Badger Infrastructure Solutions Ltd.

Good day and thank you for standing by. Welcome to the Badger Infrastructure Solutions 2022 Third Quarter 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 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Trevor Carson, Vice President, Investor Relations and Corporate Development. Please go ahead.

Thank you, Operator, and good morning, everybody, and welcome to our third quarter 2022 earnings call. On the call with me this morning are Badger's President and CEO, Rob Blackenark, and Darren Yaworski, Badger's CFO. Badger's 2022 recording earnings release, MD&A, and financial statements were released after market closed yesterday and are available on the Investors section of our website, as well as 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 facts, 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 2021 AIF. Further, such statements speak only as of today's date and Badger does not undertake to update any such forward-looking statements. Now, I'll turn the call over to Bob.

Thanks, Trevor, and good morning, everyone, and thank you for joining our Q3 earnings call. I'm pleased and excited to be joining this call for the first time as Badger's President and CEO following a successful transition on October 1st. As always, we would like to start the call with a health and safety update. As evidenced by our revenue growth and building momentum in the business, we are confident that pandemic-related issues are largely behind us and the fourth quarter continues to progress without any pandemic-related issues. This is especially important as we begin November with a focus on enhancing utilization in our typical seasonally slower months. We are focused on continuing to improve upon our leading safety culture with a focus on making sure our team and clients make it home safely each and every day. Now on to the quarter. The improving market activity and customer demand trends experienced over the first half of 2022 continued throughout the third quarter. Coupled with operational and cost management efforts, we experienced meaningful year-over-year improvements in our operating leverage and margins. Overall, the third quarter was in line with our expectations. Year-over-year quarterly revenue grew by 20%, supported by balanced revenue growth across all of our operating regions. Similarly, all operating regions experienced positive operating performance resulting from increased pricing, improved fuel recovery, and cost controls. This resulted in better operating leverage as highlighted by our improved EBITDA margins. We anticipate that improving market conditions and customer demand trends will continue for the balance of the year. These trends are supported by improved macroeconomic conditions across the broader non-residential construction activity in the U.S. and in previously weak sectors such as oil and gas. Even though Badger has managed well through the recent inflationary environment, through better realized pricing, cost management efforts, and its fuel recovery program, we're still very focused on improving operational performance. Let's go a little deeper into the revenue trends. Revenue was up 20% from last year to 163 million, which continues to reflect the market recovery that we have seen since October of 21. Higher revenue and more consistent volume supported improvements in our operating leverage. All operating regions experienced year-over-year and sequential revenue growth and improving margins from higher revenue, higher truck utilization, stronger pricing, and cost controls. This resulted in a year-over-year improvement in adjusted EBITDA margins year after adjusting for the $2.4 million in Canadian employee wage subsidies that Badger received in the third quarter of 2021. The 21.6% adjusted EBITDA margin for the quarter understates our true performance as we have pre-invested in operational and strategic priorities, namely sales and marketing programs, to support future revenue growth to achieve our long-term strategic objectives. Regarding our free investments, we have hired, onboarded, and trained our new sales and marketing teams who continue to build momentum daily. Their primary focus, and by extension, our initial measure of success, will be to drive new customer opportunities in the fourth quarter to help lift the seasonal shoulders and drive more consistent volume over the course of the full year. This will have the added benefits of stabilizing margins, and addressing some of our operator retention and turnover headwinds in the colder, more seasonal months. We also continue to be excited about our asset utilization improvements. Q3 revenue per truck per month, or RPT, was approximately $47,000, which was up 24% versus last year and 16% sequentially from Q2. We ended the quarter with 1,370 non-destructive excavation units compared to 1,353 at the end of Q2, reflecting a net increase of 17 units. Our ability to manage available fleet in real time is a significant competitive advantage for Badger. As we position the fleet while constraining availability in some regions, we can drive utilization and higher pricing where we have good opportunity. Trucks are being added in markets that demonstrate strong revenue growth, high RBT, and strong asset utilization. As we have said in the past, improving our utilization has a material impact on how we manage retirements, how we think about the number of units needed to achieve our growth targets, and the appropriate level of invested capital. Our continued focus on fleet utilization also translates into improved labor utilization. We have sufficient operators to support our current fleet size and continue to recruit new operators to support anticipated additions to our fleet over the remainder of this year. Let's discuss our manufacturing. Badger manufactured 29 non-destructive excavation units in the third quarter and 66 units year-to-date in 2022 versus 4 and 17 units respectively for the same period in 2021. We are now forecasting to build approximately 115 non-destructive excavation units down slightly from our previous guidance and the retirement of approximately 80 units in 2022 consistent with the previously provided guidance on retirements. The lower billed total for the year is a result of numerous initiatives that have happened at our Red Deer Manufacturing Plant, which include the rollout of the MRP system and the consolidation of multiple facilities in Lake Q3 and Q4. We are confident we can achieve this revised target as we are currently manufacturing four to five trucks per week and it will not have any adverse impacts on our performance expectations for the balance of the year, given our ability to flex utilization and operating leverage. We are currently planning our build program for next year and will provide an update during our upcoming Q4 call, which is consistent with past practices. With our new manufacturing leader successfully onboarded, we expect to be running at peak efficiency next year, which will allow us to absorb our planned retirements and meet our growth needs without constraints. We remain comfortable with chassis and key component availability and do not expect to be impacted materially by supply chain disruptions based on the company's supplier relationships and inventory planning completed this year. Market indications suggest that non-destructive excavation equipment will be in high demand and more difficult to source over the next several years, which makes our market position and vertical integration that much more valuable. Unless there are additional geopolitical or macroeconomic disruptions, we see conditions to be favorable for continued progress in growing the business, improving operating leverage, and returning to historical margins as the recovery continues and we execute on our commercial strategy. I will now turn the call over to Darren to discuss our financial results.