Black Diamond Group Q3 Earnings Call Highlights

Key Points

• Black Diamond delivered record third-quarter results: Revenue jumped 52% to C$159.9 million and adjusted EBITDA rose 33% to C$42.3 million, while free cash flow increased 47% to C$33.8 million. The company also raised its quarterly dividend 22% to C$0.055 per share.
• Workforce Solutions was the primary growth engine, with revenue up 127% to C$97.9 million following the Royal Camp Services acquisition. Management cited more than C$2.3 billion in formal bids and expects utilization to rise meaningfully by the second half of 2027.
• Growth investments are shifting toward Modular Space Solutions: The segment faced lower EBITDA due to deployment-related costs and permitting delays, but rental revenue grew 7% and capital commitments increased 26%. LodgeLink also posted record results, with trade value up 44% and management expecting an accelerated LodgeLink 3.0 rollout in early 2027.

Black Diamond Group TSE: BDI reported record third-quarter revenue as growth across its Workforce Solutions, Modular Space Solutions and LodgeLink businesses supported higher cash flow and a dividend increase.

Revenue for the quarter reached a record C$159.9 million, up 52% from the comparable period, while adjusted EBITDA rose 33% to C$42.3 million, Chief Executive Officer Trevor Haynes said on the company’s third-quarter 2026 results call. Record rental revenue increased 18% to C$48.9 million, and contracted future rental revenue stood at C$152.3 million at quarter-end, down 4% year over year.

The company raised its quarterly dividend 22% to C$0.055 per share, its sixth increase since reinstating the dividend in 2021. Haynes said the payout remains a relatively low proportion of free cash flow, preserving flexibility to reinvest in growth initiatives.

Workforce Solutions Drives Revenue Growth

Workforce Solutions generated C$97.9 million of revenue, an increase of 127%, and adjusted EBITDA of C$28.2 million, up 99%. The acquisition of Royal Camp Services was a significant contributor to the segment’s year-over-year expansion.

Within the segment, rental revenue rose 43% to C$18.9 million, while lodge services revenue increased 389% to C$40.6 million. Sales revenue rose 140% to C$13.2 million, driven by custom sales activity in the United States and Australia. Non-rental revenue increased 56% to C$25.2 million, supported by U.S. transportation activity and LodgeLink contributions.

Workforce Solutions utilization improved to 58% from 55% in the second quarter, leaving what management described as substantial fleet capacity available for future projects. Haynes said the company has more than C$2.3 billion in formal Workforce Solutions bids outstanding in Canada, representing more than twice the capacity of its current fleet.

Management described the pipeline as geographically and industrially diverse, spanning projects from Nova Scotia to Prince Rupert, British Columbia, as well as northern regions. Opportunities include liquefied natural gas, mining, data centers, military-related projects and infrastructure development.

Jon Warren, president of Royal Camp Services, said projects that have received positive final investment decisions are closest to advancing, while some mining projects are moving more slowly through regulatory processes. Haynes said the C$2.3 billion figure excludes broader, earlier-stage opportunities in the company’s pipeline.

Management expects Workforce Solutions utilization to rise meaningfully by the second half of 2027 compared with current levels, though it noted that large projects typically generate site preparation, mobilization and assembly revenue before rental and hospitality services ramp up.

Modular Space Investment Expected to Increase

Modular Space Solutions reported revenue of C$62 million, roughly in line with the prior-year period, while adjusted EBITDA declined 7% to C$21.2 million. Recurring rental revenue increased 7% to C$30 million, but sales revenue fell 18% to C$13 million as permitting delays shifted project deployments.

The segment’s utilization rate was 77.1%, while average monthly rental rates increased 3% from the third quarter of 2025. Value-added products and services revenue rose 25% to C$3.5 million and represented 12.7% of rental revenue.

Chief Financial Officer Toby LaBrie said Modular Space margins were affected by elevated repair, maintenance and transportation costs incurred ahead of fleet deployments. Haynes said the business is positioning assets for anticipated demand in Western Canada and in U.S. markets tied to data-center construction.

Management expects rental revenue growth in Modular Space Solutions to emerge over the next several quarters as assets are deployed. LaBrie said utilization could improve modestly, but the company does not expect a large step change because the segment is already operating near full utilization.

Haynes said the company expects capital spending to increase next year, with the bulk of growth investment directed toward Modular Space Solutions. The company had C$49.7 million of capital commitments at quarter-end, up 26% from the comparable quarter, with nearly all of that amount related to Modular Space fleet construction.

While Black Diamond expects some Workforce Solutions capital investment in the United States and Australia, Haynes said the company does not anticipate a major investment in expanding the Canadian Workforce Solutions fleet in the near term because it first expects to deploy existing capacity.

LodgeLink Sets Another Record

LodgeLink recorded total trade value of C$51.5 million, up 44% from the prior-year quarter, while net revenue increased 51% to C$6.5 million. Management attributed the growth to retention of existing customers, new customer acquisition and a greater share of spending from existing users.

Haynes said LodgeLink’s U.S. expansion is currently outpacing its Canadian growth by nearly two times. Jason Zhang, LodgeLink’s CFO, said growth during the quarter came from the existing platform, while the company prepares to transition customers to LodgeLink 3.0.

The new platform has reached general availability, and management expects a more accelerated launch in the first quarter of 2027. Zhang said the company believes the product could support growth across revenue streams and improve gross margins.

Cash Flow, Leverage and Margins

Adjusted earnings per share rose to C$0.19 from C$0.16 in the comparable quarter. Funds from operations increased 32% to C$43.6 million, while free cash flow climbed 47% to C$33.8 million.

Capital expenditures totaled C$26.8 million, up 37% year over year. Net debt was C$355.7 million at quarter-end, with net debt to trailing 12-month adjusted EBITDA of 2.4 times, within the company’s target range of two to three times. Earlier this year, Black Diamond expanded its asset-based lending facility to C$550 million.

Adjusted EBITDA margin declined to 26.5% from 30.2% in the prior-year quarter. LaBrie said the moderation reflected a larger contribution from lower-margin lodge services revenue following the Royal Camp acquisition, as well as Modular Space preparation costs.

For the fourth quarter, LaBrie said Modular Space sales may be somewhat higher than usual because sales delayed from the third quarter are expected to close during the period. Otherwise, he said revenue mix and margins should be relatively comparable with prior periods.

About Black Diamond Group (TSE:BDI)

Black Diamond is an industrial services and asset management company with two operating business units - Modular Space Solutions (MSS) and Workforce Solutions (WFS). Black Diamond operates in Canada, the United States and Australia. MSS, through its principal brands - BOXX Modular, CLM and Schiavi - owns a large rental fleet of modular buildings of various types and sizes. Its network of local branches rent, sell, service and provide ancillary products and services to a diverse customer base in the construction, industrial, education, financial, and government sectors.

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