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 31, 2022. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Ian Humphreys, and the company's External Director of Investor Relations, Cody Slock. Before we begin, I would like to turn the call over to Mr. Slock 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, Diego. 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 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. A 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, and good afternoon, everyone. Our third quarter marks our fourth consecutive quarter of double digit consolidated revenue growth, which is a testament to the strength and resilience of our business. We also reported double digit growth across all of our segments, reflecting continued organic market share gains and contributions from recent accretive acquisitions. By reporting segment, revenue in our U.S. pumping business increased 33% in the third quarter, driven by our recent strategic acquisitions, strong share growth, in our commercial and market rate increases and pent-up industry demand brought about by the pandemic recovery. Of note, all project types within our commercial market experience demand, which underscores the strength of our team and the end market's recovery. In infrastructure, we continue to benefit from our growing national footprint that allows us to capture increased funding in public project investments. We will continue to work to win projects at the state and local levels and we are encouraged by the passage of the Infrastructure Investment and Jobs Act. While we do not assume any meaningful benefit from the passage in fiscal 2022, we remain well positioned in 2023 and beyond. At this moment, the magnitude of the bill's benefit to our business today remains tough to quantify. Our residential business was relatively stable in the quarter given the structural supply-demand imbalance that continues to unwind. We recognize that there are some negative headlines coming from the residential housing industry, but it is important to note that the majority of our residential work resides in the Mountain States and in Texas. So far, these areas have performed relatively well for our business. For example, as a percentage of our total revenue, our residential work volumes traded 100 basis points with growth in our commercial market in the quarter, which carries the added benefit of higher margins compared to other end markets. This shift in revenue by end market underscores the benefits of diversity and durability of our high service value. In our UK segment, in spite of foreign exchange headwinds, revenue increased 14% compared to the prior year quarter due to organic growth, given the country's continued strong recovery from the impacts of COVID-19. Our team continues to secure energy, road, and rail projects in addition to the work we have previously announced with the Concrete Intensive High-Speed Railway Project, HS2, which is expected to last beyond 2030. In Ecopan, our concrete waste management business, revenue continues significant organic growth with an increase of 26% for the quarter due to an improved sales approach and our team's ability to execute more in-person selling. We continue to expand our Ecopan sales team in 2022 to strengthen our position for long-term growth. Going forward, we continue to expect to maintain Ecopan's double-digit organic revenue growth. We also continue to execute upon our organic M&A growth strategies. In late July, we undertook an expansive strategy along with the U.S. East Coast starting with an organic greenfield expansion opportunity in Washington, D.C., an area that has experienced rapid growth that we expect to continue. Subsequent to the quarter end, in August we strengthened our U.S. East Coast expansion strategy with the creative acquisition of Coastal Carolina Pumping. We're excited to welcome the talented Coastal team to our concrete pumping holdings family and they bring with them the largest concrete pumping service in the Carolinas with 89 units of operating equipment. We expect our East Coast strategy which includes acquisition of Coastal, our greenfield in D.C., and Ecopan Synergies to generate approximately $25 million of revenue in fiscal year 2023 with similar margins as our existing business segments. We acquired Coastal for $31 million, which we funded from existing debt and a strong free cash flow. From a financial perspective, Coastal brings all of the same value creation characteristics of previous acquisitions, such as purchasing power, economies of scale, improved utilization, and price optimization. At an average fleet age of five years, Coastal also brings a young fleet that we can use to offset future capex spend. Strategically, the acquisition checks all the boxes well. Coastal enhances our position of scale, most notably in North Carolina, South Carolina, and the Florida regions. The operational capacity enhanced is expected to provide Brundage Bone and Coastal customers with advantages like increased service offering and expanded fleet availability. Additionally, the acquisition offers a compelling opportunity for Coastal's customer base to access our Ecopan concrete waste removal services. We also plan to leverage the location of these existing Coastal customers to strengthen our recent DC greenfield expansion strategy. Shifting to the cost side of the business, as was the case last quarter, rapid inflation particularly in diesel fuel, continue to impact year-over-year gross margin comparisons. Despite this headwind, our team continued to execute the recalibration of our rates. To put the headwind into perspective, we experienced slightly more than $3 million of year-over-year increase in diesel fuel costs in our third quarter, or approximately $7 million in the first three quarters of the 2022 fiscal year. In spite of the significant cost headwind, we believe we have largely offset these costs through our rate recalibration and our margin dollars are in line with our expectations if we remove the inflationary headwinds. As a result, we continue to realize the expected equipment return on investment for the same volume of work performed. So in summary, we had another great quarter that continues to show the strength and resilience of our business. I will let Ian walk through more detail on our financial results before I return to provide some concluding remarks. Ian?