Good morning, and thank you for joining Black Diamond Group's first quarter 2025 results conference call. On the line today is Chief Executive Officer, Trevor Haynes 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 call, such as adjusted EBITDA or net debt. For more information on these terms and others, please review the sections of Black Diamond's first 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 Sedar+ website at www.sedarplus.ca. Dollar amounts discussed in today's call are expressed in Canadian dollars, unless noted otherwise, and may be rounded.

It's now my pleasure to turn the call over to Trevor Haynes to review the operational highlights. Trevor?

Thank you, Emma. And good morning, everyone.

Thank you for joining us today. I'll begin by providing a high-level overview of operating results and key areas of focus for the company as we look to the coming quarters, and then pass it over to Toby Labrie to provide detailed financial highlights.

First, following the strong results of the recent year ended, management is very pleased to report the continuation of that trend with a robust first quarter across the platform and signs of continued momentum through the balance of 2025. This again, underscores the effectiveness of our core growth and diversification strategies and, ultimately, the good, hard work being done by our best-in-class team.

We continue to focus on profitable growth, diversification, and scale of our portfolio of specialty rental, accommodation, and workforce travel management businesses to generate strong returns and compound shareholder value. First quarter profit increased by 287% to $5.8 million from the comparative quarter, and basic earnings per share increased by 400% to $0.10.

Black Diamond generated $102.2 million of consolidated revenue, up 39%, and consolidated adjusted EBITDA of $26.5 million, up 37% from the comparative quarter, and a nine-year record high. On a consolidated basis, rental revenue of $37.8 million increased 8% from the comparative quarter.

The company's consolidated contracted future rental revenue was $161.6 million, up $24.5 million, or 18% from the end of the comparative quarter. We consider rental revenue to be Black Diamond's core business and, therefore, are pleased with these results and the visibility we have on the stability of cash flow generation going forward.

We also have good line of sight on growth as a result of our continued commitment to reinvest in the business in line with our set hurdle rates of return. Within the quarter, total capital expenditures were $17.2 million, with total capital commitments of $47.9 million in place at quarter end.

A 22% increase from the comparative quarter, with most of the growth capital allocated to new fleet additions for contracted projects. ROA or Return On Assets improved 310 basis points from the comparative quarter to 17.4%, and represents an attractive return profile given the long life and low maintenance characteristics of our rental assets.

While the company favors reinvesting in the business at attractive rates of return, and we continue to believe there is ample opportunity for this approach, we have concurrently been active through our NCIB, share buyback program, through which we have repurchased an aggregate of 304,300 common shares for approximately $2.8 million in the quarter. As we focus in on the respective business segments, key metrics and performance indicators show continued strength across each area.

To highlight a few, within MSS, rental revenue grew by 19% to $25.5 million, which is a first quarter record, and sales revenue increased to $11.5 million, up 77% from the comparative quarter. While WFS rental revenue was down modestly by 10% at $12.3 million, this was offset with meaningful contributions from sales and lodge services revenues, which increased 153% and 73% respectively from the comparative quarter.

LodgeLink's net revenue of $2.7 million increased 4% from the comparative quarter, and total room nights sold grew by 7%. Our healthy financial position remains with stable and growing pre-cash flow generation and a strong balance sheet, which Toby will touch on in more detail shortly.

Before I pass the call over, let me address the macroeconomic headwinds resulting from the ongoing global tariff and trade wars and the Canadian election. While uncertainty indeed persists, the structure of our company and diversification across geographies and end markets positions us well to respond opportunistically.

Black Diamond conducts business at scale across all our operating regions and does not typically sell or move assets between Canada and the United States, materially sheltering us from the direct impact of tariffs in the first instance. We continue to see demand across our local markets, as shown through our steady utilization rates and strength in particular customer verticals that are not tied to typical economic drivers.

These verticals are those such as education, humanitarian relief, and disaster recovery. Of course, in line with our prudent and disciplined methodologies to assess risk as we grow the company, we will remain vigilant and continue to monitor the derivative effects of tariffs such as rising input costs for procurement of new assets or softening of customer activity levels.

In summary, Q1 2025 was another in a succession of very strong quarters for Black Diamond. Our effective growth strategies are firmly rooted in disciplined, prudent, and return-based capital allocation complemented by ongoing operational excellence.

With a substantial amount of future contract-backed rental revenue, healthy free cash flow, ample liquidity, and the bench strength of our best-in-class teams, we are well positioned to pursue our growth and operating strategies, even against the backdrop of a rapidly changing macro environment. I will now turn the call over to Toby for a more in-depth look at our quarter and overall financial conditions.

Toby?

Thanks, Trevor. And good morning, everyone.

Building on what was just covered, I'll highlight fleet utilization and performance, review free cash flow and the balance sheet, and then provide an overview of progress made on our ongoing ERP implementation project. At the core of this quarter's robust results is the correlating strong utilization of our fleet.

In Q1 2025, our consolidated fleet utilization was a very healthy 75.9%, with 80.8% utilization in MSS and 61.6% in WFS. MSS utilization was down slightly by 50 basis points from the comparative quarter, driven primarily by the timing of new fleet additions to meet future contracted project needs and continued strong demand.

Management reiterates that MSS utilization remains at very healthy levels relative to long-term industry trends. WFS consolidated utilization was relatively consistent with the comparative quarter.

WFS Canada utilization remains above 50% and we continue to see opportunities to drive incremental improvements. U.S.

WFS utilization of 71.4% remains healthy due to activity levels in various sectors, including energy and resource development, major infrastructure and government humanitarian relief projects. In Australia, utilization of 67.2% was below our expectations, primarily due to project timing issues on the customer side.

However, confidence in the region remains based on the current pipeline of opportunities. Complementing the strong utilization within the quarter was strong sales, non-rental and lodge services revenue.

Consolidated sales revenue was $21.6 million, which is an increase of 106% from the comparative quarter. Non-rental revenue of $30.7 million was also increased by 46% as a result of services associated with the rental and sale of our assets, including transportation, installation, maintenance and catering.

Lodge services revenue was robust as well at $12.1 million, up 73% from the comparative quarter from increase due to occupancy and higher average rates. Our core objective of delivering strong returns and stable cash flows, primarily by efficiently and strategically managing our long-lived rental asset fleets to generate sustained and compounding value over time, has not changed.

Strong revenue growth across all segments drove free cash flow in the quarter of $16.9 million, up 80% from the comparative quarter and demonstrates the operating leverage in our business. Additionally, strong free cash flow enhances our flexibility, supporting further growth investments and enabling us to return capital to shareholders through dividends, share repurchases or both.

The balance sheet remains in excellent condition. Long-term debt and net debt of $229.3 million and $217.8 million both decreased by 3% sequentially from Q4 2024.

Our net debt to trailing 12-month adjusted leveraged EBITDA ratio of 1.8 times is slightly below the low end of our targeted range of 2 to 3 times, resulting in $207.1 million of available liquidity. This amount is inclusive of the recent expansion and extension of our asset-based lending facility, where the maximum available debt under the facility was increased by $100 million to $425 million and termed out to February 2030.

The average effective interest rate on long-term debt in the quarter was 4.83%, down 145 basis points from 6.28% in the comparative quarter and continues to move down in conjunction with the prevailing Bank of Canada rates. Finally, the core team executing Black Diamond's new ERP implementation has been hard at work progressing the project, which remains on schedule and on budget.

The transition for the MSS and corporate business units is well underway with $3 million invested to date in the current phase and approximately $8.9 million remaining from the initial budget of this phase. They are on target for the planned go-live in the first half of 2026.

Again, we are very pleased with the company's performance in the first quarter of the year and attribute these solid results to the dedication and performance of our hard-working team members across the company. We are poised to sustain our strong track record of providing an unmatched level of service to our customers, acting as a reliable partner within our networks, engaging our high-performance team members, and ultimately delivering a compounding return to our shareholders.

With that, Operator, I'd like to open the call for questions.

Hi, guys. Thanks for answering my question.

Maybe just in terms of sales revenue, obviously a very strong quarter from both segments. Can you just talk about how that breaks down in terms of new versus used sales and then maybe where you're seeing opportunities to sell some of your used units, particularly in the workforce solutions segment?

Sure. Thanks, Matt.

And good morning. I think overall our used fleet sales were fairly consistent with what we've seen in past quarters.

On the MSS side, we did see a relatively weak quarter in Q1 2024 on the new manufactured sales side, and that was back at normal levels this quarter. Maybe, Ted, if you want to comment on that.

Yeah, I think you hit it right on. Our used sales were comparable to last year, and our new sales were up.

And as everybody knows, our new sales fluctuate up and down a bit quarter to quarter, and this Q1 was much more typical compared to a year ago Q1.

And, Matt, on the WFS side, customers will often come to us as well for new sale opportunities. And in this particular quarter, we had numerous ones that went through.

And as it pertains to used asset sales, a lot of times you could have a camp on a mine, for example, that they're building out the mine over a period of time. And then when it turns from construction to operations, there's a requirement to leave some or all those beds behind.

And that can often happen, which can turn into sort of a used asset sale as well.

That's helpful. Are you comfortable on the WFS side with the size of your fleet, or are you looking to maybe reduce it further through used sales?

No, we're comfortable where it's at right now. And in some cases, actually, we're looking to add in areas strategically, different type of assets when you're dealing with assets, for example, for at-risk housing or disaster relief.

It is a different type of asset often than a sort of a large camp going in. So we're looking at deploying capital in those areas as well.

Right. And maybe just sticking to the workforce solution, contractor revenue looked really good quarter to quarter.

Can you talk about what end users are sort of driving that improvement? And how should we think about it converting to utilization over the next couple of quarters?

It's really coming in a lot of different areas. There's at-risk housings.

There's disaster relief that we're working on. There's projects in Eastern Canada that are coming on stream.

The U.S. as well, as we expect growth down there.

And then over in Australia, which is really a microcosm of Black Diamond as a whole, which does both MSS and workforce business, classrooms, space rentals. So it's not coming from one specific area necessarily.

It's broad-based across the whole business.

Okay, that's helpful. I appreciate the color guys.

Thanks, Matt.

Hi, everyone. I have some questions on the MSS side.

So specific to MSS rental revenue, this part of your business is heavily linked to fairly resilient and multi-year contracted types of revenue. So economic risk not overly relevant, but I think about one-third of your MSS fleet is deployed under more kind of transactional short-term contracts.

So how is that pocket faring? Any signs of macro weakness starting to hurt utilization for that more transactional side of MSS rentals?

I would say we're seeing similar growth on both sides of the business, our transactional and what we call our modular business, which is some of the longer-term educational contracts and other longer-term industrial contracts. So, the transactional is holding up fairly steady across the system.

Individual markets vary a little bit, but that's the benefit of us being diversified by both end markets and geographically.

Got it. Okay, that's great to hear.

And then regarding MSS rental pricing, I think we all know you have this embedded price gain runway left -- at least well through the next year as contracts roll over and catch up the spot. But can you shed any light on what's going on with MSS spot rental rates in this economic environment?

Are they also holding steady?

Just the last part of your question, you said MSS box rental rates?

Spot.

Spot. Yeah, the spot is, I would say steady.

So, the increases in the spot have slowed down and it's steady, but we still have renewals on contracts we signed three to five years ago that are going through. So we kind of call that rental rate momentum, and we see that continuing.

And obviously, the 11% year-over-year increase in unit rental rates reflects that continued momentum. At some point, that will start to slow.

So we're just keeping an eye on that and monitoring that.

Got it. Okay.

Thanks for that. And then last one, you know, again on MSS, last quarter you talked about, organic growth CapEx being similar in 2025 to what you spent in 2024.

Now looking beyond your CapEx already committed, is that still the plan to be thinking this rate of growth CapEx or is any of this macro uncertainty kind of leading to you to kind of pull back on growth spending plans and flex that counter-cyclical free cash flow capability you have?

Yeah, we're really well positioned, Matt, in terms of our ability to adjust CapEx based on what's happening in the marketplace. For the most part, across the whole platform, but certainly in MSS, the bulk of the CapEx we commit already has customer contracts or specific projects linked to it.

And so, when you look at the CapEx and the cadence of CapEx currently within the system, the $17 million in Q1, the $47 million committed for expenditure at the end of the quarter, that's at fairly low risk with good visibility of forward growth in terms of rental revenue. And so, what we're seeing from our market and the way we're allocating capital is continued demand and we're not changing our risk profile and we're certainly not reducing our hurdle rate of return that we expect in terms of rental rate into the cost of an asset.

And so what we're seeing through our pipelines currently is enough recurring demand, even in this environment for us to see similar levels of CapEx to prior year without taking any different risk in terms of utilization going forward.

Okay. That's great to hear.

I appreciate the call and I'll pass it along.

Thanks, Kyle.

Good morning, guys. It's hard to poke holes in your performance in the quarter, but we did see the rate of growth at LodgeLink decelerate somewhat.

And I was wondering if you could provide a bit of color there or wondering if there's anything that was unusual or maybe one time that was behind that softness? Thank you.

Yeah. The growth rate at LodgeLink has flattened year over year.

There's a few reasons for that. There's a couple of end market verticals that are a little bit softer in terms of volumes, specifically around some of the energy services, customers, just slightly lighter volumes from prior year, which mutes the overall growth in terms of new customers or gain in share of existing companies' travel spend.

We think that's somewhat transitory based on commodity pricing and behind. What we are seeing, which gives us confidence, is our funnel in terms of new potential customers and the amount of opportunities for customer conversion into active trading is higher than we've seen in prior periods.

So it's prospective to continuing to add to the number of customers. We also look at how many customers are actively transacting within the quarter or within the month and that continues to rise.

However, we're exposed to the variances in our customers' activity in terms of number of crew members and number of crews traveling. And so that creates some degree of variability.

At the core of it, we don't think there's anything fundamentally changed in terms of the effectiveness of software being provided to the market, nor the differentiating aspects of lodging.

Thanks. Thanks for the detailed answer, Trevor.

We just came off some elections, got a new premier, or at least the Liberals are still in power. But there's obviously thoughts about what to do with respect to developing infrastructure exports, the export infrastructure to handle better movement of goods outside of the U.S.

potentially. So I was wondering if you see any opportunities, I mean, we're talking about the long term here, but anything that interests you or excites you about the potential plan by the federal government on a go-forward basis?

It's fairly easy to extrapolate benefits to the Black Diamond platform for any form of construction, infrastructure, resource development, and certainly an increase in the aggregate number of projects and the scale of those projects is all highly prospective for our business, whether it's on the MSS side or all forms of temporary space around those projects, or certainly for our workforce business where we need to accommodate trades in more remote locations. So any acceleration in timing of moving projects to FID, to accelerating infrastructure, accelerating resource extraction projects, even urban infrastructure, all of that would be beneficial for Black Diamond looking at it through the Canadian lens.

So we're hopeful that Canada will get busy, so to speak, in terms of building up infrastructure in all its forms. I guess if you think of the converse, if tariff threats were to dissipate between the two countries, we think that would augur good, strong economic activity in North America.

We also are of the mind that we would benefit from that. So I guess the way I would put it is, worst-case scenario is continued uncertainty and no firm policies being moved, no firm activity resulting from policy.

But I don't think that's a likely outcome here. So yeah, we're quite bullish here.

Great. Thanks so much.

Good luck.

Thank you.

Thank you for joining us today. Once again, we're very pleased with the performance of the company, and we thank you for your interest in Black Diamond.

Hope you have a great day.