Badger Infrastructure Solutions Ltd · TSX:BDGI
Badger Infrastructure Solutions — TD Engineering & Construction Conference 2023
32 slides from Badger Infrastructure Solutions's conference presentation, Mar 29, 2023
Slide 1: TD Engineering & Construction Conference
TD ENGINEERING & CONSTRUCTION CONFERENCE Toronto, ON March 29, 2023 TSX: BDGI
Slide 2: Cautionary Statement Regarding Forward-Looking Information
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Certain statements and information contained in this presentation and other continuous disclosure » The overall market for Badger’s services will not be adversely affected in the long-term by documents of the Company referenced herein, inclu
Slide 3: Agenda
AGENDA Delivering value to our Shareholders, our Customers and our Communities Badger’s Operational Scale • Branch Network 1. • Established fleet/trained workforce SOLID • Local servicing model with coordinated support FOUNDATION • Vertical integration Badger’s Commercial Strategy 5. 2. • Focus on h
Slide 4: Framing the Opportunity
FRAMING THE OPPORTUNITY > INFRASTRUCTURE SOLUTIONS
Slide 5: Our Foundation
OUR FOUNDATION We are leveraging Badger’s significant operating scale through our Commercial Strategy Pre-2014 2017 - 2018 2019 - 2020 2021 2022 • Built North America’s • Established Human • Established Shared • Name change, ticker • Realignment of leading provider of Resources function Services cha
Slide 6: Our Opportunity
OUR OPPORTUNITY Badger is presented with significant growth opportunities across North America We believe a mature, non-destructive excavation market across North America includes 7x-9x 2x more units than are operating today 5% 1x 1% 9x Each of our markets have a different 25% opportunity set, and o
Slide 7: Our Approach to Seize the Opportunity
OUR APPROACH TO SEIZE THE OPPORTUNITY Badger has built unique strategies for each market and customer segments LOW GROWTH OPPORTUNITY HIGH GROWTH OPPORTUNITY Strategic Markets HIGH 500-1,500 Truck Market Potential per Location • Significant organic growth opportunity with higher barriers to entry •
Slide 8: Evolution of Non-Destructive Excavation
EVOLUTION OF NON-DESTRUCTIVE EXCAVATION Badger is the innovation leader within the non-destructive excavation industry across North America Original Hydrovac, 1992 Gen 5 Hydrovac, 2022 Airvac, 2023 |8
Slide 9: Vertical Integration
VERTICAL INTEGRATION Badger’s dedicated design and manufacturing capabilities drives innovation, operating cost and return advantages Operating Cost Benefits Return on Capital Benefits Continuous truck design improvement Lower cost of acquisition/ownership Repair parts supply chain efficiencies 2021
Slide 10: Sales Strategy & National Accounts
SALES STRATEGY & NATIONAL ACCOUNTS
Slide 11: Leveraging Scale: Enhanced Commercial Strategy
LEVERAGING SCALE: ENHANCED COMMERCIAL STRATEGY Aligning Badger’s sales resources with the market and customer opportunities while leveraging our Branch network 2022 focused on establishing a robust commercial strategy to enhance market coverage, market penetration and revenue generation Restructured
Slide 12: Commercial Strategy: Opportunity-Based Territory Alignment
COMMERCIAL STRATEGY: OPPORTUNITY-BASED TERRITORY ALIGNMENT Data-driven approach to sales management and resource allocation Revenue Location and Density New territory alignment is driven by 2021 revenue density at the ZIP code level » Enables sales deployment to drive revenue density closer to our b
Slide 13: Case Study: Greater Toronto Area
CASE STUDY: GREATER TORONTO AREA Market penetration strategy to unlock sales potential in mature markets Legacy Market Coverage: GTA Case Study » Two sales reps covering one of North America’s largest and most dense markets » Challenge to move price in highly competitive environment » Risk of share
Slide 14: National Accounts: Strategic Overview
NATIONAL ACCOUNTS: STRATEGIC OVERVIEW Badger’s scale provides the unique opportunity to leverage National Accounts, which smaller competitors cannot Badger’s Positioning Badger’s Benefits Badger is the only competitor with a North Badger is the only non-destructive excavation provider with a North A
Slide 15: National Accounts: Cross Functional Alignment
NATIONAL ACCOUNTS: CROSS FUNCTIONAL ALIGNMENT Leveraging Badger’s entire Sales and Operations team to service National Accounts Customers National Accounts Team Field Sales & Operations Corporate relationships Local relationships NATIONAL Boots on the ground National agreements ACCOUNT Customer meet
Slide 16: National Accounts Strategy: Approach
NATIONAL ACCOUNTS STRATEGY: APPROACH Focusing on large customers who provide stable, predictable revenue across, geographies, seasons and economic cycles Enterprise-wide solutions for Customer-specific playbooks the most complex customers Dedicated North American and projects Manager responsible for
Slide 17: Case Study: North American Contractor
CASE STUDY: NORTH AMERICAN CONTRACTOR National Accounts focus is a key differentiator from our competitors Legacy National Accounts Customer example that illustrates the power of our Approach Approach dedicated National Accounts program $USD millions $25 Large contractor with over $20 Billion projec
Slide 18: Operational Excellence
OPERATIONAL EXCELLENCE > INFRASTRUCTURE SOLUTIONS
Slide 19: Our Enhanced Operational Strategy
OUR ENHANCED OPERATIONAL STRATEGY Leveraging Badger’s operating scale through the implementation of its enhanced Commercial Strategy Over the past 30 years, Badger has built its vertically integrated business model into North America’s largest service provider of non-destructive excavation and relat
Slide 20: Safety
SAFETY Safety is at the core of everything that we do at Badger Non-destructive excavation avoids damage to underground infrastructure » We are starting to see more legislation mandating non-destructive excavation across the U.S. » Common Ground Alliance estimates the cost of damaged underground uti
Slide 21: People
PEOPLE We are in the people business Badger University is a formal, non-destructive excavation TRAIN training offering unique in the People are our greatest asset industry We hire, train, and promote the With over 250 mentors, new best employees in the industry INVEST employees training continues in
Slide 22: People
PEOPLE Investing in our people to unlock our growth potential Shortage of CDL drivers in the US CHALLENGE New U.S. regulations require CDL training from an approved school We have ~200 non-CDL operators who could be licensed Partnered with a regional university to provide two week CDL training for o
Slide 23: Operational Excellence
OPERATIONAL EXCELLENCE Leveraging our experienced Field leadership through standardized KPIs, reporting and incentives Span of Control KPIs/Reporting Incentives New organizational structure Established consistent KPIs, Aligned Field and Sales allows for better service standardized reporting and ince
Slide 24: Asset & Labor Utilization
ASSET & LABOR UTILIZATION Optimizing asset utilization ensures better use of capital, while providing Operators with more predictable work RPT CONSISTENT OPERATOR HOURS TARGET TARGETED TRUCK BUILD PROGRAM $38,000+(Mixed Currency) SUPERIOR RETURNS ON CAPITAL | 24
Slide 25: Shareholder Value Proposition
SHAREHOLDER VALUE PROPOSITION
Slide 26: Balance Sheet Management
BALANCE SHEET MANAGEMENT Working capital and fixed asset surplus provides ~$285 million in financing capacity Amounts shown in USD $Millions Working Capital (1)(2) Net Fixed Assets (1)(2) ~$329MM ~$182 MM Right-of-Use ~$30 MM Prepayment ~$10 MM Inventories ~$25 MM ~$139 MM ~$86 MM ~$299 MM PPE Cash
Slide 27: Operating Performance and Financial Discipline
OPERATING PERFORMANCE AND FINANCIAL DISCIPLINE Combination of operating performance and financial discipline generates significant cashflow to fund growth OPERATING PERFORMANCE Addressing significant market and customer growth opportunities Targeting 30-35% Gross Margins through operating discipline
Slide 28: Liquidity Management
LIQUIDITY MANAGEMENT Ample financial capacity and flexibility to fund growth capital requirements ~$400 million in 5-Year Committed Credit Facilities(1)(2) Ample Financial Covenant Capacity Accordion Feature Available Capacity Credit Facilities Available Capacity Credit Facilities Draws on Credit Fa
Slide 29: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK Focusing financial resources towards funding organic growth opportunities Surplus Operational performance generates cash Cash/Capital flow to fund capital investments to support growth Organic Capital investments focused on organic 1 Growth growth initiatives and enhanci
Slide 30: Capital Asset Requirements
CAPITAL ASSET REQUIREMENTS Multiple Funding options to meet capital requirements over the next three to five years Estimated, Cumulative Truck1 Estimated, Cumulative Capital Estimated, Cumulative Funding Requirements Requirements Sources Estimated Retirements Estimated Retirements Estimated Retireme
Slide 31: Key Financial Performance Metrics & Targets
KEY FINANCIAL PERFORMANCE METRICS & TARGETS Financial performance targets over the next three to five years Revenue CAGR Target: (Based off fiscal 2021) 15% Direct Costs Targets, Include: 75% 65% Branch Costs (% of Revenue, variable costs) Branch Support Costs (% of Revenue, semi-fixed costs) G&A Co
Slide 32: Q&A Contact Information
Q&A » Trevor Carson, CFA » VP Investor Relations & Corporate CONTACT Development INFORMATION » tcarson@badgerinc.com » ir.badgerinc.com
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