ACUMEN CAPITAL RESEARCH BADGER DAYLIGHTING LTD. (TSX:BAD) SPECIAL SITUATIONS RESEARCH IDEAS. GROWTH. OPPORTUNITY.

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1 BADGER DAYLIGHTING LTD. (TSX:BAD) SPECIAL SITUATIONS RESEARCH Recommendation: Buy 12-Month Target: $28.00 Implied Total Return: 39.3% COMPANY DESCRIPTION: Badger Daylighting is rth America s largest provider of non-destructive hydrovac truck excavating services, targeting the utility and petroleum sectors. The Company has over 1,000 hydrovac trucks that services a diverse customer base across Canada and the United States. April 12, 2016 Event. Upcoming Q116 results and general market update. Summary. We are updating our estimates for BAD s upcoming Q116 results and FY16 forecasts amid recent stock fluctuations due to market events. Dropping Q1 Revenue per Truck ( RPT ) estimates from $25,000/month to $23,750/month, and lowering F16 RPT estimates from $25,500/month to $25,000/month. Lowering F16 Other revenue contributions from $31.0MM to $27.0MM to account for slowing demand in BAD s Fieldtek oilfield services business due to an early break-up following an unseasonably warm winter. Adjusting our CAD/USD foreign exchange estimates upwards from 0.75 to 0.77 for the remainder of 2016 to mimic the current forward strip outlook. All other estimates remain unchanged. Outlook. We see continued weakness in the O&G market throughout 2016 and adjust our estimates accordingly. The Company s 2016 goals will be to further grow the US utilities market, execute on its Eastern Canada operations, and focus on cost cuts in O&G markets. Overall, we believe the Company is well positioned to capitalize on a growing US market and should be able to weather the O&G headwinds through strict capital allocation principals and increased utilization. Recommendation. We look at the current price weakness as an attractive buying opportunity and reiterate our Buy recommendation. As a result of the new estimates we have lowered our target price to $28.00/sh (from $29.50/sh) but directionally we see good upside from the current price levels. S/O (bas.) 37.1m Last Close Price: $21.26 S/O (dil.) 37.5m Implied Total Return: 39.3% Market Cap: $788.8m Monthly Dividend $0.03 EV: $867.6m Implied Yield: 1.7% F14 F15 F16e F17e Revenue $422.2m $404.6m $394.7m $442.3m y/y growth % -4.2% -2.5% 12.1% Adj. EBITDA $120.1m $107.8m $106.5m $118.8m y/y growth % -10.3% -1.2% 11.6% Net Profit $53.1m $38.5m $42.3m $49.8m EPS (Dil.) $1.43 $1.04 $1.14 $1.34 Net Debt $105.2m $78.9m $21.9m -$6.1m Total Capex $98.5m $38.2m $19.2m $46.8m F14 F15 F16e F17e P/Sales 1.9x 1.9x 2.0x 1.8x P/Earnings 14.8x 20.5x 18.6x 15.8x EV/Adj. EBITDA 7.4x 8.1x 7.6x 6.8x Net debt/adj. EBITDA 0.9x 0.7x 0.2x -0.1x F14 F15 F16e F17e Hydrovac Fleet Key Personnel Tor Wilson Gerald D. Schiefelbein John G. Kelly Source: Acumen Capital Partners, Sedar Figures subject to rounding President & Chief Executive Officer VP & Chief Financial Officer Chief Operating Officer ACUMEN CAPITAL FINANCE PARTNERS LIMITED SUITE th AVENUE SW CALGARY, AB T2P 0R9 MAIN PHONE: TOLL FREE:

2 Page 2 of 7 OUTLOOK In light of recent market volatility, we have revisited our Q116 estimates for Badger and made adjustments to the goforward outlook for the Company. The Company s share price has fallen precipitously following the release of Q415 results that were weaker than expected (VIEW REPORT), and have been subsequently impacted by movement in the CAD/USD f/x rates and continued weakness in the O&G markets. With this in mind, we feel it s prudent to adjust our utilization forecasts (RPT), update Other revenue expectations, and align our f/x assumptions. Going forward our focus turns to several catalysts that we ve identified previously: Continued US growth in non-o&g markets - Management very bullish on further US expansion Successful integration of new Management in Eastern Canada, leading to increased utilization and penetration by H2/16 Further clarity on the CEO transition Cost minimizations and market share retention in current O&G markets Margin stability (in line with previous downturns) and strong FCF. ESTIMATES We make adjustments to our model to account for continued market volatility and discussions with management, and we outline our new estimates for 2016 and 2017 in figure 1. We have adjusted our 2016 RPT forecasts down to reflect our current outlook for the industry and outline the changes below: Revenue per Truck New Old % Change Q1/16 RPT $23,750 $25, % Q2/16 RPT $22,500 $23, % Q3/16 RPT $27,500 $28, % Q4/16 RPT $26,250 $26, % 2016 RPT $25,000 $25, % We are also making adjustments to our Other revenue contributions for F16 as a warmer than normal winter led to an early break-up, which will undoubtedly impact BAD s Fieldtek operations as lower industry activity will translate to less spending. With these assumptions, we are pulling our F16 estimates back from $31.0MM to $27.0MM. Lastly, we are revising our current foreign exchange assumptions for the remainder of 2016 and FY17. Our previous f/x estimates were using a flat 0.75 CAD/USD rate for Q2/Q3/Q4 for 2016 and 0.75 for 2017, and were based on the current forward curves at the time we initiated coverage. Since that time, the CAD has appreciated relative to the USD, and the futures now sit at 0.77 for the remainder of 2016 and Our new estimates reflect the current forward strip. FIGURE 1 BADGER DAYLIGHTING OLD VS. NEW ESTIMATES *Available For Growth = Free cash flow + growth capex F16 New F16 Old Change F17 Initial F17 Old Change Revenue $394.7m $411.4m (4.1%) $442.3m $458.3m (3.5%) Gross Profit $120.3m $125.4m (4.1%) $134.3m $139.3m (3.5%) Adj. EBITDA $106.5m $111.0m (4.1%) $118.8m $123.2m (3.5%) Free Cash Flow (AFG)* $59.5m $62.8m (5.3%) $65.0m $68.2m (4.7%) Net Income $42.3m $45.5m (7.0%) $49.8m $52.9m (5.8%) EPS (Dil.) $1.13/sh $1.21/sh (7.0%) $1.33/sh $1.41/sh (5.8%) Net Debt $21.9m $19.5m 12.8% -$6.1m -$10.4m nm

3 Page 3 of 7 VALUATION We utilize a peer based EV/EBITDA multiple and DCF analysis to arrive at our target price. We outline Badger s peer group in figure 2 and highlight the Company s superior EBITDA margins, high rates of return on invested capital, and balance sheet strength as reasons why Badger should trade in line (if not at a premium) to the group. FIGURE 2 BADGER DAYLIGHTING PEER GROUP Price Market Enterprise P/E EV/EBITDA ROIC Net Debt/ Dividend GM % EBITDA % Peer Group Ticker 4/11/2016 Cap Value 2016F 2017F 2016F 2017F 5-yr Avg. EBITDA Yield TTM TTM Enviromental & Facility Services CLEAN HARBOURS, INC. CLH-US $47.19 $2.7B $3.9B 47.4x 31.5x 8.6x 7.7x 5.0% 2.6x % 12.5% WASTE MANAGEMENT INC. WM-US $57.29 $25.5B $34.4B 20.7x 19.3x 9.6x 9.2x 7.4% 2.7x 2.7% 36.5% 19.9% Construction & Engineering AECON GROUP INC. ARE-TSX $16.70 $955.6M $1.0B 17.0x 14.9x 5.8x 5.3x 7.0% 0.2x 2.4% 10.2% 9.4% Trucking TRANSFORCE INC. TFI-TSX $22.62 $2.2B $3.8B 14.9x 12.4x 8.1x 8.5x 8.1% 3.5x 3.0% 43.0% 11.5% Oil & Gas Equipment Services MULLEN GROUP LTD. MTL-TSX $13.86 $1.3B $1.9B 26.3x 30.5x 8.3x 9.9x 9.0% 2.8x 8.7% 30.5% 15.0% SECURE ENERGY SERVICES INC. SES-TSX $8.77 $1383.1M $1.7B nm nm 16.6x 10.9x 4.1% 3.1x 2.7% 4.2% -5.2% Median 20.7x 19.3x 8.5x 8.9x 7.2% 2.7x 2.7% 29.3% 12.0% Mean 25.2x 21.7x 9.5x 8.6x 6.8% 2.5x 3.9% 25.4% 10.5% BADGER DAYLIGHTING LTD. BAD-TSX $21.26 $788.8M $867.6M 18.6x 15.8x 8.2x 7.3x 16.1% 0.2x 1.7% 30.0% 26.4% Source: Bloomberg, Capital IQ, Acumen Capital Partners, Figures subject to rounding Our 12 month price target is reduced to $28.00/sh (from $29.50/sh) on updated estimates and is based on an 8.9x 2017 EV/EBITDA multiple and a DCF analysis (see figure 3). FIGURE 3 BADGER DAYLIGHTING VALUATION SUMMARY Valuation Metric Factor Implied 12-month share price ($) F17E EV/EBITDA 8.9x $28.52 DCF Analysis 7.5x / 10.3% $27.67 Mean (rounded) $28.00 SENSITIVITY ANALYSIS We provide sensitivity analysis to our FY16 estimates for variances in Q1 RPT and Other revenue in figure 4 to illustrate the change in EBITDA expectations, while highlighting our current 2016 EBITDA estimate of $106.5 MM. FIGURE 4 BADGER DAYLIGHTING EBITDA SENSITIVITY EBITDA Sensitivity Q1/16 Monthly Revenue per Truck 2016 Annual "Other" Revenue ($MM) $0 $21,750 $22,250 $22,750 $23,250 $23,750 $24,250 $21.0 $102.9 $103.4 $104.0 $104.5 $105.0 $105.5 $23.0 $103.4 $103.9 $104.4 $105.0 $105.5 $106.0 $25.0 $103.9 $104.4 $104.9 $105.5 $106.0 $106.5 $27.0 $104.4 $104.9 $105.4 $105.9 $106.5 $107.0 $29.0 $104.9 $105.4 $105.9 $106.4 $106.9 $107.5 *Current estimates using $23,750/month RPT in Q1/16 and $27.0 MM for Other Revenue in 2016 We notice a reduction of ~$3.6MM from our current estimates to our lowest case scenario, which gives us confidence in our overall numbers even with a potential miss in Q1. Looking into this further, we run RPT and Other revenue sensitivities into 2017 to get a range of EBITDA values that can be used for target prices sensitivities. EBITDA

4 Page 4 of 7 sensitivities for 2017 are shown in figure 5 with a range of values highlighted in orange that will be used in our target price sensitivity. FIGURE 5 BADGER DAYLIGHTING EBITDA SENSITIVITY EBITDA Sensitivity Monthly Revenue per Truck (average) 2017 Annual "Other" Revenue ($MM) *Current estimates using $27,500/month RPT in 2017and $29.2 MM for Other Revenue in 2017 We provide a target price sensitivity matrix in figure 6 to highlight the impacts of EBITDA contribution and valuation multiples on our current target price. Using our range of EBITDA values (from figure 5) and EV multiples ranging from 7.5x to 8.9x, we see that the potential price target range varies between $20.56/sh and ~$28.72/sh. The yellow box in the table identifies, in our opinion, a comfortable range for Badger s target price based on the peer group multiple, with $24.47/sh being at the low-end of our expectations ($110.2MM EBITDA & 8.2x EV/EBITDA multiple). At $110.2MM of EBITDA in 2017, it assumes Badger experiences a reduction in annual RPT to $25,500/month (vs our estimates of $27,500/month), which we see as a low-case scenario as the slow build rates in 2016 & 2017 will allow RPT utilization to increase throughout the year. The 8.2x peer multiple (vs our estimates of 8.9x) is also at the low-end of our expectations as it sits 7.9% below the current peer group and falls below the Company s historical 3-year EV/EBITDA multiples on both the trailing (10.8x) and forward (8.9x) basis (see appendix I). RECOMMENDATION $0 $23,500 $24,500 $25,500 $26,500 $27,500 $28,500 $23.2 $101.1 $105.2 $109.3 $113.4 $117.4 $121.5 $25.2 $101.6 $105.7 $109.8 $113.8 $117.9 $122.0 $27.2 $102.1 $106.2 $110.2 $114.3 $118.4 $122.4 $29.2 $102.6 $106.6 $110.7 $114.8 $118.8 $122.9 $31.2 $103.0 $107.1 $111.2 $115.3 $119.3 $123.4 FIGURE 6 BADGER DAYLIGHTING VALUATION SENSITIVITY Target Price Sensitivity (EV/EBITDA) 2017 EBITDA ($MM) $28.61 $101.1 $105.7 $110.2 $114.8 $ x $20.56 $21.47 $22.39 $23.31 $ x $21.51 $22.47 $23.43 $24.39 $ EV 8.2x $22.47 $23.47 $24.47 $25.47 $26.47 Multiple 8.5x $23.42 $24.47 $25.51 $26.55 $ x $24.37 $25.46 $26.55 $27.64 $28.72 We continue to see long-term value in Badger Daylighting, despite the current near-term challenges facing the Company. The Company will be targeting increased utilization in non-o&g sectors, most notably in Eastern Canada, to help offset negative growth in the O&G markets. We continue to forecast for a slow H116 before ramping up in the back half of the year, and we look to Q1 results and clarity on the current CEO transition as the next catalysts for the Company. Our investment decision remains intact as Badger justifies the target price due to resilient FCF generation, balance sheet strength, and ROIC, however, caution remains as success depends on successful market penetration and truck utilization. We look at the current price weakness as an attractive buying opportunity and reiterate our Buy recommendation. As a result of the new estimates we have lowered our target price to $28.00/sh (from $29.50/sh), but directionally we see good upside from the current price levels.

5 Page 5 of 7 APPENDIX I: Historical EV/EBITDA Multiples Below we show the Company s trailing and forward EV/EBITDA multiple s since 2011 (Badger converted from a Trust to a Corporation on Dec 31, 2010), and we highlight the averages for both the last ~5 years and ~3 years. We chose to show the 3-year averages as the beginning of 2013 marked the start of a transitional period for Badger. Prior to 2013, Badger had less of a US presence, as the US accounted for an average of ~43% of revenues during the prior four years, and jumped up to ~48% in 2013 (increased further to ~49% and 62% in 2014 and 2015 respectively). Prior to 2013, average daily trading volume was less than 100,000 shares a day (99k/day in 2011 and 84k/day in 2012), but jumped up significantly to 182k/day in 2013 and >250k/day in 2014, 2015, & 2016 YTD. The companies build rate increased dramatically around this time from 97 and 131 trucks in 2011 and 2012, to 175 and 221 trucks in 2013 and x Trailing EV/EBITDA Multiples Badger Daylighting (TSX:BAD) 20.0x 18.0x 16.0x 3-Year Average: 10.8x 14.0x 5-Year Average: 9.0x 12.0x 10.0x 8.0x 6.0x 4.0x Current Trailing EV/EBITDA: 9.0x 2.0x 16.0x Forward EV/EBITDA Multiples Badger Daylighting (TSX:BAD) 14.0x 12.0x 10.0x 5-Year Average: 7.6x 3-Year Average: 8.9x 8.0x 6.0x 4.0x Current Forward EV/EBITDA: 7.6x 2.0x

6 Page 6 of 7 ISSUER: Badger Daylighting Ltd. (TSX:BAD) Disclosure Requirements Is this an issuer related or industry related publication? Issuer Industry Does the Analyst/Associate have a financial interest in securities of the subject issuer? If yes, nature of interest: Is Acumen Capital Partners a market maker in the issuer s securities at the date of this report? Does Acumen Capital Partners beneficially own more than 1% of any class of common equity of the issuer? Does Acumen Capital Partners or the Analyst/Associate have any actual material conflicts of interest with the issuer? Explanation: Does the Analyst/Associate or Household member serve as a Director, Officer, or Advisory Board Member of the issuer? Has the Analyst/Associate received any direct compensation from the subject company in the past 12 months?* Has Acumen Capital Partners managed or co-managed an offering of securities by the issuer in the past 12 months? Has Acumen Capital Partners received compensation for investment banking and related services from the issuer in the past 12 months? Other disclosures: * Acumen has a pool for compensation purposes, which includes research analysts, investment banking personnel, sales people and institutional traders. Revenue in the pool includes trading commissions, advisory fees, new issue commissions and broker warrant proceeds. Acumen Recommendation Structure: Buy, Speculative Buy, Hold, Reduce, Under Review, Tender Full Recommendation Structure explanation can be found at the Acumen Capital Partners website: The information transmitted is privileged, confidential, may be subject to copyright and is intended solely for the use of the individual or entity to which the transmission is addressed. This transmission is provided for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited, nor in any jurisdiction where Acumen is not registered to do so. The views expressed are those of the sender and not necessarily those of Acumen Capital Finance Partners Limited or its subsidiaries. Any unauthorized use, distribution, review or disclosure is prohibited. If you received this in error, please notify the sender and delete or destroy this message and any copies. Acumen does or seeks to do business with companies covered in our research comments and reports. As a result, investors should be aware that the firm may be in a conflict of interest. Investors should consider this report as only a single factor in making their investment decision 2016.

7 Page 7 of 7 ACUMEN CAPITAL STAFF LIST RESEARCH Brian D. Pow, MBA Vice President Research, Equity Analyst (403) bdp@acumencapital.com Trevor Reynolds Oil and Gas Research Analyst (403) treynolds@acumencapital.com Mike McMeeken Research Associate (403) mmcmeeken@acumencapital.com Oliver Shao Research Associate (403) oshao@acumencapital.com INSTITUTIONAL SALES Brian Parker President & CEO, Institutional Sales (403) bparker@acumencapital.com Douglas S. Gowland, C.A., CFA Vice President, Institutional Sales (403) doug@acumencapital.com Andre Drouillard, CFA Vice President, Institutional Sales (403) andre@acumencapital.com Robert Cooper, CFA Institutional Sales (403) rcooper@acumencapital.com TRADING Liam Farrell Vice President, Head of Institutional Trading (403) lfarrell@acumencapital.com David Waite Institutional Trading (403) dwaite@acumencapital.com Jesse Ahlan Institutional Trading (403) jahlan@acumencapital.com Crystal Bellefountaine Associate (403) cbellefountaine@acumencapital.com INVESTMENT BANKING Kelly Hughes Vice President, Investment Banking (403) khughes@acumencapital.com Ian Thomson Vice President, Investment Banking (403) ian@acumencapital.com Shawn Ostrow Investment Banking Associate (403) sostrow@acumencapital.com RETAIL SALES Robert Laidlaw Vice President (403) rlaidlaw@acumencapital.com Imran Mulji Investment Advisor (403) imulji@acumencapital.com Margaret Samson Investment Advisor Assistant (403) msamson@acumencapital.com Sheldon LeLievre Vice President, Sr. Investment Advisor (403) sheldon@acumencapital.com Craig Madill Investment Advisor (403) cmadill@acumencapital.com Erin Williams Investment Advisor Assistant (403) ewilliams@acumencapital.com Donny Woo Vice President, Sr. Investment Advisor (403) donny@acumencapital.com Darren Fong Investment Advisor (403) dfong@acumencapital.com Matthew Wiens Investment Advisor (403) mwiens@acumencapital.com Alan Tolg Investment Advisor (403) atolg@acumencapital.com Ron Cairns Investment Advisor (403) rcairns@acumencapital.com Scott Barnett Investment Advisor (403) sbarnett@acumencapital.com Curtis Schirrmacher Investment Advisor (403) curtiss@acumencapital.com Preston Smith Investment Advisor (403) psmith@acumencapital.com Grant Gowland Associate (403) ggowland@acumencapital.com TREASURY AND OPERATIONS Cindy Marthaller Operations Manager (403) cindy@acumencapital.com Myja Miller CFO, COO (403) mmiller@acumencapital.com Govind Achyuthan Chief Compliance Officer (403) govind@acumencapital.com Krystine Hebert Client Services (403) khebert@acumencapital.com Acumen Capital Finance Partners Limited Main Phone: Trading Toll Free: Suite 700, Avenue SW Calgary, AB T2P 0R9