Dexterra Group’s Earnings Call Highlights Strong 2024 Performance

Dexterra Group Inc. ((TSE:DXT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Dexterra Group Inc.’s recent earnings call conveyed a generally positive sentiment, highlighting strong financial performance in 2024, particularly within the Support Services segment, and a robust balance sheet. Despite these achievements, the company acknowledged challenges in the Asset Based Services segment due to normalized wildfire activity and potential economic risks stemming from trade policies.

Record Revenue and EBITDA

Dexterra Group ended 2024 on a high note, reporting record revenue from continuing operations of $1 billion and an adjusted EBITDA of $107 million. This milestone underscores the company’s successful financial strategies and operational efficiency throughout the year.

Support Services Segment Growth

The Support Services segment experienced significant growth in Q4 2024, with year-over-year revenue increasing by over 18%. This growth was fueled by the acquisition of CMI and organic expansion, leading to an improved adjusted EBITDA margin of 8.8%, up from 7% in Q4 2023.

Shareholder Returns

Dexterra demonstrated its commitment to shareholder value by achieving a return on equity of 13.3% in 2024. The company returned $30 million, or approximately 40% of free cash flow, to shareholders through dividends and share buybacks.

Strong Balance Sheet

The company ended 2024 with a strong balance sheet, reducing net debt to 0.6 times adjusted EBITDA, or $68 million. This financial management provides Dexterra with the flexibility to pursue future investments and growth opportunities.

Positive Market Outlook

Dexterra anticipates continued strong activity levels across the natural resources market, including energy and mining, into 2025. This positive market outlook supports the company’s growth projections and strategic initiatives.

Asset Based Services Revenue Decline

In 2024, the Asset Based Services segment faced a decline in revenues and adjusted EBITDA compared to 2023, attributed to a more normalized wildfire season. The adjusted EBITDA margin for the year was 29.3%, down from 36.7% in 2023.

Potential Economic Risks

Dexterra acknowledged potential economic risks due to increased protectionist trade and other policies, which could impact both the Canadian and U.S. economies and, consequently, the company’s operations.

Wide Range in Asset Based Services Margins

The company expects adjusted EBITDA margins in the Asset Based Services segment to fluctuate between 30% to 40%, depending on the business mix. This variability highlights the challenges in maintaining consistent profitability.

Forward-Looking Guidance

Dexterra’s guidance for 2025 indicates strong financial performance expectations, with an organic growth rate projected at 5% to 7% in Support Services and 2% to 5% in Asset Based Services. The company anticipates adjusted EBITDA conversion to free cash flow to remain above 50%, supported by a strong balance sheet and strategic re-segmentation efforts.

In summary, Dexterra Group Inc.’s earnings call reflected a positive outlook, driven by record revenue and strategic growth in the Support Services segment. While challenges persist in the Asset Based Services segment, the company’s robust balance sheet and proactive strategies position it well for future growth. Investors can look forward to continued shareholder returns and a positive market outlook as Dexterra navigates potential economic risks.