Dexterra Group Inc. Announces Results for Q3 2024
Rhea-AI Summary
Dexterra Group reported Q3 2024 results with consolidated revenue of $269.7 million, up 1.5% from Q3 2023. Adjusted EBITDA was $32.0 million, compared to $38.2 million in Q3 2023. Free Cash Flow improved to $11.9 million, up from $10.2 million last year. Net earnings from continuing operations were $13.4 million. The company completed the sale of its Modular business on August 30, 2024, focusing on core Support Services. IFM segment revenue increased 25.2% to $99.7 million, while WAFES revenue decreased to $170.1 million due to normalized wildfire activity.
Positive
- Revenue increased 1.5% YoY to $269.7 million
- Free Cash Flow improved to $11.9 million from $10.2 million YoY
- IFM segment revenue grew 25.2% to $99.7 million
- Strong workforce accommodations occupancy with >90% camp and matting utilization
- Successful divestiture of Modular business simplifying operations
Negative
- Adjusted EBITDA declined to $32.0 million from $38.2 million YoY
- WAFES revenue decreased to $170.1 million from $186.2 million YoY
- Net earnings decreased to $7.7 million from $13.9 million YoY
- Discontinued operations resulted in $5.7 million loss in Q3 2024
News Market Reaction 1 Alert
On the day this news was published, HZNOF gained 1.87%, reflecting a mild positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Toronto, Ontario--(Newsfile Corp. - November 5, 2024) - Dexterra Group Inc. (TSX: DXT)
Highlights
Dexterra generated strong results for Q3 2024 with consolidated revenue of
$269.7 million , an increase of1.5% compared to Q3 2023 and an increase of6.4% compared to Q2 2024. The increase in Q3 2024 was primarily driven by: organic growth and strong market activity in WAFES that was offset by the more normalized wildfire season in 2024 compared to 2023; IFM organic growth; and the contribution from the CMI Management LLC ("CMI") acquisition;Q3 2024 Adjusted EBITDA, which excludes the impact of discontinued operations, was
$32.0 million compared to$38.2 million and$29.3 million for Q3 2023 and Q2 2024, respectively. The increase from last quarter was due primarily to continued improvement in IFM margins as well as continued strong workforce accommodations occupancy, high asset utilization and large new contracts being fully operational in WAFES. The decrease from Q3 2023 was related to less wildfire activity;Free Cash Flow ("FCF") was
$11.9 million for Q3 2024, an improvement compared to$10.2 million in the same quarter in 2023 and reflects reduced working capital requirements partially offset by increased seasonal working capital for the quarter due to higher business activity. FCF for the nine months ended September 30, 2024 was$22.0 million with the Adjusted EBITDA conversion rate to FCF expected to exceed50% on an annualized basis;Net Earnings from continuing operations in Q3 2024 of
$13.4 million were slightly lower than$13.9 million for the comparable period in 2023 and were higher on year to date basis at$30.0 million (2023 YTD -$27.5 million ). Consolidated net earnings were$7.7 million and$13.2 million for the three and nine months ended September 30, 2024, respectively, compared to net earnings of$13.9 million and$27.1 million for the three and nine months ended September 30, 2023. 2024 consolidated net earnings were impacted by the loss from discontinued operations;Sale of the Modular business closed on August 30, 2024. This provides Dexterra with the opportunity to simplify our business model and focus on our two continuing core capital-light Support Services businesses and enhance the predictability of our business;
Earnings per share from continuing operations was
$0.21 in Q3 2024 was consistent with$0.21 for the same quarter in 2023. Earnings per share from continuing operations for the nine months ended September 30, 2024 and 2023 were$0.46 and$0.42 , respectively;The Normal Course Issuer Bid ("NCIB") program was amended effective October 16, 2024 as the Dexterra Board believes the Corporation's shares are undervalued. The NCIB amendment increases the maximum number of common shares that the Corporation can repurchase to 3,207,361; and
Dexterra declared a dividend for Q4 2024 of
$0.08 75 per share for shareholders of record at December 31, 2024, to be paid on January 15, 2025.
This news release contains certain measures and ratios, such as Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue, and FCF, that do not have any standardized meaning as prescribed by GAAP and, therefore, are considered non-GAAP measures. The method of calculating these measures may differ from other entities and accordingly, may not be comparable to measures used by other entities. See "Non-GAAP measures" and "Reconciliation of Non-GAAP measures" of the Corporation's MD&A for the three and nine months ended September 30, 2024 for details which is incorporated by reference herein.
Third Quarter Financial Summary
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (000's except per share amounts) | 2024 | 2023(1) | 2024 | 2023(1) | | |||||||
| Revenue | $ | 269,749 | $ | 265,842 | $ | 755,269 | $ | 696,580 | ||||
| Adjusted EBITDA(2) | 32,024 | 38,204 | 80,880 | 83,207 | ||||||||
| Adjusted EBITDA as a percentage of revenue(2) | 14.4 % | |||||||||||
| Net earnings from continuing operations(1)(3) | 13,359 | 13,900 | 29,956 | 27,519 | ||||||||
| Net loss from discontinued operations, net of income taxes(4) | (5,693 | ) | (25 | ) | (16,778 | ) | (466 | ) | ||||
| Net earnings for the period(3) | $ | 7,666 | $ | 13,875 | $ | 13,178 | $ | 27,053 | ||||
| Earnings per share: | ||||||||||||
| Net earnings from continuing operations per share, basic and diluted | $ | 0.21 | $ | 0.21 | $ | 0.46 | $ | 0.42 | ||||
| Total net earnings per share, basic and diluted | $ | 0.12 | $ | 0.21 | $ | 0.20 | $ | 0.41 | ||||
| Total assets | $ | 568,671 | $ | 664,073 | $ | 568,671 | $ | 664,073 | ||||
| Total loans and borrowings | 102,208 | 133,876 | 102,208 | 133,876 | ||||||||
| Free Cash Flow(2) | $ | 11,919 | $ | 10,236 | $ | 21,979 | $ | 650 | ||||
(1) The comparative numbers have been restated as the Modular segment is classified as discontinued operations for the three and nine months ended September 30, 2024 and its operations are included in net loss from discontinued operations, net of income taxes.
(2) Please refer to the "Non-GAAP measures" section for the definition of Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue and Free Cash Flow and to the "Reconciliation of non-GAAP measures" section for the related calculations.
(3) Non-recurring charges included in pre-tax earnings are described in the reconciliation of Non-GAAP measures and include $nil and
(4) Net loss from discontinued operations includes
Third Quarter Operational Analysis
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (000's) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Revenue: | ||||||||||||
| IFM | $ | 99,659 | $ | 79,599 | $ | 301,515 | $ | 242,545 | ||||
| WAFES | 170,090 | 186,243 | 453,754 | 453,535 | ||||||||
| Corporate and Inter-segment eliminations | - | - | - | 500 | ||||||||
| Total Revenue | $ | 269,749 | $ | 265,842 | $ | 755,269 | $ | 696,580 | ||||
| Adjusted EBITDA: | ||||||||||||
| IFM | $ | 6,175 | $ | 4,492 | $ | 17,289 | $ | 14,263 | ||||
| WAFES | 31,817 | 39,549 | 80,947 | 83,038 | ||||||||
| Corporate costs and Inter-segment eliminations | (5,968 | ) | (5,837 | ) | (17,356 | ) | (14,094 | ) | ||||
| Total Adjusted EBITDA | $ | 32,024 | $ | 38,204 | $ | 80,880 | $ | 83,207 | ||||
Integrated Facilities Management ("IFM")
For Q3 2024, IFM revenues were
IFM Adjusted EBITDA for Q3 2024 was
For the nine months ended September 30, 2024, IFM revenues were
Workforce Accommodations, Forestry and Energy Services ("WAFES")
Revenue from the WAFES business for Q3 2024 was
Adjusted EBITDA for Q3 2024 was
For the nine months ended September 30, 2024, revenue of
Discontinued Operations (Modular Solutions)
Net loss from discontinued operations for Q3 2024 was
Liquidity and Capital Resources
Debt was
Additional Information
A copy of Dexterra's Condensed Consolidated Interim Financial Statements ("Financial Statements") for the three and nine months ended September 30, 2024 and 2023 and related Management's Discussion and Analysis ("MD&A") have been filed with the Canadian securities regulatory authorities and are available on SEDAR at sedarplus.ca and Dexterra's website at dexterra.com. The Financial Statements have been prepared in accordance with International Financial Reporting Standards and the reporting currency is in Canadian dollars.
Conference Call
Dexterra will host a conference call and webcast to begin promptly at 8:30 a.m. Eastern time on November 6, 2024 to discuss the third quarter results.
To access the conference call by telephone the conference call dial in number is 1-844-763-8274.
A live webcast of the conference call will be accessible on Dexterra Group's website at dexterra.com/investor-presentations-events/ by selecting the Q3 2024 Results webcast link. An archived recording of the conference call will be available approximately one hour after the completion of the call until December 6, 2024 by dialing 1-855-669-9658, passcode 5076311.
About Dexterra
Dexterra employs more than 9,000 people, delivering a range of support services for the creation, management, and operation of infrastructure across Canada and the U.S.
Powered by people, Dexterra brings best-in-class regional expertise to every challenge and delivers innovative solutions, giving clients confidence in their day-to-day operations. Activities include a comprehensive range of integrated facilities management services, industry-leading workforce accommodation solutions and other support services for diverse clients in the public and private sectors.
For further information contact:
Denise Achonu, CFO
Head office: Airway Centre, 5925 Airport Rd., Suite 1000
Mississauga, Ontario L4V 1W1
Telephone: (905) 270-1964
You can also visit our website at dexterra.com.
Reconciliation of non-GAAP measures
The following provides a reconciliation of non-GAAP measures to the nearest measure under GAAP for items presented throughout the News Release.
Adjusted EBITDA
| (000's) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net earnings | $ | 7,666 | $ | 13,875 | $ | 13,178 | $ | 27,053 | ||||
| Add: | ||||||||||||
| Share based compensation | 1,881 | 693 | 3,357 | 2,030 | ||||||||
| Depreciation & amortization | 8,890 | 9,730 | 25,593 | 26,296 | ||||||||
| Gain on disposal of property, plant and equipment | (373 | ) | (167 | ) | (369 | ) | (107 | ) | ||||
| Equity investment depreciation | 123 | 439 | 887 | 1,176 | ||||||||
| Finance costs | 3,336 | 3,638 | 10,694 | 10,198 | ||||||||
| Asset impairment(1) | - | 2,210 | - | 2,210 | ||||||||
| Income tax expense | 4,808 | 5,276 | 10,401 | 8,904 | ||||||||
| Net Loss from discontinued operations, net of income taxes | 5,693 | 25 | 16,778 | 466 | ||||||||
| Non-recurring: | ||||||||||||
| Contract loss provisions(2) | - | 2,000 | - | 2,255 | ||||||||
| Restructuring and other costs(3) | - | 485 | 361 | 2,726 | ||||||||
| Adjusted EBITDA | $ | 32,024 | $ | 38,204 | $ | 80,880 | $ | 83,207 | ||||
(1) For the three and nine months ended September 30, 2023, the Corporation recognized an asset impairment of
(2) Contract loss provisions for the three and nine months ended September 30, 2024 were $nil (three and nine months ended September 30, 2023 were
(3) Restructuring and other costs for the nine months ended September 30, 2024 include
Free Cash Flow
| (000's) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net cash flows from continuing operating activities | $ | 15,863 | $ | 17,381 | $ | 38,331 | $ | 18,949 | ||||
| Sustaining capital expenditures, net of proceeds | 701 | (726 | ) | (1,330 | ) | (2,025 | ) | |||||
| Finance costs paid | (2,969 | ) | (4,720 | ) | (10,179 | ) | (10,214 | ) | ||||
| Lease payments | (1,676 | ) | (1,699 | ) | (4,843 | ) | (6,060 | ) | ||||
| Free Cash Flow | $ | 11,919 | $ | 10,236 | $ | 21,979 | $ | 650 | | |||
Forward-Looking Information
Certain statements contained in this news release may constitute forward-looking information under applicable securities law. Forward-looking information may relate to Dexterra's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "continue"; "forecast"; "may"; "will"; "project"; "could"; "should"; "expect"; "plan"; "anticipate"; "believe"; "outlook"; "target"; "intend"; "estimate"; "predict"; "might"; "potential"; "continue"; "foresee"; "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding Dexterra's future operating results and economic performance, including return on equity and Adjusted EBITDA margins; capital allocation priorities, acquisition strategy, reorganization of existing business; its capital light model management, market and inflationary environment expectations, lodge occupancy levels, its leverage, Discontinued Operations, Free Cash Flow, wildfire activity expectations and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions, including expected growth, market recovery, results of operations, performance and business prospects and opportunities regarding Dexterra. While management considers these assumptions to be reasonable based on information currently available to Dexterra, they may prove to be incorrect. Forward-looking information is also subject to certain known and unknown risks, uncertainties and other factors that could cause Dexterra's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information, including, but not limited to: the ability to retain clients, renew existing contracts and obtain new business; an outbreak of contagious disease that could disrupt its business; the highly competitive nature of the industries in which Dexterra operates; reliance on suppliers and subcontractors; cost inflation; volatility of industry conditions could impact demand for its services; a reduction in the availability of credit could reduce demand for Dexterra's products and services; Dexterra's significant shareholder may substantially influence its direction and operations and its interests may not align with other shareholders; its significant shareholder's
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/228980
FAQ
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