Black Diamond Group Announces $35 Million 2019 Capital Spending Plan
CALGARY, Alberta, Dec. 03, 2018 (GLOBE NEWSWIRE) -- (TSX: BDI) Black Diamond Group Limited (“Black Diamond” or the “Company”), a leading provider of modular space solutions and workforce accommodations, today provided its 2019 capital spending plan.
Management’s focus on operating cash flows and improved balance sheet leverage in 2018 has positioned the Company to return to disciplined organic growth. Management plans to invest approximately $35 million in capital expenditures in 2019, on a gross basis and allocated throughout the year. This plan is expected to be funded entirely through operating cash flows with residual cash from business operations applied to further reducing debt. The 2019 capital plan includes maintenance capital, which is expected to be nominal and generally in line with 2018 levels.
The majority of the 2019 capital plan will be allocated to the Company’s diversified Modular Space Solutions (“MSS”) business, which continues to generate opportunities to achieve attractive returns on investment in a number of markets and industries throughout North America. Management expects 2019 gross capital spending in MSS to be approximately $25 to $30 million.
Within the Workforce Solutions (“WFS”) business unit, our markets in Australia and the United States are seeing continued strength and Management anticipates spending approximately $5 to $10 million within these regions where customer contracts and utilization support the need for fleet growth. Also included is some modest capital for incremental software development of the LodgeLink platform.
Similar to previous years, the Company expects to sell some existing fleet assets through the normal course of business and to rebalance certain asset categories within the WFS division. Over the last several years, the Company has realized proceeds in the range of $10 to $15 million on an annual basis and expects this general trend to continue in 2019.
Despite the current headwinds within the Canadian energy industry, Black Diamond remains optimistic heading into 2019. Project-related work within our WFS segment is expected to move forward, and the Company continues to execute on its longer-term strategy of growing its MSS division, with a minimum net fleet growth of 10% per year. This growth is expected to drive continued improvement in scale and profitability leading to further stability and diversification of the Company.
About Black Diamond Group
Black Diamond 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 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.
Black Diamond has two core business units: Workforce Solutions and Modular Space Solutions. Learn more at www.blackdiamondgroup.com.
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Certain information in this news release contains forward-looking statements including potential capital expenditures, expectations around future operating cash flows and debt repayments, expected levels of used equipment sales, and future business prospects and opportunities. With respect to the forward-looking statements contained in this news release, Black Diamond has made assumptions, regarding among other things: the level of demand for space rental solutions and modular workforce accommodations, the allocation of capital in each of MSS and WFS, and that counterparties to contracts will perform the contracts as written. Although Black Diamond believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Black Diamond's control including, without limitation, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility and timely and cost effective access to sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the forgoing list of factors is not exhaustive. Additional information on these and other factors that could affect Black Diamond's operations and financial results are included in Black Diamond's most recent annual information form and other reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Black Diamond's website (www.blackdiamondgroup.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Black Diamond does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.