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 fourth quarter and fiscal year ended October 31st, 2023. 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, Camilla. I would 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 meetings 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 of 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 that 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 site. 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. We had another strong year in fiscal 2023 driven by the strength and diversification of our business. As a result, we were able to drive financial performance records for annual revenue, adjusted EBITDA, and net income. Looking at our full fiscal year of 2023, revenue increased 10% to $442 million, adjusted EBITDA increased 7% to $125 million, and net income increased 12% to $30 million. Each of our end markets contributes to this performance, particularly as residential construction remains strong and our expanded footprint enabled us to continue to win infrastructure projects. We also continue to execute on our debt reduction initiative, achieving our three times leverage ratio target at the end of the 2023 fiscal year. Shifting to our fourth quarter performance by end market, our business performed in line with expectations. In the infrastructure end market, our expanded U.S. national footprint continued to drive strong results as we captured more revenue from public project investments. We continue to see more investment flowing to numerous projects where we operate, and we plan to aggressively pursue these project opportunities with the belief that it has the potential to be a five-year-plus tailwind for our business. During the fourth quarter, our residential end market remained stable due to the continued momentum in new residential housing construction Mike SanClements, Given not only the ongoing structural supply demand in balance and housing, but the fact that home builders have enticed a new home buyer with creative home design and financing options. Mike SanClements, With interest rates falling subsequent to quarter end and the projection of additional interest rate cuts in 2024 we expect residential housing projects remain healthy for our business. In the commercial end market, we continue to experience momentum in larger commercial projects like distribution centers, warehouses, semiconductor fabrication plants, and electric vehicle and battery manufacturing plants. We expect this demand to continue given U.S. reshoring trends as companies look to build out their domestic manufacturing footprint. However, concrete pumping demand from light commercial projects has continued to be comparatively weaker as interest rate sensitivity and reduced availability of financing from smaller regional banks have stalled some projects. We expect that interest rate cuts in 2024 could help get these projects moving again. During the quarter, our commercial mix as a percentage of our total revenue declined 100 basis points year over year to 59%. This was fully absorbed by our infrastructure projects while residential was flat year over year at 29%. This once again highlights the diversity of our business and the agility of our fleet. Shifting to the cost side of our business, persistent inflationary pressures, particularly in labor, continue to hamper our ability to flow through our strong revenue performance to the bottom line margin. We estimate labor inflation accounted for roughly half of the inflationary headwinds we experienced in our P&L. While we expect these headwinds to continue into the new year, we are confident the measures we are taking to recalibrate rates and the systems we are implementing to attract and retain our employees are the right steps for our business to drive long-term shareholder value. I will now let Ian walk through more details of our financial results before he returns to provide some concluding remarks. Ian?