INVESTOR DAY November 14, 2019 www.badgerinc.com | TSX:BAD
TODAY’S PRESENTERS Paul John Kelly Tim Reiber Tracey Wallace Wade Wilson Darren Vanderberg Yaworsky Management in attendance but not presenting: Liz Peterson, VP North American Operations – East Jay Bachman, VP Financial Operations and Investor Relations Tom Ellis, Regional Manager 2
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements reflecting certain current forecasts of certain aspects of the competition, regulatory factors or other unforeseen factors; company’s future. These statements are based on current information • The overall market for Badger’s services will not be adversely affected by weather, natural disasters, global that management has assessed, but which by its nature is dynamic and subject to rapid and events, legislation changes, technological advances, economic disruption or other factors beyond Badger’s even abrupt changes. Forward-looking statements in the presentation include but are not control; limited to the following statements: • Badger will execute its growth strategy including attracting and retaining key personnel; • Badger anticipates continued overall growth in its business, particularly in its U.S. markets; • Badger will obtain all labour, parts and supplies necessary to complete the planned hydrovac build at the • Badger anticipates that the overall macro-economic environment in the U.S. is anticipated to be supportive of costs expected; and ongoing infrastructure and construction activity levels for the remainder of 2019 and into 2020, with a softer • Badger will be able to complete and implement the Common Business Platform project within the expected overall macro-economic environment anticipated in Canada, particularly in Western Canada; time frame and in accordance with the expected budget. • Badger anticipates that oil and gas activity levels for 2019 and 2020 will be consistent with 2018 levels within its U.S. operations but weaker in Canada in 2019 and 2020 compared to 2018; Badger Daylighting Ltd.’s actual results could differ materially from those stated or implied by the forward-looking • Badger continues to see customer demand as a result of increased usage of hydrovac for non-destructive statements within this presentation. The forward-looking statement with this presentation should be considered in excavation; the context of forward-looking statements in the company’s most recent filings included with the Canadian • Badger expects to see improvements in revenue as a result of investments in developing its branch network Securities Administrators, which are available on the SEDAR disclosure system (www.sedar.com). and business development function; • The benefits, if any, that Badger’s operational scale creates related to financial and operating performance; Risk factors and other uncertainties that could cause actual results to differ materially from those anticipated in • Badger anticipates that its Adjusted EBITDA for 2019 will be in the range of $155 million to $170 million and such forward-looking statements include, but are not limited to: political and economic conditions; industry for 2020 will be in the range of $175 million to $195 million; competition; price fluctuations for oil and natural gas and related products and services; Badger’s ability to attract • Badger anticipates that the number of new hydrovac builds for 2019 will be approximately 190 to 220 units and retain key personnel; Badger’s ability to complete and implement the Common Business Platform project, the and that hydrovac retirements for 2019 will be in the range of 40 to 60 units; availability of future debt and equity financing; changes in laws or regulations, including taxation and environmental • Badger anticipates that the number of new hydrovac builds for 2020 will be approximately 200 to 230 units regulations; extreme or unsettled weather patterns; and fluctuations in foreign exchange or interest rates. and that hydrovac retirements for 2020 will be in the range of 50 to 70 units; Any future orientated financial information and financial outlook information (collectively, “FOFI”) contained in this • Badger anticipates that gross profit margin and RPT for 2019 will be lower than in 2018; presentation, as such terms are defined by applicable securities laws, is provided for the purpose of providing • Badger anticipates that gross profit margin and RPT for 2020 will be consistent with 2019; information about management’s current expectations and plans relating to the future and is subject to the same • The timing, benefits and costs associated with Badger’s Common Business Platform project, including the assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. Management believes impact on general and administrative expenses; that the FOFI has been prepared on a reasonable basis, reflecting best estimates and judgments; however, actual • Badger’s estimated 2019, 2020 and long-term target for general and administrative expenses as a percentage results of the Company’s operations and financial outcomes may vary from the amounts set forth herein. FOFI of revenue on an annualized basis and its ability to achieve such targets through measures such as reducing contained in this presentation was made as of the date of this presentation and the Company does not undertake headcount and consulting costs attributable to the Common Business Platform project; any obligation to publicly update or revise any FOFI contained in this presentation, whether as a result of new • The ability and benefits of Badger to purchase and subsequently cancel up to 2,000,000 of its common information, future events or otherwise, except as may be required by applicable securities laws. Readers are shares under its NCIB; cautioned that any FOFI contained herein should not be used for purposes other than those for which it has been • The amount and timing of future working capital reduction; disclosed herein. • The timing and benefits associated with the expansion of Badger’s U.S. finance center and its centralized hydrovac operator training center; and Readers are cautioned that the foregoing factors are not exhaustive. Additional information on these and other • Anticipated general and administrative costs for fiscal 2019 and the ability and timing to reduce these costs in factors that could affect the Company’s operations and financial results is included in reports on file with securities 2020 and subsequent years including the portion and timing thereof the costs related to the implementation of regulatory authorities in Canada and may be accessed through the SEDAR website (www.sedar.com) or at the the enterprise resource planning project. Company’s website. The forward-looking statements and information contained in this presentation are expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise The forward-looking statements made in this presentation rely on certain expected economic conditions and overall any forward-looking statements or information, whether as a result of new information, future events or otherwise, demand for Badger’s services and are based on certain assumptions. The assumptions used to generate these except as may be required by applicable securities laws. forward-looking statements are, among other things, that: • There will be customer demand for hydrovac services from infrastructure, construction, and oil and gas activity in North America; • Badger will maintain relationships with current customers and develop successful relationships with new customers; • Badger will collect customer payments in a timely manner; • Badger will be able to compete effectively for the demand for its services; • There will not be significant changes in profit margins due to pricing changes driven by market conditions, 3
CORPORATE UPDATE Strategic milestones 2019 year in review A proven track record Corporate Update Organic long-term growth 4
STRATEGIC MILESTONES Badger has made significant progress towards meeting its long-term strategic financial targets. Strategic Milestones (1)(2)(3) Double the U.S. business within 3 to 5 years Successfully completed in Q4 2019; doubled 2016 U.S. revenue. 29% Adjusted EBITDA growth in 2018; 8% Adjusted EBITDA growth in YTD Grow Adjusted EBITDA by a minimum of 15% per year 2019. 63% Adjusted EBITDA growth since 2016; average 18% CAGR. 2018 Adjusted EBITDA margins up 110 bps at 26.3%; YTD 2019 Adjusted Target Adjusted EBITDA margins of 28% to 29% EBITDA margins down 120 bps at 24.9%. Drive fleet utilization and RPT above $30,000/month 2018 RPT of $34,347; 2019 YTD RPT tracking well. (1) See Badger’s 2019 third quarter, 2018 fourth quarter earnings release, and the 2018 annual MD&A for additional details regarding Adjusted EBITDA, Compliance EBITDA, revenue, Adjusted EBITDA margin and RPT. (2) See slide “Non-IFRS Measures and Key Financial Metrics” for definition and additional details on Adjusted EBITDA, Adjusted EBITDA margin and RPT. (3) Starting point is Badger’s financial results for the year ended December 31, 2016. 5
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