Investor Day November 16, 2017 www.badgerinc.com | TSX:BAD
Agenda Today’s Presenters Paul Vanderberg John Kelly Tim Reiber Elizabeth Peterson Jerry Schiefelbein Management in attendance but not presenting: Glen Roane (Director) Wade Wilson Jay Bachman Tracey Wallace George Chung Alan Richter 2
Forward Looking Statements This presentation contains forward-looking statements reflecting certain current forecasts of certain aspects There will not be significant changes in profit margins due to pricing changes driven by market • of the company’s future. These statements are based on current information that management has assessed, conditions, competition, regulatory factors or unforeseen factors; but which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking The overall market for its services will not be adversely affected by weather, natural disasters, global • statements in the presentation include but are not limited to statements regarding: events, legislation changes, technological advances, economic disruption or other factors beyond Badger’s strategic milestones which are to: 1) double the US business from fiscal 2016 levels over the Badgers control; • next 3 to 5 years 2) grow Adjusted EBITDA by a minimum of 15% per year, 3) target Adjusted EBITDA Badger will execute its growth strategy including attracting and retaining key personnel; and • margins of 28% to 29%; and 4) drive fleet utilization and revenue per truck per month above $30,000; Badger will obtain all labour, parts and supplies necessary to complete the planned hydrovac build at • Badger’s anticipation that increased year-over-year activity realized in the second and third quarters will • the costs expected. continue into the fourth quarter of 2017 and that the overall macro-economic environment in both Canada and the US is anticipated to be supportive of ongoing infrastructure, construction, and oil and With respect to dividends, investors are cautioned that monthly dividends are always subject to approval gas activity levels for the remainder of 2017; from the board of directors of Badger, and may be increased, decreased or suspended by the board at any time. Badger continues to see growth from increased usage of hydrovac for non-destructive excavation; • Badger Daylighting Ltd.’s actual results could differ materially from those stated or implied by the forward- Badger’s anticipation that the number of new hydrovac builds for 2017 will be approximately 155 units; • looking statements within this presentation. The forward-looking statement with this presentation should be Badger will continue to target long term run rate of G&A costs at 4% of revenue; considered in the context of these and other risk factors disclosed in our most recent filings included with the • Canadian Securities Administrators, which are available on the SEDAR disclosure system (www.sedar.com). All Badger’s estimates for 2017 manufactured cost of Badger hydrovacs of $390,000 to $410,000 (Canadian • future written and oral forward-looking statements made by us or on our behalf are also subject to these dollars); and factors. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Current dividend yield on Badger’s common shares. • The forward-looking statements made in this presentation rely on certain expected economic conditions and overall demand for Badger’s services and are based on certain assumptions. The assumptions used to generate these forward-looking statements are, among other things, that: Badger has the ability to achieve its revenue, net profit and cash flow forecasts for 2017 and beyond; • There will be a long-term 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; • 3
Opening Remarks And Corporate Overview 4
The Badger Daylighting Process The Badger Daylighting process involves exposing underground infrastructure to daylight: Non-destructive excavation Pressurized water stream Powerful vacuum system Purpose-built hydrovacs Professional, well trained operators “Badger strives to have the Best Trained Operators Excavated soil/water slurry remains on site or Badger and the Best Built and Most Efficient Trucks in the arranges for disposal based on customer requirements - hydro excavation business” customer maintains ownership of materials 5
Badger Hydrovac Benefits “Hydrovac excavation provides an efficient, safe and reliable alternative for excavating in sensitive or confined spaces” Customer Benefits Provides customers with safe and Efficiency – “Time is Money” Badger has developed a wide range efficient non-destructive excavation of hydrovac applications Safely locating underground conflicts In the United States, on average, a “ critical with hydrovac improves productivity Hydrovac continues to be used in new strike ” of utility infrastructure occurs every 6 of traditional excavation equipment – applications as customers realize the minutes from conventional excavation reducing project time lines benefits of non-destructive excavation tools (1) (1) Source: Pipeline Emergency Response and Damage Prevention training materials. 6
Historical Financial Performance “Badger’s organic business model has generated strong financial performance across a number of business cycles” Historical Revenue and Adjusted EBITDA (1) $477 $500 $422 $405 $404 $400 $325 $300 $239 $mm $194 $200 $148 $140 $135 $118 $100 – 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 2017 Adjusted EBITDA Revenue (1) Source: Badger historical MD&A and /or Financial Statements. Note 1: Throughout this presentation trailing twelve months (“TTM”) includes the period October 1, 2016 though September 30, 2017. Note 2: Throughout this presentation Adjusted EBITDA as defined by Badger for the years 2017 through 2013, prior to 2013 was defined as EBITDA. See Badger historical MD&A for additional details. 7
Badger Safety Culture “Safety – It’s What We Do. It’s What We Deliver.” Badger Mentor Training process to train new operators • “Best Operator, Best Truck” • Safety is a component of compensation throughout the organization • 8
Video Diary – A Day in the life of a Badger The video diary is available for review on Badger’s website at www.badgerinc.com 9
Badger – A Proven Business Model Badger’s organic growth model has historically delivered strong financial performance Badger has a proven Badger offers a Badger is business model and unique service executing on maintains a strong to attractive end a focused competitive position – use markets hydrovac strategy 10
A Proven Business Model and Strong Competitive Position 11
The Badger Business Model “Badger’s proven business model, attractive end-use markets and hydrovac focused strategy differentiate Badger from its competitors” The Badger Model at a Glance Extensive Branch Network: Key to managing customer service, Significant differentiator versus Local, Regional and National fleet utilization and operating costs smaller competitors Broad Range of Markets: Large geographic footprint and Reposition hydrovacs to drive utilization Flexible Operations broad range of markets and reduce operating costs Hydrovac Focused Organic Growth historically funded with Badger has generated more than Growth, Scalable Operations cash flow from operations and debt; $542 million in cash flow from (1) one truck/market at a time operating activities over the past 10 years Badger Design and Experience with over 1,400 Hydrovacs Design, engineering & Manufacturing of its Hydrovacs technology = best in class hydrovac (1) Includes the period January 1, 2008 through September 30, 2017. Refer to slide “Historical Financial Metrics” for additional details. 12
Extensive Branch Network “Badger’s branch network is a key differentiator from our competitors and provides Badger with a competitive advantage” Benefits of Badger’s Extensive Branch Network Geographic footprint provides market diversification • and cost efficiencies Ability to service customers across regions • Fleet and operating cost optimization • Over 150 service areas (1)(2) • 1,081 hydrovac units (3) • Operations in 5 provinces and 41 states • (1) Service Areas are locations where Badger provides services to local customers. A service area may not have a physical location where hydrovacs and staff are located. (2) Service Areas as at October 17, 2017. (3) As at September 30, 2017 13
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