Badger Infrastructure Solutions Ltd · TSX:BDGI
Badger Infrastructure Solutions — Investor Day (September 2022)
49 slides from Badger Infrastructure Solutions's investor day presentation, Sep 20, 2022
Slide 1: Investor Day 2022
INVESTOR DAY 2022 Brownsburg, IN September 20, 2022 TSX: BDGI
Slide 2: Welcome to Brownsburg, IN
WELCOME TO BROWNSBURG, IN ———
Slide 3: Introductions
INTRODUCTIONS Paul Vanderberg Chief Executive Officer Rob Blackadar Chief Operating Officer/Chief Executive Officer (October 1) Darren Yaworsky Chief Financial Officer Liz Peterson Senior Vice President, Operations Chris Gunn Vice President, Field Sales Bobby Love Vice President, National Accounts T
Slide 4: Today will be hands on!
TODAY WILL BE HANDS ON! |4
Slide 5: 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 6: CEO Transition
CEO TRANSITION Leadership evolution to support Badger’s next growth phase Rob Blackadar to succeed Paul Vanderberg as CEO effective October 1, 2022 » Rob joined Badger in July 2021 as Chief Operating Officer Culmination of succession planning process underway since late 2021 Rob brings significant o
Slide 7: Framing the Opportunity
FRAMING THE OPPORTUNITY Rob Blackadar | Chief Operating Officer/Chief Executive Officer (October 1)
Slide 8: Safety Share & Approach
SAFETY SHARE & APPROACH Safety is at the core of everything that we do at Badger Badger’s operating scale includes being the industry leader when it comes to safety: » Protecting critical infrastructure in our communities is a core value » We all arrive home in the same condition as we come Behavior
Slide 9: Investor Day Agenda
INVESTOR DAY 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.
Slide 10: 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 11: 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 12: 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 13: Our Path to Operational Success
OUR PATH TO OPERATIONAL SUCCESS Badger’s Commercial Strategy has focused the business on executing the market and customer penetration strategies Established new Regions and Market Areas STEP 1 – SPAN OF CONTROL focusing on the geographies that present the most growth opportunities STEP 2 – SALES &
Slide 14: 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 | 14
Slide 15: 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 16: Vertical Integration: Manufacturing
VERTICAL INTEGRATION: MANUFACTURING Badger’s manufacturing capabilities have been strengthened to effectively deliver the units we need to support growth 2022 production ramp up of 130-150 units vs. 36 units in 2021 Successful inventory strategy to mitigate global supply chain challenges Implementat
Slide 17: Vertical Integration: Fleet Management
VERTICAL INTEGRATION: FLEET MANAGEMENT Badger has North America’s largest non-destructive excavation fleet; providing scale and versatility to customers We have strengthened the management team by adding Lon Brown as VP, Fleet Extensive experience in fleet and operations management from his time at
Slide 18: Sales Strategy & National Accounts
SALES STRATEGY & NATIONAL ACCOUNTS Chris Gunn | Vice President, Field Sales Bobby Love | Vice President, National Accounts
Slide 19: 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 20: Commercial Strategy: Field Sales Overview
COMMERCIAL STRATEGY: FIELD SALES OVERVIEW Sizing Sales Regions and Market Areas with market and customer growth opportunities Regions Market Areas 1 BC 11 Mid South Upper 2 Prairies 12 Midwest YK NT 1 U.S. East NU 3 Ontario Midwest 13 BC NL AB QC 1 SK MB 4 Quebec 14 South Central 4 2 ON NB PE 2 U.S.
Slide 21: 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 22: 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 23: Commercial Strategy: Professional Sales Force
COMMERCIAL STRATEGY: PROFESSIONAL SALES FORCE Professionalizing our Sales force through recruitment, training and analytics Significant progress to date in recruiting, onboarding and training new sales reps » We have grown the sales force by >50 reps in 2022 We continue to refine our sales territori
Slide 24: Commercial Strategy: Technology
COMMERCIAL STRATEGY: TECHNOLOGY Leveraging our systems and data to drive decision-making With Badger’s scale, we are uniquely positioned to build market share in both mature and developing markets Utilizing integrated CRM module within Oracle to open up significant scale advantages » Redesigning lea
Slide 25: Commercial Strategy: Customer Experience
COMMERCIAL STRATEGY: CUSTOMER EXPERIENCE Relentlessly focused on customer satisfaction to drive customer loyalty Exceeding all expectations is the key to customer retention » Customer stickiness is enabled by strong sales relationships and expertise » This is also the formula for winning new account
Slide 26: 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 27: 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 28: 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 29: 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 30: Operational Excellence
OPERATIONAL EXCELLENCE Liz Peterson | Senior Vice President, Operations
Slide 31: 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 32: Operational Business Model Evolution
OPERATIONAL BUSINESS MODEL EVOLUTION Aligning with the Commercial Strategy; Leveraging Badger’s operational and geographic scale Over the past nine months, we have made tremendous strides in aligning Badger’s Operational model with our Sales + Marketing model: » Realigned and resized Regions and Mar
Slide 33: 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 34: 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 35: 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 36: Customer Service Recipe
CUSTOMER SERVICE RECIPE Providing customers with the industry-leading non-destructive excavation solutions PROACTIVE RELATIONSHIP MANAGEMENT Over 100 Field Sales and National Accounts Sale representatives coordinating and navigating our customers’ experience with Badger CONSISTENT SERVICE DELIVERY S
Slide 37: 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 38: 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 | 38
Slide 39: Shareholder Value Proposition
SHAREHOLDER VALUE PROPOSITION Darren Yaworsky | Chief Financial Officer
Slide 40: Balance Sheet Management
BALANCE SHEET MANAGEMENT Working capital and fixed asset surplus provides ~$250 million in financing capacity Amounts shown in USD $Millions Working Capital (1)(2) Net Fixed Assets (1)(2) ~$310 MM ~$170 MM Right-of-Use ~ $23 MM Prepayment ~ $14 MM Inventories ~ $21 MM ~$80 MM ~$150 MM ~ $287 MM PPE
Slide 41: Receivables Management
RECEIVABLES MANAGEMENT Significantly shortened the cash conversion cycle with ~80% of receivables aged within 30 days ACCOUNTS RECEIVABLES (PAST INVOICE DATE) – USD $Millions % COMPOSITION 2020 2022 2020 2022 Q4 Q1 Q2 Q4 Q1 Q2 0-30 days $ 61.2 $ 81.9 $ 98.4 52.7% 68.9% 78.5% 31-60 days $ 14.0 $ 5.3
Slide 42: 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 43: Liquidity Management
LIQUIDITY MANAGEMENT Ample financial capacity and flexibility to fund growth capital requirements ~$430 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 44: 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 45: 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 46: 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 47: Closing Remarks
CLOSING REMARKS Rob Blackadar | Chief Operating Officer/Chief Executive Officer (October 1)
Slide 48: Investor Day Agenda
INVESTOR DAY 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.
Slide 49: Q&A Contact Information
Q&A » Trevor Carson, CFA » VP Investor Relations & Corporate CONTACT Development INFORMATION » tcarson@badgerinc.com » ir.badgerinc.com
Badger Infrastructure Solutions — Investor Day (September 2022) on 6ix