BADGERDAYLIGHTING. Corporate Presentation 2012

Transcription

1 BADGERDAYLIGHTING Corporate Presentation 2012

2 Forward Looking Statements This presentation and this corresponding document may contain forward-looking statements reflecting certain current forecasts of certain aspects of the company s future. It is based on current information that management have assessed, but which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking statements may include but are not limited to statements regarding: Growth projections for the company, including revenues and net income; and Proposed acquisitions and corresponding revenues to the company. Badger Daylighting Ltd. s actual results could differ materially from those stated or implied by the forwardlooking statements within this presentation due to risks and uncertainties associated with its business, including, but not limited to: Our dependence on our customers; Our ability to attract and retain key personnel; Competition in all aspects of our business; Changes in profit margins due to pricing changes driven by market conditions, competition, regulatory factors or unforeseen factors; and The effect of general economic, credit and capital market conditions on our business. The forward-looking statement with this presentation should be 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 ( All future written and oral forward-looking statements made by us or on our behalf are also subject to these 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.

3 Financial Summary Shares Outstanding 12,326,631 Share price range (52 weeks) $ $30.09 Market Capitalization as at September 30, 2012 $353,000,000 Net debt as at September 30, 2012 $22,500,000 Enterprise Value as at September 30, 2012 $375,500,000 Average Return on Equity (Last 5 Years) 29% Monthly dividend $1,109,000

4 What is Daylighting? Daylighting is simply exposing underground facilities, such as utilities and pipelines, to daylight.

5 Badger Daylighting Badger Daylighting is North America s largest provider of non-destructive daylightingservices. Badger s primary customers are contractors and facility owners in the utility and petroleum sectors.

6 Badger Process Purpose built, productive Badger unit with well trained, professional operators.

7 Badger Process Pressurized water stream excavation. Nozzle design, pressure and volume is critical to prevent damage.

8 Badger Process Powerful vacuum system removes soil and debris.

9 Badger Advantages VS. Hand Digging much faster usually cheaper example repairing gas service connections 6 per day without Badger, 17 per day with Badger VS. Backhoe more efficient when underground infrastructure is present does not replace backhoes

10 Opportunity: Safety What we try to prevent Accidents. June 2010 Cleburne, Texas Power line crew hit pipeline. 18,000 Gas line ruptures annually in Texas.

11 Advantages of Badger Process Safe Helps prevent damage to underground infrastructure Saves me Keeps projects on schedule Increases efficiency of mechanical excavation equipment Easy to use in constrained areas and can work 400 away from the unit Lowers project cost or improves margins

12 Opportunity: Aging Infrastructure The City of Toronto has over 1000 water main breaks a year. Water main break Los Angeles, 2009

13 Opportunity: The Price is Right Customer would not hire us by-the- hour. Too Expensive! Offered them $150/hole. They laughed, and accepted. Dug 30 holes in 10 hours. Gave customer a choice of two bills. $4,500 (by the unit), or $2,500 (by the hour). Which do you think they chose?

14 Badger Daylighting Business Model Vertically integrated service company Designs and manufactures hydrovac units Provides fleet management, marketing and administration Retains unit ownership, bills and collects revenue Payback of capital cost in 3 to 3.5 years before tax Hydrovac unit s economic life is 10 years Network of 94 Operating Centers in key market areas Local marketing and operation of units Corporate or franchise/agent locations

15 Franchise and Corporate Operations 27 Franchise and 67 Corporate 207 Franchise units and 393 Corporate trucks Franchise receives 60% of revenue to cover direct and operating costs Repairs and maintenance are a shared expense Franchise margins for Badger are relatively stable since direct costs are predominately fixed Corporate margins fluctuate due to volume of work and local management capability

16 Badger Daylighting Markets Petroleum-related infrastructure & oil field service 45% Utilities & other 55%

17 Broad Diversified Customer Base Strategy: Add one customer at a time Provide good value and turn it into repeat business Canada Approximately 6000 customers USA Approximately 2500 customers

18 Canadian Operations

19 WESTERN CANADA 24-hour DISPATCH EASTERN CANADA 24-hour DISPATCH

20 Canadian Operations Western Canada Maturing market started 20 years ago Focused primarily on oil and gas industry facilities and 3 major cities Opportunity to grow through expanded coverage Eastern Canada Focused on utility market Good Ontario market coverage Starting to develop limited Quebec opportunity

21 U.S. Operations

22 US WEST 24-hour DISPATCH CALIFORNIA 24-hour DISPATCH US EAST 24-hour DISPATCH US SOUTH 24-hour DISPATCH

23 U.S. Operations US East Revenue is predominantly based on large projects Growing coverage of the major centres in the North East Expanding coverage of market segments US West Exposure to oil field service Expanding coverage of area Expanding coverage of market segments

24 Competitive Advantages Safety application knowledge and daylighting expertise gained from years of experience in different applications in North America National service provider in US and Canada MSA s Ability to move trucks to increase utilization Fleet management Lower service costs, longer life, less downtime

25 Competitive Advantage Technology/Truck Development In-house design and manufacturing Continuous improvement to enhance performance ensure operator friendly Other manufacturers sell - less motivation to enhance units Lower capital cost

26 Red Deer Facility 52,000 square feet Canadian administration, regional support, service shop and manufacturing Design of trucks with professional engineering resource Manufacturing capability up to 10 trucks per month (weld, assemble, blast and paint) Currently building at 2 trucks per week

27 2009 EconomicSlowdown + Badger Results Market downturn due to economic, oil and natural gas activity slowdown Badger: a) cut build to ~1.5 trucks per month b) re-allocated trucks to areas of opportunity c) continued regular dividend payment Results: a) revenue reduced by 9% b) EBITDA reduced by 12% c) EBITDA margin decreased by 1% d) paid down net debt by $12 million Note: No guarantee this can be repeated next slowdown but Badger has a great deal of flexibility

28 Earnings Statement FY 2008 FY 2009 FY 2010 FY 2011 Q Revenue 148, , , , ,980 EBITDA 40,306 35,469 34,636 52,805 43,462 NIBT 26,168 21,626 20,925 35,813 29,168 EPS - DILUTED $1.75 $1.82 $1.81 $2.38 $1.77 $000s except EPS

29 Balance Sheet September 30, 2012 $000s Working capital 42,834 Long-term debt 26,181 Cash and cash equivalents (3,657) Net Debt 22,524 Equity 133,772

30 Cash Available for Dividends and Growth CAPEX September 30, 2012 $ Funds generated from operations 35,890,446 Add: proceeds on disposal of capital assets 132,566 Less: required principal repayments of long-term debt - Less: maintenance CAPEX (2,580,906) Cash available for growth CAPEX and dividends 33,442,106 Growth CAPEX 36,655,412 Dividends 8,791,101

31 Long-Term Debt and Dividends September 30, 2012 Long Term Debt - Revolver $26,181,000 Long Term Debt to EBITDA : 1.00 Dividends 0.09 /share/ month

32 Revenue per Truck per Month 34,500 33,000 31,500 30,000 28,500 27,000 25,500 24,000 22,500 21,000 19,500 18,000 16,500 15,000 13,500 12,000 10,500 9,000 7,500 6,000 4,500 3,000 1, ,500 29,600 27,200 28,000 28,500 29,300 29,200 24,700 25,

33 Hydrovac Units

34 Total Daylighting Revenues

35 Daylighting Revenues U.S.& CDN US Revenues Canadian Revenues

36 Deployment As of September 30, 2012 TOTAL UNITS 600 Canada Canada U.S. U.S

37 Growth Opportunities Overall Increased emphasis on Business Development US Diversify customer base Eastern US Establish presence in key areas Western US Fill in holes of coverage Start to develop US South East and US West Coast Western Canada Fill in holes of coverage Eastern Canada Further develop customer coverage

38 Growth Opportunities: Major Plants

39 Questions and Answers

40 Badger Daylighting A Typical Project Locate lines before installation of 12 pipe

41 Badger Daylighting A Typical Project Customer Information: 7 lines Badger found: 17

42 Badger Daylighting A Safety Company Alternative Digging Technology

43 Daylighting / Potholing Hydrovac Applications

44 Hydrovac Applications Slot Trenching

45 Hydrovac Applications Pole Holes

46 Hydrovac Applications Debris Removal

47 Hydrovac Applications Remote Access

48 Hydrovac Applications Pipeline Crossing

49 Hydrovac Applications Piling Holes

50 Hydrovac Applications Large Excavations

51 Hydrovac Applications Facility Maintenance

52 Challenging Conditions Congested Trenching: Working with backhoe Backhoe removes top two feet of cover Hydrovacfinal 12 inches to expose asbestos lines 90 feet of trench exposed in two hours

53 Challenging Conditions Remote / Limted Access Work up to 400 feet away from the truck Between properties, inside buildings etc.

54 Challenging Conditions Frozen Ground: Onboard 1.2 million BTU coiled-heater Warms water to 150 F No need for ground thawing Eliminates hand-digging in congested ground

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