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, 2024. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Ian Humphries, and the company's External Investor Relations Director, 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 Security Litigation Reform Act of 1995 that provide important cautions 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 booking 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, leverage ratio, 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. 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. In the third quarter, continued organic growth in our U.S. concrete waste management business was offset by a series of factors that impacted volume-driven declines in our U.S. concrete pumping segments. Historic rainfall in Texas and across the Southeast region together with ongoing restrictive monetary policy curtailed construction volumes for the quarter. Higher for longer interest rates have impacted the timing of more rate sensitive commercial projects and higher commercial building vacancy rates have delayed project starts on new build projects. While we believe these circumstances are temporary, they nonetheless have had a negative impact on our financial results. In the UK, the impacts of sustained higher interest rates on volume largely followed the trends we experienced domestically, but our infrastructure projects still held up well considering the market backdrop. Meanwhile, we are quite pleased with our concrete waste management business continuing to grow organically at a double-digit rate, driven by healthy market share growth and continued price improvements in the face of the challenging construction market. We expect the tailwinds in this business to continue for the remainder of this year and beyond. In the third quarter, we continue to strengthen our balance sheet by paying down debt, preserving our robust free cash flow, and improving our adjusted EBITDA margin, which speaks to our strong financial profile in union economics, as well as our disciplined approach to fleet management, improving cost initiatives, and capital investments. Turning to specific comments by end market, we largely experienced similar trends to what we saw in our second quarter. With our commercial market, we continue to experience softness across a variety of commercial work, especially light commercial and manufacturing projects, which tend to be more sensitive to the prolonged high interest rate environment we are currently in. Larger commercial projects remained mostly durable, albeit momentum is moving at a slower pace, but even these projects haven't been immune to interest rate economics. Weather also played an outside role in the quarter, with unseasonably wet weather in Texas and the southeastern United States continuing to delay projects. As we move further into Q4, we would expect these weather events to subside and to catch up on a portion of this work. Our residential market remained resilient considering the higher interest rate environment with our overall mix of our U.S. concrete pumping work in the residential end market holding at approximately 31% of total revenue on a trailing 12-month basis. From a regional perspective, we continue to see residential construction investments within our mountain region and in Texas, which represents undersupplied regions where single-family construction is prominent. We still expect the structural supply-demand imbalance in housing will continue to support homebuilding activity, especially as homebuilders remain motivated to entice customers with creative solutions that include rate-buy downs, and we believe the Federal Reserve's path to interest rate reductions should continue to support this end market's growth. Offsetting some of our commercial market softness, revenue in our infrastructure markets grew year-over-year in the third quarter by 5% or 1% of total revenue. The combination of more resilience in our UK infrastructure projects versus our projects domestically and our expanding US national footprint drove these results. And we are finally beginning to see some 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 for the remainder of 2024 and beyond as early IIJA project advanced to the major construction phase, and we continue to aggressively pursue these opportunities. In the UK, infrastructure growth has continued to develop as funding is being deployed at faster timelines than domestic US government investment. In summary, while the construction market remains soft, particularly in commercial, we believe that we are best positioned relative to our competitors to execute in the challenging environment due to our unique value proposition to our customers given our national footprint and market diversification and the breadth, depth, and agility of our pumping fleet. Furthermore, our strong balance sheet positions us well for continued investment, both organically and through accretive M&A. As a result, over the long term, we believe our disciplined execution of our strategic growth plan and our ability to responsibly navigate through macroeconomic cycles will drive superior shareholder value. I will now let Ian address our financial results in more detail before I return to provide some concluding remarks. Ian?