Black Diamond Group Limited ("Black Diamond", the "Company" or "we"), (TSX: BDI), a leading provider of workforce accommodation and space rental solutions, today announced its operating and financial results for the three months ended March 31, 2017 (the "Quarter") compared with the three months ended March 31, 2016 (the "Comparative Quarter"). All financial figures are expressed in Canadian dollars.
Black Diamond completed a strategic $41.0 million acquisition of the Britco rentals business in British Columbia effective March 1, 2017. This acquisition within BOXX Modular increased the business unit's fleet size by approximately 50%, and gives Black Diamond a leading position in the British Columbia work space solutions market while providing additional size and scale to the Company's existing BOXX Modular operations. This acquisition, combined with the three smaller scale acquisitions within the BOXX Modular business unit also completed in the past six months, is expected to further diversify Black Diamond by continuing to scale its non-resource business lines, broaden its geographic footprint, expand its customer base, and increase future cash flow stability for the business.
The results of the Company's BOXX Modular expansion over the last 18 months have been modest to date, due mainly to offsetting weakness in Northern Alberta. However, given the recent sales pipeline activity and $9.6 million increase in contracted revenue subsequent to the Quarter, the Company expects the results of BOXX Modular to significantly improve beginning in the second quarter of 2017. Similarly, the Energy Services business unit is seeing improvement primarily as a result of wellsite accommodations utilization increasing, particularly in the Permian Basin where the Company has relocated a portion of its fleet. Relocation costs in the first half of 2017 are expected to offset this activity, with contributions significantly improving the earnings from the business unit in the second half of 2017.
In the resource markets Black Diamond serves, activity levels for remote workforce housing remain low. Previous project and spending announcements from industry participants are anticipated to influence activity levels in the field in late 2017, and into early 2018. Black Diamond's assets remain positioned to capture future increased activity resulting from customer capital project spending, however, activity levels in the first half of 2017 are expected to remain soft. In anticipation of this near-term weakness in operating activity, the Company successfully negotiated and amended its lending agreements. These amendments are expected to provide flexibility within the current environment and the ability to continue to pursue our growth and diversification strategies.
The results of the Quarter include a loss for the period of $5.5 million and Adjusted EBITDA of $4.6 million, compared with a loss of $2.4 million and Adjusted EBITDA of $17.2 million for the Comparative Quarter.
Included in Adjusted EBITDA for the Quarter are annual US property tax costs, fleet relocation costs, and settlement of a significant trade receivable. Normalizing for these items and assuming a full quarter contribution from the Britco acquisition, Adjusted EBITDA would have been approximately $6.8 million. Adjusted EBITDA for 2017 continues to be in line with the guidance provided on March 6, 2017, which stated management's expectation for Adjusted EBITDA in 2017 to be in the range of $35.0 million to $45.0 million.
HIGHLIGHTS FOR THE QUARTER
2017 Capital Plan
On March 13, 2017, the 2017 gross capital spending plan of $20.0 million was revised to $12.0 million. This includes maintenance capital which is estimated to be $1.5 million for the year, but does not include any proceeds of the normal course fleet sales that are projected to be $5.0 million for fiscal 2017. The 2017 capital spending plan remains unchanged with a focus on growth capital for the BOXX Modular space rentals business outside of Alberta. The capital plan will generally be non-speculative and support our overarching strategy to diversify the Company's platform.
Capital expenditures for the Quarter were $3.5 million, excluding a $1.5 million non-cash acquisition of wellsite accommodation units in Energy Services related to the settlement of accounts receivable. Capital expenditures for the Quarter included maintenance capital of $0.3 million, unchanged from the Comparative Quarter. Capital commitments were $3.2 million as at March 31, 2017. This is compared with capital expenditures of $3.3 million and capital commitments of $2.6 million in the Comparative Quarter.
Proceeds from used fleet sales in the Quarter were $0.6 million, compared with $2.0 million in the Comparative Quarter. Book value of total used fleet sales recognized in the Quarter was higher due to a used fleet sale recognized in the Quarter where proceeds were received in the fourth quarter of 2016.
Dividend and Payout Ratio
The Payout Ratio (see "Non-GAAP Measures") for the Quarter increased to 59% compared with 30% in the Comparative Quarter due to lower funds available for dividends and an increase in the numbers of shares outstanding (see "Non-GAAP Measures").
A copy of the Company's unaudited interim condensed consolidated financial statements for the three month periods ended March 31, 2017 and 2016 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.
Black Diamond will hold a conference call and webcast tomorrow, May 11, 2017, at 9:00 a.m. MT (11:00 a.m. ET).
Chairman, President and CEO Trevor Haynes and Executive Vice President and CFO 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 1-855-435-1153. International callers should use (210) 229-8824 (Conference ID: 79806206). Please connect approximately 10 minutes prior to the beginning of the call.
Please log into the webcast 10 minutes before the start time at: http://edge.media-server.com/m/p/4nkt5eef
Slides to accompany the conference call can be accessed through https://join.me/BDI-Investors.
Following the conference call, an audio archive will be available in the Investor Events section of the Company's website at www.blackdiamondgroup.com.
SOURCE: Black Diamond Group Limited
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.