Q3 2025 Black Diamond Group Ltd Earnings Call

October 31, 2025

Operator: Thank you for standing by. This is the conference operator. Welcome to Black Diamond Group Q3 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.

Emma Covenden: Good morning, welcome to Black Diamond Group's Q3 2025 Results Conference Call. With me this morning 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 Q3 2025 Management Discussion and Analysis entitled Forward-Looking Statements, Risks and Uncertainties, and Non-GAAP Financial Measures.

Emma Covenden: 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. 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 Q3 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.

Trevor Haynes: Thank you, Emma Covenden. We appreciate everyone joining this morning for our Q3 2025 results Conference Call. Following the solid performance of the company in the first half of the year, we are pleased with our Q3 results and very appreciative of the hard work being done by our high-performing teams across the platform. Consolidated quarterly revenue of CAD 105.3 million increased 4% from the comparative quarter, contributing to adjusted EBITDA of CAD 31.8 million, 10% above the comparative quarter. Profit for the Q3 increased 65% to CAD 12.2 million, pushing basic EPS up 58% to CAD 0.19 per share.

Trevor Haynes: Rental revenue, which we consider the core of our business, reached CAD 41.3 million on a consolidated basis, a 9% increase from the comparative quarter as we continue to see the positive impact of capital investments 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. Our approach has not changed. We continue to focus on database proven capital allocation methodologies to maximize returns over the life of our assets.

Trevor Haynes: Capital expenditures within the quarter were CAD 19.6 million, down 18% from the comparative quarter of CAD 23.8 million, with year-to-date capital expenditures of CAD 69.3 million, down 6% from the same period last year, when excluding the CAD 20.5 million for the one-time acquisition of a fleet of 329 space rental units in British Columbia. Capital commitments of CAD 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 unit, 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.

Trevor Haynes: This underscores the volume of opportunities across the business to continue investing shareholder capital and compounding growth at high rates of return. As of 30 September, the company had CAD 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 CAD 0.045 per share or CAD 0.18 annually starting with the Q4 of this year. This marks the 5th 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.

Trevor Haynes: 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 CapEx position as well for sustained growth. Strength of our Modular Space Solutions business unit continued with yet another quarterly rental revenue record reaching CAD 28.1 million, up 15% from the comparative Q. 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 business. Contracted future rental revenue for MSS remains healthy at CAD 129.8 million, an increase of 2% from the comparative Q.

Trevor Haynes: 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, remains 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 CAD 21.5 million in the quarter in line with the comparative. Consolidated WFS revenue increased by 12% to CAD 43.2 million, driving a 7% increase in EBITDA to CAD 14.2 million.

Trevor Haynes: 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. 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 a 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 accommodation fleet and expand our capabilities to service our customers and their large-scale projects with the inclusion of self-performed hospitality and catering services.

Trevor Haynes: 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. 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 Q3 as room night bookings reached over 148,000, driving gross bookings to CAD 35.7 million, up 31% from the comparative quarter. This resulted in net revenue of CAD 4.3 million, up 26% from the comparative quarter.

Trevor Haynes: 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.

Trevor Haynes: 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?

Toby LaBrie: Thanks, Trevor. Good morning, everyone. I'm pleased to provide additional context on the results, review free cash flow and net debt position, and provide an update on our ERP implementation project, then open the call for questions and answers. During the Q3, 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.

Toby LaBrie: Looking beyond the 9% increase in consolidated rental revenue, WFS non-rental revenue improved 28% to CAD 16.2 million, mainly from increased installation activity on major projects, which signals increasing recurring rental revenues ahead. WFS sales revenue of CAD 5.5 million was up 28% from the comparative quarter, driven by higher used fleet sales in Australia, which was offset by decreased used 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 demands, particularly in Canada. MSS non-rental revenue of CAD 18.2 million was down 17% from a strong comparative quarter.

Toby LaBrie: Sales revenue of CAD 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 B.C. 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 CAD 6 million and CAD 8.8 million for the three and nine months ended 30 September 2025.

Toby LaBrie: Partially offsetting this income were CAD 1.5 million of expenses in the quarter related to the acquisition of 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. Q3 free cash flow of CAD 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 CAD 197.1 million, down CAD 34.9 million from Q2 2025, as pro-proceeds from the BOT deal were used to repay debt. With liquidity of nearly CAD 230 million, we are well-positioned to fund the acquisition of Royal Camps, which is expected to close before the end of the year.

Toby LaBrie: 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 months adjusted leverage EBITDA ratio is at 1.6x. We anticipate this will fall into the low end of our target range of 2 to 3x 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.

Toby LaBrie: 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 million 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.

Toby LaBrie: 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 the Royal Camp Services and Summit Camps, we raise 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.

Operator: 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.

Toby LaBrie: Hey. Morning, guys. Maybe starting one with the nation-building bid that you're currently involved in. How confident are you in Black Diamond's ability to win a fair share of those contracts? Has there been any increase in visibility around those projects that's given you confidence to share the H2 2026 revenue expectation at this point? Or maybe the logic behind that.

Matthew Lee: Hey. Morning, guys. Maybe starting one with the nation-building bid that you're currently involved in. How confident are you in Black Diamond's ability to win a fair share of those contracts? Has there been any increase in visibility around those projects that's given you confidence to share the H2 2026 revenue expectation at this point? Or maybe the logic behind that.

Trevor Haynes: Thanks, Matt, and good morning. What gives us confidence in providing Whatever you want to call it, an outlook to second half of 2026, 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, etc. We have confidence of our positioning with regard to everything from availability of assets, quality and positioning of assets, quality of solution, and then, you know, strategic partnerships with Indigenous communities around certain of these projects. We have a reasonable degree of confidence from, you know, all of those contributing factors.

Trevor Haynes: Some of the remaining variables have more to do with decision-making in and around permit approvals for these projects, as well as with the project proponents themselves, you know, securing their internal FIDs. That's where, you know, we continue to talk in terms of having some degree of caution. Thematically and, you know, 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, you know, are reasonably well known. 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. Reasonably high confidence, but there's still variables out there.

[Analyst] (Canaccord Genuity): Would you say that activity has maybe increased since we talked last in the last Q call?

Matthew Lee: Would you say that activity has maybe increased since we talked last in the last Q call?

Trevor Haynes: Certainly the activity has been steadily increasing, you know, since March, April of this year. A significant step change, and I think it mirrors, you know, public policy changes, et cetera, along with 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, you know, the level of detail and activity around these projects and the bidding process has continued to build. I think we have more visibility on the breadth and scope of what could occur over the next several years.

Trevor Haynes: There's still a number of key hurdles that these projects need to clear before, you know, we anticipate receiving any contracts and notice to proceed, et cetera, from a camp. Keeping in mind, these projects also require space rentals type of assets which would engage our MSS businesses.

[Analyst] (Canaccord Genuity): Okay. That's helpful. 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?

Matthew Lee: Okay. That's helpful. 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?

Trevor Haynes: 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. We continue to have a very active pipeline of opportunities. I think the answer to your question is, yes, we wanna 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.

Trevor Haynes: There continue to be a number of interesting opportunities that fit well into our fairway that we'll be looking at as well.

[Analyst] (Canaccord Genuity): All right. Thanks. That's really helpful. Go Jays, go.

Matthew Lee: All right. Thanks. That's really helpful. Go Jays, go.

Trevor Haynes: Go Jays.

Operator: The next question is from Kyle McPhee with Cormark Securities. Please go ahead.

Kyle McPhee: Hi, everyone. I just wanna drill in a little bit more on, you know, de-risking of this big WFS de-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. When should we see, you know, big new rental contracts start to snowball in the backlog before you 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 now gonna see that? Just looking for kind of color on some leading indicators we can watch for.

Trevor Haynes: That's a good question, and something, you know, to 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 sort of early service providers, everything from building roads to clearing sites in preparation for camp assets to go in. 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.

Trevor Haynes: 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 online. 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.

Kyle McPhee: Got it. When you secure a contract, is that when it's gonna show up in your backlog, the contracted future rental revenue as soon as it's signed and secured?

Mike Ridley: Yes. We do have that on the Workforce Solutions side. We do track only the rental component of that committed contract in the numbers we report. But on the Workforce Solutions side, once we have that contract secured, we log that in our backlog.

Kyle McPhee: Got it. Okay, thanks. You know what, 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, the 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?

Trevor Haynes: 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 current 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 expect.

Mike Ridley: Yeah, sure.

Trevor Haynes: Within reason.

Mike Ridley: Sure.

Trevor Haynes: What we expect, over the next little while.

Mike Ridley: Yeah, you bet. Thanks for the question, Kyle. I mean, a lot of what we're doing and what we see ahead at 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. In the US, 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.

Mike Ridley: All in all, I think we'll see a slight an improvement over the first half of the year. If and 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.

Kyle McPhee: Okay. Thanks for that color. Just last one from me on your, the 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? What the budget's shaping up for next year, again, just on the growth CapEx side, and how that kinda should be splitting up into MSS and WFS.

Trevor Haynes: 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. 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. 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. What we're looking at is when you normalize with the one acquisition we did in 2024, we're looking at fairly consistent numbers for this year.

Trevor Haynes: We had expended, as we said, about CAD 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've catch up to last year over Q4 here. 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. 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 gonna generate commensurate rental streams for that those capital adds.

Trevor Haynes: 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.

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

Trevor Haynes: Yeah. To your first point, we are expanding CapEx or 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. The bulk is going into our MSS business. I think, Ted, in terms of we're seeing a little bit asymmetric where we're seeing demand.

Ted Redmond: Yeah. As Toby LaBrie said, our utilization's flat and right in our optimal range. As Trevor Haynes said, we allocate capital based on demand. A significant amount of that is actually based on customer, you know, bids that we've done. If we win the bids, then we allocate the capital for a specific bid, and those are typically long-term, you know, 2 to 5 years, but more on the long end of that. That's a real demand, and that increases utilization when we get those projects. Every market we're in, we have strategies for what equipment does that market need, what do customers need. Any speculative capital we do is to address specific needs with a high level of confidence those assets are gonna go to work.

Ted Redmond: We're trying to match capital with the demand. Unlike maybe other competitors that are building, maybe must be building more spec fleet if their utilization is dropping.

Kyle McPhee: Got it. Okay. I'll pass the line. Thank you for all the answers.

Trevor Haynes: Thanks, Kel.

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

Frederic Bastien: Good morning, everyone.

Trevor Haynes: Good morning.

Frederic Bastien: 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 kinda dynamics that you have enjoyed on the MSS side for the last couple of years with, you know, seeing very good rates of for the rental rate increases?

Trevor Haynes: We truly believe that will be the dynamic we'll experience as utilization picks up. A key difference, though, Frederic, is when we deploy assets around our workforce business, they tend to go out in larger packets of assets. 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 a fleet basis in smaller packets. You can adjust your rental rates as you see utilization gradually climbing. It'll be interesting to see how the industry addresses this fact as projects start to absorb the spare capacity.

Trevor Haynes: Even at this point in time, we're seeing a little bit of strengthening on rates of assets that are going out right now, which is encouraging. Yes, absolutely. As utilization rises on the workforce platform, we will see rental rates increase. 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 3x what the trailing average rate has been. 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 need commensurate rates and commitment on term.

Trevor Haynes: I think we're seeing the dynamics that will probably get us there over the next couple of years.

Frederic Bastien: Great. I got stuck on one of the comments you made around LodgeLink 'cause, seeing good growth opportunities in Australia, and also you mentioned Asia. Would you mind just elaborating on that, please?

Trevor Haynes: We mentioned Asia Pacific. 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. As we bring on Spencer Corporate Travel and we begin scaling the LodgeLink offering into that part of the world, we're positioning to be able to service a regional territory, Australia as the base. We're just generally calling it Asia Pacific. I know APAC is actually a much bigger region than what we're talking about here.

Trevor Haynes: 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 LodgeLink brings to our corporate customers moving workforce. We think what we're doing is very prospective for that part of the world.

Frederic Bastien: Thanks. Lastly from me on the... You mentioned a little bit of a hesitation on the education side in the US. Does that mainly pertain to custom sales?

Trevor Haynes: It certainly shows up predominantly, Ted, in custom sales in the near term, but I think, there's a correlation to rental as well. We think there's sort of a base explanation of why we've seen this in this year particularly. Maybe Ted gives some more color.

Ted Redmond: 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 'cause 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. This year we've seen more rentals and less capital. Overall, there is some uncertainty around government funding as those of you that follow, you know, the news in the US know. We think that's kind of a, you know, immediate type of headwind. Over time, we expect that to be resolved.

Ted Redmond: We haven't really seen a big overall impact in our business, but it has generated a bit of volatility in the, in the sales this year.

Frederic Bastien: Thank you very much. That is all I have.

Trevor Haynes: Thank you.

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

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

Trevor Haynes: Thanks, John, 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 and the camp industry 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. Even at current rates or, you know, slightly higher than average rates over the last few years, you know, it's still incremental value in terms of cash generation. I do believe the first projects...

Trevor Haynes: Keeping in mind that these, a number of these projects have been running competitive pricing processes for a couple of years now, even before the discussion of nation building, et cetera. Some of this is already active and various degrees of commitments in terms of pricing offers already out there. 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. That's including all catering services plus the return on the asset itself, which becomes a much more sophisticated way of pricing versus fair rent against assets.

Trevor Haynes: I think we'll see those type of rates show a step change in the asset rate when it's blended together. It'll be really interesting once once we've closed on Royal and are approaching the market in a different way than we traditionally have. I think you could see, you know, what's attributable to the assets growing more incrementally than step changes on base rent. 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, you know, their project pressures on cost, et cetera. There's a lot going on.

John Gibson: Okay. Got it. Last one for me. Just in the US, MSS revenue is down a little bit, year-over-year. We're seeing that, you know, we're seeing some pressure for 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?

Trevor Haynes: Toby, Ted.

Ted Redmond: Yeah. I, again, this is total revenue, so this would include sales and rentals. I think it reflects probably primarily the lower education sales we already talked about. Toby?

John Gibson: Yeah.

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

Ted Redmond: That's just Q3. If you look at year to date, we're up 13%. Again, this is any quarter our non-rental and sales revenues can fluctuate.

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

Trevor Haynes: Thank you, John.

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

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

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

The conference operator, welcome to 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'll 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 Covenant, and Vice President of Investor and Stakeholder Relations. Please go ahead.

Okay.

Good morning, and welcome to Black Diamond groups third quarter 2025 results Conference call with me. This morning is Chief Executive Officer, Trevor Haynes, and Chief Financial Officer, who will be livery as well as chief operating officer of modular space solutions at Redmond, and Chief operating officer of workforce solutions, Mike Ridley. Please.

Be reminded that our discussion today may include forward looking statements regarding black diamond 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 expectation 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 <unk> third quarter 2025, management's discussion and analysis entitled forward looking statements risks and uncertainties and non-GAAP financial measures. This.

This quarter's MD&A financial statements and press release May be found on the company's website at Www Dot Black Diamond group Dot Com and also on the SEDAR website at Www Dot SEDAR plus dossier.

Amounts discussed in today's call are expressed in Canadian dollars, unless noted otherwise and maybe round it.

<unk> 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.

I will now turn the call over to Trevor.

Thank you Amy.

We appreciate everyone. Joining me 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 of <unk> 58.

<unk> 19 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 investments in the fleet assets and a constructive operating environment underpinned by customer activity.

And our primary industrial 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 database 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 $25 million.

For the one time acquisition of a fleet of 329 space rental units in British Columbia.

Doubled commitments of $39 5 million at the end of the quarter were up 124% from the comparative quarter.

With 75% of this.

Our capital allocated to project specific fleet unit.

Fleet units by 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 30, the company had $159 million of future contracted rental revenue deep.

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 <unk>, 29% to $4 five per share or <unk> <unk>.

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 in 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 capex 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 of 2020.

Q3, 2025, a clear indication of the successful execution of our growth and operating strategies for this area of business.

Contracted future rental revenue per 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 suite 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 remains steady.

Shifting focus to our workforce solutions business.

This unit, we are seeing a degree of stability in this area of our business. We consider primary revenue against our fleet assets is a combination of both rental revenue and large services revenue, which generated $21 5 million in the quarter in line with the comparative Consol.

Consolidated <unk> 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 correlated 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 WNS business units.

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 accommodation fleet and expand our capabilities to service our customers and their large scale projects with the inclusion of self perform hospitality and catering services.

So 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.

Pushing to largely.

It also had a solid third quarter as room night bookings reached over 148000, 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.

This platform scales and we realize the benefits from both dispenser 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 diamonds 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 tailwind specifically in Canada.

That 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 Royall 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 accommodations and workforce travel management businesses generating positive returns and compounding shareholder value.

Overall, we are very pleased with the results of the company and 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 stability through to year end and are optimistic about the numerous sizeable opportunities as we look forward into 2026 and beyond.

With that I'll now turn the call over.

So toby to provide some more specifics.

Thanks sure.

Good morning, everyone.

I'm pleased to provide additional context on our results review free cash flow and 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 83% was unchanged year over year.

At the high end of our optimal range, while WNS 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 WNS non rental revenue improved 28% to $16 2 million, mainly from increased installation activity on major projects with.

Which signals increasing recurring rental revenues ahead.

WNS sales revenue of $5 $5 million was up 28% from the comparative quarter driven by higher used 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 <unk> to meet expected future demand, particularly in Canada.

MSS non rental revenue of $18 $2 million was 17 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 sizeable 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 DC earlier this year.

And a wildfire that occurred in northern Alberta in 2024.

As a result of this of these events the company recorded a gain of $6 million at $8 8 million for the three and nine months ended September 32025.

Partially offsetting this income were $1 $5 million of expenses in the quarter related to the acquisition of Royal accounts.

The businesses 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 approaches proceeds from the bought deal was used to repay debt.

With liquidity of nearly $230 million, we are well positioned to fund the acquisition of <unk>, which is expected to close before the end of the year.

We expect that the acquisition of Royal will further bolster bolster our free cash flow generation, which combined with our debt capacity will enable us to continue to pursue pursue our organic and inorganic growth strategies.

Currently our net debt to trailing 12 months adjusted leverage to EBITDA ratio is at one six 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 <unk> 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, five, 5% and 150 or 146 basis points lower than the comparative quarter.

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 are past 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 five six remains from the initial budget.

To reiterate Travers 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.

The anticipated close of the acquisition of Royal Camp services and summit cast we raise 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.

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 at Killen acknowledging your request.

You're using a speakerphone please pick up your handset before pressing any teams.

Your question. Please press Star then two.

Our first question is from Matthew <unk> with Canaccord Genuity. Please go ahead.

Hey, good morning, guys, maybe starting with the nation buildings bids that you are currently involved in.

How confident are you in black diamond's ability to win our fair share of those contracts and has there been any increase in visibility around those projects, that's giving you a call basis share the H $2 26 February expectation at this point.

Maybe the logic behind that.

Thanks, Matt and good morning.

What gives us confidence in.

Providing.

Okay.

Whatever you want to call it.

I'll look to second half of 'twenty six.

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. So we have a reasonable degree of confidence from from.

All of those.

Contributing factors.

Some of the.

The remaining variables have more to do with.

Decision, making.

And around permit approvals for these projects as well as.

With the project proponents themselves.

Security and internal <unk> and so that's where we continue to talk in terms of having some degree of caution.

<unk>.

Theoretically in.

The volume of bidding activity and.

Sort of the level of detail that we're seeing around.

The bidding process with a number of.

Of large projects that.

In a reasonably well known but is also.

A fairly significant number of.

Projects that don't quite hit the sort of national new cycle.

But we're also seeing.

Being moved forward.

So reasonably high confidence, but theres still variables out there.

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

Certainly the activity has been steadily.

Increasing.

<unk>.

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.

Markets for our customers' goods et cetera. So.

Yes, I would say over the last 90 days since we last held our conference call after Q2.

The.

The level of detail and activity around these projects in the bidding process.

<unk> has continued to build.

So I think we have more visibility on the breadth and scope of <unk>.

<unk>.

What could occur over the next several years.

But theres still a number of key hurdles that these projects need to.

Need to clear before we anticipate receiving any.

Contracts and notice to proceed et cetera from accounts.

And keeping in mind. These projects also require space rentals.

Those assets, which would engage or MSS businesses.

Okay. That's helpful.

And then you guys mentioned inorganic growth a couple of times on this call already.

Just given the fact that you had some digesting of Royall acquisition is their appetite to do more M&A right now or in the medium term more.

The Royal integration kind of a focus for you right now.

Yes.

Our intent is to ensure that we do.

A very good job in transition and integration.

The acquisitions that we've made power.

However.

When assets come to market and they are a good strategic fit.

For our platform.

We'll certainly be.

In the market.

US in those opportunities and we continue to have a very active.

Pipeline of.

Of opportunities though.

I think to answer to your question is.

Yes, we want to be very focused and do a great job of.

Of.

Bringing the royal assets and the team into our into our platform.

Very excited by that and that's our first priority.

But there continues to be.

A number of interesting opportunities.

The fit well into our fairway that will be we'll be looking at as well.

All right. Thanks, that's really helpful go James.

Okay.

Joe Jays.

The next question is from Kyle Mcphee with Carmike Securities. Please go ahead.

Yes.

Hi, everyone.

Wanted to drill.

Little bit more on Derisking of the peg Wfl's demand way.

Thanks for the comments on when we might see that kind of momentum start to increase in the back half of next year, but.

When should we see.

Pick new rental contracts start to snowball and the backlog for you require or you call it contracted future rental revenue.

Will that start to snowball well before.

The utilization ramp starts or is it kind of in the same quarter, we're not going to see that just looking for kind of color on some leading indicators you can watch book.

Oh, it's a good question and something.

To touch on here is that when we deploy large camp facilities. There is 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.

For <unk> to go in.

And so it can be quite complicated.

And.

There is.

High likelihood, we will have secured contracts and have visibility on forward revenue, but there will be.

A reasonable ramp up.

Certainly operations revenue were under our scope, we're doing some of that.

Logistics work of positioning assets and assembling assets you will see some revenue there, but where the real.

Sort of the bulk of the contract being the asset rental and with Royal we fully anticipate that we will be handling full turnkey operations.

Which will substantially increase.

<unk> and value of these contracts.

So those certainly be a delay.

From securing contract to full revenue streams coming online.

So I think to your point.

You'll see the add to our.

Future contracted revenue and then a bit of.

GAAP until.

The utilization in the cash flow starts rolling.

Got it and when you when you secure a contract does that one that's going to show up in your backlog that contract for future rental revenue.

Okay.

Signed unsecured.

Yes, yes, we.

We do have that on the on the workforce side, we do track only be.

The rental component of that.

Of that committed contracts in our in the numbers.

We report.

On the workforce side once once we have that contract secured weird.

We logged out in our backlog.

Got it okay. Thanks.

And.

We keep talking about the bigger kind of nation building project is one of the big.

Demand drivers and ws that spot.

Should we see any utilization ramp up before it goes to 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 felt project is being expanded.

Can we expect any utilization ramp up kind of before the back half of next year from that stuff.

Yes, what we're seeing is.

It is more broad based than just the.

Nation building projects that.

That are talked about through the major projects office Thats been created.

By the current government and across.

Verticals.

Perhaps Mike really you can.

Could you give some color around sort of the breadth of what we're seeing.

What we answer.

Within reason material, we expect over the next little while.

Yes, you bet.

Thanks for the question Kyle.

I mean, a lot of what we're doing and what we see ahead at outside of these nation building projects as kind of a continuation of our strategy.

The mining pipeline across Kansas quite active right now with commodity prices.

Where they are at and we have numerous projects right now in Canada tied to disaster relief.

Housing both workers and residences.

Going over to Australia, we anticipate seeing utilization growth in that market.

In the year ahead for.

For sure in the U S.

While not a big part of our business. It's been a it's been a really nice add on and expect to see kind.

Kind of stabilized utilization in that market. So all in all I think we will see a cycle.

An improvement over the first half of the year and then.

If and when these nation building projects.

Get contracted that's where I think you'll really see the dramatic uptick.

Upside.

The tail part of next year, the mid to the tail part of next year.

Okay. Thanks for that.

Color and then just lastly.

One for me on your total company growth Capex budget can.

Can you comment on the budget for this year, if it's changed at all since you last told us.

And what the budget is shaping up for next year again, just on the growth Capex side and.

And how that should.

It should be splitting up on MSS and bubble wrap up.

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.

Then.

We're.

Looking at not pushing capital, but Matt.

<unk>, where we see demand in our system and ensuring that it needs.

Return on investment at the asset level hurdles.

And so what youre seeing through our system is sort of the true demand from our customer verticals.

Aside from a couple of small branches, where we're green building into new areas for ourselves.

And what we're looking at is when you normalize for.

The one acquisition we did in 2004.

We're looking at.

Fairly.

System numbers for this year.

<unk> as we said of $69 million through to the end of Q3.

Got a fairly sizable.

On the Capex committed.

Through our manufacturers et cetera.

Which leads us to believe that.

We can 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 than we've seen in previous years.

So we've got pretty good visibility of capital going out.

So typically we've got contracts in hand, before we ordered the equipment. So we've got good comfort that.

We're going to generate commensurate.

Rental streams for that.

Capital S.

So we're pretty comfortable will be similar.

So net capex this year to last year and that.

That continues on.

Into the first half of next year.

Okay. Thanks.

I suspect a lot of the cash could this growth capex is weighted to MFS 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.

What's your explanation there on why you guys seem to be facing more organic growth opportunities and therefore, I think you've got to cut back.

But some of the peers are saying right now.

Yes to your first point.

We are expanding capex capital in each of the businesses.

There are certain asset classes and our workhorse business.

Those 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.

Yes.

As Toby said, our utilization flat in red and our optimal range.

So and as Trevor said, we allocate capital based on demand.

That amount of that is actually based on.

Customer bids that we've done and if we win the bid and reallocate the capital for a specific bid and those are typically long term.

Two to five years, but more on the long end of that.

That's a rail rail demand and that increases the utilization when they get those projects.

And then we every market we're in we have strategies or what.

What equipment does that market need water customers need so.

Any speculative capital we do has to address specific needs with our high level of confidence that those assets are going to go to work. So.

We're trying to match.

Capital with the demand.

Unlike.

<unk>.

Babies other other.

Competitors are building must be building more specs day to 30 utilizations dropping.

Got it okay.

Thanks, a lot and thanks for all the answers.

Hum.

The next question is from Fredrik <unk> with Raymond James. Please go ahead.

Hey, good morning, everyone.

Or are there.

Fair enough discussion around utilization on the war for Simon I'm curious about pricing.

And is there enough cheaper black diamond chain kind of benefits.

Longer term from the same kind of dynamics that you have enjoyed on the MSR side for the last couple of years.

<unk>.

Seeing very good.

Right.

Rental rate increases.

Okay.

So we truly believe that will be the dynamic will experience as.

Utilization picks up.

A key difference, though Frederick is.

When we deploy assets around our workforce business they tend to go out and 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 you can adjust your rental rates as you see utilization gradually climbing.

And so it will be interesting to see how the industry.

Addresses this fact as.

As project start to absorb.

The spare capacity.

Even at this point in time, we're seeing.

A little a little bit of strengthening on rates.

<unk> of assets that are going on right now which is encouraging.

But yes, absolutely as utilization rises on the workforce.

Platform.

We will see rental rates increase, but we're well aware of the replacement value.

The cost for incremental square footage on the GAAP 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 GAAP fleet.

We've not seen that in over a decade.

And.

To warrant that type of Capex, we're going to we 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 on one of the comments you made around largely incomes.

Seeing growth opportunities in China also you mentioned Asia would you mind just.

Elaborating on that base.

Okay.

We mentioned Asia Pacific.

Or refining with our Australian.

Customers and prospective customers, especially around the resource sector is that they look regionally.

<unk>.

Some would be aware of the Australian miners are also active in places like proppant and gaming areas of Indonesia.

The <unk> trends Tasman.

Sort of travel concept that includes New Zealand et cetera, and so.

As we bring on.

Spencer corporate travel and we begin.

<unk>.

Scaling the large link offering into that part of the world.

More positioning to be able to service.

Our regional.

Territory.

<unk> is the base.

Just generally calling it.

Asia Pacific.

APAC is actually a much bigger region and what we're talking about here.

But we're finding.

Travel in.

In Asia Pacific is really quite interesting and that is quite a bit more balkanized so to speak or.

Many more participants which means more complexity.

Even more value to what largely brings to our our corporate customers moving workforce.

So we think.

What we're doing is very prospective for that for that part of the world.

Thanks, and then lastly from me on the.

You mentioned, a little bit of hesitation on the education side in the U S.

Is that mainly pertain to.

Cost of sales.

It certainly shows up predominantly Ted and custom sales in the near term, but I think there is a correlation to Brent.

Rental as well and we think there is.

Through our base explanation of why we have seen this.

And this year, particularly but.

To give some more color.

In any given year the mix between sales and rentals and education can change depending on.

Government funding, primarily and then scoreboard budgets some times of less government capital, they're switching to rental because they still are.

Demographics that are driving the student demand and we see steady.

Population growth.

Most of the markets that we're in.

So this year, we've seen more rentals of less capital.

And then overall there is some uncertainty around government funding is supposed to be the quality.

As in the U S no.

So we think thats kind of.

Okay.

Immediate type of a headwind but overtime.

We expect that to.

Resolve that and we haven't really seen a big overall impact on our business, but it has.

This generated a bit of volatility.

And 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.

Good morning, and congrats on another solid quarter here.

Just wanted to dive in a little bit on WNS pricing ahead of this nation building projects I already talked about it with <unk> question, but I'm wondering if.

Early pricing terms could look like what it what things if 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.

Right.

This is a very good question and it's.

Where.

We're trying to answer internally here.

Certainly.

The first projects to go out.

I think the industry.

The cap industry.

Our.

Our offering probably the best rates.

Any of these projects will see over the next few years, because we do have spare capacity of almost 50% in terms of.

Rooms are a bed count.

So even at current rates are.

No.

Slightly higher than average ratio over the last few years.

It's still.

Incremental value in terms of cash generation so.

I do believe the <unk>.

First projects and keeping in mind that these a number of these projects have been.

<unk> competitive pricing.

Processes for a couple of years now even before the discussion of nation building.

In February or so.

Some of this is.

It is already active in.

<unk> degree.

Degrees of commitments in <unk>.

In terms of pricing offers already.

So I think it's the subsequent ones. The other thing we're looking at.

When we look at.

Offering on a turnkey basis.

The Royal capabilities is looking at pricing into a full.

What's referred to as mandate rates, so that's including all catering services plus the return on the asset itself.

Which becomes a much more sophisticated way of pricing versus better rents against assets.

And I think we will see.

Those type of rates.

So.

That change in.

In the asset rate when it's blended together and so it'll be really interesting ones.

Once.

We've closed on royall and are approaching the market.

A different way than we traditionally have.

So I think you can see.

Whats attributable to the assets.

Growing more incrementally.

Step changes on base rent.

So we're playing around with all kinds of pricing models price discovery.

Clearly, we're working with are we.

Our customers.

We're well aware of.

Our project pressures on.

On costs et cetera. So.

There is a lot going on.

Okay.

Okay got it last one for me just in the U S. MFS revenue was down a little bit year over year are there and we're seeing that we're seeing some pressure.

As well as the specific.

Certain regions or end markets and do you see this recovery in a kind of thing last year over the next few quarters.

Dolby.

Yes again. This is total revenues. So this would include sales and rentals. So I think it reflects probably primarily the lower.

Education sales, we already talked about.

Dolby Yeah, Yeah, exactly I think that's kind of comes back to them.

The question, we were discussing earlier around the lower sales in the U S education, and how it was describing that dynamic.

We continue to see revenue rental revenue increases in the U S and and so.

And fundamentally we don't think that.

Pat.

That decrease in sales revenue is as a longer term.

Phenomenon.

So we do continue to see strengthening in the U S market. Despite some of these near term pullbacks in certain.

Certain revenue categories.

Core rental revenue remains remains healthy and Thats 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'm, just seeing some of your peers.

Express a little bit of weakness across some some end markets I'm just wondering if you.

You haven't seen that I guess.

Doesn't seem to be the case. Thanks, a lot for the questions are the answers and I'll turn it back.

Thank you Doug.

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

Okay. 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 to this point of view and.

Sure.

We are optimistic with regards to performance going forward and what we're seeing in our end markets.

Look forward to.

Dating you again after the next quarter.

And have a great day.

Thanks, Chuck close today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Q3 2025 Black Diamond Group Ltd Earnings Call

Request DemoDemo

Black Diamond Group

Earnings