Black Diamond Income Fund Reports Results of Operations for the Third Quarter Ended September 30, 2008
November 05, 2008
CALGARY, ALBERTA--(Marketwire - Nov. 5, 2008) - Black Diamond Income Fund (TSX:BDI.UN) ("Black Diamond" or the "Fund") is very pleased to announce the results of operations for the third quarter ended September 30, 2008.
The Fund continued to provide exceptionally strong results by posting new records in respect of revenue, EBITDA and earnings for the period from July 1 to September 30, 2008. This is the eighth consecutive quarter in which the Fund has achieved higher levels of revenue and EBITDA growth. Continued robust demand for the Fund's fleet of modular structures, which is generally rented under long term contracts and therefore subject to less fluctuations in near term economic activity, used for both workforce accommodations and temporary space rentals in all the markets in which the Fund operates, offset the downturn in the economy.
The Fund's fleet growth and high levels of utilization enabled the Fund to grow revenues in the three month period ended September 30, 2008 by 22% over the previous quarter and by 86% over the same period in the previous year. The Workforce Accommodations division accounted for 51% or $10.0 million of the revenues. 38% or $7.5 million of consolidated revenue was derived from the Space Rentals division, which received an additional revenue boost provided by custom manufactured sales in both Alberta and Ontario. The Energy Services division accounted for 11% or $2.2 million of consolidated revenue. The Fund continues to provide a significant amount of accommodation and space rental structures to the oilsands sector. For the period, the revenue generated from oilsands and oilsands related projects amounted to 60% of the consolidated revenue. 27% of the Fund's revenue was generated from assets not related to oilsands activity with the remaining 13% being sourced from conventional oil and gas activity in western Canada.
The primary driver of the Fund's business remains the rental income derived from its fleet of modular structures. From September 2007 to September 2008, the workforce accommodation fleet grew by 57% or 252 units, the space rentals fleet grew by 44% or 326 units, the energy services accommodations fleet grew by 47% or 64 units while the energy services division added 122 units in respect of surface rental assets. The utilization of these fleets remained strong throughout the three months ended September 30, 2008 averaging 96% for the workforce accommodation units, 80% for the space rental fleet and 82% for the drilling accommodation units.
Gross profit margins for the period remained strong averaging 58% compared to 63% in 2007. The slight decline was due to lower margin revenues being derived from custom sale projects in the space rentals division and higher than normal levels of sub-lease revenue in the workforce accommodations division. These non-rental revenues generated in the period are conducted at lower margin levels but do not require the use of capital.
The Fund's net income for the third quarter of 2008 was $5.1 million compared to $1.9 million in the same period in 2007. When removing the effect of future income taxes, earnings in 2008 were $6.5 million compared to $3.5 million for the same period in 2007.
EBITDA for the quarter was $9.2 million or 47% of revenue versus $5.4 million or 52% of revenue for the same period in 2007.
The Fund distributes $0.09 per unit per month (the equivalent of $1.08 per unit annually) resulting in a payout ratio for the quarter of 35%.
Subsequent to the end of the third quarter 2008, Black Diamond Partnership concluded an asset acquisition for a fleet of surface rental assets from a private Alberta energy services company for aggregate consideration of approximately $10.95 million, comprised of $8.8 million in cash and the issuance of 278,000 trust units of the Fund. The acquisition was effective October 1, 2008 and is expected to be accretive on a cash flow per share basis. The assets were purchased at levels significantly below replacement cost and will be added to the Energy Services division of Black Diamond Partnership.
The following is a summary of selected financial and operating information that has been derived from and should be read in conjunction with the unaudited interim consolidated financial statements for Black Diamond for the three and nine months ended September 30, 2008.
/T/
Three months ended Nine months ended
September 30 September 30
(in thousands of dollars,
except as noted) 2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial Highlights $ $ $ $
Total revenue 19,699 10,564 51,034 26,915
Gross profit 11,422 6,624 30,400 16,746
Gross profit % 58% 63% 60% 62%
Selling, general
& administrative 2,209 1,191 5,748 3,418
Selling, general
& administrative % 11% 11% 11% 13%
EBITDA 9,213 5,433 24,652 13,328
EBITDA % 47% 52% 49% 50%
Net earnings before taxes 6,461 3,498 16,572 7,898
----------------------------------------------------------------------------
Net income (loss) 5,071 1,944 13,993 (2,952)
----------------------------------------------------------------------------
Capital expenditures 18,101 6.783 41,340 22.141
----------------------------------------------------------------------------
Property, plant & equipment 106,621 62,503 106,621 62,503
----------------------------------------------------------------------------
Total assets (as at period end) 170,537 111,382 170,537 111,382
----------------------------------------------------------------------------
Long-term debt 28,054 18,420 28,054 18,420
----------------------------------------------------------------------------
Operational Highlights
Workforce accommodation units
in operation at end of period 697 445 697 445
Average utilization during
the period 96% 91% 97% 87%
Space rental units in operation
at end of period 1,072 746 1,072 746
Average utilization during
the period 80% 86% 79% 86%
Drilling accommodation units
in operation at end of period 199 135 199 135
Average utilization during
the period 82% 69% 86% 75%
Surface rental equipment in
operation at end of period 122 - 122 -
Average utilization during
the period 13% - 22% -
Consolidated number of units 2,090 1,326 2,090 1,326
Average utilization during
the period 82% 86% 84% 86%
/T/
Results of Operations
Revenue
Revenue generated for the third quarter of 2008 (hereafter referred to as the "Period") was $19.70 million compared to $10.56 million in 2007. For the nine months ended September 30, 2008 revenues were $51.03 million compared to $26.92 million for the comparable nine months in 2007.
Workforce Accommodations
Revenue was $9.98 million (51% of consolidated revenue) for the Period compared to $7.45 million (70% of consolidated revenue) for the same period in 2007. For the nine months ended September 30, 2008, revenue was $30.68 million (60% of consolidated revenue) compared to $17.94 million (67% of consolidated revenue) in 2007.
At the end of September 2008, the workforce accommodation fleet had 697 units. This represents an increase of 252 units (57%) from September 2007. The fleet size grew by 73 units in the third quarter of 2008.
Utilization of the workforce accommodation fleet averaged 96% for the Period compared to 91% in 2007. The increase is due to a slight lag in units coming on stream for a major contract in the summer of 2007. The utilization is a reflection of the type of equipment the Fund deploys as well as the longer term nature of the rental contracts the Fund has favoured. The workforce accommodation units typically do not experience any significant seasonality. Their usage is on projects requiring larger complements of labor in remote areas and these projects tend to start and operate without regard to the time of year.
During the Period, the workforce accommodations division generated $4.68 million (47%) of its revenue from the rental of its modular accommodation units. The remaining revenue of $5.30 million (53%) was primarily generated from sub-lease activity as well as dismantling services related to the redeployment of accommodations contracted at the Canadian Natural Resources Horizon oilsands site. The sub-lease and installation activities do not employ any of the Fund's capital and therefore generate lower gross margins. Comparatively, for the nine month period ended September 30, 2007, the rental revenue generated by the workforce accommodations division was $4.20 million (56%), while the revenue generated from all other non-rental streams was in aggregate $3.25 million (44%).
Space Rentals
Revenue for the space rentals segment for the Period was $7.52 million (38% of consolidated revenue) compared to $2.16 million for 2007 (20% of consolidated revenue). A large sale of a custom manufactured complex in Ontario as well as custom complexes sold to Alberta customers provided a portion of the increase, while a year over year fleet increase of approximately 44% fueled rental revenue growth. For the nine months ended September 30, 2008, revenues were $13.51 million (27% of consolidated revenue) compared to $5.37 million (20% of consolidated revenue) in 2007. The increases are mainly due to continued fleet additions, as well as the custom projects mentioned above.
The fleet size of space rentals has increased by 44% or 326 units from September 2007. The majority of the fleet additions occurred in Alberta in concert with a stronger economic environment. During the third quarter of 2008, the fleet grew by 10% or 100 units over the second quarter, which was mainly due to fleet additions in Alberta.
Utilization of the space rental fleet averaged 80% for the Period compared to 86% for the same period in 2007. This small decline in utilization rate was primarily due to a depressed economic climate in Ontario and a short timing difference in redeployment of Alberta units to new contracted customers.
Rental revenue for the Period for the space rentals division was $2.32 million (31%) compared to $1.48 million (62%) in 2007 while revenue from other activities such as logistics, installation, sub-lease of additional fleet, unit sales and custom manufactured sales represented $5.20 million (69%) compared to $0.68 million (38%) in 2007. The increase of approximately $4.4 million is mainly due to custom manufactured sales and the associated installation in the Period. For the nine month period, this split between rental revenues and other revenue streams for the space rental division was $5.99 million (44%) and $7.52 million (56%) respectively. For comparison, nine month results in 2007 showed rental revenues of $3.54 million (66%) and other revenue streams of $1.83 million (34%). The split in the rental revenue versus other revenue streams in the space rentals division generally does not fluctuate significantly from period to period as can be seen in the workforce accommodations division. These ancillary revenue streams do not employ any of the Fund's capital and typically generate lower gross margins.
Energy Services
Revenue generated by Energy Services was $3.40 million for the Period compared with $1.98 million in 2007. For the nine months ended September 30, 2008, revenues were $10.84 million compared to $6.29 million in 2007.
Rental revenue for the Period was $1.25 million (54%) compared to $0.73 million (37%) in 2007 while revenue from other activities such as logistics, installation, sub-lease of additional fleet and unit sales represented $0.25 million (14%) compared to $nil in 2007. The remaining $1.90 million was generated in the Period by providing repair, installation and dismantling services to external customers and to other segments of the Fund. Of this, $0.74 million (39%) of the revenue is generated from third party customers, while $1.16 million (61%) was generated by providing services to the Workforce Accommodations and Space Rental divisions and was thus eliminated on consolidation.
For the nine months ended September 30, 2008, rental revenue for the Period was $3.87 million (36%) compared to $2.65 million (42%) in 2007 while revenue from other activities such as logistics, installation, sub-lease of additional fleet and unit sales represented $1.73 million (16%) compared to $nil in 2007. The remaining $5.24 million was generated in the Period by providing repair, installation and dismantling services to external customers and to other segments of the Fund. Of this, $1.40 million (13%) of the revenue is generated from third party customers, while $3.83 million (35%) was generated by providing services to the Workforce Accommodations and Space Rental divisions and was thus eliminated on consolidation.
Rental revenue tends to have a higher degree of seasonality in this division. The drill camps, free standing fleet, geologist/engineer quarters and staff quarters as well as the surface rental assets would typically have a higher degree of utilization during the winter months when drilling activity is higher. The Fund has taken a large degree of the seasonality out of its revenue generation by contracting a significant portion of its drill camp fleet under longer term, paid monthly contracts.
Drilling accommodations equated to 199 units at the end of September 2008 versus 135 units at September 2007. This represented drill camps as well as a complement of wellsites, free standing sleepers and support units. This fleet averaged utilization of 82% for the Period, compared with 69% for the same period in 2007. Substantially all of the drill camps are under long term contract to large oil companies with an average remaining contract term of approximately 17 months. The drilling accommodations comprise 87% of the asset value within the Energy Services segment.
The Fund's initial purchase of surface rental equipment was in January 2008 and has grown the asset base to a small complement of 95 pieces of equipment. The utilization on this equipment for the Period was 13%. The low level of utilization is due to the small scale of the fleet and the fact that the 3rd quarter typically experiences a cyclical downturn in the usage of this type of equipment in Alberta. This fleet is complementary to the drilling accommodations equipment and represents approximately 2% of the Fund's asset value. The acquisition subsequent to the Period adds significantly to the scale of this operation and as a result, the Fund expects the utilization to be higher on the larger platform of assets.
Direct Costs & Gross Profit
Direct costs were $8.28 million for the Period resulting in a gross profit of $11.42 million or a gross profit margin of 58% compared with 2007 direct costs of $3.94 million resulting in a gross profit of $6.62 million or a gross profit margin of 63%. The decrease is partially due to lower margins on large custom sales occurring in the Period. For the nine months ended September 30, 2008, direct costs were $20.63 million, resulting in a gross profit of $30.40 million or a gross profit margin of 60%. Direct costs for the comparable period in 2007 were $10.17 million, which resulted in gross profit of $16.75 million and a gross profit margin of 62%.
Direct costs attributable to the revenue in arriving at the gross profit are the labor, fuel, materials, freight and maintenance required in maintaining, servicing and moving the units to the contracted sites. In addition, there are often opportunities for the Fund to sell some units from its fleet, rent equipment from third parties and re-rent the equipment, provide logistics services or to provide installation and other services to customers. The net book value of sold units, costs of units sub-leased from others and the cost of transport from third parties are included in the direct costs. Revenue streams ancillary to the rental revenue are generally at lower gross margins than the fleet rental operations. Therefore, depending on the level of revenue generated from these other activities in any given period, gross profit margins may fluctuate. For the Period, approximately 58% of the consolidated Fund revenues were derived from these ancillary revenue streams which had gross profit margins ranging from 10% to 30%. For the nine months to September 30, 2008, the level of revenues generated from these other areas amounted to 54% of the consolidated revenue compared to 53% in 2007.
Selling, General & Administrative Costs
Selling, general & administrative costs ("SG&A") excluding unit-based compensation charges for the Period were $2.21 million (11% of revenue) compared to $1.19 million (11% of revenue) for the same period in 2007. For the nine months ended September 30, 2008, SG&A was $5.75 million (11% of revenue) compared to $3.42 million (13% of revenue) in 2007. Within this figure, personnel costs are the largest item representing approximately 52% of SG&A expenses, which is slightly lower than 53% for the same period in 2007. Occupancy costs and insurance combine for an additional 16% of SG&A costs which is down from 19% in the 2007 period. The remaining 31% of SG&A expenses consist of charges for items such as audit, legal, travel, meals and entertainment, bank charges and promotional items which is slightly higher than 28% from 2007. As at September 30, 2008, the Fund employed 32 people in sales and administrative positions, which is thirteen more than as at September 30, 2007.
Unit-based compensation charges are reported separately from the SG&A and were $0.10 million for the period ended September 30, 2008 compared with $0.05 million in 2007. For the nine month period ended September 30, 2008 charges were $0.26 million compared to $0.11 million in 2007. Unit-based compensation was determined using a Black-Scholes valuation method.
EBITDA
The Fund's Earnings before Income Taxes, Depreciation, Amortization and Unit Based Compensation ("EBITDA") was $9.21 million for the Period compared to $5.43 million in 2007. This represents an EBITDA margin of 47% compared to 51% in 2007. For the nine months ended September 30, 2008 EBITDA was $24.65 million and $13.33 million for the same period in 2007, which resulted in EBITDA margins of 48% and 50%, respectively. As noted above, this margin may fluctuate from period to period depending on the level and mixture of the revenue generated from the rental of the fleet assets as compared to the ancillary revenue streams such as logistics, installation, sublease and services provided.
Amortization
For the Period, the charge for amortization was $2.48 million compared to $1.60 million in 2007. This included charges of $2.23 million with respect to amortization taken on the property and equipment of the Fund and $0.25 million relating to the amortization of the intangible assets. Comparatively, amortization for the third quarter of 2007 was $1.35 million and $0.25 million, respectively. For the nine months ended September 30, 2008, the charge for amortization was $6.73 million compared to $4.46 million in 2007. The intangible assets were valued and booked in respect of the purchase of the business from Black Diamond Leasing Inc. at the time of the initial public offering and have estimated useful lives ranging from 4 to 20 years.
Interest Expense
Interest expense for the Period was $0.18 million compared with $0.29 million in 2007. Average long term debt in the Period was only slightly above the amount outstanding at June 30, 2008, as funds were drawn in the latter part of September for the majority of the fleet additions that occurred in the Period. Interest rates in the quarter ranged between 4.75% and 5.30%. For the nine months ended September 30, 2008 interest expense was $1.09 million compared to $0.86 million in 2007. This represents interest that was charged on drawings on the credit facilities in the respective periods.
Interest expense for the Period was $0.18 million compared with $0.29 million in 2007. For the nine months ended September 30, 2008 interest expense was $1.09 million compared to $0.86 million in 2007. This represents interest that was charged on drawings on the credit facilities in the respective periods.
Income Taxes
Pursuant to legislation enacted in June 2007, commencing in January 2011 (provided that the Fund experiences only "normal growth" and no "undue expansion" before then) the Fund will be liable for tax at the corporate income tax rate (which is currently proposed to be the federal corporate rate combined with the provincial income tax rate for each province in which the specified investment flow-through ("SIFT") has a permanent establishment) on all income payable to unitholders, which the Fund will not be able to deduct as a result of being characterized as a SIFT trust.
The Fund has made provision for the future tax liability associated with the above amendments in the SIFT taxation. For the Period, the Fund incurred an income tax provision of $1.39 million. There is no current portion of this charge, and as such it has been reflected as a future tax liability on the balance sheet. This liability arises due to the differences in the book value and the tax value of the assets held by the Fund that are expected to reverse after 2010. This liability and expense has been calculated at the enacted tax rate of 28%. At September 30, 2008, the future tax liability was calculated at $12.91 million compared to $10.85 million in September 2007. The increase is due to the addition of rental fleet units in the prior twelve months.
DISTRIBUTABLE CASH
The Fund declared distributions to unitholders of $3.12 million during the Period and $2.34 million for the period ended September 30, 2007. This is $0.27 per unit for the Period, or the equivalent of $1.08 per unit on an annualized basis.
Management is focused on the distributions as a percentage of Funds available for distribution. In this measure, changes in non-cash working capital are excluded. Changes in non-cash working capital balances will be a source of cash in one period and a use of cash in another depending on changes in the level of activity in a particular period and other factors. Management believes Funds available for distribution is more indicative of the cash generated by the operations in a period which would be available for distribution to unitholders. Funds available for distribution for the Period was $8.96 million compared with $5.14 million for the third quarter of 2007.
LIQUIDITY & CAPITAL RESOURCES
As of September 30, 2008, the Fund had a working capital surplus balance of $8.17 million. The Fund has established syndicated credit facilities with two Canadian chartered banks as follows: a committed operating facility of $10.0 million and a committed capital expenditure facility of $65.0 million. In addition, the capital expenditure credit facility of the Fund has a $20.0 million accordion feature which would allow the Fund to further increase the capital expenditure credit facility upon request and approval as required. As at September 30, 2008, the Fund had drawn $nil on the operating credit facility and had drawn down on the acquisition facility in the amount of $26.70 million. Drawings on both facilities are charged interest based on the previous quarter's funded debt to EBITDA ratio. As at September 30, 2008 the interest rate applied to amounts drawn on the acquisition facility was 5.087%. Both facilities are interest-only with no principal repayment obligations. The Fund does not anticipate any covenant violations or restrictions in the future financing of its operations and capital expenditure programs.
At September 30, 2008, the Fund had the equivalent of 11.55 million trust units outstanding. This was a combination of 9.79 million trust units issued and outstanding and 1.76 million trust units reserved for issuance pursuant to the exchange of 1.76 exchangeable partnership units which were issued and outstanding as at September 30, 2008. In addition at September 30, 2008, the Fund had 893,160 trust units reserved for issuance pursuant to the exercise of options which have been granted pursuant to its trust unit option plan.
Capital Expenditures
For the Period, the Fund expended $18.10 million (2007 - $6.78 million) on additions to property and equipment. The additions to the property and equipment consisted of:
- $10.72 million (2007 - $3.29 million) on workforce accommodation structures and ancillary equipment;
- $4.56 million (2007 - $3.15 million) on space rental structures with some ancillary equipment;
- $2.68 million (2007 - $0.22 million) on energy services accommodation structures and ancillary equipment; and
- $0.14 million (2007 - $0.12 million) on computers, furniture and service related equipment.
For the nine months ended September 30, 2008, the Fund expended $41.34 million (2007 - $22.14 million) on additions to property and equipment. The additions to the property and equipment consisted of:
- $20.74 million (2007 - $10.80 million) on workforce accommodation structures and ancillary equipment;
- $12.97 million (2007 - $10.82 million) on space rental structures with some ancillary equipment;
- $7.09 million (2007 - $0.22 million) on energy services accommodation structures and ancillary equipment; and
- $0.54 million (2007 - $0.30 million) on computers, furniture and service related equipment.
At September 30, 2008, the Fund had made capital expenditure commitments with key manufacturers of modular structures in the amount of $19.0 million for delivery in 2008. It is management's intention to meet the funding requirements for these commitments through a combination of internally generated cash flow and available funds from credit.
NON-GAAP MEASURES
In the foregoing discussion, the following terms have been referenced: EBITDA (Earnings before Interest, Taxation, Depreciation and Amortization), EBITDA Margin, Gross Profit, Funds available for distribution and Payout ratio. Readers are cautioned that these measures are not defined under Generally Accepted Accounting Principles ('GAAP'). Non-GAAP measures are not alternatives to measures under GAAP and should not, on their own, be construed as an indicator of the Fund's performance or cash flows, a measure of liquidity or as a measure of actual return on the Units. These Non-GAAP measures should only be used in conjunction with the consolidated financial statements of Black Diamond Income Fund. A reconciliation between these measures and measures defined under GAAP is included in the Fund's Management's Discussion and Analysis for the three months ended September 30, 2008 filed on SEDAR.
OUTLOOK
Management is pleased to have reported the 8th consecutive record quarter for the Fund. It is expected that the Fund will continue this trend in Q4 as asset additions, along with the recent surface rentals acquisition, will cause an increase in rental revenues. Gross Margins and EBITDA margins should trend in line with those generated in the first nine months of the year.
Full effect of the Fund's capital expansion program will be realized in Q1 of 2009 as rental revenues will rise in concert with increased fleet size. Non rental revenue streams will remain high through the next two quarters due to a number of custom sales projects and operations activities associated with the deployment of new fleet assets.
Despite the uncertainty surrounding the world economy, Black Diamond continues to have strong near term visibility driven by its existing contracts. In fact, a significant amount of budgeted revenue and cashflow for 2009 is already under firm contract. Also enhancing the Fund's stability, is the fact that having completed the successful redeployment of assets from the Horizon oil sands site, the Fund will no longer have any one customer representing more than 10% of revenue. Furthermore, high quality assets, strong customer relationships, and talented people should position Black Diamond to continue to perform well even in a difficult economy.
As the Fund's extensive 2008 capital build nears completion, management will take a more cautious stance toward growth. Management anticipates that attractive opportunities for new asset deployment will continue to be available to the Fund. Preference will be given to projects that offer firm contracts in advance of capital commitment. Management also expects that opportunities for accretive asset acquisitions will materialize in certain areas of the market as a result of financial market conditions. Black Diamond is well positioned to capitalize on these opportunities given the strength of its balance sheet and through the growth of retained cashflow after distributions.
Management remains confident that the Fund can sustain the current distribution payout to unitholders for the foreseeable future.
SUMMARY FINANCIAL STATEMENTS
The following is a summary of the Fund's unaudited interim consolidated balance sheets as at September 30, 2008, the Fund's consolidated statements of net income, comprehensive income and accumulated loss and consolidated statements of cash flows for the three months ended September 30, 2008. These statements should be read in conjunction with the unaudited interim consolidated financial statements including the accompanying notes for the three months ended September 30, 2008 as filed on SEDAR.
/T/
Black Diamond Income Fund
CONSOLIDATED BALANCE SHEETS
(unaudited)
(Expressed in thousands of dollars)
As at September 30, December 31,
2008 2007
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
ASSETS
Current
Cash 10,324 932
Accounts receivable 12,310 9,787
Prepaid expenses and other assets 981 411
----------------------------------------------------------------------------
23,615 11,130
Property and equipment 106,621 71,692
Intangibles 10,985 11,728
Goodwill 29,316 29,316
----------------------------------------------------------------------------
170,537 123,866
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 13,813 8,160
Distributions payable 1,040 842
Current portion of capital lease 594 -
----------------------------------------------------------------------------
15,447 9,002
Capital lease obligation 1,354 -
Long-term debt 26,700 25,420
Future income taxes 12,914 10,521
----------------------------------------------------------------------------
56,415 44,943
----------------------------------------------------------------------------
Unitholders' equity
Trust units and exchangeable partnership units 117,261 87,751
Contributed surplus 312 168
Accumulated loss, after accumulated
distributions (3,451) (8,996)
----------------------------------------------------------------------------
114,122 78,923
----------------------------------------------------------------------------
170,537 123,866
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Black Diamond Income Fund
CONSOLIDATED STATEMENTS OF NET INCOME, COMPREHENSIVE
INCOME AND ACCUMULATED LOSS
(Unaudited)
(Expressed in thousands of dollars, except per unit amounts)
Three months ended Nine months ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
$ $ $ $
----------------------------------------------------------------------------
Revenue 19,699 10,564 51,034 26,915
Direct costs 8,277 3,940 20,634 10,169
----------------------------------------------------------------------------
11,422 6,624 30,400 16,746
----------------------------------------------------------------------------
Expenses
Selling, general and administrative
costs 2,209 1,191 5,748 3,418
Amortization of property and
equipment 2,229 1,347 5,990 3,719
Amortization of intangibles 248 248 743 742
Interest on long-term debt 177 288 1,085 855
Unit-based compensation 98 52 262 114
----------------------------------------------------------------------------
4,961 3,126 13,828 8,848
----------------------------------------------------------------------------
Net earnings before income taxes 6,461 3,498 16,572 7,898
Future income tax expense 1,390 1,554 2,579 10,850
----------------------------------------------------------------------------
Net income (loss) and
comprehensive income
(loss) for the period 5,071 1,944 13,993 (2,952)
Accumulated loss after
accumulated distributions,
beginning of period (5,402) (10,115) (8,996) (957)
Distributions declared (3,120) (2,336) (8,448) (6,598)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated loss after
accumulated distributions,
end of period (3,451) (10,507) (3,451) (10,507)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per unit
Basic 0.44 0.21 1.36 (0.34)
Diluted 0.43 0.21 1.34 (0.34)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Black Diamond Income Fund
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in thousands of dollars)
Three months ended Nine months ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
$ $ $ $
----------------------------------------------------------------------------
Operating activities
Net income (loss) for the period 5,071 1,944 13,993 (2,952)
Add non-cash items:
Amortization of property and
equipment 2,229 1,347 5,990 3,719
Amortization of intangibles 248 248 743 742
Future income taxes 1,390 1,554 2,579 10,850
Unit-based compensation expense 98 52 262 114
----------------------------------------------------------------------------
9,036 5,145 23,567 12,473
Change in non-cash working
capital related to operating
activities (2,854) (1,839)
----------------------------------------------------------------------------
6,182 3,860 21,728 10,336
----------------------------------------------------------------------------
Investing activities
Purchase of property and
equipment (18,017) (6,517) (35,803) (20,941)
Additions to intangibles - - - (9)
Change in non-cash working
capital related to investing
activities 5,910 4,399
----------------------------------------------------------------------------
(12,107) (5,682) (31,404) (20,519)
----------------------------------------------------------------------------
Financing activities
Proceeds from long-term debt 17,000 4,000 31,700 12,750
Repayment of long-term debt - - (30,420) (10,000)
Repayment of capital lease (143) - (330) -
Net proceeds from issuance of
units (29) (16) 26,457 13,711
Distribution payments (3,120) (2,336) (8,249) (6,459)
Unit options exercised - - (90) -
----------------------------------------------------------------------------
13,708 1,648 19,068 10,002
----------------------------------------------------------------------------
Increase (Decrease) in cash 7,783 (174) 9,392 (181)
Cash (Bank indebtedness),
beginning of period 2,541 444 932 451
----------------------------------------------------------------------------
Cash, end of period 10,324 270 10,324 270
----------------------------------------------------------------------------
----------------------------------------------------------------------------
/T/
The Fund is an unincorporated open ended investment trust governed by the laws of the Province of Alberta. The principal undertaking of the Fund, through its indirect wholly-owned subsidiary, Black Diamond Limited Partnership, is to rent modular structures for use as workforce accommodation and temporary workspace, and to provide complementary services including transportation, installation, dismantling, repair and maintenance of modular structures, as well as related services through three operating divisions consisting of Black Diamond Camps, BOXX Modular, and Black Diamond Energy Services.
Reader Advisory
Certain information in this news release contains forward-looking statements including management's assessment of future plans and operations of Black Diamond including, without limitation, statements relating to utilization rates, fleet size, revenue and operations, cash flows, EBITDA, margins, payout ratios, capital expenditures, the entering into long term rental agreements, demand from existing and new customers, distribution levels and access to capital. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Black Diamond's control including, without limitation, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of exchange rates, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the forgoing list of factors is not exhaustive. Additional information on these and other factors that could affect Black Diamond's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Black Diamond's website (www.blackdiamondincomefund.com). 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 publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
