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Dexterra Group Inc. Announces Results for Q1 2025
May 06, 2025 5:08 PM EDT | Source: Dexterra Group Inc.
Toronto, Ontario--(Newsfile Corp. - May 6, 2025) - Dexterra Group Inc. (TSX: DXT)
Highlights
Dexterra generated strong results for the three months ended March 31, 2025 with consolidated revenue of $239.7 million, an increase of 3.4% compared to the same period in 2024. The increase in revenue was due to continued strong activity levels in Support Services including a full quarter contribution from CMI Management LLC ("CMI"), partly offset by lower access matting activity in ABS due to cold weather early in the quarter.
Adjusted EBITDA for the three months ended March 31, 2025 was $25.2 million, an increase of 29% over Q1 2024. The increase in Adjusted EBITDA is primarily due to high occupancy at camps mobilized in the second quarter of 2024 and a full quarter of CMI results in Support Services.
Free Cash Flow ("FCF") for the three months ended March 31, 2025 was $1.2 million, compared to $10.6 million for the same period in 2024. The decrease was due to the delayed receipt of a customer receivable of $20.3 million being funded by the Canadian federal government which is expected to be collected in May. The Adjusted EBITDA conversion to FCF is expected to exceed 50% on an annual basis.
Net earnings from continuing operations for the three months ended March 31, 2025 were $8.6 million, compared to $4.4 million for the same period in 2024 due to the same factors mentioned above. Our continuing operations delivered a return on equity of 15.1%. Earnings per share from continuing operations was $0.14 in Q1 2025 compared to $0.07 in Q1 2024.
In connection with the ongoing Normal Course Issuer Bid ("NCIB"), Dexterra purchased and cancelled 989,000 common shares in Q1 2025 at a weighted average price of $7.69 per share for a total consideration of $7.6 million. The Board has approved the extension of the NCIB program, subject to TSX approval. This will allow the Corporation to repurchase up to approximately 3 million shares in the period from May 23, 2025 to May 22, 2026. Dexterra plans to remain opportunistic with share buybacks in 2025 as we believe our shares are undervalued.
Dexterra declared a dividend for Q2 2025 of $0.0875 per share for shareholders of record at June 30, 2025, to be paid on July 15, 2025.
This news release contains certain measures and ratios, such as Adjusted EBITDA, Adjusted EBITDA as a % of revenue, FCF, and Return on Equity 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 months ended March 31, 2025 details which is incorporated by reference herein.
First Quarter Financial Summary
| Three months ended March 31, | ||||||
| (000's except per share amounts) | 2025 | 2024 | ||||
| Revenue | $ | 239,731 | $ | 231,896 | ||
| Adjusted EBITDA(1) | 25,174 | 19,579 | ||||
| Adjusted EBITDA as a % of revenue(1) | 10.5% | 8.4% | ||||
| Net earnings from continuing operations(2) | 8,622 | 4,437 | ||||
| Net earnings (loss)(2)(3) | 8,622 | (3,566 | ) | |||
| Earnings (loss) per share: | ||||||
| Net earnings from continuing operations per share, basic and diluted | 0.14 | 0.07 | ||||
| Total net earnings (loss) per share, basic and diluted(3) | 0.14 | (0.06 | ) | |||
| Total assets | 546,671 | 656,086 | ||||
| Total loans and borrowings ("Net Debt") | 81,506 | 132,656 | ||||
| Free Cash Flow(1) | 1,180 | 10,642 | ||||
(1) Please refer to the "Non-GAAP measures" section for the definition of Adjusted EBITDA, Adjusted EBITDA as a % of revenue, and FCF and to the "Reconciliation of non-GAAP measures" section for the related calculations.
(2) Acquisition costs in pre-tax earnings for the three months ended March 31, 2024 was $0.4 million. Please see "Non-GAAP measures" section for additional details.
(3) Net earnings (loss) for the three-months ended March 31, 2024 included net loss from discontinued operations of $8.0 million (2025 - $nil).
First Quarter Operational Analysis
| Three months ended March 31, | ||||||
| (000's) | 2025 | 2024 | ||||
| Revenue: | ||||||
| Support Services | $ | 198,775 | $ | 185,540 | ||
| Asset Based Services | 40,956 | 46,356 | ||||
| Total Revenue | $ | 239,731 | $ | 231,896 | ||
| Adjusted EBITDA: | ||||||
| Support Services | $ | 18,879 | $ | 15,274 | ||
| Asset Based Services | 13,458 | 10,023 | ||||
| Corporate, Other and Inter-segment eliminations | (7,163 | ) | (5,718 | ) | ||
| Total Adjusted EBITDA | $ | 25,174 | $ | 19,579 | ||
| Adjusted EBITDA as a % of Revenue | ||||||
| Support Services | 9.5 % | 8.2 % | ||||
| Asset Based Services | 32.9 % | 21.6 % | ||||
Dexterra completed the repositioning of its business from an operational and external reporting perspective in Q4 2024. This repositioning combines our businesses with similar characteristics and has realigned the segment reporting into two segments: Support Services and Asset Based Services ("ABS").
Support Services
Revenue for Q1 2025 was $198.8 million, an increase of 7.1% over Q1 2024, primarily driven by high occupancy at camps that were mobilized in the second quarter of 2024 and increased revenue of $10.6 million from the inclusion of CMI for a full quarter in 2025.
Adjusted EBITDA for Q1 2025 was $18.9 million, an increase of 23.6% over Q1 2024. Adjusted EBITDA margin for Q1 2025 was 9.5% compared to 8.2% in Q1 2024 and 8.8% for fiscal 2024. The increase in Adjusted EBITDA and margin is due to the factors mentioned above, continued improvement of Facilities Management margins above 6%, and the mix of business including the contribution of higher margin project work in Q1 2025. Adjusted EBITDA margins are expected to exceed 8% over the long term.
Asset Based Services
Revenue for Q1 2025 was $40.9 million, a decrease of 11.6% over Q1 2024. This decline is primarily driven by lower access matting sales and rentals which were impacted by lower demand due to cold regional temperatures during January and February. Demand for access matting is higher in milder temperatures, which occurred in Q1 2024. We expect demand to return to historically higher levels in Q2 2025.
Adjusted EBITDA for Q1 2025 was $13.5 million, an increase of 34.3% over Q1 2024. Adjusted EBITDA margin for Q1 2025 was 32.9% compared to 21.6% in Q1 2024. Adjusted EBITDA and margins were higher in Q1 2025 as a result of business mix, specifically the margin differential between higher camp asset utilization in Q1 2025 and project mobilization related work in Q1 2024. Adjusted EBITDA margins in this business in the future are expected to fluctuate between 30% to 40% depending on the mix of business.
Liquidity and Capital Resources
Net debt was $81.5 million at March 31, 2025 compared to $67.9 million at December 31, 2024. The increase in debt from Q4 2024 was due to the delayed collection of a customer receivable described earlier. Adjusted EBITDA conversion to FCF is expected to exceed 50% on an annual basis over the medium-term, with Q3 and Q4 experiencing the highest conversions to FCF as a result of the seasonality of the Support Services business.
Additional Information
A copy of Dexterra's Condensed Consolidated Interim Financial Statements ("Financial Statements") for the three months ended March 31, 2025 and 2024 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 May 7, 2025 to discuss the first 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's website at ir.dexterra.com/events-presentations by selecting the Q1 2025 Results webcast link. An archived recording of the conference call will be available approximately one hour after the completion of the call until June 7, 2025 by dialing 1- 855-669-9658, passcode 5939979.
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
| Three months ended March 31, | ||||||
| (000's) | 2025 | 2024 | ||||
| Net earnings from continuing operations | $ | 8,622 | $ | 4,437 | ||
| Add: | ||||||
| Share based compensation | 1,978 | 713 | ||||
| Depreciation and amortization | 9,577 | 8,103 | ||||
| Equity investment depreciation | 151 | 438 | ||||
| Finance costs | 2,059 | 3,830 | ||||
| Loss on disposal of property, plant and equipment | 29 | 20 | ||||
| Income tax expense | 2,758 | 1,677 | ||||
| Restructuring and other costs(1) | - | 361 | ||||
| Adjusted EBITDA | $ | 25,174 | $ | 19,579 | ||
(1) Restructuring and other costs for the three months ended March 31, 2024 of $0.4 million includes expenses related to the acquisition of CMI.
Free Cash Flow
| Three months ended March 31, | ||||||
| (000's) | 2025 | 2024 | ||||
| Net cash flows from continuing operating activities | $ | 5,643 | $ | 16,773 | ||
| Sustaining capital expenditures, net of proceeds from the sale of property, plant and equipment and intangible assets | (470 | ) | (667 | ) | ||
| Finance costs paid | (1,903 | ) | (3,932 | ) | ||
| Lease payments | (2,090 | ) | (1,532 | ) | ||
| Free Cash Flow | $ | 1,180 | $ | 10,642 | ||
Return on Equity
| Trailing twelve months ended March 31, | ||||||
| (000's) | 2025 | 2024 | ||||
| Net earnings from continuing operations | $ | 41,727 | $ | 35,563 | ||
| Average total shareholders' equity(1) | 276,477 | 281,350 | ||||
| Return on Equity | 15.1 % | 12.6 % | ||||
(1) Average total shareholders' equity is calculated as the average of beginning total shareholders' equity and ending total shareholders' equity over the period from March 31, 2024 to March 31, 2025..
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; its capital light model, market and inflationary environment expectations, asset utilization, camp occupancy levels, its leverage, FCF, wildfire activity expectations, U.S. tariff impacts, 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; outsourcing of services trends; reliance on suppliers and subcontractors; cost inflation; U.S. tariff impacts; 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 51% 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; significant legal proceedings or regulatory proceedings/changes; environmental damage and liability is an operating risk in the industries in which Dexterra operates; climate changes could increase Dexterra'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'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's services; its insurance program may not fully cover losses. Additional risks and uncertainties are described in Note 23 to the Financial Statements contained in its most recent Annual Report filed with securities regulatory authorities in Canada and available on SEDAR at sedarplus.ca. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Dexterra 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.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/251031