy and sell modular buildings in and out of our rental fleets. Proceeds from these sales have generally been in the range of $5 to $10 million and the Company expects this trend to generally hold in 2020. Accordingly, the Company’s net capital investment in 2020 is expected to be between $25 to $30 million on a net basis.
Normal Course Issuer Bid
Under the NCIB, the Company may, over a 12-month period commencing on January 15, 2020, purchase in the normal course through the facilities of the TSX or alternative trading systems, up to 4,180,249 Common Shares, such amount representing 10% of the public float of the Common Shares and approximately 7% of the 55,907,555 issued and outstanding Common Shares. Furthermore, subject to certain exemptions for block purchases, the maximum number of Common Shares that the Company may acquire on any one trading day is 8,969 Common Shares, such amount representing 25% of the average daily trading volume of the Common Shares of 35,876 for the six calendar months prior to the start of the NCIB. All Common Shares purchased by the Company under the NCIB will be cancelled. The NCIB will terminate on the earlier of January 14, 2021, the date on which the Company has purchased the maximum number of Common Shares permitted under the NCIB or the date on which the NCIB is terminated.
Management of Black Diamond believes that, from time to time, the market price of its Common Shares may not fully reflect the underlying value of the Company and that at such times the purchase of Common Shares would be in the best interests of Black Diamond. The purchase of Common Shares will increase the proportionate interest of, and be advantageous to, all remaining shareholders.
The Company has engaged Raymond James Ltd. to act as broker and to administer the NCIB.
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 www.blackdiamondgroup.com.
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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 budget for 2020 and the expected use and distribution of such capital, used fleet sales and expectations or intentions regarding potential future purchases of Common Shares under the NCIB. 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 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.