Badger Infrastructure Solutions Ltd. (BADFF) Q4 2022 Earnings Call Transcript

Badger Infrastructure Solutions Ltd. (OTCPK:BADFF) Q4 2022 Results Conference Call March 24, 2023 9:00 AM ET

Company Participants

Trevor Carson - Vice President-Investor Relations and Corporate Development

Rob Blackadar - President and Chief Executive Officer

Pramod Bhatia - Interim CFO

Conference Call Participants

Daryl Young - TD Securities

Michael Doumet - Scotiabank

Krista Friesen - CIBC

Trevor Reynolds - Acumen Capital

Operator

Good day, and thank you for standing by. Welcome to the Badger Infrastructure Solutions Ltd. 2022 Fourth Quarter Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand a conference over to your speaker today, Trevor Carson, Vice President, Investor Relations and Corporate Development.

Trevor Carson

Thank you, Josh, and good morning everybody. Welcome to our fourth quarter 2022 earnings call. On the call with me this morning are Badger’s President and CEO, Rob Blackadar; and Pramod Bhatia, VP Finance and Interim CFO.

Badger’s 2022 fourth quarter earnings release, MD&A and financial statements were released after closed yesterday and are available on the investor section of our website as well as on SEDAR.

We’re required to note that some of the statements made today may contain forward-looking information. In fact, all statements made today, which are not statements of historical fact are considered to be forward-looking statements. We make these forward-looking statements based on certain assumptions that we consider to be reasonable. However, forward-looking statements are always subject to certain risks and uncertainties, and undue reliance should not be placed on them as actual results may differ materially from those expressed or implied.

For more information about material assumptions, risks and uncertainties that may be relevant to such forward-looking statements, please refer to Badger’s 2022 MD&A along with our 2022AIF. Further, such statements speak only as of today’s date and Badger does not undertake to update any such forward-looking information.

I will now turn the call over to Rob.

Rob Blackadar

Thanks Trevor, and good morning everyone, and thank you for joining our fourth quarter earnings call. As always, we would like to start the call with a health and safety update. We have managed through some extraordinary operating conditions over the past several years, but under all conditions, our operating practices have remained the same. Focused on Badger's objective of putting our employees and customer safety first. It is our mission to be the industry's most efficient, safe, and reliable non-destructive excavation service provider. We have introduced many new safety measures and programs over the past year, as well as made significant investments in AI enhanced tools to help our operators out of homes way, tools such as Linux.

We look forward to sharing more about these exciting initiatives in our ESG report that we posted to our website and to SEDAR yesterday.

Now on to the company's performance, we are pleased with our fourth quarter and annual results for 2022. We ended the year with strong utilization and operational performance across our businesses, which reflects the resiliency of our business model. Our focus on pricing and fuel recovery coupled with our operating and cost management efforts, resulted in meaningful year-over-year improvements in our operating leverage and margins. All of our operating regions contributed to year-over-year annual revenue growth of 26%. This resulted in better operating leverage as highlighted in our year-over-year EBITDA margins.

Now let's talk more about our revenue trends. Revenue for the quarter and full year were up 23% and 26% respectively from 2021. This gives us confidence that our sales strategy implemented in early 2022 is building momentum. While we are pleased with our fourth quarter revenue contribution, it is important to note that revenue was negatively impacted during the last two weeks of December due to winter storms that shutdown a significant portion of our operation. Most of these jobs were pushed forward to January, which has contributed to a solid start for 2023.

During Investor Day, we shared our strategy to raise the shoulders in our most seasonal quarters. Early indications suggest the strategy is working. All operating regions experience strong EBITDA growth -- strong revenue growth due to improved pricing and utilization which resulted in adjusted EBITDA margins for the quarter and the year improving to 18.8% and 17.5% respectively compared with 11.1% and 12.8% last year.

As a reminder, in 2022, we established a focused sales and marketing function, including a national accounts team. The objective of this function is to leverage Badgers broad operating footprint, business scale, and customer relationships to facilitate growth and add operating leverage. This focused commercial strategy helps the company target the significant market opportunity that we see for non-destructive excavation and related services.

Our investment in our sales and marketing teams have helped us to drive more consistent volume over the course of the full year with the intention of improving margins insuring up our operator retention and turnover headwinds that we typically see in the colder months in Q4 and Q1. We continued to be excited about our asset utilization improvements. Annual revenue per truck per month or RPT was just shy of $40,000, which was up 22% versus last year. RPT in Q4 was approximately $42,000 or up 25% compared to last year highlighting our continued asset utilization improvements. We added trucks in markets that demonstrate strong revenue growth and high return on invested capital.

Our ability to manage our available fleet in real time as a significant competitive advantage. As we position the fleet strategically, we can drive utilization and higher pricing where we have good opportunity. As we have said in the past, improving our utilization has a material impact on how we manage retirements, how we think about the number of units needed to achieve our growth targets and the appropriate level of invested capital.

Now speaking about our fleet size. We ended the year with 1,387 non-destructive excavation units compared with 1,371 at the end of 2021, reflecting a net increase of 16 units. We manufactured 115 non-destructive excavation units in 2022 versus 32 in 2021. For 2023, we are forecasting to build between 200 and 230 units and retire between 80 and 100 units. Our manufacturing team has positioned the plant well for higher production levels and volume efficiencies. We are also well-positioned for supply chain components.

We built up our inventory stock in 2022 and remain comfortable with chassis and key component availability and do not expect to be impacted materially by supply chain disruptions. This positioning is a plus provides visibility to place new equipment into service versus competitive manufacturers, as truck chassis are still in tight supply.

Market indications are that equipment will be difficult to source in the short-term, which makes Badger's manufacturing and vertical integration is that much more valuable. Additionally, we are implementing proactive programs that we expect will enable us to extend the useful life of our existing assets. We believe these incremental investments will yield positive contributions to ROIC, as we continue to optimize our capital investments.

As I have shared previously, our units spend the majority of the time digging on customer sites, as opposed to racking up significant mileage. Conversely, we run at higher RPMs to perform our excavation services.

With this in mind, we may choose to selectively replace critical components, namely the engines, transmissions, transfer cases or blowers to extend the life of a well maintained chassis. Unless there are geopolitical or macroeconomic disruptions, we see conditions to be favorable for continued progress in growing the business, improving our operating leverage and returning to historical margins, as the recovery continues and we execute on our commercial strategy.

I will now turn the call over to Pramod to discuss our financial results.

Pramod Bhatia

Thanks, Rob, and good morning, everyone. Our revenue for the quarter was $149 million and for the year $571 million, up 23% and 26% respectively. Gross margins were 25% and 24% for the fourth quarter and full year respectively in 2022. During the year, we continued to invest in our sales and marketing capabilities to support future growth. As a reminder, our sales costs are included in direct costs. As reported, adjusted EBITDA was approximately $28 million and $100 million for the quarter and full year respectively. Adjusted EBITDA margins improved to 18.8% for the quarter and 17.5% for the year compared to 11.1% and 12.8% respectively in 2021.

Now on to the balance sheet. Badger maintains a focus on ensuring the strength of the balance sheet and financial flexibility. We have continued to make meaningful progress in accounts receivable management, particularly the collection of long-dated receivables. At the end of Q4, 71% of our receivable portfolio is less than 30 days, suggesting a stronger portfolio position and the DSO that calculated approximately 83 days. We believe there is still room to improve our DSO, which we continue to work towards.

We continue to maintain our C$400 million in committed credit facilities, which provides us ample liquidity and financial flexibility to fund both near term and long term growth and complimentary capital allocation decisions.

Finally, the Board has approved an increase to the quarterly cash dividend, the $0.1725 per share for the first fiscal quarter of 2023, with payments to be made on or above April 15, 2023 to all shareholders of record at the close of business on March 31, 2023. This represents an annual dividend of C$0.69 at approximately a 5% increase from C$0.66 in 2022.

I would like to turn things back over to Rob for some final comments.

Rob Blackadar

Thanks, Pramod. So before we put it up for questions, I'd like to share a few last thoughts. In 2022, we continue to improve our margins by tightening up our operating discipline and managing expense levels to anticipated revenues. We remain focused on our end markets and customers while ensuring that we have trucks available for their projects. Our view of the significant US and Canadian long-term opportunity for non-destructive excavation services and Badgers long-term growth prospects is unchanged. The required focus on infrastructure in North America supports demand for non-destructive excavation. Badger stands ready to help strengthen and maintain that infrastructure.

So just before we open up for questions, as you all may have seen in our news release recently that went out a couple of weeks ago, we're pleased to welcome our new CFO, Rob Dawson, who will be joining the team on April 10. Rob brings over 25 years of finance experience and we are thrilled to have him join the team. I would like to thank Pramod for his service as Interim CFO and Trevor on the Investor Relations side, who have both stepped up and helped and supported the company during this transition period and look forward to their continued contributions to Badger in the future.

So with those comments, Josh, let's turn it back over to you to queue up questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Daryl Young with TD Securities. You may proceed.

Daryl Young

Good morning, everyone. The first question is just around financial guidance for this year. The truck build is obviously a healthy improvement and it sounds like the end market demand is very, very strong. But I was just wondering if you could give us some goal posts around maybe where you think RPT could fall out this year and as well the cadence of maybe a recovery in margins?

Pramod Bhatia

Hey, Daryl, this is Pramod. So, at this point I will say maybe a couple things. One, we are obviously really pleased with where our utilization and RPT is landing in 2022. A good improvement for us. As you well know, RPT is driven by a couple different factors both on the pricing side as well as the utilization side, and we will continue to test those levers in 2023. From a quote unquote guidance point of view, I will still point you back to our conversations in at the Investor Day late last year.

We feel pretty confident that the 15% revenue CAGR that we talked about in the Investor Day is still something that is achievable over a near term. From a margin perspective, the range that we provided on direct cost as you know 65%, 75% [ph], I feel that we are well within those that we are going to hit as evidence in the Q4 and the full year numbers too.

And the final piece I'll say is, G&A, which for 2022 we were about $39 million, the range of $30 million to $40 million that we provided, I think, we will be well within that. So I probably will not want to go any further than that. So, remain confident that the upward trajectory that you're seeing, that we feel pretty confident about.

Daryl Young

Okay, thanks. And then with respect to the national account and the sales strategy, is there an intention to continue? It's obviously going very well with utilization strong, but is there an intention to keep adding bodies and personnel this year?

Rob Blackadar

Daryl, we were having some technical difficulties here, but I could hear, I think, you are asking, are we going to continue to add sales, sales people or bodies to our national accounts program?

And the answer is, we may bring in an additional one or two, but right now we are just now in April, we'll be at the one-year mark of when we launched national accounts. And we don't believe that we need to continue adding, but rather we need to continue to develop the accounts we have. So, we may bring in one or two for the remainder of the year, but right now we still have a lot of runway with existing team. We have and actually going wider and deeper again, because we're just at the one-year mark here in April. So, we feel comfortable with where we are and we still believe that we're going to see a lot of growth out of the national accounts team.

Daryl Young

Okay, great. And then, so in terms of the 200 basis point drag that you called out last quarter is that what you would expect to see across this year as well?

Pramod Bhatia

No -- Daryl Pramod again. As we continue to flex the top line and Rob indicated that to I would say think about the operating leverage that's generating. So no, that would not be a contributor in 2023.

Daryl Young

Okay, great. I’ll hop back in the queue.

Operator

Our next question comes from Michael Doumet with Scotiabank.

Michael Doumet

This quarter helpful guidance for the ‘23 on the G&A and the revenue. I wanted to dig in a little bit more on the gross margin. I think in -- you talked about this in Q3 versus the comparable quarter ‘19, we were 500 basis points below in Q4 we're now about 400 basis below the comparable quarter. So we're seeing a nice improvement. I'm just thinking as we think about 2023, if you think about kind of that 400 basis points gap to start with and then maybe just talk on top of that where you think you're getting confidence to close the gap further, whether it's price utilization or cost. And maybe again, just if you can help us get a sense for how much to, that'd be helpful?

Rob Blackadar

Sure. So I'll start, and then I'll let Pramod pick up wherever I leave off here. So regarding the gross margin, and especially as you relate to kind of our historical years of 2019, we have seen continued improvement in our gross margin. We will continue to, as we grow the business. If we did nothing we were pretty well-positioned from support levels to grow the business. And then since that time, during COVID and even a little bit the first half of 2022, from COVID first half 2022, we continue to say what can we do to keep our cost either flat or in certain areas that can take cost out of the business or become more efficient. As we grow the revenues, obviously, we are going to grow the gross margin and drive the business. The biggest opportunity for the company though, and we continue to believe it and a big opportunity for 2023 and beyond is, our focus on pricing.

We have shown as a company, we can drive utilization you can see definitely the RPT and the RPT growth. But when we get our focus and we continue to hone and improve on our pricing that is where you can see the gross margins really start to accelerate. Pramod you want to add something to that?

Pramod Bhatia

Yes. Of course, that was great, Rob. So a couple of things there, maybe just to point out, in 2022, obviously, a lot of investment in -- that went through in our both our sales and marketing and promotion capabilities. 2023, we don't really think that going to be a lot more. So back to my operating leverage comments, as the revenue top-line continues to grow, so that should be a lot of flow through into gross margins and adjusted EBITDA.

Second point, I'll say, RPT level that I think I will ask some other questions. The guidance we gave is greater than 38,000. We remain pretty confident we will continue to maintain that. And that's the point that we have of talking about the utilization improvements, I would say, dramatic utilization improvements in 2022. Pricing continues to remain a lever that we will continue to focus on. So all of that to say, improvements in gross margin and adjusted EBITDA margin, we are confident about that in 2023.

Michael Doumet

That's really helpful. Thank you. So maybe just switching over to the trucks, the pace department this year implies that you are planning effectively to stress the life of the truck. Can you comment on that? You've talked about maybe some of the investments that will help you do that. I guess the bigger picture, should we reconsider that 10-year time frame for a truck just in terms of the economic life? And then maybe just if you can expand on what's the incremental cost would be? Can you quantify and address?

Rob Blackadar

Sure. So I'll share some thoughts along the truck strategy that we shared, the Trevor and I recently shared I think in January at our conference in Vancouver, more through Vancouver, that, as we started to look at the assets and we are getting more and more robust data coming out of our system and our fleet management team. We are starting to realize that, the trucks themselves, the chassis themselves are not heavily used even though they are heavy spec and heavy built Peterbilt chassis. But where we are really running hard are the engines, the transmissions, the peak chassis, the transfer chassis and then the blowers on the unit. And we start looking at, okay, as we ramp up the plant and we become more efficient in the plant and we are and the plant continues to perform at a solid level.

And then our commercial strategy is creating more and more demand for our trucks. We're starting to realize that if we continue to do a one and one out at the 10-year mark, we are going to continue to have lumpiness in our replacement cycle because as several folks know on the call that we have large years where we manufacture and then we have years where it slows down a bit. And we really wanted to steady out that manufacturing capacity in the plant output.

So the way we've thought about it, we've modeled it out is instead of just retiring right at the 10-year mark. We're selectively identifying trucks that either were not used promote a lot of hours during COVID or we're not in harsh conditions and for example, harsh conditions being in the far north, so our Northern environments with a lot of salt, sand, things that can really rehabiton or frame, but we have a lot of trucks that don't have those issues.

And so we've said if you look at an engine transmission PKs and lower anywhere from $100,000 to $125,000 we can actually put in new or refurb componentry with a warranty and extend that truck life for approximately three to five years. That also starts to improve even greater the company's ROIC. And so we're pretty excited about moving towards this strategy.

As you look at it and you say, okay, so do we need to change the 10-year life cycle to 12 years, 13 years? It's still early days as we're doing this. So I would not recommend changing that. We're still targeting 10 years. But as the solid demand for this year and next, we believe we're going to take advantage of it and instead of retiring with many units just actually try to extend the life a little bit.

So hopefully, that makes sense. But I wouldn't recommend changing that model because we're -- at this point today, and we may advise at a later quarter or next -- early next year that we're getting a lot more life out of it. But at this point, we're extending life just a little bit. But again, for a little bit of investment, we believe we can get three to five years additional. So it's pretty exciting, but we're not doing that on every single asset. It's on a selective basis.

Michael Doumet

That makes a ton of sense. Thanks.

Operator

Thank you. Our next question comes from Krista Friesen with CIBC. You may proceed.

Krista Friesen

Hi, thanks for taking the question. And congrats on a good quarter. I was just wondering if you could provide just a bit more detail on the national accounts program. So it sounds like you're pretty much fully staffed up there. What are the next steps as you kind of progress there? And what inning would you say you're in, in terms of rolling out the program and maybe versus kind of what inning you're in, in terms of seeing the full extent of the program kind of take it?

Rob Blackadar

Yes. So -- thanks for asking, Krista. So we're looking at, I'd say, on rolling out the program, we're probably in the fifth or seventh inning as far as getting value and everything out of the program and is functioning and being on full cylinders and giving us full performance out of it. We're probably only in the, I'd say, the third inning. The interesting thing -- that's interesting with this program is no one else in the hydrovac industry really has the footprint that Badger has as well as the capability or the experience level and the team we put together with this national account strategy background to do what we're doing.

But we're just -- like I shared with an earlier question, we're just now coming up on our one-year mark in April, we're very pleased with what we've seen coming out of the first nine months -- eight, nine months of last year and then what we're seeing in Q1 so far on the national account side, but it's still early days.

We believe that there's a handful of things that will start to get us to further into the innings. So we could be in the sixth or eighth inning, and those things are this actually getting all the different subsidiaries of the national accounts using us and utilizing Badger as a first call or sole source or primary provider or supplier.

And then the second aspect of it, and this is where it really starts to look good for the company is our ability to actually go wider and deeper and broaden out our number of national accounts we have. An earlier question was, are we going to continue to add heads. And while we could, we don't want to outpace our ability to service our customers. And we also are trying to do it in a very orderly way. It's just, again, 11 months ago coming up on 12 months ago, we didn't even have a national accounts program and so now that this has helped us to drive our utilization in the business.

We're starting to realize, you know what, let's really continue to hone the account base that we currently been supporting and let's go wider and deeper within that account base. But the next level, and we believe we're going to be able to start really doing this Q4 and Q1 of next year start to actually add some additional accounts, we've actually limited the number of national accounts we have just due to the sheer amount of share ability for us to be able to supply and support it -- support those accounts because we want to grow in a nice quarterly incremental way rather than having where we peak in valid constantly. We want a nice incremental growth when we've been initiating the new program. So hopefully, that gives you a little bit of insight there.

Krista Friesen

Yes, that's great. That makes a lot of sense. And then I was also just wondering on the demand side of things, I know you gave your outlook for 2023, but can you give us any more granular comments on maybe what areas you're seeing the most strength in when it comes to either industry or geography? And then any areas that are maybe a bit weaker than you expected?

Rob Blackadar

Sure. So we're seeing in most of our end markets, pretty good demand, and we see and some of our larger accounts in our larger projects. Some of them are having record backlogs and especially some of our largest national accounts they have record backlogs that they've ever had in the history of their companies right now for the next two to three years. So that is very, very encouraging for us and especially having this new program that no one else in the industry has. So from purely a national account program, we're doing seeing that.

We're also seeing a lot of demand from areas that are like data centers and anything that's infrastructure related, including the grid -- supporting the grid and supporting any kind of power, any kind of infrastructure improvements and refurbishments and especially in the United States, specifically, there's just a lot of demand because the government has really a lot of money in infrastructure and starting to flow.

Regarding certain areas of the company and what we're seeing specifically geographical, most areas of the company have solid demand. There's not one pocket that you would say the Southwest or the Southeast or Northwest across the board. There's been solid demand. What's been very interesting for us is as we've seen some of the demand across Canada in the winter time here. So normally, some projects that we think that would not be happening in February and March are happening now. And so it's pretty exciting. We believe some of those projects were actually pulled in earlier to launch.

And so that's helping to drive some of the business improvement as well. Our Canadian operations just recently, definitely had seen good demand. Anything you want to add on that?

Pramod Bhatia

Not really. I think you covered really good. Maybe, Krista, the only thing I'll say is there isn't just one end user market that's driving. That's probably for me, the most pleasing part is pretty broad-based. We are, of course, focused a lot with our sales and marketing and focusing on a lot of our key markets and sort of going deeper into there, too. But both ways in those geographical markets and other use market, pretty broad-based demand, Krista, what I would say.

Krista Friesen

Perfect. Thank you so much. I will jump in the queue.

Operator

[Operator Instructions] Our next question comes from Daryl Young with TD Securities.

Daryl Young

Thanks for the follow-up. Just in terms of the labor environment, have you seen any improvement in recent months and how you're feeling about the ramp-up for next year because it does seem like the commercial construction activity is exceedingly strong for next year. So probably a lot of demand on labor?

Rob Blackadar

Yes. So we are definitely seeing labor continues to be kind of our area of opportunity for us to continue to improve on how we recruit and how we retain our operators. So far because of the concept of lifting and raising the shoulders in the seasonal months. Our operators have gotten a lot more hours. And so obviously, our turnover and retention has improved in the right way. So we haven't had to go as much out the market as we would have in previous years, but we still are actively growing the business. And you can look at our truck count and our build and we're going to need additional operators across the organization.

One of our opportunities that we found that's starting to work pretty well is some of the people that are exiting -- some veterans that are exiting the military and in their military service. We continue to be excited about recruiting former Canadian U.S. military veterans and really enjoy having this those folks join our team.

The other aspect that we're seeing regarding being able to recruit is some of the over-the-road long haul at freight carriers. Some of those companies, especially the more local and regional, their business has slowed down and because of that, we've been able to find more local CDL operators and drivers within our markets.

But it takes a unique person to come and work with Badger and on a Badger truck because it's just a different business model and a different job than just driving long haul or over the road. It's just a lot different because they're actually in the dirt, you get dirty, you work hard, but it's very rewarding and you never do the same thing twice.

So from that perspective, it's a very interesting fulfilling work, but it's totally different than that someone's working long haul. But so far, again, we're seeing -- I think we've been able to fill most of our roles, we're not taking as much pressure as we have had in previous quarters for being recruit.

Daryl Young

That's great color. And one last one. Just in terms of executing on the replacement of engines and blowers and to keep the trucks on the road longer, would you see that happening at the Red Deer facility? Or would you be looking to outsource that to third parties across the U.S. to complete that work?

Rob Blackadar

Yes. Actually, we have identified some shops that are a couple in the U.S. or a fleet leader has identified two, one very centrally located in the U.S. and one more on the West Coast and we have one in Canada today. None of them are going back to Red Deer nor do we want them going back to Red Deer.

The reason being is the Red Deer plant is operating efficiently and putting up really high-quality Gen 5 new trucks, and we want to keep the focus on that. We don't want to distract and have the Red Deer facility start to think more about replacing engines and transmissions. We want to just keep them focused on the manufacturing because we believe we're going to need to keep the pressure on the manufacturing here for the foreseeable future.

So -- but we found outside shops to do it. It's not really the highest and best use of our own employees to be replacing engines and transmissions, especially when we can do it through third-party services.

Daryl Young

Got it. [indiscernible]

Operator

Our next question comes from Trevor Reynolds with Acumen Capital.

Trevor Reynolds

Just a couple of quick questions. Just on the pricing, maybe you can just walk us through how the customers are accepting of price increases in the current environment?

Rob Blackadar

Do you want? Sure start and then I'll.

Pramod Bhatia

Perfect. Hey, Trevor. So I think as Rob touched on some of that in his comments with the inflation in 2022, our focus, obviously, is on pricing and making sure we are recovering that to one instance of that maybe as the share is on the fuel republic fee surcharge program as well, which I would say we're pretty well received and went to absolutely fine, so which is a good indication.

On the pricing side, again, I would say at this point, there is not one simple answer over there because it is, our customers are spread across different geographies, different industries. So almost a bit of sort of as around two geographies, competitive nature in some markets at the other. So that's my -- I'm sorry for the vaguer answer, but that's kind of what the truthful answer is, the reality is it's a big focus for us, and we will continue to push that. Obviously, everyone is conscious of inflation. We have seen cost increase all of us and so have our customers. So we remain focused on it. Just easier in some markets versus the others,

Rob Blackadar

I think to get probably a little bit more granular on the customer level, just like every one of our customers, Badger has seen inflation in some of our own costs. And basically, our wages and cost of labor, our some of our suppliers for actually building the trucks and keeping the trucks running and everything else that just we're not immune to inflation and our customers understand that the advice and the coaching and training that we've given our sales teams and our managers are just being mindful of how you would want to receive the message and it's actually working as long as we're reasonable and our request and how we deliver the request for additional pricing.

So far, again, I'm not saying it's been well received, like everyone loves a price increase. There's not 1-person phone call who likes that. But it's just real that the world we're in today and in our inflationary environment, we need to make sure that we're not going backwards with our pricing. And so while we realized solid pricing improvement for 2022, we're going to continue to focus on that for 2023 because we believe that alongside the utilization is what will make the company healthier. And we're very, very happy to focus on that.

Trevor Reynolds

Got it. And then just a follow-up on the national account side of things. Is that built into contract pricing increases? Or is that that's something you have to wait to apply price increases on that side of thing?

Rob Blackadar

Yes. So typically, our national accounts customers will have annual or two or three-year pricing. And the interesting thing about us kind of launching the national account program from scratch is we had a lot of large accounts, some with these two or three-year pricing agreements, some of them have escalators in them for pricing, and some of them have where they be CPI or other various metrics to have price increases come out -- come go along throughout the contract period.

But the interesting thing that we've noticed, though, is because we are starting this from scratch with both existing customers and some new customers. There's not one period where we're launching all these agreements all at the same time. And so it's out throughout every month of the year, there's a pricing or rather a customer contract that is sunsetting and another one that is starting up or a renewal period.

On our go forward, we're not really setting up any of our national account customers with flat fixed pricing beyond one-year period just because we don't know what's going to happen within the inflationary markets. And the customers, again, are -- most of our customers really appreciate our services. And as long -- and we teach our salespeople this. But as long as we're giving them good value in our new national account program gives great value because it's super simple for someone to work all across North America. We make it very, very easy term that I was sharing with a colleague is we're making our business trying to make it more and more frictionless where it's very easy to work with Badger, and there's great value in that.

And so our customers again, while no one loves a price increase as long as we're keeping it reasonable and that's what we're trying to do, they've been accepting of that so far.

Trevor Reynolds

Great. Thanks for taking my question.

Operator

Thank you and this concludes the Q&A session. I'd now like to turn the call back over to Rob Blackadar for his closing remarks.

Rob Blackadar

Thanks, Josh. So thank you, everyone, for the good questions and happy to report the quarter and we'll be doing it again here in May. So on behalf of all of us here at Badger, thanks to our customers, our employees, our suppliers and shareholders, for your ongoing support that helps to drive Badger's success. Josh, you may now end the call.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.