Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Badger Infrastructure Solutions Ltd (BADFF, Financial) achieved record top-line revenue of $745 million, a 9% increase over the previous year, driven by commercial and pricing strategies and growth in customer demand.
- The company's adjusted EBITDA margin improved to 23.6%, up from 22% in 2023, indicating enhanced operational efficiency.
- US revenue grew by 13% compared to the previous year, with consistent growth in activity and pricing gains.
- Badger Infrastructure Solutions Ltd (BADFF) maintained a strong, flexible balance sheet with a compliance leverage of 1.1 times EBITDA, down from 1.3 times a year ago.
- The Board of Directors approved a 4.2% increase in the quarterly cash dividend, reflecting confidence in the company's financial health and commitment to returning capital to shareholders.
Negative Points
- Canadian revenue was down 15% compared to 2023, with a slowdown in large project work and softness in some western provinces.
- The company faces uncertainty regarding tariffs in the US and Canada, which could impact future operations and costs.
- The build rate guidance for 2025 is lower than the previous year and below long-term targets, reflecting caution due to tariffs and market conditions.
- Weather conditions in February negatively impacted operations, particularly in the southern US and upper Midwest, affecting revenue.
- The Canadian market remains cautious due to potential impacts from tariffs and political uncertainty related to upcoming elections.
Q & A Highlights
Q: Can you give us more detail on how you've positioned your trucks ahead of the tariffs?
A: Robert Blackadar, President and CEO, explained that almost all new trucks built in the last few months of 2024 were shifted into the US to preempt tariffs. Additionally, they prepositioned US-built chassis at their Red Deer plant to avoid tariffs. The tariff situation is rapidly evolving, and they are prepared for both short-term and long-term impacts.
Q: Can you clarify the comment on securing chassis ahead of the tariffs?
A: Robert Blackadar noted that US-built chassis were prepositioned in Canada to avoid tariffs. The situation is fluid, with potential tariffs on trucks moving between the US and Canada. They are modeling worst-case scenarios but are prepared to adapt as the situation evolves.
Q: Your build rate guidance is below last year and long-term targets. Is this due to tariffs or market demand?
A: Robert Blackadar stated that the lower build rate is partly due to tariffs but also reflects their ability to drive more utilization within the existing fleet. They have increased refurbishment guidance to offset some of the build rate reduction, and there is no indication of softening demand.
Q: Can you provide an update on the Canadian market and larger contracts that were on hold?
A: Robert Blackadar mentioned that some large projects in Ontario have resumed, and there is activity in Alberta and BC. However, there is caution due to tariff impacts and the upcoming Canadian election, which may affect project certainty.
Q: What is your exposure to data center projects, and how are they progressing?
A: Robert Blackadar confirmed significant involvement in data center projects, with ongoing work and confidence from customers. While some projects are still in the announcement phase, many are underway, and Badger is well-positioned to capture opportunities in this sector.
Q: With preemptive truck movements, do you have precise locations for these trucks to drive utilization?
A: Robert Blackadar explained that about 80% of their capital spend is predetermined, with trucks moved to growth markets based on project starts. They maintain flexibility to allocate resources as needed, supported by strong data analytics.
Q: Can you quantify the impact of disaster work in the US during the quarter?
A: Robert Blackadar noted that disaster work, including hurricane response, was limited to about 10 business days and did not significantly impact revenue. However, they remain active in supporting recovery efforts, particularly in Southern California.
Q: Are you seeing improvements in the Midwest and California markets?
A: Robert Blackadar confirmed improvements in both regions, driven by projects related to renewable energy and infrastructure. However, weather conditions in February affected operations, but overall, both markets are recovering.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
