Good morning, everyone. My name is Rob Blackadar, and I'm the President and CEO of Badger, and I want to be the first to welcome you to our 2024 Investor Day. We're happy to be providing you with a business update and to share our current view of the market opportunity and strategy initiatives that we've been working on. We are very pleased to be able to hold this meeting here in Toronto this year in person, as well as offer a virtual viewing for those unable to attend in person.
This session is being recorded and will be available for viewing later on our website at ir.badgerinc.com. We have several members of our leadership team here today, and I would like to introduce those who will be presenting. Rob Dawson is our Chief Financial Officer, who many of you have already met.
Rob joined us last April and has hit the ground running, leading our finance team, and he'll give a financial update later on in the presentation. Chris Gunn is our VP of Sales, Field Sales. Chris joined Badger in December of 2021 and leads the Field Sales and Marketing teams. Chris helped launch the commercial strategy and will be sharing his perspective regarding Field Sales for 2024 and beyond. Bobby Love is our VP of National Accounts.
Bobby also joined the company in December of 2021 and leads our National Accounts team. As many of you know, National Accounts is a unique initiative in the hydrovac industry and is a significant competitive advantage that Badger holds. Bobby will be providing an update regarding our National Accounts initiatives for 2024 and beyond. And finally, I'd like to introduce Leon Walsh, who's our VP of Sustainability, Health, and Safety.
Leon is here to provide a safety share, which is how we start all of our meetings here at Badger. We're very proud of our safety performance over this past year, and Leon will share more on this shortly. We also have some additional members of our senior leadership team here, as well as four of our board members in attendance today. All of these folks will be available after the formal presentation and Q&A period during our lunch hour.
So before we get into the safety share, I'd like to address some administrative comments regarding forward-looking information. We are required to note that some of the statements made today may contain forward-looking information. In fact, all statements made today, which are not statements of historical fact, are considered to be forward-looking statements.
We make these forward-looking statements based on certain assumptions that we consider to be reasonable. However, forward-looking statements are always subject to certain risks and uncertainties, and undue reliance on them should not be placed upon them, as actual results may differ materially from those expressed or implied. Please refer to slide 5 in our presentation, as well as our MD&A and AIF, both available on our website and on SEDAR+ for more information about material assumptions, risks, and uncertainties. So with that, I'll turn it over to Leon for our safety share. Leon.
Thanks, Rob. Good morning, everyone. I'm pleased to be providing this safety share with you, similar to what we do at every meeting at Badger. First, though, in case of an emergency, we will exit through these doors here at the rear, and we will take the stairwell down to the main floor. We will exit the building, and we will meet in front of Rabba Fine Foods, the meeting point for this hotel.
At Badger, we believe that to be successful, we have to make safety personal. This is ingrained in each and every team member at Badger to ensure everyone goes home to their family at the end of the day. Every day, we have thousands of operators and vehicles dispatched and on the road. Each vehicle is equipped with machine learning, artificial intelligence system that encourages safe driving habits.
Maintaining a Just Drive mindset is crucial for all of our team members when they are behind the wheel of our vehicles. Let's watch this video, which really hits close to home as to why Just Drive is so important. A common theme in all of these video clips is things happen very quickly, and all of our drivers proactively avoid collisions as they were just driving.
These real-life examples underscore the importance of putting away our technology and focusing on the road. In 2023, Badger had a very successful year regarding safety performance, and because of this great performance, we are now able to bid on work that requires the most stringent of safety records. Best-in-class performing companies have a strong correlation between safety and financial performance, and we are pleased with Badger's journey and success. With that, I will now turn it back over to Rob. Thank you.
Well, thanks, Leon.
All right. It might be helpful before we get into the meat of the presentation to give a brief introduction of the nondestructive excavation industry and Badger as a company for those who are new to the Badger story. We are the industry-leading provider of nondestructive excavation services in North America, serving a broad range of essential end-use infrastructure customers and industries.
Badger was founded 32 years ago in Red Deer, Alberta, and our manufacturing plant and our corporate headquarters still remain in Alberta. The primary advantage of nondestructive excavation versus traditional excavation is the mitigation of potential line strikes and other underground infrastructure damage, which could result in business and service interruptions to critical systems and the customers who depend on them. Badger's nondestructive excavation approach significantly minimizes the opportunity to damage these underground utilities.
Locating underground conflicts early allows for traditional excavation methods to proceed safely, more efficiently, and avoid service interruptions and costly unscheduled repairs. In addition to the safety benefits that Badger's nondestructive excavation approach provides, we're also tirelessly focused on protecting Badger employees and Badger assets, our customers' employees and customer assets, and our community's infrastructure from avoidable risk.
There are several factors that make Badger a compelling investment proposition and why we're all here today. Overall, we continue to see strong growth opportunities across North America, reflecting anticipated, significant, and sustained growth in infrastructure and construction spending in all of our major markets over the next several years. Badger is best positioned to capture this underlying opportunity as the market leader and North America's largest provider of nondestructive excavation services.
Our fleet has grown to over 1,500 units, over 21,000 customers that we serve, and serving them all from our 140 locations all across North America. You can see the footprint on the slide. Today, Badger is the only operator of nondestructive excavation services that is also vertically integrated into design and manufacturing. We build trucks for our own use to service our customers. This vertically integrated model provides operating cost benefits and superior returns on invested capital.
We also get direct feedback daily from our operators on various ways to improve our truck's safety, performance, and efficiency. We put this feedback to work via continuous design improvement at our factory. Some of the operating cost benefits come from standard design and components and from an integrated supply chain that supports the fleet. This creates a competitive advantage for Badger that no other Hydrovac services company can match.
This advantage is widened by our ability to build trucks for a significantly lower cost than our competitors, who buy their trucks from third-party manufacturers. Over the last two years, we've been focused on establishing a professional sales function to drive our revenue growth. Core to this strategy is our ability to service customers in all the markets in which they work, something no other Hydrovac company has been able to do.
Chris Gunn and Bobby Love will give a robust update on these and other initiatives later in their presentations. Badger has been on a path to improve the profitability of the business and ensure we are providing our shareholders with improving returns. Our branch operating footprint is already largely established. We've also made investments in efficiency and scalability of our support functions for continued growth.
We believe the operating leverage this provides will continue to allow us to grow margins. To support our organic growth strategy, our substantial cash flow from operations, coupled with a strong balance sheet, provides ample opportunity to fund our growth needs. Rob Dawson will cover this later in his presentation. And finally, we've assembled a strong, experienced leadership team in place with diverse backgrounds who bring decades of experience from each of their respective industries.
Now, let's get into Badger's recent history and where we're going. From the period of 2017 to 2021, the company worked on solidifying its foundation to achieve sustainable growth. Badger grew its U.S. footprint and diversified its customer base outside of oil and gas. The company also stood up a centralized shared services function. We launched a new ERP system and strengthened our support functions.
All of these initiatives were completed to enable a foundation for future growth. For the last 24 months, we've been working hard on launching and driving our commercial strategy. We rolled out our new dynamic pricing engine across the organization to drive margin expansion, and Chris is going to give us more color on pricing during his presentation.
We also optimize and increase the capacity of the Red Deer manufacturing plant to be able to produce up to 350 units should the demand require. Now, moving into 2024 and beyond, we're excited to continue our growth trajectory by increasing our market share in the top 12 key markets in North America. We will begin to leverage our robust data that is throughout the company to further drive operational efficiency. Next, I'll cover the macro tailwinds supporting our long-term growth.
Starting at the wide end of the funnel, the overall construction industry is forecasted to grow at about 3% from 2022 to 2027. Narrowing down within the funnel, you'll see Badger's core segments laid out on the slide that are forecasted to grow between 7%-9% during the same period. Within these segments, total excavation spend is forecasted to grow at approximately 8% per year through 2027. As mentioned earlier, nondestructive excavation is still in its early stages of adoption.
There's still a lot of education and awareness to spread, especially in the U.S., about the benefits of Hydrovac. More and more companies are being proactive about mitigating subsurface risk resulting in increased Hydrovac opportunities. This provides the industry with tremendous and unique growth potential within this time frame, which is the market leader Badger's best position to capture.
The growth of these end markets is supported by committed public and private funding of over $2 trillion over the next several years, which is creating significant tailwinds in the industry. The spending in the U.S. infrastructure bill that was announced in 2021 and the 2022 U.S. Inflation Reduction Act has been and will continue to stimulate the growth in these previously mentioned core segments.
Internally at Badger and across the industry, we use Dodge, PEC, and IIR reports, which are industry-standard databases for our customers to bid work. These reports give us insight into what work is coming down the pipeline and where we need to focus our efforts and resources. These lead resources project over $2 trillion worth of work slated for the next two to five years.
An additional tailwind has been the significant increase in safety and legal trends supporting the rise in adoption of nondestructive excavation for our customer base. The Common Ground Alliance estimates the impact of damaged underground utilities to be in excess of $30 billion per year, and that's just in the U.S. alone. There's a significant shift across North America to hold contractors more accountable for hitting lines and holding utility companies more responsible for inaccurate line locates.
Due to these trends, we believe nondestructive excavation is going to increase significantly as a share of the overall excavation market. The upcoming construction and infrastructure industry spending, along with the rising adoption of nondestructive excavation, is expected to create a significant tailwind for Badger. As I mentioned previously, Badger historically served customers mainly in oil and gas.
In 2015, 2016, during the oil market downturn, Badger pivoted and diversified its customer base across all industries and focused its growth efforts down towards the United States. Fast forward to today, and oil and gas accounts for less than 5% of Badger's overall revenue. Badger now has a very diverse and strong customer end market exposure spanning from utilities to industrial to construction and transportation.
This broad customer and geographic base helps to reduce the volatility that may be experienced in any one segment or one geography. So why is Badger best positioned in the industry to capture these opportunities? Badger leads the industry with our safety culture. We've invested in our people and the technology to ensure our teams have the right tools to do their job safely.
As Leon shared earlier, many of our customers require a certain level of safety achievement to be eligible just to bid on their projects. We've worked hard to ensure we maintain and continue to improve on our safety metrics to be able to bid on these opportunities, which is something that sets us apart from many of our competitors.
We consider ourselves to be productivity partners to the various excavation contractors. We effectively expose underground infrastructure conflicts with our Hydrovacs without the risk of costly damage. Not only do we provide Hydrovac services, but we provide comprehensive project solutions based on specific project and customer needs, such as locating, data collection, mapping, and site restoration.
Given our fleet size and scale, we have the ability to respond to customers' needs and deploy a Hydrovac when and where needed, 24 hours a day, 7 days a week, 365 days a year. We also have an extensive branch network to call in Hydrovacs from surrounding branches if the local branch doesn't have a unit available. Badger is the only Hydrovac company that has a North American-wide footprint and an integrated national accounts program.
Our footprint allows us to service the same customer across North America and to provide efficient, safe, and reliable services. Badger has now built a strong foundation over the past few years, allowing for the company to grow its revenue without growing its cost at the same rate. Our support functions are scalable to support the near and mid-term growth of the company.
As I mentioned earlier, we are the only vertically integrated Hydrovac company in North America. All of these reasons support why Badger is best positioned to capture the growing market opportunities across all North America. Now, with that, I'll turn the presentation over to Chris Gunn, who will go through the specific commercial initiatives we're working on to best capture the market opportunities in front of us.
Thanks, Rob. Thank you, everyone, for joining us today. It's been a year and a half since I gave an update on our commercial strategy in Brownsburg at our last Investor Day. We have executed well on our foundational initiatives in our commercial strategy, and we are continuing to enhance our strategy throughout 2024 and beyond. We established our commercial strategy back in 2022.
The overall objective of our commercial strategy was to push more revenue and density through our existing branch network. We restructured our sales team to geographic deployment with defined territories and accountabilities to allow us to deploy resources to areas of best returns and market potentials. We introduced the commission program to align compensation with revenue growth and added sales reps to increase our market penetration in our target markets and existing customer share wallet.
2023 was a big year of enablement with our CPQ pricing engine and the refinement of our CRM processes. We provided each of our sales reps with formal negotiation training to maximize the full potential of our CPQ price engine implementation. We have been focused on customer meetings as part of our consultative selling training over the past few years, and we've began to track the data from those meetings, measuring both quality and quantity.
We've had a very busy year selling to our customers and executing projects to enhance the sales process. As you can see, our hard work is starting to pay off. While we have accomplished a lot, we are not done. We are working on a number of initiatives to continue to enhance our core processes and take our commercial strategy to the next level.
I'll dive deeper into a few of these initiatives on the next few slides. As you likely heard on our quarterly earnings call, we rolled out a new dynamic pricing engine late in the second quarter. This initial iteration of CPQ was designed to capture more data around work performed, deeper asset utilization, while putting market and branch-specific dynamic pricing tools in the hands of our reps at the quoting stage.
It uses multiple factors to determine the optimal price quoted to a customer, which includes the following: Market. Each market has its own price book. There are a few factors that play into the market price range, such as labor costs and the position Badger is in in the local market. Utilization. Depending upon how busy the branch is, the higher the utilization, the higher the price. This goes hand in hand with seasonality.
During peak season, higher utilization equals a higher price. Non-peak season, lower utilization, a lower price. Timing of the call. Specifically, short notice and emergency callouts denote pricing opportunities. Based on the urgency of our customers' needs, our price engine recommends optimal pricing for Badger's ability to promptly respond to these critical jobs. CPQ also gives us the ability to load pricing agreements for the most complex customers by market, line item, branch to ensure consistency no matter which team member writes the quote, which results in better billing accuracy for our customers.
As with everything we do here at Badger, we are focused on continuous improvement. We are already working on our next iteration of CPQ, which will further optimize pricing by using more data-driven metrics. Now, on to where we are focusing our sales efforts to drive strong revenue growth.
We've shared this slide before, outlining where our key markets and key focus has been for the past year and will be for upcoming years. As stated earlier, our territory deployment allows us to put reps in the exact markets where we strategically are looking to grow the business. These here are the top 12 markets in North America where statistically one in every three construction dollars are going to be spent.
Each of these markets represents a huge opportunity for Badger, where we can outpace construction growth rate and continue to take market share. We will continue to invest in these markets through our territory deployment strategy designed to drive revenue density by adding additional reps into the same markets, reducing the size of territories. We are also focusing on team selling, both multilevel and cross-territory, to drive density, share of wallet, and better returns.
Bobby will speak further to the relationship between field sales and national accounts and how this network of reps gives us a huge advantage on coordinating national or local accounts, overall ensuring the optimal sales coverage and the right amount of branch resources are in place to grow revenue with optimal margins. We have been able to execute this process across the U.S. and Canada.
Now, let's walk through 2 quick examples for everyone's reference. These are only 2 examples, but it is a very common theme across North America. We have a tremendous opportunity in these 2 markets where we haven't yet fully realized our full market potential: New York City. We established operations in New York City in the last 24 months. That market is experiencing significant growth, easily outpacing the rate of construction.
New York is a tough market to enter due to real estate, dispatch, taxes, logistical challenges, and a complex labor market. This market is extremely urban-dense and is primed for Hydrovac as a safe alternative to other forms of excavation. Our share in the market in New York City is about 15%, and there is significant opportunity for us to increase that percentage. In a brownfield market that has difficult barriers to entry, our commercial strategy is working to grow this market.
The next market I want to talk about is an example city in the Southeast US and is considered a high-growth market. Here, Badger is optimally positioned to win in this market because of our fleet size, few strong competitors, and a very favorable construction code. We are adding additional trucks and sales reps into this greenfield market with the intention to grow the market by 60%.
Highlighted by these case studies, we have the same runway in almost all of our target markets to grow our share and realize our full potential. I will now pass it over to Bobby to provide an update on national accounts.
Thank you, Chris, and good morning, everyone. As both Rob and Chris mentioned, our national accounts strategy is a key competitive moat Badger has deployed. No other competitor has a similar footprint or is able to provide a consistent service level to these strategic customers across North America. We've dedicated significant efforts and resources into developing the national accounts program over the last two years, and we're satisfied with the progress we've achieved thus far.
Here's what we've been working on. In short, national accounts is Badger's approach to be a one-stop shop, providing nondestructive excavation and infrastructure solutions for our large, more complex customers who have operations across North America. Our commitment to our commercial sales strategy has delivered positive momentum across our geographical footprint, and we are delivering strong growth and continue to have significant runway ahead.
Our national accounts customers have multiple points of contact here at Badger: their national accounts manager at the enterprise level and field service reps at the jobsite level. National account managers and field service reps are cross-functionally aligned to deliver specific account strategies and services to Badger's most complex customers.
These higher levels of collaborative communication and customer service are what has allowed Badger to outpace, excuse me, what has allowed national accounts to outpace the company's realized growth rate. As mentioned earlier, national accounts makes Badger easier for larger customers to work with. Both Badger and our national accounts customers mutually benefit from this relationship. We are positioning Badger as a strategic partner with our customers, and in many cases, our customers are including us in their project planning and requirement standards.
Badger has also achieved preferred vendor status with these customers, providing early access to future workflow and project planning across the customer's North American network. This higher level of service offering allows for consistent and optimal pricing that reflects the premium value that we provide. Large, multi-year projects provide us with consistent workflow and volume throughout the year, regardless of seasonality.
Now, our national accounts customers come to us with complex problems which require coordinated solutions. The national accounts team addresses these complex problems by leveraging Badger's enterprise-wide resources and solutions. Each customer has a playbook that is developed by a national account manager for the sales and operations teams to follow. The easy-button concept is a component of the national accounts customer playbook.
We want to ensure that Badger is the vendor of choice for our customers, whether the job is one day or multi-year, regardless of the market or the number of trucks needed on site. 24 hours a day, seven days a week, Badger is able to service their needs, which includes supporting communities and responding to our customers after disasters.
Some examples of this were after Hurricane Ian in Cape Coral, where we provided 57 trucks for water treatment and sanitation, or after Hurricane Ida in Louisiana, where we mobilized 110 trucks to help restore power. It would have been very difficult for local competitors to coordinate support at this level. As mentioned previously, large customers perform projects that span the breadth of Badger's geographical footprint, and those project teams move on once the job is completed.
The relationships formed when Badger's performances consistently met or exceeded a customer's expectations provide leads to future projects and opportunities. This allows Badger to become involved in the planning process and bidding phase. National account managers provide our largest, most complex customers with solutions that go well beyond dispatching a truck and digging a hole. In summary, our geographical footprint gives Badger access to these customers.
The level of service we provide and the resources we engage make Badger a strategic partner. Let me take a few minutes to expand using real-life case studies. Although we haven't mentioned any customer names on this slide, I want to emphasize that these are actual customers from two national accounts in different industry sectors or verticals. The first one I want to talk about is the work we're doing on a power project in the Eastern US for a large national accounts customer.
Badger was initially competing with other nondestructive excavation providers to provide potholing. We asked to be included in meetings with the project team and help support the job in its initial stages. Through these early meetings, along with careful examination of the project plans, we revealed the opportunity to expand Badger's scope from potholing to a more comprehensive project solution that included services just beyond excavation or excuse me, beyond just excavation.
The original scope of this project was approximately $600,000, but through our continued efforts, we've earned $3.3 million in revenue on the project thus far. This project is expected to continue into 2026. The second case study is for an industrial joint venture in the South Central US starting in 2023. Badger was initially awarded a contract with a limited scope of work, and we were mobilizing 3-5 trucks on a daily basis.
Besides our reach from a truck and crew standpoint, one of the things that has set us apart has been our capacity to handle the administrative workload required for these projects. The project now has 7 times the trucks mobilized at its peak and will generate 5 times the original scope of revenue.
Our competitors have not been able to deliver at this scale to the customer's expectations. In summary, these two case studies are indicative of the opportunity the national accounts program brings to Badger. So with that, I'll turn it back over to Rob Blackadar.
Thanks, Bobby. While we were listening to Bobby and Chris's presentation, I'm going to go off-script for a moment. If you look out to the left, you'll see one of our trucks is actually out there. It's not actually working. We thought maybe if you're not familiar with a Badger vehicle or you haven't seen one up close and personal, that's one of our new Gen 5s with a Western Star chassis, heavy spec chassis on it. So on your way out from the presentations and the meeting today, if anyone wants to go take a look at it, it has one of our operators out there as well. So all are welcome to see.
So now that you've heard from our two sales leaders on what they've been doing and what they're planning to do to continue to capture the market opportunity and execute on our organic growth strategy, I'll briefly touch on a few other initiatives we are working on operationally to leverage efficiency.
We've covered most of the points on this pyramid already, but I wanted to bring them all together on one page and show how collectively we are driving operational efficiency today that will set us up for operational excellence tomorrow. We've covered vertical integration thoroughly. Chris and Bobby just covered the commercial strategy just now. I'm going to spend a bit of time regarding data and the opportunities there on the upcoming slide. Our journey for the last two years has been that of continuous improvement and margin enhancement, as you can see on the slide.
As part of the company's journey, we realized there are millions, if not billions, of data points all around us that we can better capture and certainly leverage to drive more operational efficiency. You can see some of the areas of short-term data opportunities on this slide, but I want to take a couple of minutes and unpack three basic examples of how we will better capture and leverage data here at Badger in the future.
These are only three examples, but we could say this about every part of our business. The first example relates to fleet. So think of the truck that I just mentioned outside the window there. Today, on that truck, Badger captures our truck hours. We capture our mileage and overall fuel consumption in a very manual fashion.
Tomorrow, with Fleetio, we will be able to capture real-time maintenance spend online at the asset level, better fuel economy data, and vendor spend by market, just to name a few points. This data will allow us to better capture and manage our truck lifecycle cost in 2024. But in the future, Badger will begin to leverage predictive analytics regarding our major componentry in our trucks, our light-duty fleet, and even our maintenance practices.
Imagine a Badger Hydrovac sending data back to our branch and fleet teams real-time foreshadowing an engine problem before it actually happens. This technology exists today in the market, and Badger plans to leverage it in the future. No one in the Hydrovac industry has as many trucks as Badger to provide the multitude of data to be leveraged upon, which will continue to widen our competitive moat. The next example relates to our customers.
Today, Badger captures a customer's creditworthiness, a customer's branch and company volumes, geographies in which they work, and general realized pricing data by customer. Tomorrow, Badger will better leverage real-time credit statistics through a live feed with DNB or Dun & Bradstreet. We will be able to identify certain target SIC codes or standard industrial classification codes, identifying customers that Badger is not currently doing business with but we should be, and using that data for marketing purposes.
But in the future, we will begin to aggregate real-time customer demand tied to the volume of projects bid through the previous lead databases that Chris Gunn talked about. We will have the ability to capture all customers' project volume in any given market and focus sales campaigns catered to their specific needs.
More robust customer information will allow us to identify where best to invest into a growing, higher-performing market or divert resources from an underperforming market real-time. Additional customer data points will also help us to focus efforts on high-potential customers and find pricing opportunities in each individual market in which we operate.
Because of the size and scale of Badger's customer base in the Hydrovac industry, we believe we will begin to realize a virtuous cycle of customer adoption and growth. Now, the final example on data opportunities to be leveraged relates to our people, our Badger team. Today, Badger captures our employees' hours on the clock, hours billed on the job, employee tenure, branch turnover rates, and basic demographic information in a manual fashion.
Tomorrow, with our new HCM or human capital management system, we will be able to capture not only the data I just mentioned but also begin to identify real-time retention risk or opportunities, completely automate the hiring and background process for a more efficient onboarding experience, and we'll also be able to identify leadership development opportunities at every level of the company.
But in the future, by leveraging better data about our employees, we will be able to identify high-potential future leaders through real-time assessments, track employees' training and development, and by using our existing database of employee attributes, we will be able to best identify talent to target in each one of our end markets. We believe operator labor will continue to be critical to the execution of our long-term strategy. Again, these are only three basic examples to leverage data.
We believe these opportunities are all around us across the entire business. So with that, I'll hand it over to Rob Dawson, who will take us through our key financial targets and our capital allocation strategy.
Thanks, Rob, and good morning, everyone. I've been with Badger just shy of a year now, and I must say I'm so excited with the progress and foundation the team has set over the past few years. It does feel like we are just getting started. 2023 was a record year for the company. We saw the second consecutive year of significant growth, with revenue up 22% over 2022.
We started to meaningfully see the scalability of our operating and functional cost structures, with Adjusted EBITDA growing by 50% over 2022, more than double the increase in revenue. As an asset-intensive business, the increases in revenue and Adjusted EBITDA have now grown to the point where Badger delivered meaningful Earnings Per Share in 2023.
We have a strong foundation for continued growth and margin accretion and are now starting to realize the operating leverage from the scalability of operations and our support functions. So what do we see going forward? At our investor day in the fall of 2022, we set a 15% revenue growth target over the coming 3-5 years, using 2021 as a base.
Over the first 2 years, revenues have grown at an average of 23%, an increase in our base revenue of over 50%. Looking ahead and supported by the market, commercial, and operations views that Rob, Chris, and Bobby have just laid out, we are raising our revenue targets. Over the next 3-4 years and using 2023 revenue as a base, we are targeting annual revenue growth of 12%-14%.
As Rob stated earlier, Badger is in the best position to capture the underlying end-market growth of 7%-9%. By steadily growing our fleet, maintaining strong utilization, and capturing opportunities for pricing, we believe we can capture more than our fair share of this market over the next several years. Analogous with revenue, we are raising the bar on our revenue per truck per month target.
Our previous target was $38,000, and we achieved and surpassed that goal. Our new goal is to achieve RPT of greater than $45,000. We believe we can achieve this by maintaining strong utilization, continuing with our pricing strategies, all while growing the fleet steadily each year. We are very focused on ensuring that adjusted EBITDA grows at a faster rate than revenues. Accordingly, we are raising our targeted adjusted EBITDA margins. We had previously indicated peak margins of 28%-29%.
We believe that the execution of our organic growth strategy will result in adjusted EBITDA margins of between 25%-30% from next year to 2027. The execution of our strategies is intended to build steady, sustainable growth with continuous improvements each year. We can achieve meaningful operating leverage and improve margins through both our pricing initiatives and disciplined cost management as volumes and revenues increase.
We look at our costs in three buckets: fixed, semi-fixed, and variable. Badger's cost structure across our four regions is largely set. As Chris walked us through, most of our growth is targeted to come from our existing footprint. Significant further investment in our branch network, our leadership team size, and our geographic coverage is not generally required to meet our growth targets.
These fixed costs include items such as our operating and sales leadership teams and our real estate costs such as rents, taxes, and utilities, etc. Our branch costs, which include the cost of operators, fuel, maintenance and repairs on our trucks, and operation support, are variable in nature, making them more closely aligned with revenue.
Our branch support costs and our functional costs, for example, fleet, safety, and insurance, are semi-fixed in nature, meaning there are components that are fixed and won't grow with volume and components that are variable and will need to grow to sustainably support higher revenues. For example, our sustainability, health, and safety workforce will continue to grow with activity levels to ensure our safety culture remains ever-present. However, with the systems and processes we already have in place, these costs will grow at a lower rate than revenue.
Similarly, our general and administrative costs are semi-fixed as well. A large component of these costs are fixed. For instance, the cost of our corporate offices and our senior leadership team. However, many of these have some variability.
For example, in the finance shared service, the cost to deliver credit, contract support, billing, and collections as a core part of our customer service offering will continue to grow with our business but at a lower pace than the overall revenue growth. Over the next 3-4 years, we will continue to execute a targeted roadmap of incremental improvements to both our systems and the processes that support them to steadily increase the scalability of virtually all of our functional and general administrative costs.
These investments include the development of a data warehouse and analytic capability to support the data strategy that Rob discussed, as well as the implementation of human resources, health and safety, and financial planning modules to further enhance the scalability of these functions. Accordingly, and as you can see on the right-hand side of the slide, we expect direct and general and administrative costs to steadily fall as a percentage of revenue over the next 3-4 years.
A core focus for Badger is to deliver our targeted growth in operating and EBITDA margins while executing a stable and efficient capital spend. The optimal manufacturing model is to maintain a steady build profile. Historically, this has been difficult to achieve due mainly to the volatility of our historical heavy exposure to resource-based end markets. As Rob has already outlined, our revenue base is substantially more diverse and stable today.
Over the past year, we have conducted a full review of our fleet to assess, among other items, the remaining useful life of each unit in consideration of the environments and markets in which we now operate. Overall, the average useful life of our fleet has grown modestly. Structurally, a larger proportion of our work occurs in less extreme climates and takes place close to established highways and infrastructure.
Looking back 8-10 years, a much larger proportion of our trucks were working in harsh ground conditions and exposed to extreme weather. These conditions put more strain on our trucks. This structural shift has helped to increase the useful life of a growing proportion of our fleet. In addition to this structural change, as most of you know, the utilization of our trucks through COVID was much lower than normal.
The average engine hours on our fleet is therefore lower than it would otherwise be. These factors, combined with our newly launched refurbishment program that is targeted to extend the useful life of the truck by five years for a modest investment, and the continued implementation of fleet management processes and systems, we are increasingly able to closely manage the retirement profile of our trucks and optimize the full lifecycle costs of our core assets.
Accordingly, we are able to continue building a relatively stable number of trucks each year and meet our growth objectives. With a stable annual build of trucks and the careful management of our fleet, we plan to grow our fleet by about 7%-9% per year over the next three to four years, all while maintaining stable capital spending within the current range.
With our forecast for growing revenues and rising operating and adjusted EBITDA margins combined with a stable capital spend, the current trend of rising returns on invested capital that you see on the right side of this slide is expected to continue. Badger generates significant operating cash flows. As I've just discussed, our strategy is to use all of our excess cash flows to fund our organic growth strategies to generate rising returns on invested capital for our shareholders.
Coupled with our strong balance sheet and ample committed liquidity, we have the full flexibility to fund this organic growth strategy. We have $300 million in committed credit facilities with a syndicate of six of North America's top banks. These credit facilities provide us with an option to increase the limit by a further $120 million, potentially providing us up to $420 million in committed capacity.
At December 31st, 2023, we had about $165 million drawn on the facilities, providing us with ample undrawn room to fund growth and associated working capital. As you can see on the right-hand side of this slide, we continue to target leverage of 1-2 times debt to Adjusted EBITDA. The execution of our organic growth strategy has resulted in lower relative leverage over the past few years.
This is expected to continue. We also anticipate the continued execution of our strategy will eventually result in positive free cash flows within the next 3-4 years. Over the coming year, together with our board of directors, we will start the process of evaluating further opportunities for growth that are available to Badger. As always, we look to use our capital resources in the most accretive manner for shareholders.
Accordingly, any opportunities for growth will always be considered against the alternative of increasing returns of capital to shareholders through higher dividends as well as share buybacks. For now, though, we remain fully focused on the organic growth strategy we have carefully laid out to ensure we are able to capture more than Badger's fair share of the sustained, above-average growth in our end markets within our already established North American footprint. Now I'll pass it back to Rob for some closing remarks.
Thanks, Rob. In closing, I want to reiterate Badger's compelling investment thesis where we started the discussion earlier. As we've stated throughout the day, our business has solid demand and growth fundamentals in our end markets and our customer base. The company has delivered steady margin improvement over the last two years. As the industry market leader, Badger enjoys a significant moat that we continue to widen and deepen.
Rob Dawson just walked everyone through our strong balance sheet and capital allocation strategy to support our continued organic growth. Chris and Bobby covered a very focused commercial strategy that we launched at the beginning of 2022 and is now performing. And lastly, we are very proud of the management team we've assembled here at Badger, and we believe this team will continue to be the catalyst for Badger's growth and success in the future. So that is our presentation today.
With that, we're going to do a quick reset for the next couple of minutes, just a couple of minutes. We're going to bring a couple of stools up to the stage, and we'll start Q&A shortly with Rob and myself. Thank you.
Okay. Thanks. Thanks, Les. So if anyone has a question, please raise your hand, and we will get your microphone so everyone can hear your question. Very important, though, because we have so many people streaming, the only way we can take questions that is fair for everyone online is you have to use a microphone so the people online can hear the question. And then secondly, if you don't mind, we would appreciate Rob, and I would appreciate if you would state your name and which firm you're with. We'd appreciate that. So we'll start right there. Looks like Richard.
Thank you, Rob. Richard Tattersall, Heathbridge Capital Management. A question is on some of your strategies that have been ramping well. What inning are you in? Say, what inning are you in on the baseball analogy in terms of the national accounts, the densification? In the past, you've kind of talked about you're getting approval on the densification business, which could be a huge potential, but it's a slow grind to get approved. So maybe you can talk about those three.
Yeah. So we get asked, and I did not realize with a lot of our Canadian investors how interested they are in baseball because they always want to know about the innings. But we get asked that all the time. Richard, from our perspective, I'll just kind of go through a little of where you started, but I'll go even a little bit deeper because it might interest the rest of the room on some other areas of the business.
But if you think about what inning we're in on national accounts first, I'd say we're probably in the third inning. And the reason I know a lot of people would say, "Well, look at what you've done. Look at your footprint. Look at what Bobby just presented." I'm surprised it's not further along.
But the reason I would score it in such an early inning, Richard, is because the potential upside from where we are today is so vast. We're only dealing with a very small number relative to the entire market of who we could potentially chase as a national account.
But what we're trying to do is as we're growing the business, growing national accounts, we're trying to do it in an orderly way, and we're trying to do it where we can keep a high level of service rather than trying to do everything for everyone. And then as the company continues to scale and grow, we'll be able to grow that national account business. And so anyway, it's relatively early innings on that. On sales overall, I'd say we're probably in the fourth or fifth inning.
As most people know, we launched a commission program at the beginning of last year. This year, Chris has rolled out a variable commission, which actually incentivizes our reps to ask for more rate, and they can make more commission, or if they discount the rate, they make less. We're pretty pleased with that. But there's still a lot of runway for our sales teams as we go further and wider in some of our key markets.
Regarding operations, I would actually say we're probably in the seventh inning. We've done very, very well. Three of our RVPs are in the room, and anyone can visit with them at lunch. But I think we have a pretty mature operations within the business. Then I'm trying to think of other functions that might be of interest in the room.
On fleet, I would actually say we're probably about the fifth or sixth inning. Even though everyone should look at me like I'm crazy because we're a 32-year-old company with a lot of trucks, you would think we'd be in the final innings.
But what we're realizing is even that truck out there, the diagnostics and the data coming off that truck real-time right now, that we have the opportunity to start leveraging more and more, which I spoke about, really makes us realize we have a lot of upside there regarding our fleet and fleet management. And Rob, maybe if you don't mind, take just a minute. You're coming up on your one-year mark. Maybe speak about how you feel some of the corporate functions like finance, HR, are in their journey.
Thanks, Rob. I would put finance, human resources, IT, and support functions in the same bracket, I would say, as fleet. We're sort of in those middle innings. I believe that you would have seen that 50% revenue growth that's been achieved over the last 2 years. Finance has less people working for it today than it did 2 years ago.
There's been modest growth in some of those other ones based on that semi-flexible cost structure I talked about. But are we scalable to be able to grow another 50% or 100%? I think there's a lot we can do to improve the scalability of all those functions. And I mentioned that in our presentation. We are making targeted investments across all of our functions in both our IT systems as well as in the processes that are supporting those systems.
I believe that there is a lot more gains to be made in that scalability of those functions. Lots to do, but also great achievement so far.
All right. Thank you, Richard.
Defense. Get in touch with Defense.
He's got to have the microphone, Logan.
Defense. Defense business.
Yeah. So a few people in the room are aware, but we've started down the journey. I think some people know this, but my background, I was in the U.S. military, in the U.S. Army National Guard in Louisiana for six years. And so I have familiarity with dealing with the military in the U.S.
Actually, had dinner with someone who was in the Canadian military last night, which is kind of interesting, kind of comparing stories. But because of that familiarity, and I was one of the leaders who started the military and government sales group at United Rentals in ooh, go back in time. But that would have been in the 2003, 2004 era. And so we have good familiarity with some of those customers and the market.
We're just now getting underway with chasing some U.S. government military contracts, which we think will actually make us stickier and wider with more foundational revenue. Because as most people know, the U.S. federal government, they're not afraid to spend money, even if it's going into debt.
We believe we offer a service that would be of great value on most of the military bases and in all of the federal buildings that are all throughout the United States. A lot of those contracts in the U.S., and we did this when I was at United, actually are transferable into Canada. Canada honors some of the U.S. government military contracts and contracting vehicles, and the U.S. will honor some of Canada's.
So think in terms of, on the US side, a GSA or General Services Administration type services contract, or in the military, they have similar type vehicles that once you get onto these contracts, anyone can use it, including any contractors working on the base. It's just a complete differentiation from anyone else in our industry who's thinking kind of a bigger, larger scale. And the main kind of impetus to that, Richard, is it just really broadens our customer base even more, diversifies it more.
So as far as the timing, I mean, we're just underway with getting on some contracts and having some meetings in D.C. So very, very early for that. By the way, if you do want to talk more about that, though, Bobby Love and the national accounts team, they're heading up that whole project. So they're available after the meeting.
Hi. Yuri Lynk with Canaccord.
Hey, Yuri.
Good morning. Two questions, if you'd allow me. The first, just a confirmation on your EBITDA margin guidance. Wondering if that 25%-30% is a range you anticipate operating in over the cycle, or is that a progression to get to 30% by 2027? And secondly, you gave some market share numbers in New York and Southeast. I'm just curious what the rest of that market looks like. Is that just Hydrovac? Is that pick and shovel, other excavation methods? Just to get an idea of the potential there and the size of the market.
Thanks for the question, Yuri. With respect to our EBITDA targets, our plan is to have steady, continuous improvement. So ideally, you would see a steady progression in that EBITDA margin through the four-year period we've talked about. But of course, we've put a range out there. It's a pretty wide range.
There's going to be variability in the macroeconomic environment and variability in the outcomes from quarter to quarter. So there may be some variability in that. But the base plan is for steady, continuous improvement as revenue grows, for our cost to grow at a lower rate, and for EBITDA margins to grow at a faster rate than revenue.
Regarding market share along those lines of your question, Yuri, those were a couple of examples. But as Chris was sharing in his presentation, we believe we actually have market share opportunity in those 12 key markets. We have growth potential in every one of them at varying degrees. The market share numbers he put up there were actually in Hydrovac. That wasn't all of construction or wasn't just excavation, but it was Hydrovac.
We've also, to make sure we're not the concept of you don't want to drink your own bathwater, to make sure we're not overly exuberant or overly hard on ourselves, we engage with a third party to give us third-party non-biased information regarding market share. And they have done a whole exercise, and we can tell you what the market share is in all of our top markets and where we sit.
We're going to continue that engagement to see if we're growing or not. But I want to make sure it's a non-biased perspective. It's not something that our team out in the field saying, "Oh, I have 50% market share," when in fact, they only have 20, or vice versa. "I have really low market share," when in fact, they have higher. The reason that's so important, Yuri, and we care about market share is Chris referenced our pricing engine.
Our market position in each one of our key markets is very important because if we are the leading market position in some of our key markets, we should be leading in price. And if we are a lower market position, I can think of a couple of markets where we actually we're beyond three, maybe four or five. We need to make sure we're being competitive.
We always want to be competitive and give good value for our pricing. But we just want to make sure that our pricing is in line and it makes sense in each market. That's why we are starting to get you'll hear us talk more and more about market share over the next several years, so.
Hi. Oh, sorry. I didn't know someone else was going first.
Go ahead, Brad. Go ahead, Brad.
Nope.
You didn't get on the microphone yet.
How important is real estate optimization? Some of your markets, the penetration's really low. They're probably growing quite fast. I imagine you keep track of miles driven relative to hours worked, and you wake up and say, "You know what? We'd be better if we were on the other side of this city," based on where the customers are coming from.
We're realizing that our real estate strategy is becoming more and more key. We referenced it throughout the presentation, but our footprint is a competitive moat. It's an advantage. But once we start to really unpack and look at individual markets and we start to say, I'm just thinking of a couple of larger cities.
Think of a top 10 city in the United States, and we have this market, a superior leading market share position. And then we have a few local competitors that are growing faster than we are. We're still growing in that market, but not as fast as some of our competitors. You start to realize why, and it's just for some of the data that you referenced, Brad.
It's the if we're not in the right area of the city that's growing or has the development, or we're too far away, or the market is so broad. And some of the markets and you could say Toronto is like that, but we have several branches all around Toronto, so we have it pretty well covered.
But there's a couple other large, large, large geography cities where Badger only has a single branch. And we do very well in these large cities, but once you get about 90 minutes outside, you start to realize competitors, instead of obviously locating right next to us and trying to compete head-to-head, they just go beyond where a customer is willing to pay us to drive 90 minutes, and then they just start to compete over there. And that's where we're realizing we need to start looking at this market by market.
Each one of our RVPs is or has been going through that exercise since fourth quarter of last year on all their large key markets, realizing maybe in and I don't want to give out the markets because that would be silly, but maybe in some of these large markets where I only have 1 location, and we're still growing.
So on the surface, you'd look at it and say, "Oh, we're doing really well." But if competitors are growing faster and we're not getting out hustled, as far as sales or customer coverage, it's just a customer doesn't want to pay 2 hours of drive time. And so in some of the cities, we're having to go to 2, 3, 4 branches. That opportunity, though, also allows us to lock up these markets a lot more than we have in the past.
In the past, it just wasn't as focused a strategy from my perspective, and it's definitely becoming a more focused approach on our real estate strategy. Hopefully, that gives you a kind of color.
Ian Gillis from Stifel. First question is a follow-on from Brad's question. When you think about the 140 locations today, what do you think that number looks like come 2027? And are the costs significant as you think about opening new branches?
Yeah. So the cost doesn't have to be a full-on branch. But it needs to be a location where we can have our operators dispatch from. And so I'm trying to think of an example to use, but let me go with I'll just go with Dallas, Texas. Dallas Fort Worth, it's called the Metroplex. It's one of the I think it's the fourth largest metro area of the United States geography-wise. And you don't have to have an individual standalone branch with another branch manager and all the additional overhead.
You can actually run it with a dispatcher and what we call an operation supervisor, which is like an assistant branch manager type. And then you can have one branch manager over two or three branches.
Once you get beyond if you think of around Los Angeles, where we have a half a dozen locations, that starts to scale up, and there's enough volume there. You actually need individual branch managers. So it's case by case. But whenever I say we're going to expand and make sure we're growing, and Chris talks about the top 12 key markets and us focusing on that, the biggest thing for us is making sure that we're gaining share at the right level that we should be and not losing share and make sure we're doing it in a smart way. If we can't expand into a market and do it in a profitable way that is actually additive and accretive, we probably aren't going to do it, or there's something else going on in that market.
But again, we have a lot of opportunity in some of those key markets in a big way. When you reference the 140 and what will it look like in 2027, I see us having, as I suggested, some additional locations. I can't give you a number. We haven't modeled that out to give you an exact number by 2027. But we probably will have and if you think of those 12 key markets, there's probably half of them that we need to add some additional locations, so maybe an additional 15-20. But the biggest thing is and Chris mentioned this, but I want to make sure we don't walk past it.
The reason we don't want to do a bunch of flag planting in various cities all over the place in smaller markets is he referenced 1 in 3 dollars is going to be spent in those 12 markets. If we aren't fully capturing those 12 markets today, why do we need to keep opening up small little markets all over the place? So that's our perspective on that, so.
Follow on, it seems like M&A is going to become a bigger consideration over the next three years. As you walk to a Badger worksite today and look at some of the ancillary services around you, are there any that we should be thinking about that you, "Man, I wish I owned those. They have great margins. They have great return on capital employed that would fit in nicely with what you've got"?
Yeah. So I'm going to talk about it from the commercial side for a quick moment, Ian, and I'll let Rob talk about it from the financial side. From the commercial side, we have been really focused on getting the company really uber-focused on our profitability and getting back to some traditional profit targets that we've had in the past. And I think we've needed to be there.
We didn't need to be thinking about doing acquisitions and M&A. And I would say in the past, maybe we weren't prepared experience-wise on the leadership team. We've now flipped the script on that. And when you look at and if you don't know Rob's background, he can give more of it, but he has a heavy M&A background. I came out of United Rentals, obviously, during their M&A heyday. His is more on the front side.
Mine is more on the backside on the integration, which is my passion. I love that. So between the two of us and then the leadership team we've assembled, there's a lot of experience with acquisitions. And we talk about it from time to time, but our core business is what we've needed to focus on, Ian, and we've stayed focused, and we're going to stay focused on that for the short term and near term.
But as the core business becomes more and more or has more and more strong continuous performance is where we start to say, "Okay, what's our next thing? What's our next step?" If you think about M&A for us, we're not going to stand up here and tell you, "Okay, here's what we're going to target and what we're going to do." If I did that, that would be crazy.
But I look at it and say, think of upstream of what people are doing in advance of calling Badger, and you can call our customers and ask them. And then they call Badger, and then they use services and equipment, etc., downstream. And where can Badger complement our customers? Because the biggest thing for us is focusing on what do our customers need?
The last thing I'll add, and I'll let Rob talk about our capacity and capability for M&A and what it looks like in the next few years, is the ability to, if we're going to do an acquisition, we need to make sure that it is, again, the same concept, but additive and accretive, and it integrates well. That's way more important to me than just doing M&A for M&A's sake because none of us up here with the M&A experience need the exercise.
It's got to be something that's going to add to the company. If you want to add about kind of capabilities and capacity for our balance sheet, etc.
I don't have a lot to add on what Rob said there other than I would say having the balance sheet we do have and the access to capital we do have provides us with that opportunity set. Rob mentioned this at the end of his comments on M&A. We will have additional organic growth opportunities. We obviously have a very big and real in front of us organic growth opportunity set right in front of us. Then there may or may not be other M&A opportunities that present themselves either through us unearthing them or them coming our way. The real art is to try to compare those on a risk-adjusted basis.
So when you're building trucks that you already know how to do and you're adding those trucks into a market and an organization that is already running them and knows how to run them on a risk basis, that growth is very compelling. Again, with organic spend on some of these analogous service areas that Rob was mentioning, again, on a risk-adjusted basis, a little more risk, but certainly something that we can do and is within our wheelhouse.
Anything beyond that, we have to really approach those things from understanding what our cost of capital is and what the accretion that we can achieve without having to extend the balance sheet so much that we get some of that accretion through a degree of financial leverage rather than just operating leverage and integration. So we're going to be very, very focused on that.
As I mentioned in our speaking part of this presentation, we're just at the very early stages of even starting these conversations with our board of directors and analyzing whatever opportunities might be out there, so.
Hi. Hi, Michael Dumais, Scotiabank. Wanted to ask you guys if you can describe how much more visibility into your business you've gotten with the growth in national accounts and how you've utilized that visibility to get better pricing?
Yeah. So, Michael, I look at it, and the perspective that national accounts has given us is we have the same company or the same customer. Sometimes they're really large national or multinational customers with different divisions. But more often than not, it's a single customer who has projects all across North America.
What it has caused us to do by ramping up that program is to look a little bit more introspectively and understand where we as a company, we're giving high and good levels of service. And then potentially, and we've seen it, where we ramp up national account business into a branch, and they're not quite ready for it, or they're used to dealing with 1, 2, 3-day contracts with customers, and we plop in for, let's just, I'm just going to make up an example, but an LNG plant expansion project.
That one branch that's used to running 6 trucks, and they do a lot of 1-, 2-, 3-day or week-long contracts, we go in with a 2.5-year project. They're not used to running 25 trucks. So national accounts for us has been a bit of a journey. And that's why some others are asking, "Well, why don't you ramp it up more? And why don't you go faster?" is we need to make sure that we're giving the right level of service and a good experience to our customers. So that's been kind of a learning lesson for us because the company has always done business with these same accounts, but it was never done in a concerted way.
A top three contractor based out of the US but does work in Canada and the US came to us when Bobby had started, and he had a meeting with a senior leader at this company. The senior leader and some of his field leaders, when they met, they said, "Well, Badger is only located in Orlando and in Dallas." We looked at them and said, "Well, what are you talking about?" Bobby about fell out of his chair and said, "We have 140 locations." d
They about fell out and said, "We didn't even realize that." Because if you deal with a larger player like Badger, you don't have to go open up a new credit app every single time you come to town. You don't have to find who's my new contact and who's all that. That's all handled for them.
It's all one very easy transaction for our customers. The other thing it's caused us to realize is from an IT perspective and a technology perspective, these are larger, more sophisticated accounts. They require a little bit more complex level of service delivery regarding invoicing and billing.
Sometimes they want customized summary-type billing, which could be billing at the end of a day or end of a month, where in the past, it was, "This is the way Badger does it, and here's how we do it." With national accounts, if you're really going to take share and start to really enjoy good market share for that national account, you have to actually work with them on their systems and how they want to do it.
Some of our technology and IT was not ready for that when we launched, but happy to kind of report that that whole group and our team has really ramped that up. And you will see national accounts actually starts to drive some of our technology adoption for our customer-facing experiences. So for us, the whole national account journey has been very, very interesting and actually very rewarding.
I referenced at least two or three times in the presentation about this concept of a moat and building out a moat around the company from competitors, etc. I think that national accounts, because of kind of our first mover position in that end of the Hydrovac nondestructive excavation industry, that is of great value to the company and pretty excited about what we've built so far, but a lot of upside opportunity to it. Does that answer?
Yeah, that's great. I did have a second question, and I was trying to tie some of the numbers that were in the presentation, so maybe more for Rob Dawson for this one. But 7%-9% fleet growth, 12%-14% revenue CAGR, so delta 5% implies RPT should be going up 5% per year, which takes you above your target relatively quickly. Just thinking about that 5% every year, how much more can you squeeze on utilization? And if you're pretty close to the utilization journey, does that mean that in the latter years, most of it's going to be pricing? Just trying to break up utilization versus pricing.
It is a good question. We spent a lot of time dwelling on all the triangulation of those numbers, and we did put a plus next to that RPT target. But we were not at the point where we're disclosing utilization targets or utilization actuals or pricing. But I will say we are growing our fleet.
I don't think it's a coincidence that the growth in our fleet that we're targeting is matching the growth in the tide of the market, that 7%-9% market growth. And the rest, utilization, we feel we've made a lot of gains on utilization, particularly in 2022 and a little bit more in 2023. Our bigger opportunity going forward is likely price, but utilization is still a small piece of that. And then there's market share as well.
Thanks.
Hey, guys. Matt here at Canaccord. I just want to tie in a little bit to that last question. When you think about your really impressive revenue growth targets, I guess what would stand in the way internally from the market could change. It could be volatility, administration changes, who knows? But internally, what would stand in the way from hitting those targets?
And when I think about in the past what stood in the way or what the impediment to it was, was really at the operator level, recruiting good drivers, good operators. And if I remember back to the last investor day, turnover was somewhere around 50% at the driver level. So I didn't see you disclose that in your presentation, but I'm curious if you could comment on that. Have there been improvements?
What have you done to recruit drivers and sort of what that market looks like?
Yeah, certainly. I made a high-level comment within talking about data. At the very end, I referenced we were talking about the people side of it, and I referenced, Matt, the concept of operator and having good operators is going to be a key part of the business going forward, obviously. Without the operators, we can't produce any revenue.
Our journey on our turnover or retention, it was high during the last investor day when we reported. I don't think we've publicly disclosed that, but it has gone down significantly to where we are at the same level as the general construction or the general contractors. And in many of our markets, it's been a 180-degree change of improvement. The things that are driving that are a handful of things.
Number one, making sure that our leaders and I'm talking about our branch leaders, our ops supervisors, our branch managers, our general managers, we've been putting them through actually leadership development and leadership coursework on how to manage people in a very positive, effective way. There's not one person in this room who wants to go work for someone who's crabby. I don't. I don't think Rob does.
We like to work with people that give us good, solid feedback and are appreciative of the effort. And us training and teaching our branch managers and ops supervisors and GMs has been a big differentiator. The second thing for us is in certain markets, we've realized maybe we were undermarket comp-wise. So we've made sure we're at market. That was largely cleaned up earlier in 2023.
Then lastly, just the business itself, with that diversification of our customer base and the revenue being more foundational rather than episodic and up and down, allows all of our operators to get consistent hours. I do believe that has helped to drive it as well. If you know Badger's growing in your market and you work for a pretty decent human being who takes care of you and cares about you, and you're paid fair, you're probably going to give it a chance.
You're going to stick around. But if any one of those three legs of that stool are out of whack, it's going to be harder and harder if you're following what I'm saying there. Those are some of the basics. Then there's some other nuanced things we're doing internally. It's kind of probably more secret sauce. Everyone in here probably got a YETI cup.
If you didn't, if you haven't looked in your bag, you have a YETI cup. It's a pretty cool YETI cup. We sent those to all of our operators for Employee Appreciation Day a few weeks ago. You would have thought that we gave everyone a new car like Oprah Winfrey. But our operators actually appreciate something nice, and it's for them, and it goes to their house with a personal handwritten note.
People appreciate stuff like that. So anyway, we're just trying to up our game. I do believe there's I call it kind of it's an old concept, but kind of the concept of a war for talent. I do believe that there's going to be a continuous war for talent for any of the skilled trades, anyone with a commercial driver's license. I think that's going to just continue on.
I just don't see that changing dramatically in North America, so. Anyway, but we're pretty focused on it, if you can tell, so. Thank you, Rob. Duh. And probably the last—let me add one more thing, Matt—is the other thing, too, is and we don't release the exact final number of our safety statistics, but the company has been on a bit of a journey on our safety culture for the last probably 4 or 5 years.
Because we're really, really a lot more focused on our employees' just general welfare and safety, and then also this concept we have internally, it's a common-known concept, but we really emphasize internally what's called Stop Work Authority, where if something's unsafe, just stop. And if you make a customer or someone crabby because they're asking you to do something unsafe, that's okay.
Each one of our operators has a card from me saying, "I authorize you to stop working." The reason being is one of our employees' safety is not worth the revenue we would get. I think our employees really grasp that and really appreciate it. It's almost like an empathetic leadership style, if you can get that concept. So anyway, I think those are the main drivers. Thanks for not letting me walk past that, so.
Hi, Krista from CIBC. You spoke about a lot of the opportunities with data aggregation and interpreting it. Can you speak to the investments needed for that? Have you made those investments already, or is there still more to come?
Talk a little bit about people and concepts.
Yeah. Any investment in something like this is always going to have dual component, the right system, and then the right people that know how to not only set up the right system, but how to implement it and run it within the organization.
We're at the very early stages, but we have started doing both of those things. Oracle has a product, and we have an Oracle ERP environment called FAW, and we're in the early stages of implementing FAW as a single source of truth, a place that's going to store and hold all that data. 16,000 rows in Excel can be pretty cumbersome when you've got, as Rob said, hundreds of millions of pieces of data. It's very hard to analyze it in any form of a robust way. That's just the tool. We have started hiring.
We just hired one of the leaders from one of the large industrial facilities businesses in Canada that ran the data and analytics program for that company. He started with us just at the end of last year, and he's already well in his way. He's here today. His name is Ganesh. If you ever do run into him, I'd encourage you to ask as many questions of him as you want. We're very excited about both the people that we have, and he's got a very small team underneath him, and the system that we're building, what it's going to give us in all of the areas that Rob talked about in data.
Yeah. And Krista, there will be a modest investment in some systems, but I can't stress enough, we're not talking about an ERP system or anything like that. We're talking about things that are very modest. We referenced HCM, and again, we're just turning on modules within the Oracle Cloud world. And so the company had already and again, this is back to my concept of the company has set the foundation for what we're enjoying today and what we're going to grow to tomorrow.
That was done in late 2018, 2019, and finalized kind of at the beginning of 2020. And I would say we're the beneficiaries of that because we don't need to go buy a new ERP system. That investment's already been made. But there will be modest adding a small this or small that. So just want to make sure I cover that. Thank you.
Frederick Bastien with Raymond James. Just to build on the data capabilities, how will that help extend the useful life of your assets?
Yeah. So I referenced that concept with a truck of a lot of the data analytics coming off the truck. So the truck out there, that Western Star outside the window, has telematics in it that's cellular-based that has a high-frequency ping rate, which is how often it talks to our systems. It has the capability right now to be able to tell our fleet leaders, "Hey, there's something wrong with this cylinder.
There's something wrong with your compression. There's something wrong with the temperature on the engine. And if you continue to run it at this high temperature, you're going to have a failure." We believe that data will save us a tremendous amount in repairs and maintenance because for us to replace an engine, it's around $50,000. But if I can replace a water pump, it's a lot cheaper in doing that in advance.
The truck actually has that data pinging right now, sitting out there. And we're just now standing up the beginning stages of a system called Fleetio, which will start to capture that. But the future will be that all being tied internally to our operator as well. All of our operators carry these iPads. They'll be able to see, "Hey, your truck is having a problem.
You need to stop." Right now, our fleet guys are starting to get that information, our branches. But when the whole circle gets closed, I believe that could yield a lot of savings in our repairs and maintenance. The other thing that we've done as a company, and I'm not saying it's good or bad. It's just kind of the history of the company is we've had periods of really strong fleet maintenance and periods of not the best fleet maintenance.
It's not even periods, but rather maybe areas of the company. When you get consistent data across the entire fleet, we can start to identify the outliers. We can start to realize, "This one area" and I'm going to pick on it, even though this branch does phenomenal service, but I'm going to pick on them as an example.
The Cincinnati branch, for example, isn't doing very good service compared to all of their peers in the Midwest. We can go and actually focus a team on there and find out why not, what's missing. Maybe the service tech who's worked on our trucks is out sick or left or whatever, and we need to shore that up. Just that basic data. I know it seems very basic. Other companies are leveraging that today in the trucking business.
We haven't yet at Badger, but that's the upside that we see. The other really cool thing, and I'm very excited about it, our head of fleet, Lon, is in the room, so you can definitely grab him at lunch if you want to know more. But all this exists out in the market today, so we don't have to go figure this out or invent it.
The only lift for us in a big way is our IT systems being integrated into the trucking manufacturers, which is Daimler and PACCAR, and the adoption within the company of people using the data and the oversight for that adoption. So anyway, that to me is tremendous upside.
We think it'll. I don't think it's necessarily going to take us out an additional 5 years, but if we could get even another 6-12 months of additional life out of the truck before we either have to refurb it or we retire it. Think of the RPT numbers we just put up that are growing. That's additional revenue opportunities on an asset. So anyway, we're pretty jazzed about that.
Last one for me. I'm fairly new to the story. I was wondering if there are any low-hanging fruit opportunities to expand your service offering beyond Hydrovac in the long term.
That's similar to what Ian was asking about, okay, kind of M&A and what would you do more. And I'm going to give a similar answer, and I'm not trying to be cute. But you think about what our customers are doing before they call Badger and what they're doing and who they're calling after Badger and what kind of services do they require, what do they need.
W e could visit with you maybe at lunchtime and go through maybe Chris Gunn could go through a typical customer and what they do, what their roles are, what their job is on a project. But they're using other services and other companies to buy goods and perform services for them before Badger gets there. And then they use other services after Badger is done. And what could Badger do to kind of get involved in that?
But the biggest thing for us, though, and we will probably start swimming some upstream and some downstream of our current business, our core offering. But it's got to be complementary, and it can't be disruptive. We don't want to do anything that all of a sudden I could think of half a dozen examples, but we get into a business, and it becomes a complete distraction to the core business because right now, the core business is running and starting to run pretty well.
And we don't want to become. We want anything to be additive, not a distraction or negative. So hopefully, that gives you a little insight. Happy to visit with you if you're new to the story as well. All right, one or two more because we'll go on forever because we like this, but you can grab us at lunch.
Might be quick. It's John Gibson from BMO. Just with regards to your dynamic pricing model, have you seen any pushback from customers maybe during surge periods yet? Or have you seen any pushback just on the dynamic pricing from customers, especially during surge periods?
Yeah. So if you like a price increase on anything in your life, raise your hand in this room. Yes, we certainly. But we knew because many of us on the senior leadership team have gone through this journey, John, we've done this multiple times with multiple companies. We knew we were going to get pushback. And we're not talking about ourselves.
We're talking about the frontline leaders and our sales reps that, in advance of us rolling out our pricing strategy, Chris Gunn and Bobby and the rest of the commercial sales team, they led a whole negotiation program and training with our sales reps and actually taught them, "Okay, what happens when a customer says no? What happens when a customer says, 'I'm going to go to your competitor. I'm going to do this.
I'm going to do that?" And so we trained on that for almost about three-quarters of a year in advance of us even rolling out the pricing engine and the pricing strategy. Even after all the training, we obviously still get pushback, and we've made a few customers crabby.
On the flip side, we do believe and I'm just a big proponent of that if you're going to ask for more pricing, you have to give a customer a superior experience. And you have to either be able to outperform your competitors or at least be the top of the pack in the group that you're working with. And so because of that concept, a few of our branches who've gone in and said, "I'm going to go get a really high price increase," we actually tell them, "You know what?
You need to make sure that if you're passing on a price increase to a customer, you're giving that customer something of value for the additional price. And that value could be a higher level of service. It could be maybe we offer some safety training for their project or their own employees to complement when we're doing ours, or we do some training about hydrovacs in general. But anything to add value to customers is how we've gotten pretty good adoption on our pricing. And it seems to be working pretty good, so. Anything you want to add on that?
I think if you just do the simple things really well, it's not a very easy thing to accomplish. But showing up to the site on time, as Rob talked about, providing excellent service, having operators that know exactly what's to be done so that they don't need additional supervision, and being clean and orderly, and for the bill to be correct and delivered on time, and provide easy ways for them to pay their bill. All of those things add up to a customer experience. They're all relatively simple when you say it, but it is a differentiator, especially in this industry. If you can do that well, the price is often maybe not the most important thing.
Yeah. Cool. Is that covered? All right. Any one or two more or no? All right. Well, thank you, everyone. I appreciate everyone's participation and coming. And please join us for lunch. When will that start? Is it ready now? All right. So there will be lunch next door. If you have time, we'd love to see you. Don't forget, there's a Hydrovac out there if you want to take a peek on your way back to your offices or whatever. And I think one of our operators is out there too if you want to visit, so. All right. Thank you.