Mr. Jason Zhang reports

BLACK DIAMOND REPORTS FIRST QUARTER 2023 RESULTS AND DECLARES DIVIDEND

Black Diamond Group Ltd. has released its operating and financial results for the three months ended March 31, 2023, compared with the three months ended March 31, 2022. All financial figures are expressed in Canadian dollars.

Key highlights from the first quarter of 2023:

• Consolidated rental revenue of $34.4-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $21.4-million were up 28 per cent and 20 per cent from the comparative quarter, respectively.
• Modular space solutions (MSS) rental revenue set another quarterly record of $20.4-million and increased 27 per cent from the comparative quarter. MSS adjusted EBITDA of $16.1-million was also a quarterly record and increased 55 per cent from the comparative quarter.
• MSS average monthly rental rate per unit (excluding the impact from acquisitions made in 2022) increased 15 per cent from the comparative quarter (or 11 per cent on a constant currency basis).
• MSS contracted future rental revenue for units on rent was $97.9-million at the end of the quarter, up 73 per cent from the comparative quarter. Work force solutions (WFS) contracted future rental revenue for contracts in place was $32.8-million at the end of the quarter, up 62 per cent from the comparative quarter.
• WFS rental revenue of $14.0-million increased 30 per cent from the comparative quarter. WFS consolidated utilization of 65 per cent is the highest level observed in over five years.
• LodgeLink net revenue of $2.2-million grew 69 per cent from the comparative quarter, while the business also reported 105,958 room nights sold in the quarter, a 39-per-cent increase from the prior year. LodgeLink U.S. volumes more than doubled from the comparative quarter and continues to see an accelerated pace of growth.
• Return on assets for the quarter of 16.3 per cent represents a meaningful premium over the company's cost of capital and is consistent with the comparative quarter.
• Capital investment into organic growth was $13.5-million, while maintenance capital for the quarter was $2.3-million. Rental asset additions have been primarily non-speculative in that contracts are in place before the asset is built.
• Funds from operations of $21.4-million increased 11 per cent while free cash flow for the quarter of $13.0-million was down 4 per cent from the comparative quarter due to higher interest costs and capitalized maintenance.
• Long-term debt and net debt at the end of the quarter declined $12.1-million and $10.3-million from the fourth quarter 2022, respectively, to $214.8-million and $208.6-million. Net debt to trailing-12-month (TTM) adjusted leverage EBITDA of 2.3 times remains at the lower end of the company's target range of 2.0 times to 3.0 times while available liquidity was $115.9-million at the end of the quarter.
• Profit for the quarter of $4.4-million increased 10 per cent from the comparative quarter. Profit growth for the quarter was half of the 20-per-cent increase in adjusted EBITDA due to higher share-based compensation driven by strong operating performance and increased share prices, as well as higher interest expenses due to rising interest rates.
• Administrative costs as a percentage of gross profit remained consistent with the comparative quarter despite inflationary pressures.
• Subsequent to the end of the quarter, the company also declared a second quarter dividend of two cents, payable on or about July 15, 2023, to shareholders of record on June 30, 2023.

Outlook

The company's diverse and sizable rental platform has continued to grow its core, recurring rental revenue and management believes the outlook into 2023 remains positive. Contributing factors to continuing rental revenue growth include continued increases in average rental rates across the MSS portfolio of assets as units are recontracted in the higher-rate environment of today, deployment of contract-backed organic growth capital in MSS, continuing potential for improving utilization in WFS and continued rapid scaling of LodgeLink, particularly in the United States market.

The MSS segment set another quarterly record in both rental revenue and adjusted EBITDA. The company expects continued growth in MSS rental revenues throughout 2023 driven by continuing increases in average rental rate per unit as contracts expire and are renewed in a higher-rate environment, robust utilization levels across regions, and continued fleet growth. MSS opportunity pipeline and backlog remains strong and continues to be ahead of levels experienced at the same time last year.

The company's outlook for the WFS segment is also constructive. The WFS segment is more project oriented than the MSS segment, resulting in more variability to rental revenues. However, the strategies put in place several years ago to diversify the WFS customer base continues to support deployment of previously idled assets into increasingly diversified geographies and customer industries. Consolidated utilization in the WFS segment was 65 per cent for the quarter, the highest level observed in many years. This has resulted in continued growth in core rental revenues, which were up 30 per cent year over year. Management has continued to invest growth capital into Australia, where its asset base is effectively fully utilized while also opportunistically right-sizing parts of the North American WFS asset base. Management expects this to continue to provide high levels of free cash flow for reinvestment.

LodgeLink net revenues grew 69 per cent year over year as net revenue margin improved to 11.9 per cent. While room nights sold were down modestly on a sequential basis from the fourth quarter of 2022, which had high levels of booking volumes driven by natural disaster-related work, the platform continues to see strong uptake from both new and existing customers. Volumes during this quarter also reached a record high in the U.S., which remains as a large and significant addressable market. Supply has also continued to grow at a strong pace with over 11,000 properties listed, representing over 1.1 million rooms.

The company expects operating performance in 2023 to remain strong given the diverse nature of the existing asset rental business, further supported by a strong level of contract coverage. The company's liquidity position provides a high degree of optionality, with $115.9-million of available liquidity on its debt facility which is not up for renewal until October, 2026. While interest rates are significantly higher than a year ago, approximately one-third of debt is hedged at fixed rates. Management believes the company can continue to compound returns through reinvestment in high-return, long-lived rental assets with attractive contract terms and economics. That said, the company's growth capital expenditures remain fully discretionary. If the company encounters an environment where macroeconomic events begin impacting asset-level returns, the company's platform allows for the flexibility to reallocate high levels of free cash flow toward accelerated debt repayment or shareholder returns. Management continues to see a healthy bid volume and backlog of projects with a diversified customer base focused on longer-term infrastructure, education and government-related services, which provides the confidence that there is ample opportunity to deploy investment capital exceeding internal hurdle rates, while maintaining a conservative balance sheet.

Additional information

A copy of the company's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2023, and March 31, 2022, and related management's discussion and analysis have been filed with the Canadian securities regulatory authorities and may be accessed through SEDAR and the company's website.

About Black Diamond Group Ltd.

Black Diamond is a specialty rentals and industrial services company with two operating business units -- modular space solutions and work force solutions. The company operates in Canada, the United States and Australia.

MSS, through its principal brands, Boxx Modular, Britco, MPA, Schiavi and CL Martin, owns a large rental fleet of modular buildings of various types and sizes. Its network of local branches rents, sells, services and provides 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. Its regional operating terminals rent, sell, service and provide ancillary products and services, including turnkey 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. The LodgeLink proprietary digital platform enables customers to efficiently find, book and manage their crew travel and accommodation needs through a rapidly growing network of hotel, remote lodge and travel partners. LodgeLink exists to solve the unique challenges associated with crew travel and applies technology to eliminate inefficiencies at every step of the crew travel process from booking, to management, to payments, to cost reporting.

Conference call

Black Diamond will hold a conference call and webcast at 9 a.m. MT (11 a.m. ET) on Friday, May 5, 2023. Chief executive officer Trevor Haynes and chief financial officer 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 1-800-319-4610. International callers should use 1-604-638-5340. Please connect approximately 10 minutes prior to the beginning of the call.

To access the call via webcast, please log in on-line 10 minutes before the start time.

Following the conference call, a replay will be available on the investor centre section of the company's website, under presentations and events.

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