Black Diamond Group Ltd
TSX:BDI

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Earnings Call Transcript

Earnings Call Transcript
2021-Q1

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Operator

Thank you for standing by. This is the Chorus Call conference operator. Welcome to Black Diamond's First Quarter 2021 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Jason Zhang. Please go ahead, sir.

J
Jason Zhang

Thank you, operator. Good morning, and thank you for attending Black Diamond's First Quarter 2021 Results 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; and COO, Workforce Solutions, Mike Ridley; as well as CIO and EVP, 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 on today's call such as adjusted EBITDA or net debt. For more information on these terms, please review the sections of Black Diamond's first quarter 2021 management's discussion and analysis entitled Forward-Looking Statements, Risks and Uncertainties and Non-GAAP 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.

T
Trevor Haynes
Chairman & CEO

Thank you, Jason, and good morning, and thank you for joining us to discuss our first quarter 2021 results. We've had a strong start to the year, and I'd like to thank all of our team members for their hard work and resiliency in the face of some increased pressures from the COVID-19 pandemic. We have continued to execute on our plan to grow and diversify our business and believe the first quarter results are yet another positive data set, demonstrating our progress in this regard. Highlights include another record quarter for rental revenue generation in our Modular Space Solutions business unit, record booking volumes within LodgeLink and strong contract wins in our Workforce Solutions business unit. That have increased contracted revenue by over $55 million so far this year. Total adjusted EBITDA for the quarter was $13.3 million, an increase of 34% from Q1 2020. We also reported positive earnings of $2.7 million in the quarter or $0.05 per share on a diluted basis compared to a net loss of $0.1 million in the comparative quarter. In the MSS segment, rental revenue grew to $13.9 million or by 56% from Q1 2020, which is a fifth consecutive quarterly record. Our first quarter results include a full 3 months of contribution from Vanguard Modular, which we acquired in November of 2020, the integration of which is ongoing. The outlook for MSS remains positive as we are seeing ongoing opportunities to put organic growth capital to work at attractive rates of return, and contract duration across North America. We expect steady and continued growth in rental revenues driven by strong utilization, increasing rental rates, ongoing fleet additions and increased penetration of our value-added products and services or VAPS. Our WFS segment is showing further signs of recovery and benefiting from our efforts to diversify by end market and geography. As mentioned, since the start of 2021, WFS has added more than $55 million of new contracted revenue, which includes our previously announced Australian contract, additional assets and services in support of the coastal gasoline project and further contracts with mining customers in Eastern Canada. A number of these contracts will begin generating rental revenue throughout the latter part of the second quarter, which should provide strong momentum in rental revenue growth into the second half of the year. Our Australia market continues to perform well, and with the recent contract award is experiencing strong utilization with good contract durations and strong rental rates across the business. We remain well positioned with respect to the Goldboro LNG project, should it receive a positive final investment decision by the project proponent in the coming months. Last but certainly not least, we remain very excited about LodgeLink, our digital marketplace offering that is bringing innovation to the crew travel industry. LodgeLink set another quarterly record in room night bookings with approximately 48,000 room nights booked despite pandemic-related headwinds for travel services. This was up 109% from the comparative quarter and 36% sequentially from Q4 2020. At the end of the quarter, the platform had approximately 3,600 listed properties, representing roughly 330,000 rooms, servicing 662 distinct corporate customers. We believe the platform is positioned for continued growth this year. Given the contracts awarded to date and continued positive momentum throughout the Black Diamond businesses, which is driving increased visibility, we are optimistic that the balance of the year will show improving results across the business as we make further progress on our strategic objectives, of growing and diversifying our MSS business, unlocking operating leverage from our existing fleet of remote accommodation assets in WFS, and scaling our LodgeLink travel tech ecosystem. I will now turn the call over to Toby for some further details on the first quarter financial results.

T
Toby Labrie
Executive VP & CFO

Thanks, Trevor. Black Diamond reported consolidated revenue of $65.8 million in the first quarter and total adjusted EBITDA of $13.3 million, an increase of 46% and 34% from the comparative quarter, respectively. Net income for the quarter was $2.7 million or $0.05 per diluted share compared to a net loss of $0.1 million in Q1 2020. Adjusted EBITDA for MSS was $10.3 million, up 124% from the same quarter last year, and total revenue of $35.2 million was up 113% from the comparative quarter. This is attributable to continued growth in all revenue streams. As mentioned, the first quarter 2021 results also include a full quarter's worth of contribution from our acquisition of Vanguard Modular in the U.S. Adjusted EBITDA for Workforce Solutions was $6.1 million, down 22% from the same quarter last year. WFS revenue of $30.5 million was up 7% from the comparative quarter mainly due to positive contribution from used fleet sales in the quarter. Excluding these asset sales, overall WFS segment performance should continue to see sequential improvement on the strength of recently awarded and expanded contracts. Total administrative costs for the quarter of $10.1 million were up 29% from the comparative quarter, primarily due to an increase in personnel costs, including the addition of Vanguard personnel. There has also been a steady increase in staffing levels within LodgeLink as we remain focused on growing this platform. Total administrative costs as a percentage of revenue of 15% was down 2 percentage points from 17% in the comparative quarter. At the end of the quarter, net debt of $169 million was down from $172 million in Q4 2020. Excess borrowing capacity under the company's asset-based credit facility was approximately $87 million, and the value of eligible rental fleet used to calculate the company's borrowing base was approximately $290 million at the end of the quarter. The company exited the quarter with a net debt to adjusted EBITDA ratio of 3.8, primarily due to the funding of the acquisition of Vanguard. Net debt to adjusted EBITDA, including Vanguard's trailing 12-month results, was 3.2, and we expect this leverage ratio to be back within our target range of 2 to 3x by the end of 2021. [ Stated ] CapEx as at March 31, 2021, was approximately $14 million, the majority of which is for ongoing MSS fleet growth across North America, with a particular focus in the U.S. We are seeing ample opportunities for organic growth in MSS, and expect organic fleet growth to drive continued MSS rental revenue growth throughout the year, consistent with our stated strategies. As Trevor mentioned, we believe we are off to a strong start in 2021 and expect to continue to build on this momentum in the coming quarters as we execute on our growth strategies. Operator, we'd like to now turn the call over to -- open the call to questions.

Operator

[Operator Instructions] The first question is from Frederic Bastien with Raymond James.

F
Frederic Bastien
MD & Equity Research Analyst

Guys, I'd just like to get a bit more color on how the LodgeLink platform is doing. I know you've got all the stats available in MD&A, but I understand that you were hoping for this platform to be breakeven kind of at around the end of Q2. So just wondering if you could get an update there.

T
Trevor Haynes
Chairman & CEO

Yes. Thanks for the question, Frederic. Toby, do you want to give some color there?

T
Toby Labrie
Executive VP & CFO

Yes. Absolutely. Frederic, we -- that's a good question. We -- our primary focus for LodgeLink is on growing net revenue. We believe there's tremendous value growth created there. We do see a path to breakeven, and we see that in the near term. We're not currently breaking even with LodgeLink, but we do expect to see that in 2021 as our margins continue to improve with an increased booking volumes on the platform.

F
Frederic Bastien
MD & Equity Research Analyst

Okay. Second question relates to, I guess, there was some activity in the space, United Rentals acquiring General Finance Corporation, or at least they announced that mid-month last April. Wondering if you can get some color on your thoughts for the industry in general, and whether there's any implications for Black Diamond?

T
Trevor Haynes
Chairman & CEO

Yes. It's a good question. Obviously, we're paying attention to the transactions in and around our MSS business. We've seen consolidation accelerating over the last couple of years with the WillScot platform acquiring a number of larger players, such as ModSpace. And more recently, combining with Mobile Mini. And then United Rentals Corp. acquiring General Finance, or announcing the intent to acquire. We're certainly paying attention to the multiples of EBITDA being paid. And note that they're considerably higher than the multiple on the Black Diamond platform. But generally speaking, from a competitive perspective, we see the consolidation as being positive. At least that's been the trend to this point. We're seeing rates improving across the marketplace. We're of the mind that the end markets want competition, and so leaves a pathway for us to continue to grow our platform. And to potentially increase the pace of our expansion with some inorganic transactions ourselves. I'll just ask Ted Redmond, who operates our MSS business. If Ted, do you have any other comments you would make?

E
Edward J. Redmond
Executive VP & COO of Modular Space Solutions

No. I'd concur with your comments, the WillScot acquisitions have resulted in fewer large competitors. And we've generally seen rate increases across the business both as a result of the consolidation, but also probably just more generally because of this strong industry drivers, including the economy and also including, in our business space, additional space needed for COVID.

F
Frederic Bastien
MD & Equity Research Analyst

But I understand that I mean just wanting to know if your asset base currently overlaps with that of general finance, I understand they run this Pac-Van division. So wondering if there's any overlap there. And just some basic understanding of how -- I mean United Rentals publicly traded. So I'm sure they're a disciplined bunch of guys. But I was just wondering if you can get some color there as well.

T
Trevor Haynes
Chairman & CEO

Yes. When we look at the modular space marketplace in the U.S. There's a number of segments. Certainly, there's geographic segmentation, the way that the market is structured. Pac-Van and our BOXX Modular and Vanguard businesses have similar assets. But generally speaking, we've been focused on different regions within the U.S. So not a huge amount of overlap, but certainly in the same space. The other way we look at it is that there's the single wide container, and trailer rental business, which is more transactional, more of a volume business, more construction-oriented, which we view that as the market that United Rentals Corp. is interested in. Our business is more focused on a more sophisticated asset mix, multi-sectional buildings, end markets such as education, government, larger commercial-type of applications. That require more of a skill set for the assembly turnkey construction type of work around the buildings, et cetera. So we think -- or we know that there's a difference between the higher volume transactional platforms that are being built versus our more sophisticated project-oriented and larger asset complement. Why do we like this space? Because we feel that the higher touch part of the market, if you can perform, offers a different competitive landscape, pure competitors, and potential for stronger margins when you take the blended services along with the asset rental, plus the larger multi-sectional assets tend to stay on rent for longer periods of time with our customers. And so when we look at the market through those couple of lenses, we view it as very constructive for our platform and our vision for what we're building.

F
Frederic Bastien
MD & Equity Research Analyst

Great. That's great color. Last one for me. I mean we've seen a nice, steady performance from MSS. And then I guess, from my perspective, WFS met my expectations for Q1. But given the successes you've had adding more contracts to this division, should we expect -- just curious how we should expect this particular segment to perform throughout the year? Should we see a steady growth from the $6 million of EBITDA you reported? Or should we expect a bit of lumpiness, given the timing of these contracts?

T
Trevor Haynes
Chairman & CEO

Yes. Good question, and that's an area we've been very focused on. We've been pleased with the performance and growth and diversity we've achieved with our MSS business. When we look at our strategies around our WFS business, what we've been working on over the last several years is to broaden out beyond Western Canadian oil and gas, build up a network within end markets such as mining, disaster recovery, government, et cetera. It takes time. All of these are longer sales cycle. And where we are today with the contract wins and what we're seeing in our marketplace, we are very constructive on our forward view of performance of WFS. It is inherently a project-oriented business. And as such, there's always a degree of lumpiness, but we think we'll be able to inform sort of less volatility based on the growing rental stream in behind these contracts we've been signing. And I'll get Mike Ridley, our -- who leads our WFS business, to add some color there, too. Mike?

M
Michael Lenard Ridley
Executive VP & COO of Workforce Solutions

Thanks, Trevor. And Frederic, yes, we're really pleased with the strategy. We've been working hard on it for the last few years to really diversify our business and move away from the oil and gas sector, the mining sector into Eastern Canada, construction, government, we've partnered with a number of companies around disaster relief when those occurrences occur. We're on the heels of good contracts already in place with the coastal gas link. That was -- that continues on, and we have assets deployed for Trans Mountain, and these contracts that are recently announced. So feel pretty good about the quarters ahead. And further to that, also, our Australia business continues to perform very well, also strong space rentals business education market and a steady and good workforce market over there as well. So pleased with the progress we've made like the way the balance of the year looks.

T
Trevor Haynes
Chairman & CEO

To finish a question there, Frederic. In Q1, we did have the benefit of a larger asset sale to a customer who also took equipment on rental. As we move into Q2 and beyond, I think we'll see performance in line. But the mix of revenues with more rental and more contribution from multiple projects is what we'll show, and then growth in the subsequent quarters as well.

Operator

Next question is from Brent Watson with Cormark Securities.

B
Brent Watson
Analyst of Institutional Equity Research

Maybe to that point about workforce, if you guys can maybe characterize for us sort of the level of bidding activity going on now relative to where we might have been just sort of prior to COVID. And what kind of end users are kind of looking the most promising at this point?

T
Trevor Haynes
Chairman & CEO

Yes. It's a good question. We did see things soften through the initial part of COVID. But our pipelines are looking quite robust with lots of different customer projects in different areas. And again, Mike, why don't you give us some color there?

M
Michael Lenard Ridley
Executive VP & COO of Workforce Solutions

Sure. Yes, good question, Brent. Yes, the pipeline of activity continues to be good. I would say it's better than it was, actually even ahead of COVID. And with COVID, actually, it's created some opportunities for social distancing in terms of how norms are configured as well as in the space rental side of the business. They have a requirement for additional space with more lunch rooms, et cetera. So yes, it's a pretty active market in terms of the type of opportunities. It's certainly less in oil and gas. It's more -- a lot in the Eastern Canada, mining sector, and as I touched on earlier, a fair bit of construction across the country with opportunities as well down into the U.S. and Australia.

Operator

The next question is from John Gibson with BMO Capital Markets.

J
John Gibson
Analyst

First question, MSS utilization. It's nice to see a continued trend upwards. I guess in a perfect world, could utilization get to 100%, I mean not that it will. But I'm just trying to wonder -- or I'm just trying to get at, like, how high could it move from here? Or is it -- or will it be sort of capped at a certain level?

T
Trevor Haynes
Chairman & CEO

Yes. It's a good question. My view has always been that as you get up into the mid-80s, it becomes inefficient in that we do have shorter-term transactional needs from our customers. And if we don't have the buildings on hand, then we're not able to service the customer and, in fact, end up potentially losing that customer to a competitor simply because of availability of supply. So as we look at replenishing our fleets based on utilization, replenishing as in adding additional capacity, we look for utilizations rising above 80%. And then, of course, we also look at our trailing ROI hurdle rate and then look to add assets. So the system is fairly optimal right now in terms of utilization. We do have more fleet additions coming in Q2 and through to the end of the year, consistent with our CapEx plan. But we were constrained internally, I guess, just to make sure that we brought the Vanguard business on. And we understood after taking on some debt to do that, how our cash flows were running, et cetera. So 100% is possible. It's unusual, and not healthy for this type of rental business. Ted, anything you would add to those comments?

E
Edward J. Redmond
Executive VP & COO of Modular Space Solutions

No. You covered it pretty completely there. I guess my only other comment would be, it's -- as Trevor said, 100% is possible, but it's very difficult because as assets come off rent, it can take a few weeks or a month to get them turned around and back on rent just because of the timing of our customers' needs. So we're -- we don't want to get too much higher than we're currently at. Some of our markets are higher and some of them are slightly lower because we've got numerous [Technical Difficulty]

T
Trevor Haynes
Chairman & CEO

Hello? Ted, Are you still there? I don't know if we lost Ted there.

J
John Gibson
Analyst

No worries. That was a great answer. I just had one more. It's around your WFS segment. I'm just wondering how much of those $56 million in contracts recently signed hit during the quarter versus what will sort of move into future quarters? If you could provide any sort of breakdown?

T
Trevor Haynes
Chairman & CEO

Yes. It's a good question, and important in understanding what happens next in our WFS business. Mike, can you sort of give some color on how those contracts roll out over the next while?

M
Michael Lenard Ridley
Executive VP & COO of Workforce Solutions

You'll see -- it's -- you'll see some upfront like with trans and install parts of the -- that will roll sort of into Q2. And some small rent, but the bulk of the revenue and rental revenue is sort of beyond Q2 into Q3, Q4 and even into next year.

T
Trevor Haynes
Chairman & CEO

A number of those contracts have up to 36-month rental commitments in buying them. So we're starting to build up our base recurring rental stream in our WFS business as those unutilized assets that some of which haven't worked for a number of years, are going to work, and we'll be generating recurring cash flow for us. And that -- aside from the operational revenue, we'll receive for positioning the assets, which will show up in the near term, those nice steady recurring monthly rental revenues is what we're really quite excited about as a new development.

Operator

The next question is from [ Dustin Lee ] with [ Lee Harman ].

U
Unknown Analyst

I just had a question on LodgeLink. You put up some very impressive growth against just a really difficult macro backdrop this quarter. Why not invest more aggressively to turbocharge growth, given how well the product is resonating with customers, just the size of the opportunity here? And do you think it makes sense at some point to bring in a third-party like a VC to help take this business to the next level? And as a means of highlighting the value that you guys are building here?

T
Trevor Haynes
Chairman & CEO

Good question. In our view, if I break your question down, first off, yes, we're really pleased with the traction LodgeLink is getting in the context of the business travel industry, which at one point was down about 90% in terms of volumes due to the pandemic, and even as of today, continues to have headwinds. So in light of that, we think the growth that we're showing there is very meaningful in terms of the adoption of the platform and the quality of the product, et cetera. To your second point, we don't feel that we have been constraining LodgeLink. We've been adding resources slightly faster than we're seeing the volumes increase. It takes some time to convert a corporate customer into a user on the platform. And so we have a bit of visibility through how the pipeline works from initiating conversations, demos, et cetera, and then running pilots and then beginning to onboard the internal users of our customers, which sort of gives us the benefit of being able to gauge the pace at which we need to add to all of our teams, customer support, customer success, billing and amendments as well as product, et cetera. So we don't feel we've been throttling the business back. And in fact, we have increased the head count in LodgeLink, as Toby mentioned. The third question, yes, I mean, our intent is to generate as much value for the Black diamond shareholders as possible in all of our businesses, including LodgeLink, and we think there's a great deal of potential there. There's different ways that we can unlock that value. And we'll look at all of them. But in the near term, what we need to do is continue to drive that volume growth and net revenue growth. And as the business scales, it becomes more valuable, and then we can look at whether we need a strategic partner to help inform the best outcome in terms of performance or value of the business or any of a number of other means by which we can accomplish that over time.

Operator

[Operator Instructions] The next question is from Jeff Fetterly with Peters & Co.

J
Jeffrey Eric Fetterly
Principal and Oilfield Services Analyst

Just a question on CapEx. Whether it's the operational side of the platform or the balance sheet, what's your comfort level in pushing CapEx beyond the $35 million number you've talked about?

T
Trevor Haynes
Chairman & CEO

That's a good question. And in CapEx or capital allocation, we're looking at a number of factors. Certainly, debt levels, cash flows, how contracted the forward cash flows are, et cetera. So what we're seeing on the platform right now is very positive from what our expectations had been at this point. However, we've not allocated the full $35 million at this point. And also with the WFS asset sale in Q1, we're running stronger than we had anticipated on that fleet sales. And so it gives us some variability when we look at net CapEx to support the business. And Toby, any other thoughts there?

T
Toby Labrie
Executive VP & CFO

Yes. I just add that we've been trending to get back to our leverage -- target leverage ratios more quickly than we had originally planned, doing that through a combination of modest debt repayment. And as Trevor mentioned, starting to allocate more quickly our capital program. And so that's increasing our EBITDA generation. We see that continuing to improve throughout the year. And so with that combination, we think that on a net CapEx basis, as Trevor mentioned, we have some headroom and potential opportunity to continue to deploy more capital. But primarily, we're focused on that leverage coming back down, and we think we'll get there more quickly than we first anticipated.

J
Jeffrey Eric Fetterly
Principal and Oilfield Services Analyst

And how much of the $35 million is unallocated at this point?

T
Toby Labrie
Executive VP & CFO

We probably have about 1/3 of that unallocated.

J
Jeffrey Eric Fetterly
Principal and Oilfield Services Analyst

Okay. And so do you expect that, that will be spoken for fairly quickly? Or could it take a couple more quarters to get full visibility over your program?

T
Trevor Haynes
Chairman & CEO

I think we'll have visibility, Jeff, as we go into Q3. Typically, demand in our system slows going into the winter months. As in the Canadian markets, MSS sees a softer period in Q1 as construction starts usually coincide with frost coming out of the ground. And when we look even in the U.S. with the Vanguard system. Within Black Diamond now, the majority of their business is school-oriented. And so the big push for school additions, et cetera, is around this time of year. So it's usually a Q2, Q3, CapEx demand. So based on those factors, we would expect that, if not all, the majority of our CapEx will have been allocated before the end of the summer. That doesn't mean it's spent, but that it's been allocated. And then we'll take deliveries through to early fall, and then it will taper off.

J
Jeffrey Eric Fetterly
Principal and Oilfield Services Analyst

Just one quick question on VAPS. So the comment in the MD&A about the differential between VAPS penetration on Vanguard versus BOXX. Is there anything structural on the Vanguard side that would limit VAPs from gravitating over time towards the BOXX level?

T
Trevor Haynes
Chairman & CEO

I don't know if Ted is back on the call, but...

E
Edward J. Redmond
Executive VP & COO of Modular Space Solutions

Yes, I am.

T
Trevor Haynes
Chairman & CEO

Yes. So I was just going to point out the difference of the education market and assets for VAPS, but I'll turn it over to you, Ted.

E
Edward J. Redmond
Executive VP & COO of Modular Space Solutions

Okay. I think there is a difference between the businesses, the education market certainly would have different VAPs and probably maybe less VAPS. But the same, I think, philosophy applies where we can give our customers one-stop shopping and easier access to outfitting their units. We've been successful at that. So there's definitely some opportunities within Vanguard to increase the VAPS usage in that market. And then there's also still opportunities across the rest of the MSS platform to increase VAPS adoption and also to come up with new and new VAPS products that we can offer our customers. So we expect continued growth on the VAPS side, both on a percentage basis and a dollar basis over time.

J
Jeffrey Eric Fetterly
Principal and Oilfield Services Analyst

Is there an internal stretch target that you have in mind for where you think VAPS could go?

E
Edward J. Redmond
Executive VP & COO of Modular Space Solutions

We said our -- I mean we're setting our VAPS targets on an annual basis. So we're definitely targeting probably over 10% VAPS growth per year internally on a -- like on an absolute dollar basis. So I guess that's about -- Trevor, if you have maybe any additional color on that?

T
Trevor Haynes
Chairman & CEO

I mean notionally, trying to get our VAPS and operational revenues on ratios that work up the return on the investment in the asset itself is the overriding philosophy and then convenience to our customer that we can include other items that they require, that they would have to source elsewhere. And so in my mind, if we can get ourselves between 15% and 20% of our rental revenue, and it's going to differ by market and by product type. So we don't dictate through the system. We ask our regions what else could we add that would be convenient to our customer that connects to our main business, which is renting the buildings.

Operator

The next question is from [ Brad Venit ], private investor.

U
Unknown Attendee

Congratulations on another good quarter. If the Goldboro contract is awarded, would that change your revenue forecast for 2021? Or is that all pushed into 2022? And is there any CapEx spending that you'd be doing this year in order to fulfill that contract?

T
Trevor Haynes
Chairman & CEO

Yes. Our current view, Brad, on Goldboro, if it does achieve final investment decision on June 30, which is the date that's been put out by the proponent [ pure day ] that the revenue in this calendar year would be fairly light for us, and at the front end of the project entails the site geo tech and initial permitting, and then we need to do the civil works to prepare the site where the cap will go. And so we may have some operational revenue. If we can get all of the permits in place and get to work on the site, but very little by way of assets being on rent. And as far as CapEx for the year, if anything, it would be very light, based on what's evolved in the first phases.

U
Unknown Attendee

Okay. Switching over to LodgeLink. I keep track of your customer count, I guess, and your property count. I'm wondering, you went from 582 in the fourth quarter to 662 for customers. And properties went from 2,500 to 3,600. What is the -- do you have any guesstimate or estimate what the size of that market could be as far as a customer count and/or property count?

T
Trevor Haynes
Chairman & CEO

It's a good question. Usually, we look at the size of the market as tracked by the Global Business Travel Association, the GBTA, and they track a sector called ERM, which is essentially crew travel, and they track globally about $380 billion of spend, and that's the trade between sort of buyers of travel services, rooms, airplane seats, et cetera. And so when we look at the addressable market, even in North America, over $60 billion -- and this is pre-pandemic numbers. It's a very sizable market. And we've got lots of room. When we think about the number of properties, it becomes a bit more difficult to 0 that in. I guess, technically, any hotel and any camp or lodge in North America is a potential property. But of course, the ones that are more suitable for crew travel sort of narrows us down into certain brands and certain properties. I don't know, Patrick Melanson, our Chief Technology Officer is on the call. I don't know if this is a data point you've seen or that our team has been focused on, Patrick?

P
Patrick Melanson

Yes. I can add a little bit of color on that, Trevor, in that the properties that we are enlisting, for quality control purposes, we want to be cautious. We have our customers stay in the, let's call them, various little properties. So we stick to going after brands. So think about the large brands that we're all familiar with, and they have sub brands that are germane to the worker crew traveler. So we focus on those. And those -- there'll be a limited capacity. I don't have that number here. But they certainly have many, many properties across North America and beyond. With respect to the smaller properties that are sometimes not affiliated, we're cautious with those because without the call to control of a brand, we'd be at risk of putting our guest or guests into properties that might be not as desirable, which not what we want to do. So there is a number we can get to that for the brands for North America, perhaps for a future disclosure.

U
Unknown Attendee

So these would be like the Microtels or the Hilton Tru or...

P
Patrick Melanson

Correct. Correct.

U
Unknown Attendee

Yes. All right. And then from a customer -- I'm sorry, go ahead.

P
Patrick Melanson

Yes. On the customer side, we have a very good strategy going after different verticals. And by extension geographies. We all know we start in Western Canada, which is where our bread and butter was, and our basket of knowledge is. But now we've grown that across North America to go after customers that have crews that do work in different verticals beyond construction, mining and oil and gas, those other verticals. And we're finding companies with crews of 5 or 50, or we'll take many, many. That's our differentiator. And we've yet to scratch the surface in the U.S. as far as I'm concerned because we've been concentrated mostly in the southern part of the U.S.

T
Trevor Haynes
Chairman & CEO

In terms of numbers, companies could be customers. I mean it would be in the thousands. We've got a long ways to go.

P
Patrick Melanson

Yes.

U
Unknown Attendee

Okay. Have you seen any new competition enter that market? Or -- I guess you have the first-mover advantage, and what other people -- you're not -- you're growing as fast as you can, and there's no constraint, I guess, that you have, is that correct?

T
Trevor Haynes
Chairman & CEO

Well, what we are addressing is the inefficiency and the complexity of crew travel from a number of different perspectives. A lot of what we do is the efficiency-oriented software for tracking costs against air fees, purchase orders, et cetera, speeding up the internal administration and cost control for our customer so they can turn around more quickly and invoice their customers. So yes, the search and book is a component, but it isn't a differentiator. So really, if we look at the space, yes, there's been travel agencies and booking tools that have been involved in helping these companies book into hotels or onto airplanes, but looking at the whole integrated travel cycle and trying to bring efficiency through digital tools, we think we're one of the few focused on this particular part of the travel -- business travel world. So I wouldn't say there aren't others with traditional offerings or others that are on the peripheral of what we consider our core. But at the moment, we think we've got fairly little competition for the core target of what LodgeLink is going after.

Operator

[Operator Instructions] Gentlemen, there are no more questions registered at this time. I would like to turn the conference back over to Mr. Zhang for any closing remarks.

J
Jason Zhang

Thank you all for joining, and stay safe. We will talk to you next quarter.

T
Trevor Haynes
Chairman & CEO

Thank you.