April 2019 Investor Presentation Trevor Haynes, CEO 4/15/2019 1 - - PowerPoint PPT Presentation

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April 2019 Investor Presentation Trevor Haynes, CEO 4/15/2019 1 - - PowerPoint PPT Presentation

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April 2019 Investor Presentation Trevor Haynes, CEO 4/15/2019 1 Investor Relations | investor@blackdiamondgroup.com Forward Looking Statements This presentation contains forward- looking statements. The use of the words anticipate,

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4/15/2019 1

April 2019 Investor Presentation Trevor Haynes, CEO

Investor Relations | investor@blackdiamondgroup.com

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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 unknown risks, uncertainties and

  • ther factors that may cause actual results or events to differ materially from those anticipated in such

forward-looking statements. Management believes the expectations reflected in those forward- looking statements are reasonable but cannot give any assurance these expectations will prove to be

  • correct. Additional information on risk factors that could affect Black Diamond's operations and

financial results are included in Black Diamond's annual information form for the year ended December 31, 2018 and other reports on file with the Canadian Securities Regulatory Authorities which can be accessed on SEDAR. Readers are cautioned not to place undue reliance on these forward-looking statements. Furthermore, the forward-looking statements contained in this presentation are made as at the date of this presentation and Black Diamond does not undertake any

  • bligation to update or revise any of the forward-looking statements, except as may be required by

applicable securities laws.

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Shifting the Business to Growth Mode

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Operating Leverage

  • Improving utilization
  • Pushing up rental rates
  • Higher recurring cash flow

Improve Profitability

  • Increase economies of scale through fleet

expansion in growing markets

  • Expansion of VAPS through branch network
  • Custom sales and ancillary operational

services

Disciplined CAPEX

  • Targeting 10% net fleet growth
  • ver the next several years
  • Shift capital to revenue generating

asset categories

  • Increase funds from operations

Strong Shareholder Returns

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Modular Space Solutions (MSS)

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MSS Overview

  • Nearly 6,000 units across 13 branches

in North America

  • Attractive returns on long-lived assets
  • Strong secular tailwinds in BC, Ontario,

and the US to drive long term growth

  • CAPEX spending directed towards

healthy, growing markets with high demand for MSS fleet

  • Inflection point in Alberta – beginning

to improve

Modular Space Solutions

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MSS Overview - Growing Complementary Revenue Streams

Value Added Products and Services (VAPS)

  • Steps & Landings
  • Furniture rentals, office equipment,

cleaning services

  • Wireless connectivity, maintenance

programs, utility services, disaster recovery programs

Custom Sales – Permanent Modular Construction (PMC)

  • Planning, design and innovative

solutions

  • Delivery, install and project

management

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MSS - Major Project Sales

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Project: Huston Tillotson University Austin, Texas

Custom sale of new product Completion time: 218 days 19 modules measuring 14,704 square feet Award: 1st place in 2017 MBI’s Awards of Distinction for a Permanent Healthcare Facility

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Modular Space Solutions - Rental

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Project: Winston Medical Center Louisville, MS 9,792 sq.ft. Completion time: 9 days Award: 1st place – 2015 MBI’s Award of Distinction in Relocatable Healthcare

Winston Medical Centre was severely damaged by a tornado and unable to provide medical services to local

  • residents. BOXX Modular installed a fully functional clinic in

9 days

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Shifting Capital to Maximize Returns

  • Rebalance fleet and align to market

supply/demand characteristics

  • Free up latent capital in Western

Canada by selling excess fleet assets

  • CAPEX spending directed towards

healthy, growing markets with high demand for MSS fleet

  • Diversify by geography, industry,

product, and customer base

  • Realize efficiencies and value from

scale

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Modular Space Solutions - Market Outlook

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ND

  • Strong US economic forecast
  • Tax reform promotes private sector CAPEX
  • $1 trillion infrastructure plan
  • Continued expansion in Architecture Billings Index
  • Permanent Modular Construction (PMC) market

exceeded $7 billion USD in value (2017 estimate)

  • Rapid adoption of PMC methods in the

United States

  • Strong activity levels in BC and Ontario
  • BC, Ontario expected to be engines of growth.

Alberta/Saskatchewan seeing a recovery

  • Federal government’s long-term infrastructure

plan (delivered in 2017) envisions ~$180 billion of spending over 12 years

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Workforce Solutions (WFS)

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WFS Divisions

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WA NT QLD

Large Format Camps Wellsites Australia LodgeLink

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WFS – North America Large Format Camps

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  • Received notice to proceed on $42.5 MM Coastal GasLink

(CGL) contract. BD will provide 908 beds over 27 months, with install beginning in Q2/19. The CGL pipeline will bring shale gas from producing fields to LNG Canada’s export facility in Kitimat.

  • Separate from the CGL contract, BDI also recently

announced a 304-bed rental contract in Kitimat to support initial infrastructure build out in the region. This contract has a minimum 12 month term with an option to extend.

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 500 1,000 1,500 2,000 2,500 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

Managed Rooms and Occupancy

Managed Rooms Lodging Occupancy

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Coastal GasLink Keystone Pipeline Line 3 Replacement LNG Canada TMX Pipeline Goldboro LNG

Potential Catalysts

Black Diamond Open Camps

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WFS – Operated Lodges in Canada

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Horn River Lodge

  • Near Fort Nelson, British Columbia
  • Bed Count: 425

Little Prairie Lodge

  • Location: 135 km from Fort St. John
  • Bed Count: 252

Smoky River Lodge

  • Location: Kaybob Region of Fox Creek, Alberta
  • Bed Count: 206

Sunday Creek Lodge

  • Location: Conklin, Alberta – south of Fort McMurray
  • Bed Count: 1,182 beds

Sunset Prairie Lodge

  • Location: Between Fort St John and Fort Nelson BC
  • Bed Count: 652
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Workforce Solutions - Energy Services

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Value Creation Innovation

  • Increasing rig counts in US regions where we
  • perate
  • Relocation of certain US wellsite units into Permian

Basin completed Q2 2017

  • Rates and activity levels strong in the US. Canada

remains over-supplied

Wellsite Accommodations: Texas – Permian Basin North Dakota - Bakken Colorado – DJ & Niobrara Surface Rental Equipment & Accommodations: British Columbia Alberta Saskatchewan

0% 10% 20% 30% 40% 50% 60% 70% 80% 100 200 300 400 500 600 700 800 2014 2015 2016 2017 2018

Wellsite Units and Utilization

Units Utilization

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Workforce Solutions - Australia

  • Awarded nearly $8 million CAD in new remote workforce contracts in 2018. Momentum

continuing into 2019 with improving utilization and increased demand for capital.

  • Increased opportunities and utilization in education and infrastructure spending
  • Iron ore and met coal pricing stabilization
  • Rapid Deployment - differentiated product offering

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Value Creation Innovation

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LodgeLink Innovation in the workforce accommodation industry

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LodgeLink aggregates available remote accommodations on a single easy-to-use online marketplace

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LodgeLink

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More than 430 Active Properties Listed Over 53,000 Rooms

  • f Capacity

Nearly 250 Distinct Corporate Customers

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LodgeLink Gaining Market Traction

20 100 200 300 400 500 600

Total Customers and Unique Company Accounts

Customer Accounts Unique Companies 50 100 150 200 250 300 350 400 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

Properties Listed on LodgeLink

53,000 Rooms

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21 176 153 105 113 87 50 70 90 110 130 150 170 190 2014 2015 2016 2017 2018

Net Debt ($millions)

Net Debt 1 Reduction

Creating Financial Flexibility

21 14 11 12 10 10 1 1.5 2 2.5 3 3.5 4 2 4 6 8 10 12 14 16 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

Debt to Adjusted EBITDA1 Funds From Operating Activities ($millions)

FFO 1 and Leverage Ratio

Funds From Operations Debt to Adjusted EBITDA

  • 1. See “Non-GAAP Measures” at the end of this document.
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Growth Through Disciplined Capex

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  • 2019 capex budget of ~$35 MM (gross) funded

through operating cash flow. Net capex of $20 to $25 MM after used asset sales

  • MSS: $25 to $30 MM growth capital
  • Targeting 10% net fleet growth
  • New capital with ~20% ROI
  • Growth areas include BC, Ontario, and

Southern US

  • WFS: $5 to $10 MM growth capital
  • Fully utilized in some asset categories
  • US small format accommodations
  • Australian accommodations
  • Australian space rentals
  • Introducing new products to compliment US

accommodations

  • New capital can be deployed at ~25% ROI

and some with > 1 year term contracts

  • Modest capital for incremental LodgeLink

software development

Primary markets for Growth CAPEX

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Diversify Grow Improve Returns

Steps to Creating Value and a Better Way

4/15/2019

  • Expand MSS platform throughout our North American

footprint

  • Investment in US and AUS business
  • LodgeLink digital market expanded into US
  • MSS expected to see 10% annual fleet growth from
  • rganic capital investment
  • Continue to grow and develop LodgeLink platform
  • Maintain existing hurdle rates for investment while

adding capital light products and services

  • Sell or repurpose underutilized WFS assets
  • Tap into operating leverage throughout Canadian

WFS asset base

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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, acquisition costs, non-controlling interests, share of gains or losses of an associate, write-down of property and equipment, impairment, restructuring costs, and gains or losses on the sale of non-fleet assets in the normal course of business.

  • Funds from Operations is calculated as the cash flow from operating activities excluding

the changes in non-cash working capital. Management believes that Funds from Operations is a useful measure as it provides an indication of the funds generated by the

  • perations before working capital adjustments. Changes in non-cash working capital

items have been excluded as such changes are financed using the operating line of Black Diamond’s credit facilities.

  • Net Debt is calculated as long-term debt excluding deferred financing costs minus cash.

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THANK YOU

Investor Relations | investor@blackdiamondgroup.com