Badger Infrastructure Solutions Ltd. (BDGI:CA) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive outlook with strong financial performance, including record revenue and growth in EBITDA. The Q&A section reveals minimal impact from tariffs and optimism about infrastructure projects. Despite refurbishment delays, the company's financial health is solid, with a stable debt ratio and increased EPS. The reaffirmation of guidance and shareholder return plans, along with organic growth expectations, further supports a positive sentiment. Considering the market cap, the stock price is likely to experience a moderate positive movement in the short term.
Key Financial Performance
Revenue Record Q3 top line revenue of $237.3 million, grew by 13% year-over-year. The growth was driven by solid demand in end markets, both local customer and project-based work, and investments in sales and marketing initiatives.
Adjusted EBITDA Adjusted EBITDA grew by 15% year-over-year, with a margin increase of 40 basis points to 28.2%. This reflects strong operational efficiencies and optimization of overhead support functions.
Revenue Per Truck Per Month (RPT) RPT was $47,921 in Q3, up 8% compared to last year. This improvement reflects better fleet utilization and pricing efforts.
Hydrovac Production 57 hydrovacs were manufactured in Q3, compared to 48 units in Q3 of last year, reflecting increased demand from end markets.
Fleet Growth The fleet grew by 5% since Q3 of last year, ending the quarter with 1,703 hydrovacs. Revenue and profitability grew at more than double the rate of fleet growth, showcasing operating leverage and capital efficiencies.
G&A Expenses G&A expenses were $10.6 million or 4% of revenue, compared to $9.8 million or 5% of revenue last year, indicating improved scalability and cost management.
Adjusted Earnings Per Share (EPS) Adjusted EPS was $0.91 per share, up 25% compared to last year, driven by revenue and adjusted EBITDA growth.
Debt to EBITDA Ratio Compliance leverage ended the quarter at 1.3x debt to EBITDA, down from 1.5x in the same quarter last year, reflecting a stable and strong balance sheet.
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Operating Highlights
Hydrovac production: Produced 57 hydrovacs in Q3 2025, up from 48 units in Q3 2024. Full-year production expected at the upper end of 180-210 units due to increased demand.
Fleet growth: Fleet grew by 5% year-over-year, ending the quarter with 1,703 hydrovacs.
Denver market consolidation: Consolidated a Badger franchise in Denver, gaining full control of the market and accelerating fleet refresh to increase market share.
Strategic market branches: Targeted growth in strategic market branches to meet increasing demand in key U.S. regions and metropolitan areas.
Revenue growth: Achieved record Q3 revenue of $237.3 million, a 13% increase year-over-year.
Adjusted EBITDA: Increased by 15% year-over-year, with margins rising by 40 basis points to 28.2%.
Revenue per truck per month (RPT): Improved to $47,921 in Q3, up 8% year-over-year.
Refurbishment program: Reduced 2025 refurbishment target from 50-60 units to 30-40 units due to third-party capacity issues. Plans to develop an in-house refurbishment facility by 2026.
Infrastructure projects: Focused on large infrastructure projects such as airports, light rail, petrochemical facilities, LNG facilities, and data centers.
Energy sector demand: Increased demand for power generation and transmission, including nuclear, natural gas, and solar projects.
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Risk or Challenges
Severe Winter Weather: The company highlighted the need for preparedness for severe winter weather, which could disrupt operations and pose safety risks to employees and equipment.
Refurbishment Program Delays: The refurbishment program has lagged expectations due to third-party facility capacity issues, leading to a reduction in the refurbishment target for 2025. This could impact fleet efficiency and operational costs.
Increased Capital Expenditure: The company expects to increase its 2025 capital spending range, which could strain financial resources and impact profitability if not managed effectively.
Dependence on Third-Party Facilities: Delays in the refurbishment program were attributed to third-party facility capacity, highlighting a dependency that could pose risks to operational timelines and costs.
Market Recovery Uncertainty: While the company noted market recovery, there is an implied risk of potential fluctuations in demand, particularly in key U.S. regions and metropolitan areas.
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Guidance & Outlook
Hydrovac Production: Badger expects 2025 hydrovac production to be at the upper end of the original 180 to 210 unit range due to increased demand from end markets.
Fleet Retirements: 2025 retirements are expected to be at the upper end of the original 90 to 130 unit range, driven by the accelerated refresh of the Denver market fleet.
Refurbishment Program: The 2025 refurbishment range has been reduced from the original 50 to 60 units to 30 to 40 units due to third-party facility capacity constraints. A new refurbishment facility in the Central U.S. is planned to be operational in 2026.
Capital Expenditures: The 2025 capital spend range has been increased from the original $95 million to $115 million range to now between $115 million to $130 million, reflecting increased hydrovac production, Denver franchise consolidation, and targeted growth in strategic market branches.
Market Outlook: Badger anticipates sustained growth in key U.S. regions and large metropolitan areas through the remainder of 2025 and into 2026, supported by robust demand in infrastructure projects, power generation, and aged infrastructure renewal.
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Shareholder Return Plan
Dividend Program: The company has maintained its ability to return capital to shareholders through dividends. However, no specific details about dividend amounts or changes were provided in the transcript.
Share Buyback Program: The company renewed its NCIB (Normal Course Issuer Bid) program in the third quarter, allowing for opportunistic share purchases. However, no shares were purchased under this program during the third quarter.
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Key Q&A
Q:Can you provide more details on the amount of work being done around data centers and the percentage it represents of your work?
A:Data centers represent 5% to 8% of direct work, with an additional 3% to 4% for support functions, totaling 10% to 11% of overall work.
Q:Do you have any updates on how tariffs are impacting your business, particularly regarding heavy trucks?
A:Tariffs have not impacted the business significantly. The company remains CUSMA compliant and has not paid any tariffs on truck builds. In a worst-case scenario, a 25% tariff would increase CapEx by $10 million to $20 million, with a 1% to 3% impact on EPS.
Q:What findings have you observed regarding the longevity of refurbished units, and could their lifespan be extended beyond the expected 5 years?
A:Refurbished units have performed well, with minimal maintenance issues. The company is optimistic about their longevity but is sticking to the 5-year estimate for now. Components come with a 3-year unlimited mileage warranty.
Q:Did the recent Canadian budget include anything surprisingly positive or negative for Badger in Canada?
A:The company is encouraged by the Canadian government's support for large infrastructure projects, which is benefiting their Western and Central Canadian businesses. They are optimistic about opportunities in power, hospitals, and airports.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the impact of tariffs on heavy trucks, citing a lack of clarity on the situation. They also refrained from naming specific Canadian customers benefiting from infrastructure projects to avoid potential issues.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AIF result
CEO CFO
CFO release
Central pace
Deer manufacturing
Denver
GA
Investors section
MDA
NCIB
addition
assumption
capacity
date
demand end
emergency
end market
end unit
fact statement
hydrovac
hydrovacs
improvement utilization
information
month
production
profitability
rate fleet
refurbishment
risk uncertainty
safety
scalability
section website
support function
teamwork
utilization fleet
weather
winter
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Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
