Black Diamond Group Limited (BDI) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to the Black Diamond investor update webcast and conference call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Jason Zhang, Director of Capital Markets. Please go ahead.

Thank you, Ariel. I'd like to welcome all listeners, and thank you all for attending our investor update meeting today. We hope that all those on the line as well as your loved ones remain safe and healthy throughout these unprecedented times. Before proceeding, I'd like to point out that this meeting may contain forward-looking statements and other information based on our current expectations for the company. A number of business risks and uncertainties could cause actual results to differ materially from these forward-looking statements, which may be further amplified due to the current pandemic caused by COVID-19. Please refer to Page 2 of our most recent investor presentation as well as our financial statements for the quarter ending March 31, 2020, which can be accessed both on our website at www.blackdiamondgroup.com or on SEDAR at www.sedar.com. With us on the call today are Trevor Haynes, our CEO; Toby Labrie, EVP and CFO; Ted Redmond, EVP of Modular Space Solutions; Mike Ridley, EVP of Workforce Solutions; and Patrick Melanson, EVP and Chief Information Officer. The formal presentation will make references to our most recent investor presentation, which has been uploaded onto our website at www.blackdiamondgroup.com/investor-centre and is also accessible if you've logged into the webcast portion of this meeting. We will start with formal remarks from Trevor and our executive team, and we'll then open the line for questions. And with that, I'll pass the call on to Trevor Haynes.

Thank you, Jason. Good morning, everyone, and thank you for listening. We usually do a business strategy update at our Annual General Meeting. But given the necessity for a virtual AGM this year, decided to have a separate investor presentation today. I hope that we will all be able to do in-person presentations again soon. I will begin with a high level of our strategic objectives and an overview of the business today and impacts from COVID-19, then we'll hand over to Toby. We operate within a 5-year strategic framework and 1-year operating plans. The current strategic direction has been consistent for the past couple of years and involve 6 core objectives that drive all aspects of our operating plan and mandates. We will expand on each of these through the presentation, but simply put, they include profitably growth of Modular Space Solutions business; unlock operating leverage within the Workforce Solutions business through increased utilization; scale LodgeLink with increasing market liquidity and network effects; pursue operational excellence to enhance operating margins and life cycle return on assets; employee engagement through development, training and culture; and increase equity value. From a value creation perspective, on Slide 3, we have a solid foundation of recurring diverse and steadily growing rental and ancillary services revenue through our Modular Space Solutions business, and we are seeing opportunities to invest in this business with attractive returns, which will lead to continued growth and margin expansion. We have a high-quality modular camp and lodging platform in our Workforce Solutions business unit. This asset base has been broadly underutilized since the collapse of Canadian oil and gas activity beginning prior to 2016. As we continue to gain traction in redeploying this capacity into mining, infrastructure and disaster recovery opportunities around North America, we expect to see a continuing upward trend in contribution from legacy capital. And through LodgeLink, we have a technology-enabled workforce travel and accommodations ecosystem that has achieved proof-of-concept and is beginning to scale with increasing market liquidity and anticipated compounding network effects. We believe that LodgeLink offers the potential for transitional, if not transformational growth for Black Diamond. So in Black Diamond, you're getting the steady recurring rental cash flows, predictable growth and increasing returns of MSS, while also participating in the uptick in revenues from the repositioning of our WFS business, resulting in higher utilization of existing assets or operating leverage and meaningful value creation should LodgeLink rapidly scale as we believe it should. So there you go, stability, torque and let's say, alpha. Let us explain more. We think of ourselves as specialty rentals and industrial services provider. We organize our business into 2 principal business units: MSS, or Modular Space Solutions; and WFS, Workforce Solutions. The 2 businesses use modular structures with a good amount of shared asset knowledge. However, the BUs are organized by the end-use of modular assets, specifically workforce accommodation or camps or lodges in our WFS business unit and all other applications of modular buildings in our MSS business unit, think offices, classrooms, lavatories, storage buildings, et cetera. Our modular building asset in both business units are long-lived, low maintenance, relocatable, generally reconfigurable and that we can be -- they can be refitted for alternate uses. Tend to garner a longer-term rental term with average term per deployment of close to 27 months, and the asset holds its value well. The asset also leads to opportunity to offer related products and services such as transportation, install and associated construction work, support equipment rentals, furnishings and turnkey camp and hospitality services, et cetera, a healthy trade in the purchase and sale of new and used modular assets. In other words, many ways to capture greater share of wallet at the projects we service and many ways to enhance the return on asset through profitable ancillary revenue streams. Overall, we think this is a great alternative asset class for generating strong risk-weighted returns on invested capital. Admittedly, the company has been working against economic headwinds in Western Canada over the past several years. This is due to the sudden drop in industry activity, specifically in the Canadian energy patch caused by a fall in commodity prices, exacerbated by restrictive public policy. This has impacted our WFS business, in particular. However, we have steadily repositioned and repurposed assets, expanded business development networks into mining, infrastructure and disaster recovery, while expanding the more diversified MSS business. Core rental utilizations and revenues have shown improving metrics over the past 2 years, which is further supported by the continued diversification of rental stream -- of rental revenue sources by geography and industry segment, which Toby will touch on shortly. We have also shown the company's ability to grow again with MSS organic and inorganic fleet growth, evident. Over to Slide 5. So as you see, as we sit today, MSS has over 6,500 modular building rental units in its fleet across North America. Our WFS modular fleet consists of 3,300 units in large and small format camp configurations and operated lodges in North America and [ SBQ ] and rapid deployment camps, schools and MSS format in Australia. Put another way, the company has over 5 million square feet of rentable space with which to generate its core rental revenues. Other quick data points for you. $41 million, 12-month trailing EBITDA and a carrying book value of fleet assets of approximately $350 million. Slide 6, let me address the current situation in COVID-19. Fortunately, we have not had any of our employees or guests, infected by the virus, at least not to our knowledge as of this morning. We activated our business continuity plan around March 8 and shut down all nonessential workplace functions across the company on the 12th. Our business is deemed an essential service in all jurisdictions we operate and has therefore continued to operate throughout the crisis. To do so, we have had to impose effective protocols for distancing, heightened sanitization, adjusted foodservice methodologies and prepared response plans. From a financial perspective, we were fortunate to have ample excess liquidity through our ABL facility of greater than $80 million. We tightened credit and have been vigilant with accounts receivable with good results so far. We substantially eliminated discretionary uncommitted CapEx and adjusted headcount costs where appropriate, with support for our employees through various applicable programs. We have seen our MSS rental utilization remain stable, thus far, with increased rental rate due to new assets coming on rent. WFS saw what could be otherwise considered a seasonal decline in lodge occupancy, typical for spring breakup and some temporary deferrals of projects like Coastal GasLink, due in large part to COVID. U.S. energy services activity has fallen due to COVID impacted oil demand and prices. However, Australia and core camp rentals have remained reasonably stable. LodgeLink activity fell off significantly, along with the entire travel industry. Over 200 buildings have been mobilized for specific COVID relief requirements such as quarantine dormitories, testing and prescreening facilities, lunch room and office spaces for social distancing requirements at essential operations, et cetera. We experienced this demand in all 3 countries and continue to receive requests. The impact on our business is therefore mixed but will overall have been disruptive. While it is difficult to precisely assess timing of specific projects, backlogs and bid logs are healthy, which provides confidence in improving visibility in the second half of the year and into 2021. I will now hand the call over to Toby.

Good morning. As Trevor mentioned, we're strategically continuing to build this business on a foundation of stable recurring cash flow, our efforts are taking hold with rental revenue growing in recent years, especially in MSS and in Workforce Solutions outside of Western Canada. We earn rental revenue on thousands of assets from thousands of customers across 3 countries and in a diverse range of industries, including construction, education, military, healthcare, infrastructure, energy, mining and disaster recovery. In the past, we've had a significant exposure to Western Canada and energy. But in the last couple of years, that's dropped to approximately 30% to 35% of our business. Taking a look at Slide 9. With that stable base of recurring cash flows, we believe an appropriate, yet still conservative amount of leverage for this business is approximately 2 to 3x of EBITDA. To help contextualize why we believe this is appropriate, in periods where our business has seen market dislocation, such as the oil price crash in 2014, 2015, we were able to reduce our CapEx and other cash outflows to bring debt down nearly 50% in the subsequent 2 years. You can see from the graph on the left that as we've restarted the growth of our fleet of rental assets and the associated rental revenue base, we've managed our leverage within this range of 2 to 3x cash flow. You'll also note on the right that this leverage position is modestly conservative relative to comparable companies in the specialty rental and workforce accommodation space. On to Slide 10. At this leverage level, our debt is less than 1/3 of the net book value of our working capital and fleet assets. We've engaged a third-party appraiser to evaluate half our rental fleet, and they concluded that based on the marketability of these assets, their value on a liquidation basis, in fact, exceeds their net book value. This part of our fleet, which is mainly comprised of our MSS assets, therefore, lends itself well to financing using an asset-based lending or ABL structure. In 2019 -- in October of 2019, we entered into a 4-year committed ABL facility. The maximum borrowing base under this $200 million facility is based on the liquidation value of our qualifying fleet plus the qualifying receivables. At March 31, 2020, we had over $80 million of available liquidity under this facility at attractive borrowing rates and minimal covenants. Taking a look at Slide 11. We believe our strong balance sheet provides us with good flexibility to continue to grow our business. In 2020, we have a $35 million growth CapEx plan with $25 million of that targeted to MSS. We target returns of 18% on new capital -- new CapEx deployed and we've been achieving those rates of return on new capital over the last couple of years, while we've also been increasing utilization and rental rates against existing capital. We believe this continued growth of our stable recurring cash flows through fleet and rental growth will allow us to continue to diversify and accelerate our strategies in the coming years. I'll now turn it over to Ted Redmond to discuss the MSS business in more detail.

Thank you, Toby. I lead the strong team that runs Black Diamond's Modular Space Solutions business. On Slide 12, you can see that our MSS business now has over 6,500 units and 13 branches across North America. We have grown this business from 3,704 units at the end of Q1 2016 to 6,503 units at the end of Q1 2020. This is a 15% compound annual growth rate, and it's due to investments in new fleet as well as the Britco and Spectrum modular acquisitions. Our growth over the last 4 years has been primarily in the U.S., Eastern Canada and British Columbia. And we are seeing significant growth in unit count in those regions and realizing scale benefits in our expanding branches. We have rebranded our Spectrum Atlanta operations under our BOXX modular brand and continue to use our Britco brand in British Columbia. MPA is our brand for bank building, sales, rentals and disaster recovery solutions. As Trevor said, our vision is to grow and improve the scale, efficiency and profitability of the MSS business. Short-term, we remain well positioned to continue to profitably grow the MSS fleet by at least 10% per year and are on track to do so in 2020. Longer-term, our target is to double our MSS rental fleet while achieving strong returns on new capital investments and improving returns on existing capital. Per Slide 13, MSS rental revenue continues to grow and is up 17% versus Q1 2019. The investment in fleet has driven continued rental revenue growth, and we are seeing good absorption of the capital we have added to our markets. Sales and nonrental revenue are more variable quarter-to-quarter due to the lumpiness caused by a small number of larger transactions. Lower sales and nonrental revenue in Q1 were driven by project delays and deferrals. However, we are currently working on several sales and installation projects, and we are still seeing demand from customers who want to buy permanent modular solutions. Therefore, we expect that over time, the sales of nonrental revenues should trend similarly to rental revenues albeit in a less uniform manner. Customer demand in our core business has remained steady over the last 3 months. As an essential service, we have safely maintained operations at our branches throughout the COVID-19 crisis. We have been busy renting out extra offices and lunchrooms for social distancing, extra lavatories for handwashing and stand-alone units for COVID-19 test centers such as the Bruce Grey Hospital (sic) [Grey Bruce Hospital] picture you saw on Page 9 and that Trevor discussed. These rentals have essentially offset delays in rentals caused by project deferrals from more traditional projects as a result of COVID-19. Slide 14 shows the strength of the fundamental drivers of our rental business over the last 2 years. As you can see, our average monthly rental rate per unit continues to rise and grew 7% year-over-year to $624 per unit in Q1 2020. Another key component of rental revenue is unit count, which grew 9% year-over-year. While utilization remained essentially flat as we absorbed those extra units into our fleet. Collectively, these fundamentals drove our 17% year-over-year growth in rental revenue. Revenue from renting high-margin, value-added products and services as a complement to our unit rentals, continues to be a focus for MSS and continues to increase. VAPS revenues increased from 11% of rental revenue in Q1 2018 to over 14% of rental revenue in Q1 2020 after adjusting for the effect of the Spectrum acquisition. The fundamentals of MSS are strong and we are very focused on driving rental revenue and return on asset growth. I would now like to pass the presentation over to Mike Ridley, who leads our Workforce Solutions business.

Thank you, Ted. Moving to Slide 15. I'd like to take a few moments to chat about our workforce housing business. Firstly, our fleet is amongst the largest and highest-quality remote workforce housing dorms in North America. Furthermore, we have the largest amount of private format dorms in the market, which are becoming increasingly more popular. While we have seen improving utilization since bottoming out in 2018, there's still room to grow, we have untapped operating leverage with units being available. Our strategy of pursuing new markets in Eastern Canada, the United States and growth in the U.S. and Australia is working. Our very experienced sales team is focused on new industries in mining, green energy, homeless initiatives, disaster relief. Our Energy Services business has performed well in spite of a very challenged macro environment. Our lodging business with over 3,000 rooms remained soft due to low activity, however, we have shut down sections to help reduce costs as well as redeploy units that are in need for other project-specific camps. Australia continues to remain robust and is one of our highest utilization performers in the company. Diversified strategy with a focus on the resource sector and the education sector has enhanced our growth. Moving to Slide 16. We've had -- we've seen good steady improvement in rental revenue from early 2018. While the pandemic has deferred projects, it has not canceled projects. We anticipate improvement in the back half of this year and into next year. I will now pass it over to Trevor to speak to LodgeLink.

Thank you, Mike. Let me tell you about LodgeLink. LodgeLink is a digital marketplace that is focused on servicing companies needing to move and accommodate work crews of varying types in travel and accommodation capacity owners and service providers looking for an efficient interface for selling their capacity to companies with mobile workforces. Business travel is a $1.6 trillion per year global industry. The crew travel subsector, ERM, is estimated at $320 billion per year globally and over $70 billion per year in North America. This is our target market. Even with a slow recovery from COVID, this is a huge industry. What we know is that the logistics for crew-based travel are complicated and generally inefficient. Up to this point, not many platforms have focused on this part of the travel industry, targeting instead the less complicated personal and leisure traveler or the briefcase travel segment of business travel. We have validated the value proposition and our well-passed proof of concept. A year ago, we launched a fully functional and iteratively scalable marketplace with LodgeLink 2.0. Since then, we have been expanding the capacity listed on the platform and the number of MSA that customers engaged to transact. Prior to the COVID-induced travel restrictions, we were reaching all-time daily booking volumes for the marketplace. And importantly, the number of different companies and different properties being transacted was proving that the market liquidity was taking hold. On Slide 19, the key to the value proposition is that our customer is able to build their crew lists and rotation schedules in the system, build their crew and match it up to the camp or hotel or airplane, et cetera. They can attach job tracking codes, AFE numbers, purchase orders or the like, so that all of the costs are captured and organized for accounting and billing. Our customers and property owners received verified reservations and itineraries and 1 invoice per month with a full breakdown per crew or per job code for all stays in the month. We pay the hotels, track, report and provide analytic capabilities and invoice our customers while providing valuable reporting and insight into the -- into their travel costs. The savings for large service companies in back-office efficiencies, air reductions, cost controls and speed to invoice are significant. We negotiate volume discounts from the capacity owners and generate our net revenue through those discounts. The more volume we represent, the better the pricing for our customers and margins for ourselves. On Slide 20, we anticipate that the travel industry and crew-based activity will steadily recover from COVID shutdowns over the second half of the year and into 2021. We expect that LodgeLink will resume and scale up in Q3 with significant upside and value creation potential for Black Diamond over the coming quarters and next few years. In summary, on Slide 21, Black Diamond has been growing again through internally funded organic fleet growth in MSS, which is targeted to average 10% per annum over the next several years. EBITDA in this business unit is growing even faster, with rental rates increasing, value-added products and services being expanded and operations and sales volumes growing. Our WFS strategies of building opportunity pipelines outside of Western Canadian energy are paying off with increasing rental volumes from mining, infrastructure and disaster recovery and a growing backlog of business and prospective business. This will grow our revenues and EBITDA without the need for meaningful capital deployment. And we believe LodgeLink has a high likelihood of significant growth with recovery of workforce travel post COVID. We have a more diverse revenue profile than even 2 years ago. The MSS business has increasing diversification by geography, industry segment and lower customer concentration. WFS has increased revenue from Central Canada and mining, along with increased infrastructure projects and activity in the U.S. The Australian business continues to be strong and to show steady moderate growth, and LodgeLink is quickly expanding through the U.S. The company trades at an enterprise value, almost 50% discounted to book and not far off the company's appraised net liquidation value of just our MSS and U.S. energy assets. The recently closed ABL lending structure provides significant liquidity and with essentially no covenants at current draw. The core rental run rate is growing and the business is more diversified by revenue and geography than at any time in its history. Looking past the near-term economic uncertainty of COVID-19, we believe there is value here and meaningful upside through the balance of our 5-year strategy plan. With that, I'd like to conclude the formal part of our call. Operator, can you please open the line up for questions.

[Operator Instructions] We do have a question from the webcast. Our first question comes from Sandy Mikalachki, MIM Wealth. Please comment on buyback plans and action to date.

Thanks, Sandy. This is Toby Labrie. We put the NCIB in place in January of this year. As with the cash flows that we're generating off the business and our business plan, we felt that it was appropriate to -- in addition to the growth that we felt we could absorb into our -- the growth of our rental assets that we can also return some of that capital to shareholders through share buybacks at a modest pace. And so we had started doing that in March. And as of March 31, we have bought back proximately 88,000 shares. And we've continued into the first part of the second quarter at a similar clip, buying back shares. But we've more recently put that on pause as we navigate the current situation and want to make sure that we're prioritizing cash flows in the current environment. And we will look to potentially restart those purchases later in the year as we get further visibility if it's appropriate.

Our next question comes from Brent Watson of Cormark Securities.

I'm wondering what markets are you seeing to be the most opportunistic for further growth in MSS.

Yes, thanks, and good morning we've been focused -- I think it was Slide 11, we highlighted the areas where we're seeing organic capital flowing. Within the MSS business, British Columbia, where we operate as Britco, as Ted mentioned, we see very strong demand, high utilization, good dynamics, and we've been adding assets fairly steadily over the last 12 to 14 months. We've paused our speculative fleet adds for the time being, so we can assess the impacts of COVID on economic activity. But we do believe that the lower mainland, for example, and Northern British Columbia and even Vancouver Island, for that matter, will recover and show strength through the latter part of the year and we expect to continue to invest. We are the biggest platform in British Columbia as far as modular space rentals. We also very much like the Ontario marketplace. We've been steadily growing in the Greater Toronto area. We made our first acquisition there in 2005. So we've been in the market for quite some time. We are getting to a scale that becomes really quite interesting in this business as far as return metrics and the like. We certainly see opportunity to expand our footprint in the GTA and look to do that as we move forward. We've also had really good success in the greater Ottawa market where we entered just about 2 years ago and have been growing fairly steadily. So British Columbia and Ontario in Canada are where we're most focused. In the U.S., we continue to expand on the Gulf Coast. Our operation out of Houston that is servicing the broader market along the Gulf Coast through Louisiana and Texas is doing well. We've been adding capital there, a little bit lesser degree in the Dallas-Fort Worth area, but we very much like that Gulf Coast marketplace. And then we've been expanding into the U.S. Southeast and we've been adding fleet as well as having acquired a small platform called Spectrum, which speeds up our scale in that marketplace, which we like quite a bit, economic growth, population growth, really nice diverse economies in those surrounding states. So the Carolinas -- we're based in Atlanta, Georgia, but we service the Carolinas, Tennessee, Alabama and Florida. So those are the 4 areas that you will see us targeting the bulk of our growth capital for the MSS business.

And would there be more kind of small mom-and-pop type acquisitions to do perhaps distressed in this current environment?

For sure, there's targets that are suitable for us as tuck-ins. We're certainly looking at those opportunities. As far as them being distressed, the modular rental platforms in the markets that I've mentioned have tended to perform quite well through COVID-19. We'd be more likely to find distressed assets more in the camp and energy services space. However, we feel we've got significant capacity to reposition and address the gaps in the marketplace from attrition in that sector. So first part of your question, yes. We're interested in additional tuck-ins as a way to continue to profitably grow our MSS business. We're not seeing a great deal of distress, although we'll certainly look for that if it does develop.

Our next question comes from [ Sal Clark ] of Bank of Montreal.

Recently, mid of May, we heard that a Calgary-based company, Redrock Camps, had obtained protection under CCAA, which provides temporary accommodation sites for companies in the energy infrastructure and firefighting sectors. I just wanted to see if you had any comment on this development and if you're seeing any weakness as a broader industry on the temporary accommodation sector?

Yes. Thanks for the question. We are aware of a more foodservices-oriented camp company being in CCAA recently. The platforms that are entirely focused into Western Canada. We are seeing some distress around the foodservice camp sector and perhaps even into the modular manufacturing sector. So we are aware of that. As far as how we're looking at the market and the project opportunities that are out there, there's a bit of a gap, we'd call it near-term weakness versus sort of a broader, more prospective marketplace. And perhaps, Mike Ridley, you could chime in and add some color there?

Sure. Thanks, Trevor. Yes, I mean we're staying with our strategy. And although Western Canada has been hit hard just for the better part of 5 years now. And there was a significant buildup of inventory leading up until that. We have seen a lot of assets move into the U.S. market and other parts of the country. The projects that we're still focused on in terms of our strategy. In Western Canada, with TMX, all signs, and that's moving forward, assets are being deployed on site. Keystone, at this point, they're looking -- working through the Canadian sector. We'll see what the election holds coming up ahead in the U.S. LNG opportunities in both Eastern and Western Canada continue -- we continue to have our eyes on that. But as we talked about during the presentation, we're really -- we've worked hard to diversify our business, both geographically and industry-wise the last 2 years. We have a partnership in the U.S. now for disaster relief. And the fact of the matter is when there are disasters, there's a requirement for space rentals and there's a requirement for housing often. And we're positioned well to capitalize on those sort of opportunities. Looking at mining in Eastern Canada, we have a number of great opportunities in that regard and green energy as well. So our strategy is sound. It's good. It's working. And as it relates to others within our industry that are, I guess, in trouble, if you may, we're feeling good about where we're at with our business, our current financial position and our strategy to take assets to the market.

As far as work we have in-house, just to point that out as well, we are contracted for 2 camps on the Coastal GasLink project, with contract value, I think, we're in the mid-$40 million plus. The project has had some delays, but a good part of that contract volume is still to be taken up. And so that's significant. And then I'd say, Mike, we're over 1,000 rooms and growing in Ontario mining projects. Mining and power, which is an interesting shift for us, and we'll be able to provide additional color as the year goes on and those projects increase in deployment. So a bit of a broader footprint and perhaps what's causing near-term disruption in a more local market with smaller camps is a different part of the marketplace than we're being exposed to right now. And I guess the question is, depending how things work their way out and with several different platforms, there's a potential where our opportunity set improves with some attrition through the marketplace.

Our next question comes from Ian Gillies of Stifel.

I know you've done a lot of heavy lifting over the last number of years to transition the business towards MSS. If you go through the math and you go through a sum of parts, I mean, the value is clearly much higher than the current share price. I'm just wondering what management thinks they may still need to continue to execute to realize on some of the observable differences between, I guess, where the stock trades and the perceived intrinsic value.

It's a good question, and it's something that we're quite focused on. First off is to show steady results in line with the strategy that we're articulating here. And we believe COVID is unfortunate from many different perspectives, but there's an uncertainty for us when we've had a sequence of quarters that show the improvement in the core rental run rate and the growing diversity of the platform. But perhaps, Toby, if you can sort of touch on the value perspective and how we view that.

Yes. Sure. I think, as you mentioned, Trevor, part of our core strategy for bridging that gap is to continue to show good, strong sequential growth and results from the businesses we're targeting on improving and growing. And we think scale as well is a factor in helping us to achieve the type of valuation that we think the different parts of our business should attract. We think the MSS business and comparable businesses -- comparable public businesses in that space as well as transactions warrant a multiple higher than where we're transacting. And so continuing to grow that business organically and through tuck-in acquisitions helps us to make that a more meaningful part of the complexion of Black Diamond and then getting more of our underutilized assets work in workforce and diversifying that business helps us. And I think showing through this period, the stability of the business, I think will also help us to demonstrate the resilience of Black Diamond platform and the strategy they're pursuing. So overall, I believe our strategy is one that, as I mentioned, we're seeing the results of what we've set out to do in the last few years and we're seeing that growth. And it's one that we believe begins to accelerate as we can put more and more of our free cash flow to work. And so I think that helps bridge that gap as well, Ian.

Okay. That's helpful. And maybe along those same lines, I know this is a pretty tough time right now, but where does management stand right now on maybe getting smaller to get better or get bigger? Obviously, you have 2 areas that could be -- see pretty good growth in LodgeLink and MSS. I mean how are you thinking about, I guess, some of those dynamics once everything normalizes out here over the next 12 to 18 months.

Yes. It's a good question. I mean from our peak, we're down from 500-and-some employees, and we've been in the 230 to 250. We've got a fairly distributed footprint when you think of the branch network for our MSS business plus the terminals in our camp business, et cetera. So we think we're fairly efficient from a people perspective. The businesses are more connected than perhaps some people think. And if you look at the core asset being a modular building section or a modular building, a lot of commonality between the business units, and there's a lot of applications where you have some amount of equipment from both business units. But then, of course, they also have very distinct markets. So we work hard on that commonality internally to remove redundancies. LodgeLink is really interesting. I mean it's an outshoot of our core expertise around workforce accommodation and workforce logistics that we've been exposed to through the camp and lodging business for many years. It has a commonality in sort of that DNA. But as you scale it out, you think of it as a fairly different business in that it's very technology focused, et cetera. And so perhaps that's where you're looking at, if that's scaling up nicely and values subscribed to it differently than you would for an asset-based specialty rental business. But that's where there would be a view to some sort of partial or other degree of independence of that business. But for the time being, we think there's quite a bit of upside in getting to the next level of scale with LodgeLink, and then we'll assess where we go from there. As far as the 2 modular asset platforms, we think there's great synergy and connectivity between them. And quick to remind anybody on the call, who's not aware, we do not manufacture and we don't outperform foodservice, so we're really an asset management business. We will take on turnkey contracts, but we work through partners who are specialists in foodservices or manufacturing. And so the core business, we think, modular rental makes sense and is scalable, we will see that operating leverage recovering on the workforce business, which will inform much better returns on assets, et cetera.

Okay. Maybe last one for me. I mean we've seen a pretty active mining-financing market. Historically, that's typically been a bit of a lower-margin business on the accommodation side. But could you maybe address your intentions, what you're seeing there right now in your various geographies and perhaps Australia and whether there's any desire to maybe pursue that part of the business in a more aggressive manner just given some of the excess equipment available at this point in time?

Yes. Ian, we made that decision about 2.5, 3 years ago where we added business development skill sets and made a concerted effort to connect ourselves into the mining industry in Canada. And certainly, from a remote accommodation perspective, it is perhaps the biggest driver in the Australian market. So very much, so these are long sales cycles, and so it takes some time to build up the pipeline of opportunities. And that's what you're seeing today is that work going into that industry sector. And I think, just off the top of my head, will be trending towards over 1,000 trending towards 2,000 rooms of capacity into Canadian mining over the next couple of quarters. And so I think that will prove out that we can take the assets out of Western Canada moving in Ontario. And the returns aren't significantly different than what we're seeing in the energy sector right now. Mike, anything you would add to that comment?

Yes. Just one other comment. The nice thing also about the mining sector, construction sector in Eastern Canada is they're taking, I guess, different sort of dorms in terms of they're happy to be using Jack-and-Jill format dorms, which is sort of industry lingo, but a bedroom on each side with a bathroom -- a shared bathroom. Where we see -- so that's good. So there's numerous assets available on that type of product, where in the west in the pipelines, they generally will like the private format dorms I alluded to earlier. So the nice thing about the east is we have assets available that we can quickly move into that market and generate incremental revenue and profit. The Australian market, our approach has really just been good, steady growth. We are definitely focused on the mining sector, but we also have an MSS business currently operating in Brisbane and in Sydney that is also seeing good steady growth as well. And then also a very large focus on the education sector in Australia. So pretty bullish on the Eastern Canada market as well as our Australian market in terms of the approach and the strategy that we're taking.