Corporate Presentation August 2017 Badger Daylighting: Proven - - PowerPoint PPT Presentation
Corporate Presentation August 2017 Badger Daylighting: Proven Business Model with Organic Growth Proven business model and strong competitive position Excellent organic growth potential in existing and new markets Track record of
August 2017
competitive position
existing and new markets
economic cycles
withstand cyclicality
TSX: BAD Slide 1 August 2017
Shares outstanding
1
37.1mm Market capitalization
1
$1.1B Total debt less cash
2
$53mm Adjusted EBITDA
3 – Trailing Twelve Months (TTM) at June 30, 2017
$114mm Net Profit (after tax) – TTM at June 30, 2017 $38mm 5-year average return on equity
4
18% Dividend yield
5
1.6%
1 As at August 15, 2017. 2 As at June 30, 2017. 3 For definition of Adjusted EBITDA see slide titled “Non-IFRS Financial Measures”. 4 Average return on equity for the fiscal years 2012 through 2016. Measure is updated on an annual basis. 5 Dividend yield calculated based on August 15, 2017 share price of $28.44 and August 2017 declared dividend of $0.038 per common share ($0.456 per common share annualized).
TSX: BAD Slide 2 August 2017
quarter
Note 1: Refer to Badger’s 2017 second quarter earnings release, financial statements and management’s discussion and analysis for additional details regarding Adjusted EBITDA, Revenue, Adjusted EBITDA margin and Revenue Per Truck (RPT). Note 2: See Non-IFRS measures for definition and additional details on Adjusted EBITDA, Adjusted EBITDA margin and RPT.
TSX: BAD Slide 3 August 2017
The Badger Daylighting process involves exposing underground infrastructure to daylight:
professional operators.
design, pressure and volume are critical to prevent damage to underground infrastructure.
TSX: BAD Slide 4 August 2017 Safety – It’s What We Do. It’s What We Deliver.
Badger has developed a wide range of applications for its Badger units* TSX: BAD Slide 5 August 2017
*See Appendix for additional uses
infrastructure owners
equipment more productive
required
spaces. Badger’s Culture: Serve our customers with the Best Trained Operators and the Best Trucks in the business.
TSX: BAD Slide 6 August 2017
Offers a unique service to attractive markets Badger has an excellent business with a great track record Proven business model and strong competitive position Executing on a focused strategy TSX: BAD Slide 7 August 2017
to work which lowers
rate and to manage fleet utilization over business cycle
the 2014-2016 oil & gas downturn by repositioning fleet
TSX: BAD Slide 8 August 2017
400 600 800 1,000 1,200
100 150 200 250 300 350 400 450 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Fleet (# of Hydrovac Units) Annual Revenue ($mm CAD)
Badger Hydrovac Units and Revenue Last 10 Years
Number of Badger Units Revenue ($mm CAD)
Proven Business Model: Local Branches Part of Large Network
partner branches.
manage their own P&L’s – bonus based on pre-tax earnings. Operating partners are independent entrepreneurs.
TSX: BAD Slide 9 August 2017
Badger leverages significant scale advantages across its branch network
Areas1
17% from Operating Partners2
states.
1 Service Areas are locations where Badger provides services to local
customers regardless of whether there is a physical location where Hydrovacs and staff are located. A Branch has a physical location, staff and Hydrovacs.
2 As at December 31, 2016.
TSX: BAD Slide 10 August 2017
Proven Business Model: Flexibility over Business Cycles
TSX: BAD Slide 11 August 2017
Badger’s extensive network and market knowledge allowed it to aggressively reposition the business to offset the steep decline in oil & gas related markets
100 150 200 250 300 350 400 450 2012 2013 2014 2015 2016
Revenue ($mm CAD)
Hydrovac revenue has shifted to non-oil & gas
Hydrovac Service Revenue - Non-Oil and Gas Hydrovac Service Revenue - Oil and Gas Other Revenue
20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000 12% 14% 17% 19% 21% 24%
Revenue Per Truck/month (RPT) IRR
Pre-Tax IRR at Different Revenue Per Truck (RPT) Levels*
Very Attractive Economics:
Building our own trucks provides a number of operating advantages:
efficiency (we operate more Hydrovacs than anyone)
meet demand
*Assumes production cost of $400,000, 10 year economic life, $0 terminal value, 25% EBITDA margin. For definition of revenue per truck see slide titled Non-IFRS Financial Measures.
TSX: BAD Slide 12 August 2017
Source: Management Analysis
Badger Engineering and Truck Build
purchasing from third party manufacturers
TSX: BAD Slide 13 August 2017
Badger’s Red Deer, Alberta manufacturing facility
customers and geographic markets
new markets
states, Badger currently provides service to only 73 – significant untapped market potential
*US Census Bureau, 2010 Census – an MSA is a geographic region with a population of over 100,000 people.
TSX: BAD Slide 14 August 2017
TSX: BAD Slide 15 August 2017 Current Badger service area MSAs per 2010 Census data; lower 48 states
Significant geographic growth opportunities to pursue with Badger’s proven business model
recovery TSX: BAD Slide 16 August 2017
*Source: American Society of Civil Engineers
Badger serves infrastructure markets:
Badger is the market leader with “first mover” advantage in many markets
Badger has pioneered Hydrovac use across a wide range of sectors and geographies. Badger is the industry leader in driving Hydrovac acceptance and market penetration.
TSX: BAD Slide 17 August 2017
100 150 200 250 300 350 400 450 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Revenue ($mm CAD)
Revenue Mix Between Canada and the US ($mm CAD)
US Canada
Badger Business Development Focus
national levels
and head office contacts)
America
target new customers to broaden revenue base TSX: BAD Slide 18 August 2017
TSX: BAD Slide 19 August 2017
Badger’s proven business model provides an advantage in keeping utilization rates high and operating costs low
growth
Build the Business Platform:
and reduce costs
training
retention TSX: BAD Slide 20 August 2017
improvements
efficiently, reduce customer disposal costs and water usage
TSX: BAD Slide 21 August 2017
Strategic Milestones (3-5 years):
Offers a unique service to attractive markets Proven business model and strong competitive position Executing on a focused strategy Badger has an excellent business with a great track record
A Hydrovac Focused Business
leader
Growing Network of Locations
Strong Operations Focus
TSX: BAD Slide 22 August 2017
Sales and Business Development
lower costs Diversified and Expanding Markets
Hydrovacs
Strategy: Leverage Badger’s core Hydrovac operations and related technology
This presentation contains forward-looking statements reflecting certain current forecasts of certain aspects of the company’s future. It is based on current information that management has assessed, but which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking statements may include but are not limited to statements regarding:
per month) at $30,000 and adjusted EBITDA margin at 28-29%;
Badger also remains well positioned to capitalize on recovery in our oil & gas markets; and
returns. Badger Daylighting Ltd.’s actual results could differ materially from those stated or implied by the forward-looking statements within this presentation due to risks and uncertainties associated with its business, including, but not limited to:
The forward-looking statement with this presentation should be considered in the context of these and other risk factors disclosed in our most recent filings included with the Canadian Securities Administrators, which are available on the SEDAR disclosure system (www.sedar.com). All future written and oral forward-looking statements made by us or on our behalf are also subject to these factors. We undertake no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Slide 23 TSX: BAD August 2017
This presentation contains references to certain financial measures, including some that do not have any standardized meaning prescribed by IFRS and that may not be comparable to similar measures presented by other corporations or entities. These financial measures are identified and defined below: “Adjusted EBITDA” is earnings before interest, taxes, depreciation and amortization, share-based compensation, gains and losses on sale
profitability and is therefore useful to management and investors as it provides improved continuity with respect to the comparison of our
prior to how these activities are financed, the results are taxed in various jurisdictions, and assets are amortized. In addition, Adjusted EBITDA excludes gains and losses on sale of property, plant and equipment as these gains and losses are considered incidental and secondary to the principal business activities, it excludes gains and losses on foreign exchange as such gains and losses can vary significantly based on factors beyond our control and it excludes share-based compensation as these expenses can vary significantly with changes in the price of our common shares. “Adjusted EBITDA Margin” is Adjusted EBITDA margin as defined above, expressed as a percentage of revenues. For a reconciliation of Adjusted EBITDA to net profit, please see the most recent Management Discussion and Analysis. “Revenue per truck per month” (RPT) is a measure of hydrovac fleet utilization. It is a measure of hydrovac revenue only. The RPT is calculated by combining Canadian and US dollar hydrovac revenue without converting for exchange differences, dividing the hydrovac revenue for the period by the number of hydrovacs in service throughout the period, and further dividing by the number of months in the period.
Slide 24 TSX: BAD August 2017
Paul Vanderberg President and CEO, Director Paul has been the President and CEO of Badger since August, 2016. Prior to that he spent 14 years as President of Winroc SPI, the construction products division of Superior Plus Inc. which operated a North American decentralized fleet-based service business. He held increasingly senior positions with USG Corporation, with general management responsibilities for operations in the USA, Canada and internationally for the previous 16 years. Paul holds a BA and MBA from Michigan State University. Gerald Schiefelbein Vice President Finance and Chief Financial Officer Jerry joined Badger in June, 2014, bringing broad international financial experience to the
and the Middle East. Immediately before joining Badger, Jerry spent five years as the CFO for Ivanhoe Energy in Calgary. Prior to Ivanhoe he was the Chief Financial Officer for BP America’s based crude oil and refined products trading organization. Jerry has a degree in finance from the University of Wisconsin at Madison and a Masters of Management from Northwestern University’s Kellogg Graduate School. John Kelly Chief Operating Officer John joined Badger as Vice President – United States Operations in September 2011. Prior thereto, John was employed by Waste Management Inc. for 18 years holding various positions in hauling, transfer and recycling operations. John held positions including District Manager, Director of Operations and most recently Midwest Vice President for WM Recycle America, responsible for 24 recycling facilities in the United States and Canada, with more than 800 personnel and revenues in excess of $150 million. John holds a BA from Marist College in Poughkeepsie, New York.
Slide 26
Tracey Wallace Vice President, Human Resources
Tracey joined Badger in June 2017. Tracey has extensive business experience across several industries in Canada, the US, and
Vice-President for Carillion Canada, and Officer and Vice-President, Human Resources for the ATCO Group of Companies. Tracey has served on the boards of the ALS Society of Canada, the ALS Society of Alberta, and Rokstad Power. Tracey holds a Bachelor of Science degree with a major in Business Administration, an MBA specializing in HR Management, and holds the Certified Professional Human Resources (CPHR) designation.
Elizabeth Peterson Vice President, US Operations – East
Elizabeth started with Badger in April 2015. Prior thereto, she was employed by Clean Harbors Environmental Services, Inc. for 24 years holding various positions in both sales and operations. Elizabeth held positions including SVP East Region, Vice President Industrial Services and Vice President of InSite Services. Elizabeth holds a BA from Smith College in Northampton, MA as well as a MBA from Duke University’s Fuqua School of Business.
Mike Tunney Vice President, US Operations – Central
Mike joined Badger as VP of Operations - Central in January of 2017. He spent 35 years with Waste Management, a major Environmental Service company in several key strategic leadership roles. Mike joined Waste Management in 1983 as a Project Manager for the Construction Services Division. He advanced throughout his tenure and most recently, was the Area Director of Operations for the Midwest region.
Tim Reiber Vice President, Business Development
Tim transitioned into the newly created VP BD role in May,
Director of Operations of Badger for the West Region in the US since joining the Company in June 2012. Prior to joining Badger, Tim was the Senior Regional Director for Factory Motor Parts, a wholesale auto part distributor. Tim holds a BS/BA from the University of Florida in Gainesville, FL.
Kevin Carnahan Vice President, US Operations – Pacific
Kevin joined Badger in March of 2017. Prior to that Kevin spent more than 23 years within the environmental service industry in leadership roles. Kevin previously spent 11 years with Clean
there and most recently, was the Vice President of Northern California and Nevada.
Wade Wilson Vice President, Canadian Operations
Wade joined Badger as the Director of Operational Excellence in January of 2017. He is now VP of Canadian Operations. Prior to joining Badger he spent over 38 years with Winroc. Wade joined Winroc in 1978 as a Warehouse, Fleet and Customer Service Representative. He held various positions including VP of Winroc Operations of North America. After 2010, Winroc was acquired by Superior Plus and Wade held the position of VP of Operations, Canada. He was responsible for all aspects of operations across a decentralized branch network.
Mark Lyle Vice President, Canadian Operations – West
Mark has been with Badger for over 15 years. Mark has held positions including Director of Business Development, Regional Manager for both Western and Eastern Canada, Canadian Sales Manager and BD Representative. Mr. Lyle holds a Bachelor of Commerce degree from the University
George Chung Vice President, Canadian Operations – East
George joined Badger in October 2015 as Director of Eastern Canada Operations and became VP, Canadian Operations - East effective January 2017. Prior thereto, he was the President of Greenvac Inc. in Toronto. George developed, built and marketed a large Hydrovac disposal site in downtown Toronto for Greenvac.
Slide 27
David Calnan
David is a businessman whose principal business activities are with Rocky Layman Energy Inc., an Alberta based oil & gas company, and Am-Tek Solutions Inc., a private investment management company. He has been President of Rocky Layman Energy Inc. since 1989 and of Am-Tek Solutions Inc. since 2001. David has also served as an officer and director of ten other public companies and a number of private
member of the Law Society of Alberta and received his BA from Queen’s University in 1977 and his LLB from the University of Toronto in 1981.
Catherine Best Chair, Audit Committee
Catherine is a corporate director, currently serving on the boards of AltaGas Ltd., Canadian Natural Resources Limited, Superior Plus Corporation and Aston Hill Financial Inc. From 2000 to 2009 she was the Executive Vice President, Risk Management & Chief Financial Officer of the Calgary Health Region. Prior to 2000 she was a Corporate Audit Partner with Ernst & Young. She holds a Bachelor of Interior Design degree from the University of Manitoba. Catherine is a Chartered Accountant and was awarded her FCA designation in 2005 and her ICD.D in 2009.
Grant Billing
Grant is a corporate director who has served as a director for more than 9 companies. He was the Chairman of Superior Plus Corp. from 2011 to 2014 and served as its Chairman and CEO from 2006 to November 2011 and its Executive Chairman from 1998 to 2006. Prior to that, he held various senior management positions with exploration and production companies including President & CEO of Norcen Energy Resources Limited and Sceptre Resources Incorporated. Grant is currently a director of Pembina Pipeline Corporation and a director of Cortex Business Solutions Inc. He holds a Bachelor of Science degree from the University of Calgary and is a Chartered Accountant.
Bill Lingard Chair, HSE Committee
Bill is currently a Director of BlackSquare Inc. and was the Chairman of the Board for the Southern Alberta Institute of Technology (SAIT) until September 2014. Prior to that, he was the President and COO of URS Corporation in San Francisco from 2013 to 2014; the President, CEO and Board member of Flint Energy Services Ltd. from 2005 to 2012; and the COO of Nabors Drilling Canada from 2002 to 2005. He holds a Bachelor of Engineering degree from Memorial University in St. John’s, Newfoundland and completed business management courses at the University of Texas.
Glen Roane Board Chair
Glen is a businessman and corporate director who has served as a director of more than 15 companies since 1997 and who also served two terms as a Member of the Alberta Securities
and GBC American Growth Fund Inc. Prior to 1997, Glen was employed in the financial services industry with employers including the Toronto Dominion Bank, Lancaster Financial Inc and Burns Fry Limited. He holds a BA and MBA from Queen’s University, in Kingston, Ontario and the ICD.D designation.
Garry Mahaichuk Chair, HRC Committee
Garry has served as a director on 14 companies since 1996. He is currently a Director of: Greenfields Petroleum Corp, Nordic Petroleum AS, RLG International, Nordcon Oil and Gas AS. He is also currently a Director and President of Nordic America’s Inc., and Nordcon Canada Inc. Between 2007 and 2009 he was the President and CEO of Toromont Energy Systems Inc., and from 2005 to 2007 he was Vice President of Heavy Oil and Oil Sands for Husky Energy Inc. Garry holds a B.Sc. Mechanical Engineering from Queen’s University, a PMD diploma from Harvard University and an ICD.D designation from the Institute of Corporate Directors.
Slide 28
$mm CAD FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Revenue 324,594 422,219 404,620 404,202 101,811 123,351 Gross profit 109,883 139,574 121,515 119,905 23,640 36,612 Adjusted EBITDA 94,169 120,121 107,759 104,763 19,856 32,104 Profit before tax 57,827 73,519 41,243 47,131 5,531 21,651 EPS – Diluted $1.09 $1.43 $1.04 $0.78 $0.10 $0.40 Badger units 791 998 1,018 1,024 1,031 1,056 RPT 34,600 32,169 25,726 24,815 24,747 29,141 Slide 29 TSX: BAD August 2017
Slide 30 TSX: BAD August 2017
BADGER CLIENT
BEST OPERATOR & BEST TRUCK
Provide good value and service = satisfied client
AREA MANAGER
Attract and develop the best operators, trucks and safety program in Hydrovac industry
REGIONAL, PLANT & ADMIN STAFF
Attract and help Area Managers to be successful by providing fleet, safety and business support plus best trucks
CORPORATE OFFICE
Provide strategic direction, support for the organization and create a winning culture
Slide 31 TSX: BAD August 2017
Badger Daylighting is twenty-five years old! In 1992 Badger Daylighting (Badger) set out with a vison to use hydrovac excavation technology to protect workers, underground infrastructure, the public and the environment, leading to the ‘birth’ of a new industry. Over the course of 25 years Badger has made that vision a reality and led the industry’s growth across the US and Canada. Badger’s culture is strong and is centered around serving the customer with the Best Trained Operators and the Best Trucks in the business. Badger’s focus on safety, our customers and support for our operators has driven continued business growth. From a base in west-central Alberta Badger has grown to over 1,700 employees in over 100 locations throughout the United States and Canada. After 25 years of successfully growing demand for non-traditional, safe excavation Badger continues to innovate, improving its technology and business practices to meet safety, regulatory and customer demands. Staying focused on safety, our people, and satisfying customer needs with the Best Operator and Best Truck is a timeless strategy and will be the basis for Badger’s next 25 years. Thanks to our loyal customers and employees, who are the heart of the company.
Safety – It’s what we do. It’s what we deliver. Slide 32 TSX: BAD August 2017
Badger serves a broad customer base, with a diverse set of applications that go well beyond excavation Utilities Oil & Gas Power Generation Transportation
holes, pot holes, sight holes
upgrading
tower cleaning, pond and retaining vessel cleaning.
maintenance
trenching for power and drainage lines.
Industrial Engineering Construction Other Applications
Cleanup
prospecting (potholing)
cleanout
Slide 33 TSX: BAD August 2017
Continued non-oil & gas growth along with lower dependence on oil & gas revenue are contributing to changing seasonality.
40 60 80 100 120 140 2012 2013 2014 2015 2016 2017
Revenue ($mm CAD)
Quarterly Revenue
Q1 Q2 Q3 Q4
Slide 34 TSX: BAD August 2017
23,317 28,106 25,197 21,105 23,038 28,062 27,023 24,747 29,141
15,000 16,500 18,000 19,500 21,000 22,500 24,000 25,500 27,000 28,500 30,000
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Slide 35 TSX: BAD August 2017
136 162 184 185 212 241 285 334 413 407 412 504 630 791 998 1,018 1,024 1,031 1,056 100 300 500 700 900 1,100 1,300
Slide 36 TSX: BAD August 2017