Concrete Pumping Holdings, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings financial results for the third quarter ended July 31st, 2021. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Ian Humphreys, and the company's External Director of Investor Relations, Cody Slaw. Before we go further, I would like to turn the call over to Mr. Slaw to read the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward looking statements. Cody, please go ahead.

Thanks, Laura. I'd like to remind everyone that in the course of this call, to give you a better understanding of our operations, we will be making certain forward looking statements regarding our business and outlook. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Concrete Pumping Holdings Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, we will also reference certain non-GAAP financial measures, including adjusted EBITDA, net debt, and free cash flow, which we believe provide useful information for investors. We provide further information about these non-GAAP financial measures and reconciliations to the comparable GAAP measures in our press release issued today or the investor presentation posted on the company's website. I'd like to remind everyone this call will be available for replay later this evening. The webcast replay will also be available via the link provided in today's press release as well as on the company's website. Additionally, we have posted an updated investor presentation to the company's website. Now I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

Thank you, Cody. Good afternoon, everyone, and thanks for joining today's teleconference. I am pleased to report that after a challenging weather start to the third quarter, we had a strong finish that highlighted the relative resilience and flexibility of our business. At the beginning of the quarter, we experienced well above average rainfall in many of our markets, including Texas, Colorado, and Arizona. Because of the higher levels of precipitation, many of our customers' projects in the month of May were delayed, but I am delighted to report that our team performed exceptionally well, catching up in June and July, and we ended the quarter with 5% year-over-year consolidated revenue growth. This was driven by strong demand within our residential and infrastructure markets and our team's ability to opportunistically improve our rates. We continue to grow market share and have maintained a strong financial profile with $40.5 million in year-to-date free cash flow that has driven significant improvement in our total available liquidity. Based on our solid results to date, we remain in a strong position to execute our strategic growth priorities and financial outlook in 2021 and beyond. Within our individual reporting segments, our US pumping business was slightly low lower due to the above average rainfall that I just discussed, as well as lingering COVID-19 headwinds in some of our commercial projects. Like last quarter, this volume headwind was mostly offset by strong results and market share expansion in a residential business and continued growth in infrastructure. In our UK segment, revenue increased 37% due to continued strong recovery from the impacts of COVID-19. In Ecopan, revenues were up 8% due to organic growth and pricing improvements. Ecopan remains an important part of our long-term growth strategy, and during the quarter, we made great strides in further building out our sales team. Now turning to some end-market commentary. We continue to see strong demand within the residential market, especially for single-family homes. We have been able to capitalize on this momentum, and residential construction continues to be a bright spot for our company today. As for the commercial market, the pandemic continues to cause some weakness as we discussed in our prior earnings calls. We have intentionally tailored our fleet management to capture residential opportunities while the commercial market recovers. In the near term, we expect greater share of our overall revenue will come from residential projects. We are continuing to see momentum with our infrastructure projects in the US and the UK. In the UK, our team continues to work on the concrete intensive high-speed railway project that we expect will last beyond 2030. In the US, we've seen increased public funding from state governments for bridges, schools, wastewater treatment plants, and hospitals. As for the current infrastructure bill that is being debated in DC, we believe the federal infrastructure bill will ultimately be passed, although the timing, size, and many other details are still unknown. Regardless of whether an infrastructure bill gets passed, we expect to be able to capitalize on increased infrastructure spending at the state level. Importantly, I want to note that our current outlook for fiscal 2021 does not include possible benefits of an infrastructure bill. Our commercial end market continues to recover along with our nation's recovery from the pandemic. As we reported last quarter, we've seen continued progress in high growth markets such as fulfillment centers and data centers, both of which are concrete intensive projects. We are actively bidding projects that require specialty equipment, and it is expected that these projects will begin in early 2022. On the cost side of the business, the most notable headwind that we encountered in the third quarter was from diesel fuel. As a reminder, in our first two quarters of this year, fuel was neither a headwind or a tailwind. In our third quarter, not only did we absorb fuel price increases of almost $1 per gallon compared to last year, but we were comparing to a quarter where much less fuel was consumed, giving lower traffic congestion due to COVID-related lockdowns. In times when we face inflationary cost pressures, such as diesel fuel increases, we update our prices accordingly, and there is typically a lag as we burn off current workload as previously agreed pricing. Now looking at labor, we continue to endure challenges from availability of qualified workers due to the current tightness in the job market, It remains difficult to attract new and qualified talent, given the various COVID-19 stimulus keeping some workers on the sidelines. This isn't something that just impacted our business. Various trades across many of our customers' projects also found workers hard to acquire in the current environment. While our business generally has unique levers to pull to combat labor headwinds, like a higher wage base, which generally helps attract more sticky talent, the unique environment experienced this quarter was difficult to fully offset. We have acted on both labor and fuel cost inflation by opportunistically raising our rates. In other areas of the supply chain, I am pleased to say that the cement headwinds we mentioned last quarter were short-term and did not noticeably affect us or our customers in the third quarter. We were also able to maintain safety uptime and reliability of our equipment by holding a stable and consistent inventory of repair and maintenance parts. During the quarter, we successfully executed upon M&A strategy by securing a strategic acquisition of 16 concrete pumping trucks from a construction company in Southern California market. We folded the majority of those trucks into our Southern California location and redirected some excess equipment into the Las Vegas market. Las Vegas represents a greenfield expansion for us, and we're excited to say that we have quickly established a strong team that we believe is the right fit to pursue opportunities that would be an attractive market for our business. Our new Senior Vice President of Sales and Marketing, Tom O'Malley, who is off to a great start, is working hard to drive continued development in our U.S. national sales strategy in order to capture additional growth opportunities. In addition, as we announced today, we successfully acquired the assets of high tech concrete pumping services. High tech is an established concrete pumping service provider primarily based out of the Houston metro area that shares our core values of safety, people, and reliability. High tech notably improves our market share in the Houston metro area and further strengthens our presence in southern Texas. The acquisition will be immediately accretive to our earnings, and similar to other M&A deals, we structured it as an asset purchase paying $12.3 million in cash for 34 pieces of revenue-generated equipment, including 32 boom pumps and two placing booms with an average age of approximately seven years. We have already onboarded high-tech's experienced team and look forward to growing our breadth of services in the fast-growing Houston metro and south Texas markets. Additionally, the acquisition provides a compelling opportunity for us to introduce our Ecopan service to high-tech customers. Overall, we were pleased with our operational execution and financial performance in the third quarter. I will return to discuss our longer-term growth strategy and provide an updated market outlook, but for now, I will pass the call off to Ian to discuss our third quarter financial results in more depth. Ian?