This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk10: Good day, and thank you for standing by. Welcome to the Badger Infrastructure Solutions 2023 Fourth Quarter and Annual Earnings Results Conference Call. 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Ularte, Director of Investor Relations and Financial Planning. Please go ahead.
spk03: Good morning, everyone. Welcome to our fourth quarter and annual 2023 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. Badger's 2024 fourth quarter and annual earnings release, MD&A, AIF, and financial statements were released after market closed yesterday and are available on the investor section of Badger's website and on CDAR+. 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. 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 AIS. I will now turn the call over to Rob Blackadar.
spk01: Thanks, Lisa, and good morning, everyone, and thank you for joining our 2023 fourth quarter and full-year earnings call. Before we get into the results, I'd like to take a moment to talk about safety. In 2023, Badger had strong safety results tied to the entire team's focus on our Making Safety Personal campaign for all of last year. Great companies are safe companies, and there is a strong correlation between safety and economic performance. This is a testament to the team's commitment to safety and our investments in the right tools to help our people be successful every day. Now onto our annual results. The team finished the year strong with record annual revenues, gross profits, and adjusted EBITDA. Our top-line annual revenue of $683.8 million grew by 20%, driven by our commercial strategy launched at the beginning of 2022 and our continued focus on utilization throughout 2023. Importantly, we also continue to see the growth in adjusted EBITDA of 50% year over year, two and a half times the growth in revenue. The launch of our new pricing engine in the middle of 2023 also contributed to these improved margins. Our annual adjusted EBITDA margin was 22% up from 17.5% in 2022, the highest we have achieved in three years. Our earnings per share was up 128% at $1.21 per share, compared with 53 cents per share in 2022. The Red Deer Manufacturing Plant delivered 217 HydroVac this year versus 112 HydroVac units in 2022. We also retired 79 units and refurbished 19, ending the year with 1,534 units and growing our fleet by 11%. We achieved RPT, or revenue per truck, per month north of $43,500 in 2023, up almost 10% from the previous year due to Badger's continued focus on fleet utilization and pricing. As we look ahead to 2024, our fleet plan includes manufacturing between 190 to 220 hydrovacs, refurbishing between 35 to 45 hydrovacs, and retiring between 70 to 90 units. This allows us to grow our fleet by 7 to 10% and spend between 90 to 130 million in capital. Included in its capital range is our Hydrovac production, our refurbishments, ancillary equipment purchases, and other capital projects. On another note, the Board of Directors has approved a 4.3% increase to the quarterly cash dividend to 18 cents Canadian per common share. This will be effective for the first quarter of 2024 with payment to be made on or about April 15th, 2024 to all shareholders of record at the close of business on March 31st, 2024. I'll now turn the call over to Rob Dawson to discuss our Q4 financial results in more detail.
spk04: Thank you, Rob. As you saw in our fourth quarter release, our team delivered another strong quarter of results. We had record fourth quarter revenue up 16% from last year, driven by our U.S. operations, which were up 20%. Our Canadian operations revenue fell marginally in the fourth quarter due to lower activity from our operating partners and relatively flat revenue from our corporate operations. Gross profit and adjusted EBITDA margins continued to rise in the fourth quarter, reflecting the operating leverage gained from our pricing strategies and the scalability of a branch footprint and support functions. The trend in our adjusted EBITDA margins continue to improve at 19.9% compared with 18.8% in the fourth quarter of 2022. In aggregate, there were three discrete non-routine items totaling $5.7 million that impacted fourth quarter 2023 adjusted EBITDA. First, Badger conducted a detailed assessment of its inventory on hand at its manufacturing facility as part of the first year under a comprehensive new inventory management system. This resulted in a $2.7 million write-down of aged manufacturing inventory. Second, we had an accrual of $900,000 related to unresolved tax audits. And lastly, as a result of our strong full-year 2023 performance, we recorded an increase of $2.1 million to our full year bonus accrual. Q4 earnings per share was 14 cents per share, an increase of 17% over the prior year. Now on to the balance sheet. Our capital allocation priorities remain unchanged. We continue to have a strong, flexible balance sheet to support our organic growth and commercial strategies. Our compliance leverage ended the year at 1.3 times debt to EBITDA, down from 1.6 times a year ago. Our receivables portfolio remained strong, with over 90% of our customers having investment-grade characteristics and 90% of our receivables were below 90 days outstanding. I will now turn things back over to Rob Blackadar for some final comments.
spk01: Thanks, Rob. So before we open up for questions, a few last comments. We are pleased to see our strategies of driving strong utilization, commercial sales, and now pricing starting to pay off in our results. Badger's long-term growth prospects remain unchanged, and we are encouraged by early indications from our January and February performance so far this year. We continue to believe Badger is uniquely positioned to capitalize on a significant opportunity for non-destructive excavation services and key in markets in both the U.S. and Canada. Finally, I want to remind everyone that we are hosting an Investor Day on March 20th in Toronto. To get more information and to register, please visit our investor relations page at ir.badgerinc.com. We look forward to hosting many of you on March 20th. So with those comments, let's turn it back to the operator for questions. Operator?
spk10: Thank you. As a reminder to ask a question, please 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 roster. Our first question comes from Krista Friesen with CIBC. Your line is now open.
spk02: Hi. Thanks for taking my question. I guess I just wanted to ask, can you give us a little bit more detail of what you're seeing in the U.S. market right now? I maybe would have thought that RPT growth in the U.S. may have been a bit stronger just given the pricing initiatives and in the strength in the U.S. right now. So if you can maybe just elaborate on what you're seeing, that would be great.
spk01: Yeah, Cressa. So we continue to see strong in markets and solid demand in the U.S. with a lot of various projects that both we're on now and then what we have in the queue coming up for Q1, for the remainder of Q1 and Q2 and the rest of the year. The markets themselves are very, very strong. We work with a lot of different economists from various organizations and forecasters in both construction and industrial markets, and they're sharing the same thing for the United States. Regarding RPT, as the year goes on, obviously we still have seasonality in the business. We've referenced the last few years about the raising the shoulder seasons and et cetera, but while we're always gonna be in seasonal markets, we will have certain seasonality even if we raise the numbers on that. And so RPT will decline typically in our fourth quarter because it's one of our slower quarters and obviously picks up into the spring and summer months. Overall though on RPT, you have to keep in mind too that it's an amalgamation of three things. It's our utilization, It's our pricing, but also it's the truck volume, and we continue to add trucks. So as we add additional trucks into the fleet and grow the business and grow the fleet, RPT, you know, that's going to affect RPT. So those are some of the kind of the color that we look at when we think about RPT. Krista, anything you want to add, Rob?
spk04: Yeah, I would just echo what Rob said. I'd focus on the annualized or the trailing four-quarter, whichever you want to think about it, RPT. And we added 11% to our truck fleet and 20% to revenue. So you can see, I think, on an annual basis, the very positive impact of our focus on both pricing and utilization.
spk02: Okay, great. And then maybe just on your fleet plan for this year, can you just talk about your thought process as you think about how much you want to grow the fleet by, even something as simple as Last year, you talked about refurbishing 50 trucks, and this year, I think you're driving to 35 to 45. And just why you maybe didn't take it up to that 50 number?
spk01: Yeah, so on the refurbishment, we started off the program, and we had identified some trucks that we felt were going to be coming due and would be good candidates for the refurbishment. As well as when we launched, and I think I shared this in the last queue whenever we did this call, we ended up having to evolve our strategy. We had taken our refurbishment program out to multiple different shops that could help us with the refurbishment and give us an honor of warranty. We realized that not all shops are created equal, so we took down the guidance on refurbishments for the end of, or I guess for Q4 and the full year last year. For this year, we wanted to ramp up in kind of an orderly way and not have another misfire like that, Krista, so that's why you see the range where you see it. As we see opportunities, obviously, we're going to take advantage of it, but we feel comfortable with those numbers. We just don't want to overcommit because, like you suggested, we kind of start off high, and then we realize, you know what, as we're launching this program, We were kind of the evolution of the program. We were maybe a little bit more, a little bit too ambitious on that program. So we feel comfortable with these numbers. I feel comfortable, though, as well as with any of our manufacturing or refurbishment as we have more and more demand and the company and the business can support it and we feel comfortable with our end markets. we can be on the higher end of that range or if we need to, you know, just we're always evaluating where we need to be either on the range or if we need to go higher. So we just have a lot of flexibility to be able to do that.
spk02: Okay, great. Thank you. I'll jump back in the queue now.
spk10: Thanks, Kristen. Thank you. One moment for our next question. Our next question comes from Yuri Link with Cannon Core Genuity. Your line is now open.
spk07: Thanks very much. Good morning. Morning, Yuri. Morning. Maybe just talk a little bit about how your price increases are being accepted in the market and any color on how your competitors are reacting, if at all.
spk01: Yeah, so the model that we built is that of kind of a dynamic, getting away from more static pricing in some of our end markets and going to dynamic pricing. And so far, we've done that in a very orderly way. rather than trying to step change any kind of changes in pricing too quickly or too dramatically or drastically. We've done it kind of in a step change type way. But our pricing really is predicated on, just think of kind of basics of what the location or the branch's utilization is, as well as the demand in that market, competitors, our market position. We have a handful of things that we use to decide the pricing, and that's all actually inputted into a pricing engine that we built called CPQ, or configure price quote. So far, we've had good reception on it. We've been very close to our customers. Our customers know that the last few years with really strong inflation, and especially in 21, 22, when inflation was going up pretty dramatically, Badger didn't follow suit at the same rate as inflation. And so if anything, we're slightly behind that rate of inflation. And so us being able to pass through some reasonable pricing improvements and increases have been fairly well received. Just like with everyone on this call and everyone in the room I'm in, no one likes a price increase, but it's also part of our business and without us being able to get pricing, it doesn't allow us to grow and really drive results. As far as competitors and what we're seeing regarding their pricing, it's our belief that many of our more regional or local players and competitors in our industry, in our markets, they have a desire as well to raise pricing, and we've actually seen them follow suit with us in many of our markets. We haven't had a single market that I'm aware of, and I don't believe we actually have one, whereas we've taken up pricing, our competitors are going the other way. Because of our size and scale, we're able to really leverage a lot of our cost and our purchasing power and ability to drive good margins, and our competitors, they're not able to buy trucks and and operate at the local level necessarily as efficiently as we are. So I think just logically, they want to follow suit with us, and it helps them as well. So hopefully that gives you enough color there, Yuri.
spk07: Yeah, I'm not surprised to hear that. I mean, correct me if I'm wrong, but all the alternatives to nondestructive excavation, the cost of that's also gone up, right? You're not at a line with the market.
spk01: Obviously, a lot of the folks on the line have followed Badger for many, many years, including yourself. But the cost of the trucks, and not just Badger's cost, but you can look at the cost of our competitors who manufacture trucks, manufacturing competitors. All of their costs have gone up. All of the chassis costs have gone up. And obviously that puts pressure on any kind of our competitors, and it also has put pressure on us to have us address our pricing. So we're all kind of in the same boat, and we operate in the same markets. So that's why you're seeing we just haven't lost. I'm not aware of hardly any deals that we've lost tied to pricing. I know there's a few. I've talked about a few internally here, but not many. At this point, but again, we're being very reasonable. We're not trying to step change and ask for 20% pricing or anything like that because that's just not realistic. Because at that point, I think we would start driving customers away.
spk07: Okay. Last one for me, the quick one. No mention of your kind of three to five year 28, 29% EBITDA margin target. Just give us an update on that aspirational goal. Thanks.
spk01: Yeah, so we're still marching on toward those original goals that we set out in Investor Day in September of 2022. And if you think about 22, I think we ended the year at 17.5% adjusted EBITDA. This year, for 23, we ended it at 22%, and we're marching toward those goals, Yuri. Rob and I were chatting about, Rob Dawson and I were chatting about this, I think about two weeks ago, and we feel like we're actually ahead of our plan slightly on marching toward that. But just keep in mind here, in just under three weeks, we're going to be having that investor day, and Rob and I are planning on kind of doing a little bit of a refresh on the whole long-range planning and how we present it. And I think you'll appreciate what you see.
spk07: Look forward to it. Thanks, Dutch.
spk09: Thanks, Yuri. Thank you. One moment for our next question.
spk10: Our next question comes from Michael Dumont with Scotiabank. Your line's now open.
spk11: Hey, good morning, guys. I'll start off with, I guess, a relatively simple one. Just, you know, thinking of the write-down on the inventory is pretty self-explanatory, but just wanted to get some background on the 2.1 million true-up in the short-term comp and whether that was included in the gross margins, just trying to get a better sense for how the gross margins trended in the quarter.
spk04: Hi, Michael. It's Rob Dawson here. The annual bonus salaried employees, there's a number of them that are included both in the costs related that go down to our gross margin as well as into the costs in GNA. So it's spread in both of those places. I don't have a split between those two places, but it is through.
spk11: Okay. And that's effectively just a catch-up of what was potentially a lower estimate for that cost through the year?
spk04: That's correct. And we'll be adjusting the way we do accrued bonus going forward, but we left it at target for the first three quarters of the year and then trued up the full year to actual in the fourth quarter. Okay.
spk11: That's helpful. Thanks, Rob. Thank you. A bigger picture question here, just on the retirements and the refurbs. You know, together it looks like If you combine those two at the midpoint for 2024, it looks like 120 trucks. So I guess the first question, is it fair to assume that that's kind of the run rate that you'd like to do going forward to just smooth out production? And then the second question, that 120 in terms of retirements and refurbs, that represents about 8% of the fleet. and effectively implies an economic life of 12 and a half years per truck. So I'm just thinking, and I've asked this question before on prior calls, but should we be more permanently adjusting our view of the economic life of the truck at this point?
spk01: Why don't you take the first part, Rob, and then I'll take the second. You're exactly right, Michael. When you think about...
spk04: You know, the life of our truck, we've always said about 10 years and then would be looking to retire those trucks. Obviously, over 1,500 units in the fleet, the actual performance and wear on those trucks is quite, it's definitely not homogenous, it's quite heterogeneous. And so, you know, some earlier and quite a few later. Over the last several years, though, one, we've done a very thorough review of our fleet with our fleet operations. And with the higher percentage of our revenue and the majority of our growth, or a lot of our growth coming from the more southern parts of our geographic footprint, the wear in those vehicles is quite a bit less than it has been historically, even when you're not even on road in a lot of oil field and off-road environments like you would have been in the earlier days when it was more of an oil field service business. So that's the first thing that's that's helped these trucks is also far less caustic environment because less salt on the roads and all those sorts of things too. So the chassis are wearing a lot better than it used to be. So we are seeing on average possibly the age of those trucks. We're not at a position today to say definitively it's going to be a 12 or a 13-year life for those trucks. We're continuing to depreciate them at 10 years. But for sure, the average life of our units based on a detailed review of the wear and tear on them as we've moved into this refurbishment program, shows that there's more life in these trucks than perhaps there was in the past. The other thing, and that's more of a structural change, the other one that is more of a one-time is during COVID, utilization was very low, and so the trucks, we get an extra year or two of life of them just from the nature of them not being as hardly driven during that period. So you're seeing a small dividend or a small sort of holiday as a result of that. But going forward, and this is the way we've been talking about it with everybody, we do see the ability to manage our both retirements and refurbishments such that we can build at the manufacturing facility a relatively stable number of trucks and add in that 7% to 10% range to our fleet on an annual basis. Obviously, very good from a capital spending and planning standpoint. And more importantly, very good for the efficient operation of a manufacturing operation.
spk01: I'm going to add one quick thing to Michael that might give you more color as well. Last couple of quarters, we've obviously been talking about the refurbishment program. And I've kind of intimated on these calls, actually, that around the 10-year mark, the company has exit vehicles. And it probably looks like that externally. But I've had a chance to actually visit with several longer-term fleet leaders within the business since having those calls and saying that on these calls. And actually, historically, the company has evaluated every single truck. And it just looks like, when you think about our retirement cycles and the way we report them quarterly and annually, that it all happens around the 10-year mark, but actually every single truck has been being evaluated for quite some time in Badger's history, and where it makes sense is where we engage on the retirement cycle. As Rob suggested, a lot of our business started in Canada and has actually moved through the northern states, and now we're really across both all of Canada, northern states, and now the southern states in a big way, and we're realizing that those southern state trucks have a lot more life in them, and even our chassis manufacturers have said the same thing to them as far as the ability to do those refurbs, and they're good candidates for that. So we're still doing the same thing we have as a company in our history of evaluating every truck and is it ready to retire or not, I think it's a little early to start changing models in a big way to say, okay, now we're moving from 10 years to 12.5. Because remember, we just started the refurbishment program, I believe, Q1, Q2 of last year, just getting it started. But more to come on that, and you'll hear more about that at that investor day as well, Michael.
spk11: Thanks very much, guys.
spk10: Thank you. As a reminder, to ask a question, please press star 11 on your telephone. To withdraw your question, please press star 11 again. One moment for our next question.
spk09: Our next question comes from John Gibson with BMO Capital Markets.
spk10: Your line is now open.
spk05: Good morning, and thanks for taking my question. I just had one. Obviously, nice to see the new build program and CapEx outlook. There's quite a wide range of capital spending for 2024. I guess what I'm wondering is how do you think about the cadence of build? Are you kind of in a wait-and-see until the backup, or do you expect that build program to be relatively consistent quarter over quarter?
spk01: Yeah, so it's relatively consistent quarter over quarter, and I can't remember, I think it was actually Q4 of 2022, we started giving a little bit of build guidance, which we've never really given before, and we're largely in line with that. With the caveat at the time, we weren't doing refurbishments, now we are, so you can just kind of factor that in, and it ties out on that. If you want more color on that, not sure if you heard that, that's, again, I think four or five quarters ago, You can call us after the call and we can give you what we said on that call instead of having to go find what we did. But we're largely in line with that. We're not trying to massage or we're not in any kind of wait and see. Our end markets today are strong and we have very solid demand. And as we've been adding in The additional trucks, we've also been able to hold, and in many cases, drive utilization in some of these end markets. So as long as the demand is there, the return profiles are there, and we can make good returns, we're going to keep feeding it. And we're doing this all the while while keeping our balance sheet really, really strong. And in fact, you know, I look at where our balance sheet is today, and Rob and I, again, you know, talking about it a few days ago, we're very pleased with how we've been able to factor in the growth and keep the balance sheet as solid as it is. So anything you want to add on that, Ron?
spk04: You know, I would just add, when we're looking in-year at managing the fleet, it's all three levers. You have manufacturing, retirements, and refurbs. And I'd really... You know, we're focusing on how is revenue looking and trying to be as flexible we can with the fleet to make sure that there's enough capacity to meet market demand. And so last year we grew the fleet by 11%, but we did end the year with 217 units produced, which is great for the consistency and the per unit cost at a manufacturing plant. And we held back a little bit on some retirements and some refurbs. which allowed us to grow that fleet a little bit so that we could have enough trucks to deliver a 20% revenue growth. That's the way we're managing this going forward. I'd like people to start focusing on that 7% to 10% range of fleet growth on an annualized basis. And we start at the mid-range for manufacturing or wherever we may start the year at. And there is some flexibility in year to either dial it back a little bit or, more importantly, to ramp it up in the latter part of the year if we see some real busy people. busy demand coming in through the summer and the peak months into the early fall.
spk01: Yeah, and for us, John, I'll probably add, like we're ping-ponging the question and answer back and forth between me and Rob, but I'd probably add one additional caveat is we're trying to grow the company in as orderly a way as we can. We have good end markets and good, strong demand. but we're trying to hold utilization. And like I said earlier, many of our end markets were driving good utilization. Like it's increasing at a good clip. We're feathering in new trucks and we're working on our pricing all at the same time. And so as you can imagine, you really need to do that in a orderly way rather than just build a bunch of trucks, drive a bunch of revenue for the short term. That to us, doesn't feel very foundational. That feels very much like a blip on a radar, and we really want to be more foundational growth. We talk about that a lot internally amongst the management team, and that's kind of our philosophy. That helps you, John, with how we're thinking about things.
spk05: Yeah, that's really helpful. Thanks. What I'm trying to get is what would be the delta causing you to go from either the low end to the high end of that capital spending range? Is it more just the flexibility in that build program or are there other issues at play?
spk04: It's literally the simple math of the low and high point of the two of the three things that incur capital costs, refurbishments, and truck builds.
spk05: Okay, great. I really appreciate the detailed responses. I'll turn it back. Thanks, John.
spk10: Thank you. Our next question comes from Frederick Bestia with Raymond James.
spk09: Your line is now open. Good morning.
spk08: I was wondering if you could talk about the Yeah, thanks. I was wondering if you could talk about the geographies in the U.S. where you're seeing the best revenue growth and sales penetration. Thanks.
spk01: Yeah, thanks, Frederick. So what we're seeing in the U.S., some of our end markets, we're seeing it really across almost every one of the larger major markets. We're seeing good demand and a lot of in-market projects, both uber large projects as well as regional and smaller local servicing that we do with our trucks. But it's really across the board in the United States, there's good demand. That's why you're seeing some of the other big equipment manufacturers and the big rental houses They're all having really strong demand as well. We all operate in the same markets, and in many cases, the same customers. For us, we've been fortunate enough, Frederick, to start at the, I think it was in April of 2022, a national accounts program that supports some of the largest contractors in North America that work all across U.S. and all across Canada. And that has also helped to shore up our business. And we have this concept of lifting the shoulders. And it really is helping to drive demand more year-round. We still have seasonality because we're in seasonal markets. But it is driving the demand more year-round than we have historically. Those customers, the national account customers, in many cases continue to have record backlog. and some of those customers are public. You can go research them and find out about their backlogs and their book of business, and some of them are private, but they have record backlogs, and they are actually limited by finding qualified people to run their projects, but we stand with all of our customers, whether big or small, local, regional, or national, but we stand with them all to support them, and I think that's what's how we've been able to have so much success the last few years on our revenue growth. The last thing I'll share is you can go across almost any kind of trend project happening in the U.S. So think of like the concept of the industrial plants that are upgrading and top grading, data centers, and steel mills, and any kind of power plants, anything that is infrastructure-related that the government in the U.S. has really started pushing money toward, Badger's been a beneficiary of, and those markets are really strong. The only thing that we've seen, there's a bit of a shift, and it's happening mainly in the U.S., and it's a slight shift. is on some of the battery electric vehicle plants. Those feel like they're starting to slow down the rate of future projects. They're not canceling, with one exception, they're not canceling a bunch of projects. They're just not the rate of growth of additional new ones. But other than that, the rest of the end markets are pretty strong.
spk08: Thanks for unpacking all of this. Based on your outlook, is it reasonable to expect the revenue growth in 2024 to look similar to what you experienced in 2023?
spk01: We don't give revenue guidance, but like I was just sharing, solid demand in the markets. but we don't give revenue growth. Rob, I don't know if you want to approach that, you know, how we could answer that.
spk04: You know, we've got five-year revenue growth guidance in the market that we provided at our 2022 Investor Day with 21 as a base five-year at 15%. First year, we delivered 25%. Second year, which is 2023, it was 20%. So at some point, I think you're going to start to see a teenager or something to bring that average in a little bit. We'll be refreshing our views on that at our investor day. But as Rob said, we're not going to be providing specific point guidance for next year. We do also look at our truck growth in that 7% to 10% range and note that last year was 11% as well. Yeah.
spk08: Appreciate that. But you're still comfortable with that 15% five-year target? Is that right?
spk01: As an overall range, yeah, we haven't changed that. And like I shared earlier, we're probably slightly ahead of that at this moment in time. But in less than three weeks, we're going to be doing our investor day, and I think you'll get a little bit more color along those lines.
spk08: Thank you. I'll leave it at that. Thank you.
spk10: Thanks. Thank you.
spk09: One moment for our next question. Our next question comes from Trevor Reynolds with Acumen Capital. Your line is now open. Hey, guys.
spk06: Just wanted to touch on the refurbishments. quickly again. Have those costs been coming in line with your expectations so far?
spk01: Actually, they have been. They've been really, really – the suppliers that we've found have done a really good job of keeping the cost right on what we've been talking about all along. But there's one other caveat to that. Trevor, that may give you more color as well. Not only are the costs coming in line, which is obviously important to make sure we're driving the returns, and our returns definitely improved over 2023. But in addition to that, the trucks that are coming out as a result of the cost investment that we're putting into them, they've been very well received by the field. and every one of the trucks that we've actually delivered back into the field is out driving revenue right now so obviously the return profile on that on those trucks uh is really really strong it helps to drive the whole ro roic for the whole company so it's good stuff that's great that answered uh the second question but uh just uh
spk06: You dialed back a little bit, I think, in terms of what your expectations were. Maybe just the pace of refurbishments in 2024. Is that your guidance? Is that kind of a flat level through the year, or is that a front-end loaded number? If you are able to find additional partners, do you expect that number to potentially go higher?
spk01: Well, there's a lot of people who can do the work, but they move at a different pace. It's not the lack of people who can actually change out an engine, a transmission, a transfer case, and a blower. It's actually just their capabilities to do it in an expeditious way. And for us, we found a couple partners that can do the volume to support the guidance we gave. It is potential that we could ramp that up. But keep in mind, the other caveat to the refurbishment program is not just the work being done, even though that's what we were just talking about, but it's also having candidate trucks to feed the pipelines to have them refurbed. And if a truck is running and performing, we're not going to just put it through a refurb. automatically if it's actually doing just fine out in the field so we feel comfortable with the guidance we gave we do like I like I said earlier we do have the capabilities to ramp it up but last year we were a little exuberant when we started the program and now we just wanted to put out something that we know we can perform to and it isn't too disruptive business and that's what we gave the guidance on
spk06: That's great. That's all my questions. Thanks, Ed. Thank you both. Appreciate it.
spk10: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Rob Blackletter for closing remarks.
spk01: Thank you, Operator. So 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 end the call. Thank you.
spk10: This concludes today's conference call. Thank you for participating. You may now disconnect.
Disclaimer