U.S. Markets open in 8 hrs 42 mins
  • S&P Futures

    3,253.50
    +15.50 (+0.48%)
     
  • Dow Futures

    26,845.00
    +130.00 (+0.49%)
     
  • Nasdaq Futures

    10,941.25
    +49.50 (+0.45%)
     
  • Russell 2000 Futures

    1,459.00
    +12.00 (+0.83%)
     
  • Crude Oil

    40.56
    +0.25 (+0.62%)
     
  • Gold

    1,874.20
    -2.70 (-0.14%)
     
  • Silver

    23.28
    +0.08 (+0.36%)
     
  • EUR/USD

    1.1667
    -0.0008 (-0.0700%)
     
  • 10-Yr Bond

    0.6660
    -0.6660 (-100.00%)
     
  • Vix

    28.51
    -28.58 (-100.00%)
     
  • GBP/USD

    1.2754
    +0.0002 (+0.0179%)
     
  • BTC-USD

    10,702.73
    -57.86 (-0.54%)
     
  • CMC Crypto 200

    218.11
    +9.17 (+4.39%)
     
  • FTSE 100

    5,822.78
    -76.48 (-1.30%)
     
  • Nikkei 225

    23,200.67
    +112.85 (+0.49%)
     

Edited Transcript of BAD.TO earnings conference call or presentation 12-Mar-20 3:00pm GMT

Q4 2019 Badger Daylighting Ltd Earnings Call

CALGARY Apr 4, 2020 (Thomson StreetEvents) -- Edited Transcript of Badger Daylighting Ltd earnings conference call or presentation Thursday, March 12, 2020 at 3:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Darren Julian Yaworsky

Badger Daylighting Ltd. - VP of Finance & CFO

* Paul J. Vanderberg

Badger Daylighting Ltd. - President, CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Daryl Young

TD Securities Equity Research - Mining Research Associate

* Jonathan Lamers

BMO Capital Markets Equity Research - Analyst

* Maggie Anne MacDougall

Stifel Nicolaus Canada Inc., Research Division - Head of Research

* Trevor Reynolds

Acumen Capital Finance Partners Limited, Research Division - VP of Research & Equity Research Analyst

* Yuri Lynk

Canaccord Genuity Corp., Research Division - Director and Senior Engineering & Construction Equity Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for standing by, and welcome to the Badger Daylighting 2019 Fourth Quarter Results Conference Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Mr. Paul Vanderberg. Please go ahead, sir.

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [2]

--------------------------------------------------------------------------------

Thanks, Olivia. Good morning, everyone, and we appreciate you joining Badger's 2019 Q4 and our annual investor call. Joining me this morning is our CFO, Darren Yaworsky; our COO, John Kelly; and Jay Bachman, our VP of Financial Operations.

Our Q4 earnings release, MD&A, financial statements and AIF were released after the market closed yesterday and are available on the Investors section of our website and also on SEDAR. Before we get into the call today, we're required to note that some of the statements made on the call 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 statements based on certain assumptions that we consider to be reasonable. However, forward-looking statements are always subjects to certain risks and uncertainties and undue reliance should not be placed upon them as actual results may differ materially from those expressed or implied. For more information about material assumptions, risks and uncertainties that may be relevant to such statements, please refer to Badger's Q4 press release, the 2019 MD&A and Badger's 2019 annual information form. Further, such statements speak only as of today's date, and Badger does not undertake to update any such forward-looking statements.

I usually read this every quarter, and it sounds particularly germane in Q4 2019. So let's get into it. I'd like to start with an update on our ERP implementation, a huge focus for the entire organization throughout 2019. We're delighted to confirm that through Q4 and into January 2020, we successfully went live with ERP across the entire company. This is a very significant accomplishment, and we are very pleased to have the rollout behind us. As we now move into the refinement phase of implementation throughout 2020, you'll see us focused on driving the efficiencies of the system in order to get to many managers who dedicated a lot of time and effort to this project, back to their day jobs of growing Badger, and at the same time, allowing us to move forward on a number of efficiency initiatives. I'll speak more on the ERP implementation in a couple of minutes. Now some comments on Q4 financial and operational performance.

Q4 revenue was $167.2 million, adjusted EBITDA of $35.8 million and consolidated RPT of $31,075. Q4 revenues, adjusted EBITDA and RPT were consistent with the outlook that we put out in November, with full year adjusted EBITDA of $158.4 million. On a quarter-over-quarter basis, Q4 is lower than the prior year, which is due primarily to an exceptionally strong Q4 last year. As you may recall, and as highlighted in the Q4 release, the prior year fourth quarter results included the benefit of $20 million of emergency response revenue, which did not recur this year. That work was related to hurricanes in the Southeastern U.S. and also related to the wildfires in California.

That emergency response revenue was the primary driver of Badger's record 2018 Q4 performance. Some color on our Q4 revenue. Q4 revenue was 9% lower in the U.S. and U.S. dollars, with revenue in Canada down 10% compared to prior year. Although overall growth was lower in Q4 relative to recent quarters, excluding the impact of emergency services revenue, we continued to experience positive growth in majority of our U.S. regions. Revenues in Q4 continued to be a regional story as it generally is at Badger, with a combination of factors driving consolidated revenue and EBITDA.

As detailed in our Q4 earnings release, revenue growth in the quarter was impacted by the following: variations in regional revenue and the growth rates, with the majority of regions continuing to deliver overall revenue growth. I mentioned the lack of the $20 million of emergency response from -- in Q4 from the earlier year's quarter. Revenues in Western Canada declined and have declined the last several quarters as a result of reduced oil and gas activity. This market in Alberta and Saskatchewan, in particular is looking like it's going to be soft for some time with some real structural challenges. And we continue to optimize the branch network, looking at our expenses and, of course, relocating trucks. In addition to lower oil and gas activity in Western Canada, we've seen activity levels in our U.S. oil and gas markets to be slower versus prior year. Again, we anticipate a continued slowdown in these markets and really, really highlighted by the recent market and commodity volatility in those markets, and we expect a lot of uncertainty to continue here in the coming months.

We are very pleased with increased revenues and operational performance in Eastern Canada. Those improvements have been made in Ontario over the past year and have really moved the needle in our Ontario business on both growth and profitability. In 2019, we opened 16 new service locations, and of course, we have plans for additional locations for 2020. The opportunity in the U.S. is to expand not only at existing locations, but also continue to open new locations to drive growth, and that remains a key driver and a focus for us.

For Q4 and for annual 2019, U.S. revenues accounted for 78% of our total revenue. We added 49 Hydrovacs and retired 8 in the quarter for a net add of 41 units. And for the year, we added 199 Hydrovacs and retired 56 for a net add of 143. The Hydrovac build and retirements for fiscal '19 were both in line with the outlook that we talked about in November. As I previously noted, adjusted EBITDA for Q4 was $35.8 million with an EBITDA margin of 22%.

The primary factors driving the change in adjusted EBITDA and an EBITDA margin where, as I mentioned, the absence of $20 million in emergency response revenue, which more than offset continued growth in a number of our U.S. markets. It also reflected continued pricing initiatives and improvements related to that, with Hydrovacs rates consistent to modestly higher across the majority of our regions.

Lower activities in Western Canada, as a result of continued weakness in oil and gas more than offset stronger revenues and financial performance in Lower Canada. Also impacted Q4 and overall 2019 year-to-date margins were higher G&A costs related to the ERP implementation, which we had highlighted as a headwind and a factor in our outlook back when we released our Q3 earnings.

And lastly, the adoption of IFRS 16 had a positive impact, similar to previous quarters of approximately $1.1 million.

Some comments on net earnings in the quarter. Our net earnings were $17.8 million compared to $31.9 million in Q4 last year. Net earnings were impacted by the same drivers as discussed a minute ago, on adjusted EBITDA with a further impact related to higher depreciation expense due to growth in the fleet, offset by lower share-based compensation expense due to a lower share price in Q4.

Now just a couple of comments on the balance sheet and shareholder return initiatives. Badger's balance sheet continues to be strong, providing the necessary flexibility to support growth opportunities, strategically managed capital allocation and deal with uncertainties in the economy. As of year-end, total debt less cash was $177.3 million or 1.2x trailing 12 months compliance EBITDA. Badger continued to utilize the NCIB program during Q4, and -- under which we repurchased and canceled 210,000 shares in the quarter. Since we began repurchasing shares under the NCIB in Q4 '18, we have repurchased and canceled approximately 2.2 million shares or 6% of the float.

As a follow-up to our discussion from last quarter, I'd like to make a couple of comments on our accounts receivable and our aging. Due to a combination of growth in the business, lot of internal focus on ERP, the aging of our receivables portfolio at year-end is not at historical levels or where we foresee or expect it to be in the future. Darren and John's teams are focused on getting back to Badger's historical AR standards and improving beyond those. We anticipate steady progress on the portfolio throughout 2020 and are pleased with progress in Q1 on DSOs compared to our DSOs at year-end.

Badger also continued its focus on overall shareholder returns. We increased the dividend by 6% back in March of 2019, while at the same time, continuing to repurchase shares under the NCIB. In Q3, Darren extended and upsized our credit facility, which, together with Badger's strong balance sheet, provides the company with ample financial flexibility to support growth in operations across a wide variety of economic conditions.

Considering Badger's financial position, the board approved an additional increase in the dividend for this year of 5%, effective with the March payment.

Now that I've provided some color around Q4, I'd like to spend a minute to highlight the progress made during 2019 on several key initiatives as well as providing an update as to what we're going to be focused on for 2020.

2019 was truly a transformational year for the company. We focused on building out our systems, standardizing business processes and strengthening key business functions, all of this work to allow us to establish a platform to support growth and capturing the North American market opportunity that we see over the long-term for nondestructive excavation.

These investments began to be made during 2017, continued at '18, and in particular, ramped up with our ERP implementation in 2019. These are long-term decisions and actions we've taken to sustain long-term profitable growth.

Our new ERP system is now live across the entire organization. It's quite an accomplishment. Our corporate operations went live in Q4, and we ended up with our franchisees and operating partners going live in the month of January. We are very pleased with the regional rollout. The strong execution on this project would not have been possible without the dedication and significant commitment of time and energy from the entire Badger team. The ERP implementation, of course, was a top focus for us during 2019. Significant employee involvement from across the entire business was required from design to testing to -- right through to rollout.

The team committed significant time away from day-to-day operations to ensure this project is a success. We've all heard about companies where this has not been a success, and I much rather take the time away and the commitment to make it go right the first time. It makes all the difference in the implementation. However, this time away from the business was a distraction and a significant one. A lot of work, and especially when you get into the rollout phase, it's all consuming. There's no turning back. So as the ERP project moves now from rollout into the operational phase, you'll see us seek to aggressively realize the operational and financial benefits that are inherent in the system design. Our focus in 2020 will be on continuing to drive organic revenue growth, of course, realizing the benefits from the ERP system and managing margins as we always do through operating costs and strategic pricing initiatives.

So a comment on our 2020 financial outlook. As outlined in the Q4 press release, we are staying with and confirming our 2020 financial outlook as outlined back in November. However, the events of the last several weeks have really brought forward a tremendous amount of economic uncertainty, probably as high as it's been since the last financial-based recession.

We are very closely monitoring events surrounding the coronavirus and also recent financial and commodity market volatility. We will actively manage any impact to the business, customers and employees. We're working to ensure that appropriate policies are in place and communications are in place to protect our employees and customers' safety and any impact on the business. We will take all necessary steps to manage the situation as events unfold, and this week, they're certainly unfolding. Given the dynamic nature of the coronavirus, it's really difficult to determine the exact nature of its ultimate impact. Significant uncertainty exists across financial and commodity markets with the potential impact on the global and North American economy is quite uncertain at this point.

It's unclear what the long or short-term impact may be on operations, but you can be assured, in the event of any economic downturn in any of our markets, you all know what we're going to do. We will proactively reallocate Hydrovacs across the branch network in response to different activity levels in different regions. This has been our historical past practice. We'll continue to manage our capital expenditures and build very prudently, and we'll continue to push Hydrovac growth in the many markets, where Hydrovac is underutilized. When we get to the point where we can provide an update on the outlook, and we have a view based on the future and as things start to clarify, we'll provide an update.

Despite the near-term disruption that the coronavirus has created, we remain focused on generating profitable, long-term sustainable growth to drive long-term, sustainable shareholder returns. With that, in conjunction with our 2019 Investor Day, and consistent with past years, we had confirmed our 3- to 5-year strategic financial and operational milestones, which we talk about each quarter, which consists of: number one, doubling the U.S. business from fiscal 2019 levels over a period of 3 to 5 years; growing adjusted EBITDA by 15% a year; targeting adjusted EBITDA margins of 28% to 29%; and driving fleet utilization and maintaining revenue per truck per month above $30,000.

In closing, we want to reiterate that the key to Badger's business model is consistency of approach. We've always historically managed for the long term. We've made a lot of investments over the last several years that set Badger up for a very, very good future in health and safety, in environmental, in human resources, in sales and marketing, in manufacturing fleet. We've strengthened the finance organization, and in 2015, have implemented a very successful ERP system.

These investments are being put in place to create the operating platform to profitably capture the significant market opportunity that we see in Canada and the U.S. for nondestructive excavation. So with that, why don't we turn the call over to the moderator? Olivia, open it up for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question coming from the line of Yuri Lynk with Canaccord.

--------------------------------------------------------------------------------

Yuri Lynk, Canaccord Genuity Corp., Research Division - Director and Senior Engineering & Construction Equity Analyst [2]

--------------------------------------------------------------------------------

Little more color, please, on what went on in Canada in the quarter? I mean, you saw your RPT come down quite substantially in the quarter. Normally, I would have thought that we would have seen an exodus of trucks from Canada, but it looks like you added 9. So just why add trucks when your margins are down and RPT is down? And I guess, more importantly, is there anything that's prohibiting those trucks in the oilfields in Alberta from moving into other applications?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Yes. No, good question. Very much a regional east and west, different story there, Yuri. We -- the trucks added were in the east. We've had a really nice growth run in 2019, not only in our corporate operations but also with our operating partners, our franchisees in Eastern Canada that are growing. So that's been real gratifying for us. In the west, there were some projects that finished up that required units in the west, and we're looking very carefully and very closely at what needs to be moved. That's the way we always do it. And it's just a matter of timing.

--------------------------------------------------------------------------------

Yuri Lynk, Canaccord Genuity Corp., Research Division - Director and Senior Engineering & Construction Equity Analyst [4]

--------------------------------------------------------------------------------

The trucks in the west, Paul, are they all -- could those come right out and go and move into -- onto the highway and move into other applications so they're not overweight or different configuration?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [5]

--------------------------------------------------------------------------------

No, not -- there's no physical restrictions on operating jurisdictions. That's the way we design Badgers and they're designed to be compliant in all regulatory jurisdictions across North America.

--------------------------------------------------------------------------------

Yuri Lynk, Canaccord Genuity Corp., Research Division - Director and Senior Engineering & Construction Equity Analyst [6]

--------------------------------------------------------------------------------

Okay. You ended the year about $2.5 million lower on SG&A than I think where you indicated back in the Investor Day. Was that SG&A pushed into 2020? Or I guess, in hindsight, does it just appear that you were a bit conservative in your outlook for SG&A for the year?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [7]

--------------------------------------------------------------------------------

Yes. No, that's a good question. SG&A is near and dear to our heart and will continue to be. Any time you have a monster project like the ERP, there's lots of expenses that get booked and get paid. So we did a really good scrub at year-end as to what expenses were part of ERP, what might not have been, what needed to be capitalized, what needed to be expensed based on all the IFRS guidelines. So we did a good scrub on that and wanted to end the year nice and tight. So that's basically what it reflected.

--------------------------------------------------------------------------------

Yuri Lynk, Canaccord Genuity Corp., Research Division - Director and Senior Engineering & Construction Equity Analyst [8]

--------------------------------------------------------------------------------

Okay. And last one for me, I'll turn it over. I just want to dig in a little bit on your gross margin expectations. If I compare this -- 2019 with 2018, you did get a bit of a boost from IFRS. So I think on a like-for-like basis, you're down about 100 bps. So you would think it would be a bit of an easier compare in 2020. So what are some of the puts and takes that's -- that are perhaps weighing on margin and what you're doing to address them?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [9]

--------------------------------------------------------------------------------

Yes. Well, some of the takes in 2019 have been labor. We've had to respond to some regional labor pressures in the U.S. That's been the most significant one on the gross margin perspective. And you have some regional differences, for sure, in that area, but that would be the major category. That's our biggest operating expense. And you try to increase pricing to make up with that. There has been a lag on that in several markets. But with the new system and the visibility we have going into 2020, we're in a much better position on visibility into the regional pricing to try to stay ahead of that. And a very different world we're in going into 2020 on ability to see what's happening in the business. So mostly lagging on making up for labor increases.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

And our next question coming from the line of Maggie MacDougall with Stifel.

--------------------------------------------------------------------------------

Maggie Anne MacDougall, Stifel Nicolaus Canada Inc., Research Division - Head of Research [11]

--------------------------------------------------------------------------------

So first question, and this may be difficult to answer, but obviously, market conditions and economic conditions are changing quite rapidly for everybody. And I'm wondering if you are able to help us out with understanding, should the U.S. shale market go the way that the Canadian energy market has gone over the past several years, what type of exposure would you have to that? Or perhaps what would be the magnitude of Badgers that would be potentially moved around into new markets in order to put them at work in other places?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [12]

--------------------------------------------------------------------------------

Yes. No, a great question, Maggie. I go back to the disclosure in the AIF and oil and gas from Badger's 22% last year. Generally, and this is a broad generality, but pipeline and distribution systems, the utility piece of the oil and gas segment, if you were, is about -- approximately half of that. And then the other half of that would be a combination of facilities work and upstream field work. So the question you asked is really the impact on upstream field work. Of course, with the broad economic downturn, people could cut capital budgets on the other segments. But it's really about, say, a half of a half quarter, 25% of that segment.

--------------------------------------------------------------------------------

Maggie Anne MacDougall, Stifel Nicolaus Canada Inc., Research Division - Head of Research [13]

--------------------------------------------------------------------------------

Okay. And I'm wondering if we could discuss just a little bit this indirect versus direct cost concept related to the CBP, an ERP implementation? So do you have any direct costs remaining related to the ERP? I suppose we could discuss in isolation. And then on the indirect cost component, what amount was actually embedded in the Q4 SG&A? And perhaps speak to the path this year to sort of wind those indirect costs down.

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [14]

--------------------------------------------------------------------------------

Okay. There will be continuing CBP implementation costs as we're still in hyper care. We're in post rollout hyper care, where we have support from consultants, and that continues. That will continue for a few months, very normal. And we just finished going live about 6 weeks ago. So that's pretty normal with ERPs. And I guess, Darren, I might refer to you on the second half of Maggie's question about the direct and indirect in Q4. We did call that out in our full year guidance. And I don't know how you might think about answering her question. I would have to refer back to the guidance on that.

--------------------------------------------------------------------------------

Darren Julian Yaworsky, Badger Daylighting Ltd. - VP of Finance & CFO [15]

--------------------------------------------------------------------------------

Sure. I think, Maggie, the breakdown that we gave in Toronto back in November is pretty much still a par. So just to refresh everybody, there was 3 broad components. There is the consulting cost associated with the implementation itself, which went from being capitalized to expense in Q4 for a good chunk of those costs. The second component was the IT infrastructure. So that was the IT infrastructure spend that we accelerated to ensure that we had the network strength to be able to run Oracle. And then the third, the IT cost. So similarly, we had gone from a very lean IT group to a much larger group to be able to support the implementation. And through that process, a lot of those people that were hired were consultants and are consultants. So there is a higher cost structure versus our anticipated run rate on the IT side of things.

--------------------------------------------------------------------------------

Maggie Anne MacDougall, Stifel Nicolaus Canada Inc., Research Division - Head of Research [16]

--------------------------------------------------------------------------------

Okay. So if I refer back to the MD&A for this quarter, I think there was $1.9 million in G&A directly associated with ERP. And so should we expect that run rate to continue for a few more months, while you are still sort of in hyper care, I think is what you called it? And then the indirect cost the $10 million that you referenced, is that G&A related? And should that be expected to continue for a few more months? Or is it more like for a couple of quarters? Or just trying to get a sense as to how to model that?

--------------------------------------------------------------------------------

Darren Julian Yaworsky, Badger Daylighting Ltd. - VP of Finance & CFO [17]

--------------------------------------------------------------------------------

Sure. So the discrete costs in Q4, the $1.9 million, we would anticipate some of those costs to leak into Q1 of 2020. And just referring back to Paul's point about supporting the hyper care and stabilization of Oracle, which is, quite frankly, going really well. With regards to those other indirect costs, the IT infrastructure component will continue to run in G&A, but we'll see a marked improvement in our IT, personnel, G&A costs, likely, the second half of the year.

--------------------------------------------------------------------------------

Maggie Anne MacDougall, Stifel Nicolaus Canada Inc., Research Division - Head of Research [18]

--------------------------------------------------------------------------------

Okay. And then a final question from me on priorities for, I guess, capital allocation. We've seen the market have a very significant sell-off in the last couple of days, in particular. And I'm wondering if that has made your view of your NCIB as it -- making it look a bit more attractive? Or how you're sort of thinking through things as they are quite dynamic at this point?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [19]

--------------------------------------------------------------------------------

Well, they certainly are dynamic, Maggie. Probably an understatement this morning. But as we did announce, the Board did approve another 5% increase in the dividend. We consider this to be a very good use of capital and part of our overall shareholder value equation. And we do have the existing NCIB that is in place through May. And we are looking at options as to what we do after that, which we're not in the position to disclose yet. But we're currently in blackout from buying under the NCIB. And as our blackout ends, I think you'll -- what you'll see is our activity reflected in the public filings.

--------------------------------------------------------------------------------

Maggie Anne MacDougall, Stifel Nicolaus Canada Inc., Research Division - Head of Research [20]

--------------------------------------------------------------------------------

Paul, could you please remind me how much you have remaining under the current NCIB?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [21]

--------------------------------------------------------------------------------

Yes. It's about half on the -- just a little under 1 million shares, I believe, Maggie.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

And our next question coming from the line of Jonathan Lamers from BMO Capital Markets.

--------------------------------------------------------------------------------

Jonathan Lamers, BMO Capital Markets Equity Research - Analyst [23]

--------------------------------------------------------------------------------

Paul, a question on the Q4. In your prepared remarks, you mentioned there were variations in U.S. revenue by region. Were you referring to declines for the hurricane markets only or declines for any other markets in Q4?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [24]

--------------------------------------------------------------------------------

Well, we did touch earlier on oil and gas. And of course, we've seen continued year-over-year declines in Western Canada. We've seen declines in West Texas and the mountain states related to oil and gas. And then when you look at other markets, Badger is always a story of our regions. But we talked about Ontario earlier, good growth in Ontario. Good growth year-over-year in the Northeast and slightly lower sales in the Southeast. Texas, non oil and gas has been very good and solid. And the West Coast, California up into D.C. have had good year-over-year growth. So as usually with Badger, there's different activity in different regions but that would be the characterization of Q4.

--------------------------------------------------------------------------------

Jonathan Lamers, BMO Capital Markets Equity Research - Analyst [25]

--------------------------------------------------------------------------------

Okay. And we're pretty well into Q1, like, how have revenue per truck trends been through Q1 to date?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [26]

--------------------------------------------------------------------------------

Well, we typically would disclose all of that along with our Q1 earnings. But some general color on revenue, we've had revenue the first couple of months slightly lower than last year. And any time you're in winter, you have pluses and minuses there. And for March, we're seeing a very typical seasonal uptick from February. Very, very good growth from February. And so now we should get into March and April, and May, now you have different markets transitioning from winter weather into spring weather patterns, and our March uptick so far has been very typical as to what we've seen in past years.

--------------------------------------------------------------------------------

Jonathan Lamers, BMO Capital Markets Equity Research - Analyst [27]

--------------------------------------------------------------------------------

And you've highlighted the opportunity in the West -- Western U.S. Do you have plans to recruit a VP to manage those operations?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [28]

--------------------------------------------------------------------------------

Yes. What we've done is, John has restructured our overall operation span of control with Liz Peterson taking approximately half of the eastern -- the eastern half of North America, north to south across the Canadian border, and Tim Reiber taking over the west half. And it splits Badger approximately 50-50 based on truck count and employees. And we're very, very pleased with both Liz and Tim taking on those responsibilities and expect great things.

--------------------------------------------------------------------------------

Jonathan Lamers, BMO Capital Markets Equity Research - Analyst [29]

--------------------------------------------------------------------------------

Okay. And just the last question. We've spent some time talking about the economic uncertainty out there. Just to be clear, are there any indications of changes in customer activity to date? And do you have any comments on how we should think about the potential effect for the sort of infrastructure end markets?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [30]

--------------------------------------------------------------------------------

Yes. No, that's something we're obviously watching very closely. I mean, we have had economic and industry impact in the oil and gas segments that we talked about earlier. And it looks like there's going to be more of that uncertainty to come. We're watching very closely what the E&P companies are saying about their budgets and their drilling programs. Pipeline and distribution, the utility-like piece of our oil and gas operations, we see continuing activity there with projects being mobilized. And as that we sit here today in the rest of our business, we've not seen significant project cancellations.

We were talking with the Board yesterday. There's one company that had a facility that they've shut all outsiders out of, and that's a pharmaceutical manufacturing company, which no surprise, in that type of manufacturing operation, it makes total sense to not have outsiders in and out, and that would include the UPS and the postman. So -- but other than that, and outside of oil and gas, as we sit here, we've not seen significant dislocation, but it doesn't mean that in a general economic decline, we won't see companies deferring decisions, moving to maintain liquidity in delaying things. We just haven't seen it yet.

--------------------------------------------------------------------------------

Operator [31]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question coming from the line of Daryl Young with TD Securities.

--------------------------------------------------------------------------------

Daryl Young, TD Securities Equity Research - Mining Research Associate [32]

--------------------------------------------------------------------------------

My question is with respect to the ERP, and just in the past, you've talked about the revenue opportunities as well as some cost savings for truck tracking. I'm just wondering if you could maybe give us a bit of update on how that progressed through Q4. And maybe what strategies or plans you might have in place to leverage that and to drive revenue this year?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [33]

--------------------------------------------------------------------------------

Yes. No, a great question. It is an exciting opportunity for us. And as I mentioned earlier, relative to pricing, the visibility that we've had in our early days. Again, we just finished go-live 6 weeks ago is very exciting, and it applies to many aspects of our business. On the truck side, we're really looking at how else we can track utilization, and what other ways we can track utilization and to help us manage the uptime and also help us manage moving trucks around. So there are some opportunities there. And I mentioned pricing earlier. But also, there's other opportunities, top to bottom, in the income statement, from direct cost management to tracking indirect costs, the branch SG&A. So we'll be looking at all of those, but its early days. In Q4 -- your question was about Q4. Really, we were all hands on deck to get rolled out. And it's an intense process. So John and Darren are very closely coordinating on the type of KPIs and numbers that John and his operating folks would like to see. And Darren, with his business intelligence team, now has access to information to start to make any reports. But it's very, very early days. But we're very pleased with the visibility we've seen so far.

--------------------------------------------------------------------------------

Daryl Young, TD Securities Equity Research - Mining Research Associate [34]

--------------------------------------------------------------------------------

Excellent. And then can you just remind us what percentage of your cost is fuel cost, just with gas prices, presumably, about to decline significantly?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [35]

--------------------------------------------------------------------------------

Yes. Well, if you look at our 3 biggest operating costs, direct labor on the trucks, plus or minus 35% to 40% range. Then you have maintenance and repair on the trucks in the range of 6% to 7%. And then fuel will be the next biggest in the 5-plus-or-minus-percent range of our -- of note, they're all percentages of revenues.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

And our next question coming from the line of Trevor Reynolds with Acumen Capital.

--------------------------------------------------------------------------------

Trevor Reynolds, Acumen Capital Finance Partners Limited, Research Division - VP of Research & Equity Research Analyst [37]

--------------------------------------------------------------------------------

Just wondering if you can give us a little better sense of what the percentage of Canadian revenues is from Alberta and Saskatchewan? And the oil and gas industry in particular?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [38]

--------------------------------------------------------------------------------

Yes, it's pretty well split about half and half, east and west.

--------------------------------------------------------------------------------

Trevor Reynolds, Acumen Capital Finance Partners Limited, Research Division - VP of Research & Equity Research Analyst [39]

--------------------------------------------------------------------------------

Okay. And then just on the receivables, I know you guys were looking at the implementation of pre-authorized payment on smaller jobs. So I was just wondering how that -- is that system in place now? Or what's the time line on that?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [40]

--------------------------------------------------------------------------------

Yes. That system is a follow-on to the go-lives, that's been the way we've planned it. And it's a Q1, early Q2 activity. And I'm pleased to report that is proceeding very well.

--------------------------------------------------------------------------------

Trevor Reynolds, Acumen Capital Finance Partners Limited, Research Division - VP of Research & Equity Research Analyst [41]

--------------------------------------------------------------------------------

And so, I guess, just one quick follow-on then. Like, so you expect that to probably have an impact in the back half of the year?

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [42]

--------------------------------------------------------------------------------

Oh, for sure. We're very excited about it. And that implementation is going well. We didn't want to do it in the midst of the rollout. But I'm personally very optimistic on the benefits we're going to see from that.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

I'm not showing any further questions at this time. I would like to turn the call back over to Mr. Paul Vanderberg for closing remarks.

--------------------------------------------------------------------------------

Paul J. Vanderberg, Badger Daylighting Ltd. - President, CEO & Director [44]

--------------------------------------------------------------------------------

Okay. Thanks, Olivia. And thanks, everyone, for joining us this morning. It's been an interesting several weeks. And we appreciate your interest in Badger. And you know what we're going to be doing. We're going to be looking at driving growth, managing our income statement top-to-bottom and moving trucks around to optimize shareholder capital. So until we talk again in May, thank you, everybody.

--------------------------------------------------------------------------------

Operator [45]

--------------------------------------------------------------------------------

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all disconnect.