Highlights
Revenue of $164.4 million and $477.8 million for the three months and year ended December 31, 2020, respectively;
Adjusted EBITDA of $17.5 million and $71.1 million, for the three months and year ended December 31, 2020, respectively;
Net earnings of $0.03 million and $64.5 million and basic EPS of nil and $1.25 for the three months and year ended December 31, 2020, respectively. Net earnings for the year includes a non-cash bargain purchase gain of $29.9 million (three months ended December 31, 2020 - $4.2 million loss);
EBITDA for Q4 2020 and the year ended December 31, 2020 was positively impacted by Canada Emergency Wage Subsidies ("CEWS") of $4.2 million and $32.9 million, respectively;
Net debt reduced by $53 million from $138 million to $85 million since the merger;
Dexterra Group declared a dividend of $0.075 per share for shareholders of record at March 31, 2021, to be paid April 15, 2021; and
The Corporation has leased a facility in Cambridge, Ontario for NRB Modular Solutions. The capital cost of the plant is estimated to be $7 million and it will provide incremental annual production capacity in excess of $100 million. The facility will be operational by the end of the second quarter of 2021 and will ramp-up production through the remainder of 2021.
Toronto, Ontario--(Newsfile Corp. - March 10, 2021) - Dexterra Group Inc. (TSX: DXT) ("Dexterra Group" or the "Corporation") reported its financial and operating results for the three months and year ended December 31, 2020 and 2019. In addition, Dexterra Group announced a quarterly dividend of $0.075 per common share which will be paid on April 15, 2021 to shareholders of record on March 31, 2021. The dividend is an "eligible dividend" in accordance with the income tax act of Canada.
Fourth Quarter and Annual Financial Summary
| Three months ended December 31, | Years ended December 31, | |||||||||||
| (000's except per share amounts) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenue(1) | $ | 164,418 | $ | 64,134 | $ | 477,815 | $ | 261,059 | ||||
| EBITDA(2)(4) | 18,713 | 3,240 | 77,190 | 16,465 | ||||||||
| Adjusted EBITDA(2)(4)(5) | 17,477 | 3,315 | 71,087 | 16,540 | ||||||||
| Net earnings(3)(4) | 27 | 1,455 | 64,479 | 9,304 | ||||||||
| Earnings per share: | ||||||||||||
| Basic(6) | $ | 0.00 | $ | 0.04 | $ | 1.25 | $ | 0.28 | ||||
| Diluted(6) | $ | 0.00 | $ | 0.04 | $ | 1.24 | $ | 0.28 | ||||
| (1) | Revenue for the year ended December 31, 2020 includes $6.6 million related to amounts awarded on two legal proceedings with former customers. |
| (2) | Please refer to "Non-GAAP measures" for the definition of EBITDA and Adjusted EBITDA. |
| (3) | Net earnings for the three months and year ended December 31, 2020 includes $(4.2) million and $29.9 million, respectively Bargain purchase (reduction)/gain resulting from the Acquisition. |
| (4) | Includes $4.2 million and $32.9 million of pre-tax Canada Emergency Wage Subsidy for the three months and year ended December 31, 2020, respectively . |
| (5) | Non-recurring items excluded from Adjusted EBITDA for Q4 2020 relate to legal costs recovered through legal proceedings with a former customer and for the year ended December 31, 2020 incrementally adjusts for acquisition costs and the revenue in item (1) above. |
| (6) | All share and per share data presented has been retroactively adjusted to reflect the share Consolidation discussed in the "Outstanding Shares" section of the MD&A. |
Fourth Quarter Operations Analysis
| Three months ended December 31, | Years ended December 31, | |||||||||||
| (000's) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenue: | ||||||||||||
| Facilities Management | $ | 38,522 | $ | 44,698 | $ | 147,229 | $ | 166,761 | ||||
| WAFES | 78,225 | 19,436 | 234,681 | 94,298 | ||||||||
| Modular Solutions | 48,212 | - | 98,767 | - | ||||||||
| Inter-segment eliminations | (541 | ) | - | (2,862 | ) | - | ||||||
| Total Revenue | $ | 164,418 | $ | 64,134 | $ | 477,815 | $ | 261,059 | ||||
| EBITDA: | ||||||||||||
| Facilities Management | $ | 2,609 | $ | 3,195 | $ | 21,345 | $ | 9,778 | ||||
| WAFES | 14,391 | 1,744 | 57,245 | 11,403 | ||||||||
| Modular Solutions | 4,360 | - | 10,636 | - | ||||||||
| Total EBITDA(1) | 21,360 | 4,939 | 89,226 | 21,181 | ||||||||
| Other Revenue | - | - | (6,569 | ) | - | |||||||
| Corporate and non-recurring items(2) | (3,883 | ) | (1,624 | ) | (11,570 | ) | (4,641 | ) | ||||
| Total Adjusted EBITDA(1) | $ | 17,477 | $ | 3,315 | $ | 71,087 | $ | 16,540 | ||||
| (1) | Includes CEWS of $4.2 million and $32.9 million for Q4 2020 and the year ended December 31, 2020, respectively. | |
| (2) | Includes $1.3 million of legal cost recoveries in Q4 2020 which was applied against expenses and relates to the legal settlement award in Q3 2020 and for the year ended December 31, 2020 incrementally adjusts for transaction costs and $6.6 million awarded in two legal proceedings. | |
Facilities Management
Facilities Management revenues in Q4 2020 were $38.5 million, which represents a decrease of $6.2 million or 14% from the $44.7 million in Q4 2019. Facilities Management revenue decreased primarily due to lower aviation and retail revenue, which decreased by $8.4 million compared to Q4 2019. This was partially offset by new business.
EBITDA as a percentage of revenue was consistent at 7% in both Q4 2020 and Q4 2019 due to the inclusion of $1.0 million in Canada Emergency Wage Subsidy ("CEWS") in Q4 2020 which offset the decrease in revenue from Q4 2019. When adjusting for wage subsidies, EBITDA margin was 4% for Q4 2020 or 3% lower than Q4 2019, due to a restructuring and reorganization in Q4 2020, the increased costs in the healthcare and defense sector, and other costs associated with operating in a COVID-19 environment. See "Non-GAAP measures" below for the definition of "EBITDA as a percentage of revenue".
Workforce Accommodations, Forestry and Energy Services ("WAFES")
Revenues from the WAFES segment for Q4 2020 were $78.2 million, an increase of $58.8 million compared to Q4 2019. The increase in Q4 2020 segment revenues was primarily driven by the Acquisition which added $49.6 million of revenue growth in catering and infrastructure install and rental activities.
EBITDA as a percentage of revenue increased to 18% in Q4 2020 from 9% in Q4 2019 mainly due to the inclusion of $2.8 million CEWS and stronger occupancy at higher margin camps. When adjusting for wage subsidies, EBITDA as a percentage of revenue is 15% which is an increase of 6% compared to Q4 2019. This increase in margin is related to stronger occupancy at higher margin camps.
Modular Solutions
The Modular Solutions business was part of the Acquisition which closed on May 29, 2020. Modular Solutions segment revenues for Q4 2020 were $48.2 million. These revenues are primarily focused on social and affordable housing, industrial projects and portable classrooms.
EBITDA for Q4 2020 was $4.4 million, which included $0.4 million of CEWS impact. The results reflect the focus on social and affordable housing projects where performance and execution have been strong as well as the positive impact of cost reductions and improved efficiencies in our western Canada operations combined with continued strong performance from eastern Canada as we improved resource utilization.
A key metric for the Modular Solutions segment is the backlog[1] of projects and timing of backlog execution. The focus for this business unit will be to secure and increase backlog, which was $61.2 million for social housing at the end of Q4 2020. Additionally, Modular Solutions has recurring modular business beyond social housing worth approximately $40 million per annum.
Liquidity and Capital Resources
The Corporation's financial position and liquidity are strong. The Corporation generated Free Cash Flow of $64.0 million in 2020. In future quarters, principal sources of liquidity include generated Free Cash Flow and proceeds from the disposal of idle or underutilized assets across its operating segments. See "Non-GAAP measures" below for the definition of "Free Cash Flow".
The Corporation significantly improved its leverage and liquidity position subsequent to the Acquisition as well as increased its available capital by negotiating the amended and extended credit facility with an increased limit to $175 million. Since the Acquisition, approximately $53 million on its credit facility has been repaid. As at December 31, 2020, the Corporation had $81.6 million of available liquidity which provides it with significant financial flexibility. Debt reduction will pause in the first quarter of 2021 due to an increased COVID-19 impact on our WAFES business in British Columbia, and the NRB Modular Solutions plant expansion.
Additional Information
A copy of the Corporation's Consolidated Financial Statements for the years ended December 31, 2020 and 2019 and related Management's Discussion and Analysis ("MD&A") have been filed with the Canadian securities regulatory authorities and are available on SEDAR at sedar.com and the Corporation's website at dexterra.com. The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards and the reporting currency is in Canadian dollars.
Conference Call
Dexterra Group will host a conference call and webcast to begin promptly at 8:30 Eastern time on March 11, 2021 to discuss Dexterra Group's fourth quarter results.
To access the conference call by telephone the conference call dial in number is 1-800-319-4610.
A live webcast of the conference call will be accessible on Dexterra Group's website at dexterra.com/investor-presentations-events/ by selecting the webcast link. A PowerPoint presentation will be posted on Dexterra Group's website at dexterra.com on March 10, 2021 to be reviewed on the conference call.
An archived recording of the conference call will be available approximately one hour after the completion of the call until March 25, 2021 by dialing 1-855-669-9658, passcode 6248.
About Dexterra Group
Dexterra Group employs more than 6,000 people across Canada and delivers a range of support services for the creation, management, and operation of infrastructure across Canada.
Powered by people, Dexterra Group 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 facilities management services, industry leading workforce accommodation solutions, innovative modular building capabilities, and other support services for diverse clients in the public and private sectors.
For further information contact:
Drew Knight, CFO
Head office: Airway Centre, 5915 Airport Rd., 4th Floor Mississauga, Ontario L4V 1T1
Telephone: (416) 767-1148
You can also visit our website at dexterra.com
Non-GAAP measures
Certain measures in this press release do not have any standardized meaning as prescribed by generally accepted accounting principles ("GAAP") and, therefore, are considered non-GAAP measures. Non-GAAP measures include "EBITDA", calculated as earnings before interest, taxes, depreciation, amortization, depreciation from equity investment, share based compensation, bargain purchase gain (reduction) and gain/loss on disposal of property, plant and equipment, "Adjusted EBITDA", calculated as EBITDA before acquisition costs, other revenue and non-recurring items, "EBITDA as a % of revenue", calculated as EBITDA divided by revenue, and "Free Cash Flow", calculated as net cash flows from (used in) operating activities, less maintenance capital expenditures, payments for lease liabilities and finance costs, to provide investors with supplemental measures of Dexterra Group's operating performance and thus highlight trends in its core businesses that may not otherwise be apparent when relying solely on GAAP financial measures. Dexterra Group also believes that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Dexterra Group's management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets, and to determine components of management compensation.
These measures are regularly reviewed by the Chief Operating Decision Maker and provide investors with an alternative method for assessing the Corporation's operating results in a manner that is focused on the performance of the Corporation's ongoing operations and to provide a more consistent basis for comparison between periods. These measures should not be construed as alternatives to net earnings and total comprehensive income determined in accordance with GAAP as an indicator of the Corporation's performance. The method of calculating these measures may differ from other entities and accordingly, may not be comparable to measures used by other entities. For a reconciliation of these non-GAAP measures to their nearest measure under GAAP please refer to "Reconciliation of non-GAAP measures" of the Corporation's MD&A.
Forward-Looking Information
Certain statements contained in this press release may constitute forward-looking information under applicable securities law. Forward-looking information may relate to Dexterra Group'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 Group's future operating results and economic performance, its leverage, the NRB Modular Solutions plant in Cambridge, and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions, including expected growth, results of operations, performance and business prospects and opportunities regarding Dexterra Group, which Dexterra Group believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to Dexterra Group, 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 Group'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 Group operates; reliance on suppliers and subcontractors could have a material adverse effect on its business; profitability could be adversely affected by cost inflation; volatility of industry conditions could impact demand for its services; a reduction in the availability of credit could reduce demand for Dexterra Group's products and services; Dexterra Group's significant shareholder may substantially influence its direction and operations and its interests may not align with other shareholders; its significant shareholder's 49% ownership interest may impact the liquidity of the common shares; cash flow may not be sufficient to fund its ongoing activities at all times; loss of key personnel; the failure to receive or renew permits or security clearances; risks related to significant legal proceedings or regulatory proceedings/changes; environmental damage and liability is an operating risk in the industries in which Dexterra Group operates; climate changes could increase Dexterra Group's operating costs and reduce demand for its services; liabilities for failure to comply with public procurement laws and regulations; any deterioration in safety performance could result in a decline in the demand for its products and services; failure to realize anticipated benefits of acquisitions and dispositions; inability to develop and maintain relationships with Indigenous communities; the seasonality of Dexterra Group's business; inability to restore or replace critical capacity in a timely manner; reputational, competitive and financial risk related to cyber-attacks and breaches; failure to effectively identify and manage disruptive technology; economic downturns can reduce demand for Dexterra Group's services; its insurance program may not fully cover losses. Additional risks and uncertainties are described in Note 22 of the Corporation's Consolidated Financial Statements for the years ended December 31, 2020 and 2019 contained in our most recent Annual Report filed with securities regulatory authorities in Canada and available on SEDAR at sedar.com. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Dexterra Group is under no obligation and does not undertake to update or alter this information at any time, except as may be required by applicable securities law.
[1] Backlog is the total value of work that has not yet been completed that: (a) has a high certainty of being performed based on the existence of an executed contract or work order specifying job scope, value and timing; or (b) has been awarded to Dexterra Group, as evidenced by an executed letter of award or agreement, describing the general job scope, value and timing of such work, and where finalization of a formal contract in respect of such work is reasonably assured and expects to be recognized in the next 12 months.
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