Concrete Pumping Holdings Reports Strong Third Quarter 2023 Results

Double-Digit Revenue Growth Drives Another Record Quarter

DENVER, Sept. 07, 2023 (GLOBE NEWSWIRE) -- Concrete Pumping Holdings, Inc. (Nasdaq: BBCP) (the “Company” or “CPH”), a leading provider of concrete pumping and waste management services in the U.S. and U.K., reported financial results for the third quarter ended July 31, 2023.

Third Quarter Fiscal Year 2023 Highlights vs. Third Quarter of Fiscal Year 2022 (where applicable)

Management Commentary

“The growth we experienced in the first half of the year accelerated in our record-setting third quarter, driven by double-digit revenue growth in every segment of our business,” said CPH CEO Bruce Young. “This was primarily driven by strong organic growth, as well as the results from accretive acquisitions. By end market, our business is also performing well, particularly as demand for new residential housing has reaccelerated, and our expanding U.S. footprint continued to allow us to win infrastructure projects.

“Given the momentum in our business, we are well-positioned to deliver a record-setting year in fiscal 2023. So far this year we have continued to prioritize deleveraging, and we are also on track to reduce our leverage ratio to 3.0x by fiscal year end, which is ahead of our expectation. We believe the combination of our diversified and resilient revenue mix, high value service offering, and our opportunistic, accretive M&A strategy, while strategically balancing our leverage, is the most optimal path to continued shareholder value creation.

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1 Adjusted EBITDA, Adjusted EBITDA margin and net debt are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See “Non-GAAP Financial Measures” below for a discussion of the non-GAAP financial measures used in this release and a reconciliation to their most comparable GAAP measures. As of the first quarter of fiscal 2023, adjusted EBITDA no longer includes an add-back for director costs and public company expenses.

2 Leverage ratio defined as net debt divided by Adjusted EBITDA over the trailing four quarters.

Third Quarter Fiscal Year 2023 Financial Results

Revenue in the third quarter of fiscal year 2023 increased 16% to $120.7 million compared to $104.5 million in the third quarter of fiscal year 2022. The increase was attributable to strong growth across each of the Company’s segments as a result of organic growth from higher volumes in certain regions coupled with improved pricing, as well as the acquisition of Coastal Carolina Pumping (Coastal) in August 2022. Revenue attributable to the Coastal acquisition was $5.6 million in the third quarter of 2023.

Gross profit in the third quarter of fiscal year 2023 increased 18% to $49.5 million compared to $41.9 million in the prior year quarter. Gross margin increased 90 basis points to 41.0% compared to 40.1% in the prior year quarter. The increase in gross margin was primarily related to the strong revenue growth and the easing of diesel fuel prices compared to the prior year quarter, partially offset by inflationary pressures in labor inflation.

General and administrative expenses in the third quarter were $29.9 million compared to $27.8 million in the prior year quarter due to higher labor costs of approximately $3.0 million as a result of additional headcount from recent acquisitions. As a percentage of revenue, G&A costs were 24.8% in the third quarter compared to 26.6% in the prior year quarter.

During the three-month periods ended July 31, 2023 and 2022, the Company recognized gains of $0.9 million and $7.4 million, respectively, on the fair value remeasurement of its liability-classified warrants. The continued decline in the fair value remeasurement of the public warrants for both periods is due to the Company's share price being below the exercise price as the warrants get closer to expiring in December 2023.

Net income in the third quarter of fiscal year 2023 was $10.3 million compared to $13.0 million in the third quarter of fiscal year 2022. Net income attributable to common shareholders in the third quarter of fiscal year 2023 was $9.9 million, or $0.18 per diluted share, compared to $12.5 million, or $0.22 per diluted share, in the prior year quarter.

Adjusted EBITDA in the third quarter of fiscal year 2023 increased 16% to $34.9 million compared to $30.0 million in the prior year quarter. Adjusted EBITDA margin increased to 28.9% compared to 28.8% in the prior year quarter.

Liquidity

On July 31, 2023, the Company had debt outstanding of $410.7 million, net debt of $399.2 million and total available liquidity of $195.5 million.

On June 1, 2023, the ABL Facility was amended to, among other changes, (1) increase the maximum revolver borrowings available to be drawn thereunder from $160.0 million to $225.0 million, (2) increase the letter of credit sublimit from $10.5 million to $22.5 million and (3) extend the maturity of the ABL Facility to the earlier of (a) June 1, 2028 and (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable. The ABL Facility also provides for an uncommitted accordion feature under which the borrowers under the ABL Facility can, subject to specified conditions, increase the ABL Facility by up to an additional $75.0 million. The $65.0 million in incremental commitments were provided by JPMorgan Chase Bank, N.A. and PNC Bank, N.A.

Segment Results

U.S. Concrete Pumping. Revenue in the third quarter of fiscal year 2023 increased 13% to $87.3 million compared to $77.4 million in the prior year quarter. The increase was due to organic volume growth in the segment and revenue contribution in the third quarter of 2023 from the Coastal acquisition. Net income in the third quarter of fiscal year 2023 increased 25% to $3.5 million compared to $2.8 million in the prior year quarter. Adjusted EBITDA was $20.5 million in the third quarter of fiscal year 2023 compared to $19.8 million in the prior year quarter.

U.K. Operations. Revenue in the third quarter of fiscal year 2023 increased 20% to $17.3 million compared to $14.4 million in the prior year quarter. Excluding the impact from foreign currency translation, revenue was up 18% year-over-year, due primarily to pricing improvements. Net income in the third quarter of fiscal year 2023 improved to $1.6 million compared to $0.4 million in the prior year quarter. Adjusted EBITDA increased 41% to $5.6 million in the third quarter of fiscal year 2023 compared to $4.0 million in the prior year quarter.

U.S. Concrete Waste Management Services. Revenue in the third quarter of fiscal year 2023 increased 29% to $16.5 million compared to $12.8 million in the prior year quarter. The increase was due to organic growth and pricing improvements. Net income in the third quarter of fiscal year 2023 increased 100% to $4.0 million compared to $2.0 million in the prior year quarter. Adjusted EBITDA in the third quarter of fiscal year 2023 increased 44% to $8.2 million compared to $5.7 million in the prior year quarter.

Fiscal Year 2023 Outlook

The Company now expects fiscal year 2023 revenue of approximately $440.0 million, Adjusted EBITDA of approximately $125.0 million, and free cash flow3 of approximately $70.0 million.

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3 Free cash flow is defined as Adjusted EBITDA less net replacement capital expenditures less cash paid for interest.

Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its third quarter 2023 results.

Date: Thursday, September 7, 2023
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-877-407-9039
International dial-in number: 1-201-689-8470
Conference ID: 13739666

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1622741&tp_key=80f2847994 and via the investor relations section of the Company’s website at www.concretepumpingholdings.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through September 14, 2023.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13739666

About Concrete Pumping Holdings

Concrete Pumping Holdings is the leading provider of concrete pumping services and concrete waste management services in the fragmented U.S. and U.K. markets, primarily operating under what we believe are the only established, national brands in both geographies – Brundage-Bone for concrete pumping in the U.S., Camfaud in the U.K., and Eco-Pan for waste management services in both the U.S. and U.K. The Company’s large fleet of specialized pumping equipment and trained operators position it to deliver concrete placement solutions that facilitate labor cost savings to customers, shorten concrete placement times, enhance worksite safety and improve construction quality. Highly complementary to its core concrete pumping service, Eco-Pan seeks to provide a full-service, cost-effective, regulatory-compliant solution to manage environmental issues caused by concrete washout. As of July 31, 2023, the Company provided concrete pumping services in the U.S. from a footprint of approximately 100 branch locations across approximately 20 states, concrete pumping services in the U.K. from approximately 30 branch locations, and route-based concrete waste management services from 19 operating locations in the U.S. and 1 shared location in the U.K. For more information, please visit www.concretepumpingholdings.com or the Company’s brand websites at www.brundagebone.com,www.camfaud.co.uk, or www.eco-pan.com.

Forward‐Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ from expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” “outlook” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance, including the Company's fiscal year 2023 outlook. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Most of these factors are outside the Company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: the adverse impact of recent inflationary pressures, global economic conditions and developments related to these conditions, such as fluctuations in fuel costs and the ongoing war in Ukraine and the COVID-19 pandemic, on our business; the outcome of any legal proceedings or demand letters that may be instituted against or sent to the Company or its subsidiaries; the ability of the Company to grow and manage growth profitably and retain its key employees; the ability to complete targeted acquisitions and to realize the expected benefits from completed acquisitions; changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission, including the risk factors in the Company's latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and Form 10-Q/A. The Company cautions that the foregoing list of factors is not exclusive. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

Non-GAAP Financial Measures

This press release presents Adjusted EBITDA, Adjusted EBITDA margin, net debt and free cash flow, all of which are important financial measures for the Company, but are not financial measures defined by GAAP.

Adjusted EBITDA is a financial measure that is not calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). The Company believes that this non-GAAP financial measure provides useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. The Company’s management also uses this non-GAAP financial measure to compare the Company’s performance to that of prior periods for trend analyses, determining incentive compensation and for budgeting and planning purposes. Adjusted EBITDA is also used in quarterly and annual financial reports prepared for the Company’s board of directors. The Company believes that this non-GAAP measure provides an additional tool for investors to use in evaluating the Company’s ongoing operating results and in comparing the Company’s financial results with competitors who also present similar non-GAAP financial measures.

Adjusted EBITDA is defined as net income calculated in accordance with GAAP plus interest expense, income taxes, depreciation, amortization, transaction expenses, loss on debt extinguishment, stock-based compensation, other income, net, and other adjustments. Other adjustments includes the adjustment for warrant liabilities revaluation, non-recurring expenses and non-cash currency gains/losses. As of the first quarter of fiscal 2023, we have modified the method in which Adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. Adjusted EBITDA in the three and nine months ended July 31, 2022 is recast by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenue for the period presented. See below for a reconciliation of Adjusted EBITDA to net income (loss) calculated in accordance with GAAP.

Net debt is calculated as all amounts outstanding under debt agreements (currently this includes the Company’s term loan and revolving line of credit balances, excluding any offsets for capitalized deferred financing costs) measured in accordance with GAAP less cash. Cash is subtracted from the GAAP measure because it could be used to reduce the Company’s debt obligations. A limitation associated with using net debt is that it subtracts cash and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. CPH believes this non-GAAP measure provides useful information to management and investors in order to monitor the Company’s leverage and evaluate the Company’s consolidated balance sheet. See “Non-GAAP Measures (Reconciliation of Net Debt)” below for a reconciliation of Net Debt to amounts outstanding under debt agreements calculated in accordance with GAAP.

Free cash flow is defined as Adjusted EBITDA less net replacement capital expenditures and cash paid for interest. This measure is not a substitute for cash flow from operations and does not represent the residual cash flow available for discretionary expenditures, since certain non-discretionary expenditures, such as debt servicing payments, are not deducted from the measure. CPH believes this non-GAAP measure provides useful information to management and investors in order to monitor and evaluate the cash flow yield of the business.

The leverage ratio is defined as the ratio of net debt to Adjusted EBITDA for the trailing four quarters. The Company believes its leverage ratio measures its ability to service its debt and its ability to make capital expenditures. Additionally, the leverage ratio is a standard measurement used by investors to gauge the creditworthiness of an institution.

The financial statement tables that accompany this press release include a reconciliation of Adjusted EBITDA and net debt to the applicable most comparable U.S. GAAP financial measure. However, the Company has not reconciled the forward-looking Adjusted EBITDA guidance range and free cash flow range included in this press release to the most directly comparable forward-looking GAAP measures because this cannot be done without unreasonable effort due to the lack of predictability regarding the various reconciling items such as provision for income taxes and depreciation and amortization.

Current and prospective investors should review the Company’s audited annual and unaudited interim financial statements, which are filed with the U.S. Securities and Exchange Commission, and not rely on any single financial measure to evaluate the Company’s business. Other companies may calculate Adjusted EBITDA, net debt and free cash flow differently and therefore these measures may not be directly comparable to similarly titled measures of other companies.

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1 Adjusted EBITDA is a financial measure that is not calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). See “Non-GAAP Financial Measures” for a discussion of the definition of the measure and below for a reconciliation of the current period such measure to its most comparable GAAP measure.
2 Information on M&A or growth investments included in capital expenditures have been included for relevant quarters below:
*Q1 2022 capex includes approximately $19 million M&A and $2 million growth investment.
*Q2 2022 capex includes approximately $11 million M&A and $5 million growth investment.
*Q3 2022 capex includes approximately $7 million growth investment.
*Q4 2022 capex includes approximately $31 million M&A and $13 million growth investment.
*Q1 2023 capex includes approximately $3 million growth investment.
*Q2 2023 capex includes approximately $6 million M&A and $1 million growth investment.
*Q3 2023 capex includes approximately $1 million growth investment.

(1) Other adjustments include the adjustment for warrant liabilities revaluation, restructuring costs, non-recurring expenses and non-cash currency gains/losses. As of the first quarter of fiscal 2023, we have modified the method in which adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. Adjusted EBITDA in the three and nine months ended July 31, 2022 is recast by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change.

(1) See note above.