Google Finance
Filing
Nov. 20, 2015
2015 Q3 Data
1.Basic Information
(1) History
Trevor Haynes is the founder. Previously he worked for ATCO Structures & Logistics from 1992 to 2002. At 2003 he found BDI and took it IPO at 2006 as income fund. Later converted to corporation. The company grows quite well to close to $400m sales at 2014.
(2) Business related:
Its main business is the camp and catering which provide housing rental and catering for oil, gas, pipeline companies. Currently it has around 6000 units with more than 13,000 rooms. It takes around 25% of the total camp market share of Canada.
50% revenue seems related to oil and rest seems less affected by oil price.
The rental business has a very high gross margin which is over 90%. However, it doesn't count the depreciation which is the major expense. The lodging business might have just 30% to 35% margin.
The company uses a declining balance depreciation method instead of straight line which is quite unusual. Boxx fleet uses 6% declining rate, Camps fleets uses 10% declining rate. Those fleets usually can last for 25 years. As mentioned in Q3 2015 release, 2016 maintenance CapX is only $3.0m, however, it is just the repair cost, not the replacement cost. Currently total asset is around $550m. I am using current $50m depreciation as ongoing maintenance CapX, future depreciation expense will be lower if there is not much growth CapX.
(3) Management.
CEO: Trevor Haynes.
(4) Debt and Credit facility.
Around $185m debt outstanding right now.
$168m line of credit: $96m outstanding, current interest 3%. Debt covenant: Debt/EBITDA <= 3.0. Currently the ratio < 2.
$50m term loan mature at 2019: interest 5.5%. Annual repayment $12.4m
$40m term loan mature at 2022: interest 4.6%. Annual repayment $13.3m starting July 2020.
(5) Insider holding, options, Insider trading info, share buy back.
Trevor Haynes: 2.5m shares. 6%.
Steven Stein: 1m shares. 2.5%.
Total insider around 15%.
(6) Employee numbers
Around 450 at end of 2014. Current might below 400.Steven Stein: 1m shares. 2.5%.
Total insider around 15%.
(6) Employee numbers
(7) Auditor
(8) Industry comparison.
1) ATCO: the original company Harynes worked for. Its revenue around $4B but camp related revenue just around $800m right now. It seems has 3300 housing units which is close to BDI, and 13000 space rental units. Because it is diversified, its less affected by the oil price.
2) Horizon North Logistics: Camp revenue $250m in 2015 compare to $280m in 2014. Has around 9500 beds. It has very little debt.
3) Civeo Corporation: 2015 revenue $500m compare to over $900m in 2014. It might have around 18000 rooms in total. This company seems the most trouble one. At end of 2015, its net debt is around $350m
4) Noralta Lodge: Seems a private company. It has around 6000 of camp rooms which might be half of BDI's size. At end of 2014 it has 560 employees. The company seems doing quite well, it recently even join-opened new service business.
5) Clean Harbors, Inc: Public company. Mainly not on camps. Camp revenue around $90m in 2015, down half from 2014.
The top four players seems each took around a quarter market share in Canada. Among the four BDI seems the only one that does not do manufacturing. As stated by the company that the manufacturing business doing good in booming years but well have trouble in bad years, so BDI chose to outsource it. This seems a wise decision. Horizon North and Civeo seems only had business related to oil and gas. These two was hit hard the most. However, Civeo seems the worst managed and has a lot of debt.
(9) Major events
2. Financial data.
1) Staring Q3 2015, cut dividend from 8c/month to 5c/month. It still needs to pay out dividend around $24m/year.
3. Valuation
Current price around $7 with market cap of $290. Tangible book value around $8.
LNG(Liquified Nature Gas): There are two major LNG pipeline projects in waiting for approve by the federal government at early 2016. Any approve of them will benefit all the four companies. However, the process could be long the result is unknown. Company shouldn't rely on these project to survive.
Assume revenue down to $200m, Gross margin 50%, SG&A 15%, then EBITDA will be 35% which is $70m. Assume $50m depreciation, $8m interest expense, that would leave just $12m pretax income. Not good but still profitable. On a cash basis, the maintenance CapX should much lower than $50m, As indicated in Q3 release, 2016 CapX will be $25m. So it even revenue drops to $150m, it can generate around $52m EBITDA, it still can be cash positive. However, it might need to cut dividend to achieve that in this case. Currently its cash needs is $24m dividend + $8m interest + $12.4m debt repayment + $25m CapX = $70m.
Its BOXX modular business seems not tightly related to oil and gas. It generates $7m/ quarter EBITDA currently. It was acquired from Nortex Modular at 2009 for around $25m. At that time, it has revenue of $35m/year and EBITDA of $6.2m/year.
Among the 3 companies that only doing the camping, this company is in the best shape. The main reason is that it doesn't have manufacturing segment. It is the only one that is still profitable.
4. Risk
1) Don't know how bad the oil sand business will be. It is hard to tell from its report which parts are not affected by the low oil price. In my view, its segment allocation is really poor thus it will reorganize the segment in next year. Hopefully it will provide more clear picture. Currently it is hard to tell what is the bottom line of its revenue.
2) It is hard to tell real maintenance cost of its capital. The depreciation method is not usual. Overall I feel 10% annual depreciation rate is enough. Real replacement cost might be lower.
5. Conclusion
The company is well managed and been very successful in the past 10 years. With price below tangible book value and it unlikely be cash negative, current price is quite cheap. However, there is risk of continue revenue shrink.
6.Links
Jan. 14, 2016
Recent price dropped to $5 with market cap around $210m.
1) There is not much change except the crude oil dropped to low $30s. Its very likely that the oil sand business part will be really shrinking in the short term. But I believe it still can maintain $150m revenue level in 2016.
2) However, there is two concerns here. First is the debt covenant, currently it needs to maintain around $60m annual EBITDA otherwise it will trigger the default. I believe its asset has not much value if sale them now. If revenue indeed decrease to $150m, the EBITDA really depends the revenue mix, if most revenue is from lodging, then EBITDA possible be below $60m.
3) The second concern is the another dividend cut. If revenue drops to $150m, then it is almost certain will be cut. Even without that, it is still wise to cut dividend to reduce debt. However, the market will react badly any time the dividend is cut.
4) On the plus side, the company is easy to be cash positive. I wish its debt had been lower and don't have the dividend burden.
Ap. 05, 2016
Recent price: $3.90, market cap $150m.
1) Dividend cut to half which is $0.30/year. 2016 CapX reduced to $10m. Currently its new cash needs for 2016 is $12m dividend + $10m CapX + $8m interest +$12.5m debt payment = $42.5m.
2)Reduce net debt to around $154m. Including $70m line of credit and $90m in term loan.
3)There are four segments in the business:
(1)Camps: around $400m in assets, around 3400 units and 12500 beds. valued $120k/units and $30k/beds. Its revenue includes rental income and non-rental revenue. Currently reports revenue combined with BOXX segments. In 2015, total EBIDTA is around $55m.
(2)BOXX: around $100m in assets. around 3700 units, valued around $27k/units. Count rental as revenue. In 2015, total EBIDTA is around $27m. Combined Camps and BOXX, total revenue is around $170m in 2015. I estimate only $50m to $60m is from BOXX. Around 30% of BOXX is related to oil and gas.
(3)Logistic: Not much asset value, mainly service revenue. Around 30% gross margin. EBIDTA for 2015 is $19m with $87m in revenue.
(4)Energy service and other: 10% of revenue. EBIDTA not much.
4)New valuation:
(1) The BOXX segment seems the most stable one which I believe can still generate $20m-$25m in EBIDTA in 2016 or even better.
(2) Camp and logistic will be report together in 2016. Assume 45% decrease, it will generate $40m in EBIDTA, estimate $15m corp expense in 2016, total EBIDTA will be $45m to $50m. It still can be cash positive. However, the 3:1 debt covenant is kind of close. I would expect it would cut the dividend totally which will leave only $30m basic cash need.
(3) On a valuation basis, the BOXX segment should provide a basic $70m-$80m bottom value for the company. With current $150m market cap. It is value the rest of the company for $70-$80m with net asset value of $250m($400m-$150m). Unless the line of credit became an issue, the company is really cheap now.
(4)Generally I like the management team. It took necessary steps to cut cost and even cut 10% in salary starting 2016. The BOXX segment really provide some bottom line for this company. Otherwise it is hard to tell what will happens and feels it is even worse than Horizon North. But with BOXX, it might do better.
Apr. 20, 2016
Price: $4.20.
(1) The company released 2015 data in reorganized segments. The BOXX segment revenue actually is $62m, but EBITDA is only $19.7m. This is quite different than the reported space rental segment EBITDA of $26.6m. Probably because there is 28% of space rental EBITDA is related to oil & gas which is moved to energy service. Assets belongs to BOXX is $120m.
(2) Energy service EBITDA is $10.8m while previously reported as $4.1m. So the $6.7m is taking from space rental segment in previous report. Assets: $110m
(3) Camp & lodging EBITDA is $74m which is consistent with previous reported data of $55.3m+$18.9m. Assets : $250m.
(4) Corporate EBITDA is $18.8m which is $2m more than previous reported data. Assets: $38m.
(5) BOXX segment is the most stable part which still can generate $20m in EBITDA I believe. Energy service EBITDA is also more stable. I estimate $2m/quarter which equals $8m/year.
(6) Camp&Lodging segment: The rental part has high margin around 90% while non rental has low margin around 30%. Rental revenue down from $12.7m in Q1 to $6.6m in Q4. Rental beds down from 5000 in Q1 to 3000 in Q4. Rate holds pretty well at $25/day. Lodging Revenue down from $40m to $20m from Q1 to Q4. Beds down from 4300 to 3100. Rate down from $106 to $74.
(7) Assume Lodging beds average 2500 in 2016, day rate $70, then it would generate 2500*$70*365*30% =$19m EBIDTA. Assume rental beds average 2000 in 2016, then it would generate 2000*$25*365*90% = $16m in EBIDTA. Totally $35m in EBIDTA.
(8) Assume ($15m) in corporate expense, adding together $20+$8+$35-$15=$48m EBIDTA/year. That is $12m/quarter. Let see how it goes.
May 03, 2016
Price: $4.3
2016 Q1 Data
(1) Net debt $150m. EBIDTA $17.2m.
(2)BOXX segment both revenue and EBITDA are down. The EBITDA is only $3.5m which may drive whole year 2016 EBIDTA only around $15m.
(3)Energy service EBIDTA is also down to just $1.2m. Whole year might be just $5m.
(4)Lodging and Camp are doing better thank I think with EBIDTA of $16.5m. Lodging beds are 3200. Lodging rate is $78 compare to $74 in 2015Q4. Rental beds is 2850. Rate is $22 compare to $25 in 2015Q4. other revenue is 3.4m. Totally EBIDTA margin is 52% which is much high than 40% level last year. That is how the $16.5m EBIDTA is generated. I guess the lodging EBIDTA margin has at least increased to 40%. Don't know whether they can hold this rate.
(5) Together if Lodging & Camp can generate $10m/quarter EBIDTA for the next 3 quarter, then it is can generate $46m EBIDTA for the whole year. Adding $15m in BOXX and $5m in Energy, deduct $15m in corporate EBIDTA, then it can still generate around $50m in EBIDTA. With Q1 2016 net EBIDTA $17.2m, the next 3 quarter each need to generate $11m net EBIDTA.
Mar 15, 2017
2016 Year End Data
Price: $3.6. Market Cap $155m.
(1) 2016 Revenue just a little above $150m. EBIDTA $42m. Net debt reduced to around $105m. CapX $15m, interest expense $6.1m. Dividend $15m.
(2) The company acquired Britco from WesternOne at Mar. 2017 for $41m in cash. It issued 7.7m shares at $3.75/share and sell & lease back some assets for $11m. Britco is an addition to BOXX modular. It expected to generate $5m-$10m in EBITDA at 2017.
(3) The company projected 2017 EBITDA to be $35m-$45m including Britco. CapX $12m. Total share outstanding around 53m after Britco acquisition. Dividend $16m. Interest $6m. It is just be able to cover those cost and not much will be left to reduce debt.
(4) The $25m share offering at 2016 at $5.05 and $30m share offering at 2017 at $3.03 diluted the company shares quite a bit. However, they were not very bad moves. The debt now is reduced to close to $100m which is more safer. The new acquisition give the company more growth on BOXX side. The company still paying dividend which supported the share price but is quite a burden. There a dividend reinvest program but not sure how many share holders will participate.
(5) The company did worse than I expected at 1.5 years ago. It is impossible to estimate how its each sector will be. However, it is no really important as for now its main task to stay cash positive.
(6) Overall the management did quite well through the years as manage the business quite actively. It could be much worse. The energy industry recovery is very slow and 2017 probably will be worst year for the company. Once it can go through the year, it might do very well after.
Jan. 14, 2016
Recent price dropped to $5 with market cap around $210m.
1) There is not much change except the crude oil dropped to low $30s. Its very likely that the oil sand business part will be really shrinking in the short term. But I believe it still can maintain $150m revenue level in 2016.
2) However, there is two concerns here. First is the debt covenant, currently it needs to maintain around $60m annual EBITDA otherwise it will trigger the default. I believe its asset has not much value if sale them now. If revenue indeed decrease to $150m, the EBITDA really depends the revenue mix, if most revenue is from lodging, then EBITDA possible be below $60m.
3) The second concern is the another dividend cut. If revenue drops to $150m, then it is almost certain will be cut. Even without that, it is still wise to cut dividend to reduce debt. However, the market will react badly any time the dividend is cut.
4) On the plus side, the company is easy to be cash positive. I wish its debt had been lower and don't have the dividend burden.
Ap. 05, 2016
Recent price: $3.90, market cap $150m.
1) Dividend cut to half which is $0.30/year. 2016 CapX reduced to $10m. Currently its new cash needs for 2016 is $12m dividend + $10m CapX + $8m interest +$12.5m debt payment = $42.5m.
2)Reduce net debt to around $154m. Including $70m line of credit and $90m in term loan.
3)There are four segments in the business:
(1)Camps: around $400m in assets, around 3400 units and 12500 beds. valued $120k/units and $30k/beds. Its revenue includes rental income and non-rental revenue. Currently reports revenue combined with BOXX segments. In 2015, total EBIDTA is around $55m.
(2)BOXX: around $100m in assets. around 3700 units, valued around $27k/units. Count rental as revenue. In 2015, total EBIDTA is around $27m. Combined Camps and BOXX, total revenue is around $170m in 2015. I estimate only $50m to $60m is from BOXX. Around 30% of BOXX is related to oil and gas.
(3)Logistic: Not much asset value, mainly service revenue. Around 30% gross margin. EBIDTA for 2015 is $19m with $87m in revenue.
(4)Energy service and other: 10% of revenue. EBIDTA not much.
4)New valuation:
(1) The BOXX segment seems the most stable one which I believe can still generate $20m-$25m in EBIDTA in 2016 or even better.
(2) Camp and logistic will be report together in 2016. Assume 45% decrease, it will generate $40m in EBIDTA, estimate $15m corp expense in 2016, total EBIDTA will be $45m to $50m. It still can be cash positive. However, the 3:1 debt covenant is kind of close. I would expect it would cut the dividend totally which will leave only $30m basic cash need.
(3) On a valuation basis, the BOXX segment should provide a basic $70m-$80m bottom value for the company. With current $150m market cap. It is value the rest of the company for $70-$80m with net asset value of $250m($400m-$150m). Unless the line of credit became an issue, the company is really cheap now.
(4)Generally I like the management team. It took necessary steps to cut cost and even cut 10% in salary starting 2016. The BOXX segment really provide some bottom line for this company. Otherwise it is hard to tell what will happens and feels it is even worse than Horizon North. But with BOXX, it might do better.
Apr. 20, 2016
Price: $4.20.
(1) The company released 2015 data in reorganized segments. The BOXX segment revenue actually is $62m, but EBITDA is only $19.7m. This is quite different than the reported space rental segment EBITDA of $26.6m. Probably because there is 28% of space rental EBITDA is related to oil & gas which is moved to energy service. Assets belongs to BOXX is $120m.
(2) Energy service EBITDA is $10.8m while previously reported as $4.1m. So the $6.7m is taking from space rental segment in previous report. Assets: $110m
(3) Camp & lodging EBITDA is $74m which is consistent with previous reported data of $55.3m+$18.9m. Assets : $250m.
(4) Corporate EBITDA is $18.8m which is $2m more than previous reported data. Assets: $38m.
(5) BOXX segment is the most stable part which still can generate $20m in EBITDA I believe. Energy service EBITDA is also more stable. I estimate $2m/quarter which equals $8m/year.
(6) Camp&Lodging segment: The rental part has high margin around 90% while non rental has low margin around 30%. Rental revenue down from $12.7m in Q1 to $6.6m in Q4. Rental beds down from 5000 in Q1 to 3000 in Q4. Rate holds pretty well at $25/day. Lodging Revenue down from $40m to $20m from Q1 to Q4. Beds down from 4300 to 3100. Rate down from $106 to $74.
(7) Assume Lodging beds average 2500 in 2016, day rate $70, then it would generate 2500*$70*365*30% =$19m EBIDTA. Assume rental beds average 2000 in 2016, then it would generate 2000*$25*365*90% = $16m in EBIDTA. Totally $35m in EBIDTA.
(8) Assume ($15m) in corporate expense, adding together $20+$8+$35-$15=$48m EBIDTA/year. That is $12m/quarter. Let see how it goes.
May 03, 2016
Price: $4.3
2016 Q1 Data
(1) Net debt $150m. EBIDTA $17.2m.
(2)BOXX segment both revenue and EBITDA are down. The EBITDA is only $3.5m which may drive whole year 2016 EBIDTA only around $15m.
(3)Energy service EBIDTA is also down to just $1.2m. Whole year might be just $5m.
(4)Lodging and Camp are doing better thank I think with EBIDTA of $16.5m. Lodging beds are 3200. Lodging rate is $78 compare to $74 in 2015Q4. Rental beds is 2850. Rate is $22 compare to $25 in 2015Q4. other revenue is 3.4m. Totally EBIDTA margin is 52% which is much high than 40% level last year. That is how the $16.5m EBIDTA is generated. I guess the lodging EBIDTA margin has at least increased to 40%. Don't know whether they can hold this rate.
(5) Together if Lodging & Camp can generate $10m/quarter EBIDTA for the next 3 quarter, then it is can generate $46m EBIDTA for the whole year. Adding $15m in BOXX and $5m in Energy, deduct $15m in corporate EBIDTA, then it can still generate around $50m in EBIDTA. With Q1 2016 net EBIDTA $17.2m, the next 3 quarter each need to generate $11m net EBIDTA.
Mar 15, 2017
2016 Year End Data
Price: $3.6. Market Cap $155m.
(1) 2016 Revenue just a little above $150m. EBIDTA $42m. Net debt reduced to around $105m. CapX $15m, interest expense $6.1m. Dividend $15m.
(2) The company acquired Britco from WesternOne at Mar. 2017 for $41m in cash. It issued 7.7m shares at $3.75/share and sell & lease back some assets for $11m. Britco is an addition to BOXX modular. It expected to generate $5m-$10m in EBITDA at 2017.
(3) The company projected 2017 EBITDA to be $35m-$45m including Britco. CapX $12m. Total share outstanding around 53m after Britco acquisition. Dividend $16m. Interest $6m. It is just be able to cover those cost and not much will be left to reduce debt.
(4) The $25m share offering at 2016 at $5.05 and $30m share offering at 2017 at $3.03 diluted the company shares quite a bit. However, they were not very bad moves. The debt now is reduced to close to $100m which is more safer. The new acquisition give the company more growth on BOXX side. The company still paying dividend which supported the share price but is quite a burden. There a dividend reinvest program but not sure how many share holders will participate.
(5) The company did worse than I expected at 1.5 years ago. It is impossible to estimate how its each sector will be. However, it is no really important as for now its main task to stay cash positive.
(6) Overall the management did quite well through the years as manage the business quite actively. It could be much worse. The energy industry recovery is very slow and 2017 probably will be worst year for the company. Once it can go through the year, it might do very well after.
