Dexterra Group Announces Results for Q1 2021 and Declares Dividend

Highlights

• Revenue of $155.4 million and EBITDA of $17.8 million for the three months ended March 31, 2021;
• Net earnings of $4.5 million and basic EPS of $0.07 for the three months ended March 31, 2021;
• Generated Free Cash Flow of $12.4 million in Q1 2021;
• Capital improvements to the new Modular Solutions plant in Cambridge are underway with the plant expected to be operational by the end of Q2 2021;
• Debt reduced to $78.9 million at March 31, 2021 from $85.4 million at year end. Management has a strong financial position as it looks to execute on its growth strategy; and
• Dexterra Group declared a dividend for the second quarter of 2021 of $0.075 per share, for shareholders of record at June 30, 2021, to be paid July 15, 2021.

Toronto, Ontario--(Newsfile Corp. - May 11, 2021) - Dexterra Group Inc. (TSX: DXT)

First Quarter Financial Summary

(1) Please refer to "Non-GAAP measures" for the definition of EBITDA and Adjusted EBITDA.
(2) Includes $4.9 million and $nil of pre-tax Canada Emergency Wage Subsidy for the three months ended March 31, 2021 and March 31, 2020, respectively and the recognition in 2021 of a tax benefit of $1.1 million related to non-capital loss carryforwards based on the implementation of a new tax plan and the profitability of the related businesses.
(3) All Q1 2020 share and per share data presented has been retroactively adjusted to reflect the five-for-one share consolidation completed on July 16, 2020.

First Quarter Operations Analysis

Facilities Management

For Q1 2021, Facilities Management revenues were $38.0 million and decreased by $5.4 million or 12% from the $43.4 million in Q1 2020. Revenue decreased primarily due to the temporary closure or reduction in operations at certain facilities as a result of COVID-19. In particular, the aviation and retail sectors decreased by $8.7 million compared to 2020. This was partially offset by new business.

EBITDA margin increased to 9% for Q1 2021 (Q4 2020 - 7%), mainly due to stronger project management and management delivering on operational improvements. See "Non-GAAP measures" above for the definition of "EBITDA as a percentage of revenue".

Workforce Accommodations, Forestry and Energy Services ("WAFES")

WAFES revenue performance was strong in a COVID-19 environment despite Q1 2021 being negatively impacted by temporary camp closures, especially in British Columbia. Revenue from the WAFES segment for the three months ended March 31, 2021 was $75.7 million.

EBITDA as a percentage of revenue was 20% which is an increase of 8% compared to Q1 2020, due to strong utilization of support services and the addition of new contracts and business in Eastern Canada with the growth of infrastructure and mining projects. This margin is similar to Q4 2020.

Modular Solutions

Modular Solutions segment revenues for Q1 2021 were $41.9 million. These revenues are primarily focused on social and affordable housing and portable classrooms.

EBITDA for Q1 2021 was $2.9 million. The results reflect the focus on social and affordable housing projects where performance and execution have been strong in western Canada. This was partially offset by lower than expected margins in Eastern Canada due to project delays. The lower margins and lower revenue compared to Q4 2020 is not expected to continue and the new Cambridge plant will be better suited for construction of affordable housing projects.

A key metric for the Modular Solutions segment is the backlog¹ of projects and timing of backlog execution. The focus for this business unit will be to secure and increase backlog, which was $63.5 million for social housing at the end of Q1 2021. Additionally, Modular Solutions has recurring modular business beyond social housing worth approximately $40 million per annum, which mainly consists of portable classrooms and is finalizing contracts exceeding $45 million with the City of Toronto that will be manufactured in 2021 and are not included in the backlog numbers above.

Liquidity and Capital Resources

For the three months ended March 31, 2021, cash generated by operating activities was $17.9 million, compared to $5.1 million in the same period of 2020. The variance was business volume driven primarily by an increase in earnings before depreciation of $12 million in Q1 2021 compared to the prior period and reduced working capital needs by $3.1 million in Q1 2021. This was used to fund the $1.3 million in capital expenditures for the Cambridge NRB plant as well as to repay debt and pay dividends.

Debt was $78.9 million and available borrowing capacity was $83.7 million at March 31, 2021.

Additional Information

A copy of Dexterra Group's Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2021 and 2020 and related Management's Discussion and Analysis ("MD&A") have been filed with the Canadian securities regulatory authorities and are available on SEDAR at sedar.com and Dexterra Group's website at dexterra.com. The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards and the reporting currency is in Canadian dollars.

Conference Call

Dexterra Group will host a conference call and webcast to begin promptly at 8:30 Eastern time on May 12, 2021 to discuss Dexterra Group's first quarter results.

To access the conference call by telephone the conference call dial in number is 1-800-319-4610.

A live webcast of the conference call will be accessible on Dexterra Group's website at dexterra.com/investor-presentations-events/ by selecting the webcast link. A PowerPoint presentation will be posted on Dexterra Group's website at dexterra.com on May 11, 2021 to be reviewed on the conference call.

An archived recording of the conference call will be available approximately one hour after the completion of the call until June 2, 2021 by dialing 1-855-669-9658, passcode 6678.

About Dexterra Group

Dexterra Group employs more than 6,000 people across Canada and delivers a range of support services for the creation, management, and operation of infrastructure across Canada.

Powered by people, Dexterra Group 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 facilities management services, industry leading workforce accommodation solutions, innovative modular building capabilities, and other support services for diverse clients in the public and private sectors.

For further information contact:

Drew Knight, CFO
Head office: Airway Centre, 5915 Airport Rd., 4th Floor Mississauga, Ontario L4V 1T1
Telephone: (416) 767-1148

You can also visit our website at dexterra.com

Non-GAAP measures

Certain measures in this press release do not have any standardized meaning as prescribed by generally accepted accounting principles ("GAAP") and, therefore, are considered non-GAAP measures. Non-GAAP measures include "EBITDA", calculated as earnings before interest, taxes, depreciation, amortization, depreciation from equity investment, share based compensation, bargain purchase gain (reduction) and gain/loss on disposal of property, plant and equipment, "Adjusted EBITDA", calculated as EBITDA before acquisition costs, other revenue and non-recurring items and including CEWS, "EBITDA as a % of revenue", calculated as EBITDA divided by revenue, and "Free Cash Flow", calculated as net cash flows from (used in) operating activities, less maintenance capital expenditures, payments for lease liabilities and finance costs, to provide investors with supplemental measures of Dexterra Group's operating performance and thus highlight trends in its core businesses that may not otherwise be apparent when relying solely on GAAP financial measures. Dexterra Group also believes that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Dexterra Group's management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets, and to determine components of management compensation.

These measures are regularly reviewed by the Chief Operating Decision Maker and provide investors with an alternative method for assessing Dexterra Group's operating results in a manner that is focused on the performance of the Dexterra Group's ongoing operations and to provide a more consistent basis for comparison between periods. These measures should not be construed as alternatives to net earnings and total comprehensive income determined in accordance with GAAP as an indicator of Dexterra Group's performance. The method of calculating these measures may differ from other entities and accordingly, may not be comparable to measures used by other entities. For a reconciliation of these non-GAAP measures to their nearest measure under GAAP please refer to "Reconciliation of non-GAAP measures" of Dexterra Group's MD&A.

Forward-Looking Information

Certain statements contained in this press release may constitute forward-looking information under applicable securities law. Forward-looking information may relate to Dexterra Group'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 Group's future operating results and economic performance, its leverage, the NRB Modular Solutions plant in Cambridge, and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions, including expected growth, results of operations, performance and business prospects and opportunities regarding Dexterra Group, which Dexterra Group believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to Dexterra Group, 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 Group'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 Group operates; reliance on suppliers and subcontractors; cost inflation; volatility of industry conditions could impact demand for its services; a reduction in the availability of credit could reduce demand for Dexterra Group's products and services; Dexterra Group's significant shareholder may substantially influence its direction and operations and its interests may not align with other shareholders; its significant shareholder's 49% 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 Group operates; climate changes could increase Dexterra Group'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 Group'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 Group's services; its insurance program may not fully cover losses. Additional risks and uncertainties are described in Note 22 of Dexterra Group's Consolidated Financial Statements for the years ended December 31, 2020 and 2019 contained in our most recent Annual Report filed with securities regulatory authorities in Canada and available on SEDAR at sedar.com. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Dexterra Group 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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¹ Backlog is the total value of work that has not yet been completed that: (a) has a high certainty of being performed based on the existence of an executed contract or work order specifying job scope, value and timing; or (b) has been awarded to Dexterra Group, as evidenced by an executed letter of award or agreement, describing the general job scope, value and timing of such work, and where finalization of a formal contract in respect of such work is reasonably assured and expects to be recognized in the next 12 months.

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