Badger Infrastructure Solutions Ltd. (BDGI) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Stockholders of Badger Daylighting Ltd. Please note that today's meeting is being recorded. [Operator Instructions]. It is now my pleasure to turn today's meeting over to Glen Roane. The floor is yours.

Thank you, operator. Good afternoon, ladies and gentlemen. Thank you for joining us today for the Annual and Special Meeting of Shareholders of Badger Daylighting Ltd. My name is Glen Roane. I'm the Chair of the Board of Badger, and it's my pleasure and responsibility to chair this meeting. Attending the meeting with me today are Paul Vanderberg, a Director of the Corporation and our President and Chief Executive Officer; and Darren Yaworsky, our Vice President, Finance and Chief Financial Officer. Certain of our other directors, officers and employees are also attending the meeting, and I'd like to thank and acknowledge their contribution to Badger over the past year. I'd also like to take this opportunity to recognize Mr. Garry Mihaichuk, who will be retiring from the Board of Directors as of today and who will not be standing for reelection. On behalf of Badger, I'd like to thank Garry for his 15 years of service to the company. Garry's leadership and collaboration on the Board will be missed by all, and Badger has benefited from the significant contributions he's made over the years. Thank you, Garry. Before proceeding with the meeting, I note that in light of ongoing concerns relating to the spread of COVID-19, Badger is holding this annual and special meeting in a virtual manner via a live audiocast. Voting instructions and audiocast access information were provided in Badger's notice of meeting and management information circular dated March 30, 2021, and on our website. Lisa Olarte, our Manager, Corporate Finance and Investor Relations, will now provide further instructions regarding the virtual meeting procedures.

As this meeting is being held virtually via live audiocast, we note the following procedures for the orderly conduct of the meeting. Registered shareholders and duly appointed proxy holders who have properly logged into the audiocast will have the opportunity to ask questions during the meeting. [Operator Instructions] Please remember questions that relate to a specific motion must indicate to which motion they relate at the start of the question and must be submitted prior to voting on the motion so they can be addressed at the appropriate time during the meeting. If questions do not indicate to which motion they relate or are received after voting on the relevant motion, they will be addressed after the formal business of the meeting is concluded. Questions or comments submitted through the text box of the webcast platform will be read or summarized by a representative of Badger, after which the Chair will respond or direct the question to the appropriate person. As several questions relate to the same or a very similar topic, we may choose to group such questions and indicate that similar questions were received. Unless aggregated, for each question we answer, we will summarize the question and read out loud the name of the person who asked such a question and if applicable, the entities such person represents. Please note that there will be a slight delay in the publication of the communications received during the meeting. Voting on all matters will be conducted by online ballot using the Lumi virtual platform. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item during the presentation of the business items. You will only have a certain amount of time to do so when the polls are open. When the Chair declares the poll open, a voting icon will appear on your device or screen, and the motions brought forth at the meeting will be displayed. To vote, tap or select one of the voting options. Your response will be highlighted. The number of items you have voted on or have yet to vote on is displayed at the top of the screen. Votes may be changed up to the time the Chair closes the pole. Note that if you submitted a proxy prior to the meeting, any votes cast on an online ballot will be counted and the previously submitted proxy will be disregarded. Finally, please be aware that in order to vote on some devices, you may need to minimize the audiocast by selecting the arrow in the broadcast bar. To return to the audiocast after voting, select the arrow again. Please refer to the virtual AGM user guide posted on our website for screenshots illustrating the steps relating to asking questions and voting during the audiocast.

Thank you, Lisa. I'd like to call the meeting to order. At the conclusion of the formal business of the meeting, Paul Vanderberg, our President and CEO, will give a brief discussion regarding Badger's business and answer any questions attendees, including guests, may have. I now propose to proceed with the formal part of the meeting. I now call the meeting to order. As Chair of the meeting, I hereby appoint Shannon Glover to act as Secretary of the meeting. And with the consent of the meeting, I appoint representatives of Computershare Trust Company of Canada to act as scrutineers. Notice of this Annual and Special Meeting of Shareholders of Badger Daylighting Ltd. was mailed to all shareholders of record as of the close of business on March 30, 2021. I direct that proof of mailing of the notice and the other documents mailed to shareholders be kept with the minutes of this meeting. Registered shareholders and duly appointed proxy holders attending the meeting will vote by completing an online ballot. It's important that you're connected to the Internet at all times during the meeting in order to vote when balloting commences. Once again, registered shareholders and duly appointed proxy holders will be asked to vote on each business item during the presentation of the business items. All votes will be conducted by ballot. The scrutineers will count all of the ballots, and we will read the results of the voting on each matter once all of the meeting matters to be voted on have been voted on accordingly. Specific results will be filed by SEDAR by the -- will be filed on SEDAR by the corporation in accordance with the requirements of applicable securities laws. I've been advised by the scrutineer that there are 166 shareholders present today, either in person by having logged into the audiocast or represented by proxy, representing 28,985,741 shares, which is 83.16% of the company's issued and outstanding shares. Accordingly, we have a quorum present. The scrutineer's report is available for inspection by any shareholder, and I direct that a copy of the scrutineer's report be filed with the minutes of today's meeting. I would also note that under applicable corporate law and the bylaws of the corporation, the corporation is permitted to hold this meeting via the electronic means that we are using. With that said, I now declare this meeting to be duly called and properly constituted for the transaction of business. To facilitate proceedings, I've asked David Trang and Lisa Olarte, who are also shareholders or duly appointed proxy holders, to move and second all motions. I will call on them at the appropriate time. This is not intended in any way to curtail discussion. The first item of business is the presentation of the audited financial statements of the corporation for the year ended December 31, 2020, which have been approved by the Board of Directors and together with the auditor's report thereon, have been mailed to the registered shareholders and supplemental mailing list, and it is not proposed to read them to the meeting. Additional copies of the financial statements are available upon request. No action is required to be taken by the shareholders on these financial statements. Are there any questions on the financial statements or the auditor's report? Seeing no questions submitted, I now declare that the audited financial -- audited consolidated financial statements of Badger Daylighting Ltd. for the year ended December 31, 2020, and the auditor's report thereon have been presented and received. As mentioned earlier, voting for all the matters before the meeting today will be conducted by online ballot. I will now take a moment to ask that the balloting be opened to registered holders and duly appointed proxy holders. I will once again ask Lisa Olarte of Badger to provide instructions on voting through the electronic platform.

The polls are now open, and at this point, all registered shareholders and duly appointed proxy holders who have properly logged in with their control numbers or user name and wish to vote will be able to see on the screen all motions being brought forth at this meeting. The polls will remain open until the end of the presentation of the business items.

It is now in order to proceed with the election of directors. Information about each nominee is included in the management information circular. In accordance with our articles and bylaws, the Board of Directors has determined that the Board shall consist of 9 members. The names of those persons who have been nominated for election as directors until the date of the next Annual Meeting of Shareholders or until their successors are elected or appointed are: myself, Glen Roane; Catherine Best; Grant Billing; David Bronicheski; William Derwin; Stephen Jones; Mary Jordan; William Lingard; and Paul Vanderberg. No other nominations were received in accordance with the corporation's bylaws dealing with the requirements for advanced notice of nominations of directors. Accordingly, I declare the nominations closed and will now ask for a motion that each of the nominees will be elected to serve as a director. This motion must be passed by a majority of the votes cast by the shareholders present in person by having logged into the audiocast or by proxy.

I move that Glen Roane, Catherine Best, Grant Billing, David Bronicheski, William Derwin, Stephen Jones, Mary Jordan, William Lingard and Paul Vanderberg be elected as Directors of the corporation to hold office until the close of business of the next Annual Meeting of Shareholders or until their successor duly elected or appointed.

Thank you, David.

Mr. Chair, I second the motion.

Thank you, Lisa. Are there any questions related to the motion? As voting on the election of the nominees will occur together with the other matters, I will now move on to the next item of business. The next item of business is the appointment of the auditor. May I now have a motion on this matter?

Mr. Chair, I move that Deloitte LLP Chartered Accountants be appointed as the auditor of the corporation until the close of the next Annual Meeting of Shareholders at such remuneration as may be fixed by the Board of Directors and that the directors be and are hereby authorized to fix such remuneration.

Thank you, David.

I second the motion.

Thank you, Lisa. Are there any questions related to the motion? Seeing no questions submitted, I will move to the next item of business. The next item of business is the vote, on an advisory basis and not to diminish the role and responsibilities of the Board, to accept the corporation's approach to executive compensation. This motion must be passed by a majority of the votes cast by the shareholders present in person by having logged into the audiocast or by proxy. This is an advisory vote, which means that the results are not binding on the Board. The Board will, however, consider the outcome of the vote as part of its ongoing review of executive compensation. The text of the resolution to accept the corporation's approach to executive compensation is set out on Page 10 of the management information circular. May I please have a motion on this matter?

I move that the ordinary resolution set out on Page 10 of the management information circular with respect to the corporation's approach to executive compensation be approved.

Thank you, David.

I second the motion.

Thank you, Lisa. Are there any questions related to the motion? Seeing no questions submitted, I will move to the next item of business. The next item of business is the approval of the resolution ratifying and confirming the repeal of the corporation's bylaw #1 and approving the adoption of a new bylaw #1. This motion must be passed by a majority of the votes cast by the shareholders present in person by having logged into the audiocast or by proxy. A description of the requirement for approval to ratify and confirm the repeal of the corporation's bylaw #1 and the adoption of a new bylaw #1 is set out on Pages 10 and 11 of the management information circular. Since the date that the management information circular was mailed to shareholders, the new bylaw #1 has been amended to remove subsection 9.4 (c). This amendment is intended to bring the advanced notice provisions contained in the new bylaw #1 into alignment with current market best practices and has been approved by the Board of Directors on May 4, 2021. The text of the ordinary resolution to ratify and confirm the repeal of the corporation's bylaw #1 and to approve the adoption of a new bylaw #1 is set out on Page 12 of the management information circular. May I please have a motion on this matter?

I move that the resolution ratifying and confirming the repeal of the corporation's bylaw #1 and approving the adoption of a new bylaw #1 set out on Page 12 of the management information circular, as amended to remove subsection 9.4 (c) and as approved by the Board of Directors on May 4, be approved.

Thank you, Lisa.

I second the motion.

Thank you, David. Are there any questions related to the motion or the amendment to the new bylaw #1? Seeing no questions submitted, I will move on to the next item of business. The next item of business is the approval of the name change of the corporation to Badger Infrastructure Solutions Ltd. This motion must be passed by a majority of not less than 66 2/3% of the votes cast by the holders of common shares present in person by having logged into the audiocast or represented by proxy. The text of the special resolution to confirm the approval of the name change is set out on Page 12 of the management information circular. May I please have a motion to approve the special resolution confirming the name change of the corporation and authorizing the corporation to amend its articles accordingly as set out on Page 12 of the management information circular.

I move that the special resolution confirming the name change of the corporation and authorizing the corporation to amend its articles accordingly as set out on Page 12 of the management information circular be approved.

Thank you, Lisa.

I second the motion.

Thank you, David. Are there any questions related to the motion? Seeing no questions submitted, we will now move to vote on the matters today. We will provide registered shareholders and duly appointed proxy holders approximately 30 more seconds to complete the ballots. Once the online balloting closes, the voting page will disappear and your votes will automatically be submitted. [Voting]

I would ask that the scrutineers compile the report regarding the results of voting on all business matters. I have been advised by the scrutineers that the ballots and proxies deposited for the meeting have been voted in favor of all resolutions. Each of the 9 nominees have been elected as directors of the corporation, and all nominees received more for votes than withheld votes. The appointment of Deloitte LLP as the auditors of the corporation has been approved. The say-on-pay resolution accepting the corporation's approach to executive compensation has been approved. The resolution repealing the corporation's bylaw #1 and adopting a new bylaw #1 as amended to remove Section 9.4 (c) and as approved by the Board on May 4, 2021, has been ratified, confirmed and approved. The special resolution to change the corporation's name to Badger Infrastructure Solutions Ltd. has been approved. I therefore declare that all these motions have been carried and direct that the results of the poll be included with the minutes of this meeting and that the final results be announced in a press release in accordance with the policies of the TSX and filed on SEDAR. The formal items of business as set out in the motion in the notice of meeting have now been dealt with. As there's no further business to come before the meeting, I declare that the formal part of the meeting is concluded. Thank you for attending. I'll now turn the meeting over to Paul Vanderberg to provide a brief discussion regarding Badger's business and to answer any questions that you may have. [Operator Instructions] We will answer as many questions as time permits. [Operator Instructions] And with that, I would turn the meeting over to Mr. Vanderberg.

Thanks, Glen. Good afternoon, and thanks for participating in Badger's 2021 AGM. Joining us today is our CFO, Darren Yaworsky; Pramod Bhatia, our VP of Strategic Planning and Investor Relations; and Craig Mass, our VP of Business Insights and Shared Services. A copy [ of the presentation ] is posted on our Investor Relations section of our website and could also be viewed on the Lumi lite platform. Just a comment about the Lumi lite platform. As we go through the presentation today, it requires our participants to advance slides. So I'll try to note the slide change when moving through the script of the presentation as we move to the next slide. Before we begin, as always, we remind everyone that statements made during today's presentation regarding management's expectations or predictions for the future are forward-looking statements. 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 assumptions we consider to be reasonable. However, forward-looking statements are always subject to risks and uncertainties, and undue reliance should not be placed on them. Actual results may differ materially from those expressed or implied. For more information about material assumptions, risks and uncertainties, we believe may be relevant to forward-looking statements, please refer to Badger's annual management -- MD&A for the period ended December 31, 2020, which is available on our website and also posted to SEDAR. Moving on now to Slide 3. We always start at Badger with a safety share. Safety is at the heart of everything we do. We're the largest provider of nondestructive excavation services in North America, and we service a broad range of essential end-use infrastructure segments. Nondestructive excavation remains in the early stages of adoption, especially in the U.S. There are many advantages of nondestructive excavation. Many people are still not aware of the risk of damage to infrastructure that can occur while infrastructure is being worked on and underground infrastructure is exposed for construction and repair. The biggest advantage of nondestructive excavation is the safety and the safety benefits that it provides. Nondestructive excavation virtually eliminates the risk of damage and line strikes when working on and around underground infrastructure. Line strikes create safety hazards for not only the workers on job site but also damage to infrastructure that can result in interruptions to critical services and create safety hazards for the general public. Recent industry studies indicate that less than half of excavation contractors in the U.S. utilize some form of locating, and that form of -- and daylighting, which Badger does, is one form of locating, to identify potential hazards prior to digging. The Badger nondestructive excavation system, as I mentioned, basically and virtually eliminates the opportunity for damage when working on these sites. So I'll move on now to Slide 4. Badger has had significant network expansion and revenue growth over the past decade. We've grown our fleet and branch footprint by almost 4x in the last 10 years and achieved 10-year compound annual revenue growth of 15%. The company's business model is strong in good times and in bad. We managed very well through the oil and gas downturn in 2015 and '16 and have managed very well again throughout the current COVID downturn. We've expanded our end-use market exposure to include a broad range of utility, construction and industrial segments. Expanding end-use markets and growth in them has supported a 23% compound annual growth rate in U.S. revenue since 2010. We estimate that Badger has approximately 20% to 25% of the truck-mounted hydrovac fleet share in Canada and approximately a 30% to 35% share in the U.S. Our scale of operations provides value to our customers and our day-to-day service. Our objective is to always have a truck when a customer needs one. Badger's network and operating scale also supports expense management, margin and asset utilization. It's also important to note that Badger has always managed for the long term. Our strategy targets the long-term market opportunity we see, improving operating performance and improving returns on capital. I'll now move on to the next slide. The company has repositioned the business with a wide range of infrastructure end-use segments over the last 10 years. In 2010, about 45% of the overall revenue was weighted to the oil and gas segment. Through the energy sector downturn in 2015 and '16, we successfully positioned the fleet from an oil and gas-focused operation to an operation focused on a broad range of critical infrastructure, construction, expansion and maintenance. Today, we have a diverse customer relationships and a base to growth. In 2020, oil and gas exploration and production represented 4% of our consolidated revenue. Pipelines represented approximately 9% and related facilities represented 6%. While smaller as a percentage of our total revenue than they were back in 2010, these segments continue to be very important to us, and we have strong operations and a strong branch network in those geographic markets where we're energy focused. However, we've seen that the value of nondestructive excavation has allowed us to build relationships far beyond our historical start in the oil and gas segment to a wide range of other very attractive customer segments. I'll now move on to the next slide. As I said a minute ago, Badger has always historically invested in the business with the long term in mind. In 2019, we implemented a new ERP system. We call this our common business platform. This process and the implementation of this system has worked out very well. The improved visibility into the operations that it's provided to us has been especially valuable and really paid off in managing through the 2020 COVID downturn. During 2020, we also stood up a shared services group that we've discussed in previous calls. The shared services group we've established in finance and HR provides a base for our G&A expense, which we believe can support up to $1 billion in revenue with fairly limited cost increases. In 2020, we also stood up a strong IT organization and continue to advance the information flow and technology that we gained through the ERP implementation. We have also strengthened the manufacturing organization, and the manufacturing team took full advantage of the slowdown at the Red Deer plant during COVID to work to streamline our processes in the plant and increase capacity to where it's now estimated to be in excess of 350 units per year. We've been very pleased with this progress. This year, in 2021, we're strengthening Badger's sales and marketing organization to go hand in hand with and to leverage our strong operations model and execute on the market penetration and the opportunity for additional market penetration that we see. We're also optimizing our legal and tax structure for operating and tax efficiencies. Part of that is establishing an internal transportation company which allows for significantly more flexibility in the movement of our fleet across the various jurisdictions, states and provinces that Badger operates in. In summary, we continue to position Badger to capture the significant growth opportunity in nondestructive excavation that exists across our range of critical infrastructure end-use markets. And I'll move on to the next slide, Slide 7. These are the strategic milestones that we've set for Badger over the next 3 to 5 years. We're focused on growth in revenue, margin and return on investment. We've had excellent historical progress against the strategic milestones that we've set in the past. We first started setting these strategic milestones at our Investor Day in November 2017. We've made excellent progress since then. So our strategic milestones for the next 3 to 5 years are, number one, to double the U.S. business again. We did it in about 33 months from the starting point we had back in November of 2017. And we're measuring from -- again, for our next doubling of the U.S. business from a 2020 base in revenue. We want to achieve average adjusted EBITDA growth of 15% over the next 3 to 5 years. We continue to target adjusted EBITDA margin in the 28% to 29% range, and we were very pleased with how margin held up in the 2020 downturn, especially in Q2 and Q3 last year. And then finally, our fourth milestone is to maintain and achieve revenue per truck per month above the $30,000 level, and that $30,000 level, as we discussed in past presentations, is a level that provides excellent returns on capital over the life of a Badger. I'll now move on to Slide 8. We'd like to take a couple of minutes to outline our meaningful growth opportunities and how we're breaking the opportunities into bite-sized pieces through our market and customer segmentation work. On to Slide 9. We first reviewed this slide at our December Investor Day, and it's an overview of how we calculate and dimension the size of the market. The use of nondestructive excavation, as I said earlier, is in the early stages of adoption in the U.S. We believe our growth opportunity is sustainable and achievable over the long term. This is not a short-term opportunity. We've been able to achieve a 15% revenue compound annual growth over the last 10 years, and we have more opportunity like that in front of us. The research we've done over the last 1.5 years suggests that the opportunity for nondestructive excavation in the U.S. and Canada is 7 to 9x the current market size. It's pretty exciting. We see a range of market sizes, and we're developing regional plans to target the penetration and address the opportunity that exists. I'll now move on to Slide 10. Badger has historically been a very decentralized business with local and regional focus that served us very well and supported growth over almost 30 years. We're now working to refine our operating model, and that allows us to address this market opportunity I commented on a minute ago. And this is especially valuable in larger markets and is especially valuable in helping maintain and optimize our scalability of our business model. We're shifting to a more functionally focused structure with key functions that support our very strong branch network. Our functional areas which are broadly operations, fleet management, sales and marketing and manufacturing, all are supported by our technology and our common business platform, our ERP system and are also broadly supported by our shared services support function, which are finance, human resources, health and safety and IT. We believe this structure maximizes our scalability and allows us to also have the capability of addressing the market opportunity. We continue to have a strong branch focus, but also, we want to have consistent, sustainable operating procedures and processes that are consistently executed on over the entire branch network. I'll now move on to Slide 12. The legal structure we have lined out on this slide provide better leadership and better business segment alignment for us. We're changing our name to Badger Infrastructure Solutions Ltd., and we very much appreciate the shareholders' support today in helping us move forward with that name. We believe it much more accurately describes the work we do. As you can see on this slide, we're aligning our operating model by branch operations, manufacturing, fleet and tax. Those are our major focus areas for this initiative. On the operations side, we provide nondestructive excavation in our contracting, all these related services we provide to our customers. Our operations each have stand-alone P&Ls to track performance, and we have traditionally and continue to use a business case to request new equipment, capital employed, and this further feeds in to drive improving utilization and increasing our return on invested capital. Badger's historical branch incentive plans are very robust. They're based on pretax earnings after a charge for capital, which really creates good alignment for our managers with Badger shareholders. We've been very pleased with this system and continue to use it. On the manufacturing side, our manufacturing plant will be restructured into an Alberta C-corp, which creates a tax benefit, so we're not taxed individually in every province. We're also standardizing fleet management to improve asset utilization. Under this structure, Badger fleet owns the trucks and leases the unit to the contract services or our operations side of the company. The sales tax will be paid on the lease value of the hydrovac over the lease term versus the total cost of building the unit that we've done in the past. This therefore provides the opportunity to defer sales tax over the useful life of the unit rather than upfront. Establishing the leasing entity provides us with more flexibility to move the fleet across state boundaries, as I mentioned earlier, without triggering compliance or tax -- excise tax issues. And last but not least, we're setting up an international tax structure that is expected to optimize our overall corporate tax rates. With the name change to Badger Infrastructure Solutions, we're also changing our ticker on the Toronto Stock Exchange from BAD, B-A-D, to BDGI, Badger Infrastructure Solutions. We expect the common shares to start trading under the new name and ticker on or about May 11. There's no action required by our existing shareholders with respect to the name change or trading symbol changes. In summary, we're aligning our legal structure with our strategic initiatives and the strategic milestones -- achieving the strategic milestones that we reviewed earlier. These legal and tax initiatives are expected to be completed by the end of this year. Move now on to Slide 14. We'll touch on our capital allocation strategy for a minute, which many of you have already seen. Our first priority is to grow the business organically. It's the best thing we can do with shareholder cash. It's the best way we can translate cash into a meaningful value appreciation for our shareholders. Although not an active part of past strategy, based on the platform initiatives I talked about earlier, getting the ERP system in place and strengthening the organization that we've done over the last several years, Badger will be in a better position in the future to also consider mergers and acquisitions as a complementary way to grow our business. We have a very strong opportunity for organic growth, but there may also be opportunities for M&A. At this point in time, we don't see anything imminent on the M&A side, but it could be a part of addressing Badger's 3 to 5-year strategic milestones. And finally, we remain committed to returning capital to our shareholders in the most accretive manner. This includes both dividends and share repurchases. In March, the Board increased the dividend by 5% and put a new normal course issuer bid program in place. Badger has always been committed to using shareholder value in a thoughtful and accretive manner and always thinks about the long term. I'll now move on to the next slide, Slide 15. Your company continues to maintain a strong financial position. The company has approximately $330 million in total liquidity, this through a combination of cash on hand and committed credit facilities. At the end of Q1, our total debt less all cash on hand to EBITDA ratio was 1.2x. That's well within the financial covenant of 4x under our credit facilities. As disclosed in our Q1 earnings release, Badger renewed that supplemental $100 million 1-year credit facility this week. This goes hand in hand with the $300 million core credit facility that has a remaining term of 3 years and matures in September 2024. We continue to maintain ample liquidity and financial flexibility to support growth. So we'll move on now to Slide 16. As we discussed in past quarters and as we're very pleased with the progress, we continue to make meaningful improvements in working capital management. Since Q1 2020, we have reduced our outstanding receivables in this -- in the over 90-day bucket by $26 million. Again, we're very pleased with the progress we've made. This comes on the heel of our very successful rollout of the ERP system. So that ERP system and then the improvements we've made in our accounts receivable and credit management and the strengthening we've been very successful at putting in place with our credit collections team have allowed us to continue to make very good progress and we anticipate continued good progress on our AR processes. This has all contributed to improvement in our day sales outstanding, our DSO, from 96 days in Q1 2020 to 77 days in Q1 2021. We've implemented formalized credit and collections processes. And part of this, we proactively evaluate our credit exposure for each account to ensure we have a strong and creditworthy customer base. We use a risk-based and systematic approach to manage collection and credit granting, significant improvements with -- from Badger's processes just a couple of years ago. And we continue to be focused on further working capital improvements. Just as a data point, we estimate that 90% of our counterparties in our AR portfolio today are rated as an investment-grade or better. So I'll move now on to Slide 18. So there it is. The Badger business fundamentals are strong. And the market opportunity for nondestructive excavation is large, and it's there to go after. Your company has solid strategic initiatives, and we continue to execute on them. We're aligning our legal structure to support our strategy and to facilitate our strategic initiatives. We'll also continue to be focused on further improving how we penetrate the market. We're strengthening the Badger operations and sales marketing team to support that growth. We're focusing closely on fleet utilization to drive returns on capital, and we also want to ensure that we have sufficient manufacturing capability to support growth. All these things we do as part of managing Badger for the long term. So that's the Badger investment opportunity. The Badger team is committed to the strategy, and we're very excited about the potential for the next few years. So with that, let's now move on to the Q&A section. [Operator Instructions] So let's see how this works. Thanks.

Thank you, everybody. Lisa, I don't see any questions on the screen. Might there be a lag here?

No, there should not be any lags. We'll give them maybe a few more seconds to submit a question. And if not, we can turn it back to the operator.

So there being no questions, I'd like to thank everyone for their participation in Badger's 2021 Annual General Meeting, their support for the company overall. And we'd like to thank our customers our employees, our suppliers and especially our shareholders for your support of Badger, and we are hoping you're going to go with us into the future on our exciting growth journey. So with that, we'll turn it back to the operator, Lisa. Thank you.

This concludes the meeting. You may now disconnect.