Black Diamond Group Limited · TSX:BDI
Black Diamond — Q3 2021 Earnings Presentation
35 slides from Black Diamond's earnings presentation, November 2021
Slide 1: Investor Update
INVESTOR UPDATE INVESTOR RELATIONS November 2021 © 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, improving returns MSS • • Strong free cash flow characteristics Long-lived rental assets Modular Space Solutions • L
Slide 5: Operating Overview
Operating Overview Modular Space Solutions (MSS) Fleet 8,801 Units 1 WFS Rental Fleet 3,925 Units1 Head Office MSS Consolidated Rentable Square Feet WFS ~6.8 mm 188,429 TTM LodgeLink Bookings 2 $57.6 mm TTM Adjusted EBITDA 1,2,3 $405 mm PP&E Book Value 1 1. Source data: Q3 2021 Financial Statements,
Slide 6: Revenue Diversity
Revenue Diversity Revenue by Industry Construction Education Government Mining Oil and Gas Other Power and Energy Infrastructure 0% 5% 10% 15% 20% 25% 30% Q3-21 Q3-20 Revenue by Country Australia US Canada 6 0% 10% 20% 30% 40% 50% 60% 70% © Black Diamond Group Ltd. All Rights Reserved Q3-21 Q3-20
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 17.0 MSS: Modular Space Solutions 15.0 • Diversified Rental 13.0 • Custom, Major Project or Used 11.0 $mm Sales 9.0 • Ancillary, Value Added Products & Se
Slide 8: MSS Overview
MSS Overview Modular Space Solutions • 8,801 units across 19 branches in North America with attractive returns on long-lived assets • Targeting average annual net fleet growth of 10%. With added scale and additional product offering, return metrics are improving. Rental revenue growth expected to ou
Slide 9: MSS Overview – Revenue Detail
MSS Overview – Revenue Detail MSS Rental Revenue Modular Space Solutions 17.0 15.0 15.3 14.6 13.0 13.9 • Rental revenue up 55% Y/Y $mm 11.0 11.3 • Strengthening rental revenue 9.0 8.9 9.1 9.9 8.8 8.7 driven by continued capital 7.0 investment, higher rates, 5.0 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1
Slide 10: WFS Overview
WFS Overview Workforce Solutions • Includes Camps, Lodging, Energy & Industrial Services, Australia and LodgeLink • Geographic Diversification • U.S. • Eastern Canada • Continued growth in Australia • Industry Diversification • Disaster Relief • Homeless Initiatives • Mining • Green Energy • 2021 WF
Slide 11: WFS Overview – Revenue Detail
WFS Overview – Revenue Detail Workforce Solutions WFS Rental Revenue • Contracted rental revenue of $26.3 12.0 mm at the end of Q3 21, up 72% from 10.0 10.7 the comparative quarter 8.0 8.6 8.9 8.2 8.6 7.5 $mm 6.0 6.7 • Continuing growth in eastern Canada, 6.0 5.3 4.0 providing customer and geographi
Slide 12: Significant Asset Coverage Against Debt
Significant Asset Coverage Against Debt • Q3/2021 net debt1 of $160 mm remains well below hard asset coverage on a net book value and third-party appraisal basis • In conjunction with Vanguard deal, expanded existing credit facility to $300 million • Orderly liquidation value of eligible rental flee
Slide 13: Financial Flexibility
Financial Flexibility Leverage Ratio Net Debt/EBITDA (TTM as at last reported Quarter ) 4 5 4.5 3.5 4 3 3.5 3 2.5 2.5 2 2 1.5 1.5 1 1 0.5 0 0.5 Q1-20 Q2-20 Q3-20 Q4-20 Pro Q1-21 Pro Q2-21 Pro Q3-21 Pro Forma Forma Forma Forma Vanguard* Vanguard* Vanguard* Vanguard* 0 Debt to Adjusted EBITDA BDI Pro
Slide 14: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation Free Cash Flow • Asset rental model has continued 45 to provide a strong base of Free Cash Flow, generating over $17 40 million in Q3/2021 35 30 • The company has reinstated a 25 quarterly dividend of $0.0125 per $mm share, or $0.05 per share on an 20 annualized basi
Slide 15: Growth Through Disciplined Capex
Growth Through Disciplined Capex 2021 Capital Program • Net capex of $25 to $30 mm after used asset sales • Realizing return on assets for new capital (defined as annualized rental revenue divided into the cost of a new asset) of 18% or higher • MSS: ~$25 mm (gross) growth capital to Primary markets
Slide 16: Digital B2B Platform for Workforce Travel
LodgeLink is a multi-sided marketplace for the $320 billion of Digital B2B Platform for Workforce Travel crew travel and related goods and services consumed by crews each year.
Slide 17: LodgeLink Gaining Market Traction
LodgeLink Gaining Market Traction Total Unique Customer Accounts Multi-sided B2B Platform focused on crew travel 700 605 • Efficiently connect the supply/demand of room and accommodation bookings for 600 545 companies employing field crews 500 421 • Custom-built platform to remove inefficiency at ev
Slide 18: LodgeLink - Room Bookings
LodgeLink - Room Bookings Gross Bookings ($mm) 12 10 8 • Continued growth in unique customer accounts 6 4 2 • Growing share of travel wallet within existing customer base 0 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Total Gross Bookings ($mm) • Record booking volumes and gross revenue ach
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 • Lodging 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 $mmm 11.0 9.0 7.0 5.0 Average Rental Rate Unit Count Utilization $700 90% 9,000 $650 8,000 80% $600 7,000 70% $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) 18% revenue continuing to grow 16% 14% • VAPS as a % of revenue down in Q3/21 12% 10% due to addition of Vanguard rental 8% revenue which currently has 6% 4% comparatively lower penetration 2% 0% Q3-19 Q3-2
Slide 24: Rental Utilization
Rental Utilization • Utilization showing further MSS and WFS Rental Utilization improvement after pandemic 90% low in Q2 2020 80% • MSS rental fleet maintaining 70% utilization above 70% 60% 50% • WFS improvement in rental 40% utilization supported by diversification of assets outside 30% of western
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 - Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 WFS Room Count • WFS camps ren
Slide 26: Adjusted EBITDA Detail By Quarter
Adjusted EBITDA1 Detail By Quarter Quarterly EBITDA Detail 30.0 25.0 19.7 20.0 15.0 13.5 13.3 11.1 10.5 10.6 9.9 9.9 9.8 10.0 5.0 0.0 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 (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 60 31.8 30.5 24.9 40 23.7 25.9 17.3 28.6 15.4 50.2 20 37.1 31.4 35.2 22.3 21.4 22.0 23.9 16.5 0 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 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 Example of an existing corporate customer: Room Nights: 5,000 Administrative Assumptions: Avg Number of Rooms Per Transaction: 3 Cost to issue one invoice: $15 Total Transactions: 1,667 Cost to issue one purchase order: $150 Room Rate: $100/night Traditional Use Average
Slide 34: Non-GAAP Measures
Non-GAAP Measures • Adjusted EBITDA 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, amortization, accretion, foreign exchange, stock-based compensation,
Slide 35: Thank You
THANK YOU INVESTOR RELATIONS © Black Diamond Group Ltd. All Rights Reserved investor@blackdiamondgroup.com