Q1 2024 Badger Infrastructure Solutions Ltd Earnings Call
Okay.
Operator: Good day, and thank you for standing by. Welcome to the Badger Infrastructure Solutions LTD 2024 First Quarter Results Conference Call.
Good day, and thank you for standing by.
Operator: Welcome to the Badger infrastructure solutions L. T D 2024 first quarter results conference call.
Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Lisa Olarte, Director of Investor Relations and Financial Planning. Please go ahead.
Operator: At this time.
Speaker Change: All participants are in a listen only mode.
Lisa Olarte: After the speaker's presentation, there will be a question and answer session.
Lisa Olarte: To ask a question. During this session you will need to press star one one or your telephone.
Lisa Olarte: You will then hear an automated message advisory your hands raised.
Speaker Change: Draw. Your question. Please press star one one again.
Operator: Please be advised that today's conference is being recorded.
Lisa Olarte: I would now like to hand, the conference over to your host today, Lisa Oh Latte.
Lisa Olarte: Rector of Investor Relations and financial planning. Please go ahead.
Lisa Olarte: Good morning, everyone, and welcome to our first quarter 2024 earnings call. My name is Lisa Olarte, Badger's Director of Investor Relations and Financial Planning. Joining me on the call this morning are Badger's President and CEO, Rob Blackadar, and our CFO, Rob Dawson.
Lisa Olarte: Good morning.
Lisa Olarte: Welcome to our first quarter of 2024 earnings call My name is Lisa.
Lisa Olarte: Rogers Director of Investor Relations and financial planning joining me on the call. This morning are <unk>, President and CEO, Rob block at our <unk> and our CFO Rob Doctor.
Lisa Olarte: Badger's 2024 first quarter earnings release, MD&A, and financial statements were released after markets closed yesterday and are available on the investor section of Badger's website and on CDER Plus. We are required to note that some of the statements made today may contain forward-looking information. In fact, all statements made today, which are not statements of historical fact, are considered to be forward-looking statements. We make these forward-looking statements based on certain assumptions that we consider to be reasonable.
Lisa Olarte: Pattern 2024 first quarter earnings release, MD&A and financial statements were released after market closed yesterday and are available on the investors section of Badger's website and on SEDAR.
Lisa Olarte: However, forward-looking statements are always subject to certain risks and uncertainties, and undue reliance should not be placed on them, as actual results may differ materially from those expressed or implied. For more information about material assumptions, risks, and uncertainties that may be relevant to such forward-looking statements, please refer to Badger's 2023 MD&A, along with the 2023 AIF. I will now turn the call over to Rob Blackadar. Thank you.
Lisa Olarte: We're required to note that some of the statements made today may contain forward looking information.
Robert G. Blackadar: Which are not statements of historical.
Robert G. Blackadar: <unk> are considered to be forward looking statements.
Robert G. Blackadar: These forward looking statements based on certain assumptions that we consider to be reasonable.
Robert G. Blackadar: However forward looking statements are always subject to certain risks and uncertainties.
Robert G. Blackadar: Undue reliance should not be placed on them.
Robert G. Blackadar: Actual results may differ materially from those expressed or implied for more information about that.
Robert G. Blackadar: Risks and uncertainties that may be relevant such forward looking statements. Please refer to badger's 2023, MD&A along with the 2023.
Robert G. Blackadar: I will now turn the call over to Rob later.
Robert G. Blackadar: Thanks, Lisa, and good morning, everyone, and thank you for joining our 2024 First Quarter Earnings Call. Before we get into the results, I'd like to take a moment to talk about safety. Safety is at the center of everything we do here at Badger. April was Distracted Driving Awareness Month. Every day, we have thousands of operators and vehicles on the road, and each vehicle is equipped with machine learning AI technology to encourage safe driving habits.
Robert G. Blackadar: Thanks, Lisa and good morning, everyone and thank you for joining our 2024 first quarter earnings call.
Robert G. Blackadar: Before we get into the results I'd like to take a moment to talk about safety.
Robert G. Blackadar: Safety is at the center of everything we do here at Badger.
Robert G. Blackadar: April was distracted driving awareness month.
Robert G. Blackadar: Everyday we have thousands of operators and vehicles on the road in each vehicle is equipped with machine learning AI technology to encourage safe driving habits.
Robert G. Blackadar: Maintaining a just drive mindset is crucial for all of our team members when they are behind the wheel. Just Drive is just as it states, eliminating all distractions while in the vehicle so our operators can just drive.
Robert G. Blackadar: Maintaining a just drive mindset is crucial for all of our team members when they are behind the wheel.
Robert G. Blackadar: Just drive is just as it states eliminating all distractions while in the vehicle. So our operators can just drive.
Robert G. Blackadar: Now on to the first quarter results. The team had another strong quarter with record revenues, gross profit, and adjusted EBITDA. Our top line revenue of $150,000. $61.6 million group by 13%, driven by the strength of our U.S. operations, which saw a revenue increase of 19% year over a year. We continue to experience softness in our Canadian markets due to a decrease in overall construction activity, the completion of several large projects on the West Coast, and delayed starts of some significant projects in Central Canada.
Robert G. Blackadar: Now onto the first quarter results.
Robert G. Blackadar: The team had another strong quarter with record revenues gross profit and adjusted EBITDA.
Robert G. Blackadar: Our topline revenue of 100.
Robert G. Blackadar: $61 6 million.
Robert G. Blackadar: <unk> grew by 13% driven by the strength of our U S operations, which saw a revenue increase of 19% year over year.
Robert G. Blackadar: We continued to experience softness in our Canadian markets due to a decrease in overall construction activity. The completion of several large projects on the west coast and delayed starts of some significant projects in central Canada.
Robert G. Blackadar: This overall slowdown in the market led to an increased supply of idle hydrovacs across Canada. We continue to monitor closely the end market activity in our Canadian region and will align our sales resources, as well as our fleet to pivot, with the overall demand. We achieved RPT, or revenue per truck per month, of $36,904 in Q1, down slightly from the previous year due to the slowdown in the Canadian market. However, RPT in the U.S. for the quarter was up 3% compared with last year. We continue to see growth in adjusted EBITDA track higher than our revenue growth, up 22% year-over-year, driven by improved operating leverage and cost management strategies. Our adjusted EBITDA margin was 18.1%, up from 16.7% in 2023.
Robert G. Blackadar: Overall slowdown in the market led to an increased supply of.
Robert G. Blackadar: Idaho Hydro vacs across Canada.
Robert G. Blackadar: We continue to monitor monitor closely the end market activity and our Canadian region and will align our sales resources.
Robert G. Blackadar: As well as our fleet to pivot.
Robert G. Blackadar: With the overall demand.
Robert G. Blackadar: We achieved RPT or revenue per truck per month of $36904 in Q1 down slightly from the previous year due to the slowdown in the Canadian market.
Robert G. Blackadar: RPT in the U S for the quarter was up 3% compared with last year.
Robert G. Blackadar: We continued to see growth in adjusted EBITDA track higher than our revenue growth up 22% year over year, driven by improved operating leverage and cost management strategies.
Robert G. Blackadar: Our adjusted EBITDA margin was 18, 1%.
Robert G. Blackadar: Up from 16, 7% in 2023 and as a reminder, the first quarter is our slowest.
Robert G. Blackadar: And as a reminder, the first quarter is our slowest, most seasonal quarter of the year. The Red Deer plant manufactured 52 hydrovacs this quarter versus 57 units in Q1 of 2023. The fleet team used the seasonally slower quarter to retire 66 units and refurbish 8 units. We also took the opportunity to accelerate some Q2 and Q3 retirements from our Canadian region due to the project start delays discussed earlier. We ended the quarter with 1,529 units, growing our fleet by 10% since Q1 of 2023.
Robert G. Blackadar: Seasonal quarter of the year.
Robert G. Blackadar: The Red Deer plant manufactured 50 to high <unk> this quarter versus 57 units in Q1 of 2023.
Robert G. Blackadar: The fleet team.
Robert G. Blackadar: Use a seasonally slower quarter to retire 66 units and refurbish eight units.
Robert G. Blackadar: We also took the opportunity.
Robert G. Blackadar: To accelerate some Q2 and Q3 retirements from our Canadian region due to the project start delays discussed earlier.
Robert G. Blackadar: We ended the quarter with 1529 units growing our fleet by 10% since Q1 of 2023.
Robert G. Blackadar: Our full year fleet plan remains unchanged from previous guidance, manufacturing between 190 to 220 Hydra-Vac units, retiring between 70 to 90 units, and refurbishing between 35 to 45 hydrovacs. I'll now turn the call over to Rob Dawson to discuss our Q1 financial results in more detail.
Robert G. Blackadar: Our full year fleet plan remains unchanged from previous guidance.
Robert P. Dawson: Manufacturing between 190 to 220 Hydro vacs.
Robert P. Dawson: Hiring between 70 to 90 units and refurbishing between 35% to 45 hydro bags.
Robert G. Blackadar: I'll now turn the call over to Rob Dawson to discuss our Q1 financial results in more detail.
Robert P. Dawson: Thank you Rob.
Robert P. Dawson: As you saw in our first quarter release, our team delivered another strong quarter of results. We had record first quarter revenue, up 13% from last year, driven by our U.S. operations, which were up almost 19%. Partially offsetting this, our Canadian operations were down 18% from last year due to the reasons Rob mentioned earlier. The team is prepared to execute on our pipeline of projects coming up later this year and into next.
Robert P. Dawson: As you saw in our first quarter release, our team delivered another strong quarter of results.
Robert P. Dawson: We had record first quarter revenue up 13% from last year, driven by our U S operations, which was up almost 19%.
Robert P. Dawson: Partially offsetting us our Canadian operations were down 18% from last year due to the reasons Rob mentioned earlier.
Robert P. Dawson: The team is prepared to execute on our pipeline of projects coming up later this year.
Robert P. Dawson: And into next.
Robert P. Dawson: Our margins have continued to rise, reflecting the operating leverage gained from our pricing strategies and the scalability of our branch network and support functions. Our gross profit margins were strong for the first quarter at 24.8% compared with 22.9% last year, also driven by our U.S. operations. The trend in our adjusted EBITDA margins continued to improve at 18.1% compared with 16.7% in the prior year. Our four-quarter trailing EBITDA margins also continued to grow in line with our long-term objective.
Robert P. Dawson: Our margins have continued to rise, reflecting the operating leverage gain from our pricing strategies and the scalability of our branch network and support functions.
Robert P. Dawson: Our gross profit margins were strong for the first quarter at 24, 8% compared with 22, 9% last year also driven by our U S operations.
Robert P. Dawson: The trend in our adjusted EBITDA margins continued to improve at 18, 1% 18, 1% compared with 16, 7% in the prior year.
Robert P. Dawson: Our four quarter trailing EBITDA margins also continued to grow in line with our long term objectives.
Robert P. Dawson: GNA expenses were $10.8 million, or 6.7% of revenue, compared with $8.8 million, or 6.2% of revenue, in the prior year. Total G&A expenses were slightly elevated from a run rate over the second half of 2023, due primarily to the timing of IT spend in the first quarter.
Robert P. Dawson: Yes.
Robert P. Dawson: G&A expenses were $10 8 million or six 7% of revenue compared with $8 8 million or.
Robert P. Dawson: Or six 2% of revenue in the prior year.
Robert P. Dawson: Total G&A expenses were slightly elevated from a run rate over the second half of 2023 due primarily to the timing of it spend in the first quarter. We continued to expect relatively stable full year G&A spend.
Robert P. Dawson: We continue to expect relatively stable full-year G&A spending. Q1 adjusted earnings per share was 14 cents per share, up 27% compared to the prior year, due to the higher adjusted EBITA margins, offset in part by higher depreciation expense associated with the 10% increase in our fleet and higher right of use assets. With revenues up 13%, adjusted EBITDA up 22%, and adjusted EPS up 27%, we are encouraged by the continued scalability and growth in margins. Now on to the balance sheet. Our capital allocation priorities are unchanged.
Robert P. Dawson: Q1, adjusted earnings per share was <unk> 14 per share up 27% compared to the prior year due to the higher adjusted EBITDA margins offset in part by higher depreciation expense associated with the 10% increase in our fleet and higher right of use assets.
Robert P. Dawson: With revenues up 13%.
Robert P. Dawson: Adjusted EBITDA up 22%.
Robert P. Dawson: And adjusted EPS up 27%, we are encouraged by the continued scalability and growth in margins.
Robert P. Dawson: Now onto the balance sheet.
Robert P. Dawson: Our capital allocation priorities are unchanged, we continue to maintain a strong flexible balance sheet to support our organic growth and commercial strategy.
Robert P. Dawson: We continue to maintain a strong, flexible balance sheet to support our organic growth and commercial strategy. Our compliance leverage ended the year at 1.5 times debt to EBITDA, down from 1.6 times a year ago. This is up from 1.3 times at the end of 2023. The increase from year-end primarily reflects the impact of the payments made under our share-based compensation plans in the first quarter.
Robert P. Dawson: Our compliance leverage ended the year.
Robert P. Dawson: At one five times debt to EBITDA.
Robert P. Dawson: Ended the quarter at my apologies.
Robert P. Dawson: Down from one six times a year ago.
Robert P. Dawson: This is up from one three times at the end of 2023, the increase from year end, primarily reflects the impact of the payments made under our share based compensation plans in the first quarter.
Robert G. Blackadar: I will now turn things back over to Rob Blackadar for some final comments. Okay, Rob?
Robert P. Dawson: I will now turn things back over to Rob Lochinvar for some final comments Rob.
Robert G. Blackadar: Thanks, Rob. So before we open it up for questions, just a few last comments. We are pleased with our continued strategy to further diversify the company's business across key markets in both the U.S. and Canada. Badger's overall performance continues to scale and grow with broad exposure in our resilient end market. Badger's long-term growth prospects remain unchanged, and we continue to believe Badger is uniquely positioned to capitalize on the significant opportunity for non-destructive excavation services across North America.
Robert G. Blackadar: Thanks, Rob before we open it up for questions a few last comments.
Robert G. Blackadar: We are pleased with our continued strategy to further diversify the companys business across key markets in both the U S and Canada.
Robert G. Blackadar: Badger's overall performance continues to scale and grow with broad exposure in our resilient end markets.
Robert G. Blackadar: Badger's long term growth prospects remain unchanged and we continue to believe Badger is uniquely positioned to capitalize on the significant opportunity for non destructive excavation services across North America.
Robert G. Blackadar: Finally, I want to remind everyone that we have our virtual annual meeting of shareholders today at noon Eastern Time, 10 a.m. Mountain Time. To get more information, please visit our Investor Relations page at ir.badgerinc.com. So with those comments, I'll turn it back over to the operator to open it up for Q&A. Thank you.
Speaker Change: Finally, I want to remind everyone that we have our virtual annual meeting of shareholders today at noon Eastern time 10, a M mountain time.
Robert G. Blackadar: To get more information please visit our Investor Relations page at IR Dot Badger, Inc. Dot com.
Speaker Change: So with those comments I'll turn it back over to the operator to open it up for Q&A operator.
Speaker Change: Thank you.
Operator: At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Yuri Lynk with Canaccord Genuity Inc. Your line is now open.
Speaker Change: At this time, we will conduct a question and answer session.
Operator: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced soon withdraw. Your question. Please press star one one again please.
Operator: Please standby, while we compile the Q&A roster.
Operator: Okay.
Operator: Yeah.
Yuri Lynk: Our first question comes from the line of jewelry Lee.
Yuri Lynk: With Canaccord Genuity. Your line is now open.
Yuri Lynk: Hey, good morning. Thanks for taking my question. Good morning Yuri. Good morning Rob.
Yuri Lynk: Hey, good morning, Thanks for taking my question.
Yuri Lynk: A nice quarter. I think it could have been even better if Canada had performed like it did even last year. Can you talk a little bit more about the delays that you saw, and it doesn't sound like those projects are going to ramp up until the back half of the year, so I was wondering why you weren't able to put those trucks to work in other markets or maybe even move them into the U.S. and put them to work there.
Gary: Good morning, Gary.
Yuri Lynk: Good morning, Robert and a nice quarter.
Yuri Lynk: I think it could have been even better if if.
Yuri Lynk: Canada had performed like it did even last year.
Yuri Lynk: Can you talk a little bit more about the delays that you saw and.
Yuri Lynk: It doesn't sound like those projects are going to ramp up until the back half of the year. So just wondering why you werent able to put those trucks to work in other markets or maybe even move them into.
Yuri Lynk: The U S and put them to work there.
Robert G. Blackadar: Yeah, so a couple of quick things. I'll talk a little bit about the first part of your question, and then I'll talk a little bit about the ability to kind of redeploy the trucks and why we did what we did with our retirements. So, regarding the Canadian market specifically, we have been on several large projects for the last few years across Canada. Probably the most notable that most folks, if they work in the Canadian markets, are aware of is the Trans Mountain Pipeline, and for our part of that work, it largely ended in Q4 for everything we had going on with that. And that represented a significant number of trucks.
Speaker Change: Yes so.
Robert G. Blackadar: A couple of quick things I'll talk a little bit about the first part of your question and then I'll talk a little bit about the ability to kind of redeploy the trucks in.
Robert G. Blackadar: Why are we good.
Robert G. Blackadar: We did what we did on our retirements so regarding the Canadian market specifically.
Robert G. Blackadar: We had been on several large projects for the last few years across Canada.
Robert G. Blackadar: The most notable that most folks if they work in the Canadian markets are aware of is <unk>.
Robert G. Blackadar: <unk> Mountain pipeline.
Robert G. Blackadar: For our part of the that work is largely ended in Q4 for everything we have going on with that and that represented a significant amount of trucks.
Robert G. Blackadar: We had a few other large projects as well, but they all were sunsetting at the end of last year. We had bid on and successfully bid on several large projects that we were anticipating being started by now for Q1, so we really weren't expecting much of a hiccup at all and just the continuation of keeping the trucks working and on projects. Those larger projects, and we don't give out future projects or current projects we're working on.
Robert G. Blackadar: We had a few other large projects as well, but they all were sunsetting at the end of last year.
Robert G. Blackadar: We have.
Robert G. Blackadar: Bid and successfully bid on several large projects that we were anticipating being started by now for Q1, So we really weren't expecting.
Robert G. Blackadar: Much of a hiccup at all.
Robert G. Blackadar: Just continuation of keeping the trucks working on projects.
Robert G. Blackadar: Those larger projects and we don't give out future projects our current projects we're on.
Robert G. Blackadar: From time to time, we'll talk about past projects, but for competitive reasons, especially in Canada, we're not going to discuss the ones that we're bidding on, but anyone can Google or figure out what the large projects are coming up. They continue to be delayed. One of them was going to start at the end of Q4. It got delayed to the beginning of Q2, and now it's being delayed to the end of Q3.
Robert G. Blackadar: We will we are from time to time, we'll talk about past projects, but for competitive reasons, especially in Canada, we're not going to discuss the ones that we're bidding on but most anyone can Google or figure out what the large projects are coming up.
Robert G. Blackadar: They continue to be delayed one of them was going to start at the end of Q4. It got delayed to the beginning of Q2 and now it's being delayed to the end of Q3 beginning of Q4.
Robert G. Blackadar: For us, our core business or, you know, regular construction business, and a lot of our utility business is unchanged, remains unchanged; our trucks are busy. The large projects, though, absorb, you know, a relatively smaller number of these projects, a lot of our fleet. When these got delayed, we looked at it and said we had a few options. We can sit on the current trucks we have and just kind of wait for those large projects to start.
Robert G. Blackadar: For us our core business or.
Robert G. Blackadar: Regular construction business.
Robert G. Blackadar: And a lot of our utility business is unchanged remains unchanged and our trucks are busy.
Robert G. Blackadar: The large projects, though absorb.
Speaker Change: On it.
Robert G. Blackadar: A relatively smaller number of these projects a lot of our fleet.
Robert G. Blackadar: When these got delayed we looked at it and said we can leaders we had a few options. We can sit on the current trucks we have.
Robert G. Blackadar: And just kind of wait for those large projects to start if they start at the end of Q3 beginning of Q4, we can identify trucks that we were going to retire in Q2 Q3, maybe at the beginning of Q4.
Robert G. Blackadar: If they start at the end of Q3, the beginning of Q4, we can identify trucks that we were going to retire in Q2, Q3, maybe the beginning of Q4, and maybe we could accelerate that. We made the decision in Q1 to accelerate those retirements and not carry them if we're not going to keep them busy. We do, but we don't make it a regular practice. We move our trucks all across Canada and all across the U.S., but we don't make it a regular practice to move trucks north and south of the border.
Robert G. Blackadar: And.
Robert G. Blackadar: Maybe we could accelerate that so we made the decision in Q1 to accelerate those retirements and not carry them if.
Robert G. Blackadar: If we're not going to keep them busy.
Robert G. Blackadar: We do we don't make it a regular practice, we move our trucks all across Canada, and all across the U S. But we don't make it a regular practice to move trucks, north and south of the border.
Robert G. Blackadar: Typically, we have what's called FET, or Federal Excise Tax Implications, when moving trucks because we actually use these as our, they are purpose-built trucks, vocational trucks, and because of that, we have a lot of duty and tax implications when moving them north and south of the border. So that's when we looked at the fleet and said, it feels like we're going to have some potential excess fleet until these large projects start, we identified some of the oldest units.
Robert G. Blackadar: Typically.
Robert G. Blackadar: We have what's called <unk> or federal excise tax implications.
Robert G. Blackadar: By moving trucks, because we actually use these as.
Robert G. Blackadar: R.
Robert G. Blackadar: They are purpose built trucks vocational trucks and because of that we have a lot of duty and tax implications to move north and south of the border.
Robert G. Blackadar: So thats when we looked at the fleet and we said it feels like we're going to have some potential excess fleet until these large projects start we identified some of the oldest units.
Robert G. Blackadar: And we said, let's accelerate the retirement of those instead of waiting when we would normally do it. That's the whole story behind that, Yuri. There's not a lot of additional color than what I just laid out for you.
Robert G. Blackadar: And we said, let's accelerate the retirement of those instead of waiting when we would normal course do it.
Robert G. Blackadar: That.
Robert G. Blackadar: That's the whole story behind that Yuri Theres not.
Robert G. Blackadar: Not a lot of additional color.
Robert G. Blackadar: Other than what I just laid out for you.
Yuri Lynk: Okay. No, that makes sense. And
Robert G. Blackadar: Okay.
Yuri Lynk: Sense.
Yuri Lynk: And.
Robert G. Blackadar: The Canadian outlook, I mean, I think the language in the MD&A changed a little bit. You're not talking about growth now in Canada. Should we expect, you know, a kind of similar quarter in Q2? And then maybe the ramp up of those projects in Q3 and Q4, but Canada largely down in 2024. Yeah, so
Yuri Lynk: The Canadian outlook, I mean, I think the language in the MD&A changed a little bit.
Robert G. Blackadar: Not talking about growth now in Canada. So.
Robert G. Blackadar:
Robert G. Blackadar: Should we expect kind of a similar quarter in Q2.
Robert G. Blackadar: And then.
Robert G. Blackadar: Maybe the ramp up of those projects in Q3, and Q4, but Canada largely down in 2024.
Robert G. Blackadar: Yes, so my perspective in visiting with our Canadian leaders across the country, they are sharing that the business, the backlog of their day-to-day business is continuing robust, and we're expecting a normal course season. What's missing is some of these large projects and the volume. So looking at it from a year-over-year perspective, I think you're largely correct that we are going to see a lift in Q2, and we're going to see a lift in Q3 relative to Q1 because we saw that it's a seasonal business; the summer season is going to be rolling.
Speaker Change: Yes so.
Robert G. Blackadar: My perspective and.
Robert G. Blackadar: And visiting with our Canadian leaders across the country.
Robert G. Blackadar: They are sharing that.
Robert G. Blackadar: The business the backlog of their day to day business is continuing robust and we're expecting a normal course season.
Robert G. Blackadar: What's missing in some of these large projects and the volume so if.
Robert G. Blackadar: Looking at it from a year over year perspective, I think you're largely correct.
Robert G. Blackadar: We are going to see lift in Q2, we're going to see lift in Q3 relative to Q1, because we saw a seasonal business the.
Robert G. Blackadar: The summer season is going to be rolling.
Robert G. Blackadar: But I would not be expecting any growth, and as we are looking at some of the projects if they start in Q4, and again these have been pushed twice now, but if they start in Q4, we believe we'll have the opportunity to get back to close to even on some opportunities, but it's not so robust that we think that we're going to have any kind of growth across Canada.
Robert G. Blackadar: But I would not be expecting any growth.
Robert G. Blackadar: And as we are looking at.
Robert G. Blackadar: Some of the projects if they start in Q4 and again these have been pushed twice now, but if they start in Q4. We believe we will have the opportunity to get back to close to even on some opportunities but.
Robert G. Blackadar: It's not so robust that we think that we're going to have any kind of growth across Canada, and Rob I don't know if you want to add anything on that I have nothing to add to that okay that sounds good.
Robert G. Blackadar: And Rob, I don't know if you want to add anything to that. I have nothing to add to that. Okay. That was good. Okay.
Speaker Change: Okay. Thanks, guys.
Rob: Thanks, Eric.
Krista Friesen: Thank you so much. One moment for our next question, please. Our next question comes from the line of Krista Friesen with CIBC. Your line is now open.
Robert G. Blackadar: Yes.
Speaker Change: Thank you so much volatile Mafara next question. Please.
Krista Friesen: Our next question comes from the line of Chris The freezer with Ci BC. Your line is now open.
Krista Friesen: Hi, thanks for taking my question. Just on the refurbishments, it looks like you continue to do them in Q1. Is that progressing as planned in terms of sorting out all the issues with your suppliers and also just the cost to do the refurbishments as well?
Krista Friesen: Hi, Thanks for taking my question.
Krista Friesen: Just on the Refurbishments.
Krista Friesen: Looks like you continue to do that in Q1 or is that progressing as.
Krista Friesen: As planned in terms of sorting out all the issues with your suppliers and also just the cost to secure the refurbishments as well.
Robert G. Blackadar: Absolutely. So, we just did an update the other day with some of the management team and the board and shared the same sentiment that we're pretty pleased. The eight that we have here are kind of the cleanup. If you remember, there's a little bit of a hangover.
Krista Friesen: Yeah, absolutely. So we just had an update just the other day with some of the management team and the board and shared the same Christa.
Robert G. Blackadar: That.
Robert G. Blackadar: We're pretty pleased.
Robert G. Blackadar: <unk> eight that we have here are kind of a clean up if you remember there's a little bit of a hangover when we first launched we put out.
Robert G. Blackadar: A lot of our Refurbishments out multiple shops, and we realized there is a more efficient way to do it.
Robert G. Blackadar: When we first launched, we put out a lot of our refurbishments to multiple shops, and we realized there's a more efficient way to do it. These eight are coming from some of those multiple shops and getting cleaned up. We still have a few more, but not many. And then the trucks that we're seeing coming out of our one focused shop, we're actually seeing the good cost and pricing that we were expecting. But the shop that we have coalesced on and on which we're having the main focus of the refurbishments is well within the range that we've shared with investors.
Robert G. Blackadar: These eight are coming from some of those multiple shops and getting cleaned up we still have a few more but not many.
Robert G. Blackadar: And then the trucks that we're seeing coming out of.
Robert G. Blackadar: Our one.
Robert G. Blackadar: Focused shop.
Robert G. Blackadar: We're actually seeing the good.
Robert G. Blackadar: Good cost and pricing that we were expecting.
Robert G. Blackadar: And as I think we had said in Q4, it was a little bit harder whenever we have disparate shops and theyre doing a one off.
Robert G. Blackadar: One or two trucks at a clip.
Robert G. Blackadar: On the cost to be controlled as it is when we're following them all through one.
Robert G. Blackadar: We're satisfied with the one shop.
Robert G. Blackadar: Their cost.
Robert G. Blackadar: But the clean up on.
Robert G. Blackadar: Some of the ones that we just have received.
Robert G. Blackadar: Were just slightly higher if you remember we had originally said 125 to $1 50 range and these were.
Robert G. Blackadar: That 160 ish range.
Robert G. Blackadar: But the shop that we are have coalesced on and we're having the main focus of the refurbishment refurbishment on as well within the range that we've shared with our investors.
Krista Friesen: Okay, great. And then maybe just on Canada, the results this quarter, is that really just reflecting the delay of some of these large projects? Or are there maybe some issues with pushing through increased pricing in Canada and executing on some of the sales strategy?
Speaker Change: Okay, Great and then maybe just on on Canada.
Krista Friesen: Results. This quarter is that really just reflecting the delay assembly starts projects or.
Krista Friesen: Or are there may be some issues.
Krista Friesen: <unk> increased pricing in Canada, and executing on some of the sales strategy up here.
Robert G. Blackadar: Yeah, certainly you know we've had a pricing focus across the entire company, and it's our perspective that we don't believe that pricing is what's driving the volume and lack of volume there in Canada. The reason I feel pretty comfortable with that, Krista, is our CPQ pricing engine is actually dynamic in nature, and so as the utilization or the business slows down in a certain branch, the pricing actually will decrease to make sure that we don't lose a deal to keep our utilization at a proper level.
Speaker Change: Yeah, So certainly.
Robert G. Blackadar: We've had our pricing focus across the entire company.
Robert G. Blackadar: And.
Robert G. Blackadar: It's our perspective that we don't believe.
Robert G. Blackadar: That pricing is what's driving.
Robert G. Blackadar: The volume.
Robert G. Blackadar: And lack of volume there in Canada.
Robert G. Blackadar: The reason.
Robert G. Blackadar: Pretty comfortable with that Christa as our <unk> pricing engine actually is dynamic in nature, and so as the utilization or the business slows down a certain branch the pricing actually will decrease.
Robert G. Blackadar: To make sure that we don't lose a deal to keep our utilization at a proper level as utilization increases.
Robert G. Blackadar: As utilization increases, obviously, the pricing will increase, and with that dynamic pricing model, we don't feel like pricing is what the driver of the revenue decline, but certainly, we keep an eye on it. We're also just in the early stages of starting to track what we call a lost deal log, and that concept is, you know, if you lose a deal, why are we losing it? Are we losing it to price? Are we losing it to availability? To service levels or something like that? Even to a customer credit issue or something like that?
Robert G. Blackadar: Obviously, the pricing will increase.
Robert G. Blackadar: With that dynamic pricing model.
Robert G. Blackadar: We don't feel like pricing is what the driver is of the revenue decline.
Robert G. Blackadar: But certainly we keep an eye on it. We're also just in the early stages of starting to track what we call like a lost deal log.
Robert G. Blackadar: And that concept is.
Robert G. Blackadar: If you lose a deal why are we losing a reloaded at the price related to availability to to service levels or something like that or even to a customer credit issue or something like that.
Robert G. Blackadar: And we haven't, as we're just starting that exercise, we haven't seen any kind of uptick regarding losing a bunch of deals on pricing. We're very mindful of that, though, because very quickly, you can start to lose deals on pricing if you don't keep an eyeball on it. But our head of Canadian operations and our head of sales watch it like a hawk. Rob, do you want to add anything to that?
Robert G. Blackadar: And we haven't we're just starting that exercise, we haven't seen any kind of uptick regarding losing a bunch of deals on pricing, we're very mindful of that though because.
Robert G. Blackadar: Very quickly you can start to lose deals on pricing. If you don't keep an eyeball on it but our head of Canadian operations and our head of sales are they watch it like a hawk, Rob you want to add anything on that.
Robert G. Blackadar: No, I don't think I have anything else to add to that. I mean, obviously, in the winter season, when utilization is generally low, and then it was a little lower than anticipated in Q1, that's not the point in time when we're going to be pressing on price either. Right. So I would say that it just reinforces Rob's comments that we feel that the work we're receiving is good, and the work we're getting is still representative of the full market available. And it's not just a badger issue.
Robert G. Blackadar: I have anything else to add on that I mean, obviously in the winter season, when utilization is generally low.
Robert G. Blackadar: And then it was a little lower than that anticipated in Q1, that's not the point in time, when we're going to be pressing on price either right.
Robert G. Blackadar: No.
Robert G. Blackadar: I would say that would just reinforce rob's comments that we feel that the work we're receiving.
Robert G. Blackadar: And the work we're getting is still representative of the full market available and it's not just a badger issue.
Krista Friesen: Okay, great. Thanks for the color. I'll jump back in the queue. Thanks, Krista.
Speaker Change: Okay, great. Thanks for the color I'll jump back in the queue.
Speaker Change: Thanks, Chris.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Tolson J. Ola with Scooter Bank. Your line is now open.
Krista Friesen: Yes.
Speaker Change: Thank you one moment for our next question.
Operator: Okay.
Operator: Okay.
Speaker Change: Our next question comes from the line of Tulsa in Gela with Scotiabank. Your line is now open.
Tolson J. Ola: Hi, this is Dustin here. I'm calling in on behalf of Michael.
Operator: Alright.
Dustin: This is still sitting there.
Dustin: And for Michael.
Tolson J. Ola: I just wanted to ask, at your recent investor relations day, you spoke about leveraging technology in fleet management, HR, and marketing. I mean, I'd like you to provide an update on how those initiatives are progressing, and should we look at those initiatives as just an incremental cost before it's an incremental benefit, you know what I mean.
Dustin: I just wanted to ask you.
Tolson J. Ola: Our recent.
Tolson J. Ola: Im going to start with.
Tolson J. Ola: You spoke about maybe bridging technology.
Speaker Change: As Matt HR marketing.
Tolson J. Ola: I'd like you to provide an update on all those initiatives are progressing.
Tolson J. Ola: Should we knew kind of initiative.
Tolson J. Ola: That incremental cost.
Tolson J. Ola: Alright.
Tolson J. Ola: Incremental benefit.
Tolson J. Ola: Yes.
Robert G. Blackadar: Thanks, and yeah, we understand Michael wasn't able to join us, so thank you for asking the question. Yes, so we are progressing. If you remember, we said we'd start toward the end of the year to start to introduce some leveraging data a lot more for some of the business decisions made within the business, and we are progressing along with that on time and on schedule. We've actually had a couple of key stakeholder meetings since Investor Day to structure our data warehouse and our data technology and what some of the things are that we're going to start leveraging, so we're pretty satisfied with that.
Robert G. Blackadar: Thanks.
Robert G. Blackadar: And.
Robert G. Blackadar: Yes, we understand Michael wasn't able to join so thank you for asking the question.
Robert G. Blackadar: Yes. So we are progressing if you remember we said we're going to start towards the end of the year start to introduce some.
Robert G. Blackadar: Leveraging data a lot more for some of the business decisions are made within the business.
Robert G. Blackadar: And.
Robert G. Blackadar: We are progressing along with that.
Robert G. Blackadar: On time and on schedule, we've actually had a couple of key stakeholder meetings.
Robert G. Blackadar: Since Investor day.
Robert G. Blackadar: And structuring our kind of our data warehouse and our data.
Robert G. Blackadar: Technology and what some of the things are that we can start leveraging so we're pretty satisfied with that we built that into our business plan for 2024. So.
Robert G. Blackadar: We built that into our business plan for 2024, so we feel comfortable there's not going to be a bunch of excessive cost tied to or any kind of major expense jumps tied to this data journey that we're starting. And you know, we feel pretty comfortable with that. We also believe, though, as the business gets more ramped up leveraging data, that it will actually take and drive more efficiency within the business. We see it today as it sits.
Robert G. Blackadar: We feel comfortable there is not going to be a bunch of excess of cost tied to or.
Robert G. Blackadar: Or any kind of major.
Robert G. Blackadar: Expense jumps tied to this data journey that we're starting.
Robert G. Blackadar: And.
Robert G. Blackadar: We feel pretty comfortable with that we also believe though as the business gets more ramped up leveraging data.
Robert G. Blackadar: That.
Robert G. Blackadar: It will actually take and drive more efficiency within the business, we see it today as it sits.
Robert G. Blackadar: We leverage today, right now, a bunch of data on our driving and our drivers' behaviors behind the wheel. We leverage something called Lytx, which is an AI-based system, and we're obviously not an AI company, so I'm cautious leveraging the term AI, but in this case, it's an AI-based system that identifies our driver's behaviors, and it helps coach and helps our drivers drive more safely and more efficiently. And so far, we've actually, we were chatting about this yesterday in a meeting, we're watching our safety and our statistics and our vehicle incidents and accidents decrease in a big way, and it's tied to leveraging that data.
Robert G. Blackadar: We leverage.
Robert G. Blackadar: Today right now a bunch of data on our driving and our drivers behaviors behind the wheel, we levered something called <unk>, which is an AI based and we're obviously we are not an AI company. So I'm cautious.
Robert G. Blackadar: Leveraging the term AI, but in this case, it's an AI based system that identifies our drivers' behaviors and it helps coach and helps our drivers drive more safely and more efficiently.
Robert G. Blackadar: And so far we've actually we were chatting about this yesterday in a meeting.
Robert G. Blackadar: We're watching our safety and our statistics and our vehicle incidents and accidents decrease.
Robert G. Blackadar: Big way and it's tied to leveraging that data that obviously translates into lower.
Robert G. Blackadar: That obviously translates into lower costs regarding insurance, etc., and anything we can do to mitigate all the insurance costs that are increasing by showing that we actually are driving safer, more miles, and with fewer incidents. That's just an example, but we're going to be doing that on steroids. I don't know if you want to talk anything more about the data, Rob.
Robert G. Blackadar: Cost regarding insurance.
Rob: Et cetera, and anything we can do to mitigate all the insurance right.
Robert G. Blackadar: Cost.
Rob: Our increasing by.
Rob: By showing that we actually are driving safer more miles and with less incidence.
Robert G. Blackadar: Just an example, but we're going to be doing that on steroids I don't know if you were talking about anything more about the data Rob.
Robert P. Dawson: You know, one example is that just this quarter, we've implemented FleetTO, as I think Rob's mentioned a number of times over the past few weeks, and that's a fleet management system, and it's providing us with a significant amount of data already, and we've already identified opportunities in our maintenance and repair spend, both in planned maintenance and in other opportunities. We think these savings are going to be material, and it's all part of the plan that we have to increase. of the business. That's just one example as we roll out a lot of these data platforms and aggregate them going forward.
Robert G. Blackadar: One example is just this quarter, we've implemented <unk> as I think Rob's mentioned, a number of times over the past, while and Thats a fleet management system and it is providing us with a significant amount of data already and we have already identified opportunities in our maintenance and repair spend.
Robert P. Dawson: Both in planned maintenance and another and another opportunities. We think these savings are going to be material and it's all part of the plan that we have to increase the scalability of the business. That's just one example.
Robert P. Dawson: As we rollout a lot of these data platforms in aggregate it going forward.
Tolson J. Ola: Thank you. Maybe just a final question from my end. And could you also just speak on inflationary trends, you know, labor? I mean, whatever shade you can provide in the real world.
Speaker Change: Thank you maybe just a final question from my end.
Speaker Change: Could you also just speak on inflationary trends.
Tolson J. Ola: April.
Tolson J. Ola: Dana.
Tolson J. Ola: Okay.
Robert G. Blackadar: So, inflation-wise, just like every other business in North America and probably even globally, you know, Badger's not immune to inflation and some of the cost pressures we're getting from our own suppliers and vendors, etc. We've seen some inflationary pressures on our truck build program and from some of our suppliers because we've been steady state in our manufacturing, which we always felt was going to be the case, but we've become a more predictable customer and consumer for some of our suppliers.
Tolson J. Ola: So.
Robert G. Blackadar: Inflation wise just like <unk>.
Robert G. Blackadar: Every other business in North America, and probably even globally.
Robert G. Blackadar: <unk>.
Robert G. Blackadar: Badger is not immune to inflation in some of the cost pressures, we're getting from our own suppliers and vendors et cetera, we've seen some inflationary pressures on our truck build program.
Robert G. Blackadar: And from some of our suppliers.
Robert G. Blackadar: Because we've been.
Robert G. Blackadar: Steady state on our manufacturing, which we always felt was going to be the case, but we've become a more predictable customer and consumer for some of our suppliers.
Robert G. Blackadar: We are getting inflationary pressures and some cost increases, but I don't believe we're getting them at the same level as we see some of our competitors who are, they're not necessarily buying at the same volume, at the same steady state as Badger. As far as labor inflationary pressures, just like everyone else, our employees expect to be paid, and we will pay a fair wage for our employees. We do, everyone, for the most part, depending on their situation, gets an annual raise and that type of thing, but there's nothing out of the ordinary that we're seeing unless you
Robert G. Blackadar: We are getting inflationary pressures in some cost.
Robert G. Blackadar: Increases, but I don't believe we're getting them at the same level as we see some of our competitors who are they are not buying necessary at the same volume at the same steady state is badger is.
Robert G. Blackadar: Sure.
Robert G. Blackadar: As far as labor.
Robert G. Blackadar: Inflationary pressures.
Robert G. Blackadar: Just like with everyone else.
Robert G. Blackadar: Our employees expect to be paid and we will pay a fair wage for our employees.
Robert G. Blackadar: We do.
Robert G. Blackadar: For the most part depending on their situation.
Robert G. Blackadar: Gibson annual raise and that type thing, but there is nothing out of the ordinary that we're seeing in Ms.
Speaker Change: Do you want to add anything regarding inflationary pressures, yes, I would say we've disclosed our truck build costs and you can see that they've really moderated over the last six quarters I would say, maybe six to eight quarters and we're back into a low single digit inflationary environment, which was elevated in the into the double digits, two or three years ago.
Robert P. Dawson: I would say we've disclosed our truck build costs, and you can see that they've really moderated over the last six quarters, I would say, maybe six to eight quarters, and we're back into a low single-digit inflationary environment, which was elevated into the double digits two or three years ago. The same thing goes for our operating costs. You see our gross margin picking up almost 200 points year-on-year at a time when we're seasonally low on revenue, and we do have a pretty good operating leverage slash fixed cost environment with our current footprint of branches.
Robert P. Dawson: Same thing goes for our operating costs, you see our gross margin.
Robert P. Dawson: Picking up almost 200 points year on year at a time when were seasonally low on revenue and we do have a pretty good operating leverage plastics fixed cost environment with our with our with our current footprint of branches. So.
Robert P. Dawson: Not only is there low single-digit inflation, but there's also a lot of very good work that's underway to partially offset the impact of that inflation. It's not, in any way, fully within the plan that we laid out at our investor day that we would continue to be exposed to this level of inflation, and I would say it's all going according to plan so far.
Robert P. Dawson: Not only is there low single digit inflation. There is also a lot of very good work that's underway to partially offset the impact of that inflation. So it's in no way is it fully within the plan that we laid out at our Investor day that we would be continue to be exposed to this level of inflation.
Robert P. Dawson: And I would say, it's all following according to plan so far.
Tolson J. Ola: Thank you. That's all for me. Thank you.
Speaker Change: Thank you that's all for me.
Speaker Change: Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Ian Gillies with Stifle. Your line is now open.
Ian Brooks Gillies: Thank you.
Ian Brooks Gillies: Our next question.
Operator: Our next question comes from the line of Ian Gillies with Stifel. Your line is now open.
Ian Brooks Gillies: Good morning, everyone.
Ian Brooks Gillies: Good morning, Ian.
Ian Brooks Gillies: In the US, the operating cadence seemed to do pretty well during Q1, given the plethora of weather issues. Can you talk a little bit about the operating cadence so far in Q2 and how you're thinking about going into Q3 and what your customers may be saying?
Operator: Okay.
Ian Brooks Gillies: In the U S.
Ian Brooks Gillies: The operating cadence seems to do pretty well during Q1, given the plethora of weather issues.
Ian Brooks Gillies: Can you talk a little bit about the operating cadence so far in Q2, and how youre thinking about into Q3.
Ian Brooks Gillies: And what your customers may be sand.
Operator: I'll repeat the question, the phone was scratching a little bit, if you don't mind, Ian.
Operator: Repeat the question the phone was scratching a little bit if you don't mind Ian.
Ian Brooks Gillies: I was just asking about what the operating cadence looks like moving into Q2 in the U.S. and Q3 after the business held up quite well in Q1.
Ian: Apologies I was just asking about what the operating cadence looks like moving into Q2 in the U S. In Q3.
Ian Brooks Gillies: After the business held up quite well in Q1.
Robert G. Blackadar: Yeah, so right now, for Q2, we have started off, and we're pretty pleased with everything we've seen for the month of April. Again, we're on today, May 2nd.
Ian: Yes, so right now.
Robert G. Blackadar: Sure.
Robert G. Blackadar: Q2, we have started off we're pretty pleased with everything we've seen for the month of April again, we're on today's may 2nd So early.
Speaker Change: Already in early.
Robert G. Blackadar: Into the quarter, but so far pretty pleased with what we saw at the beginning of the quarter.
Robert G. Blackadar: So, early, early yet, and early into the quarter. But so far, pretty pleased with what we saw at the beginning of the quarter. You know, the biggest thing for us is our end markets, and we chat about this a little bit in the script, certainly in some of our MD&A and documents and our press release, about the resiliency of the markets and what we have and what we see as far as Badger's footprint and the ability to capture that.
Robert G. Blackadar: <unk>.
Robert G. Blackadar: The biggest thing for US is our end markets and we chat about this a little bit in the script certainly in some of our.
Robert G. Blackadar: MD&A and documents and our press release is kind of the resiliency of the markets and what we have and what we see as far as badger's footprint and the ability to capture that right.
Robert G. Blackadar: Right now, the markets continue to be very strong in the U.S. and very, very pleased. And you have to remember, a significant portion of our revenues are U.S.-based. And so we feel like we're in a really good position to capture that. So, Rob, anything you want to add on that? No, I have nothing to add.
Robert G. Blackadar: Right now the markets are continue to be very strong in the U S.
Rob: And very very pleased and you have to remember like <unk>.
Rob: A significant portion of our revenues are U S based and so we feel like we're in a really good position to capture that.
Rob: A lot of our projects that we've been bidding and winning are starting to build into a nice little.
Rob: Kind of a backlog of business going into Q2, the end of Q2 and beginning of Q3. So we're pleased in how it setup where on almost every single major project across the United States.
Rob: And we are being a lot more hawkish on that than we ever have been in addition to our local business.
Robert G. Blackadar: And we're pretty pleased with that so Robyn you want to add on that.
Robert G. Blackadar: I have nothing to add. I think it's just good to point out that although Canada has been a little soft, it really does show the value of the diversification both in our geography and customer segment base that we talked about, that we do talk about. The value of that is really coming out clear because the overall results are still in line with what we're planning on a longer term objective.
Robert G. Blackadar: Nothing to add I think it's just good to point out that.
Robert G. Blackadar: Although Canada has been a little soft, but it really does show the value of the diversification both in our geography and customer segment base that we talked about that we do talk about the value of that is really showing clear because the overall results are still in line with what we're what we're planning on our longer term objectives.
Robert G. Blackadar: Okay.
Ian Brooks Gillies: And if I could drill in on that a little bit, just because I'm curious, there's obviously a lot of capital being deployed towards semi-fabs. The CapEx number is quite frankly astounding, and I was wondering how you're trying to position Badger in and around some of that spending and how you think you can perhaps capture some of that market.
Robert G. Blackadar: And if I could drill in on that a little bit just because I'm curious, there's obviously a lot of capital being deployed towards semi semi fabs.
Ian Brooks Gillies: Capex numbers quite frankly, astounding and I was wondering how you are trying to position badger and around some of that spending or and how do you think you can perhaps capture some of that market.
Ian Brooks Gillies: Yes.
Robert G. Blackadar: Yeah, so very similar to the previous caller. And the question is, we're actually starting to leverage data like the company has never done before, regarding our market share in each one of our largest markets. If you remember from both Investor Day and previous We have a strategy of focusing on the top 10-12 markets and then looking also at our secondary markets, but really making sure that we are leveraging our market position and the ability to capture and maintain strong market share in each one of those key markets.
Speaker Change: Yes, so very similar to the previous caller and the question is we're actually starting to leverage data.
Robert G. Blackadar: The company has never done before regarding our market share in each one of our largest markets. If you remember from both Investor day and previous discussions we've had.
Robert G. Blackadar: As we have a strategy of focusing on top 10 to 12 markets and then looking also at our secondary markets, but really making sure that we are leveraging our market position and the ability to capture.
Robert G. Blackadar: Yes.
Robert G. Blackadar: And maintained strong market share in each one of those key markets. The upside on that remains very strong we're very enthusiastic about what we're doing though is we're now leveraging some data.
Robert G. Blackadar: The upside on that remains very strong. We're very enthusiastic about that. What we're doing, though, is we're now leveraging some data, and we're saying, what is our market share, what is our utilization, and what are our returns by each one of those markets, and where do we need to basically, the concept, if you think about it from a basketball concept, Ian, feed the hot hand, and if there's markets, and we have several, that are hot in the United States, we're feeding those hot hands.
Robert G. Blackadar: And we're saying what is our market share what is our utilization and what our returns by each one of those markets.
Robert G. Blackadar: And where do we need to basically the concept. If you think about it from a basketball concept and feed the hot hand, and if there is markets and we have several that are hot in the United States. We're feeding those those hot hands, we're feeding the markets that are hitting.
Robert G. Blackadar: We're feeding the markets that are hitting, and the beauty of our model being vertically integrated is that it's just so unique that we can control doing that, and what it does is it continues to allow us to hit these quarters of growth. One thing Rob and I are very, very proud of our team and our teams in the field is that they're not just growing revenue for the sake of growing revenue in the States, but they're also trying to drive additional margins as well. So, just very proud of that. Rob, anything you want to add?
Rob: And the beauty of our model being vertically integrated is.
Rob: Just so unique that we can control doing that and what it does is it continues to allow us to hit these quarters of growth.
Robert G. Blackadar: And one thing Rob and I are very very proud of our team and our teams in the field is theyre not just growing revenue for the sake of growing revenue in the states, but they are also trying to drive additional margins as well. So just very proud of that and Rob anything you want to add.
Robert G. Blackadar: Okay.
Robert G. Blackadar: Nothing to add. Okay. Yeah. So, that's our thoughts there, Ian.
Robert G. Blackadar: So.
Rob: That's our thoughts there.
Ian Brooks Gillies: No, that's helpful. And if I could sneak in a third one, it's a bit more theoretical in nature.
Speaker Change: No that's helpful.
Speaker Change: If I could sneak in a third one and it's a bit more theoretical in nature.
Ian Brooks Gillies: The average build cost for a third-party HydroVac now is obviously up significantly from five years ago. And when you look across your markets in the US, do you think pricing is anywhere close to reflecting what it needs to be to generate a sufficient return there? Or do you think pricing just naturally has to go higher over the course of time to meet those hurdles?
Ian Brooks Gillies: The average build costs for third party Hydro Vac now is obviously up significantly from five years ago, and when you look across your markets in the U S.
Ian Brooks Gillies: Do you think pricing is anywhere close to reflecting what it needs to be to generate a sufficient return there or do you think pricing just naturally has to go higher over the course of time to to meet those hurdles.
Robert G. Blackadar: I think I don't see cost going, you know, ever getting to anytime soon getting back to either flat or going back down on any of this. So absolutely, I feel like, you know, Badger has inflationary pressures, but I also feel that some of our competitors in the field, whether they be small mom and pop, or if like a local player with 1, 2, 3 hydrovacs, a regional player with maybe 10 to 20 hydrovacs, or even let's just say a private equity type player that maybe has 100 hydrovacs, I don't see any one of those competitors not having inflationary pressures on all of their costs, and especially the truck replacements.
Speaker Change: I think.
Robert G. Blackadar: I don't see costs going.
Robert G. Blackadar: Ever getting to anytime soon getting back to either flat or going back down on any of this so absolutely I feel like.
Robert G. Blackadar: Badger as inflationary pressures, but I also feel that some of our competitors in the field, whether they be small mom and pop or if like a local player with 123 Hydro vacs, a regional player with maybe 10% to 20 hydro vacs or even let's just say a private equity type.
Robert G. Blackadar: Player that maybe is 100 hydro vacs.
Robert G. Blackadar: Don't see any one of those.
Robert G. Blackadar: Competitors are.
Robert G. Blackadar: Not having inflationary pressures on all of their costs and especially the truck replacements.
Robert G. Blackadar: So as people get into the business, if you were able to get into some trucks, and you were able to pick them up for, on the used market, $250,000 to $500,000. On the new market, you picked them up in the past for $400,000 to $600,000. Those same trucks are spec'd the exact same way, or $750,000 and higher, as brand new, fresh off the showroom floor. Rob and I have actually been fortunate enough to talk to not only a few competitors but several customers who have considered buying hydrovacs, and the outlay cost of capital for that is tremendous right now, Ian, and I just don't see that going backwards.
Robert G. Blackadar: So as people get into the business. If you were able to get into some trucks and you were able to pick them up for on the used market $2 50 to 500000 on a new market.
Robert G. Blackadar: You picked them up in the past that 4% to $600000 those same trucks.
Robert G. Blackadar: The exact same way, our 750 and higher.
Robert G. Blackadar: As brand new fresh off the showroom floor.
Robert G. Blackadar: Rob and I have actually been fortunate enough to talk to.
Robert G. Blackadar: Not only a few competitors, but several customers who have considered buying hydro vacs and the outlay cost of capital for that is tremendous right now Ian I, just don't see that going backwards. So yes.
Ian Brooks Gillies: No, that's very helpful. Thanks very much. I'll turn it back over. Thank you.
Ian Brooks Gillies: That's very helpful. Thanks, very much I'll turn it back over.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Sean Jack with Raymond James Ltd. Your line is now open.
Speaker Change: Well thank you.
Sean Jack: Thank you <unk> next question.
Operator: Yes.
Operator: Okay.
Operator: Our next question comes from the line of Sean Jack with the Raymond James LTV. Your line is now open.
Sean Jack: Hey, good morning, guys. So I know that you don't have a crystal ball, but just thinking about how strong US markets are looking right now and some of the past performance you've been having, is it possible that we see US EBITDA margins hit or exceed the upper end of the range in the back half of the year that was set out in the investor day?
Sean Jack: Hey, good morning, guys.
Sean Jack: So I know that you don't have a crystal ball, but just thinking about with how strong U S markets are looking right now.
Sean Jack: And from the past performance, we've been having is it possible that we see U S EBIT margins hit or exceed the upper end of the range in the back half of the year that was set out in the Investor day.
Robert P. Dawson: Hi Sean, it's Rob here.
Sean Jack: Hi, Sean it's Rob here I would say, it's it's very premature to be.
Rob: Advising the guidance that we provided at Investor day.
Robert P. Dawson: I would say it's very premature to be, you know, revising the guidance that we provided at Investor Day, you know, six or eight weeks ago. So I do believe that there are opportunities, as I said at that meeting, to be in the lower end of that range on a consolidated basis over the next few years, and we still see that opportunity for sure. And there might be, you know, some great quarters that pop us into that range, but I think we're going to be more focused on our trailing four-quarter margins, as I mentioned in our prepared script for this call, and making sure that we have sustainable growth on those margins.
Sean Jack: Six or eight weeks ago.
Robert P. Dawson: So I do believe that there are opportunities.
Robert P. Dawson: As I said at that at that meeting to be in the lower end of that range on a consolidated basis.
Robert P. Dawson: Over the next few years, and we still see that opportunity for sure.
Robert P. Dawson: And there might be some great quarters that pop us into that range, but I think we're going to be more focused on our trailing four quarter margins as I mentioned in our prepared script for this call and making sure that we have sustainable growth on those margins. So.
Sean Jack: Right. Okay, makes sense. And then I'm not sure if it was touched upon in an earlier question, but just to do with the Canadian trucks.
Speaker Change: Right, Okay makes sense and then.
Sean Jack: I'm not sure if it was touched upon in an earlier question, but just to do with the Canadian trucks.
Sean Jack: I'm wondering if there are any opportunities, obviously, you're looking to, you know, pull retirements forward and recognize the fleet. Are there any opportunities to dispose of them? Are there any sources of demand that you guys could be able to find to look to get a bit of a return on those assets?
Sean Jack: I'm wondering if there's any opportunities obviously youre looking to.
Sean Jack: Paul retirement stronger again ranked as the fleet is there any opportunities to dispose of them.
Sean Jack: Is there any sources of demand that you guys can be able to find too.
Sean Jack: Get a bit of a return on those assets.
Robert G. Blackadar: So, yeah, I'll cover that one. This is Rob Blackadar, Sean.
Speaker Change: So yes, I'll cover that one this rob block at our Sean Yes, So we actually dispose of all of our trucks a handful of ways. One of them is through public auctions that are non reserves such as like a ritchie brothers or someone like that Taylor Martin truck auctions.
Robert G. Blackadar: Yeah, so we actually dispose of all of our trucks in a handful of ways. One of them is through public auctions that are non-reserved, such as Ritchie Brothers or someone like that, Taylor & Martin truck auctions. And other things we do is we will sell them on the private market if we feel we can do better on the private market than we can at public auctions. And we have a whole team that is on the disposition side of it.
Robert G. Blackadar: And other things we do is we will sell them on the private market. If we feel we can do better on the private market. Then we can at the public auctions.
Robert G. Blackadar: We do not sell, though; we're very similar to the way Badger views our fleet. We're very similar to the waste business and similar to the concrete business. And in both those industries, they don't sell used trucks as a whole truck on purpose because we don't want to be competing against our same trucks at a much lower cost basis because we believe we have a pretty strong truck. And so, just like in the waste business or the cement business, they will take their tool off the back of a chassis. It could be a trash compactor. It could be a concrete bowl, like a concrete mixer.
Robert G. Blackadar: And we have a whole team that is on the disposition side of it we do not sell though we're very similar the way Badger views. Our fleet were very similar to the waste business and similar to the concrete mix cement.
Robert G. Blackadar: Business and in both those industries they.
Robert G. Blackadar: They don't sell used trucks as a whole truck on purpose.
Robert G. Blackadar: Because we don't want to be competing against those more of those.
Robert G. Blackadar: Our same trucks at a much lower cost basis, because we believe we have a pretty strong truck and so just like in the waste business or the <unk> business. They will take their tool off the back of a chassis it could be a trash compactor it could be a cement bowl cement mixer they remove.
Robert G. Blackadar: The component after back we did the same thing with our hydro Vac, we removed the hydro vac componentry off the back.
Robert G. Blackadar: They remove the component from the back. We do the same thing with our Hydravac. We remove the Hydravac components off the back, and we will refurb it or repurpose it for used parts for other trucks within our fleet, and we sell just the chassis. Do I suspect that if we wanted to sell our whole units in the future, we could get some really strong prices? Probably. But we would also potentially be competing against our own trucks. In our world, we never had that program in place, and I don't see us changing that model today. Okay, that makes sense. Yeah, thanks.
Robert G. Blackadar: We will refurbished or repurpose it for used parts for other trucks within our fleet and we sell just the chassis.
Robert G. Blackadar: Do I suspect at some future time, we wanted to sell our whole units.
Robert G. Blackadar: We can get some really strong pricing probably.
Robert G. Blackadar: But we would also potentially be competing it's our own trucks.
Robert G. Blackadar: That.
Robert G. Blackadar: And our world.
Robert G. Blackadar: We just.
Robert G. Blackadar: We've never had that program in place and I don't see us changing that model today.
Sean Jack: Great. Okay, that makes sense. Yeah, thanks. That's all for me.
Speaker Change: Alright, Okay makes sense.
Speaker Change: Yes, Thanks, that's all for me.
Sean Jack: Okay. Thanks, Sean.
Sean Jack: Sure.
Speaker Change: Thank you.
Operator: I am showing no further questions at this time. I would now like to turn it back to Rob Blackadar for closing remarks.
Speaker Change: I am showing no further questions at this time.
Robert G. Blackadar: I'd now like to turn it back to Rob <unk> for closing remarks.
Robert G. Blackadar: Thank you, operator. And on behalf of all of us at Badger, thanks to our customers, our employees, suppliers, and shareholders for your ongoing support that drives Badger's success.
Robert G. Blackadar: Thank you operator and on behalf of all of us at Badger, Thanks to our customers our employees suppliers and shareholders for your ongoing support that drives badger's success. Operator, you may now and the call. Thank you.
Operator: Operator, you may now end the call. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Operator: Yes.
Operator: Okay.
Operator: [music].
Operator: Okay.
Operator: [music].