Black Diamond Group Limited

Welcome to Black Diamond's second quarter results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Mr. Sean McPherson, Investor Relations Specialist. Go ahead.

Good morning, and thank you for joining Black Diamond Group's second quarter 2024 results conference call. On the line with us today is Chief Executive Officer Trevor Haynes and Chief Financial Officer Toby LaVrie, as well as Chief Operating Officer of Modular Space Solutions, Ted Redmond, Chief Operating Officer of Workforce Solutions, Mike Ridley, and Chief Operating Officer of LaunchLink, Kevin Love. Please be reminded that our discussions today may include forward-looking statements regarding Black Diamond's future results and that such statements are subject to a number of risks and uncertainties. Actual financial and operational results may differ materially from these forward-looking expectations. Management may also make reference to various non-GAAP financial measures in today's calls, such as adjusted EBITDA or net debt. For more information on these terms and others, please review the sections of Black Diamond's second quarter 2024 Management Discussion and Analysis entitled Forward-Looking Statements, Risks and Uncertainties, and Non-Gap Financial Measures. This quarter's MDMA, financial statements, and press release may be found on the company's website at www.blackdiamondgroup.com and also on the CDAR Plus website at www.cdarplus.ca. All dollar amounts discussed in today's call are expressed in Canadian dollars, unless noted otherwise, and may be rounded. I will now turn the call over to Trevor Haynes to review this quarter's operational highlights.

Thank you, Sean. Good morning, and thank you all for joining. I will provide a high-level overview of operating results and recent records achieved by the company, and then pass the call over to Toby DeVry to provide additional financial highlights and commentary. Results for the quarter were strong with revenues of $95.5 million and adjusted EBITDA of $27.9 million, up 5% and 24% respectively from the comparative quarter. Net profit of $7.5 million and earning per share of $0.12 are higher by 63% and 50% respectively compared to Q2's 0.23%. Management considers rental fleet operations and rental revenue to be Black Diamond's core business. The company generated a combined $35.3 million of rental revenue in the quarter, essentially flat from prior year. Within the business unit, MSS saw rental revenue grow by 6% from the comparative quarter to $22.2 million, which is offset by a 7% decline in the WFS rental revenue to $13.1 million, due to lower utilization following the completion of rental terms with two large pipeline construction projects late last year. Nonetheless, consolidated utilization at the end of the quarter was a solid 75.5%, with MSS at 80.7% and WFS at 62.4%. compared to 79.3%, 83.4%, and 69.8% respectively in the comparative quarter. Average monthly rental rates increased 9% in MSS from the comparative quarter. WFS average rates continue to rise as well. Overall management believes that the company's utilization and average rental rate trends on a year-over-year and multi-year basis are very healthy, in the context of current and long-term industry averages. Consolidated contracted future rental revenue, that is the total amount of firm contracted rental revenue at the end of the quarter, grew by 16% to $139.6 million compared to $120.1 million at the end of 2023. We believe the MSS contracted future rental revenue increase of 26% to $107.7 million from $85.4 million to be a highlight, as is the average rental duration increase to 58.7 months from 51.1 months. These are strong indicators of forward cash flow generation, stability, and visibility extending through the balance of this year and well into 2025. Year-to-date gross capital expenditures of $64.7 million, net of $6.1 million of maintenance capex, compares to $30.8 and $4.3 million in the first half of 2023. Fleet sales of $13.1 million increased from $8.9 million. Net capex, excluding maintenance capex, is therefore $51.6 million year-to-date. This is essentially growth capex, including the acquisition of a third-party rental fleet for $20.5 million effective June 28, adding 329 space rental units to our MSS fleet in the Western Canadian region. The MSS fleet has increased by 759 rental units in the first half of 2024 to 12,098 total units, The WFS lead count has reduced 1.3% to 81 units in the first half to 5,067 units. Capital commitments at the end of the quarter were $32.3 million, which is 36% higher than at the end of the comparative quarter. Substantially, all of this incremental traffic is for lead growth with customer contracts already in place. The key takeaway here is is that rental fleet growth is elevated on a year-over-year basis. Given it is substantially backed by rental contracts in place, management expects not only fleet growth, but also continued rental revenue growth in the second half of 2024 and beyond. The strong performance and growth of our modular rental platforms has contributed to a 300 basis point increase in our most important KPI as asset managers, which is the return on assets ROA metric. They came in at 19.9% in the quarter. Turning now to our non-ventical business lines, Logilink, our workforce travel platform, delivered record gross booking of $24.4 million and record net revenue of $2.9 million, up 25% and 26% respectively from the comparative quarter. Total room nights sold in the quarter rose 28% from Q2 of 23 to a record 129,737, and net revenue margins rose 10 basis points to 11.9% from the comparative quarter. The platform has over 17,000 active properties and 1.6 million rooms of capacity. Management believes lodge lengths is well positioned to generate strong year-over-year growth rates as it continues to develop an expanding user base in North America and Australia. MSS new and new sales volumes of $13.2 million increased 103%, or $6.7 million from a soft Q1-24, as idiosyncratic project permit timing issues have been resolved for the most part. However, this compares to $14.3 million in the comparative quarter, or 8% lower. This decline is primarily due to the lower existing fleet sales in this quarter to the comparative. Sales volumes for the second half of the year are expected to remain strong on a sequential basis. Non-rental revenue for MSS increased 31% from the comparative quarter to $16.1 million, which reflects the volume of field-level activity for transportation and installation of new buildings and mobilization of existing buildings. MSS staff's revenue grew 8% from the comparative quarter to $1.3 million. WFS sales revenue was elevated at $7.8 million, or 212%, higher than the comparative quarter due to opportunistic sales of unutilized large-format camp assets in Canada Non-rental revenue was $14 million, down 24% from the $18.4 million in Q2-23. Lodge services revenue was up 7% to $9.1 million when compared to the prior quarter. Sales and non-rental revenues contributed to a 49% increase from the comparative quarter in EBITDA for WFS to $17.3 million. The core rental platform is performing well in terms of utilization, average rental rate, contracted rental revenue outstanding, average rental duration, and ancillary revenue drivers, all of which are contributing to stable, recurring, and growing tax flows and strong return on assets. Elevated capex and the corresponding growth of rental units on the platform, the majority of which in an unspecified manner, will deliver continued growth into 2025 and beyond. Wadron continues to scale nicely, achieving new record volumes of revenues, and the company is well capitalized to support continued growth. For more color on current liquidity and other financial data points, I will now pass the call to Toby.