Mr. Trevor Haynes reports

BLACK DIAMOND REPORTS SECOND QUARTER 2023 RESULTS AND DECLARES DIVIDEND

Black Diamond Group Ltd. has released its operating and financial results for the three and six months ended June 30, 2023, compared with the three and six months ended June 30, 2022. All financial figures are expressed in Canadian dollars (as is always the case on Stockwatch unless otherwise stated).

Key highlights from the second quarter of 2023

• Consolidated rental revenue of $35.2-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $22.5-million were each up 24 per cent from the comparative quarter.
• The company's consolidated contracted future rental revenue at the end of the quarter was $120.1-million. Modular space solutions (MSS) contracted future rental revenue for units on rent was $85.4-million at the end of the quarter, up 56 per cent from the comparative quarter. Work force solutions (WFS) contracted future rental revenue for contracts in place was $34.7-million at the end of the quarter, up 102 per cent from the comparative quarter.
• MSS rental revenue and adjusted EBITDA for the quarter were both all-time record highs of $21.0-million and $17.1-million, up 20 per cent and 34 per cent respectively from the comparative quarter.
• MSS average monthly rental rate per unit (excluding the impact from acquisitions made in 2022) increased 13 per cent from the comparative quarter (or 10 per cent on a constant currency basis).
• WFS rental revenue of $14.1-million, increased 29 per cent from the comparative quarter. WFS consolidated utilization of 65 per cent continues to trend higher and it remains at the highest level observed in over half a decade.
• LodgeLink net revenue of $2.3-million grew 92 per cent from the comparative quarter. LodgeLink also reported 101,746 room nights sold in the quarter, a 49-per-cent increase from the comparative quarter.
• Return on assets for the quarter of 16.9 per cent represents a meaningful premium over the company's cost of capital and is relatively consistent with the comparative quarter.
• Capital investment into organic growth was $17.3-million, while maintenance capital for the quarter was $2.0-million. Rental asset additions have been primarily deployed on projects with long-term contracts at rental rates that meet or exceed the company's hurdle rates.
• Funds from operations of $26.0-million increased 30 per cent while free cash flow for the quarter of $17.0-million was up 17 per cent from the comparative quarter.
• Long-term debt and net debt were $219.2-million and $204.1-million respectively at the end of the quarter. Continued positive free cash flow decreased long-term debt and net debt by $7.7-million and $14.8-million respectively since Dec. 31, 2022. Net-debt-to-trailing-12-month (TTM) adjusted leverage EBITDA of 2.2 times remains at the lower end of the company's target range of 2.0 times to 3.0 times while available liquidity was $122.7-million at the end of the quarter.
• Profit for the quarter of $4.6-million increased 15 per cent from the comparative quarter.
• Subsequent to the end of the quarter, the company also declared a third quarter dividend of two cents payable on or about Oct. 15, 2023, to shareholders of record on Sept. 30, 2023. Dividends are designated as eligible dividends for Canadian income tax purposes.

Outlook

Results for the quarter reflect a continuation of the company's growing rental platform which is underpinned by over $120.1-million of forward rental revenue and remains highly diverse across numerous customers and industries. The company continues to see opportunities to invest and compound shareholder capital throughout the business and anticipates continuing year-over-year growth throughout the back half of 2023 and into 2024.

The MSS segment set an all-time record high in both rental revenue and adjusted EBITDA. The company continues to actively invest in additional fleet growth and expects continuing improvement in average rental rate per unit as contracts expire and are renewed in a higher rate environment. While rental revenues continue to benefit from contract-backed fleet and rate growth, MSS continues to see consistent utilization levels across regions due to the diversified nature of the customer end markets that are serviced. The MSS project pipeline remains robust and continues to track ahead of levels experienced at the same time last year with particular strength being experienced in education and civil infrastructure.

The WFS segment continues to see highest levels of rental revenue and adjusted EBITDA observed in over half a decade and continues to see an active pipeline across several industries and geographies. Management expects WFS revenues to continue building into the back half of 2023 and remains optimistic regarding future opportunities into 2024 as the company continues to expand into more diversified end markets in mining, industrial infrastructure and government-related projects. Core rental revenues should continue to improve in the back half of the year before taking a modest pause in year-over-year growth in early 2024 as certain assets return from existing contracts before being redeployed onto new project sites. WFS Australia performance remains strong and utilization is expected to remain stable as the company adds additional assets in response to demand which in turn is driving continued rental revenue growth.

LodgeLink net revenues nearly doubled year-over-year as net revenue margin improved to 11.8 per cent. Total room nights sold for the quarter of 101,746 was a 49-per-cent improvement from year-ago levels. Both sides of the digital marketplace continue to scale with over 800 cumulative corporate customers transacting across a supply network of over 12,000 properties or 1.2 million rooms. LodgeLink is expected to see continued momentum as the business begins to track annualized net revenue in excess of $10-million, with transportation and resource sectors contributing to recent growth.

Black Diamond expects continuing growth into the back half of 2023 as all parts of the platform continue to operate well. The growth outlook is primarily based on contracts in place, deployment of new rental assets with long-term contracts, redeployment of previously idle assets in WFS and continuing momentum in average rental rates per unit. The company's liquidity position remains strong with over $122.7-million of available liquidity, primarily from the company's asset-based revolving credit facility (the ABL facility) that is not up for renewal until October, 2026. The strong cash flow characteristics of the growing diversified rental business, combined with ample liquidity on the balance sheet positions the company well into 2024. Over all, the company continues to see a robust pipeline of growth opportunities.

Additional information

A copy of the company's unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2023, and 2022 and related management's discussion and analysis have been filed with the Canadian securities regulatory authorities and may be accessed through the SEDAR+ website and the company website.

About Black Diamond Group Ltd.

Black Diamond is a specialty rentals and industrial services company with two operating business units -- modular space solutions (MSS) and work force solutions (WFS). It 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 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. 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.

Conference call

Black Diamond will hold a conference call and webcast at 9 a.m. MT (11 a.m. ET) on Friday, Aug. 4, 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.

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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