News Column

Badger Daylighting Ltd. Announces Results for the Three Months Ended March 31, 2014

May 14, 2014

Calgary, Alberta CANADA, May 14, 2014 /FSC/ - Badger Daylighting Ltd. (BAD - TSX), (the "Company" or "Badger") is pleased to announce its results for the three months ended March 31, 2014.  

Highlights for the three months ended March 31, 2014:

* Revenues increased by approximately 45 percent to $100.0 million from $69.2 million for the comparable quarter of 2013 due to a 42 percent increase in Canadian revenues and a 48 percent increase in United States revenues. This is the first full quarter in which Fieldtek, acquired in November 2013, has been part of the financial results.  Without Fieldtek, Canadian revenues would have increased by 25 percent.  As a result of the increase in revenues, the Company's quarterly Adjusted EBITDA increased by 24 percent to $24.4 million for the first quarter of 2014 from $19.7 million in the first quarter of 2013;

* Adjusted EBITDA margins were 24 percent for the three months ended March 31, 2014 compared to 28 percent for the three months ended March 31, 2013;

* Funds generated from operations decreased by 2 percent period-over-period to $15.2 million from $15.6 million in the comparable quarter of 2013 mainly as a result of the increase in the market price for Badger's shares and therefore the increase in the deferred unit plan expense, which increased from $1.8 million for the three months ended March 31, 2013 to $7.4 million for the three months ended March 31, 2014;

* Adjusted EBITDA margins in Canada decreased to 24 percent from 30 percent for the comparable period of last year due to a combination of factors.   These factors include the addition of Fieldtek in November 2013 which lowered the Adjusted EBITDA margin by 1.5 percent, additional costs to establish the corporate Toronto area, plus reduced margins in the western Canadian corporate operations due to increased fuel prices, greater employee costs and a slow reaction to adjust prices accordingly.  Adjusted EBITDA margins in the United States decreased to 25 percent from 27 percent for the comparable period of  last year due to adverse weather conditions in the eastern half of the United States, which led to increased costs for moving equipment to other locations to keep the fleet busy;

* Profit per share was $0.15 per share for the first quarter of 2014 versus $0.22 per share for the first quarter of 2013.  The main reason for the decrease was the increase in deferred unit plan expense;

* On January 24, 2014 the Company closed a private placement of senior secured notes, which rank pari passu with the senior credit facilities, have a principal amount of US $75 million, an interest rate of 4.83 percent per annum and mature in 2022.  Amortized repayment of the notes begins in 2020;

* Badger had 846 daylighting units at the end of the first quarter of 2014, reflecting the addition of 57 daylighting units to the fleet to date in 2014 and the retirement of two units.  Of the total, 376 units were operating in Canada and 470 in the United States at quarter-end.  Badger had 324 units in Canada and 346 in the United States for a total of 670 units at March 31, 2013.  The new units were financed from cash generated from operations and existing credit facilities; and

* On January 24, 2014 the Company completed a split of all the issued and outstanding common shares on the basis of three common shares for each existing common share held, leaving 37,033,893 common shares issued and outstanding on that date.

Management's Discussion and Analysis

The following Management's Discussion and Analysis (MD&A) should be read in conjunction with the attached unaudited interim consolidated financial statements of Badger Daylighting Ltd. (the "Company" or "Badger").  The interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS).  Readers should also refer to the audited consolidated financial statements and MD&A for the year ended December 31, 2013, which along with all previous public filings, including the Company's Annual Information Form for the year ended December 31, 2013, may be found on SEDAR at www.sedar.com.

All comparative share capital and profit per share amounts have been adjusted for the three for one share split that occurred on January 24, 2014.

This MD&A has been prepared taking into consideration information available to May 13, 2014.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements and information contained in this MD&A and other continuous disclosure documents of the Company referenced herein, including statements related to the Company's capital expenditures, projected growth, view and outlook toward margins, cash dividends, customer pricing, future market opportunities and statements, and information that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may" and similar expressions relating to matters that are not historical facts, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. These statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. The Company believes the expectations reflected in such forward-looking statements and information are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements and information included in this MD&A should not be unduly relied upon. These forward-looking statements and information speak only as of the date of this MD&A.

In particular, forward-looking information and statements include discussion reflecting the Company's belief that:

* Internal preparations for anticipated growth in 2014 will be completed;

* As long as overall activity in the economy and the oil and natural gas industry remains essentially constant, Badger will be able to continue to grow the business in 2014;

* Badger in 2014 can further develop the organization to position itself to be able to handle the planned future growth;

* The new locations opened in the United States will provide an increased contribution to cash flows from operations and net profit during 2014;

* The current business development initiative will provide Badger with the additional new customers necessary to grow the business in 2014 and the future;

* Eastern Canada will continue with steady growth in 2014, driven by activity in the utility and construction segments;

* There will be an increase in Western Canada revenue during 2014 due to anticipated project volume and spending in the oil and natural gas sector;

* The expectation that Western Canada EBITDA margins will improve during the remainder of 2014; and,

* An increase in Company capital will be required to finance the anticipated capital expenditure program.

The forward-looking statements rely on certain expected economic conditions and overall demand for Badger's services and are based on certain assumptions. The assumptions used to generate forward- looking statements are, among other things, that:

* Badger has the ability to achieve its revenue, net profit and cash flow forecasts for 2014;

* There will be long-term demand for hydrovac services from oil refineries, petro-chemical plants, power plants and other large industrial facilities throughout North America;

* Badger will maintain relationships with current customers and develop successful relationships with new customers;

* The Company will collect customer payments in a timely manner; and

* Badger will execute its growth strategy.

Risk factors and other uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements include, but are not limited to: price fluctuations for oil and natural gas and related products and services; political and economic conditions; industry competition; Badger's ability to attract and retain key personnel; the availability of future debt and equity financing; changes in laws or regulations, including taxation and environmental regulations; extreme or unsettled weather patterns; and fluctuations in foreign exchange or interest rates.

Readers are cautioned that the foregoing factors are not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results is included in reports on file with securities regulatory authorities in Canada and may be accessed through the SEDAR website (www.sedar.com) or at the Company's website. The forward-looking statements and information contained in this MD&A are expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

NON-IFRS FINANCIAL MEASURES

This MD&A contains references to certain financial measures, including some that do not have any standardized meaning prescribed by IFRS and that may not be comparable to similar measures presented by other corporations or entities. These financial measures are identified and defined below:

"Cash available for growth and dividends" is used by management to supplement cash flow as a measure of operating performance and leverage. The objective of this measure is to calculate the amount available for growth and/or dividends to shareholders. It is defined as funds generated from operations less required debt repayments and maintenance capital expenditures, plus any proceeds received on the disposal of assets.

"EBITDA" is earnings before interest, taxes, depreciation and amortization and is a measure of the Company's operating profitability and is therefore useful to management and investors. EBITDA provides an indication of the results generated by the Company's principal business activities prior to how these activities are financed, assets are amortized or the results are taxed in various jurisdictions. EBITDA is calculated from the consolidated statement of comprehensive income as gross profit less selling, general and administrative costs, deferred unit plan costs and unrealized foreign exchange gain/loss. "Adjusted EBITDA" is EBITDA prior to recognizing deferred unit costs and unrealized foreign exchange gain (loss).  They are calculated as follows:

-***-

                                          Three

months ended March 31, ----------------------------------------------------------------------- -------------------------------- ------------------ ------------------- $ thousands                                   2014                2013 -------------------------------- ------------------ ------------------- Gross profit                                             30,438              22,721 Selling, general and administrative costs                       (6,071)             (3,019) Deferred unit plan                         (7,436)             (1,763) Unrealized foreign exchange gain                                           185                   - -------------------------------- ------------------ ------------------- EBITDA                                      17,116              17,939 Deferred unit plan                           7,436               1,763 Unrealized foreign exchange gain                                         (185)                   - -------------------------------- ------------------ ------------------- Adjusted EBITDA                             24,367              19,702 ================================ ================== ===================



   -****-

"Funded debt" is a measure of Badger's long-term debt position. Funded debt is long-term debt.

"Funds generated from operations" is used to assist management and investors in analyzing operating performance and leverage. It is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an alternative to cash flow from operating activities, net profit or other measures of financial performance calculated in accordance with IFRS. Funds generated from operations are derived from the consolidated statement of cash flows and is calculated as follows:

-***-

                                            

Three months ended March 31, -------------------------------------------------------------------------- ---------------------------------------- ------------- ------------------- $ thousands                                      2014                2013 ---------------------------------------- ------------- ------------------- Cash provided by operating activities          10,271               4,549 Add (deduct): Net change in non-cash working capital relating to operating activities                4,953               9,547 Equity-settled share plan settled



in

cash                                        

-                   1,513 ---------------------------------------- ------------- ------------------- Funds generated from operations                15,224              15,609 ======================================== ============= ===================



   -****-

"Growth capital expenditures" are capital expenditures that are intended to improve Badger's efficiency, productivity or overall capacity and thereby allow Badger to expand overall activity and/or access new markets. They generally represent any net additions to the daylighting fleet. Growth capital expenditures exclude acquisitions.

"Maintenance capital expenditures" are any amounts incurred during a reporting period to keep the Company's daylighting fleet at the same number of units (including costs incurred to extend the operational life of a daylighting unit), plus any other capital expenditures required to maintain the capacities of the existing business. The amount will fluctuate period-to-period depending on the number of units retired from the fleet.

"Net debt" is funded debt less cash and cash equivalents.

Cash available for growth and dividends, EBITDA, Adjusted EBITDA, funded debt, funds generated from operations, growth capital expenditures, maintenance capital expenditures and net debt throughout this document have the meanings set out above.

-***-

                                        

Three months ended  Three months ended                                                   March 31,           March 31,                                                        2014                2013 ---------------------------------------- ------------------- ------------------- Revenues                                            100,022              69,154



EBITDA                                              

17,116              17,939

Adjusted

EBITDA                                      24,367              19,702

Profit before tax                                     8,386              12,336

Income tax expense     Current                                           2,307               2,502     Deferred                                            349               1,849 Net profit                                            5,730               7,985



Profit per share - diluted ($)                         0.15                0.22

Funds generated from operations                      15,224              15,609 Funds generated from operations     per share - diluted ($)                            0.41                0.42



Maintenance capital expenditures                      1,213                 673

Required long-term debt repayments                        -                   -

Cash available for growth and     dividends                                        14,092              14,993



Dividends

declared                                    3,333              

3,330

Growth capital expenditures                          24,845              12,250



Total shares outstanding (end of period)         37,033,893          36,997,893

   -****-

OVERVIEW

Highlights for the three months ended March 31, 2014:

* Revenues increased by approximately 45 percent to $100.0 million from $69.2 million for the comparable quarter of 2013 due to a 42 percent increase in Canadian revenues and a 48 percent increase in United States revenues. This is the first full quarter in which Fieldtek, acquired in November 2013, has been part of the financial results.  Without Fieldtek, Canadian revenues would have increased by 25 percent.  As a result of the increase in revenues, the Company's quarterly Adjusted EBITDA increased by 24 percent to $24.4 million for the first quarter of 2014 from $19.7 million in the first quarter of 2013;

* Adjusted EBITDA margins were 24 percent for the three months ended March 31, 2014 compared to 28 percent for the three months ended March 31, 2013;

* Funds generated from operations decreased by 2 percent period-over-period to $15.2 million from $15.6 million in the comparable quarter of 2013 mainly as a result of the increase in the market price for Badger's shares and therefore the increase in the deferred unit plan expense, which increased from $1.8 million for the three months ended March 31, 2013 to $7.4 million for the three months ended March 31, 2014;

* Adjusted EBITDA margins in Canada decreased to 24 percent from 30 percent for the comparable period of last year due to a combination of factors.   These factors comprised the addition of Fieldtek in November 2013 which lowered the Adjusted EBITDA margin by 1.5 percent, additional costs to establish the corporate Toronto area, plus reduced margins in the western Canadian corporate operations due to increased fuel prices, greater employee costs and a slow reaction to adjust prices accordingly.  Adjusted EBITDA margins in the United States decreased to 25 percent from 27 percent for the comparable period of  last year due to adverse weather conditions in the eastern half of the United States, which led to increased costs for moving equipment to other locations to keep the fleet busy;

* Profit per share was $0.15 per share for the first quarter of 2014 versus $0.22 per share for the first quarter of 2013.  The main reason for the decrease was the increase in deferred unit plan expense;

* On January 24, 2014 the Company closed a private placement of senior secured notes, which rank pari passu with the senior credit facilities, have a principal amount of US $75 million, an interest rate of 4.83 percent per annum and mature in 2022.  Amortized repayment of the notes begins in 2020.

* Badger had 846 daylighting units at the end of the first quarter of 2014, reflecting the addition of 57 daylighting units to the fleet to date in 2014 and the retirement of two units.  Of the total, 376 units were operating in Canada and 470 in the United States at quarter-end.  Badger had 324 units in Canada and 346 in the United States for a total of 670 units at March 31, 2013.  The new units were financed from cash generated from operations and existing credit facilities; and

* On January 24, 2014 the Company completed a split of all the issued and outstanding common shares on the basis of three common shares for each existing common share held, leaving 37,033,893 common shares issued and outstanding on that date.

OUTLOOK Badger is pleased with;



*  Revenue growth and the increase in revenue per truck across the Company.  To be able to add that much revenue and to increase revenue per truck in the first quarter was a great achievement given the adverse weather conditions experienced in much of the United States and Canada.

* Decent results earned by the United States operations given the very difficult weather conditions experienced in the first quarter.

* Results in Eastern Canada and progress made in Eastern Canada improving the organization.  The restructuring of the operations of Toronto and surrounding areas is mostly complete and ready for growth.

Opportunities for improvement noted;

* Some areas in Western Canada experienced margin erosion due to increased fuel and labor costs plus some additional costs due to abnormal travel in the region. These costs should have been passed on to end users.  Badger expects margins will improve in future quarters.  It should be noted that the Fieldtek business is a lower margin business than the Badger hydrovac business which reduces overall margins in Canada.  The Company doesn't expect Badger will be able to significantly increase margins in the Fieldtek business.

Regional Comments

* The United States business was able to take advantage of good opportunities in western parts of the country by moving trucks and crews from areas where work was very slow due to bad weather conditions.  These opportunities understandably added costs to move trucks and crews to the areas of opportunity.  Incurring these costs made sense as they built the customer base, increased utilization and kept people employed.

* Forecasts for business spending in the United States appear to be increasing starting late in the second quarter, which will be positive for the business development efforts.  As always, attracting and retaining good employees is the biggest challenge of the United States operation.  Success in this area is critical to maintaining Badger's pace of growth in this market.

* Eastern Canada operations have added costs as they build the infrastructure necessary to grow the Ontario business this year and next.  Badger believes these costs are a good investment.  Eastern Canada also benefited from a good project which provided good revenue and margin gains in the region. This project had not started in the first quarter of 2013. The duration of this project is unknown at this time.  

* There appears to be a lot of work available in Western Canada for the rest of the year.  Once spring break up is over utilization will return to normal and should be strong the rest of the year.  Management is committed to returning margins to the previous level in the hydrovac business.

* The plant in Red Deer performed very well in the first quarter meeting all build expectations.  The plan is to complete one new unit every business day on average for the foreseeable future.

Overall the first quarter of 2014 provided some weather and cost challenges.  The Company reacted very well to most challenges but fell a bit short on others.  The Company's long term focus to continue profitable growth has not changed.  Badger intends to build the organization, grow the customer base, add more hydrovac units and improve business processes. The outlook for the rest of the year remains quite positive for Badger due to the passing of the adverse weather conditions, positive signals in the economy and a reasonable outlook for the oil and natural gas industry.

Results of Operations Revenues



Revenues of $100.0 million for the three months ended March 31, 2014 were 45 percent greater than the $69.2 million generated during the comparable period in 2013.  The increase is attributable to the following:

* Canadian revenues increased by 42 percent from $39.4 million in the first quarter of 2013 to $56.0 million in the first quarter of 2014.  As noted above, excluding Fieldtek, Canadian revenues would have increased by 25 percent.  Western Canada revenue increased due to the addition of Fieldtek and general increases in hydrovac revenue.  Eastern Canada revenue increased due to the addition of some good projects and increased focus in the Toronto and area markets; and

* United States revenue grew from $29.8 million for the three months ended March 31, 2013 to $44.0 million for the three months ended March 31, 2014.  Removing the effect of foreign exchange rate changes, revenues increased by 36 percent quarter-over-quarter.  The increase is due to additional revenue in new locations and the positive effects of business development.

Badger's average revenue per truck per month during the three months ended March 31, 2014 was $33,800 versus $33,200 for the three months ended March 31, 2013.

Direct Costs

Direct costs for the quarter ended March 31, 2014 were $69.6 million compared to $46.4 million for the quarter ended March 31, 2013.  The increase of 50 percent is greater than the 45 percent increase in revenues due to additional expenses in Western Canada caused by higher fuel costs and wages, and additional costs in the United States for moving trucks and crews to areas of opportunity due to adverse weather in the eastern half of the United States.

Gross Profit

The gross profit percentage was 30.4 percent for the quarter ended March 31, 2014 compared to 32.9 percent for the quarter ended March 31, 2013. The Canadian gross profit percentage decreased from 35.9 percent for the first quarter of 2013 to 32.6 percent.  United States gross profit percentage decreased from 28.9 percent for the first quarter of 2013 to 27.7 percent.  See commentary under Direct Costs above.

Depreciation of Property, Plant and Equipment

Depreciation of property, plant and equipment was $7.6 million for the three months ended March 31, 2014, $2.3 million higher than the $5.3 million incurred for the three months ended March 31, 2013, due to the increased number of hydrovac units in the fleet.

Amortization of Intangible Assets This amount of $0.3 million represents the amortization of intangible assets acquired on November 1, 2013.

Finance Cost

Finance cost was $0.9 million for the quarter ended March 31, 2014 versus $0.3 million for the quarter ended March 31, 2013. The higher financing cost was due to having a higher average debt balance and a higher borrowing rate quarter-over-quarter.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by 101 percent to $6.1 million for the quarter ended March 31, 2014 from $3.0 million for the quarter ended March 31, 2013. The main reasons for the increase were an increase in personnel salary costs resulting from the growth in Badger's business, the addition of $0.9 million in ongoing Fieldtek costs, an increase in professional fees related to the January 2014 debt refinancing and an overall increase in costs to support the larger operations.  As a percentage of revenues, selling, general and administrative expenses increased to 6.1 percent for the first quarter of 2014 from 4.4 percent for the first quarter of 2013.

Deferred Unit Costs

Deferred unit costs represent executive, director and employee incentive compensation.  They increased from $1.8 million in the first quarter of 2013 to $7.4 million in the first quarter of 2014 due to the increase in Badger's share price.

Unrealized Foreign Exchange Gain

Badger recognized an unrealized foreign exchange gain of $0.2 million in the first quarter of 2014.  This was due to the impact of the change over the period in the value of the Canadian dollar relative to the United States dollar on the Company's $75 million of United States dollar denominated debt.

Income Taxes

The effective tax rate for the quarter ended March 31, 2014 was 32 percent versus 35 percent for the quarter ended March 31, 2013.   

Exchange Differences on Translation of Foreign Operations

The exchange differences result from converting the balance sheet and profit statement related to the United States operations into Canadian currency.

Liquidity and Dividends

Funds generated from operations decreased to $15.2 million for the quarter ended March 31, 2014 from $15.6 million for the comparable period in 2013 due to the increased deferred unit plan expense. The Company uses its cash to pay dividends to shareholders, build additional hydrovac units, invest in maintenance capital expenditures and repay long-term debt.

The Company had working capital of $60.5 million at March 31, 2014 compared to $61.8 million at December 31, 2013.  The increase in trade and other receivables was offset by the increase in the deferred unit plan liability.

The following table outlines the cash available to fund growth and pay dividends to shareholders for the three months ended March 31, 2014:

-***-

($ thousands)

----------------------------------------------------------- ------------- Funds generated from operations                             15,224 Add: proceeds from sale of property, plant       and equipment                                         81 Deduct: required mandatory repayments of long-term debt     - Deduct: maintenance capital expenditures                    (1,213) ----------------------------------------------------------- ------------- Cash available for growth capital expenditures       and dividends                                         14,092 ----------------------------------------------------------- ------------- Growth capital expenditures                                 24,845 ----------------------------------------------------------- -------------



Dividends

declared                                          3,333

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

   -****-

In determining cash available for dividends, the Company excludes non-cash working capital changes for the period as well as growth capital expenditures. Changes in non-cash working capital items are excluded so as to remove the effects of timing differences in cash receipts and disbursements, which generally reverse themselves and can vary significantly between fiscal periods. Growth capital expenditures are excluded so as to include only the maintenance capital expenditures required to sustain the existing asset base.

The following table outlines the excess of cash provided by operating activities and net profit for the period over dividends declared during the quarter ended March 31, 2014 and the year ended December 31, 2013:

-***-

                                            Three

months    Year ended                                              ended March      December -------------------------------------------- ---------------- ------------- ($ thousands)                                       31, 2014      31, 2013 Cash provided by operating activities                 10,271        58,403 Net profit     ??                                       5,730        40,363 Dividends declared                                     3,333        13,323 Excess of cash provided by operating     activities over dividends declared                 6,938        45,080 Excess of net profit over     dividends declared                                 2,397        27,040



   -****-

The Company pays cash dividends monthly to its shareholders.  They may be reduced, increased or suspended by the Board of Directors depending on the operations of Badger and the performance of its assets. The actual cash flow available for dividends is a function of numerous factors, including: the Company's financial performance; debt covenants and obligations; working capital requirements; maintenance and growth capital expenditure requirements for the purchase of property, plant and equipment; and the number of shares outstanding.

The Company maintains a strong balance sheet. Its debt management strategy includes retaining sufficient funds from available distributable cash to finance maintenance capital expenditures as well as working capital needs. Growth capital expenditures will generally be financed through existing debt facilities, proceeds received from equity financings or cash retained from operating activities. The majority of the cash provided by operating activities in the three months ended March 31, 2014 was used to finance growth capital expenditures and to pay dividends to shareholders.

If maintenance capital expenditures increase in future periods, the Company's cash available for growth capital expenditures and dividends will be negatively affected. Due to Badger's growth rate in recent years, the majority of the hydrovac units are relatively new, with an average age of approximately four years. As a result, Badger is incurring relatively low maintenance capital expenditures. Over time, Badger would expect to incur annual maintenance capital expenditures approximately equaling the year's depreciation expense. Badger estimates it will remove approximately 20 to 30 hydrovac units from the fleet in 2014. Badger expects that cash provided by operations and cash available for growth capital expenditures and dividends will be sufficient to fund its future maintenance capital expenditures.

Badger is restricted from declaring dividends if it is in breach of the covenants under its credit facilities. As at the date of this MD&A the Company is in compliance with all debt covenants and is able to fully utilize its credit facilities as well as declare dividends. Badger does not have a credit rating.

Capital Resources Investing



The Company spent $26.1 million on property, plant and equipment for the three months ended March 31, 2014 compared to $12.9 million for the three months ended March 31, 2013. During the first quarter of 2014 the Company's capital expenditure program consisted of various capital equipment, including 57 new hydrovac units.  The costs to build a hydrovac unit remained consistent with the average for 2013. Maintenance capital expenditures are incurred during a period to keep the hydrovac fleet at the same number of units plus any other capital expenditures required to maintain the business. This amount will fluctuate period-to-period depending on the number of units retired from the fleet. During the first quarter of 2014 only two units were removed from the fleet and, therefore, maintenance capital expenditures were minimal.

Financing

On January 24, 2014 the Company closed a private placement of senior secured notes.  The notes, which rank pari passu with the senior credit facilities, have a principal amount of US $75 million, an interest rate of 4.83 percent per annum and mature January 24, 2022.  Amortizing principal payments of US $25 million are due under the notes on January 24, 2020, January 24, 2021 and January 24, 2022.  Interest will be paid semi-annually in arrears.  Proceeds were used to repay a portion of the outstanding debt under the Company's extendable revolving credit facility and for ongoing capital expenditures and general corporate purposes.

The Company has a $75 million extendable revolving credit facility which is used to help finance Badger's capital expenditure program and support corporate activities, of which $12.1 million was drawn at March 31, 2014.  The facility has no required principal repayments. It expires on June 21, 2015 and is renewable by mutual agreement of the Company and the lender for an additional 364-day period. If not renewed, interest is payable on the facility for 364 days, after which the entire amount must be repaid. The facility bears interest at the bank's prime rate or bankers' acceptance rate plus 1.25 percent plus 0 to 1.25 percent depending on Badger's ratio of funded-debt-to-EBITDA.

The Company's net debt increased by 26 percent during the first three months of 2014. As at March 31, 2014 Badger's cash and cash equivalents were $2.4 million, resulting in net debt of $92.6 million versus cash and cash equivalents of $8.6 million and net debt of $73.7 million at December 31, 2013.  The main reasons for the increase were the capital expenditures incurred during the first quarter of 2014 and the increase in trade and other receivables.

Management believes that the Company's healthy balance sheet, combined with funds generated from operations, will provide sufficient capital to fund ongoing operations, pay dividends to shareholders, finance future capital expenditures and execute its strategic plan for the foreseeable future.  The Company's practice is to utilize an appropriate mix of debt and equity to finance its maintenance capital expenditures and growth initiatives.

Badger is in compliance with all financial ratio covenants under the credit facility agreements.   Financial performance relative to the financial ratio covenants is reflected in the table below:

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Ratio                       March 31, 2014  December 31, 2013        Threshold --------------------------- --------------- ------------------ ----------------

Funded Debt(1) to EBITDA(2)         1.11:1             0.88:1   2.75:1 maximum Interest Coverage Ratio(3)         36.97:1            51.16:1   3.00:1 minimum



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

   -****-

1 Funded debt is long-term debt less cash and cash equivalents (cash and cash equivalents not to exceed $10 million).

2 Funded debt to EBITDA means the ratio of consolidated funded debt to the aggregated EBITDA for the trailing 12 months. EBITDA is defined as the Company's actual EBITDA for the trailing 12 months.

3 Interest coverage ratio means the ratio of aggregated EBITDA for the trailing 12 months to the aggregated finance costs for the trailing 12 months.

The Company has committed to certain capital expenditures totalling approximately $27.2 million. They will be financed with existing credit facilities and funds generated from operations. There are no set terms for remitting payment for these financial commitments.

SHARE CAPITAL

Shareholders' capital remained unchanged from the balance at December 31, 2013. Shares outstanding at March 31, 2014 were 37,033,893.  There was no change to the balance as of May 13, 2014. SELECTED QUARTERLY FINANCIAL INFORMATION

-***-

------------------------- --------- --------------------------------------- ($ thousands except per share amounts)            2014                    2013                



------------------------- --------- ---------------------------------------                                 Q1        Q4        Q3        Q2        Q1

------------------------- --------- --------- --------- --------- --------- Revenues                   100,022    94,240    87,542    73,658    69,154 ------------------------- --------- --------- --------- --------- --------- Net profit                   5,730    11,233    11,774     9,371     7,985 ------------------------- --------- --------- --------- --------- --------- Net profit per share -        0.15      0.30      0.32      0.25      0.22 basic (1) ------------------------- --------- --------- --------- --------- --------- Net profit per share -        0.15      0.30      0.32      0.25      0.22 diluted (1) ------------------------- --------- --------- --------- --------- --------- ------------------------- --------- ---------------------------- ($ thousands except per share amounts)            2014            2012 ------------------------- --------- ----------------------------                                 Q1       Q4        Q3        Q2 ------------------------- --------- -------- --------- --------- Revenues                   100,022   69,249    61,961    53,984 ------------------------- --------- -------- --------- --------- Net profit                   5,730    7,888     7,902     6,145 ------------------------- --------- -------- --------- --------- Net profit per share -        0.15     0.21      0.21      0.19 basic (1) ------------------------- --------- -------- --------- --------- Net profit per share -        0.15     0.21      0.21      0.19 diluted (1) ------------------------- --------- -------- --------- ---------



   -****-

(1) All per share amounts have been adjusted for the three for one share split that occurred on January 24, 2014.

ACCOUNTING STANDARDS PENDING ADOPTION

The following are the IFRS pronouncements which have been issued but are not yet effective as at March 31, 2014.  The pronouncements may, however, have a future impact on the measurement and/or presentation of the Company's consolidated financial statements.  The pronouncements are as follows:

i) IFRS 9, 'Financial Instruments' was issued in November 2009 as the first step in its project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. IFRS 9 introduces new requirements for classifying and measuring financial instruments that must be applied starting January 1, 2018, with early adoption permitted.  The IASB intends to expand IFRS 9 during the intervening period to add new requirements for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment and hedge accounting. The Company is currently assessing the impact of this standard on the consolidated financial statements.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to critical accounting estimates since December 31, 2013.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Disclosure Controls and Procedures

Badger's President and CEO and its VP Finance and CFO have designed, or caused to be designed under their direct supervision, Badger's disclosure controls and procedures (as defined by National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings, adopted by the Canadian Securities Administrators) to provide reasonable assurance that (i) material information relating to Badger, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which the annual filings are being prepared; and (ii) material information required to be disclosed in the annual filings is recorded, processed, summarized and reported on a timely basis. Further, they have evaluated, or caused to be evaluated under their direct supervision, the effectiveness of Badger's disclosure controls and procedures at December 31, 2013 and as a result of identifying the material weakness outlined below have concluded the disclosure controls and procedures are not fully effective.

Internal Control over Financial Reporting

Badger's President and CEO and its VP Finance and CFO have also designed, or caused to be designed under their direct supervision, Badger's internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Further, using the criteria established in Internal Control - Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework), they have evaluated, or caused to be evaluated under their direct supervision, the effectiveness of Badger's internal control over financial reporting at December 31, 2013 and as a result of identifying the material weakness outlined below have concluded the internal controls over financial reporting are not fully effective.

Material Weakness

Badger has identified that it does not have sufficient accounting personnel with the appropriate tax expertise to allow for an effective review of the accuracy of its accounting for income taxes and the determination of the income tax provision. Management and the Board of Directors have determined that it is not economically feasible to maintain such personnel in-house or to engage an external tax consultant to perform an independent review. This material weakness could result in a misstatement in various tax-related accounts that could result in a material misstatement to Badger's annual consolidated financial statements and disclosures that would not be prevented or detected.

Changes in Internal Control over Financial Reporting

No changes were made to the design of Badger's internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Inherent Limitations

Notwithstanding the foregoing, because of its inherent limitations a control system can provide only reasonable assurance that the objectives of the control system are met and may not prevent or detect misstatements. Management's estimates may be incorrect, or assumptions about future events may be incorrect, resulting in varying results. In addition, management has attempted to minimize the likelihood of fraud. However, any control system can be circumvented through collusion and illegal acts.

BUSINESS RISKS

The MD&A for the year ended December 31, 2013, which was filed on SEDAR, includes an overview of business risks associated with the Company.  Those business risks remain.  The reader is also referred to Badger's 2013 Annual Information Form.

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

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.  

For more information regarding this press release, please contact:

Tor Wilson President and CEO Greg Kelly, CA Vice President Finance and CFO 1000, 635 - 8th Avenue SW Calgary, Alberta T2P 3M3 Telephone 403-264-8500 Fax 403-228-9773



Badger Daylighting Ltd. Interim Condensed Consolidated Financial Statements (unaudited) For the period ended March 31, 2014

REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim condensed consolidated financial statements, the statements must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim condensed consolidated financial statements of the Corporation have been prepared by Badger Daylighting Ltd. management.

The Corporation's independent auditor has not performed a review of the accompanying unaudited interim condensed consolidated financial statements in accordance with standards established by the CICA for a review of interim financial statements by an entity's auditor.

-***-

                                                        March

31,   December 31,                                                              2014           2013 As at                                         Notes             $              $ --------------------------------------------- ----- -------------- ------------- ASSETS Current Assets Cash and cash equivalents                                   2,372          8,623 Trade and other receivables                                99,118         92,115 Prepaid expenses                                            2,389          1,459 Income taxes receivable                                     1,082              - Inventories                                                 4,671          3,300                                                     -------------- -------------                                                           109,632        105,497                                                     -------------- ------------- Non-current Assets Property, plant and equipment                             234,132        211,614 Goodwill and intangible assets                             16,468         16,787                                                     -------------- -------------                                                           250,600        228,401                                                     -------------- ------------- Total Assets                                              360,232        333,898                                                     -------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Trade and other payables                                   26,650         23,657 Deferred unit plan liability                     6         21,369         13,933 Income taxes payable                                            -          4,952 Dividends payable                                           1,111          1,111                                                     -------------- -------------                                                            49,130         43,653                                                     -------------- ------------- Non-current Liabilities Long-term debt                                   4         94,922         82,319 Deferred income tax                                        38,706         36,857                                                     -------------- -------------                                                           133,628        119,176                                                     -------------- -------------                                                     -------------- Shareholders' Equity Shareholders' capital                            5         80,944         80,944 Contributed surplus                              5            548            548 Accumulated other comprehensive income (loss)    5          7,299          3,291 Retained earnings                                          88,683         86,286                                                     -------------- -------------                                                           177,474        171,069                                                     -------------- ------------- Total Liabilities and Shareholders' Equity                360,232        333,898                                                     -------------- -------------



   -****-

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

-***-

                                                        

March 31,   March 31,                                                              2014         2013 For the three months ended                        Notes         $            $ ------------------------------------------------ ------ ---------- ------------



Revenues                                            

7     100,022      69,154 Direct costs                                                69,584      46,433                                                         ---------- ------------ Gross profit                                                30,438      22,721 Depreciation of property, plant and equipment                7,568       5,333 Amortization of intangible assets                              319           - Selling, general and administrative                          6,071       3,019 Deferred unit plan                                           7,436       1,763                                                         ----------                                                         ---------- ------------ Operating profit                                             9,044      12,606 Gain on sale of property, plant and equipment                  (57)       (28) Finance cost                                                   900         298 Unrealized foreign exchange (gain) loss                       (185)          -                                                         ---------- ------------ Profit before tax                                            8,386      12,336 Income tax expense                                           2,656       4,351                                                         ---------- ------------ Net profit for the period                                    5,730       7,985



Other comprehensive income (loss):

Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations                                        4,008       1,504                                                         ---------- ------------ Total comprehensive income for the period attributable to shareholders of the Corporation                              9,738       9,489                                                         ---------- ------------ Earnings per share Basic                                                8       0.15         0.22 Diluted                                              8       0.15         0.22    -****-



The accompanying notes are an integral part of these interim condensed consolidated financial statements.

-***-

                                                                    

Accumulated

                                                                          

other

                                      

Shareholders'  Contributed  comprehensive

                                            

capital      surplus  income (loss) For the three months ended      Notes              $            $              $ ------------------------------- ------ -------------- ------------ ------------- As at January 1, 2013                         80,640         2,061       (2,239) Net profit for the period                          -             -            - Other comprehensive income for the                                            -             -        1,504 Share options exercised           5              135             -            - Options surrendered for cash      5                -        (1,513)           - Dividends                                          -             -            -                                        -------------- ------------ ------------- As at March 31, 2013                          80,775           548         (735)                                        -------------- ------------ ------------- As at January 1, 2014                         80,944           548        3,291 Net profit for the period                          -             -            - Other comprehensive income for the period                                     -             -        4,008 Share options exercised           5                -             -            - Dividends                                          -             -            -                                        -------------- ------------ ------------- As at March 31, 2014                          80,944           548        7,299                                        -------------- ------------ -------------



                                      

                                      

                                          

Retained       Total                                            earnings      equity For the three months ended      Notes             $           $ ------------------------------- ------  ------------ ------------ As at January 1, 2013                        59,246     139,708 Net profit for the period                     7,985       7,985 Other comprehensive income for the                                           -       1,504 Share options exercised           5               -         135 Options surrendered for cash      5               -     (1,513) Dividends                                    (3,330)    (3,330)                                         ------------ ------------ As at March 31, 2013                         63,901     144,489                                         ------------ ------------ As at January 1, 2014                        86,286     171,069 Net profit for the period                     5,730       5,730 Other comprehensive income for the period                                    -       4,008 Share options exercised           5               -           - Dividends                                    (3,333)    (3,333)                                         ------------ ------------ As at March 31, 2014                         88,683     177,474                                         ------------ ------------



   -****-

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

-***-

                                                          

March 31,  March 31,                                                                 2014       2013 For the three months ended                           Notes         $          $ ---------------------------------------------------- ----- ---------- ---------- Operating activities Net profit for the period                                      5,730       7,985 Non-cash adjustments to reconcile profit from operations to net cash flows:     Depreciation of property, plant and equipment              7,568      5,333     Amortization of intangible assets                            319          -     Deferred income tax                                          349      1,849     Equity-settled share plan settled in cash            5         -      (1,513)     Gain on sale of property plant and equipment                 (57)        (28)     Unrealized foreign exchange (gain) loss                     (185)          -     Unrealized foreign exchange (gain) loss on           deferred tax                                         1,500         470                                                            ---------- ----------                                                               15,224      14,096 Net change in non-cash working capital relating to    operating activities                                       (4,953)     (9,547)                                                            ---------- ---------- Net cash flows from operating activities                      10,271       4,549                                                            ---------- ---------- Investing activities Purchase of property, plant and equipment                    (26,058)    (12,923) Proceeds from sale of property, plant and equipment               81          57                                                            ---------- ---------- Net cash flows used in investing activities                  (25,977)    (12,866)                                                            ---------- ---------- Financing activities Proceeds received on the exercise of share options                 -         135 Proceeds from long-term debt                                  95,700      10,683 Repayment of long-term debt                                  (82,912)          - Dividends paid to owners                                      (3,333)     (3,329)                                                            ---------- ---------- Net cash flows from financing activities                       9,455       7,489                                                            ---------- ---------- Net (decrease) increase in cash and cash equivalents          (6,251)       (828) Cash and cash equivalents, beginning of period                 8,623       2,460                                                            ---------- ---------- Cash and cash equivalents, end of period                       2,372       1,632                                                            ---------- ---------- Supplemental cash flow information:     Interest paid                                                245         298                                                            ---------- ----------     Income tax paid                                            8,458       4,787                                                            ---------- ----------



   -****-

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

1 Incorporation and Operations

Badger Daylighting Ltd. and its subsidiaries (together "Badger" or the "Corporation") provide non-destructive excavating services to the utility, transportation, industrial, engineering, construction and petroleum industries in Canada and the United States. Badger is a publicly traded corporation. The address of the registered office is 1000, 635 - 8th Avenue SW, Calgary, Alberta T2P 3M3.

The interim condensed consolidated financial statements of the Corporation for the period ended March 31, 2014 were authorised for issue in accordance with a resolution of the directors on May 13, 2014.

All current and comparative share capital and profit per share amounts have been adjusted to reflect the three-for-one share split that was completed in January 2014.

2 Basis of Preparation Statement of compliance



These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB").

The interim condensed consolidated financial statements should be read in conjunction with the Corporation's annual consolidated financial statements for the year ended December 31, 2013.

Basis of measurement

These consolidated financial statements have been prepared under the historical cost convention.

Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars, which is the Corporation's functional currency.

3 Recent accounting pronouncements

The Corporation adopted amendments to IFRS 7, IAS 32, IAS 36, and IFRIC 21 on January 1, 2014. There was no material impact to the Corporation's interim condensed consolidated financial statements as a result of the adoption of those standards.

The Corporation has reviewed new and revised accounting pronouncements that have been issued but are not yet effective and determined that the following may have an impact on the Corporation:

ii) IFRS 9, 'Financial Instruments' was issued in November 2009 as the first step in its project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. IFRS 9 introduces new requirements for classifying and measuring financial instruments that must be applied starting January 1, 2018, with early adoption permitted. The IASB intends to expand IFRS 9 during the intervening period to add new requirements for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment and hedge accounting. The Corporation will assess the impact of this standard in conjunction with the other phases, when the final standard including all phases is issued.

4 Long-term debt

-***-

                                                                  

December 31,                                                 March 31, 2014             2013                                                              $                $ --------------------------------------------------------------------------------                                                --------------------------------- Extendable revolving credit facility                    12,069           82,319 Senior secured notes                                    82,853                -                                                ---------------------------------                                                         94,922           82,319                                                ---------------------------------



   -****-

Extendable revolving credit facility

The Corporation has established a $75,000 extendable revolving credit facility.  The purpose of the credit facility is to finance the Corporation's capital expenditure program and for general corporate purposes. The credit facility bears interest, at the Corporation's option, at either the bank's prime rate (March 31, 2014 - 3.00%) or bankers' acceptance rate plus 1.25% (March 31, 2014 - 2.41%). An additional stand-by fee calculated at an annual rate of 0.25% per annum is also required on the unused portion of the credit facility. This fee is expensed as incurred.

The credit facility has no required principal repayment. The credit facility expires on June 21, 2015 and is renewable by mutual agreement of the Corporation and the lender for an additional 364 day period, after which the entire amount must be repaid. If not renewed, interest is payable monthly on the facility for 364 days after which the entire amount is to be repaid.

The extendable revolving credit facility is collateralized by a general security interest over the Corporation's assets, property and undertaking, present and future.

Under the terms of the credit facilities, the Corporation must comply with certain financial and non-financial covenants, as defined by the bank. Throughout 2014, and as at March 31, 2014, the Corporation was in compliance with all of these covenants.

As at March 31, 2014, the Corporation has issued letters of credit in the amount of approximately $1,180. The outstanding letters of credit reduce the amount available under the extendable revolving credit facility.

At March 31, 2014, the Corporation had available $61,751 (December 31, 2013 - $16,321) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

Senior secured notes

On January 24, 2014 Badger closed a private placement of senior secured notes.  The notes, which rank pari passu with the extendable revolving credit facility, have a principal amount of US $75,000, and an interest rate of 4.83% per annum and mature on January 24, 2022. The Canadian dollar equivalent on January 24, 2014 was $82,912. Amortizing principal repayments of US $25,000 are due under the notes on January 24, 2020, January 24, 2021 and January 24, 2022.  Interest is paid semi-annually in arrears.

For the three months ended March 31, 2014, Badger recorded an unrealized foreign exchange gain of $185. This was due to the impact of the change over the period in the value of the Canadian dollar relative to the US dollar on the Corporation's $75,000 of US dollar denominated debt.

5 Shareholders' capital and reserves

A) Authorized shares An unlimited number of voting common shares are authorized without nominal or par value.

B) Issued and outstanding -***-



                                                                        

Amount

                                                

Number of Shares             $                                                  ----------------- ------------- At December 31, 2012                                   36,979,893        80,640 Shares issued pursuant to the share option plan            54,000           304                                                  ----------------- ------------- At December 31, 2013 and March 31, 2014                37,033,893        80,944                                                  ----------------- -------------



   -****-

Share amounts have been restated to reflect the impact of the three-for-one common share split completed in January 2014.

C) Accumulated other comprehensive income (loss)

The accumulated other comprehensive income (loss) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

D) Contributed surplus

The contributed surplus reserve is used to recognise the fair value of share options granted to employees, including key management personnel, as part of their remuneration.

-***-

                                                  

For the three months ended                                                  March 31, 2014  March 31, 2013                                                               $               $ -------------------------------------------------------------------------------- Opening balance                                             548           2,061 Equity-settled share plan settled in cash                     -          (1,513)                                                --------------------------------- Closing balance                                             548             548                                                ---------------------------------



   -****-

6 Deferred Unit Plan

The Deferred Unit Plan ("DUP") was established to reward officers and employees. Directors may also participate in the plan whereby they will be paid 60% to 100% of the annual retainer in the form of deferred units. Pursuant to the terms of the DUP, participants are granted deferred units with a value equivalent to the value of a Badger share. Subsequent to the January 2014 three-for-one common share split, each unit under the plan was amended to provide three units, each with a value of one post-split Badger share. The deferred units granted earn additional deferred units for the dividends that would otherwise have been paid on the deferred units as if they instead had been issued as Badger shares on the date of the grant. The deferred units granted other than to the directors, which vest immediately, vest equally over a period of three years from the date of the grant. Upon vesting, the participant may elect to redeem the deferred units for an equal number of Badger shares or the cash equivalent.

The DUP has been accounted for as a cash-settled plan. The compensation expense is based on the estimated fair value of the deferred units outstanding at the end of each quarter (share price $41.55 March 31, 2014; share price $28.42 December 31, 2013) and recognized using graded vesting throughout the term of the vesting period, with a corresponding credit to liabilities.

The liability of deferred units outstanding as at March 31, 2014 is $21,369 (December 31, 2013 - $13,933). The fair value of deferred units exercisable as at March 31, 2014 is $15,831 (December 31, 2013 - $10,799). Changes in the number of deferred units under the Badger DUP were as follows:

-***-

                                                                          Units

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

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

At December 31, 2012                                                    498,375 Granted                                                                 101,550 Dividends earned                                                         14,418 Redeemed                                                                (34,002) Forfeited                                                               (13,323)                                                                 ---------------- At December 31, 2013                                                    567,018 Dividends earned                                                          1,490 Forfeited                                                                     -                                                                 ---------------- At March 31, 2014                                                       568,508                                                                 ---------------- Exercisable at March 31, 2014                                           381,015                                                                 ----------------    -****- 7 Revenues -***-



                                                  For

the three months ended                                                 March 31, 2014   March 31, 2013                                                              $                $ ---------------------------------------------- ---------------- ---------------- Rendering of services                                   99,288           68,712 Truck placement fees                                       734              442                                                ---------------- ----------------                                                        100,022           69,154                                                ---------------- ----------------



   -****-

8 Earnings per share

Basic earnings per share ("EPS")

Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period. The denominator is calculated by adjusting the shares in issue at the beginning of the period by the number of shares bought back or issued during the period, multiplied by a time-weighting factor. Earnings per share and share amounts have been retroactively restated to reflect the three-for-one share split completed in January 2014.

The calculation of basic earnings per share for the three months ended March 31, 2014, was based on the profit available to common shareholders of $5,730 (2013 - $7,985), and a weighted average number of common shares outstanding of 37,033,893 (2013 - 36,994,893).

Weighted average number of common shares

-***-

                                                    

For the three months ended                                                 March 31, 2014   March 31, 2013 ---------------------------------------------- ---------------- ---------------- Issued common shares outstanding,   beginning of period                               37,033,893       36,979,893 Effect of share options exercised                            -           15,000                                                ---------------- ---------------- Weighted average number of common   shares, end of period                             37,033,893       36,994,893                                                ---------------- ----------------



   -****-

Diluted EPS

Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential shares. The effects of anti-dilutive potential shares are ignored in calculating diluted EPS. All options are considered anti-dilutive when the Corporation is in a loss position. Diluted earnings per share and share amounts have been retroactively restated to reflect the three-for-one share split completed in January 2014.

The calculation of diluted earnings per share for the three months ended March 31, 2014, was based on a weighted average number of common shares outstanding after adjustment for the effects of all dilutive potential common shares of 37,033,893 (2013 - 37,016,289), calculated as follows:

-***-

                                              

For the three months ended                                             March 31, 2014   March 31, 2013 ------------------------------------------ ---------------- ---------------- Weighted average number of common    shares (basic)                               37,033,893       36,994,893 Effect of share options exercised                        -           21,396                                            ---------------- ---------------- Weighted average number of common    shares (diluted)                             37,033,893       37,016,289                                            ---------------- ----------------



   -****-

9 Segment reporting

The Corporation operates in two geographic/reportable segments providing non-destructive excavating services in each of these segments. None of the corporate head office expenses are allocated to the United States.  The following is selected information for the periods ended March 31, 2014 and 2013 based on these geographic segments.

-***-

For three months ended:                               March 31, 2014             ----------------------------------------- ---------------------------------- ----------------------------------------- ----------- ----------- ----------                                           Canada ($)    U.S. ($)   Total ($) ----------------------------------------- ----------- ----------- ---------- Revenues                                      56,042      43,980     100,022 Direct costs                                  37,795      31,789      69,584 Depreciation of property, plant and   equipment                                    3,435       4,133       7,568 Amortization of intangible assets                319           -         319 Selling, general and administrative            4,708       1,363       6,071 Deferred unit plan                             7,436           -       7,436 Profit before tax                              1,729       6,657       8,386 ----------------------------------------- ----------- ----------- ---------- For three months ended:                             March 31, 2013 -----------------------------------------  ---------------------------------- -----------------------------------------  ------------ --------- -----------                                             Canada ($)  U.S. ($)   Total ($) -----------------------------------------  ------------ --------- ----------- Revenues                                        39,398    29,756      69,154 Direct costs                                    25,263    21,170      46,433 Depreciation of property, plant and   equipment                                      2,613     2,720       5,333 Amortization of intangible assets                    -         -           - Selling, general and administrative              2,355       664       3,019 Deferred unit plan                               1,763         -       1,763 Profit before tax                                7,164     5,172      12,336 -----------------------------------------  ------------ --------- -----------    -****- -***- For three months ended:                          March 31, 2014               ------------------------------------ ---------------------------------------- ------------------------------------ ------------- ------------- ------------                                        Canada ($)      U.S. ($)    Total ($) ------------------------------------ ------------- ------------- ------------ Additions to non-current assets:   Property, plant and equipment            12,178        13,880       26,058 ------------------------------------ ------------- ------------- ------------ For three months ended:                           March 31, 2013 ------------------------------------  --------------------------------------- ------------------------------------  ------------- ------------ ------------                                         Canada ($)     U.S. ($)    Total ($) ------------------------------------  ------------- ------------ ------------ Additions to non-current assets:   Property, plant and equipment              4,017        8,906       12,923 ------------------------------------  ------------- ------------ ------------    -****- -***-



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

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

------------------------------ --------------- ---------------- ----------------                                    Canada ($)         U.S. ($)        Total ($) ------------------------------ --------------- ---------------- ---------------- As at March 31, 2014 Property, plant and equipment         113,615          120,517          234,132 Intangible assets                      16,468                -           16,468 Total assets                          195,781          164,451          360,232 As at December 31, 2013 Property, plant and equipment         103,740          107,874          211,614 Intangible assets                      16,787                -           16,787 Total assets                          178,703 ??        155,195          333,898 ------------------------------ --------------- ---------------- ----------------    -****- 10 Subsidiaries



The consolidated financial statements include the financial statements of Badger Daylighting Ltd. and the subsidiaries listed in the following table:

-***-

                                                          %

equity interest                                                          -----------------------                                                          ---------- ------------                                Country of Incorporation  March 31,  December 31, Name                                                          2014          2013 ---------------------------- --------------------------- ---------- ------------ Badger Daylighting    (Fort McMurray) Inc.                          Canada       100%          100% Badger Edmonton Ltd.                             Canada       100%          100% Fieldtek Ltd.                                    Canada       100%          100% Badger ULC                                       Canada       100%          100% Badger Daylighting USA, Inc.   United States of America       100%          100% Badger Daylighting Corp.       United States of America       100%          100% Badger, LLC                    United States of America       100%          100%



   -****-

Balances and transactions between Badger Daylighting Ltd. and its subsidiaries have been eliminated on consolidation and are not disclosed in this Note. There are no significant restrictions on the Corporation's or its subsidiaries ability to access or use the assets, and settle the liabilities, of the Corporation.

To view the press release as a PDF, please click on the following link: http://www.fscwire.com/sites/default/files/news_release_pdf/badger05142014.pdf

Source: Badger Daylighting Ltd.  (TSX - BAD) www.badgerinc.com Maximum News Dissemination by FSCwire. http://www.fscwire.com


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