Badger Infrastructure Solutions (TSX:BDGI) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by. Welcome to the Badger Infrastructure Solutions Second Quarter twenty twenty six Results Call. During the presentation, all participants will be in listen only mode. For those who have dialed into the audio portion of this call to ask a question during the live question and answer session, please press star one to raise your hand. Please wait for the operator to say your name and company before your question.

0:30 For those listening through the webcast, attendees will be in listen only mode. If you need technical assistance, please submit your request under the tech tab in the window on the right hand side of your computer screen. As a reminder, this event is being recorded today, 07/31/2026, and will be made available on the Investors section of Badger's website. I would now like to turn the call over to Ann Plasterer, Director of Investor Relations. Thank you. Good morning, everyone, and welcome to our second quarter twenty twenty six earnings call. Joining me on the call this morning are Badger's President and CEO, Rob Lacquadar and our CFO, Rob Dawson.

1:17 Badger's twenty twenty six second quarter earnings release, MD and A and financial statements were released after market closed yesterday and are available on the Investors section of Badger's website and on SEDAR 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. 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

1:58 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 2025 MD and A along with the 2025 AIS. I will now turn the call over to Rob Lapdar. Thank you, Anne. Good morning everyone and thank you for joining our twenty twenty six second quarter earnings call. Before we get into the details, I'd like to take a moment to talk about safety, which is how we start all of our meetings here at Badger. Safety is not only a value here at Badger, it's one of the key reasons customers choose to work with us.

2:45 Every day, our teams operate in complex environments around critical infrastructure where planning, communication, and safe execution are essential. Our strong safety culture and our Make Safety Personal annual safety campaign helps protect our people, supports our customers' objectives, and reinforces the high standard of service we deliver across North America every single day. I want to personally thank all of our Badger team members and customers for their continued commitment to working safely together. Now on to the quarter's results.

3:33 The Badger team delivered another record quarter of double digit organic growth in revenue and adjusted EBITDA. Building on our positive momentum from Q1, the second quarter top line revenue of $257,000,000 represents 23% growth over the prior year, driven by our extremely diverse end markets. Some of the projects that began or are currently underway include LNG plants, semiconductor manufacturing plants, new hospital construction, several airport expansions, energy storage facilities, including solar, new automotive manufacturing plants, sports stadiums, chemical processing plants, power generation plants, oil and gas pipeline work, fiber and communication expansions, wastewater treatment plants, data centers, food and beverage manufacturing plants, pharmaceutical plants, transmission and distribution mega projects, non residential construction, utility maintenance, several transportation and rail projects, and heavy civil

5:03 infrastructure projects, just to name a few. Needless to say, we are seeing broad based, end market healthy demand.

5:14 We successfully met this demand through increased utilization and continued fleet expansion. The Badger team's ability to deliver top tier customer service is setting the foundation for the remainder of 2026. Adjusted EBITDA grew 25% year over year to 66,000,000,000 We continue to invest in our teams and our branch network, positioning Badger to benefit from our competitive advantages. As fleet utilization rose through the second quarter, we began to realize pricing opportunities across all of our markets in which we operate.

6:02 We achieved RPT, or revenue per truck per month, of $47,731 in Q2, up 14% compared to last year. This reflects our utilization and pricing efforts. Badger ended the quarter with eighteen twenty two hydrovacs, an increase of its average fleet count by 8% compared to last year, while still achieving greater year over year RPT performance. Additionally, our expanded fleet enhances our ability to take immediate advantage of our planned growth for the remainder of 2026 and into 2027.

6:50 Our Red Deer plant delivered 80 hydrovacs this quarter versus 51 units in the same quarter last year. We also retired 36 units and refurbished 12 units in the quarter. With a noted extraordinary demand and opportunities across all of our end markets, our full year fleet strategy remains on track. As we shared last quarter, we are growing our fleet at the high end of the 7% to 10% range for the full year 2026, and we intend to refurbish between 30 to 50 hydrovacs and retire between 130 to 150 units. We also announced in our release that we are underway with a second manufacturing plant to be located in The United States and we expect that plant to come online in the back half of twenty twenty seven or early into twenty twenty eight, and Rob will speak a little bit more on that.

7:56 Before I pass the call over to Rob Dawson, I'd like to share one last thought. Our enthusiasm is not only tied to the strength of the demand environment, but it is rooted in Badger's ability to capitalize on it as we have proven through our performance over the last several years.

8:16 With our industry leading fleet capacity, vertically integrated manufacturing capabilities, extensive branch network, and highly trained workforce, we believe we have competitive advantages that are difficult to replicate and best positions Badger to support our customers on all of their critical project needs.

8:42 With that, I'll turn it over to Rob to give our financial update and then we'll go straight into Q and A after Rob's comments. Thanks Rob. Our second quarter results reflected the strength of customer demand, the effectiveness of our operating strategy and the continued commitment of our team to deliver profitable growth.

9:09 As Rob noted, we grew revenue and adjusted EBITDA by over 20%, demonstrating the ongoing execution of our roadmap of building scalability at every level of our operations. Strong performance was also driven by continued fleet investments to capitalize on increased demand across our entire branch network.

9:34 Our adjusted EBITDA improved to 66,100,000 an increase of 25% compared to 2025. And adjusted EBITDA margin was 25.7%, up 40 basis points from the same period. Adjusted EBITDA margins have returned to growing as revenue growth, improved efficiency and utilization of our fleet, as well as operating leverage offset the near term impact of our ongoing investments we have been undertaking. As we discussed in the first quarter, we are well underway on investments to add to Badger's long term scale, diversity and profitability. The acceleration of hiring and training of operators that we discussed in the fourth quarter of last year and the first quarter of twenty twenty six moderated in the second quarter and was a key factor in our ability to absorb the levels of demand we have been experiencing.

10:38 The rollout of operational excellence and the launch of two new complementary service lines continues to proceed in line with our expectations. While we make these investments for the longer term, they have reduced our second quarter twenty twenty six gross profit margins by approximately 50 to 70 basis points.

10:59 General and administrative expenses were $11,400,000 or 4% of revenue compared to $10,800,000 or 5% of revenue in the prior year. And finally, adjusted earnings per share was $0.69 per share, up 15% compared to last year.

11:18 Turning to the balance sheet, as you know, Badger has for a long time maintained a strong balance sheet combined with conservative financial objectives, including relative leverage, available liquidity and debt maturity profiles. This has served us very well allowing us to fund our growth largely from cash flows while continuing to return capital to shareholders through dividends and the NCIB.

11:48 In line with these objectives, during the quarter, Badger executed our inaugural unsecured bond issue, raising CAD300 million of five point three seven five five year senior notes. The proceeds of the offering were used to pay down our credit facility, leaving us with ample long term committed liquidity. We were very pleased with the strong support from our new Canadian fixed income investors.

12:16 With this undrawn capacity on our five year credit facility and our compliance leverage at 1.5 times EBITDA, the midpoint of our one to two times targeted range.

12:29 We have lots of flexibility to continue investing in our organic growth, to support investments in new service lines, to fund our plans to develop second manufacturing facility in The United States and to continue to return capital to shareholders. Year to date, we have purchased and canceled 80,676 common shares under the NCIB at a weighted average price per share of $63.18 We intend to renew the NCIB in August, maintaining our ability to make share purchases in addition to returning capital to our shareholders through dividends.

13:12 With those comments, let's turn it back to the operator for questions. And our first caller is Yuri Lynk from Canaccord Genuity. Go ahead Yuri. Good morning, gentlemen. Good morning, Yuri. Good morning. Just want to talk a little bit about RPT. Obviously strong in the quarter. I've got your LTM RPT at around $44,000 And I think and maybe Dawson can help me on this one. I think your Investor Day target converted the new calculation was just under $43,000 So you're above that.

14:08 How do we think about the sustainability of RPT on a trailing basis?

14:15 And is there anything different you're seeing in the market now that might argue for that 43,000 target being higher or lower in the future?

14:30 Yuri, great question. A couple of comments on RPT, I would say the addition of our data platform and a number of significantly positive changes we're making in how we approach capacity availability for our customers. One example would be leaving our trucks parked at a customer site versus having them return to our branch, just as one example, has increased the availability of our fleet for revenue producing activities and as a result our utilization has really been one of the drivers of our RPT to be above what we thought was possible even a few years ago at our data center, at our Investor Day. So I would say, yes, we're very pleased with where that's gone.

15:19 We don't believe that there is likely to be a lot of downturn in that number on a last trailing twelve months basis as you've indicated. In fact, I think there remains some opportunities to improve utilization

15:35 and as we'll talk about, there is opportunities for further pricing improvements as well as our utilization on the fleet continues to rise. I'll add one other thing to Rob's comments, Yuri, that might be helpful for you. When we did that Investor Day, which was March 2024, we had announced at that Investor Day that we were launching this thing called Badger Analytics Platform, but it was very early stages, and it was just underway. The data and the amount of analysis we're starting to get out of the fleet metrics and the ability to move the fleet faster and get more efficient is allowing us to actually just get higher and start to move that trend higher.

16:29 And I believe that we're going to continue to see that going forward because the amount of analysis

16:37 and our customers, we're actually sharing some of that analysis with our customers because the goal for us is to be digging holes. It's not to be driving back and forth and commuting because most of our customers pay port to port. Our best opportunity to show greater efficiency than any competitor is to actually share that data with the customers and they really love it. So you're going to see us continue to have a really strong focus on RPT. I wouldn't say at this point like it needs to have some major re rating from that Investor Day, but I would tell you it remains a big focus in the company and will remain going forward as well.

17:24 Would you Rob, how would you characterize the pricing environment because we've picked up that you might in some markets, might be a little bit behind on pricing in recent months. So do you feel you're I mean, you talked about some upside to pricing. Is that what you're referring to? You've got some room to play catch up in some markets?

17:46 Yeah, absolutely. So the way we're viewing pricing is the pricing environment was continued to be under a fair amount of pressure back half of last year and through Q1 of this year. We identified in the month as the quarter for second quarter as it was going on

18:12 in April and May, that there were some pricing opportunities. And in some instances, Badger was able to capture the pricing. And in a few others, we we were not as nimble as we felt we could be. Since that time, as the quarter went on for the second quarter, we started to pick up more and more momentum on the pricing. And I think on a go forward basis, you're going to see just tied to the demand, the end markets, everything happening within.

18:49 I mean, you saw the laundry list of projects we're on that is so broad that if you can't get pricing in this environment, we're doing something wrong. And we started to see it as the quarter went on toward the end of the quarter, and my opinion, we were probably a little slow at the beginning of the quarter. The opportunity though is really on a go forward basis. So we're pretty enthusiastic about how the it's not just the leadership team, Gary, but the whole company is leaning in on the pricing opportunities to where we're not just covering inflationary

19:25 pressures and cost, but we're actually going to be exceeding. And because the market is here and so now is the time as the industry leader, we should be leading that pricing and you'll see more and more of that. But we also, the way we frame it up, because we have not just competitors who listen to these calls, but also customers, is Badger has always got to be giving extreme value. If we're going to be the

19:51 pricing leaders, we have to be giving extreme value and efficiency and safety and reliability. And so you're going to see more us continue to be amping up in all those areas, but pricing is definitely going to be a nice opportunity. Believe, I feel pretty comfortable we're going to be capturing the back half of the year and then going forward into next year, Yuri. Thanks for the color, guys. I'll turn it over there. Thanks, bud.

20:21 Thank you. Our next question comes from Tim James at TD Securities. Go ahead, Tim. Thanks very much. Good morning. My first question, I'm just wondering if you could give us you called out the new service lines and that it's progressing as expected. I'm just wondering if you can provide us a little more kind of detail customer response, how that's fitting into the business, kind of the returns that you're seeing or anticipate from those two new service lines.

20:56 Tim, it's Rob Dawson here. We've launched principally one of the two service lines, the other one is going to get going in the second half of this year, that first one being our industrial cleaning and it's very adjacent to a lot of the work we're already doing. It's got a similar customer list and a similar

21:17 list of assets. And so the returns are similar to what we see from hydrovac. It just allows us to get a lot more long term recurring contracts on a maintenance basis on industrial facilities, whereas in the past we would be working on a project basis on those facilities during larger turnarounds or debottlenecking work. So this is just circling those plants with a little more assets, little more service and giving us stickier presence with those customers. So far we're very pleased with the way it's gone. It's all proceeding as we

21:52 penciled it out I guess as far as our XL business plan and we're looking forward to having it develop a little more. And Tim, I'll add a little bit of color about the customers and the adoption you were asking about. What we're realizing and very, very pleased about this is every time we have launched one of these industrial cleaning branches

22:22 in the various cities and we go sit down with customers and we start talking about Badger's capabilities, and again it's beyond hydrovacking inside these industrial plants, they're actually coming to us and instead of us kind of pushing to get into more of their manufacturing plants to do our work, they're actually starting to pull us in and asking, can you do more across the large industrial manufacturing owners across their whole portfolio?

22:54 And so think of chemical plants and pulp pulp plants and power plants where they're saying, could you do some of this work across our whole footprint? So we're very, very pleased the how quickly we're being adopted into the markets in which we've already launched and regarding the margins, we like again still very early days, but a few quarters in the margins are playing out exactly how we had planned. And so obviously it makes the return profile and the investments we've made we're pleased with it. Okay, that's great, that's helpful, thank you. My second question just returning to The U. S. Manufacturing facility or potentially U. S.

23:42 Manufacturing facility and forgive me my line cut out for a minute, but is there any way you could kind of give us a bit of a sense for what the capital requirement could be for that facility?

23:56 And then is it reasonable to assume that CapEx that goes along with it, kind of return associated with that is effectively from avoiding the tariffs that are currently being incurred?

24:12 Yeah, so I'll start a little bit about kind of where we are in the process, and then Rob, if he wants to add any more about kind of the return or tariff comment. So right now, it's still relatively early. So we started talking just slightly about this on, I believe it was during the Q and A for the last quarter about a second manufacturing plant being contemplated by the management team and the board. And then since that time, we've been off working alongside of as the management team alongside of a small subcommittee of the board

24:52 to run the ground which markets we want to potentially locate and land the manufacturing plant in. Just think in terms generally of where is Badger doing a lot of business and it's the Southern Part of The US and it's more if you were to decide to be somewhere, let's say between, let's say Texas, Oklahoma over to the I-seventy 5 North South Corridor in that range, that area. As far as being able to give a CapEx guidance, we have a pretty broad range of which we've been contemplating internally and then shared with our Board of Directors, But it's too early for us to say, okay, we think it's going to be between X number of millions and X number of millions because it really does depend on the cost of the land, the cost of the development, or if we buy an existing facility, which there are some out there, but if we buy an existing facility, what can we actually get it at?

25:57 And then Rob can talk a little bit about how we might finance that and maybe tariffs and stuff. When you think about the economics of a new facility, I would just ignore tariffs at the outset and say our growth profile, the size of our existing fleet and where we feel it's going to grow to over the next several years, even just the replacement capital for that fleet, risk management when you have a single facility, logistics for having it in two facilities in two markets to serve different areas. There's ample return available to justify a new facility. And then when you think about the current tariffs we're paying on trucks that we're producing in Canada and then importing into The United States, that just increases those returns to make it pretty easy get there. The strategic need for the facility, the growth of the business and the returns that our current organic growth strategy is offering us justify the facility in its own right and then that these tariffs recently I think are just a little cherry on top of those economics.

27:07 As far as funding it, as I mentioned, we have ample available liquidity on a largely undrawn credit facility. Our balance sheet is just in the midpoint of our leverage target range of one to two times, so we've got plenty of capacity to be able to finance this without any concerns. Okay, that's super. Thank you very much. Our next caller is Ian Gillies from Stifel. Go ahead, Ian. Morning, everyone. Morning, Ian. A follow-up on The U. S. Manufacturing facility.

27:53 When you look out to 2028 and 2029, would the intention be that you run both the Canadian and The US facility concurrently because that's where you see demand going? Yes. So we've actually been having really good discussions with our manufacturing plant up in Red Deer, which by the way is performing extremely well, and we're having the best quality of trucks. I actually believe in Badger's history coming out of the plant right now, and our manufacturing team is very, very engaged. And we've been having discussions both with that plant as well as we're building out and continue to evolve our three to five year plan because we look at it just constantly, both Rob and I, on where is the business going and what are we going to need resource wise.

28:53 We believe at a minimum we're going to need these two plants both up and running and performing. Think in terms, Ian, as when I came into the business just around five years ago, we were in that 1,200 to 1,300 truck size for hydrovacs, and now we're 1,800 moving toward 1,900 and the business will continue to scale, we believe, over the next three to five years, if longer. So we're going to need both the plants. We're pretty excited about that, and we're building the plants. Once the US plant is up and running, we'll continue to say, okay, how can we drive the most efficient efficiency between the two?

29:46 But it just gives us the capacity to continue to scale the business. And it also, there's one other factor that a lot of people think, you have the potential for tariff avoidance or just building the trucks, but it also gives us a little bit of a risk mitigation factor by having a second plant, that if for whatever reason one of our plants were to go down, you have a little bit of a backup factor. And so it's just good practice to not have all your eggs in one basket, and so there's just multiple reasons that this second plant makes a lot of sense. But we probably you never say never or anything, but we just don't see a pathway at all anytime soon of just having one single plant or going back to one single plant.

30:39 Understood. The other one to ask bluntly, do you feel like the hydrovac industry in The U. S. Is finally capacity constrained? As we think about that comment, should we be thinking about EBITDA margins, the improvement accelerating year over year as we go through the back half of the year? It's kind of what you'd spoken to previously, but you just had a good quarter and I just wouldn't mind getting an updated view there. Yes, so I would say it's not necessarily constrained because hydrovac in The US continues to be just a really good adoption story. And you you're you know, obviously, Ian, you're talking to a guy who's been in the business around thirty five years in construction and construction equipment businesses.

31:34 But it is it reminds me a lot of the early days back in the rental industry is the concept is still being adopted, but certainly, at least it is our belief that competitive manufacturers are building and pushing on their plants to build as many hydrovacs as they can, and obviously we have competitors who have taken delivery. Badger, while we're not at full capacity today, we continue to grow our manufacturing and you saw how we've moved within our own range from the low to mid point of the range to now we're at the higher end of the range of what we're giving guidance on for 2026.

32:23 But there's still some capacity out there, but I believe the hydrovac industry will continue to just evolve and companies like Badger and other manufacturing companies will continue to build more and more capacity. A lot of people think in terms of the way hydrovac used to be back in the oil and gas days, or there's some ability that, okay, they're just going to run out of places for people to use a hydrovac in the oil and gas or the oil field services. And right now, I mean, just think of the script that I just shared with everyone on the call, the amount of different applications is almost limitless of how you could leverage a hydrovac to make a project safer, more efficient, and move without any incidents on it. So for us, we're pretty excited about not just our positioning, but where we're going.

33:28 But like with everything, Ian, as there's higher utilizations and certainly we're seeing, Rob talked about this in his comments, good utilization, you'll also see every manufacturer continue to ramp up production. Another way to think about this Ian, is we're fortunate that our customer base are some of the largest of the large construction and industrial firms in the world, and their work that they're doing in North America, many of them are public, many of them I'm sure some of the analysts on this call, follow. They have record, historical record backlogs, historical record performance and business happening right now, and a lot of the backlogs that they're sharing with us, and we're not getting them off their calls, they're actually telling our national accounts people that their work will be taking them to the early to mid point of the 2030s.

34:36 So today it's 2026, but they have projects that are going be starting in '28, 2930. And I named some of the projects we're on now, but a lot of those projects, there's more to come behind those and beyond those. So it's a long tail, Ian, and it's a pretty exciting time, but I'll let you if you want to talk a little bit about the margins and what that might look like Rob. You know Ian, I would caution anyone from thinking that margin improvements are going to start to accelerate. And I just want The phase we're in from Q1 of twenty twenty five through to today, our quarterly growth has gone from 8% to 11 to 13%, 15%, 18% and now 23%, we've been accelerating on our top line and the size of our market and the opportunity in front of us. We've also been investing during that period and I know there were some concerns from some people about the heavy investment we're making in new operators and training those operators in the fourth quarter, in the first quarter, the last couple of quarters, we would not be able to be delivering the level of service we are to customers today and meeting their needs if we hadn't have done that. And so we are continuing to focus on longer term value and growth and we're not stepping aside to let I guess margins be a focus. We

36:07 are continuing to grow profitably, don't get me wrong at all, but we are going to continue to invest in the business and ensure that we can continue to scale up efficiently and effectively the way we have been. One good example of that is in The United States, we've just recently increased the number of regions we have from three regions to four regions so that we can have enough people focused on the density of opportunity and not get spread too thin. That being said, we do think that we will and we still remain very confident that we will start to proceed to go back into that 25% to 30% EBITDA margin range, but we still feel that the guidance we gave that on the last call where we start to see that approaching those numbers in 2027 to be still the case. Understood.

36:52 That's incredibly helpful. I'll turn the call back over. Thank you. Thanks, Ian. Thank you. Our next caller is Maxim Sytchev. Go ahead, Maxim. Hi, good morning, gentlemen. I wanted to ask you a question, if you don't mind reminding us about your data center exposure, and maybe just general comment around how sort of the spending in that space is creating tightness in everything else that you're doing. And obviously, I'm fully on board with the excitement around LNG, petrochemical, etcetera. But I guess any qualitative comments you can provide that would be super helpful. Thank you. Yes, so, and obviously, is the topic of the day that a lot of various folks ask us about.

37:45 So we continue to be in that same range we talked about coming out of Q1 and what we realized in q two. I think in q one, we were in that eleven, twelve, 13 ish range, and we're we're, like, just right around sub 15, I think 14% as we went through Q2, like it wasn't materially moving or or or driving our business, like, in some kind of an outsized way or or we cycled it up in any kind of a dramatic way. Max, the way we think about data centers is we're here every day to support our customers.

38:36 And if our customers are calling and they need help, and they, wanna use Badger, we're here we work for our customers every day. What do you need, and what can we do to provide you an excellent level of service? If that happens to be on a data center, we're gonna work with them on a data center. If it happens to be on an LNG plant or wastewater treatment plant or a chemical plant, we're gonna go work for them. To give you a perspective though, Badger had in our, kind of the origin story of Badger, and I'm not sure, Max, if if we've ever visited with you on this, but the origin story of Badger was we were an oil and gas field services business. And for the longest time, we were greater than 50% of our revenue was oil and gas.

39:27 And then today that represents around just a tick under 5%, four to 5%. And it wasn't necessarily that we are anti oil and gas. I even named that in the list of projects that we're in the middle of right now, but we just don't have any one particular area as our main focus. But I want to be very clear, we're not anti data center, but that's not the focus of our business only. We believe it's going to be around in that 15% range, again, plus or minus whatever, as data centers continue to be to be built out. I'll also give a data point that, is very interesting that a lot of people aren't aware of, but, when we look at all the available opportunities in every part of every project being bid, for '26, '27, and '28, we use, a service you've heard us talk about, but called Dodge and Peck reports.

40:34 So these are like bidding services that all the construction firms use, and data center bidding and work contributes or consumes about 44 of all the upcoming Dodge projects that are being bid right now. And so us giving you the perspective of if we're sitting in that 13%, 14% range right now, clearly, you know, we're not focusing only on data centers. We're not saying no to it, but it's just not a core tenant. But and we're always mindful not to get too heavy. I don't know if you want to add anything on that Rob or I would say that, you know, these data centers are certainly constraining the capacity and our customers ability to deliver.

41:24 It's also a lot of the projects that are on that list that aren't data centers and it's in the trillions of non data center work. They're largely non discretionary and are very or highly likely to occur. If they don't occur this year or next year because a data centre gets prioritised, it's very likely that they'll happen in two or three years. It's our enthusiasm for the longer term opportunities that exist for Badger continue to be very high. Yeah. Yeah, absolutely. And then I had a quick operational question, if I may. So as you're getting more data, just overall for machines and branches, etcetera, can you maybe talk about qualitatively around the delta between kind of the top and bottom performing branches and how much of an opportunity to potentially closing that gap could represent in terms of utilization?

42:23 I mean, how should we think about the direction of travel there? Thanks. Yeah, great question. So we are leveraging a lot of the data that in the past prior to the Badger, to our Badger Analytics Platform or BAP. That's kind of our data mainframe repository in our or Oracle ERP system. Prior to us having full good access to that and it being such a good robust dataset, we were doing a lot of this very manually on Excel spreadsheets. Now we're able to identify real time on a daily basis where there's opportunities for improvement, and we are engaging actively on those branches that have historically either underperformed or they're going through some kind of a cycle.

43:20 Maybe some customers or projects have moved away, making sure that those branches are right sized, both with their personnel, the number of personnel, the number of trucks, etcetera. And we're able to do that in a much faster, robust manner than we've ever been able to. And the cool thing about all of our businesses, our operators are fungible. Our operators, we we they can go and operate the same Badger truck or a different Badger truck because they're all the exact same controls, same training, same everything. They can move between branches, between markets, and we actually encourage that, as well as the assets are very fungible.

44:05 They just move across markets. Rob, if you want add anything? Maxime, it's such a great question. The opportunities that we have don't just reside in utilization either where we're getting such huge returns. Our operational excellence programs, we're able to see on a daily basis what's the maintenance and reliability by truck, by branch, by market, by region, on a monthly, daily, weekly basis, either per engine hour or per dollar of revenue, what's our direct labor utilization, what's our direct labor hours per build hours, all of these different data points we're feeding to our branch managers and our general managers that run our smaller markets on daily and weekly basis.

44:52 And the spread between low and high is wide and the opportunity is big on all of those measures. That's a great color. Yes, thank you so much. Thanks Max. Our next question comes from Kristen Friesen at CIBC. Go ahead Kristen. Hi, good Good morning. Thanks for taking my question. I was just wondering more on the competition side on some of these bigger projects and maybe what your national accounts group would address. What are you seeing from competition? Are people starting to get a little bit more aggressive here? Are you seeing more competition on these projects?

45:42 Any color would be great. Yeah. Hey, Chris. Good morning. So we certainly, competition, there's Badger, again, I just celebrated my fifth year, and we are the competition is as much as we've ever had. I wouldn't say it's either ramping up or down. It is interesting that it feels like there's certain players kind of on the way up as competitors, and then there's a few players that a few years ago that were pretty strong competitors that feel like they are struggling because they're not backfilling or refreshing their fleets like at the rate that Badger is. And again, I'm not familiar with the reasons why and you'd probably have to go ask them.

46:32 As far as on projects and national accounts, we just don't have any competitor that has the same footprint that we have, and it's just a huge differentiation factor that Badger offers that no one else has at this point. But I'll also share, we talk about this all the time with the leadership team, is we have to remain hungry. We have to understand that competitors will always be out there and if we ever take our eye off the ball or we get a little less hungry or to quote someone recently, if you become kind of fat, lazy and happy, that's where companies, they lose their edge and then they start losing their market position.

47:25 But for us, Krista, on let's just use some projects, really large projects that we're on, we're starting to realize that Badger, not only do we bring a leading safety record and safety culture process, to these projects on these mega projects that, most small or regional because there's no other national, service provider that does what Badger does. But these smaller regional guys, they don't have that level of sophistication. There are a few regional ones that are decent. They're pretty good regarding their safety programs. But then when a customer says, I need 25, I need 50, I need 75 Hydrax on this project, no one else can do that. And or if they say, okay, we'll provide 25 trucks on this project, that is half their fleet or three quarters of their fleet or in a few instances, and we watched it happen, where customers will say, you know what, we think we can get it cheaper from one of your competitors, and we think we're providing a competitive price, and so they try the competitor, and then normally within, I'd say, seven, ten days, two weeks, we're getting a callback saying, we really need you back, and we're willing to pay what now we're realizing what Badger is worth.

48:54 And and, Carissa, we like that positioning. And and again, though, we're not naive enough to think that competitors don't have the ability to get stronger or combine or whatever, but the Badger team's pretty hungry and focused. I don't know if you have anything else on that. I've got nothing else to add. Okay. So hopefully that gives you more a little bit of color there, Krista. Thanks. Yeah. That's great color. And just a second one for me. I know I know we talked about this on the last call, but any updates on on ability to provide, a bit more of a backlog and maybe just as it relates to some of these larger projects that are longer term, are you able to quantify that in any regard?

49:43 Yeah, so we don't have a backlog in the traditional sense of a construction firm would have. But we are getting a lot more visibility because the projects are so large, and, they're starting to realize that if we're gonna call and say, hey, Badger, I need 25, thirty, fifty trucks, while we can definitely provide that, they're not just sitting around waiting on the phone call. So it takes some logistics, some movement around, and some time. We're getting a lot more notification, a lot more visibility on what the revenue streams are going to do, more than we've ever had, Krista. And obviously, we're very pleased about that because it helps Rob and I be able to forecast along with the rest of the leadership team what our manufacturing needs are going to be, our capacity.

50:43 It also helps us on our pricing and understanding should we be pushing pricing in these markets or holding pricing or getting more competitive on pricing. And so we have a lot more visibility. The concept though of an overall backlog, I don't know at this moment if we're ever going to have a traditional sense like you might get from a general contractor. So anything on that one? I mean I think as we also become a utilities, more of a utilities and infrastructure service business as well, we're working very hard on how we can portray what the types of revenues we are seeing and what the longer term nature of those are, we're being quite pragmatic and making sure that we don't say things that aren't actually defensible and long term truth.

51:37 I understand you're maybe impatience on this question but we're making sure that we get it right. Chris, will give you something that we've been doing a lot of work on and you're going to hear, I was hoping to have it here sooner rather than later. I just don't know if it's gonna be ready to roll before the end of twenty twenty six. It may be a 2027 type discussion with analysts and investors. But this concept of recurring revenues and the reason, as you know, we have these national account contracts, many of them are two years, three years to five years in nature. They all have pricing escalators, proper payment terms, etc.

52:28 And we do, and we have a proven track record, in many cases north of ten years with some of these large utilities. And it's the same way that these other large utility contractors, I'm not going to name them on our call, but you know who I'm talking about, They view those as long term contracts that recur year after year, and we're having the same benefit out of that. But we've just never identified it and put it out as a recurring revenue stream and actually identified it that officially. We are internally working on that and more to come on that. I think you're going to get more visibility, which may help you as well, Krista, as you're looking at kind of Badger, not necessarily as a backlog, but more of a, okay, this much of Badger's business is truly recurring or it's under an MSA that goes on for three years.

53:25 I believe that investors and analysts would see a lot of value in that visibility. So hopefully that helps, Christa, with what your question was. Thanks, that's certainly helpful and definitely sounds like the visibility is improving versus a couple of years ago, so that's great to hear. Yes, absolutely. Thank you, Krista. Our next call comes from John Gibson at BMO Capital Markets. Go ahead, John. Morning. Thanks for taking my question. I just had one more on The US manufacturing. Just wondering, know, Red Deer does or can do up to 350 trucks a year. I guess when both are up and running, would you expect a significantly higher level of new builds going forward? Or, know, maybe just kinda give some guidance on on how you expect that facility to ramp and and the potential number of trucks you can put out both in The US and Canada.

54:25 Yeah. I love that. So, John, we're we're looking at it as we know the capacity, like it's actually, you know, very, very focused, very clear what the capacity is of Red Deer. We also know how we can continue to improve the capacity levels and gain more capacity out of Red Deer. But as we're looking at The US second campus for manufacturing, we actually want the variability of it to where obviously it could produce at even just a minimum of what the Red Deer campus can do, but having somewhat of tremendous amounts of scalability.

55:16 There's multiple ways you can do that when you're building out a manufacturing plant, and you don't have to build it all at once. We don't have to front all the capital and build some mega plant for the next thirty years, but rather as long as and we're working with a couple of outside advisory and engineering firms that are guiding us on this, but as long as you make sure you have the plant for what you need today in the next three to five years built out, but with the ability to expand, we believe that would allow Badger to have kind of infinite capabilities. The cool thing about that is, again, and I share this all the time with our internal Badger team, John is, Badger will never be as small as it is today, and then next week we're never going be as small as it is then.

56:09 So as we continue to scale and grow the business, we're going to have more and more need for additional capacity, and we just want to make sure, as Rob and I discussed with our Board of Directors, we are being very measured and thoughtful on this process rather than just knee jerking, trying to put something together quickly and it's not very well thought out. So clearly you can tell we've been contemplating it, but you're on the right track. I just can't give you those numbers, and a little bit of is for competitive reasons as well, because we know we have competitive companies that listen to our calls and we're not going to tell, okay, here's our exact capacity on a second plant, because we don't want someone trying to trump us, if that makes sense, John.

56:59 No. That's that's helpful. I think it's fair to assume that builds should go higher over the next few years with the new facility, but that's helpful. Just shifting to Canada, we haven't talked about it much. It seems like we're in a, early innings of a pretty significant project build out as well. How are you thinking about the Canadian market? I know it's a bit smaller now, but is demand there now or do you see it coming? Yeah. So we are very pleased for the second quarter and actually the last few quarters of just as you're suggesting, there's a lot of projects that are being let and started and underway here in Canada. And we're very, very pleased with what we're seeing there. A lot of our customers are now starting to report mega billion dollar, in many cases nation building projects, and them actually winning those projects, putting them in their backlog officially.

58:04 Again, we work for a lot of those customers and they're great customers of ours. So we're like their biggest cheerleaders as they're they continue to win bigger projects because we believe over time, Badger can support them in all their projects, but we are seeing improvement. Now, at least for Badger, it's still relatively early innings on a turnaround, and I'm sure there will be lumpy months. And from time to time, you know, this month's a little off or this month's, you know, outsizing what it's been, but the trend right now is positive. Anything else? Yeah. Mean, I would say Canada is growing, you know, maybe not at the same pace as The United States is definitely well into the double digits. Yeah. We're very pleased with where it's going. Particularly in Ontario, Quebec and the West Coast. Yeah, West Coast of like BC and all that.

59:03 A lot guys, very helpful. I'll turn it back to you. Thank you. And it appears that we have no more callers, so I will turn it back over to you, Rob Blackadar. Thank you, operator. And so I'll close with, on behalf of all of us here at Badger, we want to thank our customers, our employees, our suppliers, and our shareholders for your ongoing support that drives Badger's ongoing success. Operator, you may now end the call. Thank you. This concludes today's event. Thank you for your time and participation today.