An anonymous director reports

BLACK DIAMOND REPORTS SECOND QUARTER 2019 RESULTS

Black Diamond Group Ltd. has released its operating and financial results for the three and six months ended June 30, 2019, compared with the three and six months ended June 30, 2018. All financial figures are expressed in Canadian dollars.

Revenue for the Quarter was $47.3 million, up 11% or $4.6 million from the Comparative Quarter. Approximately 66% of revenue was generated from outside of the western Canadian energy resource sector, compared to 58% in the Comparative Quarter. Revenue generated outside of Canada accounts for 52% of total revenue in the Quarter, compared to 25% in the Comparative Quarter. Increased consolidated rental revenue to $15.9 million, up 30% from the Comparative Quarter.

Adjusted EBITDA for the Quarter was $10.0 million, an increase of 5% or $0.5 million from the Comparative Quarter, primarily due to the adoption of the IFRS 16 accounting standard, which had a positive impact on Adjusted EBITDA of $1.0 million.

The Company exited the Quarter with a Funded Debt to Adjusted EBITDA ratio of 3.11 (December 31, 2018 - 2.95) and a Funded Debt to Tangible Book Value ratio of 0.48 (December 31, 2018 - 0.44).

The Modular Space Solutions ("MSS") fleet increased to 6,126 units in the Quarter, over 5% from 5,813 units at December 31, 2018.

Workforce Solutions ("WFS") rental revenue increased 57% from the Comparative Quarter, to $7.7 million. The Company's previously announced $20 million rental project in California was fully installed in late April. Subsequent to the Quarter, Black Diamond began mobilization and installation of the Sukunka River Lodge, a $42 million full turnkey project to service the construction of the Coastal GasLink Pipeline.

LodgeLink bookings grew to ~16,500 room nights in the Quarter, more than a two-fold increase from prior year.

Revenue in the MSS business segment increased 2% to $20.6 million, compared to $20.1 million in the Comparative Quarter. MSS Adjusted EBITDA for the Quarter increased to $6.0 million, up 13% from the Comparative Quarter. Increased activity and average rental rates in Canada and increased non-rental revenue in the U.S. contributed to the increase in revenue. Adjusted EBITDA increased in the Quarter due to continued growth in rental revenue and an IFRS 16 impact of $0.6 million, partially offset by lower Adjusted EBITDA margins.

In the WFS segment, revenue increased by 19% from the Comparative Quarter to $26.8 million, and rental revenue grew to $7.7 million, up 57%. For the Quarter, WFS Adjusted EBITDA was $6.6 million, lower than the Comparative Quarter, primarily due to a larger project positively impacting the Comparative Quarter results, and a decrease in lodging activity in the Quarter. The impact from IFRS 16 in the WFS segment amounted to $0.4 million in the Quarter.

Net Debt at the end of the Quarter increased from $88.0 million as at March 31, 2019 to $93.5 million, primarily due to a $4.2 million build in working capital during the Quarter. The Company expended $10.0 million of gross capital expenditures during the Quarter, and $18.2 million YTD. The Company's 2019 gross capital plan of $35 million is unchanged and is expected to continue to be funded from internally generated cash flow.

Outlook

Management's continuing long-term business objectives are to grow the MSS fleet by 10% per year while maintaining target rates of return, unlock operating leverage in the WFS asset base, and drive continued growth and awareness of our online digital marketplace, LodgeLink. Year-to-date results, and our current outlook for the remainder of the year, leads us to believe that the Company is on track to achieve these objectives while improving balance sheet metrics.

The Company expects to see ongoing growth in its MSS business, supported by continued pull through of organic capital investment throughout our North American footprint. Year to date, MSS has added 313 net units to the fleet and is on track to meet or exceed the segment's goal of growing the fleet by 10% per annum. Over time, management expects Adjusted EBITDA growth within the segment to outpace fleet growth as certain regions benefit from added scale, and project teams continue to focus on driving additional rental revenue streams through Value Added Products and Services (VAPS).

The WFS segment is also expected to show improvement in the second half of the year as installation on the previously announced Sukunka camp (to service construction of the Coastal GasLink pipeline) began early in the third quarter. This coupled with the full impact of rental contribution from the previously announced California contract should result in continued sequential increases in WFS asset utilization levels. Management believes there is a strengthening in momentum and bidding activity within its Canadian WFS business and expects this to translate into additional improvement in asset utilization into next year. Lodging activity, however, is expected to remain fairly soft throughout the third quarter, but improve in the fourth quarter due to customer contract commitments. Utilization rates throughout our U.S. business remains healthy, with the Company seeing no deleterious effects on utilization from the slight softening in U.S. rig counts. In Australia, our business has seen meaningful strength YTD and the Company anticipates positive market conditions to persist in the region.

The Company's online digital marketplace, LodgeLink continues to gain traction. Total room nights booked grew to roughly 16,500 throughout the Quarter, more than a two-fold increase to the Comparative Quarter. With the recent launch of an enhanced version of the digital marketplace, the Company expects ongoing momentum on the platform through supplier base growth and signing up new customers.

       Second Quarter 2019 Financial Highlights
 
                                  Three months ended  June 30,
(in millions, except where noted)  2019 $    2018  $   Change 

Revenue                                                       
Modular Space Solutions             20.6       20.1      2%   
Workforce Solutions                 26.8       22.6      19%  
Total  Revenue                      47.3       42.7      11%  
Total Adjusted  EBITDA              10.0       9.5       5%   
Funds  from Operations              11.7       12.3     (5)%  
Per  share ($)                      0.21       0.22     (5)%  
Loss                               (2.0)      (0.9)     122%  
Loss per share - Basic and diluted (0.04)     (0.02)    100%  
Capital expenditures                10.0       3.6      178%  
Property  & equipment (NBV)        334.1      352.1     (5)%  
Total  assets                      419.1      402.4      4%   
Long-term  debt                     94.0       86.5      9%   

Additional Information

A copy of the Company's unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2019 and 2018 and 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 ) and www.blackdiamondgroup.com .

About Black Diamond Group

Black Diamond Group rents and sells space rental solutions and modular workforce accommodations to business customers in Canada, the United States and Australia. The Company also provides specialized field rentals to the oil and gas industries of Canada and the United States. In addition, Black Diamond Group provides turnkey lodging services, as well as a host of related services that include transportation, installation, dismantling, repairs, maintenance and ancillary field equipment rentals. From twenty-two locations, the Company serves multiple sectors including oil and gas, mining, power, construction, engineering, military, government and education.

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