Black Diamond Group Limited (OTCPK:BDIMF) Q3 2022 Earnings Conference Call November 4, 2022 11:30 AM ET
Company Participants
Jason Zhang – Director-Investor Relations
Trevor Haynes – Chief Executive Officer
Toby LaBrie – Chief Financial Officer
Ted Redmond – Chief Operating Officer-Modular Space Solutions
Mike Ridley – Chief Operating Officer-Workforce Solutions
Kevin Lo – Chief Operating Officer-LodgeLink
Patrick Melanson – Chief Investment Officer
Conference Call Participants
Frederic Bastien – Raymond James
Matthew Lee – Canaccord Genuity
Brent Watson – Cormark Securities
Trevor Reynolds – Acumen Capital
Jason Zhang
Thank you, Dawn. Good morning and thank you for attending Black Diamond’s Third Quarter 2022 Results and Conference Call. With us on the call today is our CEO, Trevor Haynes and CFO Toby LaBrie. We are also joined today by COO, Modular Space Solutions, Ted Redmond; COO, Workforce Solutions, Mike Ridley; COO, LodgeLink, Kevin Lo; and CIO, Patrick Melanson.
Our comments today may include forward-looking statements regarding Black Diamond’s future results. We caution that these forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. Management may also make reference to non-GAAP financial measures in today’s call, such as adjusted EBITDA or net debt. For more information on these terms, please review the sections of Black Diamond’s third quarter 2022 Management’s Discussion and Analysis entitled Forward-Looking Statements, Risks and Uncertainties and non-GAAP financial measures. This quarter’s MD&A, news release and financial statements can be found on the company’s website at www.blackdiamondgroup.com as well as on the SEDAR website. Dollar amounts discussed in today’s call are expressed in Canadian dollars unless noted otherwise and are generally rounded.
I will now turn the call over to Trevor Haynes to review the quarter.
Trevor Haynes
Thank you, Jason, and good morning. Thank you for joining us to discuss our third quarter results. We are highly pleased with company’s results from the quarter and the track record we have built up over the last several years showing steady growth of our core high margin recurring rental revenue across a diversified asset rental platform. This continued growth has given management and the Board further confidence in the stability and diversity of our existing platform. And concurrent with the third quarter results, we are announcing a 33% increase to the annual dividend per share, moving to $0.08 from $0.06. This is the company’s second increase since reinstating the dividend in 2021, and we will continue to monitor and reevaluate the dividend as our diversified cash flows grow.
We recently announced that we have closed the strategic acquisition of an Ontario based modular rental company specializing in the education and government sector. The deal values the acquired company at $54.5 million and adds over 1,850 units to Black Diamond’s MSS, which is now over 11,000 units or greater than 6 million square feet of rentable space.
Adjusted EBITDA for the quarter over the last 12 months was approximately $7.8 million. We expect forward EBITDA growth based on recently signed contracts and further capital investment of $4 million this year. The acquisition also increases our base of contracted revenue by approximately $33 million and accelerates our growth in an active central Canadian market.
In the third quarter Black Diamond reported consolidated rental revenue of $31.5 million, which grew 21% from the comparative quarter. This drove an adjusted EBITDA of $26 million, which is 32% above year ago levels.
The outlook for our MSS business continues to be positive. Utilization in the quarter was 86%, while average rental rates increased 8% on a constant currency basis. This drove EBITDA $17 million for the quarter, up 36% from the comparative quarter. We expect continued year-over-year growth in our core high margin rental revenue driven by fleet and rental rate growth and believe rental rate per unit will continue to trend higher in coming quarters as assets coming off of contracts are renewed at higher spot rates.
As we have mentioned on previous calls, increasing unit rental rates across the fleet have a powerful effect on returns, especially on those assets that may have been acquired some years ago. We continue to view our MSS business as a strong diversified cash flowing business driven by a suite of specialty rental assets with long useful lives, low maintenance and utilization by customers in multiple industries and geographies with a strong level of contract coverage, which pro forma, our recently announced acquisition is almost $100 million up substantially from a year ago.
We continue to see attractive growth opportunities in our North American MSS markets and remain optimistic around this segment into 2023. The outlook within our WFS business is likewise positive, driven by existing contracts in place, ongoing strength in Australia, deadly improving activity levels in Canada, and the ability for our commercial teams to drive operating leverage by putting idle assets back to work.
Consolidated utilization within WFS improved to 60% from 51% in the comparative quarter and help drive adjusted EBITDA of $14.6 million, up 16% from the comparative quarter. Return on assets in the quarter of 42%, was up from 34% last year. We remain focused on diversifying our revenue streams in WFS and are seeing opportunities and signing new contracts in mining and resources, disaster recovery, social housing, and remote infrastructure.
LodgeLink’s had another record in room night sold of almost 95,000, which was up 57% year-over-year. Net revenue for the quarter was $1.8 million, up 50% from the comparative quarter. Both sides of the platform are seeing healthy levels of growth as our unique corporate customer account grew to 702 and listed capacity stands at over 920,000 rooms at the end of the quarter.
We continue to be very bullish around the long-term prospects of LodgeLink and believe the consistent growth in room night sold is a strong indicator with respect to the value proposition our corporate customers and supply network are driving from the platform.
In summary, we believe Black Diamond is very well positioned, given the diverse nature of our cash flows, strong contract coverage and healthy balance sheet, even in a higher interest rate or possible recessionary environment. We’re continuing to see good opportunities across our geographies for both organic and inorganic growth and will keep – and look to keep prudently growing our diverse rental platform and crew travel ecosystem in line with our long-term vision with a keen focus on driving stakeholder returns.
I will now hand the call over to Toby LaBrie to provide more detail on the quarterly results. Toby?
Toby LaBrie
Thank you, Trevor. Total adjusted EBITDA for the quarter was $26 million, an increase of 32% from Q3 2021. This was driven primarily by improving consolidated rental revenues of $31.5 million, which were up 21% year-over-year. Consolidated revenues of $95.9 million, were down 12% from the comparative quarter, primarily due to relatively high levels of lower margin, non rental revenues in the comparative quarter.
The consistent increase in our core recurring high margin rental revenue streams resulted in a five percentage point improvement in return on assets to 24% for the third quarter of 2022 from the same quarter last year, which demonstrates the continued improvement in profitability in our existing asset base as a result of increased scale and efficiencies.
During the quarter, we continue to invest organically in our fleet to drive recurring compounding returns with $15 million of CapEx with attractive economics and long-term contracts. Alongside reinvestment of internally generated cash flows into rental revenue generating fleet assets, we also return capital of $4.3 million to shareholders in the quarter by redeeming $2.2 million of preferred shares of a subsidiary, paying our quarterly common share dividend of $0.015 per share and buying back approximately $1.2 million of common shares. All of this was achieved while net debt of $148 million declined from $153 million at the end of the comparative quarter, and also declined from sequentially from Q2 2022. Net debt to trailing 12-month adjusted leverage EBITDA of 1.9 times decreased from approximately 2.7 times in Q3 2021.
We exited the quarter with roughly $125 million of available liquidity from our asset-based lending facility with an average interest rate on outstanding debt during the quarter of 3.8%. Nearly one third of our outstanding long-term debt remains hedged at attractively low rates locked in during 2021 and early 2022.
Free cash flow in the quarter before growth CapEx was $23.9 million, up 40% versus the comparative quarter and diluted earnings per share of $0.15 was up 50% from $0.10 in Q3 2021. Given, the continued growth in our diversified rental business, our free cash flows have continued to improve and our debt levels have declined while we grow adjusted EBITDA at a significant rate. This combined with our ABL Facility provides us with ample flexibility to perform accretive business acquisitions such as the one we announced earlier this week.
As Trevor mentioned, the adjusted EBITDA generated by this acquired business was approximately $7.8 million. The $54.5 million acquisition was funded entirely through debt, which was primarily drawn from our asset base lending facility. The assets will be qualified as eligible inventory in our ABL facility, further expanding our borrowing base.
We also expect to increase the size of our ABL facility from $300 million to $325 million and pro forma of the acquisition, we expect our net debt to trailing 12-month adjusted leverage EBITDA to be at the midpoint of our longer-term range of two to three times. This should leave us with significant liquidity and dry powder to continue our growth strategy.
To echo Trevor’s comments, we are continuing to see good opportunities to compound returns within our rental platform, which has resulted in strong and growing free cash flow generation across a diverse mix of geographies and markets and customers. Our balance sheet and liquidity position have and are expected to continue to allow for a high degree of flexibility moving forward as we continue to pursue both organic and inorganic growth.
With that, I’d like to open the call up for questions.
Question-and-Answer Session
Operator
Thank you. We’ll now take questions from the telephone lines. [Operator Instructions] And the first question is from Frederic Bastien from Raymond James. Please go ahead.
Frederic Bastien
Good morning, guys.
Trevor Haynes
Good morning, Frederic.
Frederic Bastien
First off, I just want to congratulate you, these are excellent results, but they are the results of a lot of years of hardworking, heavy lifting. So kudos to all of you.
Trevor Haynes
Thank you.
Frederic Bastien
Just wanted to see with respect to new asset purchases, are you seeing sort of the pricing pressure that you’ve experienced in the last couple quarters? I mean, is this starting to abate? I mean, with respect to, I know that when you look into deploying capital, you have contracts that basically back these assets up. But just wondering if you could comment on the overall environment with respect to new assets that you’re looking to purchase?
Trevor Haynes
Yes, good question. Thanks, Frederic. It’s a little bit regional in what we’re seeing. We buy our assets from third-party manufacturers and we tend to buy regionally, because they’re large format, somewhat expensive to move long distances. What we are seeing generally is a moderation in escalation of building materials. If you think of our asset competing to a certain degree with residential home construction, we’re certainly seeing in and around our U.S. manufacturers cost of lumber and steel has stabilized or perhaps reduced a little bit. However, our manufacturers have incurred significant labor cost increases over the last two years and we don’t see any retracement in that. So while we aren’t seeing a reduction in the cost of new assets, we are seeing a stabilization of pricing certainly slower increase in cost of new assets.
At the same time, we’re seeing it as some deep bottlenecking with our fabricators, a moderate amount where they’re able to get materials and labor again. And so we’re seeing throughput improvements which shortened somewhat the timelines of order to delivery of assets. So what we’ve been doing is a good part of our organic CapEx has been matched up with contracts from customers. So our worry about being able to generate a rate of return or ROI that meets our hurdle over an extended period of time. We can take the utilization risk out for the first several years.
And so that gives us sort of a lower risk way to put capital work. And then we’ve also been giving preference to retrofitting older assets in our fleet or acquiring third party and then doing retrofits up to our fleet standard to put it into our fleet as a more cost effective way, if you will, of bringing on rental capacity as you can see from our utilization rates in MSS. I mean, we’re essentially at fully utilization if you think about the gradual turnover of the fleet and being able to have capacity to match demand. And even in workforce, which is something new for us. In certain asset categories, we’re essentially fully utilized and so looking for options. So generally speaking, I would say that we’re seeing a stabilization in pricing for our assets at least in this period of time.
Frederic Bastien
Thanks, Trevor. My next question would’ve taken probably not a lot of time to answer five years ago, but now that you’re a lot more diversified. Just wondering if you could comment just briefly on sort of the demand environment for your largest end markets and what you’re seeing out there? What clients are telling you?
Trevor Haynes
Yes, that’s a good way to frame the question because now it’s not a discussion about one or two primary end markets. We have multiple end markets that now include various aspects of government services, whether it’s disaster recovery, social housing is increasing part of our business, but also education as well as industrial civil infrastructure and smaller consumer construct or commercial construction. And then of course, upstream oil and gas and mining is a big part. So this could take us some time Frederic. But I think what I’ll do is ask our guys maybe Ted if you can make some comments from our MSS perspective, and I guess that may start with education.
Ted Redmond
Yes, generally speaking – thanks, Trevor. Generally speaking, I think all of our markets are still strong and we’re not seeing signs of a slowdown, coding activity is still strong and project wins are still strong. If we look at the individual markets, the U.S. kind of East Coast, we’re again seeing steady demand there from our education and other customers. So both the market and that education and market are strong. That was the original Vanguard markets and that continues strong in the U.S. Southwest. Again, that’s a little bit more, there’s education work definitely there, but also some more construction type work.
And again, the industrial, infrastructure type construction and infrastructure type construction continue to be strong and putting units out on rent on good rates. Eastern Canada, again, the industrial and infrastructure construction continues to go strong. We don’t have any exposure to residential, which is slowed down, but our markets are good. And then in Western Canada, again, we’re seeing continued strength. So that’s really my comments on the markets. So maybe over to Mike to talk about some of the workforce markets.
Mike Ridley
Thanks, Ted. Thanks, Trevor. The – we pointed out the outset Frederic, that this has been years of hard work. We employed a strategy several years ago and it’s working and it couldn’t be happy with the results that we’re seeing. The geographic diversity, we’ve never been more geographic diverse in our WFS side with good growth in Eastern Canada, mining, construction, other types of product or industries that are taking our product. Industry diversification, government, social migrant housing, U.S. infrastructure, emergency relief, oil and gas. We’re capitalizing on a pretty robust oil and gas market right now in the Duvernay and the Montney, and also in the Permian down in Texas, so, which is excellent. And then Australia is just really going very, very well for us in all sectors, construction, infrastructure, education, military and on and on. So it’s – the strategy that we put forth again a few years ago is really paying off for us. On the whole, WFS business has never been more balanced by industry and geography, and I think that is going to serve us well for the long haul.
Trevor Haynes
And not seeing any meaningful change currently in terms of demand in those industries.
Mike Ridley
No, they’re all very, very strong and our bid log is good and coming from a lot of different industries and different geographic locations that we did not see several years ago. So it’s working very well.
Trevor Haynes
And maybe quickly Frederic, we’ll get Kevin Lo to comment from the LodgeLink perspective. We’re seeing some substantial growth in the U.S., but also in a couple of our key verticals, Kevin?
Kevin Lo
Yes, thanks, Trevor. And hi, Frederic. Within LodgeLink, we did see some substantial growth in the third quarter and continue to see that. And similar to my partners what we’ve done is this is a result of combination of a few years of prospecting and some of these key clients that we’ve had. We’ve been prospecting for a while. The upstream oil and gas industry continues to be really strong for us. We have a bunch of really loyal clients and we’ve continued to add logos to that mix. And we’ve also expanded into the U.S. and the U.S. now accounts for about 40% of our revenue now. So we have some of that geographic diversification. And lastly, we’ve also had some successes in the emergency response with the BC wildfires and some of the other issues that we’ve had North America wide. So we’ve done a lot of work around there as well.
Trevor Haynes
Thanks, Kevin. Vinny Campana, our Chief Commercial Officer in LodgeLink and his team are doing a fantastic job of developing verticals. But also as we gain market share and primary verticals, we can good progress. So I have a quick walk around the various end markets Frederic.
Frederic Bastien
Okay. Thank you all. I have more, but I’ll pass it over for now.
Trevor Haynes
Thank you.
Operator
Thank you. The next question is from Matthew Lee from Canaccord Genuity. Please go ahead.
Matthew Lee
Hey, good morning, guys. Congrats on the good quarter. I wanted to first talk about Workforce Solutions. Can you maybe help us understand the trajectory of utilization and what you expect that it will be able to reach in 2023, just given the improvements that you’ve mentioned in [indiscernible] market?
Trevor Haynes
Yes, we’d happy to do that. But I think Mike, our view is fairly stable. But then you need to sort of look within WFS to some of the key elements you touched on a little bit for like Australia and some of the upstream and the like. But I’ll pass it over to you.
Mike Ridley
Sure. The – and I mean, just to sort of follow on some of my previous comments around market and industry, university. [Ph] It’s a lot of the same, Matt. It’s – we expect continued strength in the oil and gas sector through 2023 with our small formatted well site fleet as well as down in the U.S., Australia, and we don’t see a slowdown there on the horizon. We have utilization in the 90% plus range and most of our asset classes there and expect that to carry through.
And then are sort of our typical large format fleet in Canada. We have good contract coverage through most of 2023. And our bid activity is very good across Canada and well into the U.S., again, into areas that we didn’t see a few years ago. And I think we’re going to continue to see some modest growth in that regard.
Trevor Haynes
And really we’re seeing the combined effect we have opportunistically sold down excess capacity in certain asset classes where we just have more capacity facing the market than needed. And then at the same time, we’ve been getting more assets out to work through this diversification. So you see the utilization being impacted by reducing capacity somewhat and then increasing utilization. And then we’ve got a bit of an odd situation where certain asset classes are undersupplied into the market and there’s still a couple of asset class areas where the industry continues to have a bit much capacity. So we’ve been working to repurpose assets from sort of one format to another as a way to sort of economically solve where we’re having high demand versus where we have lower. So a lot of interesting things we can do right now with such a large high quality asset base around WFS.
Matthew Lee
Right. And then maybe the utilization came in at 60% for Q3. There’s a little bit of seasonality in there, correct?
Trevor Haynes
Well, if anything, the seasonality is stronger through the winter months or has been traditionally, although we haven’t been seeing all that much variability as the upstream oil and gas side that uses our small format isn’t as seasonal anymore with the big pad drilling and, and where we are seeing activity in the shales Canada, in the U.S. So not as much seasonality as we once add. And I don’t think we really predict that much seasonality, a little bit on the lodging side, perhaps in break up next spring, little bit on the small format, a little bit on the lodging side during breakup, struggling really to bring the balance of the business is, it’s going to be pretty level over the course of the year.
Our mining customers and we’ve got about a quarter of the fleet, almost half of our utilization currently in Canada is mining, and we don’t see the seasonality both those projects work year round, et cetera. So the diversification, Matt, has taken a good degree of the seasonality and variability out of our utilization.
Matthew Lee
Oh, that’s fantastic color. And then just maybe quickly on the MRC acquisition, can you just help me get a feel as to what the growth runway is there and whether it’ll primarily be rate related or fleet size related or both?
Trevor Haynes
Yes, both. We’re really happy about the acquisition really high quality, well built business, really good team, very focused all of the businesses in Ontario, a very standardized asset which lends itself to operational excellence and really high service levels for this customer. All things that we like similar with all of our asset classes, spot rates are higher and our customers are accustomed to the fact that there’s inflation across the all sectors of the economy just as all of us are experiencing. So we anticipate over time these are very long contracted assets. But as we move from one customer to another, there’s rate increase. And then we’re also seeing demand for new classrooms to go out to work. So we think we get both growth. Ted maybe add a little bit more color. I probably touched on all your talking points, but anyways if you’ve got anything to add there, Ted?
Ted Redmond
Yes, I think you covered quite a few of them, or most of them. There’s like – there’s definitely growth in unit demand from the customers. Population growth and replacement of older units that were built in the, like 70s and early 80s that are – weren’t built up to today’s standards. And so there’s upside for their education customers to replace those is also potential for rate increases on existing and refurbished units as units come off rent. So, there’s opportunities there. And potentially future geographic growth opportunities, although that’s wouldn’t be the first priority. It would be meeting the demand from the existing customers and we continue to see strong demand from those customers. Those are my comments.
Operator
Thank you. The next question is from Brent Watson from Cormark Securities. Please go ahead.
Brent Watson
Hey guys. The lodging segments are nice uptick in revenue kind of quarter-over-quarter. Can you maybe sort of comment on what drove that around kind of occupancy and maybe kind of rates?
Trevor Haynes
Yes, great question. This area has surprised us a little bit. I guess, there’s a read through of what’s happening in the end markets around where our two lodges are. Maybe it shouldn’t be that surprising, but we have seen strength there. Mike?
Mike Ridley
Yes, our two main open camps are in an area that’s fairly active right now. So we’ve been able to benefit from that activity and capitalize in getting room days booked in those two open camps. Kevin touched on it earlier as well. There was some forest fires that were in the area. And we were able to house hundreds of firefighters over the course of, call it six weeks, which also was a nice little uptick. So it’s just general good activity, good location for our open lodges, and it’s – we benefited from it and as Trevor alluded to it’s been a pleasant surprise. And sort of in culmination with LodgeLink being able to also help fill those heads and beds with some of the smaller contractors. That’s also been beneficial.
Trevor Haynes
And just for color, those two lodges that are in the Montney, Duvernay area of Northeastern British Columbia. So the baseline load is infrastructure construction in those very prolific shales as well as some of the fracking completions, fracks are really big. So a large crew movement and then the emergency relief labor in the area.
Brent Watson
Okay. That’s great. How about on the rate side? Are you kind of nudging things higher as occupancy has sort of been strong?
Trevor Haynes
Yes, the rates are I would say, Mike, the rates are very fair for our customers, but we’re getting a good rate.
Mike Ridley
We’ve seen rate improvement now. Costs have also gone up, everybody’s following the inflation. But we’ve been able to pass that on to our customers and yes it’s – we’ve seen nice growth with late as well.
Brent Watson
Okay. Thanks a lot.
Trevor Haynes
Thank You.
Operator
Thank you. The next question is from Justin Lee from Lee Finance. [Ph] Please go ahead.
Unidentified Analyst
Hi, good morning, and congratulations on the great operational results here. I just have a question on VAPS, just looking at one of your peers where they have VAPS penetration at 30%, I think or so of average daily rate compared to BDI is 10%. Is there something structurally different between you and some of your peers that makes it more difficult to close that gap? And where do you think that’s penetration over time could get to? And what are the steps that you’d like to see or you need to see to get there?
Trevor Haynes
Yes, that’s a good question. There is a slight difference. The education market doesn’t lend itself as much to VAPS in terms of furniture, rental, et cetera, as the more transactional construction. I think we compare much better when we sort of compare like-for-like in terms of asset type. But we still have the aspiration to increase our VAPS. And Ted, maybe you could give more color on the comparison between us and our big U.S. competitors?
Ted Redmond
Sure, Trevor. Yes, another difference would be the average contract term. So the longer the contract term, the more likely the customer is to buy their own VAPS. So some of the other companies would be more transactional in nature. And on the shorter term, on a three or six month deal, we’re very successful in selling VAPS like they are. Also with the acquisitions that we’ve done, those companies typically haven’t traditionally done very much VAPS. So you would’ve saw when we did the Vanguard acquisition that actually dropped our VAPS as a percent of revenue. And now we’re putting in place programs to roll VAPS across acquired companies.
So our aspirations are definitely to get VAPS as a percent of rental revenue up. We’re working hard on that. We’re making progress and – but there is some structural differences between the businesses. And again, we like the long-term contacted revenue, especially if there’s potential for economic headwinds in the future. So our business model are good business model and – but where we can do VAPS, we’re pushing hard to do it. Trevor?
Unidentified Analyst
Right. And my, sorry…
Trevor Haynes
Go ahead.
Unidentified Analyst
Yes, sorry, I just had a follow-up on MSS. Can you talk about what the spread to market rates on average is across the fleet currently, and how are you finding able to push spot rates just given economic crosswinds as well as your tight utilization?
Trevor Haynes
Yes, part of the answer is in the question. The tight utilization and not just in our system, which is performing well, but the industry is supportive of increasing rates. Then the cost of new assets and the escalation and new assets over the last couple of years supports a higher rental rate in terms of meeting the return expectation on this type of asset. And so for the most part, we’ve had a decent absorption of our rate increases as driven by those two primary KPIs across the platform. What takes some time though in our system we may be, well, we are longer contracted than average for our industry. And so as the fleet turns over and is able to go out at higher rates, that’s where as we look forward. Even if rates were to stabilize, we still see an upward trend over the next two years at least as the fleet turns over to current spot rates.
So that’s where we get the visibility. One thing we’re very focused on is keeping the minimum quality standard of our asset. Whether it’s six years old or six months old, our customers should be able to enjoy the same quality of space and use of an asset, and therefore they should be able to work at the same rate. So through our maintenance programs, et cetera, we maintained a current market standard, and therefore that older asset also gets to enjoy the current spot rate. So that’s how we think about it. And as you can see in our results, we’ve been showing that steady year-over-year average rate increase.
Operator
Thank you. [Operator Instructions] And the next question is from Frederic Bastien from Raymond James. Please go ahead.
Frederic Bastien
Hello, again. Just on LodgeLink, just wondering how the mobile app is doing and whether it’s allowed you to track more clients or grow wallet share with existing clients?
Trevor Haynes
Yes, thanks for the question. We’re kind of excited to talk about some of the product development at LodgeLink. Our team did a great job, got this out on time at the minimum viable product standard we set out and what we had targeted for cost to get it done. Patrick, so in terms of what we delivered, maybe touch on that and then the amount of download rate, et cetera that we’re seeing.
Patrick Melanson
Thank you for the question. Yes, the mobile app first version has been a success by the measures that we put in place where it’s a launch. We’ve had downloads on the Apple Store in the hundreds, a little bit less on the Android store. The feedback from the customers is positive from what we had published as the features of the first releases. We are collecting requirements features for the next iterations of the mobile app. We’re also making sure the mobile app will keep pace with what we offer for certain features on the main browser features of the product. And 2023 should bring more features on the mobile app to the pleasure of our customers.
Trevor Haynes
Thanks, Patrick.
Frederic Bastien
Thanks. Trevor, are you or Toby, just wondering if you’re running LodgeLink at break even now or and where does that stand? And as we look ahead, I mean, is this – has any thought been given to potentially reporting LodgeLink as a standalone segment?
Toby LaBrie
Yes, that’s a good question, Frederic. So we – as we’ve said in the past, we’ve been running at a negative clip on EBITDA for so well since inception of LodgeLink. And a lot of that is as we invest in future growth G&A to drive continued exponential growth in our growth volumes. We see that that negative drag with this quarter is very strong volumes. We are approaching not quite EBITDA breakeven, but we’re getting close. But to a certain extent, we are continuing to be committed to invest in that future growth of bookings.
And so, the target for us is to continue to drive efficiencies. So that we can grow those bookings without growing the base G&A to process our volumes on the back end. And so we are making progress there, but also continuing to invest in our resources and in our product to grow future volumes as well. And given, where the size of LodgeLink is at from an accounting point of view, yes, we’re looking closely at breaking it out as its own reporting segment. So I likely see that sometime in the near future.
Frederic Bastien
Great. Thanks. That’s all I have.
Trevor Haynes
Thanks, Frederic.
Operator
Thank you. The next question is some Trevor Reynolds from Acumen Capital. Please go ahead.
Trevor Reynolds
Hey guys. Just a quick follow-up on the lodge services on WFS. I was just wondering if you are able to quantify what contribution the forest fires had and maybe I’ll just start there.
Trevor Haynes
Thanks, Trevor. Do you want to touch on that to?
Toby LaBrie
Yes, the overall contribution, I mean it’s hard to give an exact number on that Trevor. But as Mike said, we probably had a couple hundred people for a month to month and a half. And so as far as the proportion of our lodging for the quarter, that probably represented somewhere in the neighborhood of 5% to 10%.
Trevor Haynes
It’s not a significant portion of it, Trevor. It’s a good add and part of the color of what’s happening, but not a meaningful impact on the quarter.
Trevor Reynolds
Okay. Great. And then just sticking with that the lodge services with the Blueberry issues ongoing there and producers, kind of a few of them anyways, highlighting that they’re kind of running out to inventory, is there a potential issue or impact on your lodging moving forward?
Trevor Haynes
We’re a little outside of the Blueberry area. And so the Blueberry decision has broader ramifications than just in the Blueberry territory itself. So I don’t want to oversimplify the issue. But where we’re seeing activities coming more out of the sort of the cut back and ground barged those areas are closer to where those two lodges are. And we also support other types of infrastructure construction. So it’s not all reliant on upstream. That being said, Mike, we’ve – we’re not hearing anything from our customers is slowing down activity.
Mike Ridley
No, not at all and we still, again, as I said earlier, we expect a fairly active market over the course of the winter in that area, not necessarily, Blueberry, Trevor touched on. But that product type has really not just been focused on oil and gas either. It’s really gone into a lot of different markets, government parks and rec, homeless initiatives. Yes, it’s just really taken off in terms of an industry diversity that we did not see before a few years back.
Trevor Haynes
Even in our small format upstream is what you’re talking about.
Mike Ridley
Yes, exactly.
Trevor Haynes
For what we use call upstream, but small format camp assets.
Trevor Reynolds
Great. That’s helpful. Thanks guys.
Trevor Haynes
Thank you.
Operator
Thank you. There are no further questions registered at this time. I’d like to turn the meeting back over to Trevor Haynes.
Trevor Haynes
Thank you, operator. And thank you everybody for joining and listening in this morning. Once again, we’re really pleased with how the business is running and what we’re seeing in the near term here. So thank you for your interest. Have a great day.
Operator
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.
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