Black Diamond Group Limited · TSX:BDI

Black Diamond — Q2 2023 Earnings Presentation

39 slides from Black Diamond's earnings presentation, Aug 4, 2023

  1. Slide 1: Investor Update

    INVESTOR UPDATE INVESTOR RELATIONS September 12, 2023 © Black Diamond Group Ltd. All Rights Reserved investor@blackdiamondgroup.com

  2. 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

  3. 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

  4. Slide 4: Black Diamond Investment Attributes

    Black Diamond Investment Attributes  Consolidated contracted future rental revenue of over $120 mm Stability through diversification (MSS of ~$85 mm and WFS of ~$35 mm)1 by asset, industry, & geography  Avg duration of MSS lease portfolio of ~51 months2  Thousands of customers across diverse indu

  5. Slide 5: Unit Economics Example

    Unit Economics Example1 Utilization Lifetime Return on Annualized Return Lifetime return on Initial Investment on Initial Investment initial investment 525% 85% 525% 17% 75% 475% 15% Practical Asset 65% 425% 13% Life 30+ Years Used assets typically sell at a premium to Payback Period NBV ~ 5 Years I

  6. Slide 6: Operating Overview

    Operating Overview 1 Modular Space Solutions (MSS) Fleet $337 mm NBV 11,214 Units Workforce Solutions (WFS) Fleet $149 mm NBV 6,586 Units Consolidated Rentable Square Feet ~7.6 mm 419,667 TTM Total LodgeLink room nights sold $27.4 mm TTM Profit $91.9 mm TTM Adjusted EBITDA 2 $500 mm PP&E Book Value

  7. Slide 7: Rental Revenue Diversity – Q2/2023

    Rental Revenue Diversity – Q2/2023 Other 8% Construction Power and 29% Energy Infrastructure 18% Australia 10% RENTAL REVENUE BY INDUSTRY REVENUE BY Canada GEOGRAPHY 54% Oil and Gas US 9% 36% Education 19% Mining 7% Government 10% 7 Source data: Q2 2023 Management, Discussion and Analysis © Black Di

  8. Slide 8: Creating a Better Way

    Creating a Better Way MODULAR SPACE SOLUTIONS - MSS • Diversified, steady, compounding growth • Predictable and improving returns • Strong free cash flow characteristics • Attractive unit economics • Long-lived rental assets • Low maintenance capital WORKFORCE SOLUTIONS LODGELINK - WFS WFS MSS LL •

  9. Slide 9: 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 23.0 MSS: 21.0 Modular Space Solutions 19.0 17.0 • Diversified rental stream through rental of 15.0 modular buildings in Canada and U.S. $mm 13.0 • Ancill

  10. Slide 10: MSS Overview

    MSS Overview MSS Rental Revenue 23.0 • 11,214 units across 22 branches in North America with attractive returns on long- 21.0 Our MSS business rents 19.0 20.0 20.4 21.0 lived assets and sells temporary 17.0 17.5 18.5 • With added scale and additional product permanent modular 16.1 16.1 offering, ret

  11. Slide 11: WFS Overview

    WFS Overview WFS Rental Revenue • Geographic Diversification 16.0 • U.S. 14.0 • Eastern Canada 14.0 14.1 13.0 13.3 • Continued growth in Australia 12.0 • Industry Diversification Our WFS business 11.2 10.9 10.0 10.7 10.8 • Disaster Relief provides remote $mm 8.0 8.6 • Social Housing Initiatives 7.5

  12. Slide 12: LodgeLink Gaining Market Traction

    LodgeLink Gaining Market Traction LodgeLink is a software Multi-sided B2B Platform focused on crew travel solution that supports • Efficiently connect the supply/demand of room and accommodation bookings for companies businesses with end-to- employing field crews end crew travel • Custom-built platf

  13. Slide 13: LodgeLink – Key Performance Indicators

    LodgeLink – Key Performance Indicators • Product market fit has been proven • Strong momentum into 2023 with strong booking volumes experienced over first three months of the year • Over 1 mm room nights sold to date (June 30, 2023) • Q2/23 LodgeLink room nights sold grew 49% to 101,746 from 68,412

  14. Slide 14: Significant Asset Coverage Against Debt

    Significant Asset Coverage Against Debt • Q2/2023 Long-Term Debt of $219.2 mm and Net Debt1 of $204.1 mm remains well below tangible asset coverage on a net book value and third-party appraisal basis • Asset Based Lending (“ABL”) facility termed out to fall of 2026. Average cost of debt for Q2/23 wa

  15. Slide 15: Financial Flexibility

    Financial Flexibility Leverage Ratio Net Debt/EBITDA 3.5 3 3 2.5 2 2.5 Vanguard 1.5 acquisition 1 2 0.5 Ontario based 1.5 modular rental acquisition Q/4 0 2022 BDI MSS Comparables WFS Comparables Source: CapIQ & Company Documents 1 MSS Comparables: MGRC, WSC WFS Comparables: CVEO, TH, DXT Note: Net

  16. Slide 16: Strong Free Cash Flow Generation

    Strong Free Cash Flow Generation • Asset rental model has continued to provide a strong base of Free Cashflow1, generating $17.0 mm Free Cash Flow in Q2/2023 30 25 20 $mm • Current quarterly dividend of 15 10 $0.02 per share, or $0.08 per 5 share on an annualized basis 0 • Base of diversified asset

  17. Slide 17: Growth Through Disciplined Capex

    Growth Through Disciplined Capex Organic Growth Capex • Cadence of organic growth capex in the range of $40 mm to $50 mm, net of proceeds from asset sales. • Realizing strong returns for new capital investment. • Reported consolidated Return on Assets (“ROA1”) of 16.9% in Q2/2023 Primary markets for

  18. Slide 18: Appendix

    Appendix 18 © Black Diamond Group Ltd. All Rights Reserved

  19. Slide 19: 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 19 © Black Diamond Group Ltd. All Rights Reserved

  20. Slide 20: Total Revenue, by Industry

    Total Revenue, by Industry As at Q2/23 20% 12% 10% 7% 5% 14% 32% © Black Diamond Group Ltd. All Rights Reserved

  21. Slide 21: Adjusted EBITDA Detail By Quarter

    Adjusted EBITDA1 Detail By Quarter Quarterly EBITDA Detail 30.0 26.0 25.0 22.0 22.5 21.4 19.7 18.2 17.5 20.0 17.9 17.1 13.5 13.3 17.0 15.0 16.1 11.1 9.9 14.6 14.3 11.6 9.8 12.8 13.9 13.3 12.0 $mm 10.0 12.512.6 9.7 11.0 10.0 10.3 10.4 10.0 10.7 7.8 5.0 7.0 6.1 6.2 5.5 4.5 4.3 0.0 (2.6) (2.5) (3.1) (5

  22. Slide 22: Revenue Detail by Quarter

    Revenue Detail by Quarter 120.0 Consolidated Revenue by Quarter 100.0 80.0 58.6 45.1 44.2 41.5 43.5 35.4 $mm 60.0 30.5 31.8 35.8 32.3 40.0 24.9 15.4 17.3 50.2 51.0 51.7 47.5 46.1 47.6 20.0 31.4 35.3 37.1 34.4 37.1 22.0 23.9 0.0 MSS WFS 22 © Black Diamond Group Ltd. All Rights Reserved

  23. Slide 23: Revenue Detail by Division

    Revenue Detail by Division MSS Revenue by Quarter WFS Revenue by Quarter 60.0 70.0 50.0 60.0 9.4 14.9 16.0 50.0 11.8 11.1 12.3 40.0 20.8 40.0 7.3 8.5 14.0 10.8 10.9 $mm 12.5 $mm 30.0 10.3 10.8 17.2 15.7 14.6 14.3 30.0 37.5 9.4 7.9 10.3 20.0 5.6 6.4 20.9 8.2 18.4 14.1 8.7 12.6 20.0 9.9 11.1 11.7 7.5

  24. Slide 24: Rental Utilization

    Rental Utilization MSS and WFS Rental Utilization • MSS rental fleet maintaining 90% utilization above 80% 80% • WFS improvement in utilization 70% supported by diversification of 60% assets outside of western Canada 50% 40% 30% 20% MSS U�liza�on WFS U�liza�on Consolidated U�liza�on 24 © Black Diamo

  25. Slide 25: WFS Room Count by Geography

    WFS Room Count by Geography WFS Room Count 14,000 Ca na da US Aus tra l i a 12,000 10,000 8,000 6,000 4,000 2,000 - 25 © Black Diamond Group Ltd. All Rights Reserved

  26. Slide 26: MSS – VAPS Penetration

    MSS – VAPS Penetration VAPS Revenue • VAPS as a % of rental down due to an 2 1.8 acquisition of units with little or no VAPS 1.6 contribution 1.4 1.2 $mm 1 • Expect ongoing VAPS growth as 0.8 0.6 acquisitions are integrated, with 0.4 additional products and services rolled 0.2 0 out VAPS as a % of R

  27. Slide 27: 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

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: 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

  31. Slide 31: 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 31 © Black Diamond Group Ltd. All Rights Reserved

  32. Slide 32: 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

  33. Slide 33: Non-GAAP & Supplementary Financial Measures

    Non-GAAP & Supplementary Financial Measures • Net Revenue Margin is calculated by dividing net revenue by Gross Bookings for the period. Management believes this ratio is an important supplemental measure of LodgeLink's performance and profitability and believes this ratio is frequently used by inte

  34. Slide 34: Adjusted EBITDA, Return on Assets

    Adjusted EBITDA, Return on Assets 34 © Black Diamond Group Ltd. All Rights Reserved

  35. Slide 35: Net Debt, Net Debt to TTM Adjusted Leverage EBITDA

    Net Debt, Net Debt to TTM Adjusted Leverage EBITDA 35 © Black Diamond Group Ltd. All Rights Reserved

  36. Slide 36: Free Cashflow

    Free Cashflow 36 © Black Diamond Group Ltd. All Rights Reserved

  37. Slide 37: Net Revenue, Gross Bookings and Net Revenue Margin

    Net Revenue, Gross Bookings and Net Revenue Margin 37 © Black Diamond Group Ltd. All Rights Reserved

  38. Slide 38: Enterprise Value

    Enterprise Value 38 © Black Diamond Group Ltd. All Rights Reserved

  39. Slide 39: Thank You

    THANK YOU INVESTOR RELATIONS © Black Diamond Group Ltd. All Rights Reserved investor@blackdiamondgroup.com

Black Diamond Group — Q2 2023 Earnings Presentation on 6ix