Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Black Diamond Group Ltd (BDIMF, Financial) reported strong financial results with revenues of $95.5 million and adjusted EBITDA of $27.9 million, marking increases of 5% and 24% respectively from the previous year.
- Net profit increased by 63% to $7.5 million, and earnings per share rose by 50% to $0.12 compared to Q2 2023.
- The company's Modular Space Solutions (MSS) segment saw rental revenue growth of 6% to $22.2 million, with average monthly rental rates increasing by 9%.
- Consolidated contracted future rental revenue grew by 16% to $139.6 million, indicating strong forward cash flow generation and stability.
- LodgeLink, the workforce travel platform, achieved record gross bookings of $24.4 million and net revenue of $2.9 million, up 25% and 26% respectively from the previous year.
Negative Points
- Workforce Solutions (WFS) rental revenue declined by 7% to $13.1 million due to lower utilization following the completion of large pipeline construction projects.
- The WFS fleet count reduced by 1.3% or 81 units in the first half of 2024.
- Non-rental revenue for WFS decreased by 24% from $18.4 million in Q2 2023 to $14 million.
- The average cost of debt increased to 6.27% from 5.56% in Q2 2023, reflecting higher borrowing costs.
- Administrative costs rose by 18% to $19.9 million, with ERP costs contributing to the increase.
Q & A Highlights
Q: In terms of MSS utilization, should we expect it to remain in the 80% to 81% range, or is there potential to increase it further?
A: Trevor Haynes, CEO: We aim for a utilization range of 75% to 85% for our MSS fleets, balancing asset availability with demand. Edward Redmond, COO of Modular Space Solutions, added that they are comfortable with the current range and only invest in CapEx when necessary to meet demand.
Q: Regarding the newly acquired assets, aside from the attractive unit price and existing contracts, what makes this market particularly attractive?
A: Trevor Haynes, CEO: We focus on CapEx with customer contracts in place, ensuring returns on investment. Edward Redmond, COO of Modular Space Solutions, mentioned strategic growth in market share and penetration into new end markets as key opportunities.
Q: The 329 units acquired this quarter, did they come with contracts and revenue?
A: Trevor Haynes, CEO: Most units were already generating revenue on a project, though the project is in its late cycle. Edward Redmond, COO of Modular Space Solutions, noted strong demand for these asset classes in Western Canada.
Q: Is it reasonable to expect rental revenue growth at MSS to pick up in the second half of the year?
A: Trevor Haynes, CEO: We expect growth due to new education assets being placed during summer, with revenue increasing as the school year begins. Edward Redmond, COO of Modular Space Solutions, confirmed continued growth in rental revenue.
Q: Can we expect the pace of growth in Workforce Solutions to accelerate in the back half of the year?
A: Trevor Haynes, CEO: We anticipate growth as we deploy more assets and see higher rates. Michael Ridley, COO of Workforce Solutions, highlighted strong demand in small format business and opportunities in various sectors.
Q: Workforce Solutions segment margins were high this quarter. Will they normalize in Q3 and Q4?
A: Toby LaBrie, CFO: Margins were unusually high due to low project costs in Q2. We expect them to return to normal levels in future quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
