Black Diamond Reports Second Quarter 2020 Results

CALGARY, Alberta, Aug. 11, 2020 (GLOBE NEWSWIRE) -- Black Diamond Group Limited ("Black Diamond", the "Company" or "we"), (TSX: BDI), a leading provider of space rental and workforce accommodation solutions, today announced its operating and financial results for the three and six months ended June 30, 2020 (the "Quarter") compared with the three and six months ended June 30, 2019 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.

In the second quarter of 2020, Black Diamond reported consolidated revenue of $37.3 million, Adjusted EBITDA of $9.9 million, and core rental revenue of $14.4 million.

Key Highlights from the Second Quarter of 2020

• Modular Space Solutions ("MSS") rental revenue of $9.1 million was a quarterly record and grew 11% from the Comparative Quarter.
• MSS rental fleet grew to 6,588 units, or 8% from the Comparative Quarter while utilization held steady and average rental rates increased 8%.
• MSS Adjusted EBITDA of $7.0 million increased 17% from the Comparative Quarter.
• Workforce Solutions ("WFS") Adjusted EBITDA of $5.5 million decreased 17% from the Comparative Quarter.
• Included in consolidated Adjusted EBITDA is a $1.3 million government subsidy received through the Canadian Emergency Wage Subsidy ("CEWS") program.
• Revenue from sources outside of the western Canadian energy sector was approximately 85% of consolidated revenue for the Quarter, demonstrating a further diversification of end markets.
• The Company continues to maintain significant liquidity with excess borrowing base availability of approximately $76 million.

In the MSS business unit, Adjusted EBITDA of  $7.0 million increased 16% from the Comparative Quarter.  MSS Consolidated revenue of $22.0 million increased 7% from $20.6 million due to continued growth in rental revenue and stronger non-rental revenue in the Quarter, slightly offset by lower sales revenue.  Sales and non-rental revenue can fluctuate quarter-to-quarter as the timing of certain custom sales projects can vary.  Adjusted EBITDA margin of 32% was also modestly stronger than the Comparative Quarter due to a higher proportion of overall revenue weighted towards high-margin rental revenue, combined with modestly lower business unit costs as a result of decreased travel and contribution from the CEWS.

The Company's WFS business unit generated Adjusted EBITDA of $5.5 million, which was a 17% decrease versus the Comparative Quarter.  Consolidated revenue of $15.3 million was down 43% from the Comparative Quarter primarily due to weak occupancy and utilization in the Company’s Lodging and Energy Services businesses respectively.  Continued strength in Australia, along with newly signed contracts for camp rentals in Ontario, and contribution from the CEWS provided a modest offset to the rapid decline in Lodging and Energy Services activity levels throughout the Quarter.

On January 15, 2020,  Black Diamond announced TSX approval of a Normal Course Issuer Bid ("NCIB").  Over a 12-month period, the Company may, in normal course, purchase up to 4,180,249 Common Shares (10% of the public float of Common Shares). Since the implementation of the NCIB, the Company has purchased 219,200 shares at an average price of $1.17.

At the end of the Quarter, Net Debt of $108.9 million was down modestly from $110.6 million in the first quarter of 2020.

Outlook

Results for the Quarter are reflective of the Company's continued focus to diversify our asset rental platform which has been a key aspect of the Company's longer-term vision over the last several years.  Despite the onset of a global pandemic and a precipitous decline in field level activity in some of the Company's traditional, western Canadian energy markets, consolidated Adjusted EBITDA remained flat compared to results from the prior year. Since the onset of the COVID-19 pandemic, Black Diamond has continued to operate as an essential service providing necessities in space rental and workforce accommodation solutions throughout our North American and Australian platforms.

The MSS business continues to grow its core, recurring, rental revenue and achieved a quarterly record in rental revenue of $9.1 million during the Quarter.  Given current contracts in place both for existing equipment and for new build assets in the second half of the year, the Company expects continued momentum in rental revenue growth throughout the remainder of the year.  As an offset, custom sales revenue in MSS is expected to remain soft in the near-term compared to historical averages due to deferral of certain major projects in the pipeline as a result of COVID-19 restrictions.

The WFS segment is continuing to see the positive effects of the Company's diversification strategy undertaken several years ago.  Despite a steep and rapid decline in the Lodging and Energy Services businesses, the WFS segment continued to see strong activity levels in Australia, as well as increasing revenue generation from mining, infrastructure and disaster recovery customers throughout our footprint. The Company expects continued, moderate contraction in overall WFS performance as energy-related activity levels have reached multi-decade lows.  However, given that the WFS customer base is as diverse as ever, the overall reduction in WFS is expected to be meaningfully less than what is currently being observed in the Company's Energy Services and Lodging businesses. A gradual increase in camp rental and lodging will likely occur in the fourth quarter and into 2021 provided that COVID-19 restrictions don't further hinder major resource projects.

LodgeLink, Black Diamond's digital marketplace platform for workforce travel and accommodation, continues to scale, with 500 unique corporate customers and more than 1,500 properties, representing approximately 160,000 rooms of capacity listed at the end of the Quarter.  Room bookings fell 47% from the Comparative Quarter due to broad-based COVID-19 related travel restrictions throughout the Quarter.  However, booking activity began to recover in June and July and is now trending meaningfully higher compared to prior-year levels due to continued expansion of the marketplace and a gradual re-opening of economies.

Currently, approximately $5 million of capital is committed throughout the second half of the year with the vast majority underpinned by contracts.  The Company’s financial and liquidity situation remains strong, with approximately $76 million of available liquidity principally through a committed ABL Facility that matures in October of 2023.

Despite the near-term disruption to certain of the Company's markets caused by the COVID-19 pandemic, the Company remains committed to executing on its long-term strategy of growth and diversification.  Further, in light of physical distancing measures, the Company is continuing to observe an ongoing trend with its customers and potential customers of more square footage per individual across both the WFS and MSS segments.  With over 5.1 million square feet of rentable space across the platform, Management believes the Company is well positioned to continue executing on the longer-term vision to build a stable, diversified, recurring revenue generating rental platform.

Second Quarter 2020 Financial Highlights

	Three months ended June 30,
(in millions, except where noted)	2020		2019		Change
	$		$
Revenue
Modular Space Solutions	22.0		20.6		7%
Workforce Solutions	15.3		26.8		(43)%
Total Revenue	37.3		47.3		(21)%
Total Adjusted EBITDA	9.9		10.0		(1)%
Funds from Operations	11.5		11.7		(2)%
Per share ($)	0.21		0.21		—%
Loss	(0.4)		(2.0)		(80)%
Loss per share  - Basic and diluted	(0.01)		(0.04)		(75)%
Capital expenditures	9.8		10.0		(2)%
Property & equipment (NBV)	348.4		334.1		4%
Total assets	423.1		419.1		1%
Long-term debt	112.2		94.0		19%
Cash and cash equivalents	3.3		0.5		560%

Additional Information

A copy of the Company's unaudited interim condensed consolidated financial statements for the three and six month periods ended June 30, 2020 and 2019 and related management's discussion and analysis have been filed with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and www.blackdiamondgroup.com.

About Black Diamond Group

Black Diamond is a specialty rentals and industrial services Company with two operating business units - Modular Space Solutions (MSS) and Workforce Solutions (WFS). We operate in Canada, the United States, and Australia.

MSS through its principal brands, BOXX Modular, Britco, and MPA, 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 and a fleet of liquid and solid containment assets. Its regional operating terminals rent, sell, service, and provide ancillary products and services including turn-key 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.

Learn more at www.blackdiamondgroup.com.

For investor inquiries please contact Jason Zhang at 403-206-4739 or [email protected].

Reader Advisory

Forward-Looking StatementsCertain information set forth in this news release contains forward-looking statements including, but not limited to, the amount of funds that will be expended on the 2020 capital plan, how such capital will be expended, expectations for asset sales, management's assessment of Black Diamond's future operations and what may have an impact on them, financial performance, business prospects and opportunities, changing operating environment including the impact of COVID-19, amount of revenue anticipated to be derived from current contracts, anticipated debt levels, economic life of the Company's assets, future growth and profitability of the Company and realization of the anticipated benefits of acquisitions and sales. With respect to the forward-looking statements in the news release, Black Diamond has made assumptions regarding, among other things: future commodity prices, that Black Diamond will continue to conduct its operations in a manner consistent with past operations, that counter-parties to contracts will perform the contracts as written and that there will be no unforeseen material delays in contracted projects. Although Black Diamond believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made are reasonable, there can be no assurances that such expectations or assumptions will prove to be correct. Readers are cautioned that assumptions used in the preparation of such statements may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties and other factors, many of which are beyond the control of Black Diamond. These risks include, but are not limited to: the impact of general economic conditions, industry conditions, fluctuation of commodity prices, the impact of the COVID-19 pandemic, the Company's ability to attract new customers, failure of counterparties to perform on contracts, industry competition, availability of qualified personnel and management, timely and cost effective access to sufficient capital from internal and external sources, political conditions, dependence on suppliers and stock market volatility. The risks outlined above should not be construed as exhaustive. Additional information on these and other factors that could affect Black Diamond's operations and financial results are included in Black Diamond's annual information form for the year ended December 31, 2019 and other reports on file with the Canadian Securities Regulatory Authorities which can be accessed on SEDAR. Readers are cautioned not to place undue reliance on these forward-looking statements. 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 or revise any of the forward-looking statements, except as may be required by applicable securities laws.

Non-GAAP MeasuresIn this news release, the following terms have been referenced: Adjusted EBITDA, Funds from Operations and Net Debt. Readers are cautioned that these measures are not defined under International Financial Reporting Standards ("IFRS"). 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.  A reconciliation between these measures and measures defined under IFRS is included in management's discussion and analysis for the three and six month periods ended June 30, 2020 filed on SEDAR.

Source: Black Diamond Group Limited

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