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Dark Days for Badger Daylighting -- Barrons.com

20 May 2017 5:58 am

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A Toronto-listed ditch-digging company exited March with its shares cruising along near 35 Canadian dollars ($26). Then the company, Badger Daylighting, drove the shares (BAD.Canada) into a sinkhole with its May 12 announcement that first-quarter earnings were C$0.10 a share, instead of the C$0.32 expected. Badger closed Friday at C$22.41.

On Thursday morning, the Calgary-based company's board told investors that Badger was "well-positioned to play a significant role in government and industry projects to address North America's aging infrastructure" -- with its fleet of "hydrovac" trucks that use water jets to unearth buried pipes and power lines. Investors may want to avoid Badger until they understand what's going wrong with the business.

The stock was at C$30 when Barron's warned readers last year that Badger traded at a high multiple of earnings and book value, considering its sputtering revenue growth and accounting incongruities ( "Badger Daylighting Shares Could Tumble More Than 30%," Oct. 29, 2016). Before that story, Badger financial chief Jerry Schiefelbein backed out of a scheduled phone interview when he saw our written questions about its accounting.

On Wednesday, Schiefelbein again refused an interview request from Barron's, blaming short sellers. "The stuff you published last time seemed to come right out of the shorts," he said. "Just a short report with your name put on it."

March-quarter revenue rose 16% from the prior year, but higher costs from wages, repairs, and fuel pinched margins.

Schiefelbein said Badger would address investor concerns -- some of them fanned on a website ( turnoutthebadgerdaylight.com) put up by short seller Marc Cohodes. Cohodes, it's worth noting, previously warned correctly of the collapse of Canadian mortgage lender Home Capital Group (HCG.Canada). -- Bill Alpert

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(END) Dow Jones Newswires

May 20, 2017 01:58 ET (05:58 GMT)

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