Black Diamond Group Limited · TSX:BDI
Black Diamond — Q4 2021 Earnings Presentation
35 slides from Black Diamond's earnings presentation, March 2022
Slide 1: Investor Update
INVESTOR UPDATE INVESTOR RELATIONS March 2022 © Black Diamond Group Ltd. All Rights Reserved investor@blackdiamondgroup.com
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements. The use of the words “anticipate”, “continue”, “estimate”, “expect”, “will”, “project”, “should”, “believe”, “intend” and similar expressions identify forward-looking statements. These statements involve known and unkn
Slide 3: Introduction
Introduction Black Diamond Group rents and sells modular space and workforce accommodation solutions to customers in Canada, the United States and Australia. We serve diverse sectors including construction, education, engineering, resources, financial institutions, military, and government. Ticker T
Slide 4: Creating a Better Way
Creating a Better Way • Disruptive digital platform • Rapidly scaling LL • Unique solution focused on essential workforce travel LodgeLink • Diversified, steady growth • Predictable and improving returns MSS • • Strong free cash flow characteristics Long-lived rental assets Modular Space Solutions •
Slide 5: Operating Overview
Operating Overview Modular Space Solutions (MSS) Fleet $246 mm NBV1 8,827 Units 1 Workforce Solutions (WFS) Fleet $142 mm NBV1 6,800 Units1 Consolidated Rentable Square Feet ~6.8 mm 222,801 TTM LodgeLink Bookings 2 $20.4 mm TTM Net Income or Profit $64.0 mm TTM Adjusted EBITDA 1,2,3 $405 mm PP&E Boo
Slide 6: Revenue Diversity
Revenue Diversity Revenue by Industry Construction Education Government Mining Oil and Gas Power and Energy Infrastructure Other 0% 5% 10% 15% 20% 25% 30% Q4-21 Q4-20 Revenue by Country Australia US Canada 6 0% 10% 20% 30% 40% 50% 60% 70% © Black Diamond Group Ltd. All Rights Reserved Q4-21 Q4-20
Slide 7: Black Diamond Group - Who We Are
Black Diamond Group - Who We Are Specialty rentals and industrial services provider organized into two business units Consolidated Rental Revenue MSS: 17.0 Modular Space Solutions 15.0 • Diversified Rental 13.0 • Custom, Major Project or Used Sales $mm 11.0 • Ancillary, Value Added Products & Servic
Slide 8: MSS Overview
MSS Overview Modular Space Solutions • 8,827 units across 19 branches in North America with attractive returns on long-lived assets • With added scale and additional product offering, return metrics are improving. Rental revenue growth expected to outpace fleet growth • Y/Y, rental rates have increa
Slide 9: MSS Overview – Revenue Detail
MSS Overview – Revenue Detail MSS Rental Revenue Modular Space Solutions 17.0 16.1 15.0 15.3 14.6 13.0 13.9 • Q4/21 Rental revenue up 42% Y/Y $mm 11.0 11.3 • Strengthening rental revenue 9.0 8.9 9.1 9.9 8.7 driven by continued capital 7.0 investment, higher rates, improving 5.0 Q4-19 Q1-20 Q2-20 Q3-
Slide 10: WFS Overview
WFS Overview Workforce Solutions • Includes large and small format accommodation rentals, ancillary surface rentals and services across Canada, U.S. and Australia. • LodgeLink, the Company’s digital travel platform is also within the WFS segment • Geographic Diversification • U.S. • Eastern Canada •
Slide 11: WFS Overview – Revenue Detail
WFS Overview – Revenue Detail Workforce Solutions WFS Rental Revenue 12.0 11.2 • Constructive outlook into 2022 based 10.0 10.7 on contracted rental revenue in place, 8.0 8.9 8.2 8.6 7.5 $mm recent growth in eastern Canada, and 6.0 6.0 6.7 improving field-level activity from 4.0 5.3 energy customers
Slide 12: Significant Asset Coverage Against Debt
Significant Asset Coverage Against Debt • Q4/2021 Net Debt1 of $151 mm and Long Term Debt of $155.6 remains well below hard asset coverage on a net book value and third-party appraisal basis • Recently renewed Asset Based Lending (“ABL”) facility with extension out to fall of 2026. Average cost of d
Slide 13: Financial Flexibility
Financial Flexibility Leverage Ratio Net Debt/EBITDA (TTM as at last reported Quarter ) 5 4.00 4.5 3.50 4 3.00 3.5 2.50 3 2.00 2.5 1.50 2 1.00 1.5 0.50 1 0.00 0.5 BDI MSS Comparables WFS Comparables 0 Q1-20 Q2-20 Q3-20 Q4-20* Q1-21* Q2-21* Q3-21* Q4-21 Source: Factset MSS Comparables: MGRC, WSC WFS
Slide 14: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation Free Cash Flow • Asset rental model has continued to 60 provide a strong base of Free Cash Flow1, generating over $15 million in Q4/2021 and Cash flow from 50 operating Activities of $20.4 million 40 • The company announced a 20% increase to its quarterly dividend, u
Slide 15: Growth Through Disciplined Capex
Growth Through Disciplined Capex Organic Growth Capex • Annual organic growth capex of ~$25 to $30 mm after used asset sales • Realizing strong returns for new capital investment. Reported consolidated ROA1 of 17% in Q4/2021 • Vast majority of capex targeted for organic growth in MSS with opportunit
Slide 16: Digital B2B Platform for Workforce Travel
LodgeLink is a multi-sided marketplace for the $320 billion of Digital B2B Platform for Workforce Travel crew travel and related goods and services consumed by crews each year.
Slide 17: LodgeLink Gaining Market Traction
LodgeLink Gaining Market Traction Total Unique Customer Accounts Multi-sided B2B Platform focused on crew travel 700 615 582 • Efficiently connect the supply/demand of room and accommodation bookings for 600 companies employing field crews 500 443 • Custom-built platform to remove inefficiency at ev
Slide 18: LodgeLink - Room Bookings
LodgeLink - Room Bookings Room Nights Booked • Continued growth in unique customer accounts 80,000 70,000 60,000 • Growing share of travel wallet within existing 50,000 customer base 40,000 30,000 20,000 • Since Q2/2020, have set quarterly, sequential 10,000 records in booking volumes. 0 Q3-19 Q4-19
Slide 19: Black Diamond Investment Attributes
Black Diamond Investment Attributes MSS fleet growth ahead of plan as a result of Spectrum and Vanguard acquisitions in 2020 MSS EBITDA growth to outpace fleet growth driven by Growth stronger rental revenue as a result of rising rates and utilization, economies of scale, VAPS and other service
Slide 20: Appendix
Appendix 20 © Black Diamond Group Ltd. All Rights Reserved
Slide 21: Sources of Revenue
Sources of Revenue MSS Business Unit WFS Business Unit • Rental Revenue • Rental Revenue • Sales Revenue • Sales Revenue • Non-Rental Revenue • Non-Rental Revenue • Lodge Services Revenue 22 © Black Diamond Group Ltd. All Rights Reserved
Slide 22: MSS – Drivers Behind Rental Revenue Growth
MSS – Drivers Behind Rental Revenue Growth MSS Rental Revenue 17.0 15.0 13.0 11.0 $mm 9.0 7.0 5.0 Average Rental Rate Unit Count Utilization $700 9,000 90% 85% $650 8,000 80% 75% $600 7,000 70% 65% $550 6,000 60% 23 © Black Diamond Group Ltd. All Rights Reserved
Slide 23: MSS – VAPS Penetration
MSS – VAPS Penetration VAPS as a % of Rental Revenue • Value Added Products & Services (VAPS) 14% revenue continuing to grow 12% 10% • VAPS as a % of revenue down in Q4/21 8% due to addition of Vanguard rental 6% revenue which currently has 4% comparatively lower penetration 2% 0% Q4-19 Q4-20 Q4-21
Slide 24: Rental Utilization
Rental Utilization MSS and WFS Rental Utilization • Utilization showing further improvement after pandemic 90% low in Q2 2020 80% • MSS rental fleet maintaining 70% utilization above 80% 60% 50% • WFS improvement in utilization 40% supported by diversification of 30% assets outside of western Canada
Slide 25: MSS & WFS Fleet Overview
MSS & WFS Fleet Overview MSS Fleet Unit Count 10,000 • Continued growth in MSS rental 9,000 8,000 7,000 6,000 fleet, supported by organic 5,000 4,000 investment and recent 3,000 2,000 acquisition of Vanguard 1,000 - Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 WFS Room Count 14,000 Canada U
Slide 26: Adjusted EBITDA Detail By Quarter
Adjusted EBITDA1 Detail By Quarter Quarterly EBITDA Detail 30.0 25.0 19.7 20.0 17.5 15.0 13.3 13.5 10.6 11.1 9.9 9.9 9.8 10.0 5.0 0.0 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 (5.0) (10.0) Modular Space Solutions Workforce Solutions Total Consolidated Corporate 1. See “Non-GAAP Measures”
Slide 27: Revenue Detail by Quarter
Revenue Detail by Quarter Consolidated Revenue by Quarter 120 100 80 58.6 45.1 60 31.8 30.5 24.9 40 25.9 17.3 28.6 15.4 50.2 51.0 20 37.1 31.4 35.2 21.4 22.0 23.9 16.5 0 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 MSS WFS 28 © Black Diamond Group Ltd. All Rights Reserved
Slide 28: LodgeLink - The Problem
LodgeLink - The Problem Crew (workforce) travel is a complex task that adds costs to running a business • When groups or crews are required to travel for work, finding, booking and managing travel and accommodations is challenging • Solutions for consumer travel exist, however, they ignore the added
Slide 29: LodgeLink – The Problem (continued)
LodgeLink – The Problem (continued) LodgeLink addresses many of the problems faced by companies needing to book crew travel accommodations and the crew members themselves Company Perspective TRAVEL DIRECT HOTEL EMPLOYEE SELF • Booking and managing travel and accommodations LODGELINK MANAGEMENT GROUP
Slide 30: LodgeLink - Market Opportunity
LodgeLink - Market Opportunity Global Business Travel Market Annual Spend 2019 Target Market ($billions) Global Workforce Crew Travel U.S. 65 ~$1.6 Trillion Canada 6 Per Year ~$320 Australia 6 Billion Per Year South America 13 Rest of World 230 Countries listed above are areas where LL Management te
Slide 31: LodgeLink – The Solution
LodgeLink – The Solution Save time. Control costs. • A web-based solution for workforce travel management o LodgeLink is an end-to-end solution focused on the needs of crews o The platform applies web-based technology that simplifies the crew travel process • Delivering efficiency and cost control f
Slide 32: LodgeLink – Business Model
LodgeLink – Business Model Current Future Future Margin On Transactions Advertising Data & Other Services • LodgeLink profits on the spread • Advertise travel support services • SAAS Application - Potential for between buy and sell price for (dining and entertainment, remote enhanced features, data
Slide 33: LodgeLink - Value Proposition
LodgeLink - Value Proposition • Assumptions: • Approximately 4,700 room nights @ $108/night • 3 rooms per transaction • results in 1,560 transactions per year (or 30 per week) • Assumes no additional savings on negotiated rates or direct billing 34 © Black Diamond Group Ltd. All Rights Reserved
Slide 34: Non-GAAP & Supplementary Financial Measures
Non-GAAP & Supplementary Financial Measures • Adjusted EBITDA is a non-GAAP financial measure, is not a measure recognized under IFRS and does not have standardized meanings prescribed by IFRS. Adjusted EBITDA refers to consolidated earnings before finance costs, tax expense, depreciation, amortizat
Slide 35: Thank You
THANK YOU INVESTOR RELATIONS © Black Diamond Group Ltd. All Rights Reserved investor@blackdiamondgroup.com