Badger Infrastructure Solutions Ltd · TSX:BDGI
Badger Infrastructure Solutions — Badger Daylighting — Investor Presentation (June 2017)
37 slides from Badger Infrastructure Solutions's investor presentation, June 2017
Slide 1: Corporate Presentation
Corporate Presentation June 2017
Slide 2: Badger Daylighting: Proven Business Model with Organic Growth
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 creating value through economic cycles • Balance sheet prudently managed to withstand cyclicality •
Slide 3: Financial Summary – Strong Balance Sheet and Historical Return on Invested Capital
Financial Summary – Strong Balance Sheet and Historical Return on Invested Capital Shares outstanding – at May 31, 2017 37.1mm Market capitalization – at May 31, 2017 $0.9B Total debt less cash – at March 31, 2017 $41mm Adjusted EBITDA1 – Trailing Twelve Months (TTM) at March 31, 2017 $105mm Net Ear
Slide 4: The Badger Daylighting Process
The Badger Daylighting Process The Badger Daylighting process involves exposing underground infrastructure to daylight: • Purpose-built Badger units with well trained professional operators. • Pressurized water stream excavation. Nozzle design, pressure and volume are critical to prevent damage to u
Slide 5: The Badger Daylighting Process
The Badger Daylighting Process Badger has developed a wide range of applications for its Badger units* *See Appendix for additional uses TSX: BAD Slide 4 June 2017
Slide 6: The Badger Process Advantage
The Badger Process Advantage • Safe → helps prevent damage to underground infrastructure • Time is Money → keeps projects on schedule/improves returns for infrastructure owners • Locating underground conflicts makes traditional excavation equipment more productive • Precise excavation → can reduce t
Slide 7: Badger Daylighting
Badger Daylighting Badger has an excellent business with a great track record Proven business model Offers a unique service to Executing on a focused and strong competitive attractive markets strategy position TSX: BAD Slide 6 June 2017
Slide 8: Proven Business Model and Strong Competitive Position
Proven Business Model and Strong Competitive Position Badger Hydrovac Units and Revenue Last 10 Years 450 1,200 • Organic growth model: build 400 one truck at a time and put it 350 1,000 to work which lowers operating risk Annual Revenue ($mm CAD) Fleet (# of Hydrovac Units) • Flexibility to adjust
Slide 9: Proven Business Model and Strong Competitive Position
Proven Business Model and Strong Competitive Position Proven Business Model: Local Branches Part of Large Network • Growing network of locally operated corporate and operating partner branches. • Always say “yes” when a customer calls… find a truck. • Focus on building a diverse, local customer base
Slide 10: Proven Business Model and Strong Competitive Position
Proven Business Model and Strong Competitive Position Badger leverages significant scale advantages across its branch network • Over 100 Branches and over 150 Service Areas1 • Over 1,000 Badger Hydrovac units; 83% operated from Corporate locations, and 17% from Operating Partners2 • Provides service
Slide 11: Proven Business Model and Strong Competitive Position
Proven Business Model and Strong Competitive Position Hydrovac revenue has shifted to non-oil & gas 450 400 Badger’s extensive 350 network and market 300 knowledge allowed it Revenue ($mm CAD) 250 to aggressively 200 reposition the 150 business to offset the 100 steep decline in oil & gas related ma
Slide 12: Proven Business Model and Strong Competitive Position
Proven Business Model and Strong Competitive Position Very Attractive Economics: Building our own trucks provides a Pre-Tax IRR at Different Revenue Per Truck (RPT) Levels* number of operating advantages: 36,000 • Best in class design for greater 34,000 efficiency (we operate more 32,000 Hydrovacs t
Slide 13: Badger Engineering and Truck Build
Proven Business Model and Strong Competitive Position Badger Engineering and Truck Build • Vertical integration in truck design and build • Badger units designed to optimize life cycle costs, at a lower initial capital cost versus purchasing from third party manufacturers • Design input from over 1,
Slide 14: Offers a Unique Service to Attractive Markets
Offers a Unique Service to Attractive Markets • Badger is the leader in introducing Hydrovac technology to new customers and geographic markets • Growth driven via penetration in existing markets and entering new markets • Of 347 US Metropolitan Statistical Areas (MSAs)* in the lower 48 states, Badg
Slide 15: Offers a Unique Service to Attractive Markets
Offers a Unique Service to Attractive Markets Current Badger service area MSAs per 2010 Census data; lower 48 states Significant geographic growth opportunities to pursue with Badger’s proven business model TSX: BAD Slide 14 June 2017
Slide 16: Offers a Unique Service to Attractive Markets
Offers a Unique Service to Attractive Markets Badger serves infrastructure markets: • $4 trillion in estimated US Infrastructure needs over next 10 years* • Hydrovac is a small and growing part of infrastructure construction • Badger has proven that Hydrovac has a wide range of infrastructure applic
Slide 17: Offers a Unique Service to Attractive Markets
Offers a Unique Service to Attractive Markets Badger is the market leader with “first mover” advantage in many markets Revenue Mix Between Canada and the US ($mm CAD) 450 400 350 Revenue ($mm CAD) 300 250 200 150 100 50 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 US Canada Badger has pioneer
Slide 18: Offers a Unique Service to Attractive Markets
Offers a Unique Service to Attractive Markets Badger Business Development Focus • Local branch managers are main customer contact • Business development efforts at local, regional, national levels • Focus on geographic and customer segments (local and head office contacts) • Over 70 business develop
Slide 19: Executing on a Focused Strategy
Executing on a Focused Strategy • “Build a service business from the inside-out” – Badger’s organic growth o Add a Badger unit train operators sell the service • Leverage core Hydrovac expertise (~90% of our business) o Best Trucks, Operators, Training, Value o Safety and reliability is our prio
Slide 20: Executing on a Focused Strategy
Executing on a Focused Strategy Build the Business Platform: - Build out platform to support sustainable growth and reduce costs - Human resource organization • Recruiting, onboarding/training • Career management and management training • Improve operator and area manager retention - Common operatio
Slide 21: Strategic Milestones
Strategic Milestones Badger has an excellent business with a great track record Proven business model Offers a unique service to Executing on a focused and strong competitive attractive markets strategy position Strategic Milestones (3-5 years): • Double the US business again within 3 to 5 years • G
Slide 22: The Badger Business Advantage
The Badger Business Advantage Strategy: Leverage Badger’s core Hydrovac operations and related technology A Hydrovac Focused Business Sales and Business Development • Focus is on the Hydrovac business – we are the industry • Strong local branch network: Corporate and leader operating partners • ~90%
Slide 23: Forward Looking Statements
Forward Looking Statements 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 c
Slide 24: Non-IFRS Financial Measures
Non-IFRS Financial Measures 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 id
Slide 25: Appendices
Appendices
Slide 26: Badger Management Team
Badger Management Team 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 flee
Slide 27: Badger Management Team
Badger Management Team Tracey Wallace Tim Reiber Mark Lyle Vice President, Human Resources Vice President, Business Development Vice President, Canadian Operations – West Tracey joined Badger in June 2017. Tracey has extensive business Tim transitioned into the newly created VP BD role in May, Mark
Slide 28: Badger Board of Directors
Badger Board of Directors Glen Roane David Calnan Board Chair David is a businessman whose principal business activities are with Rocky Layman Energy Inc., an Alberta Glen is a businessman and corporate director who has served as a director of more than 15 based oil & gas company, and Am-Tek Solutio
Slide 29: Summary Financial Results
Summary Financial Results $mm CAD FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Revenue 324,594 422,219 404,620 404,202 101,811 Gross profit 109,883 139,574 121,515 119,905 23,640 Adjusted EBITDA 94,169 120,121 107,759 104,763 19,856 Profit before tax 57,827 73,519 41,243 47,131 5,531 EPS – Diluted $1.09
Slide 30: Badger: Safety
Badger: Safety Safety – It’s What We Do. It’s What We Deliver. • Train with the Best • Badger uses a mentor training process to train new operators • “Best Operator, Best Truck”
Slide 31: Organizational Chart and Responsibilities
Organizational Chart and Responsibilities BADGER CLIENT BEST OPERATOR & BEST TRUCK Provide good value and service = satisfied client AREA MANAGER Attract and develop the best operators, trucks and safety program in Hydrovac industry REGIONAL, PLANT & ADMIN STAFF Attract and help Area Managers to be
Slide 32: Badger Daylighting Celebrates its 25th Anniversary in April 2017
Badger Daylighting Celebrates its 25th Anniversary in April 2017 Badger Daylighting is twenty-five years old! In 1992 Badger Daylighting (Badger) set out with a vison to use hydrovac excavation technology to protect workers, underground infrastructure, the public and the environment, leading to the
Slide 33: Badger Hydrovac Uses
Badger Hydrovac Uses Utilities Oil & Gas Power Generation Transportation • Utility pole holes – new and replacement • Integrity work • Various cleaning applications – cooling • Derailment cleanup • Utility verification – daylighting, test • Pipeline crossings tower cleaning, pond and retaining vesse
Slide 34: End Use Market and Geographic Diversification is Changing Seasonality
End Use Market and Geographic Diversification is Changing Seasonality Quarterly Revenue 120 100 Revenue ($mm CAD) 80 60 40 20 - 2012 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Continued non-oil & gas growth along with lower dependence on oil & gas revenue are contributing to changing seasonality.
Slide 35: Badger Revenue per Truck per Month
Badger Revenue per Truck per Month Multi-Currency Metric 30,000 28,500 28,106 28,062 27,023 27,000 25,197 25,500 24,747 24,000 23,317 23,038 22,500 21,105 21,000 19,500 18,000 16,500 15,000 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Slide 36: Total Units: Canada and the US
Badger Hydrovac Units Total Units: Canada and the US 1,100 998 1,018 1,0241,031 1,000 900 791 800 700 630 600 504 500 413 407 412 400 334 285 300 241 184 185 212 200 136 162 100 • Change in total units year-over-year represents the net of additions and retirements • Badger average fleet age was appr
Slide 37: DAYLIGHTING™
DAYLIGHTING™
Badger Daylighting — Investor Presentation (June 2017) on 6ix