Black Diamond Group Limited (“Black Diamond” or “the Company”) (TSX:BDI) announced that the Board of Directors has approved the 2020 capital budget of $35 million. Black Diamond also announced that it has obtained approval from the Toronto Stock Exchange (the "TSX") to commence a normal course issuer bid (the "NCIB"). The Company expects that the 2020 net capital budget, as well as any potential purchases under the NCIB, will generally be funded from internally generated operating cash flow on a full-year basis.
Highlights of 2020 Budget
- Capital plan of $35 million on a gross basis; approximately $25 to $30 million on a net basis
- Continued focus on growing Modular Space Solutions (“MSS”) with approximately $25 million of gross capital planned for this segment
- Approximately $8 million of capital earmarked for WorkForce Solutions (“WFS”)
- Remaining $2 million of capital for leasehold improvements, infrastructure, and a new terminal/yard location
In 2020, approximately $25 million is expected to be invested into the MSS business unit, primarily to drive organic growth across the Company’s North American MSS footprint. The Company will remain disciplined with respect to its capital allocation decisions and ensure capital investments continue to meet or exceed internal hurdle rates within each region.
For the WFS business unit, Black Diamond expects to invest approximately $8 million to drive continued growth of our Australian business while also selectively targeting growth initiatives within our U.S. Energy Services business and to continue to develop the LodgeLink platform.
In Black Diamond’s normal course trade of business, we regularly buy and sell modular buildings in and out of our rental fleets. Proceeds from these sales have generally been in the range of $5 to $10 million and the Company expects this trend to generally hold in 2020. Accordingly, the Company’s net capital investment in 2020 is expected to be between $25 to $30 million on a net basis.