Mr. Paul Vanderberg reports

BADGER DAYLIGHTING LTD. ANNOUNCES RECORD FOURTH QUARTER AND ANNUAL 2018 RESULTS, A 6% DIVIDEND INCREASE AND CONFIRMS 2019 FINANCIAL OUTLOOK

Badger Daylighting Ltd. has released its financial and operating results for the three months and year ended Dec. 31, 2018.

Badger achieved 2018 annual adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $161.7-million, exceeding its 2018 financial outlook.

Fourth quarter and year-end highlights:

• Badger generated record fourth quarter 2018 adjusted EBITDA of $47.9-million, up 39 per cent, and record annual 2018 adjusted EBITDA of $161.7-million, up 29 per cent;
• Record revenues realized in 2018 for the fourth quarter and annual periods, up 35 per cent and 24 per cent respectively, over the prior-year periods;
• Revenue per truck (RPT) per month for the fourth quarter was $37,837, up 19 per cent, with RPT for fiscal 2018 of $34,347, up 13 per cent;
• Adjusted EBITDA margin for the fourth quarter was 26.8 per cent, up 60 basis points or 2 per cent, and for the year ended 2018 was 26.3 per cent, up 110 basis points or 4 per cent;
• Net profit for the fourth quarter of $23.5-million compared with $31.2-million in the prior-year comparative quarter, with net profit for the year ended 2018 of $67.8-million compared with $65.9-million in 2017. Net profit for the fourth quarter and fiscal year ended 2017 included a one-time $17.2-million benefit due to the enactment of U.S. income tax legislation changes in the fourth quarter of 2017;
• Continued focus on delivering long-term shareholder return: (i) 6-per-cent increase to Badger's dividend; and (ii) utilization of Badger's normal course issuer bid program (NCIB), with 628,614 common shares or 1.7 per cent of Badger's issued and outstanding common shares repurchased during the fourth quarter 2018.

"Badger achieved record revenues and adjusted EBITDA for both the fourth quarter and the fiscal year ended 2018, driven by strong growth across our end use and geographic markets, as customers continue to adopt hydrovac excavation as a method of non-destructive and safe excavation. Throughout 2018, we focused on driving growth and profitability by developing our extensive branch network while working to streamline our business through business process and information technology initiatives," said Paul Vanderberg, president and chief executive officer.

"We are pleased with both our 2018 financial results and our future growth potential as detailed in our 2019 financial outlook. The improvements realized in 2018 with respect to revenues, margins, adjusted EBITDA and revenue per truck per month indicate the size of the market opportunity for Badger, while also confirming the benefit of Badger's growth and business improvement initiatives. Badger's organic growth model, adding one operator and one truck at a time, provides the foundation for our strong financial performance. The continued strength in the business and Badger's strong balance sheet has provided Badger with the confidence to repurchase shares under our NCIB while increasing our dividend by 6 per cent," stated Mr. Vanderberg.

                                        FINANCIAL HIGHLIGHTS
            (in thousands of dollars, except RPT, per-share information and as indicated) 

                                        Three months ended Dec. 31,       12 months ended Dec. 31,
                                           2018            2017 (4)       2018            2017 (4)
Revenue
Hydrovac service revenue              $ 171,516          $ 127,346     $ 587,206        $ 469,082
Other revenue                             7,093              6,471        28,236           27,726
Total revenue                           178,609            132,789       615,442          496,808
RPT -- consolidated (mixed 
currency) (1) (2)                        37,837             31,921        34,347           30,266
RPT -- U.S. (U.S. dollars) 
(1) (2)                                  40,859             34,058        36,799           32,149
RPT -- Canada (Canadian dollars) 
(1) (2)                                  30,544             27,587        28,834           26,552
Adjusted EBITDA (1)                      47,858             34,539       161,707          125,381
Adjusted EBITDA per share, 
basic and diluted (1) (3)             $    1.29          $    0.93     $    4.36        $    3.38
Adjusted EBITDA margin (1)                26.8%              26.2%         26.3%            25.2%
Profit before income tax                 31,947             19,698        97,634           71,625
Net profit                               23,468             31,244        67,817           65,852
Net profit per share, 
basic and diluted (3)                 $    0.63          $    0.84     $    1.83        $    1.77
Cash flow from operating 
activities before working 
capital adjustments                      48,936             34,364       162,494          123,683
Cash flow from operating 
activities before working capital 
adjustments per share, 
basic and diluted (3)                 $    1.32          $    0.93     $    4.38        $    3.33
Dividends paid                            5,009              4,043        18,996           15,444

(1) Non-IFRS (international financial reporting standards) measures.
                                  
(2) See changes in key financial metrics and classification of revenue groupings in Badger's 2018 
annual management's discussion and analysis for additional details on the calculation and 
disclosure of RPT.     

(3) Per-share, basic and diluted, measures calculated by dividing the respective financial 
measure with the weighted average common shares outstanding for the respective period. See 
Badger's 2018 annual management's discussion and analysis for additional details on the weighted 
average common shares outstanding.

(4) Certain comparative revenue amounts for the three and 12 months ended Dec. 31, 2017, have 
been reclassified to conform to the current-year presentation as a result of the adoption of 
IFRS 15.

                            COMPARABLE IFRS FINANCIAL INFORMATION (1)
                    (in thousands of dollars, except per-share information) 

                                        Three months ended Dec. 31,    12 months ended Dec. 31,
                                              2018            2017        2018            2017

Cash flow from operating activities      $  67,196       $  42,252   $ 134,382       $  87,400    
Cash flow from operating activities 
per share, basic and diluted (2)         $    1.81       $    1.14   $    3.62       $    2.36      

(1) Cash flow from operating activities is provided as a comparable measure with cash flow 
from operating activities before working capital adjustments.

(2) Per-share, basic and diluted, measures calculated by dividing the respective financial 
measure with the weighted average common shares outstanding for the respective period.

Fourth quarter financial and operational overview

Adjusted EBITDA for the fourth quarter of 2018 was $47.9-million, an increase of 39 per cent compared with $34.5-million in the prior-year comparative quarter, and for the year ended 2018 was $161.7-million, compared with $125.4-million in the prior year, an increase of 29 per cent. Adjusted EBITDA margin for the fourth quarter of 2018 was 26.8 per cent, compared with 26.2 per cent in the prior year quarter, and for the year ended 2018 was 26.3 per cent, compared with 25.2 per cent in the prior year. Improvements in adjusted EBITDA and adjusted EBITDA margin were driven by revenue growth, higher hydrovac utilization and improved labour efficiency.

Badger realized record revenues for the fourth quarter of 2018 of $178.6-million, 35 per cent higher compared with $132.1-million for the same period in 2017. Record revenues were driven by revenue growth in the United States of 40 per cent with revenue of $105.9-million (U.S.) in the fourth quarter of 2018, while revenue in Canada of $38.9-million was 8 per cent higher than the prior-year comparative quarter. Average hydrovac rates for the fourth quarter were consistent to modestly higher across both the U.S. and Canadian markets, compared with the same period in 2017. Badger's investment in sales and marketing continues to contribute to the continuing growth in revenue, particularly within the U.S. operations, where the opportunity for further market penetration in both new and existing markets exists as a result of hydrovac being an underutilized component of the excavation value chain in many parts of the U.S.

Revenue growth, particularly in the U.S. operations, was attributable to increased demand for hydrovac services from both new and existing customers, due in part to the continued growth in the adoption of hydrovac technology combined with revenues related to emergency response work as a result of hurricane Michael and the California wildfires. Fourth quarter revenue related to emergency response work was approximately $20.0-million, the impact of which was partially offset by a fourth quarter bad debt provision of $5.3-million, the majority of which relates to a Chapter 11 bankruptcy filing by a large utility customer for work performed related to the California wildfires.

RPT for the fourth quarter was $37,837 or 19 per cent higher compared with $31,921 for the same period in 2017, and for the year ended 2018 was $34,347 or 13 per cent higher compared with $30,266 in the prior year. Badger successfully increased RPT for both the fourth quarter and year ended 2018 while at the same time adding a net 14 hydrovacs in the quarter and a net 112 hydrovacs for the year. The improvements in RPT were driven by a combination of revenue growth, including the impact of emergency response work, and improved fleet utilization. Badger's operational scale and its importance in driving fleet utilization was evident in Badger's fourth quarter revenues and RPT, with both financial measures benefiting from Badger's operating scale. Badger's extensive operating scale provided the ability to respond to significant customer demand related to emergency response activities as noted above. Badger had 1,221 hydrovacs in operation at Dec. 31, 2018, compared with 1,109 as at Dec. 31, 2017.

Badger continues to actively manage direct operating costs, in particular, direct labour, resulting in an improvement in Badger's gross profit margin to 31.5 per cent in the fourth quarter of 2018, compared with 31.1 per cent in the prior-year comparative quarter. Direct operating costs as a percentage of revenue for the fourth quarter were 68.5 per cent, compared with 68.9 per cent in the prior year quarter. In addition to improved labour efficiency, margins also benefited from modestly higher average pricing due to the continuing implementation of strategic pricing initiatives, the impacts of which more than offset higher bad debts. Badger continues to focus on ensuring services rates are reflective of both the total value proposition Badger's services provide and local market conditions. The improvement in gross profit margin is a testament to the focus of Badger's operations team on managing direct operating costs and selling prices.

As initially announced in the second quarter of 2018, Badger has initiated a process to upgrade and standardize its legacy information technology systems into a single enterprise resource planning (ERP) system. During the fourth quarter, activities related to the common business platform were primarily focused on business process redesign and the related configuration and integration into the ERP platform. The common business platform is currently on budget and on time.

Net profit for the fourth quarter of 2018 was $23.5-million or 63 cents per share, compared with $31.2-million or 84 cents per share in the prior-year comparative quarter. Net profit for the year ended was $67.8-million or $1.38 per share, compared with $65.9-million or $1.77 per share in the prior year. Net profit for fourth quarter of 2018 and the year ended 2018 was impacted by the same items as adjusted EBITDA and the impact of tax adjustments related to updated U.S. tax legislation enacted in the fourth quarter of 2017.

See Badger's 2018 annual MD&A for additional details on Badger's 2018 annual and fourth quarter financial results.

Driving long-term shareholder returns: normal course issuer bid (NCIB) and dividend increase

During the fourth quarter and for the fiscal year ended 2018, pursuant to Badger's NCIB, Badger purchased and cancelled 628,614 common shares at a weighted average price per share of $31.96. In addition, for the period ended Jan. 1, 2019, through March 12, 2019, Badger purchased an additional 633,454 common shares at a weighted average price per share of $33.50.

In addition to driving long-term shareholder returns through the NCIB program, Badger's board of directors has approved a 6-per-cent increase to the dividend. Effective with the March, 2019, dividend, payable in April of 2019, Badger will increase its dividend to 4.75 cents per common share per month or 57 cents per common share annualized from the current rate of 4.5 cents per common share per month or 54 cents per common share annualized.

Badger continues to maintain a strong balance sheet. As at Dec. 31, 2018, there were no amounts drawn on its syndicated revolving credit facility, providing the flexibility to facilitate continuing growth in the business. Badger's total debt less cash and cash equivalents was $54.0-million at Dec. 31, 2018, with a corresponding total debt less cash and cash equivalents to compliance EBITDA ratio of 0.4 times.

2019 financial outlook

Based on existing and forecasted activity levels, Badger anticipates that its 2019 adjusted EBITDA will be in the range of $170-million to $190-million with a hydrovac build of between 190 to 220 units and retirements of 40 to 60 units, which is consistent with the 2019 financial outlook provided in the third quarter of 2018.

Continued growth in Badger's end use markets and geographic areas has resulted in an increase in revenue and improved fleet utilization as evidenced by improved financial results and a higher realized RPT in 2018. Badger anticipates continued growth in revenues in 2019 with gross profit margin for 2019 to be similar to 2018. RPT for 2019 is anticipated to be modestly lower than in 2018, particularly in the U.S. operations, as $22.5-million of emergency response work completed during the third and fourth quarters of 2018 resulted in an increase to Badger's 2018 RPT. Emergency response work related to natural disasters is not possible to predict and may not recur in 2019.

Badger's 2019 financial outlook assumes that Badger will continue to realize continuing growth in the use of hydrovac for non-destructive excavation as a result of continued customer adoption, particularly in its U.S. markets. Badger expects to see improvements in revenue as a result of the scale of its extensive branch network combined with the continuing benefits of sales and marketing related activities. The overall macroeconomic environment in both the U.S. and Canada is anticipated to be supportive of continuing infrastructure and construction activity levels for 2019. Oil and gas activity levels are anticipated to be consistent with 2018 levels within Badger's U.S. operations but weaker in Canada in 2019 compared with 2018. Badger continues to see organic growth opportunities in the majority of its markets, although the ability to capture these opportunities may be partially limited by the availability of trained operators as the market for labour, particularly in certain oil and gas focused regions, continues to be challenging.

Badger's 2018 adjusted EBITDA of $161.7-million was modestly higher than the 2018 financial outlook provided in the third quarter of 2018 of $150-million to $160-million. The improvement compared with the previously provided financial outlook was due to stronger than anticipated customer activity levels throughout the fourth quarter, due in part, to the impact of emergency response work related to hurricane Michael and the California wildfires. During 2018, Badger placed 191 new hydrovacs into service while retiring 79 units, both of which were consistent with the outlook previously provided by Badger.

Badger remains focused on generating profitable long-term sustainable growth to drive total shareholder returns. In that light, during 2017 and 2018, substantial progress was made toward meeting the strategic milestones that were established in late 2016. Significant progress has been made in meeting the objectives to: (i) double the U.S. business from fiscal 2016 levels over a period of three to five years; (ii) grow adjusted EBITDA by a minimum of 15 per cent per year; (iii) target adjusted EBITDA margins of 28 per cent to 29 per cent; and (iv) drive fleet utilization and revenue per truck per month above $30,000. Although the adjusted EBITDA margin for 2018 of 26.3 per cent was below the longer-term objective of 28 per cent to 29 per cent, it was a 110-basis-point increase over 2017. Badger remains focused on business improvement activities to drive further margin improvements over the next several years. Badger's record financial performance in 2018 is a testament to the strength of Badger's unique business model.

Conference call to discuss 2018 fourth quarter and year-end results

A conference call and webcast for investors, analysts, brokers and media representatives to discuss the 2018 fourth quarter and year-end results is scheduled for 9 a.m. MT on Wednesday, March 13, 2019. Internet users can listen to the call live or as an archived call on Badger's website under the upcoming events and investor presentation section. To participate in the call, dial 1-844-740-2014 and enter passcode 1679718.

2018 annual disclosure documents

Badger's 2018 annual management's discussion and analysis and audited consolidated financial statements for the year ended Dec. 31, 2018, along with all previous public filings of Badger, may be found on SEDAR.

Non-IFRS financial measures

This news release contains references to certain financial measures, including some that do not have any standardized meaning prescribed by IFRS and that may not be comparable with similar measures presented by other companies or entities. See Badger's 2018 annual MD&A for detailed reconciliations of non-IFRS financial measures.

About Badger Daylighting Ltd.

Badger is North America's largest provider of non-destructive excavating services. Badger traditionally works for contractors and facility owners in a broad range of infrastructure industries. The company's key technology is the Badger hydrovac, which is used primarily for safe digging in congested grounds and challenging conditions. The Badger hydrovac uses a pressurized water stream to liquefy the soil cover, which is then removed with a powerful vacuum system and deposited into a storage tank.

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