Mr. Trevor Haynes reports

BLACK DIAMOND REPORTS STRONG FOURTH QUARTER AND YEAR-END RESULTS AND DECLARES DIVIDEND

Black Diamond Group Ltd. has released its operating and financial results for the three months and 12 months ended Dec. 31, 2023, compared with the three months and 12 months ended Dec. 31, 2022. All financial figures are expressed in Canadian dollars.

Key highlights from 2023:

• Generated consolidated revenue was $393.5-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) was $106.6-million for the year, up 21 per cent and up 27 per cent from the prior year, respectively.
• Consolidated rental revenue of $145.0-million was up 21 per cent from the prior year.
• The company's consolidated contracted future rental revenue at the end of the year was $136.4-million, up $20.1-million or 17 per cent from the prior year. Modular space solutions (MSS) contracted future rental revenue for units on rent was $101.8-million at the end of the year, up 8 per cent from the prior year. Work force solutions (WFS) contracted future rental revenue for contracts in place was $34.6-million at the end of the year, up 56 per cent from the prior year.
• MSS generated record rental revenue and adjusted EBITDA of $85.4-million and $72.7-million, respectively, up 18 per cent and 34 per cent from the prior year.
• WFS rental revenue and adjusted EBITDA were $59.6-million and $59.1-million, respectively, up 24 per cent and 17 per cent from the prior year.
• LodgeLink continued to scale and generated record net revenue of $9.8-million, up 48 per cent from the prior year. Gross bookings (1) of $78.4-million grew 33 per cent from the prior year while total room nights sold for the year were up 18 per cent from the prior year.
• Gross capital expenditures for the year were $69.1-million, compared with $54.2-million in the prior year. This included $56.9-million of capital investment into organic growth, $3.9-million for LodgeLink software development and $8.3-million for sustaining capital expenditures. Proceeds from fleet sales were $22.5-million.
• Long-term debt and net debt (1) were $190.4-million and $184.2-million, respectively, at the end of the year. Continued positive free cash flow (1) decreased long-term debt and net debt by $36.5-million and $34.7-million, respectively, from Dec. 31, 2022. Net debt to trailing-12-month (TTM) adjusted leverage EBITDA (1) of 1.7 times is now just below the company's target range of 2.0 times to 3.0 times while available liquidity was $142.6-million at the end of the year.
• Profit for the year was $30.4-million, up 15 per cent from the prior year, and consolidated return on assets (1) for the year was 19.6 per cent, up 60 basis points from prior year.
• Diluted earnings per share for the year were 49 cents, up 11 per cent compared with 44 cents for the prior year. The prior year included a one-time non-cash impairment reversal related to Australian assets of $6.3-million, or $4.4-million and seven cents per share after tax. Excluding the impact of that reversal, 2023 diluted earnings per share of 49 cents were up nearly 32 per cent.
• Since reinstating the dividend in 2021, the company has announced three dividend increases, with the most recent occurring in the fourth quarter of 2023. In the year, Black Diamond returned over $4.8-million to shareholders in the form of dividends, which accounted for approximately 4 per cent of funds from operations, leaving ample financial flexibility for continued growth.

Key highlights from the quarter:

• Consolidated rental revenue of $36.0-million and adjusted EBITDA (1) of $26.1-million were up 8 per cent and 19 per cent from the comparative quarter, respectively.
• MSS rental revenue for the quarter of $22.0-million was up 10 per cent from the comparative quarter. MSS adjusted EBITDA (1) of $17.3-million increased 21 per cent from the comparative quarter.
• MSS average monthly rental rate per unit (excluding the impact from acquisitions made in 2022) increased 9 per cent from the comparative quarter.
• WFS rental revenue and WFS adjusted EBITDA (1) for the quarter were $14.0-million and $14.7-million, up 5 per cent and 6 per cent, respectively, from the comparative quarter despite the conclusion of two large-scale pipeline contracts, with those assets being off rent for most of the quarter.
• LodgeLink net revenue grew 8 per cent from the comparative quarter to $2.6-million, generating net revenue margins (1) of 13.3 per cent. LodgeLink also reported 101,726 room nights sold in the quarter, a 13-per-cent decrease from the comparative quarter.
• Capital investment into organic growth was $11.7-million, while maintenance capital for the quarter was $2.2-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 $30.1-million and free cash flow (1) of $20.5-million for the quarter were up 43 per cent and 68 per cent, respectively, from the comparative quarter.
• Profit for the quarter of $7.8-million decreased 17 per cent from the comparative quarter.
• Subsequent to the end of the quarter, the company declared a first quarter dividend of three cents, payable on or about April 15, 2024, to shareholders of record on March 31, 2024.

Outlook

Black Diamond's diversified, specialty rental platform continues to benefit from strong contract coverage, supportive macro tailwinds, and a pipeline of attractive growth opportunities in North America and Australia. Management remains focused on growing the company's high-margin, recurring rental revenue while reinvesting strong organically generated cash flows to further compound shareholder value.

MSS rental revenue of $22.0-million was up 10 per cent from the comparative quarter. Strong results were driven by robust utilization, targeted fleet growth and a supportive rate environment. The company continues to see healthy demand and additional opportunities in its core education and infrastructure customer segments, which have driven MSS contracted future rental revenue to reach $101.8-million with an average duration of 51.9 months at the end of the quarter. Management continues to expect healthy demand for rental assets across the platform to drive continued rental and ancillary revenue growth in 2024 and beyond.

WFS continues to generate strong returns, with return on assets (1) of 39 per cent for the quarter, as the company benefits from successful efforts to right-size the fleet and diversify its customer base by both geography and end-market. Despite the conclusion of two large-scale pipeline projects during the quarter, which drove utilization down to 60 per cent from 70 per cent in the comparative quarter, adjusted EBITDA of $14.7-million for the quarter was 6 per cent higher from the comparative quarter, driven by a 5-per-cent increase in rental revenue as average realized rates improve. The WFS segment also ended the quarter with $34.6-million of contracted future rental revenue, a 56-per-cent increase from the comparative quarter. The sales pipeline and opportunity set remain healthy and management expects a resumption of year-over-year growth in WFS in late 2024 as assets are redeployed in today's generally more constructive rate environment when compared with rental rates several years ago.

The company continues to see positive momentum in LodgeLink, with gross bookings (1) and net revenue for the year growing 33 per cent and 48 per cent from the prior-year levels, respectively. Net revenue margins (1) have also continued to improve and are up 120 basis points year over year, reaching 12.4 per cent in the year and 13.3 per cent in the quarter as additional revenue streams have been introduced. Management continues to believe that LodgeLink is well positioned for continuing growth to service a significant North American addressable market for work force travel. Today, LodgeLink services an expanding base of corporate customers with the support of the company's supply partners that represent over 1.4 million rooms of capacity across North America.

Given the strong growth rates experienced over the last several years across the platform, management began and largely completed work around a corporate structure reorganization during the quarter, in preparation for an enterprise resource planning (ERP) system implementation. The company expects to transition LodgeLink onto a new ERP system during the second quarter of 2024 and is working toward a planned transition for its asset rental businesses into 2025. Management remains focused on growing and compounding the company's high-margin, recurring rental revenue streams. The company believes the outlook for 2024 remains constructive and is supported by a strong sales and opportunity pipeline in both MSS and WFS, with LodgeLink expected to continue on its path of rapid scaling.

(1) Adjusted EBITDA, net debt, funds from operations, gross bookings and free cash flow are non-GAAP (generally accepted accounting principles) financial measures. Return on assets, net debt to TTM adjusted leverage EBITDA and net revenue margin are non-GAAP ratios. Refer to the non-GAAP financial measures section of this news release for more information on each non-GAAP financial measure and ratios.

Additional information

A copy of the company's audited consolidated financial statements for the years ended Dec. 31, 2023, and Dec. 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 -- MSS and WFS. The company operates in Canada, the United States and Australia.

MSS, through its principal brands, Boxx Modular, Britco, CLM, MPA Systems and Schiavi, 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 owns a large rental fleet of modular accommodation assets of various types. 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.

In addition, WFS includes LodgeLink, which operates a digital marketplace for business-to-business crew accommodation, travel and logistics services across 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, March 1, 2024. 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 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.

Non-GAAP measures

In this news release, the following specified financial measures and ratios have been disclosed: adjusted EBITDA, adjusted EBIT (earnings before interest and taxes), funds from operations, net debt, net debt to TTM adjusted leverage EBITDA, return on assets, net revenue margin, adjusted EBITDA as per cent of revenue, gross bookings, and free cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed under international financial reporting standards (IFRS) and therefore may not be comparable with similar measures presented by other entities. Readers are cautioned that these non-GAAP measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator of the company's performance or cash flows, a measure of liquidity or as a measure of actual return on the common shares of the company. These non-GAAP measures should only be used in conjunction with the consolidated financial statements of the company.

We seek Safe Harbor.