Calgary, Alberta (FSCwire) - Badger Daylighting Ltd. (the “Company” or “Badger”) is pleased to announce its results for the nine months ended September 30, 2014 and the continued strengthening of its management and oversight through an executive appointment and Board renewal.

 

As part of a board renewal process, Badger’s long-serving Board Chairman, George Watson, has announced his retirement, both as Chairman and as a member of the Board. George joined the Badger Board in early 2000 and for the next 14 years guided the Company with sage advice and dedicated leadership. The Board, together with Badger’s management, thank him for his contributions to Badger’s success and wish him good fortune in the future. He will be missed.

 

Concurrent with George Watson’s retirement, the Board of Directors has appointed Glen Roane as the Chairman effective immediately. The Board and management are pleased that Glen has accepted the Chairmanship and look forward to his leadership. As part of the continuous board renewal program, Badger will seek to add other board members in the future to provide additional strength and capabilities in this important oversight function.

 

Effective January 1, 2015 John Kelly, Badger’s Executive Vice President – USA, is appointed Chief Operating Officer of Badger Daylighting. After doubling the size of the United States company within three years, John will now be responsible for all operations, both in Canada and the U.S. John will report to Tor Wilson, Badger’s CEO, and will be located in the Company’s Pittsboro, Indiana office. A search is underway for a U.S. Vice President to replace John and add depth to the Executive group.

 

 

Highlights for the three months ended September 30, 2014:

 

• Revenues increased by approximately 29 percent to $113.1 million from $87.5 million for the comparable quarter of 2013 due to a 34 percent increase in Canadian revenues and a 24 percent increase in United States revenues. This is the third full quarter in which Fieldtek, acquired in November 2013, has been part of the financial results.  Without Fieldtek, Canadian revenues would have increased by 17 percent. 
• Adjusted EBITDA margin increased to 32% in the third quarter of 2014 from 30% for the same quarter of 2013.
• Adjusted EBITDA margins were 27 percent for the nine months ended September 30, 2014 compared to 30 percent for the nine months ended September 30, 2013;
• Funds generated from operations increased by 58 percent period-over-period to $30.9 million from $19.6 million in the comparable quarter of 2013;
• Canadian adjusted EBITDA margins decreased 1% from 32 percent to 31 percent from the comparable period last year due to the impact of the lower margin Fieldtek business. Without Fieldtek Canadian margins would be the same as the previous third quarter.
• U.S. adjusted EBITDA margins increased to 33 percent from 32 percent for the comparable period of last year helped by underlying business improvement.
• Badger had 957 daylighting units at the end of the third quarter of 2014, reflecting the addition of 174 daylighting units to the fleet to date in 2014 and the retirement of eight units.  Of the total, 405 units were operating in Canada and 552 in the United States at quarter-end.  Badger had 340 units in Canada and 408 in the United States for a total of 748 units at September 30, 2013.  The new units were financed from cash generated from operations and existing credit facilities.

 

The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the attached unaudited interim consolidated financial statements of Badger Daylighting Ltd. (the “Company” or “Badger”).  The interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS).  Readers should also refer to the audited consolidated financial statements and MD&A for the year ended December 31, 2013, which along with all previous public filings, including the Company’s Annual Information Form for the year ended December 31, 2013, may be found on SEDAR at www.sedar.com.

 

All comparative share capital and profit per share amounts have been adjusted for the three for one share split that occurred on January 24, 2014.

 

This MD&A has been prepared taking into consideration information available to November 12, 2014.

 

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

 

Certain statements and information contained in this MD&A and other continuous disclosure documents of the Company referenced herein, including statements related to the Company’s capital expenditures, projected growth, view and outlook toward margins, cash dividends, customer pricing, future market opportunities and statements, and information that contain words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may” and similar expressions relating to matters that are not historical facts, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. These statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. The Company believes the expectations reflected in such forward-looking statements and information are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements and information included in this MD&A should not be unduly relied upon. These forward-looking statements and information speak only as of the date of this MD&A.

 

In particular, forward-looking information and statements include discussion reflecting the Company’s belief that:

 

• Internal preparations for anticipated growth in 2014 will be completed;
• As long as overall activity in the economy and the oil and natural gas industry remains essentially constant, Badger will be able to continue to grow the business in 2014;
• Badger in 2014 can further develop the organization to position itself to be able to handle the planned future growth;
• The new locations opened in the United States will provide an increased contribution to cash flows from operations and net profit during 2014;
• The current business development initiative will provide Badger with the additional new customers necessary to grow the business in 2014 and the future;
• Eastern Canada will continue with steady growth in 2014, driven by activity in the utility and construction segments;
• There will be an increase in Western Canada revenue during 2014 due to anticipated project volume and spending in the oil and natural gas sector;
• The expectation that Western Canada EBITDA margins will improve during the remainder of 2014; and,
• An increase in Company capital will be required to finance the anticipated capital expenditure program.

 

The forward-looking statements rely on certain expected economic conditions and overall demand for Badger’s services and are based on certain assumptions. The assumptions used to generate forward- looking statements are, among other things, that:

 

• Badger has the ability to achieve its revenue, net profit and cash flow forecasts for 2014;
• There will be long-term demand for hydrovac services from oil refineries, petro-chemical plants, power plants and other large industrial facilities throughout North America;
• Badger will maintain relationships with current customers and develop successful relationships with new customers;
• The Company will collect customer payments in a timely manner; and
• Badger will execute its growth strategy.

 

Risk factors and other uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements include, but are not limited to: price fluctuations for oil and natural gas and related products and services; political and economic conditions; industry competition; Badger’s ability to attract and retain key personnel; the availability of future debt and equity financing; changes in laws or regulations, including taxation and environmental regulations; extreme or unsettled weather patterns; and fluctuations in foreign exchange or interest rates.

 

Readers are cautioned that the foregoing factors are not exhaustive. Additional information on these and other factors that could affect the Company’s operations and financial results is included in reports on file with securities regulatory authorities in Canada and may be accessed through the SEDAR website (www.sedar.com) or at the Company’s website. The forward-looking statements and information contained in this MD&A are expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

 

 

NON-IFRS FINANCIAL MEASURES

This MD&A 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:

 

“Cash available for growth and dividends” is used by management to supplement cash flow as a measure of operating performance and leverage. The objective of this measure is to calculate the amount available for growth and/or dividends to shareholders. It is defined as funds generated from operations less required debt repayments and maintenance capital expenditures, plus any proceeds received on the disposal of assets.

 

“EBITDA” is earnings before interest, taxes, depreciation and amortization and is a measure of the Company’s operating profitability and is therefore useful to management and investors. EBITDA provides an indication of the results generated by the Company’s principal business activities prior to how these activities are financed, assets are amortized or the results are taxed in various jurisdictions. EBITDA is calculated from the consolidated statement of comprehensive income as gross profit less selling, general and administrative costs, deferred unit plan costs and unrealized foreign exchange gain/loss.

 

 

“Adjusted EBITDA” is EBITDA prior to recognizing deferred unit costs and unrealized foreign exchange gain (loss).  They are calculated as follows:

                                               

Three months ended September 30,			Nine months ended September 30,
$ thousands	2014	2013	2014	2013
Gross profit	40,264	30,932	101,034	79,233
Selling, general and administrative costs	(4,342)	(4,290)	(15,652)	(10,601)
Deferred unit plan	2,560	(2,916)	(2,354)	(6,624)
Unrealized foreign exchange (loss) gain	(3,765)	-	(1,173)	-
EBITDA	34,717	23,726	81,855	62,008
Deferred unit plan	(2,560)	2,916	2,354	6,624
Unrealized foreign exchange loss (gain)	3,765	-	1,173	-
Adjusted EBITDA	35,922	26,642	85,382	68,632

“Funded debt” is a measure of Badger’s long-term debt position. Funded debt is long-term debt.

 

 

“Funds generated from operations” is used to assist management and investors in analyzing operating performance and leverage. It is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an alternative to cash flow from operating activities, net profit or other measures of financial performance calculated in accordance with IFRS. Funds generated from operations are derived from the consolidated statement of cash flows and is calculated as follows:

 

Three months ended September 30,			Nine months ended September 30,
$ thousands	2014	2013	2014		2013
Cash provided by operating activities	15,269	8,985	53,409		36,559
Add (deduct): Net change in non-cash working capital relating to operating activities	15,683	10,648	12,416		14,289
Equity-settled share plan settled in cash	-	-	-		1,513
Funds generated from operations	30,952	19,633	65,825		52,361

 

“Growth capital expenditures” are capital expenditures that are intended to improve Badger’s efficiency, productivity or overall capacity and thereby allow Badger to expand overall activity and/or access new markets. They generally represent any net additions to the daylighting fleet. Growth capital expenditures exclude acquisitions.

 

 

“Maintenance capital expenditures” are any amounts incurred during a reporting period to keep the Company’s daylighting fleet at the same number of units (including costs incurred to extend the operational life of a daylighting unit), plus any other capital expenditures required to maintain the capacities of the existing business. The amount will fluctuate period-to-period depending on the number of units retired from the fleet.

 

“Net debt” is funded debt less cash and cash equivalents.

 

Cash available for growth and dividends, EBITDA, Adjusted EBITDA, funded debt, funds generated from operations, growth capital expenditures, maintenance capital expenditures and net debt throughout this document have the meanings set out above.

 

FINANCIAL HIGHLIGHTS

($ thousands, except per share and total shares outstanding information)
 

		Three Months Ended September 30				Nine Months Ended September 30
		2014		2013		2014		2013
Revenue		113,121		87,543		313,869		230,354
EBITDA		34,717		23,726		81,855		62,008
Adjusted EBITDA		35,922		26,642		85,382		68,632
Profit Before Tax		23,941		17,143		52,662		43,686
Income Tax
Expense		7,113		3,109		14,982		9,207
Deferred		750		2,260		1,623		5,348
Net Profit		16,078		11,774		36,057		29,130
Profit per Share - Diluted ($)		0.43		0.32		0.97		0.79
Funds Generated from Operations		30,952		19,633		65,825		52,361
Funds from Operations per Share ($)		0.84		0.53		1.78		1.41
Maintenance Capital Expenditures		2,209		2,437		3,229		5,615
Long-term Debt Repayments		-		-		-		-
Cash Available for Growth & Dividends		28,808		17,276		63,002		47,014
Dividends Declared		3,333		3,331		9,999		9,990
Growth Capital Expenditures		19,720		16,613		71,868		45,711
Total Shares Outstanding (end period)		37,033,893		37,006,893		37,033,893		37,006,893

 

 

OVERVIEW

Highlights for the three months ended September 30, 2014:

 

• Revenues increased by approximately 29 percent to $113.1 million from $87.5 million for the comparable quarter of 2013 due to a 34 percent increase in Canadian revenues and a 24 percent increase in United States revenues. This is the third full quarter in which Fieldtek, acquired in November 2013, has been part of the financial results.  Without Fieldtek, Canadian revenues would have increased by 17 percent. 
• Adjusted EBITDA margin increased to 32% in the third quarter of 2014 from 30% for the same quarter of 2013.
• Adjusted EBITDA margins were 27 percent for the nine months ended September 30, 2014 compared to 30 percent for the nine months ended September 30, 2013;
• Funds generated from operations increased by 58 percent period-over-period to $30.9 million from $19.6 million in the comparable quarter of 2013;
• Canadian adjusted EBITDA margins increased 1 percent from 29 percent to 30 percent from the comparable period last year despite the impact of the lower margin Fieldtek business. Without Fieldtek Canadian margins would be an additional 1 percent higher.
• U.S. adjusted EBITDA margins increased to 33 percent from 32 percent for the comparable period of last year helped by underlying business improvement.
• Badger had 957 daylighting units at the end of the third quarter of 2014, reflecting the addition of 174 daylighting units to the fleet to date in 2014 and the retirement of eight units.  Of the total, 405 units were operating in Canada and 552 in the United States at quarter-end.  Badger had 340 units in Canada and 408 in the United States for a total of 748 units at September 30, 2013.  The new units were financed from cash generated from operations and existing credit facilities.

 

OUTLOOK 

Positives in the quarter;
 

• Along with continued growth, Management’s focus on margin improvement has shown results in the third quarter, with margins firming relative to the softer first half results.
• Growth continued with a 29 percent increase in revenue in the third quarter this year compared to the same quarter last year. 
• The net addition of 166 units in the first nine months of 2014 was a real achievement for both the Red Deer facility and the Company as a whole, who created the demand for these trucks.  Of interest, 120 of these units went to the US.
• Adjusted EBITDA margins increased to 32 percent in the third quarter of 2014 compared to 30 percent in the same quarter of 2013.This increase in margin was very satisfying given the Company’s response to improve them following the slightly reduced margin for the business in the first six months of the year.
• Better than expected results in Eastern Canada were due to better overall execution, and a good project providing better utilization, margin and revenue.
• Continued evolution of the US business, specifically business and organizational development.

 

 

Opportunities for improvement noted;
 

Western Canada Corporate Operations continued to have lower than forecast revenue due to weaker than expected demand in Northern Alberta (mainly Oil Sands related) and two other areas.  Badger is working to improve revenue in the fourth quarter.

 

Regional Comments;
 

• The U.S. as a whole had a successful quarter in terms of revenue growth, adding people, equipment and development of the organization. Organizational development in the U.S. remains a high priority and we are improving our capability in this area.
• The U.S. economy has improved which will create more work opportunities. However, it is countered by lower oil prices which may impact some oilfield work. 
• Eastern Canada has had a strong year in 2014 and this is forecast to continue for the rest of the year.  The decision to purchase the Toronto operation has resulted in added trucks and income in the east.  There is one large project which has provided good revenue and margin for the Region. 
• Although Western Canada has been slower than anticipated, Badger believes work will pick up for the rest of the year with the exception of the Oil Sands area of Northern Alberta.  This area is expected to get busier in 2015, subject to the price of oil.  Badger plans show Canada should grow 10 to 15% per year for the foreseeable future.
• The plant in Red Deer continued to perform, meeting all build expectations.  The plan for the next year is to build 3 to 5 units a week.  Badger adjusts the build rate to manage revenue per truck, increasing the build when revenue per truck is high and decreasing it when revenue per truck falls below certain trigger points. Revenue per truck spiked in the third quarter of 2013 which signaled that Badger was likely turning away work. The Company responded by increasing the build rate to improve customer service. When revenue per truck started to return to normal levels in early 2014, the Company reduced its build.

 

Overall the third quarter of 2014 was satisfactory for Badger given the additional growth achieved in revenue, margin and fleet size.  The Company's long term focus on continued profitable growth has not changed.  Badger intends to build the organization, grow the customer base, add more hydrovac units and improve business processes.  The outlook for the remainder of the year is positive for Badger given the strong market for our services.

 

Results of Operations

 

Revenues

Revenues of $113.1 million for the three months ended September 30, 2014 were 29 percent greater than the $87.5 million generated during the comparable period in 2013. The increase is attributable to the following:

 

 

• Canadian revenues increased by 34 percent from $42.6 million in the third quarter of 2013 to $57.2 million in the Third quarter of 2014. Western Canada revenue was lower than forecast, with some continued softness in the Ft. McMurray area resulting in single digit growth. However, Fieldtek continued to add revenue with strengthening margins. Eastern Canada revenue increased due to success in securing pipeline work and the continuation of a large project.

 

• United States revenue increased from $44.9 million for the three months ended September 30, 2013 to $55.9 million for the three months ended September 30, 2014. Revenues increased by 24 percent quarter-over-quarter. The increase is due to the addition of new areas last year and early this year, enhanced business development efforts that have succeeded in enlarging the customer base, plus organizational improvements. 

 

Badger’s average revenue per truck per month during the three months ended September 30, 2014 was $33,136 versus $37,800 for the three months ended September 30, 2013. While the 2014 number is lower than 2013, it is in-line with the 2012 third quarter number of $33,000. In the third quarter of 2013 Badger’s high revenue per truck provided excellent utilization but meant Badger could not service all its customers. The build was increased to a truck a day for a period of months to increase Badger’s level of service. Badger’s average revenue per truck per month during the nine months ended September 30, 2014 was $32,715 versus $34,400 for the nine months ended September 30, 2013.  The first nine months of 2012 generated $32,000 of revenue per truck per month.

 

Direct Costs

Direct costs for the quarter ended September 30, 2014 were $72.9 million compared to $56.6 million for the quarter ended September 30, 2013. The increase of 29 percent mirrors the 29 percent increase in revenues.

 

Gross Profit

The gross profit percentage was 36 percent for the quarter ended September 30, 2014, up slightly from the 35 percent for the quarter ended September 30, 2013. The Canadian gross profit percentage held steady at 36 percent for the third quarter of 2014, versus the same quarter in 2013. United States gross profit percentage increased from 34 percent for the Third quarter of 2013 to 36 percent for the most recent quarter, helped by improved operational efficiencies.

 

Depreciation of Property, Plant and Equipment

Depreciation of property, plant and equipment was $8.6 million for the three months ended September 30, 2014,

$2.4 million higher than the $6.2 million incurred for the three months ended September 30, 2013, due to the increased number of hydrovac units in the fleet.

 

Finance Cost

Finance cost was $1.9 million for the quarter ended September 30, 2014 versus $0.5 million for the same quarter in 2013. The higher finance cost was due to having a higher average debt balance as well as moving most of the balance from short-term Bankers’ Acceptance rates to the longer-term Prudential facility with slightly higher interest rates.  Future borrowing will utilize the TD syndicated facility which will bear short-term, Banker Acceptance type rates. Prudential interest payments will remain for some time.

 

Selling, General and Administrative Expenses

Selling, general and administrative expenses were essentially flat at $4.3 million for the third quarter in both 2013 and 2014 after removing the cost of the Deferred Unit compensation plan from both years. As a percentage of revenues, selling, general and administrative expenses remain below Badger’s target of 5% of revenue.

 

Income Taxes

The effective tax rate for the nine months ended September 30, 2014 was 32 percent versus 33 percent for the nine months ended September 30, 2013. Profit before tax in Canada increased relative to United States  profit before tax, resulting in the decrease in the effective tax rate given that corporate income tax rates are higher in the United States.

 

Exchange Differences on Translation of Foreign Operations

The exchange differences result from converting the United States balance sheet and profit statement into Canadian currency, as the Canadian dollar weakened relative to the prior period.

 

 

Liquidity and Dividends

Funds generated from operations increased to $30.9 million for the quarter ended September 30, 2014 from $19.6 million for the comparable period in 2013 due primarily to increased revenues and EBITDA. The Company uses its cash to pay dividends to shareholders, build additional hydrovac units, invest in maintenance capital expenditures and repay long-term debt.

 

The Company had working capital of $77.5 million at September 30, 2014 compared to $61.8 million at December 31, 2013 due primarily to an increase in trade receivables and prepaid expenses.

 

The following table outlines the cash available to fund growth and pay dividends to shareholders for the three and nine months ended September 30, 2014:

 

Liquidity and Dividends
	September 30, 2014
($)	Three Months Ended					Nine Months Ended
Funds Generated from Operations	30,952					65,825
Add: proceeds from sale of PP&E	65					406
Deduct: Long-term Debt Repayment
Deduct: Maintenance Capital	2,209					3,229
Cash Available for Growth Capital	28,808					63,002
and Dividends
Growth Capital Expenditures	19,720					71,868
Dividends Declared	3,333					9,999

 

 

In determining cash available for dividends, the Company excludes non-cash working capital changes for the period as well as growth capital expenditures. Changes in non-cash working capital items are excluded so as to remove the effects of timing differences in cash receipts and disbursements, which generally reverse themselves and can vary significantly between fiscal periods. Growth capital expenditures are excluded so as to include only the maintenance capital expenditures required to sustain the existing asset base.

 

The following table outlines the excess of cash provided by operating activities and net profit for the period over dividends declared during the nine months ended September 30, 2014 and 2013 and the year ended December 31, 2013:

 

			Three months		Nine months		Year ended
			ended Sept		ended Sept		December
($)			30, 2014		30, 2014		31, 2013
Cash provided by operating activities			15,269		53,409		58,403
Net profit			16,078		36,057		40,363
Dividends declared			3,333		9,999		13,323
Excess of cash provided by operating activities			11,936		43,410		45,080
over dividends declared
Excess of net profit over dividends declared			12,745		26,058		27,040

 

 

The Company pays cash dividends monthly to its shareholders. They may be reduced, increased or suspended by the Board of Directors depending on the operations of Badger and the performance of its assets. The actual cash flow available for dividends to shareholders of Badger is a function of numerous factors, including: the Company’s financial performance; debt covenants and obligations; working capital requirements; maintenance and growth capital expenditure requirements for the purchase of property, plant and equipment; and the number of shares outstanding.

 

The Company maintains a strong balance sheet. Its debt management strategy includes retaining sufficient funds from available distributable cash to finance maintenance capital expenditures as well as working capital needs. Growth capital expenditures will generally be financed through existing debt facilities, proceeds received from equity financings or cash retained from operating activities. The majority of the cash provided by operating activities in the nine months ended September 30, 2014 was used to finance growth capital expenditures and to pay dividends to shareholders.

 

If maintenance capital expenditures increase in future periods, the Company’s cash available for growth capital expenditures and dividends will be negatively affected. Due to Badger’s growth rate in recent years, the majority of the hydrovac units are relatively new, with an average age of approximately four years. As a result, Badger is incurring relatively low maintenance capital expenditures. Over time, Badger would expect to incur annual maintenance capital expenditures approximately equaling the year’s depreciation expense. Badger estimates it will remove approximately 10 to 15 hydrovac units from the fleet in 2014. Eight have been removed to date. Badger expects that cash provided by operations and cash available for growth capital expenditures and dividends will be sufficient to fund its future maintenance capital expenditures.

 

Badger is restricted from declaring dividends if it is in breach of the covenants under its credit facilities. As at the date of this MD&A the Company is in compliance with all debt covenants and is able to fully utilize its credit facilities as well as declare dividends. Badger does not have a credit rating.

 

Capital Resources

Investing

The Company spent $21.9 million on property, plant and equipment for the three months ended September 30, 2014 compared to $19.0 million for the three months ended September 30, 2013. The costs to build a hydrovac unit remained consistent with the average for 2013.

 

Maintenance capital expenditures are incurred during a period to keep the hydrovac fleet at the same number of units plus any other capital expenditures required to maintain the business. This amount will fluctuate period-to-period depending on the number of units retired from the fleet. During the first nine months of 2014 only eight hydrovac units were removed from the fleet.

 

Financing

Syndicated credit facility

The Corporation has established a $125 million syndicated credit facility.  The purpose of the credit facility is to finance the Corporation's capital expenditure program and for general corporate purposes. The credit facility bears interest, at the Corporation's option, at either the bank's prime rate plus a tiered set of basis points or bankers' acceptance rate also with a tiered structure. A stand-by fee is also required on the unused portion of the credit facility on a tiered basis. The prime rate tiers range between zero and 125 basis points. The bankers’ acceptance tier ranges from 125 to 250 basis points. The stand-by fee tiers range between 25 and 50 basis points.  All of the tiers are based on the Company’s Funded Debt to EBITDA ratio.  The stand-by fee is expensed as incurred.

 

The credit facility expires on July 22, 2018.

 

The syndicated credit facility is collateralized by a general security interest over the Corporation’s assets, property and undertaking, present and future.

 

Under the terms of the credit facilities, the Corporation must comply with certain financial and non-financial covenants, as defined by the bank. Throughout 2014, and as at September 30, 2014, the Corporation was in compliance with all of these covenants.

 

As at September 30, 2014, the Corporation has issued letters of credit of approximately $2.0 million. The outstanding letters of credit support the U.S. insurance program and reduce the amount available under the syndicated credit facility.

 

At September 30, 2014, the Corporation had available $93.9 million (June 30, 2014 - $59.2 million under the old facility) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

 

Senior secured notes

On January 24, 2014 Badger closed a private placement of senior secured notes.  The notes, which rank pari passu with the extendable revolving credit facility, have a principal amount of US $75.0 million and an interest rate of 4.83 percent per annum and mature on January 24, 2022. The Canadian dollar equivalent on January 24, 2014 was $82.9 million. Amortizing principal repayments of US $25.0 million are due under the notes on January 24, 2020, January 24, 2021 and January 24, 2022.  Interest is paid semi-annually in arrears.

 

For the nine months ended September 30, 2014, Badger recorded an unrealized foreign exchange loss of $1.2 million. This was due to the impact of the change over the period in the value of the Canadian dollar relative to the US dollar on the Corporation’s $75.0 million of US dollar denominated debt.

 

As of September 30, 2014 and the date of this MD&A Badger is in compliance with all financial covenants under both credit facility agreements.

 

SHARE CAPITAL

Shares outstanding at September 30, 2013 were 37,033,893. There was no change to the balance as of November 13, 2014.

 

SELECTED QUARTERLY FINANCIAL INFORMATION

 

 

All amounts are  $000's except	2014			2013				2012
Per Share amounts are $'s	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4
Revenue	113,121	100,726	100,022	92,240	87,542	73,658	69,154	62,249
Net Profit	16,078	14,249	5,730	11,233	11,774	9,371	7,985	7,888
Net Profit per share - Basic	0.43	0.38	0.15	0.30	0.32	0.25	0.22	0.21
Net Profit per shaare - Diluted	0.43	0.38	0.15	0.30	0.32	0.25	0.22	0.21

 

CHANGES IN ACCOUNTING POLICIES

The Corporation adopted amendments to IFRS 7, IAS 32, IAS 36, and IFRIC 21 on January 1, 2014. There was no material impact to the Corporation’s interim condensed consolidated financial statements as a result of the adoption of those standards.

 

ACCOUNTING STANDARDS PENDING ADOPTION

 

The following are the IFRS pronouncements which have been issued but are not yet effective as at June 30, 2013. The pronouncements may, however, have a future impact on the measurement and/or presentation of the Company’s consolidated financial statements. The pronouncements are as follows:

 

1. IFRS 9, ‘Financial Instruments’ was issued in November 2009 as the first step in its project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 introduces new requirements for classifying and measuring financial assets that must be applied starting January 1, 2015, with early adoption permitted. The IASB intends to expand IFRS 9 during the intervening period to add new requirements for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment and hedge accounting. The Company is assessing the impact of this standard on the consolidated financial statements.
2. IFRS 15, “Revenue from Contracts with Customers” replaces IAS 11, Construction Contracts, IAS 18, Revenue, IFRIC 13, Customer Loyalty Programs, IFRIC 15, Agreements for the Construction of Real Estate, IFRIC 18, Transfers of Assets from Customers and SIC-31, Revenue - Barter Transactions Involving Advertising Services and is effective for annual periods beginning on or after January 1, 2017. IFRS 15 specifies how and when entities recognize revenue, as well as requires more detailed and relevant disclosures. The new standard provides a single, principles based five-step model to be applied to all contracts with customers, with certain exceptions.

 

                          a. Identify the contract(s) with the customer;

                          b. Identify the performance obligation(s) in the contract;

                          c. Determine the transaction price;

                          d. Allocate the transaction price to each performance obligation in the contract;

                          e. Recognize revenue when (or as) the entity satisfies a performance obligation.

 

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to critical accounting estimates since December 31, 2013.

 

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Disclosure Controls and Procedures

Badger’s President and CEO and its VP Finance and CFO have designed, or caused to be designed under their direct supervision, Badger’s disclosure controls and procedures (as defined by National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings, adopted by the Canadian Securities Administrators) to provide reasonable assurance that (i) material information relating to Badger, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which the annual filings are being prepared; and (ii) material information required to be disclosed in the annual filings is recorded, processed, summarized and reported on a timely basis.  Further,  they  have  evaluated,  or  caused  to  be  evaluated  under  their  direct  supervision,  the effectiveness of Badger’s disclosure controls and procedures at September 30, 2014 and have concluded the disclosure controls and procedures are fully effective.

 

Internal Control over Financial Reporting

Badger’s President and CEO and its VP Finance and CFO have also designed, or caused to be designed under their direct supervision, Badger’s internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Further, using the criteria established in Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, they have evaluated, or caused to be evaluated under their direct supervision, the effectiveness of Badger’s internal control over financial reporting at June 30, 2014 and have concluded the internal controls over financial reporting are effective.

 

Changes in Internal Control over Financial Reporting

In the third quarter of 2014 there were no material changes to Badger’s internal control over financial reporting.

 

Inherent Limitations

Notwithstanding the foregoing, because of its inherent limitations a control system can provide only reasonable assurance that the objectives of the control system are met and may not prevent or detect misstatements. Management’s estimates may be incorrect, or assumptions about future events may be incorrect, resulting in varying results. In addition, management has attempted to minimize the likelihood of fraud.  However,  any  control  system  can  be  circumvented  through  collusion  and  illegal  acts.

 

BUSINESS RISKS

The MD&A for the year ended December 31, 2013, which was filed on SEDAR, includes an overview of business risks associated with the Company. Those business risks remain. The reader is also referred to Badger’s 2013 Annual Information Form.

 

 

Badger is North America’s largest provider of non-destructive excavating services. Badger traditionally works for contractors and facility owners in the utility and petroleum industries. The Company’s key technology is the Badger Hydrovac, which is used primarily for safe digging in congested grounds and challenging conditions. The Badger Hydrovac uses a pressurized water stream to liquefy the soil cover, which is then removed with a powerful vacuum system and deposited into a storage tank. Badger manufactures its truck-mounted hydrovac units.

 

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

 

For more information regarding this press release, please contact:

 

 

Tor Wilson                                                       Gerald Schiefelbein

President and CEO                                           Vice President Finance and CFO

1000, 635 – 8th Avenue SW Calgary,

Alberta T2P 3M3

Telephone 403-264-8500

Fax 403-228-9773

 

 

 

Badger Daylighting Ltd.

Interim Condensed Consolidated Financial Statements (unaudited)

For the period ended September 30, 2014

 

 

REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim condensed consolidated financial statements, the statements must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

 

The accompanying unaudited interim condensed consolidated financial statements of the Corporation have been prepared by Badger Daylighting Ltd. management.

 

The Corporation’s independent auditor has not performed a review of the accompanying unaudited interim condensed consolidated financial statements in accordance with standards established by the CICA for a review of interim financial statements by an entity’s auditor.

 

BADGER DAYLIGHTING LTD. Unaudited Interim Consolidated Statement of Financial Position (Expressed in thousands of Canadian Dollars)

 

As at	Notes	September 30, 2014 $	December 31, 2013 $
ASSETS
Current Assets
Cash and cash equivalents		10,637	8,623
Trade and other receivables		109,431	92,115
Prepaid expenses		3,883	1,459
Inventories		2,379	3,300
		126,329	105,497
Non-current Assets
Property, plant and equipment		268,135	211,614
Goodwill and intangible assets		15,830	16,787
		283,965	228,401
Total Assets		410,294	333,898
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Trade and other payables		29,510	23,657
Deferred unit plan liability	6	12,925	13,933
Income taxes payable		5,254	4,952
Dividends payable		1,111	1,111
		48,800	43,653
Non-current Liabilities
Long-term debt	4	116,787	82,319
Deferred income tax		40,473	36,857
		157,260	119,176
Shareholders’ Equity
Shareholders’ capital	5	80,944	80,944
Contributed surplus	5	548	548
Accumulated other comprehensive income (loss)	5	10,398	3,291
Retained earnings		112,344	86,286
		204,234	171,069
Total Liabilities and Shareholders’ Equity		410,294	333,898

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

BADGER DAYLIGHTING LTD. Unaudited Interim Consolidated Statement of Comprehensive Income (Expressed in thousands of Canadian Dollars)

 

 

		For the nine months ended				For the three months ended
		September 30,		September 30,			September 30,		September 30,
	Notes	2014 $	2013 $		2014 $			2013 $
Revenues	7	313,869	230,354		113,121			87,543
Direct costs		212,835	151,122		72,857			56,611
Gross profit		101,034	79,232		40,264			30,932
Depreciation of property, plant and equipment		24,276	17,255		8,600			6,153
Amortization of intangible assets		957	-		319			-
Selling, general and administrative		15,652	10,601		4,342			4,290
Deferred unit plan		2,354	6,624		(2,560)			2,916
Operating profit		57,795	44,752		29,563			17,573
Gain on sale of property, plant and equipment		(252)	(112)		(36)			(60)
Finance cost		4,212	1,178		1,893			490
Unrealized foreign exchange (gain) loss		1,173			3,765
Profit before tax		52,662	43,686		23,941			17,143
Income tax expense		16,605	14,556		7,863			5,369
Net profit for the period		36,057	29,130		16,078			11,774
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		7,107	2,478		7,313			(1,668)
Total comprehensive income for the period attributable to shareholders of the Corporation		43,164	31,608		23,391			10,106
Earnings per share
Basic	8	0.97	0.79		0.43			0.32
Diluted	8	0.97	0.79		0.43			0.32

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

BADGER DAYLIGHTING LTD. Unaudited Interim Consolidated Statement of Changes in Equity (Expressed in thousands of Canadian Dollars)

 

 

		Shareholders’ capital	Contributed surplus	Accumulated other comprehensive income (loss)	Retained earnings	Total equity
	Notes	$	$	$	$	$
As at January 1, 2013		80,640	2,061	(2,239)	59,246	139,708
Net profit for the period		-	-	-	29,130	29,130
Other comprehensive income for the period		-	-	2,478	-	2,478
Share options exercised	5	176	-	-	-	176
Options surrendered for cash	5	-	(1,513)	-	-	(1,513)
Dividends		-	-	-	(9,990)	(9,990)
As at September 30, 2013		80,816	548	239	78,386	159,989
As at January 1, 2014		80,944	548	3,291	86,286	171,069
Net profit for the period		-	-	-	36,057	36,057
Other comprehensive income for the period		-	-	7,107	-	7,107
Dividends		-	-	-	(9,999)	(9,999)
As at September 30, 2014		80,944	548	10,398	112,344	204,234

 

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

BADGER DAYLIGHTING LTD. Unaudited Interim  Consolidated Statement of Cash Flows (Expressed in thousands of Canadian Dollars)

 

 

		For the nine months ended		For the three months ended
		September	September	September	September
	Notes	30, 2014 $	30, 2013 $	30, 2014 $	30, 2013 $
Operating activities
Net profit for the period		36,057	29,130	16,078	11,774
Non-cash adjustments to reconcile profit from operations to net cash flows:
Depreciation of property, plant and equipment		24,276	17,255	8,600	6,153
Amortization of intangible assets		957	-	319	-
Deferred income tax		1,623	5,348	750	2,260
Equity-settled share plan settled in cash	5	-	(1,513)	-	-
Gain on sale of property plant and equipment		(252)	(112)	(36)	(60)
Unrealized foreign exchange (gain) loss		1,172	-	3,764	-
Unrealized foreign exchange (gain) loss on deferred tax		1,992	740	1,477	(493)
		65,825	50,848	30,952	19,633
Net change in non-cash working capital relating to operating activities		(12,416)	(14,290)	(15,683)	(10,648)
Net cash flows from operating activities		53,409	36,558	15,269	8,985
Investing activities
Purchase of property, plant and equipment		(75,097)	(51,326)	(21,929)	(19,050)
Purchase of intangible assets		-	(2,555)	-	-
Proceeds from sale of property, plant and equipment		406	267	65	80
Net cash flows used in investing activities		(74,691)	(53,614)	(21,864)	(18,970)
Financing activities
Proceeds received on the exercise of share options		-	176	-	41
Proceeds from long-term debt		116,207	25,947	17,218	11,689
Repayment of long-term debt		(82,912)	-	-	-
Dividends paid to owners		(9,999)	(9,989)	(3,333)	(3,330)
Net cash flows from financing activities		23,296	16,134	13,885	8,400
Net (decrease) increase in cash and cash equivalents		2,014	(922)	7,290	(1,586)
Cash and cash equivalents, beginning of period		8,623	2,460	3,347	3,124
Cash and cash equivalents, end of period		10,637	1,538	10,637	1,539
Supplemental cash flow information:
Interest paid		4,212	1,178	1,893	490
Income tax paid		15,015	9,324	4,502	1,881

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

 

 

BADGER DAYLIGHTING LTD. Notes to the Interim Condensed Consolidated Financial Statements Nine months ended September 30, 2014 (Unaudited – Expressed in thousands of Canadian Dollars unless stated otherwise)

 

1.   Incorporation and Operations

 

Badger Daylighting Ltd. and its subsidiaries (together “Badger” or the “Corporation”) provide non-destructive excavating services to the utility, transportation, industrial, engineering, construction and petroleum industries in Canada and the United States. Badger is a publicly traded corporation. The address of the registered office is 1000, 635 – 8^th Avenue SW, Calgary, Alberta T2P 3M3.

 

The interim condensed consolidated financial statements of the Corporation for the period ended September 30, 2014 were authorised for issue in accordance with a resolution of the directors on November 13, 2014.

 

All current and comparative share capital and profit per share amounts have been adjusted to reflect the three-for-one share split that was completed in January 2014.

 

2.   Basis of Preparation

 

Statement of compliance

These interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB").

 

The interim condensed consolidated financial statements should be read in conjunction with the Corporation’s annual consolidated financial statements for the year ended December 31, 2013, as well as the Corporation’s interim consolidated financial statements for the period ended September 30, 2014.

 

Basis of measurement

These consolidated financial statements have been prepared under the historical cost convention.

 

Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars, which is the Corporation’s functional currency.

 

3.   Recent accounting pronouncements

 

The Corporation adopted amendments to IFRS 7, IAS 32, IAS 36, and IFRIC 21 on January 1, 2014. There was no material impact to the Corporation's interim condensed consolidated financial statements as a result of the adoption of those standards.

 

The Corporation has reviewed new and revised accounting pronouncements that have been issued but are not yet effective and determined that the following may have an impact on the Corporation:

 

1. IFRS 9, ‘Financial Instruments’ was issued in November 2009 as the first step in its project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 introduces new requirements for classifying and measuring financial instruments that must be applied starting January 1, 2018, with early adoption permitted. The IASB intends to expand IFRS 9 during the intervening period to add new requirements for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment and hedge accounting. The Corporation will assess the impact of this standard in conjunction with the other phases, when the final standard including all phases is issued.
2. IFRS 15, ‘Revenue from Contracts with Customers” replaces IAS 11, Construction Contracts, IAS 18, Revenue, IFRIC 13, Customer Loyalty Programmes, IFRIC 15, Agreements for the Construction of Real Estate, IFRIC 18, Transfers of Assets from Customers and SIC-31, Revenue – Barter Transactions Involving Advertising Services and is effective for annual periods beginning on or after January 1, 2017. IFRS 15 specifies how and when entities recognize revenue, as well as requires more detailed and relevant disclosures. The new standard provides a single, principles based five-step model to be applied to all contracts with customers, with certain exceptions.

 

1. Identify the contract(s) with the customer;
2. Identify the performance obligation(s) in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to each performance obligation in the contract;
5. Recognize revenue when (or as) the entity satisfies a performance obligation.
6. The Corporation will assess the impact of this standard when the final standard is issued.

 

4.   Long-term debt

 

	September 30,  2014 $	December 31, 2013 $
Extendable revolving credit facility	32,731	82,319
Senior secured notes	84,056	-
	116,787	82,319

 

Syndicated credit facility

The Corporation has established a $125 million syndicated credit facility.  The purpose of the credit facility is to finance the Corporation's capital expenditure program and for general corporate purposes. The credit facility bears interest, at the Corporation's option, at either the bank's prime rate plus a tiered set of basis points or bankers' acceptance rate also with a tiered structure.. A stand-by fee is also required on the unused portion of the credit facility on a tiered basis. The prime rate tiers range between zero and 125 basis points. The bankers’ acceptance tier ranges from 125 to 250 basis points. The stand-by fee tiers range between 25 and 50 basis points.  All of the tiers are based on the Company’s Funded Debt to EBITDA ratio.  The stand-by fee is expensed as incurred.

 

The credit facility expires on July 22, 2018.

 

The syndicated credit facility is collateralized by a general security interest over the Corporation’s assets, property and undertaking, present and future.

 

Under the terms of the credit facilities, the Corporation must comply with certain financial and non-financial covenants, as defined by the bank. Throughout 2014, and as at September 30, 2014, the Corporation was in compliance with all of these covenants.

 

As at September 30, 2014, the Corporation has issued letters of credit of approximately $2.0 million. The outstanding letters of credit support the U.S. insurance program and reduce the amount available under the syndicated credit facility.

 

At September 30, 2014, the Corporation had available $93.9 million (June 30, 2014 - $59.2 million under the old facility) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

.

 

Senior secured notes

On January 24, 2014 Badger closed a private placement of senior secured notes.  The notes, which rank pari passu with the extendable revolving credit facility, have a principal amount of US $75,000, and an interest rate of 4.83% per annum and mature on January 24, 2022. The Canadian dollar equivalent on January 24, 2014 was $82,912. Amortizing principal repayments of US $25,000 are due under the notes on January 24, 2020, January 24, 2021 and January 24, 2022.  Interest is paid semi-annually in arrears.

 

For the nine months ended September 30, 2014, Badger recorded an unrealized foreign exchange gain of $ 1,173. This was due to the impact of the change over the period in the value of the Canadian dollar relative to the US dollar on the Corporation’s $75,000 of US dollar denominated debt.

 

5.   Shareholders’ capital and reserves

 

A)     Authorized shares

 

An unlimited number of voting common shares are authorized without nominal or par value.

 

B)     Issued and outstanding

 

	Number of Shares	Amount $
At December 31, 2012	36,979,893	80,640
Shares issued pursuant to the share option plan	54,000	304
At December 31, 2013 and September 30, 2014	37,033,893	80,944

Share amounts have been restated to reflect the impact of the three-for-one common share split completed in January 2014.

 

C)     Accumulated other comprehensive income (loss)

 

The accumulated other comprehensive income (loss) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

 

D)     Contributed surplus

 

The contributed surplus reserve is used to recognise the fair value of share options granted to employees, including key management personnel, as part of their remuneration.

 

	For the nine months ended		For the three months ended
	September 30,  2014 $	September 30,  2013 $	September 30,  2014 $	September 30,  2013 $
Opening balance	548	2,061	548	548
Equity-settled share plan settled in cash	-	(1,513)	-	-
Closing balance	548	548	548	548

 

6.   Deferred Unit Plan

 

The Deferred Unit Plan (“DUP”) was established to reward officers and employees. Directors may also participate in the plan whereby they will be paid 60% to 100% of the annual retainer in the form of deferred units. Pursuant to the terms of the DUP, participants are granted deferred units with a value equivalent to the value of a Badger share. Subsequent to the January 2014 three-for-one common share split, each unit under the plan was amended to provide three units, each with a value of one post-split Badger share. The deferred units granted earn additional deferred units for the dividends that would otherwise have been paid on the deferred units as if they instead had been issued as Badger shares on the date of the grant. The deferred units granted other than to the directors, which vest immediately, vest equally over a period of three years from the date of the grant. Upon vesting, the participant may elect to redeem the deferred units for an equal number of Badger shares or the cash equivalent.

 

The DUP has been accounted for as a cash-settled plan. The compensation expense is based on the estimated fair value of the deferred units outstanding at the end of each quarter (share price $28,12  September 30, 2014; share price $28.42 December 31, 2013) and recognized using graded vesting throughout the term of the vesting period, with a corresponding credit to liabilities.

 

The liability of deferred units outstanding as at September 30, 2014 is $12,925 (December 31, 2013 - $13,933). The fair value of deferred units exercisable as at September 30, 2014 is $11,332 (December 31, 2013 - $10,799). Changes in the number of deferred units under the Badger DUP were as follows:

 

	Units
At December 31, 2012	498,375
Granted	101,550
Dividends earned	14,418
Redeemed	(34,002)
Forfeited	(13,323)
At December 31, 2013	567,018
Granted	53,196
Dividends earned	3,969
Redeemed	(91,678)
Forfeited	(17,604)
At September 30, 2014	514,991
Exercisable at September 30, 2014	403,027

	For the nine months ended		For the three months ended
	September 30, 2014 $	September 30, 2013 $	September 30, 2014 $	September 30, 2013 $
Rendering of services	312,318	228,901	112,796	87,034
Truck placement fees	1,551	1,453	325	509
	313,869	230,354	113,121	87,543

 

 

8.   Earnings per share

 

Basic earnings per share (“EPS”)

Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period. The denominator is calculated by adjusting the shares in issue at the beginning of the period by the number of shares bought back or issued during the period, multiplied by a time-weighting factor. Earnings per share and share amounts have been retroactively restated to reflect the three-for-one share split completed in January 2014.

 

The calculation of basic earnings per share for the nine months ended September 30, 2014, was based on the net profit available to common shareholders of $36,057 (2013 - $29,130), and a weighted average number of common shares outstanding of 37,033,893 (2013 – 36,979,893).

 

The calculation of basic earnings per share for the three months ended September 30, 2014, was based on the net profit available to common shareholders of $16,078 (2013 - $11,774), and a weighted average number of common shares outstanding of 37,033,893 (2013 – 36,997,893).

 

The weighted average number of common shares is calculated as follows:

 

		For the nine months ended			For the three months ended
	September 30, 2014		September 30, 2013	September 30, 2014		September 30, 2013
Issued common shares outstanding, beginning of period	37,033,893		36,979,893	37,033,893		36,997,893
Effect of share options exercised	-		19,911	-		8,610
Weighted average number of common shares, end of period	37,033,893		36,999,804	37,033,893		37,006,503

 

Diluted EPS

Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential shares. The effects of anti-dilutive potential shares are ignored in calculating diluted EPS. All options are considered anti-dilutive when the Corporation is in a loss position. Diluted earnings per share and share amounts have been retroactively restated to reflect the three-for-one share split completed in January 2014.

 

The calculation of diluted earnings per share for the nine months ended September 30, 2014, was based on a weighted average number of common shares outstanding after adjustment for the effects of all dilutive potential common shares of 37,033,893 (2013 – 37,018,476).

 

The calculation of diluted earnings per share for the three months ended September 30, 2014, was based on a weighted average number of common shares outstanding after adjustment for the effects of all dilutive potential common shares of 37,033,893 (2013 – 37,026,609).

-

 

 

The weighted average number of dilutive potential common shares is calculated as follows:

 

 

9.   Segment reporting

 

The Corporation operates in two geographic/reportable segments providing non-destructive excavating services to each of these segments. The following is selected information for the periods ended September 30, 2014 and 2013 based on these geographic segments.

 

For nine months ended:	September 30, 2014			September 30, 2013
	Canada ($)	U.S. ($)	Total ($)	Canada ($)	U.S. ($)	Total ($)
Revenues	166,299	147,570	313,869	118,981	111,373	230,354
Direct costs	111,552	101,283	212,835	76,117	75,005	151,122
Depreciation of property, plant and equipment	10,843	13,433	24,276	8,193	9,062	17,255
Amortization of intangible assets	957	-	957	-	-	-
Selling, general and administrative	11,811	3,841	15,652	7,803	2,798	10,601
Deferred unit plan	2,354	-	2,354	6,624	-	6,624
Profit before tax	26,249	26,413	52,662	19,289	24,397	43,686

 

For three months ended:	September 30, 2014			September 30, 2013
	Canada ($)	U.S. ($)	Total ($)	Canada ($)	U.S. ($)	Total ($)
Revenues	57,207	55,914	113,121	42,618	44,924	87,542
Direct costs	36,794	36,063	72,857	27,149	29,462	56,611
Depreciation of property, plant and equipment	3,775	4,825	8,600	2,855	3,298	6,153
Amortization of intangible assets	319	0	319	-	-	-
Selling, general and administrative	3,185	1,157	4,342	3,008	1,282	4,290
Deferred unit plan	(2,560)	-	(2,560)	2,916	-	2,916
Profit before tax	12,629	11,312	23,941	6,318	10,825	17,143

 

 

 

Selected Consolidated Statement of Financial Position Information

	Canada ($)	U.S. ($)	Total ($)
As at September 30, 2014
Property, plant and equipment	121,919	146,216	268,135
Intangible assets	15,830	-	15,830
Total assets	204,072	206,222	410,294
As at December 31, 2013
Property, plant and equipment	103,740	107,874	211,614
Intangible assets	16,787	-	16,787
Total assets	178,703	155,195	333,898

 

Selected Consolidated Statement of Cash Flows Information

For nine months ended:	September 30, 2014			September 30, 2013
	Canada ($)	U.S. ($)	Total ($)	Canada ($)	U.S. ($)	Total ($)
Additions to non-current assets:
Property, plant and equipment	29,072	46,025	75,097	19,323	32,003	51,326
Intangible assets	-	-	-	2,555	-	2,555

 

For three months ended:	September 30, 2014			September 30, 2013
	Canada ($)	U.S. ($)	Total ($)		Canada ($)	U.S. ($)	Total ($)
Additions to non-current assets:
Property, plant and equipment	3,607	18,322	21,929		7,787	11,263	19,050
Intangible assets	-	-	-		-	-	-

 

The consolidated financial statements include the financial statements of Badger Daylighting Ltd. and the subsidiaries listed in the following table:

		% equity interest
Name	Country of Incorporation	September 30, 2014	December 31, 2013
Badger Daylighting (Fort McMurray) Inc.	Canada	100%	100%
Badger Edmonton Ltd.	Canada	100%	100%
Fieldtek Ltd.	Canada	100%	100%
Badger ULC	Canada	100%	100%
Badger Daylighting USA, Inc.	United States of America	100%	100%
Badger Daylighting Corp.	United States of America	100%	100%
Badger, LLC	United States of America	100%	100%

 

Balances and transactions between Badger Daylighting Ltd. and its subsidiaries have been eliminated on consolidation and are not disclosed in this Note. There are no significant restrictions on the Corporation’s or its subsidiaries ability to access or use the assets, and settle the liabilities, of the Corporation.

To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/badger11142014.pdf

Source: Badger Daylighting Ltd. (TSX:BAD) http://www.badgerinc.com/

 

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