Mr. Trevor Haynes reports

BLACK DIAMOND REPORTS STRONG THIRD QUARTER 2023 RESULTS AND INCREASES DIVIDEND

Black Diamond Group Ltd. has released its operating and financial results for the three and nine months ended Sept. 30, 2023, compared with the three and nine months ended Sept. 30, 2022. All financial figures are expressed in Canadian dollars.

Key highlights from the third quarter of 2023:

• Consolidated rental revenue of $39.5-million and adjusted EBITDA (1) (earnings before interest, taxes, depreciation and amortization) of $36.6-million were up 25 per cent and 41 per cent from the comparative quarter, respectively. This represents the company's highest quarterly rental revenue and adjusted EBITDA in a decade.
• The company's consolidated contracted future rental revenue at the end of the quarter was $128.6-million, up $43.7-million or 51 per cent from the comparative quarter. Modular Space Solutions (MSS) contracted future rental revenue for units on rent was $99.7-million at the end of the quarter, up 54 per cent from the comparative quarter. Workforce Solutions (WFS) contracted future rental revenue for contracts in place was $28.9-million at the end of the quarter, up 42 per cent from the comparative quarter.
• MSS rental revenue for the quarter was a 14th consecutive record high at $22.0-million and was up 19 per cent from the comparative quarter. Adjusted EBITDA was an all time record high at $22.2-million and was up 31 per cent 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 11 per cent on a constant-currency basis).
• WFS rental revenue and adjusted EBITDA for the quarter were $17.5-million and $21.8-million, up 35 per cent and 49 per cent, respectively, from the comparative quarter. WFS consolidated utilization of 68 per cent continues to trend higher and remains at the highest level observed in over half a decade.
• LodgeLink net revenue grew 50 per cent to a record of $2.7-million from the comparative quarter, generating record net revenue margins (1) of 12.7 per cent. LodgeLink also reported 109,898 room nights sold in the quarter, a 16-per-cent increase from the comparative quarter.
• Return on assets (1) for the quarter of 27.3 per cent represents a meaningful premium over the company's cost of capital and was up 340 basis points from the comparative quarter.
• Capital investment into organic growth was $18.3-million, while maintenance capital for the quarter was $1.8-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 (1) of $39.2-million and free cash flow (1) of $30.6-million were each up 28 per cent from the comparative quarter.
• Long-term debt and net debt were $206.1-million and $200.8-million, respectively, at the end of the quarter. Continued positive free cash flow (1) decreased long-term debt and net debt by $20.8-million and $18.1-million, respectively, since Dec. 31, 2022. Net debt to trailing-12-month (TTM) adjusted leverage EBITDA (1) of 1.9 times is now just below the company's target range of 2.0 times to 3.0 times, while available liquidity was $126.0-million at the end of the quarter.
• Profit for the quarter of $13.6-million increased 51 per cent from the comparative quarter.
• Subsequent to the end of the quarter, the company increased its quarterly dividend per share payout by 50 per cent from two cents to three cents. The company declared a fourth quarter dividend of three cents, payable on or about Jan. 15, 2024, to shareholders of record on Dec. 31, 2023. This is the third dividend increase since dividends were reinstated in the fourth quarter of 2021. Dividends are designated as eligible dividends for Canadian income tax purposes.

Outlook

The strong financial and operating results in the quarter and YTD (year to date) continue to demonstrate the foundational strength and diversity of the company's platform. The business continues to benefit from strong contract coverage, supportive macro tailwinds, and a healthy pipeline of growth opportunities in North America and Australia. Management remains focused on growing the company's high-margin, recurring rental revenues through disciplined capital allocation and expects continued momentum into 2024.

MSS set all-time records in both rental revenue and adjusted EBITDA (1) driven by robust utilization, fleet growth and a supportive rate environment. At the end of the quarter, the MSS segment reported an average rental duration of 50.4 months and contracted forward rental revenue of approximately $100-million. The company continues to see particularly strong activity and opportunities in its core education and infrastructure customer segments and expects healthy demand for longer-duration rental assets to drive continued rental revenue growth into 2024 and beyond.

WFS performance has also continued to improve on the back of years of successful efforts to diversify by geography and end-market. Rental revenue and adjusted EBITDA reached levels not seen since 2014, improving 35 per cent and 49 per cent, respectively, versus the comparative quarter driven by improving consolidated utilization and overall activity levels across North America and Australia. Management is anticipating a moderation in rental revenue and adjusted EBITDA on a sequential, quarterly basis into early 2024 as certain assets are redeployed from previous contracts that are expected to result in a relatively flat rental revenue comparison year over year relative to Q1 2023. The bid and sales pipeline remains robust and management anticipates a return to sequential growth in WFS in the latter half of 2024 as assets are redeployed in a higher rental rate environment.

The company continues to see positive momentum in LodgeLink, with gross bookings (1) and net revenue growing 27 per cent and 50 per cent from the comparative quarter, respectively. Net revenue margins (1) have also continued to improve and are up 170 basis points from the comparative quarter, reaching a record rate of 12.7 per cent. Management remains highly optimistic with respect to LodgeLink's future growth potential in an estimated $70-billion market. The business continues to scale and service the company's 886 cumulative corporate customers with the support of its supply partners that represent 1.36 million rooms of capacity across North America. From a financial standpoint, the company continues to deliver robust free cash flow (1) that enabled the repayment of $20.8-million of long-term debt in the first nine months of 2023, while also financing $49.1-million of existing organic growth year to date. Currently, the company's $126.0-million of available liquidity through an asset-based lending facility provides ample financial flexibility to continue investing through both organic and inorganic expansion initiatives.

(1) Adjusted EBITDA, net debt, funds from operations, gross bookings and free cash flow are non-GAAP financial measures. Return on assets, net debt to TTM adjusted leverage EBITDA and net revenue margin are non-GAAP (generally accepted accounting principles) ratios.

Additional information

A copy of the company's unaudited interim condensed consolidated financial statements for the three and nine months ended Sept. 30, 2023, and Sept. 30, 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 (MSS) and Workforce Solutions (WFS). 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, Nov. 3, 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 into the webcast link 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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