Black Diamond Group Limited

Thank you for standing by. This is the conference operator. Welcome to the Black Diamond Group third quarter 2025 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 question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Emma Covenden, Vice President, Investor and Stakeholder Relations. Please go ahead.

Good morning, and welcome to Black Diamond Group's third quarter 2025 results conference call. With me this morning is Chief Executive Officer Trevor Haines and Chief Financial Officer Toby Labrie, as well as Chief Operating Officer of Modular Space Solutions Ted Redmond, and Chief Operating Officer of Workforce Solutions, Mike Ridley. 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 third quarter 2025 management discussion and analysis entitled Forward-Looking Statements, Risks and Uncertainties, and Non-GAAP Financial Measures. This quarter's MD&A, 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. Dollar amounts discussed in today's call are expressed in Canadian dollars unless noted otherwise and may be rounded. The format for today will be similar to prior conference calls. Trevor will start with a high-level overview of the company's performance and highlights from the third quarter and year-to-date results, including our view of the current and forward-looking operating environment. Trevor will then pass the call over to Toby for a more in-depth summary of the financials, and then we will open the line for question and answer. I will now turn the call over to Trevor.

Thank you, Emma. We appreciate everyone joining this morning for our third quarter 2025 results conference call. Following the solid performance of the company in the first half of the year, we are pleased with our third quarter results and very appreciative of the hard work being done by our high performing teams across the platform. Consolidated quarterly revenue of $105.3 million increased 4% from the comparative quarter, contributing to adjusted EBITDA of 31.8 million, 10% above the comparative quarter. Profit for the third quarter increased 65% to 12.2 million, pushing basic EPS up 58% to 19 cents per share. Rental revenue, which we consider the core of our business, reached 41.3 million on a consolidated basis, a 9% increase from the comparative quarter, as we continue to see the positive impact of capital investment into fleet assets and a constructive operating environment underpinned by customer activity in our primary industry verticals of construction, major infrastructure, energy, and education. Our growth strategies are backed by organic capital allocation and operational excellence, and our approach has not changed. We continue to focus on data-based prudent capital allocation methodologies to maximize returns over the life of our assets. Capital expenditures within the quarter were 19.6 million, down 18% from the comparative quarter of 23.8 million, with year-to-date capital expenditures of 69.3 million, down 6% from the same period last year, when excluding the $20.5 million for the one-time acquisition of a fleet of 329 space rental units in British Columbia. Capital commitments of $39.5 million at the end of the quarter were up 124% from the comparative quarter, with 75% of this per capital allocated to project-specific fleet units backed by long-term contracts, driving our stable recurring rental revenue and the balance of the CapEx was for real estate investment and sustaining maintenance. This underscores the volume of opportunities across the business to continue investing shareholder capital and compounding growth at high rates of return. As of September 30th, the company had $159 million of future contracted rental revenue, a decrease of 3% from the comparative period, but an increase of 4% on a sequential basis underpinning our confidence in the stable outlook for rental run rate into the future. Based on the recent performance trends of the business combined with continued multi-year growth, we've announced an increase to the dividend of 29% to 4.5 cents per share, or 18 cents annually, starting with the fourth quarter of this year. This marks the fifth consecutive annual dividend increase since its reinstatement in 2021 What stands out in this and recent quarters is the consistency from all areas of the business. While variability in certain revenue streams and market activity or customer and project delays are always factors that we monitor closely, the strength and stability of our core rental platform, the benefits of diversification by geography, customer, and product lines, and the non-speculative nature of our growth ethics position us well for sustained growth. Strength of our modular space solutions business unit continued with yet another quarterly rental revenue record reaching $28.1 million, up 15% from the comparative quarter. Rental revenue has grown at a 23% compound annual growth rate from Q3 2020 to Q3 2025, a clear indication of the successful execution of our growth and operating strategies for this area of the business. Contracted future rental revenue for MSS remains healthy at $129.8 million, an increase of 2% from the comparative quarter. As we look ahead, we expect rental revenue stability with moderate growth in concert with organic fleet additions. There is always a degree of variability in the MSS sales and non-rental revenue streams, which may impact quarterly comparisons. However, utilization of the fleet is within the optimal range and customer activity across key end market verticals, including construction, major infrastructure, and education, remain steady. Shifting focus to our workforce solutions business unit, we are seeing a degree of stability in this area of our business. We consider primary revenue against our fleet assets as a combination of both rental revenue and large services revenue, which generated $21.5 million in the quarter in line with the comparative. Consolidated WFS revenue increased by 12% to $43.2 million, driving a 7% increase in EBITDA to $14.2 million. Although we are currently seeing increased bidding activity and customer project planning stemming from prospective nation-building projects in Canada, we do not anticipate meaningful growth correlating with this activity earlier than the latter half of next year. Therefore, as we look ahead to the next several quarters, we anticipate reasonably consistent to slightly elevated results for the WFS business unit. Within the quarter, we announced the definitive share purchase agreement to acquire all of the issued and outstanding shares of Royal Camp Services and continue to expect that acquisition will close by the end of 2025, pending clearance under the Competition Act, Canada. On combination, we will effectively double the size of Black Diamond's Canadian workforce accommodations fleet and expand our capabilities to service our customers and their large-scale projects with the inclusion of self-performed hospitality and catering services. At Black Diamond, we have a strong track record of successfully integrating high-quality businesses to further our growth strategies, better service our customers, and deliver compounding shareholder returns. And we look forward to welcoming everyone from the Royal and Summit teams to our company very soon. Switching to LodgeLink, it also had a solid third quarter as room night bookings reached over 148,000, driving gross bookings to $35.7 million, up 31% from the comparative quarter. This resulted in net revenue of $4.3 million, up 26% from the comparative quarter. As this platform scales and we realize the benefits from both the Spencer Group of Companies acquisition that closed in the quarter and the accelerated investment in product development, the expectation is for accelerating growth as we focus expansion efforts in the United States and now also the Asia-Pacific region. Looking further ahead, we are confident in Black Diamond's performance and expect to see stable compounding rental revenue growth given our rate of organic investment in the business and our long-term prudent approach to capital allocation. We're also well attuned to the growing market tailwinds, specifically in Canada, and are of the view that should those come to fruition, it will be of significant benefit to our company. We look forward to the successful close of our acquisition of Royal Camp Services and remain highly optimistic that this will occur by the end of the year. We will continue to focus on profitable, sustainable growth and diversification as we scale our portfolio of specialty rental accommodation and workforce travel management businesses, generating positive returns and compounding shareholder value. Overall, we are very pleased with the results of the company in the first nine months of the year, which were in line with internal expectations and provide the free cash flow to fuel future growth. We have confidence in Black Diamond's stability through to year end and are optimistic about the numerous sizable opportunities as we look forward into 2026 and beyond. With that, I'll now turn the call over to Toby to provide some more specifics. Toby?

Thanks, Trevor. And good morning, everyone. I'm pleased to provide additional context on the results, review free cash flow, a net debt position, and provide an update on our ERP implementation project and then open the call for questions and answers. During the third quarter, consolidated fleet utilization was 75.8%, flat with the comparative quarter. Breaking that down further, MSS utilization of 80.3% was unchanged year over year and is at the high end of our optimal range, while WFS had a small pullback of 130 basis points to 62.2%, leaving ample spare capacity for us to bid on large-scale projects as they materialize in our pipeline of opportunities. Looking beyond the 9% increase in consolidated rental revenue, WFS non-rental revenue improved 28% to $16.2 million, mainly from increased installation activity on major projects, which signals increasing recurring rental revenues ahead. WFS sales revenue of $5.5 million was up 28% from the comparative quarter driven by higher-use fleet sales in Australia, which was offset by decreased-use fleet sales in Canada and custom fleet sales in the United States. While there is growing demand for asset sales in the market, we continue to prioritize rental and lodging opportunities over sales of fleet assets to position WFS to meet expected future demand, particularly in Canada. MSS non-rental revenue of $18.2 million was down 17% from a strong comparative quarter. Sales revenue of $15.8 million was down 3% from the prior year due to lower custom sales, which will remain variable depending on the number and timing of projects. While increasing profit in the first half of the year is indeed indicative of our commitment to profitable growth, It must be noted that the sizable increase of 65% in the quarter is due in part to insurance proceeds and the related write-off of a small number of assets destroyed by wildfires in Northern BC earlier this year and a wildfire that occurred in Northern Alberta in 2024. As a result of these events, the company recorded a gain of $6 million and $8.8 million for the three and nine months ended September 30th, 2025. Partially offsetting this income were $1.5 million of expenses in the quarter related to the acquisition of the Royal Camps. The business's ability to generate stable and growing free cash flow, backed by a strong balance sheet, is a defining characteristic of Black Diamond. Third quarter free cash flow of $23 million, up 17% from the comparative quarter, was driven by higher revenue and declines in maintenance capital and interest costs. At quarter's end, net debt was $197.1 million, down $34.9 million from Q2 2025, as proceeds from the bought deal were used to repay debt. With liquidity of nearly $230 million, we are well positioned to fund the acquisition of Royal Camps, which is expected to close before the end of the year. We expect that the acquisition of Royal will further bolster our free cash flow generation, which combined with our debt capacity will enable us to continue to pursue our organic and inorganic growth strategies. Currently, our net debt trailing 12-month adjusted leveraged EBITDA ratio is at 1.6 times, but we anticipate this will fall into the low end of our target range of two to three times upon the close of the Royal Camps acquisition. This provides us with significant flexibility given the continued strength of our balance sheet pro forma the acquisition. The average interest rate paid on debt during the quarter was 4.55% and 146 basis points lower than the comparative quarter as benchmark interest rates have continued to decline. Lastly, we continue to work through the ERP upgrade, which is expected to improve operational efficiency and be supportive of the company's long-term growth objectives. We have passed the halfway point of this long and complex project, but thanks to the hard work of our team, it continues to progress on time and on budget towards the scheduled go-live of this phase of the project in the first half of 2026. At the present time, we have invested $6.3 million and approximately 5.6 remains from the initial budget. To reiterate Trevor's commentary, we are confident in the stability of the business performance over the next few quarters, with the potential for a positive inflection point as early as the second half of 2026, pending progress of major nation-building projects in Canada. Our team is committed to rigorous safety and operating standards and is ready to continue our strong track record of delivering innovative solutions and exceeding our customers' high expectations. Upon the anticipated close of the acquisition of Royal Camp Services and Summit Camps, we raised that bar even further in combining the strengths of both our platforms to better serve our customers and stakeholders, including our Indigenous partners and the communities in which we operate. With that, operator, I'd like to turn the call over for questions.

Thank you. We'll now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. you'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Matthew Lee with Canaccord Genuity. Please go ahead.

Hey, morning, guys. Maybe starting one with the nation-building bids that you're currently involved in, how confident are you in Black Diamond's ability to win a fair share of those contracts? And has there been any increase in visibility around those projects that's given you confidence to share the H-226 revenue expectation at this point, or maybe the logic behind that?

Thanks, Matt, and good morning. What gives us confidence in providing whatever you want to call it to second half of 26 is mostly rooted in the activity that we're seeing in our bid pipeline with regard to engagement with numerous projects around pricing and logistics planning, et cetera. We have confidence of our positioning with regard to everything from availability of assets, quality and positioning of assets, quality of solution, and then strategic partnerships with indigenous communities around certain of these projects. We have a reasonable degree of confidence from all of those contributing factors. Some of the remaining variables have more to do with decision making in around permit approvals for these projects as well as with the project proponents themselves securing their internal FIDs. And so that's where we continue to talk in terms of having some degree of caution. But thematically and the volume of bidding activity and sort of the level of detail that we're seeing around the bidding process with a number of large projects that are reasonably well known, but there's also... a fairly significant number of projects that don't quite hit the sort of national news cycle that we're also seeing being moved forward. So reasonably high confidence, but there's still variables out there.

And would you say that activity has maybe increased since we talked last in the last quarter call?

Certainly the activity has been steadily... increasing since March, April of this year, a significant step change. And I think it mirrors public policy changes, et cetera, along with the strength of commodity prices and demand and world markets for our customers' goods, et cetera. Yes, I would say over the last 90 days since we last held our conference call after Q2, the level of detail and activity around these projects and the bidding process has continued to build. So I think we have more visibility on the breadth and scope of what could occur over the next several years. But there's still a number of key hurdles that these projects need to clear before we anticipate receiving any contracts and notice to proceed, et cetera, from a camp. And keeping in mind, these projects also require space rentals type of assets, which would engage our MSS businesses.

Okay, that's helpful. And then, you know, you guys mentioned inorganic growth a couple of times on this call already. You know, just given the fact that you're still digesting the Royal acquisition, is there appetite to do more M&A right now or in the medium term? Or is the Royal integration kind of the focus for you right now?

Our intent is to ensure that we do a very good job in transition and integration. of the acquisitions that we've made. However, when assets come to market and they're a good strategic fit for our platform, we will certainly be in the market and assessing those opportunities. And we continue to have a very active pipeline of opportunities. So I think the answer to your question is, Yes, we want to be very focused and do a great job of bringing the Royal assets and the team into our platform. We're very excited by that, and that's our first priority. But there continue to be a number of interesting opportunities that fit well into our fairway that we'll be looking at as well.

All right, thanks. That's really helpful. Go, Jays, go.

Go, Jays.

The next question is from Kyle Nixie with Cormark Securities. Please go ahead.

Hi, everyone. I just want to drill in a little bit more on de-risking of this big WFS demand wave. Thanks for the comments on when we might see the kind of momentum start to increase in the back half of next year, but When should we see, you know, big new rental contracts start to snowball in the backlog employee report? I think you call it contracted future rental revenue. Will that start to snowball well before, you know, the utilization ramp starts, or is it kind of in the same quarter we're all going to see that stuff? Just looking for kind of color on some leaving indicators we can watch for.

It's a good question and something – You know, the touch-on here is that when we deploy large camp facilities, there's a reasonably long front-end period for positioning of assets. The logistics are often quite complicated. And even sequencing amongst the early service providers, everything from building roads to clearing sites in preparation for camp assets to go in, And so it can be quite complicated, and there's a high likelihood we'll have secured contracts and have visibility on forward revenue, but there will be a reasonable ramp up, certainly operations revenue, where under our scope we're doing some of that logistics work of positioning assets and assembling assets. We'll see some revenue there. But for the real... sort of bulk of the contract being the asset rental. And with Royal, we fully anticipate that we'll be handling full turnkey operations, which will substantially increase the size and value of these contracts. There'll certainly be a delay from securing contract to the full revenue streams coming in line. So I think to your point, we'll see the add to our future contracted revenue, and then a bit of a gap until the utilization and the cash flow starts rolling.

Got it. And when you secure a contract, is that one that's going to show up in your backlog, the contracted future rental revenue, as soon as it's signed and secured?

Yes. Yeah, we do have that on the workforce side. We do track only the the rental component of that committed contract in the numbers we report. But yeah, on the workforce side, once we have that contract secured, we log that in our backlog.

Got it. Okay, thanks. And we keep talking about the bigger kind of nation-building project as one of the big demand drivers in WFS. But, you know, should we see any utilization ramp up before those bigger things start to contribute in the back half of next year? I think you guys have a lot of other pockets of demand that are growing as well. For instance, mining sector across multiple commodities, projects being built, projects being expanded. Can we expect any utilization ramp up kind of before the back half of next year from that stuff?

Yeah, what we're seeing is more broad-based than just the nation-building projects that are talked about through the Major Projects Office that's been created by the Kearney government, and across different verticals. Perhaps, Mike Ridley, you can sort of give some color around sort of the breadth of what we're seeing and what we have within reason for what we expect over the next little while.

Yeah, you bet. Thanks for the question, Kyle. I mean, a lot of what we're doing and what we see ahead outside of these nation-building projects is just kind of a continuation of our strategy. The mining pipeline across Canada is quite active right now with commodity prices to where they're at, and we have numerous projects right now in Canada tied to disaster relief, housing both workers and residences. you know, going over to Australia, we anticipate seeing utilization growth in that market in the year ahead for sure. And in the U.S., you know, while not a big part of our business, it's been a really nice add-on and expect to see, you know, kind of stabilized utilization in that market. So all in all, I think we'll see an improvement over the first half of the year. And then when these nation building projects Get contracted, that's where I think you'll really see the dramatic upside, kind of at the tail part of next year, the mid to the tail part of next year.

Okay, thanks for that color. And then just last one from me on your total company growth CapEx budget. Can you comment on the budgets for this year, if it's changed at all since what you last told us and and what the budget's shaping up for next year, again, just on the growth capex side, and how that kind of should be splitting up into MSS and WFS.

Yeah, we switched just in the last couple of years to a different methodology where we use a rolling capital allocation framework, which allows us to adjust according to the cash generation of the business. And then, you know, we're... looking at not pushing capital, but matching where we see demand in our system and ensuring that it meets our return on investment at the asset level hurdles. And so what you're seeing through our system is sort of the true demand from our customer verticals, aside from a couple of small branches where we're greenfielding into new areas for ourselves. And what we're looking at is when you normalize with the one acquisition we did in 24, we're looking at fairly consistent numbers for this year. We had expended, as we said, about $69 million through to the end of Q3. We've got a fairly sizable amount of CapEx committed, contracted through our manufacturers, et cetera, which leads us to believe that we'll catch up to last year over Q4 here. And then we've already committed capital that supports projects where assets will come into our system in Q1, which is probably earlier, I think, Ted, than we've seen in previous years. So we've got pretty good visibility of capital going out. Typically, we've got contracts in hand before we've ordered the equipment. So we've got good comfort that we're going to generate commensurate rental streams for those capital ads. So we're pretty comfortable. We'll be a similar cadence of net capex this year to last year, and that continues on into the first half of next year.

Okay, thanks. I suspect a lot of this growth CapEx is weighted to MSS. Correct me if I'm wrong. But if that's the case, I see some of your MSS peers out in the market kind of pulling back on growth CapEx, not spending much anymore, just given utilization rates are softening a bit. But you guys seem to have visible growth still. I mean, what's... What's the explanation there on why you guys seem to be facing more organic growth opportunities and therefore sinking growth cutbacks versus what some of the peers are saying right now?

Yeah, to your first point, we are expending capital in each of the businesses. There are certain asset classes in our workforce business that are very highly utilized, and we've been adding capital, which is a bit of a change versus the last several years, but the bulk is going into our MSS business. And I think that in terms of we're seeing a little bit asymmetric where we're seeing demand.

Yeah, so we, as Toby said, our utilization is flat and right in our optimal range. So, and as Trevor said, we allocate capital based on demand. A significant amount of that is actually based on customer bids that we've done, and if we win the bid, then we allocate the capital for a specific bid, and those are typically long-term, you know, two to five years, but more on the long end of that. So that's a real demand, and that increases utilization when we get those projects. And then every market we're in, we have strategies for what equipment does that market need what do customers need so any speculative capital we do is to address specific needs uh with a high level of confidence those assets are going to go to work so we're just we're trying to match capital with the demand and uh unlike um maybe other other competitors that are building Maybe it must be building more spec fleet if their utilization is dropping. Got it. Okay.

I'll pass the line. Thanks for all the answers. Please go.

The next question is from Frederic Bastien with Raymond James. Please go ahead.

Good morning, everyone. There's been a fair amount of discussion around utilization on the workforce side. I'm curious about pricing. Is there an opportunity for Black Diamond to kind of benefit longer term from the same kind of dynamics that you have enjoyed on the MSS side for the last couple years with, you know, seeing very good rates of good rental rate increases?

We truly believe that will be the dynamic we'll experience as utilization picks up. A key difference, though, Frederick, is when we deploy assets around our workforce business, they tend to go out in larger packets of assets, and so we'll see more of a step change in pricing as opposed to a gradual iterative change like we were able to demonstrate with our MSS business where assets tend to go out at least on a percentage of the fleet basis in smaller packets. And so you can adjust your rental rates as you see utilization gradually climbing. And so it'll be interesting to see how the industry addresses this fact as projects start to absorb the spare capacity. Even at this point in time, we're seeing a little bit of strengthening on rates of assets that are going up right now, which is encouraging. But yes, absolutely, as utilization rises on the workforce, platform, we will see rental rates increase. And we're well aware that the replacement value or the cost for incremental square footage on the camp side of the business requires rates to be pretty much three times what the trailing average rate has been. And so I believe the aggregate demand we're looking at will require incremental capacity to be added. to the consolidated Canadian camp fleet. We've not seen that in over a decade. And to warrant that type of capex, we're going to need commensurate rates and commitment on term. I think we're seeing the dynamics that will probably get us there over the next couple of years.

Great. I got stuck on one of the comments you made around lodging because seeing good growth opportunities in Australia. And also, you mentioned Asia. Would you mind just elaborating on that, please?

We mentioned Asia Pacific. So, what we're finding with our Australian customers and prospective customers, especially around the resource sector, is that they look regionally. As some would be aware, the Australian miners are also active in places like Papua New Guinea and areas of Indonesia, the trans-Tasman sort of travel concept that includes New Zealand, et cetera. And so as we bring on Spencer Corporate Travel and we begin scaling the LodgeLink offering into that part of the world, more positioning to be able to service a regional territory, Australia as the base. So we're just generally calling it Asia Pacific. I know APAC is actually a much bigger region than what we're talking about here, but we're finding travel in Asia Pacific is really quite interesting in that it's quite a bit more balkanized so to speak, or many more participants, which means more complexity and even more value to what LogisLink brings to our corporate customers moving workforce. So we think what we're doing is very prospective for that part of the world.

Thanks. And then lastly for me on the... You mentioned a little bit of hesitation on the education side in the U.S. Does that mainly pertain to custom sales?

It certainly shows up predominantly, Ted, in custom sales in the near term, but I think there's a correlation to rental as well, and we think there's... a base explanation of why we've seen this in this year particularly, but maybe that gives more color.

Yeah, in any given year, the mix between sales and rentals and education can change depending on government funding primarily and then school board budgets. I guess in times of less government capital, they're switching to rental because they still, it's the demographics that are driving the student demand and we see steady population growth in most of the markets that we're in. So this year, we've seen more rentals and less capital. And then overall, there is some uncertainty around government funding as those be the fall, you know, the news in the U.S. know. So we think that's kind of, you know, immediate type of headwind. But over time, we expect that to be resolved and we haven't really seen a big overall impact in our business, but it has generated a bit of volatility in the sales this year.

Thank you very much. That's all I have. Thank you.

The next question is from John Gibson with BMO Capital Markets. Please go ahead.

Morning and congrats on another solid quarter here. I just wanted to dive in a little bit on WFS pricing ahead of these nation building projects. I know we talked about it with Frederick's question, but wondering if early pricing terms could look like, would things tighten? Is there an opportunity to increase pricing with the first wave or maybe you have to wait till things tighten closer to full capacity to really move the needle?

Thanks, John, and good morning. You know, this is a very good question, and it's something we're trying to answer internally here. Certainly, the first projects to go out, I think the industry, the cap industry, are are offering probably the best rates that any of these projects will see over the next few years because we do have spare capacity of almost 50% in terms of rooms or bed count. And so even at current rates or slightly higher than average ratio the last few years, it's still incremental value in terms of cash generation. I do believe the first projects, and keeping in mind that a number of these projects have been running competitive pricing processes for a couple of years now, even before the discussion of nation building, etc. Some of this is already active and various degrees of commitments in terms of pricing offers already out there. So I think it's the subsequent ones. The other thing we're looking at, you know, when we look at offering on a turnkey basis with the Royal capabilities is looking at pricing into a full what's referred to as mandate rate. So that's including all catering services plus the return on the asset itself which becomes a much more sophisticated way of pricing versus bear rent against assets. And I think we'll see those type of rates show a step change in the asset rate when it's blended together. And so it'll be really interesting once we've closed on Royal and are approaching the market in a a different way than we traditionally have. So I think you can see what's attributable to the asset growing more incrementally than step changes on base rent. So we're playing around with all kinds of pricing models, price discovery. Clearly, we're working with our customers, and we're well aware of their project pressures on costs, et cetera, so there's a lot going on.

Okay, got it. Last one for me. Just in the U.S., MSS revenue is down a little bit year over year. Are there, and we're seeing that, you know, we're seeing some pressure from some of your peers as well. Is this specific to certain regions or end markets, and do you see this recovering or kind of staying flat here over the next few quarters?

There'll be 10.

Yeah, again, this is total revenue, so this would include sales and rental, so I think it reflects probably primarily the lower education sales we already talked about.

Yeah, exactly. I think this kind of comes back to the question we were discussing earlier around the lower sales in U.S. education and how Ted was describing that dynamic. We continue to see rental revenue increases in the U.S. and fundamentally we don't think that decrease in sales revenue is a longer-term phenomenon. So, we do continue to see strength in the U.S. market despite some of these near-term pullbacks in certain revenue categories, but the core rental revenue remains healthy.

And that's just Q3. If you look at year-to-date, we're up 13%. So, again, this is any quarter our non-rental and sales revenues can fluctuate.

For sure. I've just seen some of your peers express a little bit of weakness across some end markets. I'm just wondering if you haven't seen that, I guess. It doesn't seem to be the case. Thanks a lot for the questions or the answers, and I'll turn it back. Thank you, John.

This concludes the question and answer session. I'd like to turn the conference back over to Trevor Haynes for any closing remarks.

Thank you. Thank you, everybody, for joining us today and for your interest in Black Diamond. We're very pleased with the performance of the business at this point in the year, and we're optimistic with regards to performance going forward and what we're seeing in our end markets. We look forward to updating you again after the next quarter. Thank you, and have a great day.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.