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Black Diamond Group Limited Reports Results for the Fourth Quarter and Year Ended December 31, 2012

CALGARY, ALBERTA--(Marketwire - March 12, 2013) - Black Diamond Group Limited (TSX:BDI) ("Black Diamond" or the "Company") is pleased to announce its financial and operational results for the three months and year ended December 31, 2012.

HIGHLIGHTS - FOURTH QUARTER 2012

Black Diamond's strategic growth and diversification over the past several years has resulted in revenue generation in the fourth quarter 2012 of $68.4 million with EBITDA of $27.9 million for the period, compared to revenue of $66.2 million and EBITDA of $25.5 million for the same period in 2011.

Rental revenue generated was $32.6 million, 28% higher than the prior year's comparable period due to the growth of the modular structures and oilfield service rental equipment. Non-rental revenue was $26.7 million and lodging revenue was $9.1 million, both off slightly from the same period in the prior year as a result of decreased capacity at Sunday Creek Lodge during the expansion activities completed during the quarter.

EBITDA margin of 41% for the quarter was up from 39% generated in the same period in the prior year. This is a result of a higher proportion of revenue coming from rental activity. Highlights from each of the operating divisions for the fourth quarter are as follows:

Camps Division:

The Camps division ended the quarter with 2,825 units in the rental fleet which averaged 91% utilization for the period. The division generated $28.4 million in revenue compared to $22.8 million in the same quarter of 2011 primarily due to a 44% increase in rental revenue. The 44% increase in rental revenue for the quarter is predominantly derived from the 41% increase in the fleet size, consisting of 819 units added since December 31, 2011. There was also an increase in average rental rates.

EBITDA generated for the quarter was $19.9 million or 58% higher than the same period in the prior year.

Logistics Division:

The Logistics division ended the quarter with a 2,755 bed count. The division generated $15.3 million in revenue compared to $14.8 million in the same quarter of 2011 primarily as a result of increases in non-rental revenue. Non-rental revenue increased by 78% from the same quarter in 2011, which reflects the increase in operational activity associated with the deployment of several substantial projects during the quarter.

Lodging revenue decreased by 19% in the quarter compared to 2011 due to the expansion at Sunday Creek Lodge, which temporarily decreased the number of beds available for occupancy throughout the quarter.

The EBITDA margin decreased to 24% in the quarter from 42% in the same period in the prior year as a direct result of non-rental revenues making up a larger proportion of total revenue. Non-rental revenue produces lower margins than lodging revenue.

BOXX Modular Division:

The BOXX Modular division ended the quarter with 3,109 units in the rental fleet which averaged 84% utilization. The division generated $15.8 million in revenue, a minimal increase from $15.5 million in the same quarter of 2011. Non-rental revenue decreased slightly as a result of fewer sales of manufactured units. This was offset by a 45% increase in rental revenue to $7.4 million, up from $5.1 million in the same period in the prior year. The increase in rental revenue as a proportion of total revenue had a direct positive effect on the EBITDA margin. EBITDA increased from $4.6 million in the fourth quarter of 2011 to $6.2 million in 2012.

Energy Services Division:

The Energy Services division ended the quarter with 2,306 units in the surface rental fleet which averaged 41% utilization for the period, and 270 units in the drilling accommodations fleet which averaged 64% utilization for the period. The division generated $8.9 million in revenue compared to $13.1 million in the same quarter of 2011. Rental revenue decreased by 18% due to some equipment being reserved for use at customers' sites and unavailable for rent and an overall decline in drilling activity over the comparative period. Non-rental revenue decreased in the quarter due to a substantial decrease in sales over the same period in the prior year.

HIGHLIGHTS- YEAR ENDED DECEMBER 31, 2012

Revenue levels for the year ended December 31, 2012 increased by 9% to $264.3 million compared to the year ended December 31, 2011. Rental revenue was 33% higher at $110.5 million compared to 2011, while Non-rental revenue was 7% lower at $101.5 million, and lodging revenue was 7% higher at $52.3 million.

One of the primary drivers of Black Diamond's business continues to be the rental revenue from fleet units. The significant investment in fleet and operated facilities has resulted in a 33% or $27.1 million increase in rental revenue in 2012 compared to 2011 and will translate into strengthening results in 2013. The fleet of Camps units grew by 41% or 819 units between December 31, 2011 and December 31, 2012. Over the same period, the BOXX Modular fleet grew by 16% or 420 units, Energy Services accommodations fleet grew by 22% or 48 units, and the number of surface rental pieces of equipment increased 8 units, from 2,298 units to 2,306 units.

The utilization of these fleet assets remained strong throughout 2012 averaging 93% for Camps equipment compared with 93% for 2011. BOXX Modular fleet utilization increased slightly to 80% in 2012 as compared to 75% in 2011. Within Energy Services, the drilling accommodations and surface rental equipment utilization rates were 67% and 44% respectively in 2012, compared to 45% and 46% in 2011.

The Company's business activities continue to be concentrated on the resource sector with approximately 82% of total revenue generated by oil and gas related companies in western Canada, including oilsands projects representing 38% of total revenue. Revenue generated from non-oil and gas sectors include 8% relating to mining and metal extraction and the balance of 10% generated from business not directly related to the resource sector.

Net income for 2012 was $47.4 million compared to $41.0 million for 2011.

Camps Division:

This division generated $89.1 million in revenue for the year as compared to $76.2 million in 2011. Rental revenue was $62.9 million for the year, a 38% increase from $45.6 million in 2011.

The decrease in non-rental revenue in 2012 compared with 2011 from $30.7 million to $26.2 million was due to a decrease in used fleet sales in 2012.

The increase in EBITDA margin from 62% in 2011 to 71% in 2012 was a direct result of the relative increase of rental revenue versus other revenue streams compared to 2011.

Logistics Division:

Revenue for this division increased from $67.0 million in 2011 to $80.9 million in 2012 as a result of increases in non-rental revenue. Non-rental revenue in the year increased 59% over 2011 with the deployment of several substantial projects in the year.

Lodging revenue increased by 7% in 2012 from 2011 due to higher bed counts at operated camps.

EBITDA margin decreased to 30% in 2012 compared to 33% in 2011as a direct result of non-rental revenues making up a larger proportion of total revenue.

BOXX Modular Division:

Revenue generated for the BOXX Modular division was $56.5 million compared to $61.6 million in the prior year as a result of a 26% decrease in non-rental activity which was a result of lower manufactured sales in 2012 as compared to 2011. This was offset by a 30% increase in rental revenue in the year to $25.6 million, up from $19.7 million in 2011, with a 16%, or 420 unit increase in the rental fleet year over year. The increase in rental revenue as a percentage of the total revenue had a direct positive effect on the EBITDA margin.

Energy Services Division:

Revenue for this division increased minimally in 2012 to $37.8 million compared with $37.1 million in 2011. Rental revenue increased by 22% to $21.9 million in 2012 primarily due to fleet additions. The drilling accommodations fleet increased by 22%. This total includes drill camps as well as a complement of wellsite units, free standing sleepers and support units. Non-rental revenue decreased in 2012 to $15.9 million due to a substantial decrease in used fleet sales over 2011.

DIVIDENDS

The Company paid dividends of $0.055 per share per month in January through April 2012 and paid dividends of $0.060 per share per month in May through December 2012 resulting in a payout ratio for 2012 of 27% compared to 22% for 2011. The Board of Directors of Black Diamond is confident that the cash generated from operations will be sufficient to meet the dividend obligations in the foreseeable future.

OUTLOOK

Management is pleased with the Company's year end results and anticipates that, despite general weakness in drilling related activity in western Canada, the results for the first quarter of 2013 will be significantly stronger than the comparative period in 2012 for a number of reasons:

  • the significant investment in fleet and operated facilities is expected to translate into strengthening results in 2013;
  • the focus on remote workforce accommodation and long-term contracts is expected to mitigate and offset any negative impact of general weakness in drilling related activity in western Canada;
  • the Company recognized initial revenues from its Australian acquisitions starting January 1, 2013; and
  • Sunday Creek Lodge came fully back on-stream in January 2013 after a major retrofit and capacity expansion completed in Q4 2012.

Approximately $40 million of the Company's $90 million 2013 capital expenditure budget has been committed to date. This capital expenditure includes the initial acquisition of fleet assets from Nomad Building Solutions Limited, the acquisition of 116 additional Nomad fleet units and acquisition of the remaining 10% of the modular rental business of Australian Portable Buildings Pty. Ltd. ("APB") not already indirectly owned by the Company. The capital committed to date does not include the initial acquisition of 90% of the modular rental business of APB for $42.59 million.

In summary, the Company's operations continue to be extremely healthy and management fully anticipates robust results as the Company moves forward through 2013. The strength of the Company's business has led the Board of Directors to approve a 17% increase in the Company's monthly dividend from $0.06 to $0.07 per month, which will take effect in March 2013, for payment to shareholders in April 2013.

SUMMARY FINANCIAL STATEMENTS

The following is a summary of the Company's Consolidated Statement of Financial Position as at December 31, 2012 and 2011, and the Company's Consolidated Statements of Net Income and Cash Flows for the years ended December 31, 2012 and 2011. These summary statements should be read in conjunction with the Company's consolidated financial statements including the accompanying notes for years ended December 31, 2012 and 2011 as filed on SEDAR.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at December 31,
(Expressed in thousands) 2012 2011
As at
$ $
ASSETS
Current
Cash and cash equivalents 2,697 22,990
Trade and accrued receivables 76,578 47,641
Due from related parties 121 1,313
Prepaid expenses and other current assets 7,477 8,066
86,873 80,010
Non-Current
Long term receivables 2,708 -
Property and equipment 423,281 301,073
Intangible assets 9,757 10,690
Goodwill 34,577 34,657
557,196 426,430
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 39,486 24,788
Due to related parties 1,174 1,415
Dividends payable 2,472 1,771
Income taxes payable 8,524 44
51,656 28,018
Non-Current
Long-term debt 96,359 86,130
Risk management liability 1,324 2,074
Asset retirement obligations 1,955 1,907
Deferred income taxes 44,821 38,892
196,115 157,021
Shareholders' equity
Share capital 309,140 240,350
Contributed surplus 4,431 4,778
Non-controlling interest 5,274 1,359
Accumulated other comprehensive loss (3,285 ) (2,889 )
Retained earnings 45,521 25,811
361,081 269,409
557,196 426,430
CONSOLIDATED STATEMENT OF NET INCOME
for the years ended December 31,
(Expressed in thousands, except per share amounts)
2012 2011
$ $
Revenue 264,274 241,808
Direct costs 118,386 119,485
Gross Profit 145,888 122,323
Expenses
Administrative expenses 37,861 30,102
Depreciation of property and equipment 34,665 27,285
Amortization of intangibles 879 1,415
73,405 58,802
Operating profit 72,483 63,521
Finance costs 5,747 4,884
Income before income taxes 66,736 58,637
Income tax
Current 8,520 60
Deferred 7,061 13,996
15,581 14,056
Net income 51,155 44,581
Net income attributable to non-controlling interest 3,761 3,602
Net income attributable to Black Diamond Group Limited 47,394 40,979
Net income per share
Basic 1.21 1.15
Diluted 1.18 1.12
CONSOLIDATED STATEMENT OF CASH FLOWS
for the years ended December 31,
(Expressed in thousands)
Year ended December 31,
2012 2011
$ $
Operating activities
Net Income attributable to Black Diamond Group Limited 47,394 40,979
Add (deduct) non-cash items:
Depreciation of property and equipment 34,665 27,285
Amortization of intangible assets 879 1,415
Net income attributable to non-controlling interest 3,761 3,602
Unrealized foreign exchange loss 36 7
Finance costs 5,747 4,884
Deferred income taxes 7,061 13,996
Share-based compensation expense 3,321 1,843
102,864 94,011
Book value of used fleet sales in operating activities 6,817 14,171
Change in long-term receivables (2,708 ) -
Change in non-cash working capital related to operating activities (3,458 ) (39,378 )
Net cash from operating activities 103,515 68,804
Investing activities
Purchase of property and equipment (163,628 ) (94,656 )
Increase in other non-current asset -
Change in non-cash working capital related to investing activities (404 ) 9,506
Net cash used in investing activities (164,032 ) (85,150 )
Financing activities
Proceeds from long-term debt 10,000 62,000
Repayment of long-term debt - (41,000 )
Costs of long-term debt issuance and refinancing (97 ) (949 )
Repayment of finance lease - (561 )
Interest in the year (5,470 ) (4,765 )
Net proceeds from issuance of shares 57,465 48,772
Dividend payments (26,983 ) (20,138 )
Distribution to non-controlling interest (1,218 ) (1,451 )
Purchase of shares in trust (993 ) (220 )
Sale of shares in trust 206 206
Bank indebtedness - (6,776 )
Share options exercised 7,587 1,655
Change in non-cash working capital related to financing activities (241 ) 2,573
Net cash from financing activities 40,256 39,346
Increase/ (decrease) in cash and cash equivalents (20,261 ) 23,000
Cash and cash equivalents, beginning of year 22,990 -
Effect of foreign currency rate changes on cash and cash equivalents (32 ) (10 )
Cash and cash equivalents, end of year 2,697 22,990

Additional Information

A copy of the Company's audited consolidated financial statements for the years ended December 31, 2012 and 2011 along with the 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).

Conference Call

Black Diamond will host a conference call for analysts, investors and interested parties to discuss its financial and operational results at 4:30 p.m. MST on March 12, 2013. Trevor Haynes, President and Chief Executive Officer, and Michael Burnyeat, Executive Vice President and Chief Financial Officer, will be in attendance. The call can be accessed by calling 416-340-2217 or toll free 1-866-696-5910 prior to the scheduled start time. Digital playback of the conference call will be available on the Company's website.

About Black Diamond

Founded in 2003, Black Diamond Group Limited is one of the fastest growing remote lodging, modular building and energy services companies worldwide. With its corporate head office located in Calgary, Alberta, Black Diamond provides world-class services to a full spectrum of industries including oil and gas, mining, power, construction, engineering, military, government and education.

Through its direct and indirect wholly-owned subsidiaries and its approximate 50% equity participation in certain aboriginal limited partnerships, Black Diamond operates four complementary business units in seventeen strategic locations across Canada, the United States and Australia.

Black Diamond Structures rents and sells remote workforce housing and modular workspace solutions and provides associated services; Black Diamond Logistics provides turnkey lodging services, remote facility management and supply chain solutions; Black Diamond Energy Services rents and sells a complement of oilfield equipment and services and Black Diamond International rents and sells remote workforce housing and modular workspace solutions and provides associated services outside of North America.

Reader Advisory

Certain information in this news release contains forward-looking statements including management's assessment of future plans and operations of Black Diamond and statements relating to future operational and financial results and dividend levels. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Black Diamond's control including, without limitation, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of exchange rates, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the forgoing list of factors is not exhaustive. Additional information on these and other factors that could affect Black Diamond's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Black Diamond's website (www.blackdiamondlimited.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Black Diamond does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

In this news release, the following terms have been referenced: EBITDA (earnings before interest, taxation, depreciation and amortization) and payout ratio. Readers are cautioned that these measures are not defined under Canadian Generally Accepted accounting Principles ("GAPP"). Readers are cautioned that these non-GAAP measures are not alternatives to measures under GAAP and should not, on their own, be construed as an indicator of the Company's performance or cash flows, a measure of liquidity or as a measure of actual return on the common shares of the Company. These Non-GAAP measures should only be used in conjunction with the consolidated financial statements of the Company. A reconciliation between these measures and measures defined under GAAP is included in management's discussion and analysis for the three months and year ended December 31, 2011 filed on SEDAR.

FOR FURTHER INFORMATION PLEASE CONTACT:

Black Diamond Group Limited
Trevor Haynes
President and Chief Executive Officer
(403) 206-4737
(403) 264-9281 (FAX)

Black Diamond Group Limited
Michael Burnyeat
Executive Vice President and Chief Financial Officer
(403) 206-4740
(403) 264-9281 (FAX)
www.blackdiamondlimited.com