Badger Infrastructure Solutions Ltd. (“Badger”, the “Company”,
“we”, “our” or “us”) (TSX:BDGI) reported second quarter results
today. All results are presented in U.S. dollars unless otherwise
stated.
2024 SECOND
QUARTER OPERATIONAL
HIGHLIGHTS
- The Company achieved revenue of
$186.8 million, up 9% from 2023.
- U.S. revenue was $165.6 million (89%
of total revenue), up 14% from 2023.
- Canada revenue was $21.2 million (11%
of total revenue), down 19% from 2023.
- Gross profit margin of 29.2%, was
consistent with 29.1% in 2023.
- Adjusted EBITDA(1) improved to $44.6
million, up 14% from 2023.
- Adjusted EBITDA margin(1) rose to
23.9%, up from 22.8% in 2023.
- Revenue per truck per month
(“RPT”)(1) for the quarter was $43,161, compared to $44,502 in
2023.
- Adjusted earnings
per share(1) was $0.45 per share, up 18% from 2023.
- The Board of
Directors has approved the quarterly cash dividend of CAD$0.18 per
common share for the third fiscal quarter of 2024, with payment to
be made on or after October 15, 2024, to all shareholders of record
on September 30, 2024.
- Badger intends to
file a notice of intention to make a Normal Course Issuer Bid
("NCIB") with the Toronto Stock Exchange pursuant to which the
Company may acquire common shares for cancellation.
“Our U.S. end markets drove another quarter of
solid overall growth, with revenue of $186.8 million, 9% higher
than the second quarter of 2023. Adjusted EBITDA was 14% higher
than last year as we continue to focus on improving our margins and
profitability. The execution of our commercial, sales and pricing
strategies have set the foundation for Badger to continue its
journey as the industry leader in non-destructive excavation in
2024.” said Rob Blackadar, President & Chief Executive
Officer.
“We are now in our busy construction season and
remain focused on pricing, sales and utilization to continue to
drive revenue growth and profitability. We have grown year-to-date
revenues by over 10%, Adjusted EBITDA by 17% and Adjusted earnings
per share by 18%.” concluded Mr. Blackadar.
FINANCIAL HIGHLIGHTS
($ US thousands except RPT, per share amounts, share
information and ratios) |
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue: |
|
|
|
|
Non-destructive excavation service |
|
177,193 |
|
|
163,967 |
|
|
329,184 |
|
|
300,506 |
|
Other |
|
9,645 |
|
|
7,919 |
|
|
19,216 |
|
|
14,596 |
|
Total revenue |
|
186,838 |
|
|
171,886 |
|
|
348,400 |
|
|
315,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPT - Consolidated (mixed
currency)(1) |
|
43,161 |
|
|
44,502 |
|
|
39,685 |
|
|
40,849 |
|
RPT - U.S. (USD)(1) |
|
45,176 |
|
|
45,010 |
|
|
42,123 |
|
|
41,407 |
|
RPT - Canada (CAD)(1) |
|
36,626 |
|
|
43,060 |
|
|
31,961 |
|
|
39,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
44,632 |
|
|
39,151 |
|
|
73,811 |
|
|
63,137 |
|
Adjusted EBITDA per share,
basic and diluted(1) |
$1.29 |
|
$1.14 |
|
$2.14 |
|
$1.83 |
|
Adjusted EBITDA margin(1) |
|
23.9 |
% |
|
22.8 |
% |
|
21.2 |
% |
|
20.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings before income
tax |
|
16,551 |
|
|
14,960 |
|
|
18,893 |
|
|
18,633 |
|
Net earnings |
|
11,910 |
|
|
11,013 |
|
|
13,689 |
|
|
13,777 |
|
Net earnings per share, basic
and diluted(1) |
$0.35 |
|
$0.32 |
|
$0.40 |
|
$0.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings(1) |
|
15,466 |
|
|
13,146 |
|
|
20,298 |
|
|
17,106 |
|
Adjusted net earnings per
share, basic and diluted(1) |
$0.45 |
|
$0.38 |
|
$0.59 |
|
$0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations
before working capital and other adjustments |
|
44,618 |
|
|
38,864 |
|
|
73,814 |
|
|
62,850 |
|
Cash flow from operations
before working capital and other adjustments per share, basic
and diluted(1) |
$1.29 |
|
$1.13 |
|
$2.14 |
|
$1.82 |
|
Total debt to Compliance
EBITDA(1) |
|
1.5 |
x |
|
1.6 |
x |
|
1.5 |
x |
|
1.6 |
x |
Capital expenditures |
|
29,121 |
|
|
41,692 |
|
|
59,152 |
|
|
55,742 |
|
Hydrovac truck count |
|
1,584 |
|
|
1,470 |
|
|
1,584 |
|
|
1,470 |
|
Dividends paid |
|
4,614 |
|
|
4,427 |
|
|
9,057 |
|
|
8,633 |
|
Weighted average common shares outstanding(2) |
|
34,473,438 |
|
|
34,473,438 |
|
|
34,473,438 |
|
|
34,473,438 |
|
(1) "Adjusted EBITDA", "Adjusted EBITDA margin",
"Adjusted net earnings", "Compliance EBITDA", "Total debt" and
"RPT" are not standardized financial measures prescribed by IFRS
and may not be comparable to similar measures presented by other
companies or entities. See “Non-IFRS Financial Measures” and
p.12-13 of the Annual MD&A for additional detail on the
definition and calculation of Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted net earnings, Compliance EBITDA and Total debt.
See "Key Financial Metrics and Other Operational Metrics" and p.10
of the Annual MD&A for additional details on RPT. Per share,
basic and diluted measures are calculated by dividing the financial
measure with the weighted average common shares outstanding for the
period.(2) See “Share Capital” for additional
details.
BUSINESS OUTLOOK
In the second half of 2024, we continue to
expect growing demand in our end markets, including infrastructure,
utilities, and non-residential construction, across all of our U.S.
regions. While this growth remains in line with our long term
expectations, the rate of growth has slowed somewhat in California
and the Upper Midwest markets. The slowdown we have experienced in
Canada is attributed to the delay of several projects and we
continue to expect these to begin later in the year, and into early
2025. Our strategy and focus remains the same. We are focused on
increasing revenue through our sales and national accounts
commercial strategy to drive higher activity levels, capture
pricing opportunities throughout our branch operations network. We
also remain focused on both operational, functional and
administrative scalability to drive operating leverage and continue
growing Adjusted EBITDA margins and Adjusted net earnings at a
higher rate than revenue growth.
As a result of slightly lower than expected
utilization on our fleet, reflecting primarily weaker results from
Canada, we now expect the increase in our fleet count to fall in
the lower half of our 7% - 10% growth range. This will be achieved
primarily by building to the lower end of our original new build
range.
|
2024 Outlook |
New builds |
190 units to 220 units |
Retirements |
70 units to 90 units |
Refurbishments |
35 units to 45 units |
Total Capital Spend(1) |
$90 million to $130 million |
(1) Total capital spend for the 2024 Outlook includes the cost
to manufacture a new hydrovac, refurbishments, ancillary equipment
and other capital projects.
ABOUT BADGER
INFRASTRUCTURE SOLUTIONS
LTD.
Badger Infrastructure Solutions Ltd. (TSX:BDGI)
is North America’s largest provider of non-destructive excavating
services. Badger works for contractors and facility owners in a
broad range of infrastructure industries and in general commercial
construction. Badger’s customers typically operate near high
concentrations of underground power, communication, water, gas and
sewer lines, where safety and economic risks are high and where
non- destructive excavation provides a safe alternative for certain
customer excavation requirements.
The Company’s key technology is the Badger
HydrovacTM, which is used primarily for safe excavation around
critical infrastructure and in congested underground conditions.
The Badger Hydrovac uses a pressurized water stream to liquify the
soil cover, which is then removed with a powerful vacuum system and
deposited into a storage tank. Badger is unique in the
non-destructive excavation industry because it designs and
manufactures all of its hydrovac units at its plant in Red Deer,
Alberta, which has an annual production capacity of more than 350
hydrovac units. To complement the Badger Hydrovac, the Company has
a select number of specialty units, mainly Airvacs, combo trucks
and sewer and flusher units.
2024 SECOND
QUARTER CONFERENCE
CALL
A conference call and webcast for investors,
analysts, brokers and media representatives to discuss the 2024
second quarter results is scheduled for 9:00 a.m. ET on Friday,
August 2, 2024. To join the call and ask a question during the live
questions and answers session:
https://register.vevent.com/register/BI0eacf5cdf69d44b4819c1141f33b3dbf.
To join the call with audio only:
https://edge.media-server.com/mmc/p/bimfrao7.
2024 SECOND
QUARTER DISCLOSURE
DOCUMENTS
Badger’s second quarter 2024 Management’s
Discussion and Analysis ("MD&A") and Interim Condensed
Consolidated Financial Statements for the three and six months
ended June 30, 2024, along with all previous public filings of
Badger Infrastructure Solutions Ltd. may be found on SEDAR+ at
www.sedarplus.ca.
NON-IFRS
FINANCIAL MEASURES
This press release contains references to
certain financial measures, including some that do not have any
standardized meaning prescribed by International Financial
Reporting Standards ("IFRS") and that may not be comparable to
similar measures presented by other companies or entities. These
financial measures are identified and defined below. See “Non-IFRS
Financial Measures” in the Company’s 2023 Annual MD&A for
detailed reconciliations of non-IFRS financial measures.
“Adjusted EBITDA” is earnings
before interest, taxes, depreciation and amortization, share-based
compensation, gains and losses on derivative instruments, gains and
losses on sale of property, plant and equipment and right of use
assets, and gains and losses on foreign exchange. Adjusted EBITDA
is a measure of the Company’s operating profitability and is
therefore useful to management and investors as it provides
improved continuity with respect to the comparison of operating
results over time. Adjusted EBITDA provides an indication of the
results generated by the Company’s principal business activities
prior to how these activities are financed, the results are taxed
in various jurisdictions and assets are amortized. In addition,
Adjusted EBITDA excludes gains and losses on sale of property,
plant and equipment and right of use assets as these gains and
losses are considered incidental and secondary to the principal
business activities, gains and losses on foreign exchange as such
gains and losses can vary significantly based on factors beyond the
Company’s control; and share-based compensation and gains and
losses on derivative instruments as these expenses can vary
significantly with changes in the price of the Company’s common
shares.
“Adjusted
EBITDA margin” is Adjusted EBITDA
as defined above, expressed as a percentage of revenues.
"Adjusted net earnings" is net
earnings adjusted for share-based compensation, gains and losses on
derivative instruments, gains and losses on sale of property, plant
and equipment and right of use assets, and gains and losses on
foreign exchange, tax impacted using the effective tax rate.
KEY FINANCIAL
METRICS AND
OTHER OPERATIONAL
METRICS
“Revenue per truck per month”
(“RPT”) is a measure of non-destructive excavation fleet
utilization. It is calculated using non-destructive excavation
revenue only. RPT is calculated on both a consolidated basis and
for each geographic segment by dividing non-destructive excavation
revenue for each segment, in the respective local currency, by the
average number of non-destructive excavation units in the segment
during the period.
See “Key Financial Metrics and Other Operational
Metrics” on page 11 of the Company’s 2024 second quarter MD&A
for additional details on RPT.
CAUTIONARY STATEMENTS
REGARDING FORWARD-LOOKING INFORMATION AND
STATEMENTS
Certain statements and information contained in
this press release and other continuous disclosure documents of the
Company referenced herein, including statements and information
that contain words such as “could”, “should”, “can”, “anticipate”,
“expect”, “believe”, “will”, “may”, “continue”, “focus on”, "grow",
"trend" and similar expressions relating to matters that are not
historical facts, constitute “forward-looking information” within
the meaning of applicable Canadian securities legislation. These
statements and information involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements and information. The Company believes
the expectations reflected in such forward-looking statements and
information are reasonable, but no assurance can be given that
these expectations will prove to be correct. Such forward-looking
statements and information included in this press release should
not be unduly relied upon. These forward-looking statements and
information speak only as of the date of this press release.
In particular, forward-looking information and statements in
this press release include, but are not limited to the
following:
- Badger’s
expectations with regard to demand for non-destructive excavation
services across its end markets;
- Badger’s
expectations regarding Canadian and U.S. operations in 2024,
including the expected timing of projects in Canada and the U.S.
and the results of operations in such markets;
- The
implementation of the NCIB program including receipt of customary
approvals and the timing associated with receipt of such
approvals;
- Badger's
strategic initiatives, including sales and marketing investments
and pricing strategies;
- Badger’s
expectations with respect to the production, retirement and
refurbishment of non-destructive excavation and specialty
units;
- Badger's focus on
maintaining utilization rates throughout the branch operations
network;
- Badger's
continued focus on increasing revenues through its sales and
national accounts commercial strategy;
- The expectation
that Badger’s growing customer base and national accounts program
will contribute to year over year growth;
- Badger's
continued focus on fleet management and utilization to support its
organic growth requirements;
- The expected
growth of Badger's fleet count in the 7% to 10% range in 2024;
- Badger’s
continued focus on operational, functional and administrative
scalability to drive operating leverage and continue growing
Adjusted EBITDA margins and Adjusted net earnings at a higher rate
than revenue growth;
- Disclosure under
the heading “Business Outlook”; and
- The payment of
Badger's quarterly cash dividends and anticipated timing
thereof.
The forward-looking information and statements
made in this press release rely on certain expected economic
conditions and overall demand for Badger’s services and are based
on certain assumptions. The assumptions used to generate this
forward-looking information and statements are, among other things,
that:
- Badger will maintain its financial
position and financial resources will continue to be available to
Badger;
- There will be
long-term sustained customer demand for non-destructive excavation
and related services from a broad range of end use markets 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, competition, regulatory factors or other
unforeseen factors;
- Badger will
realize and continue to realize the efficiencies and benefits of
the executed business restructuring activities and other business
improvement initiatives; and
- Badger will
obtain all labour, parts and supplies necessary to complete the
planned Badger non- destructive excavation build at the costs and
on the timeline expected.
Risks and other uncertainties that could cause
actual results to differ materially from those anticipated in such
forward-looking statements include, but are not limited to:
political and economic conditions; industry competition; price
fluctuations for oil and natural gas and related products and
services; Badger’s ability to attract and retain key personnel; the
availability of future debt and equity financing; changes in laws
or regulations, including taxation and environmental regulations
which may adversely impact the labour supply and operating costs of
Badger; extreme or unsettled weather patterns; and fluctuations in
foreign exchange or interest rates.
Readers are cautioned that the foregoing factors
are not exhaustive. Additional information on these and other
factors that could affect the Company’s operations and financial
results is included in reports on file with securities regulatory
authorities in Canada and may be accessed through the SEDAR+
website (www.sedarplus.ca) or at the Company’s website. The
forward-looking statements and information contained in this press
release are expressly qualified by this cautionary statement. The
Company does not undertake any obligation to publicly update or
revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, except as
may be required by applicable securities laws.
For further information:Robert Blackadar, President & Chief
Executive OfficerRobert Dawson, Chief Financial OfficerLisa Olarte,
Director, Investor Relations & Financial Planning
Badger Infrastructure Solutions Ltd. ATCO Building II4th Floor,
919 11th Avenue, SW Calgary, Alberta T2R 1P3 Telephone (403)
264-8500Fax (403) 228-9773
Source: Badger Infrastructure Solutions Ltd.
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