Dexterra Group Inc. Announces Results for Q4 and Year Ended December 31, 2024

This news release contains certain measures and ratios, such as Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue, Return on Equity, and Free Cash Flow 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 and year ended December 31, 2024 and 2023 details which is incorporated by reference herein.

Fourth Quarter and Annual Financial Summary

 

(1) The comparative numbers have been restated as the Modular business was classified to discontinued operations in Q1 2024.

(2) Please refer to the “Non-GAAP measures” section for the definition of Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue, and Free Cash Flow and to the “Reconciliation of non-GAAP measures” section for the related calculations.

(3) Acquisition costs in pre-tax earnings for the three months and year ended December 31, 2024, were $nil and $0.4 million. For the year ended December 31, 2023, charges included a $1.6 million contract loss provision (Q4 2023 – $0.7 million recovery), $2.7 million in restructuring and other costs (Q4 2023 – $nil), and a $2.2 million impairment charge (Q4 2023 – $nil). Please see “Non-GAAP measures” section for additional details.

(4) Net loss from discontinued operations includes $1.8 million related to transaction and closing costs for the year ended December 31, 2024, and a $0.7 million and $2.0 million loss on sale for the three months and year ended December 31, 2024, respectively (three months ended and year ended December 31, 2023 – $nil). The working capital adjustment was recorded in Q4 2024.

Fourth Quarter and Annual Operational Analysis

 

Support Services

Revenue for the year ended December 31, 2024 was $811.2 million, an increase of 10.5% compared to 2023. The increase is primarily driven by the acquisition of CMI which added $66.1 million in revenue and organic growth including several new larger contracts that were mobilized in the second quarter of 2024.

Adjusted EBITDA for the year ended December 31, 2024 was $74.1 million, an increase of 36.8% compared to 2023. The main factors for the overall increase in Adjusted EBITDA include the acquisition of CMI, improved Adjusted EBITDA margins in Facilities Management which were 6.3% in Q4 2024 and strong occupancy at multiple large camps. In 2024, our Support Services business was also successful in replacing the unprecedented wildfire hospitality activity in 2023 with new long-term contracts. Collectively, these factors resulted in a significant net positive impact on Adjusted EBITDA and margins which are expected to exceed 8% over the longer-term.

For Q4 2024, Support Services revenues were $206.5 million, an increase of 18.2% over Q4 2023. Adjusted EBITDA was $18.2 million in Q4 2024 compared to $12.2 million for Q4 2023 and Adjusted EBITDA as a percentage of revenue was 8.8% in Q4 2024 compared to 7.0% in Q4 2023. Drivers of the increases in revenue and Adjusted EBITDA are consistent with the factors mentioned above.

Asset Based Services

Revenue for the year ended December 31, 2024 was $191.8 million a decrease of $1.1 million compared to $192.9 million in 2023. The decrease is due to a more normalized wildfire season in 2024 compared to 2023, which was mostly offset by the strong utilization of assets including mobilization of new long-term contracts in 2024.

Adjusted EBITDA for the year ended December 31, 2024 was $56.2 million, a decrease of $14.7 million compared to $70.9 million in 2023. Adjusted EBITDA margin for the year ended December 31, 2024 was 29.3% compared to 36.7% in 2023. The lower Adjusted EBITDA and Adjusted EBITDA margin in 2024 is due to the mix of business (i.e. unprecedented wildfire camp construction activity occurred in 2023 versus new contract mobilization activity in 2024). Adjusted EBITDA margins in this business in the future are expected to fluctuate between 30% to 40% depending on the mix of business.

For Q4 2024, ABS revenues were $41.3 million compared to $56.5 million in Q4 2023. The decrease was primarily due to the demobilization activity of wildfire support camp equipment in Q4 2023. Adjusted EBITDA for the quarter was $13.9 million compared to $15.6 million for Q4 2023 and Adjusted EBITDA as percentage of revenue was 33.7% in Q4 2024 compared in 27.6% in Q4 2023. The increase in Adjusted EBITDA margin in Q4 2024 is related to stronger camp equipment rentals in 2024 versus more demobilization activity in Q4 2023.

Liquidity and Capital Resources

Debt was $67.9 million at December 31, 2024, compared to $102.2 million at Q3 2024. The decrease in debt from Q3 2024 was expected as our accounts receivable from the strong summer activity levels were converted into cash as the business moved out of its normal seasonal peak activity period in Q3 2024. Adjusted EBITDA conversion to FCF was 69.5% for the 2024 year as compared to 54.1% in 2023. Adjusted EBITDA conversion to FCF is expected to continue to be above 50% 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. We will continue to have the benefit of paying nominal income taxes in 2025 as the Corporation’s 2025 tax installments will not be payable until early 2026.

Additional Information

A copy of Dexterra’s Consolidated Financial Statements (“Financial Statements”) for the years ended December 31, 2024 and 2023 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. Additional history of comparative information under our new segmentation is also available on our website under Investors & Governance and is for informational purposes only.

Conference Call

Dexterra will host a conference call and webcast to begin promptly at 8:30 a.m. Eastern Time on March 7, 2025 to discuss the 2024 year-end and fourth 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 dexterra.com/investor-presentations-events by selecting the webcast link. An archived recording of the conference call will be available approximately one hour after the completion of the call until April 6, 2025, by dialing 1- 855-669-9658, passcode 3578869.

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

 

(1) For the year ended December 31, 2023, the Corporation recognized an asset impairment of $2.2 million on excess camp assets which it was selling.

(2) Contract loss provision (recovery) for the three months and year ended December 31, 2023 of $0.7 million and $1.6 million was driven by the settlement of an onerous Support Services contract with a customer and provision for an onerous Support Services contract related to the right-sizing of the Support Services portfolio, respectively.

(3) Restructuring and other costs for the year ended December 31, 2024 of $0.4 million include expenses related to the acquisition of CMI during the year. Restructuring and other costs for the three months and year ended December 31, 2023 of $nil and $2.7 million, respectively include costs related to the CEO and CFO transitions of $1.9 million and demobilization and restructuring costs of $0.8 million.

Free Cash Flow

 

Return on Equity

 

(1) Average total shareholders’ equity is calculated as the average of beginning total shareholders’ equity and ending total shareholders’ equity for the year.

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, discontinued operations, 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.

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