Black Diamond Group (TSE:BDI) reported second-quarter 2026 revenue growth driven by recurring rental and lodging services, while adjusted EBITDA rose at a slower pace as the company’s revenue mix shifted following its acquisition of Royal Camp Services.
Consolidated revenue increased 23% year over year to CAD 129.2 million, while adjusted EBITDA rose 4% to CAD 30.4 million. Chief Executive Officer Trevor Haynes said the lower margin reflected a greater contribution from Lodge Services revenue, including catering and hospitality operations, which carries lower margins than the company’s core rental businesses.
Consolidated rental revenue rose 17% to CAD 45 million. Contracted future rental revenue stood at CAD 136.5 million at quarter-end, which management said illustrated the resilience of its recurring revenue base.
Workforce Solutions expands with Royal contribution
Revenue in the Workforce Solutions segment increased 55% from a year earlier to CAD 72.2 million, while adjusted EBITDA increased 3% to CAD 15.6 million. The results were primarily driven by the contribution from Royal Camp Services, acquired late last year.
Lodge Services revenue increased 174%, while rental revenue rose 35% and non-rental revenue increased 34%. Sales revenue, however, declined 70% as the company elected to retain fleet capacity rather than sell used assets.
“With fleet rationalization largely complete and demand visibility continuing to strengthen, we believe this approach better positions the business to capitalize on future opportunities,” Chief Financial Officer Toby LaBrie said.
Workforce Solutions utilization was 55.2% in the quarter. Management said the segment has more than CAD 2 billion in formal bids outstanding across more than 20 active Canadian projects, representing more than twice its current available fleet capacity. The pipeline includes energy, mining, infrastructure, data center, defense and military-related projects.
Haynes said the company has approximately 5,300 to 5,500 beds of available capacity and expects to use that capacity before making significant new investments in camp assets. He said smaller projects are beginning to move forward and could gradually lift utilization, while larger projects could create more substantial increases over a two- or three-quarter period if they proceed.
Management described the typical term assumed in its bid pipeline as roughly three years, although some larger mining developments could include multi-year construction periods followed by much longer operating lives. Jon Warren, president of Royal Camp Services, said some customers have begun seeking to secure assets in advance because of concerns about future availability.
Haynes also said Workforce Solutions bid rates have increased about 50% from their trough more than two years ago, though he said rates would likely need to approximately double from current levels to justify capital spending on newly built camp equipment.
Modular Space Solutions posts rental and VAPS growth
Modular Space Solutions generated rental revenue of CAD 28.6 million, up 8% from the prior-year quarter. Adjusted EBITDA rose 3% to CAD 20.9 million. Utilization was 77.9%, and average monthly rental rates increased 3%.
Sales revenue in the segment fell 18%, primarily because of lower custom sales activity and funding uncertainty in the U.S. education market. Ted Redmond, chief operating officer of Modular Space Solutions, said the quarter was compared against a strong sales period a year earlier and that the company’s second-quarter sales performance was in the middle of its range over the past six years.
Redmond said the company expects its sales backlog to support a “decent” second half, though project timing can make custom sales volatile. He added that U.S. education demand is closer to normal levels than the elevated levels seen during the COVID period and amid earlier infrastructure-related incentive programs.
Value-Added Products and Services revenue increased 35% and reached 11.7% of Modular Space Solutions rental revenue. Redmond said the company continues to target VAPS penetration in the mid-teens over the long term.
Capital expenditures totaled CAD 24.9 million in the quarter, down 23% year over year, while capital commitments rose 24% to CAD 34.2 million. Haynes said the majority of committed growth capital is currently directed toward Modular Space Solutions, including demand in the southern and southeastern United States and Western Canada. He characterized inflation in Modular Space Solutions building costs as approximately 3% to 4% year over year.
LodgeLink reaches record trade value
LodgeLink delivered record total trade value of CAD 43.5 million, up 69% year over year. Net revenue rose 64% to CAD 5.4 million, while travel segments sold increased 44% to more than 215,000.
Haynes said customer retention, new customer adoption and engagement remain strong. The company expects its new LodgeLink software product to enter beta testing shortly and become generally available later this year. Management said the platform has more than 2 million hotel rooms signed onto it and is generating positive EBITDA.
LaBrie said LodgeLink’s results demonstrate its potential to become a meaningful long-term growth driver, with revenue primarily included in Workforce Solutions non-rental revenue.
EPS declines as company cites acquisition-related costs and tax assessment
Reported earnings per share were CAD 0.01, compared with CAD 0.15 in the prior-year quarter. Adjusted EPS was CAD 0.09, down from CAD 0.18. The company introduced adjusted EPS as a non-GAAP measure that excludes ERP implementation costs, amortization of intangible assets from the Royal acquisition and a provision related to British Columbia sales-tax assessments.
Black Diamond recorded a CAD 3.6 million charge associated with the B.C. assessments. LaBrie said the assessments stem from a retroactive application of a revised interpretation of tax definitions. The company is appealing the assessments and invoicing customers in an effort to recover the additional tax.
Free cash flow was CAD 14.6 million and funds from operations were CAD 28.6 million. The company said working capital was temporarily affected by delays in billing and collections following the launch of a new enterprise resource planning system for its Modular Space Solutions and corporate operations. Management expects working capital to normalize as the system stabilizes.
Net debt was CAD 351 million at quarter-end, representing net debt-to-trailing-12-month adjusted EBITDA leverage of 2.4 times, within the company’s target range of two to three times. During the quarter, Black Diamond expanded its asset-based lending facility to CAD 550 million, bringing available liquidity to nearly CAD 200 million.
Haynes said the company expects capital spending to accelerate in the second half as demand develops, while continuing to prioritize contract-backed investments and fleet deployments with attractive expected returns.
About Black Diamond Group (TSE:BDI)
Black Diamond is an industrial services and asset management company with two operating business units – Modular Space Solutions (MSS) and Workforce Solutions (WFS). Black Diamond operates in Canada, the United States and Australia. MSS, through its principal brands – BOXX Modular, CLM and Schiavi – owns a large rental fleet of modular buildings of various types and sizes. Its network of local branches rent, sell, service and provide ancillary products and services to a diverse customer base in the construction, industrial, education, financial, and government sectors.
