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 second quarter ending April 30, 2024. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Ian Humphreys, and the company's External Investigation Director, Cody Schloss. Before we go further, I would like to turn the call over to Mr. Schloss to read the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important caution regarding forward-looking statements. Cody, please go ahead.

Thank you. 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 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. 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. On a consolidated level, our revenue performance for the second quarter was largely in line with last year, and I am pleased with the resilience of our business model and the execution by our team in a dynamic volume environment across our end markets. In our U.S. pumping business, we experienced some softness across a variety of commercial work, with commercial projects remaining sensitive to higher for longer interest rates. However, offsetting some commercial softness, revenue in our infrastructure and residential sectors grew year over year in the second quarter by 14% and 12% respectively. Larger commercial projects remained mostly durable, albeit volumes were impacted by interest rate economics and project delays in the second quarter due to unseasonably wet weather in Texas and in the Southwest. In the UK, our team continued to support a high volume of key commercial and infrastructure projects and have successfully recalibrated rates to lessen the impact of cost inflation in the region. In our concrete waste management services segment, we sustained double digit growth in the second quarter, despite facing challenging volume and weather related environments that impacted our US concrete pumping operations. These factors affected our top line performance, both on a consolidated level and within our US concrete pumping segment. However, we maintain stable performance in our UK operations and strong organic growth momentum in concrete waste management services, delivering 8% year over year adjusted EBITDA growth in both segments. Transitioning to our segments by end market, we continue to experience similar trends to what we saw in our first quarter. Within the commercial end market, momentum in larger projects has tempered, like distribution centers, warehouses, semiconductor fabrication plants, and electric vehicle and battery manufacturing plants, amid growing reshoring trends in the U.S. As I just mentioned, concrete pumping demand and activity on commercial projects were relatively weaker given the interest rate environment. This has not only affected project volumes, but it has also driven competition to be more aggressive on rates, resulting in a reduction in our ability to gain the pricing leverage we would normally expect. While we had initially expected some recovery and an improved project funding landscape in the second half of fiscal 2024, current interest rates have stayed at levels more comparable to what we saw in 2023. This has had the impact of Weaker than expected demand environment in the commercial sector over the coming quarters, we will closely monitor further evolution in the broader interest rate environment and the shape of the recovery. Residential construction remains resilient, growing 12% year over year in the second quarter, with the structural supply demand imbalance continuing to drive increased home building activity. While interest rates remain elevated, home builders continue to provide creative solutions to home buyers, and we remain encouraged that demand momentum in this end market will remain stable despite the challenges of affordability between purchasing a new home versus an existing one. From a regional perspective, we continue to see strong residential construction investments within our mountain region and in Texas, which represent undersupplied regions where single-family construction is prominent. In infrastructure, Our expanded U.S. national footprint continued to drive strong results, growing 14% year-over-year in the quarter as we finally began to see momentum in capital deployment from the Infrastructure Investment and Jobs Act and other public project investments. As a result, we expect to see infrastructure projects continue to grow in 2024 and beyond as early IIJA projects advance to a major construction phase and we will plan to aggressively pursue these opportunities. In the U.K., infrastructure growth has continued to develop as funding is being deployed at faster timelines than domestic U.S. government investment. Phase one of HS2 infrastructure spending has continued as originally planned in the U.K., along with plans for investments in net zero projects such as Sizewell Sea, a concrete intensive nuclear power station project to which the U.K. government has committed approximately $3 billion. This project is similar to scale as Hinkley Point, a nuclear power project our Camford team has already supported. As a result of Camford's previous involvement with Hinkley Point, we believe we are well positioned for further involvement in size we'll see once the project is approved. Moving to the cost side of our business, our second quarter performance reflects similar headwinds to what we expected in Q1. Persistent inflation, largely a mix of labor and commercial insurance, have remained affecting our consolidated profitability performance along with downstream margin impacts from lower revenue volumes in our U.S. pumping business. While we expect these headwinds to be present in the second half of 2024, we are beginning to see our cost control initiatives take hold, which in conjunction with expected rate recalibration improvement across our end markets should yield improved margins. As we navigate lower commercial project volumes, we are tightening our financial outlook to the lower end of our initially stated range. Additionally, as a result of the investments we made in our fleet over the last several years, we are well-placed to optimize the utilization of our existing concrete pumping fleet, unlocking significant free cash flow. This flexibility, combined with other cost control initiatives, gives us the confidence that we can maintain our original 2024 free cash flow target of at least $75 million. We continue to use this free cash flow generation to pay down debt, and we are on track to reduce our net leverage to approximately 2.75 times by the end of this fiscal year, tracking steadily towards our long-term target of 2.5 times. I will now let Ian walk through more details of our financial results before I return to provide some concluding remarks. Ian?