Concrete Pumping Holdings, Inc.

Good afternoon, everyone. I thank you for participating in today's conference call to discuss Concrete Pumping Holdings financial results for the second quarter ended April 30th, 2025. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Ian Humphreys, and the company's external director of investor relations, Cody Sloth. Before we go further, I would like to turn the call over to Mr. Sloth 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.

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. 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 Yellen. Bruce?

Thank you, Cody, and good afternoon, everyone. In the second quarter, we continue to navigate a challenging construction environment marked by persistent macroeconomic headwinds and regional weather disruptions. Despite these market pressures and uncertainties, we remain focused on the elements we can control, including capital allocation, cost discipline, fleet optimization, and strategic pricing across our business. Our second quarter was again impacted by volume-driven declines in our U.S. pumping segment, offsetting continued growth in our concrete waste management business. Specifically, lingering higher interest rates and the broader macroeconomic uncertainty continue to delay the timing of commercial project starts, and more recently, we've experienced challenges in residential construction starts. Additionally, higher-than-normal rainfall in our central, Midwest, and southern regions as well as a severe storm system in April which brought widespread flooding and tornadoes in our southern region further impacted our revenue. In the UK, the impacts of the economic uncertainty on commercial project volume largely followed similar trends we experienced domestically, but our higher mix of work and infrastructure and improved pricing held up reasonably well considering the market backdrop. Despite the top line decline, our disciplined fleet management and cost control strategies help limit the impact on margins, leading to less pronounced declines in gross and adjusted EBITDA margins compared to the changes in revenue. Turning to specific comments by end market, with our commercial end market, we continue to experience construction softness across a variety of commercial work, especially in more interest rate sensitive like commercial and office building work. Dave Kuntz, Larger commercial projects, including data centers and warehouses remained mostly durable but continue to move at a slower pace, given the economic uncertainty backdrop. Dave Kuntz, The residential and markets in our mountain and Texas regions remained largely resilient, but we have witnessed. Dave Kuntz, Emerging signs of residential softness in our other US regions, due to the elevated interest rate environment. Despite this, our residential and market mix remained at 33% of total revenue on a trailing 12-month basis. We continue to see residential construction investments within our mountain region and in Texas, which represent undersupplied regions where single-family construction is prominent. We still expect the structural supply demand imbalance in housing will continue to support medium to long-term home building activity especially as home builders 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 the commercial and residential market softness, revenue in our infrastructure and markets continue to grow sequentially and year over year. In the UK, infrastructure remains resilient, particularly with continued growth in HS2 While in the US, our national footprint allows us to win more projects. We expect our infrastructure business to remain robust in fiscal year 2025 due to the funding environment in the UK, as well as opportunities domestically from the conversion of allocated budget funding into project starts within the Infrastructure Investment and Jobs Act. I will now let Ian address our financial results in more detail before I return to provide some concluding remarks. Ian?

Thanks Bruce and good afternoon everyone. Moving right into our results for the second quarter, revenue was $94 million compared to $107.1 million in the prior year quarter. As Bruce mentioned, the decreased revenue was mostly attributable to a decline in our U.S. concrete pumping segment due to the continued softness in U.S. commercial construction volume, recent regional residential headwinds, and adverse weather in several of our U.S. regional markets. Revenue in our US concrete pumping segment, mostly operating under the Brandeis Bone brand, was 62.1 million compared to 74.6 million in the prior year quarter. We estimate that the adverse weather impact in our second quarter revenue was approximately three to four million dollars. For our UK operations, operating largely under the Camford brand, revenue was 13.8 million compared to 15.5 million in the same year-over-quarter due to lower volumes caused by a general slowdown in commercial construction work, mostly due to the impact from higher interest rates. Foreign exchange translation was a 180 basis point benefit to revenue in the quarter. Revenue in our U.S. Concrete Waste Management Services segment operating under the EcoPAM brand increased 7% to $18.1 million when compared to $16.9 million in the prior year quarter. This organic increase was driven by increased pan pickup volumes and sustained improvement in pricing. Returning now to our consolidated results, gross margin in the second quarter declined by 50 basis points to 38.5% compared to 39% in the same year-ago quarter. Continued improvement in our cost control initiatives, including improved fuel and repair and maintenance efficiencies, roughly offset lower revenue in the quarter. General and administrative expenses in the second quarter declined 6% to $27.9 million, compared to $29.7 million in the prior year quarter, primarily due to lower labour costs of approximately $1.3 million and non-cash decreases in amortisation expense of $800,000. As a percentage of revenue, G&A costs were 29.7% in the second quarter, compared to 27.7% in the prior year quarter. Net loss available to common shareholders in the second quarter was $400,000 or $0.01 per dilute share compared to net income of $2.6 million or $0.05 per dilute share in the prior year quarter. Consolidated adjusted EBITDA in the second quarter was $22.5 million compared to $27.5 million in the same year-over-quarter and adjusted EBITDA margin was 23.9% compared to 25.7% in the prior year quarter. In our US concrete pumping business, adjusted EBITDA declined to 12.7 million compared to 17.5 million in the same year-ago quarter. In our UK business, adjusted EBITDA was 3.2 million compared to 4.1 million in the same year-ago quarter. And for our US concrete waste management services business, adjusted EBITDA increased 12% to 6.7 million compared to 5.9 million in the same year-ago quarter. Turning now to liquidity, At April 30th, 2025, we had total debt outstanding of $425 million and net debt of $387.2 million. This equates to a net debt to EBITDA leverage ratio of approximately 3.7 times. We had approximately $353 million of available liquidity at the end of April, which includes cash on the balance sheet and availability from our ABL facility. Now moving on to our share buyback plan. During the second quarter, we repurchased approximately 1 million shares for $6 million, or an average price of $5.90 per share. Since the buyback was initiated in 2022, we have repurchased approximately $26 million of our stock, with $9 million remaining in the authorized plan through December of 2026. However, as announced today, our board has authorized an additional $15 million to be added to the existing share buyback plan. We believe our share buyback plan demonstrates both our commitment to delivering enhanced value to shareholders and our confidence in our long-term strategic growth plan. Moving now to our 2025 full-year guidance, while we had expected some market recovery and project commencements in the first half of fiscal 2025, higher for longer interest rates, and now with uncertainty around the tariffs, this has weakened the near-term demand environment particularly in our U.S. commercial and residential end markets. As such, we do not expect there will be a meaningful market rebound in the current fiscal year, and thereby we are adjusting our financial outlook for fiscal 2025. We now expect fiscal year revenue to range between $380 and $390 million, and adjusted EBITDA to range between $95 and $100 million. We expect free cash flow, which we define as adjusted EBITDA less net replacement capex, and less cash paid for interest to be approximately $45 million. Despite a challenging macro backdrop, we are committed to a prudent capital allocation and flexible investment strategy. Combined with our consistent track record of strong unit economics, healthy liquidity, and improving balance sheet strength, we believe we are well positioned for continued investments in our fleet, to strengthen our service offering in anticipation of a market recovery in fiscal 2026 and beyond. With that, I will now turn the call back to Bruce.

Thanks, Ian. In conclusion, although the market has not recovered as we had expected, our business remains well positioned for a future rebound. Over the past several quarters, we have strengthened our liquidity while consistently generating strong free cash flow. To address the anticipated discussion on tariffs, while there is no meaningful near-term direct impact on our business, the added uncertainty has caused some turbulence and further delays in commercial construction commitments. We remain focused on the long-term strategic aspects of our business that we can meaningfully influence, including the consistent and disciplined execution of our strategic growth plan, resolute adherence to our leading commercial strategy, and prudent cost control through ongoing operational excellence. Our financial flexibility allows us to pursue disciplined strategic acquisitions when the timing is right, invest in organic growth opportunities, and return capital to shareholders demonstrated by our recent special dividend and ongoing share buyback program. The fundamental strength and underlying drivers of our resilient business model, proven strength, strategic plan, strong balance sheet with significant opportunities for growth and long history of successfully managing and investing through economic cycles provides us with great confidence in our ability to continue delivering robust financial and operational performance. In closing, we believe these priorities lay a strong foundation for long-term value creation. With that, I would like to turn the call back over to the operator for Q&A. Joe?

Thank you, Terry. Ladies and gentlemen, if you would like to ask a question, please press call 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question comes from the line of Tim Mulrooney with William Blair. Please proceed.

Hi, this is Luke McFadden on for Tim. Thanks for taking our questions here. Maybe one to start just on guidance. In your outlook commentary, you noted that you're not expecting any meaningful recovery in construction markets until 2026 at the earliest. I just wanted to confirm whether or not this comment pertains to expectations across both commercial and residential construction, or was it more end-market specific? And maybe as a follow-up to that, what are the factors that could cause your expectations around construction recovery to be pushed out even further?

Yeah, so we'll take it one segment at a time. So in the residential, the softness is minor and we don't expect anything too turbulent with the residential market going forward. The commercial market, there's continued softening there. We expect that once the tariff conversation settles, I think that that market will start improving. As you know, there's been several delays and so that's delayed a lot of those projects. but we are optimistic that we'll find a recovery there. The tax plan will eventually get approved, and with interest rates likely coming down at the end of the year, we expect the commercial market to come back after that.

Great. Thanks. Very helpful. And then maybe just one more from us. You know, it sounds like the infrastructure market continues to be a bright spot for the business. Can you talk about what sort of visibility you have just into that end market going forward here. It sounds like you're continuing to expect strong results in 2025, but yeah, just any additional color there in terms of particular pockets of strength within infrastructure related to projects or otherwise would be helpful. Thanks so much.

Yeah, so we're seeing growth in nearly all segment of infrastructure. Roads and bridges have been a big part of us. As you know, we don't do the paving, but we do the structures, and so A lot of wastewater and water treatment plants going on. Airport construction has been really strong, but really it's across the board with infrastructure. In the US, it's gaining some momentum, and the UK has been strong for quite some time, and we expect that to stay strong for the foreseeable future.

Thank you very much.

Thank you. Ladies and gentlemen, again, if you would like to ask a question. please press star one on your telephone keypad. And the next question comes from one of Jean Valise with DA Davidson. Please proceed.

Hi, guys. Thank you for the time. Could you provide more color on the project delays? More specifically, have you guys seen more project delays since April? And as a follow-up, have customers given you a time horizon when those delayed projects may be reviewed again?

Yeah, so a lot of the project delays have a lot to do with the tariffs and uncertainty there. Our customers are saying their backlogs are quite strong for next year. Still, there are some concerns when those projects might start. And so we're seeing that backlog is built by not only those jobs that are delayed, but new projects that would be coming on the books for them. So there is some optimism that once things settle out that the commercial market could come back very quickly.

And on the commercial, sorry, on the infrastructure, are the delays also tied to these types of uncertainties or other factors that came into play this quarter?

Yeah, so I don't think we're seeing delays in infrastructure programs. I think the challenge was meeting the requirements of the bill. And they seem to be doing a better job of getting that done.

And so the infrastructure dollars are flowing more freely than what we'd seen in the previous years.

All right. I appreciate the time.

Thank you. Thank you.

Thank you. This concludes the question and answer session. And I'd like to hand the call back to Mr. Bruce Young for closing remarks.

Thank you, Joe. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you and report our third quarter fiscal 2025 results in September.

Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.