Concrete Pumping (BBCP) 6 Jun 242024 Q2 Earnings call transcript

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings financial results for the second quarter ended April 30, 2024.

Joining us today are Concrete Pumping Holdings' CEO, Bruce Young; CFO, Iain Humphries; and the company's external Investor Relations Director, Cody Slach.

Before we go further, I would like to turn the call over to Mr. Slach 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.

you. Thank forward-looking remind you the our a will making to call, of operations, that business be give our to better certain everyone like course in this we and I'd outlook. regarding statements understanding of and subject results cause materially such risks differ that statements. could These statements numerous uncertainties are from to actual to

The For annual XX-Q XX-K, SEC. Form on of Form disclaims report and or with events these publicly company quarterly revise and filings otherwise. statements, future whether see uncertainties, or update risks concerning as intention on information Concrete a Holdings' available other obligation result Pumping any or information, forward-looking report new the to any

cash for non-GAAP financial certain further today financial also website. comparable or the On today's these adjusted will the investors. information call, presentation in believe about on reconciliations and issued measures, non-GAAP GAAP we press provide company's useful which measures We flow, our we posted and provide information EBITDA, the to reference free measures including net investor debt release

like press on this the be provided later today's for replay available well as webcast call evening. website. also link that to A remind available this via replay in will the will I'd company's as release everyone be

call like would Young. to to I Bruce Now of turn over Pumping CEO Holdings, the Concrete the Bruce?

pleased a And markets. our am the our team performance Thank by was you, I environment Cody, model dynamic and the largely last good and volume across a our consolidated second business quarter for year. execution line afternoon, our revenue resilience everyone. in end level, the On in of with with

commercial longer remaining of some experienced interest sensitive commercial we to business, work across softness pumping for U.S. a our rates. higher variety projects with In

residential key and in infrastructure impacted and respectively. albeit in revenue inflation in successfully team were some rates sectors volumes and durable, In second and a XX% and the commercial Texas the in commercial weather by in unseasonably to commercial of and cost in to U.K., the offsetting impact second economics region. Southwest. project interest the our Larger have support projects XX%, of delays projects However, to volume mostly continued wet quarter due by the grew remained infrastructure quarter our the lessen recalibrated year-over-year softness, high rate

segment. Waste performance, segment, In Services and Concrete our sustained that impacted the and within affected Concrete environments facing growth quarter both Concrete Management challenging consolidated double-digit a despite Pumping in we on level factors Pumping top our operations. weather-related line U.S. our our These second volume U.S.

Waste operations momentum stable strong in U.K. However, both X% segments. in growth we maintained in organic delivering and year-over-year our EBITDA performance Concrete Management adjusted Services, growth

end our to market. segments Transitioning by

experience similar we saw to continue We to our first what in trends quarter.

market, plants vehicle commercial centers, battery growing in plants electric momentum amid trends reshoring like end manufacturing Within semiconductor and larger has the tempered, distribution fabrication the warehouses, projects in and U.S.

a reduction As only pumping I be commercial it rates, rate resulting pricing leverage just and ability in the we aggressive competition environment. to gain project were has activity also driven affected in normally has interest more demand given but expect. volumes, projects weaker not This mentioned, the on on concrete our would to relatively

environment have While quarters. the funding second XXXX, in project demand impact levels sector improved comparable the recovery half XXXX. commercial what we expected stayed in saw interest the of coming and in This we initially of had over landscape current the had weaker-than-expected some fiscal more rates an to at has

of shape further in We the environment broader the the will rate closely and recovery. monitor evolution interest

in growing quarter resilient, remains activity. construction supply-demand structural the XX% the drive with increased homebuilding Residential second imbalance to year-over-year continuing

versus affordability we remain demand end despite remain one. to new between buyers, continue market and provide to challenges momentum in home solutions home of the will homebuilders While interest existing rates remain that an stable purchasing this encouraged a elevated, creative

a regional Mountain drive is In undersupplied strong we where in and which continue infrastructure, continued represent prominent. investments single-family our From regions see finally residential capital year-over-year deployment construction the national region perspective, XX% and began -- quarter in momentum Texas, to construction Infrastructure our Jobs as within in other we to project see U.S. footprint results, investments. growing to from expanded and XX Investment public strong growing Act the

projects plan pursue to result, to opportunities. we a in a these projects and early advance major expect XXXX will and grow construction As infrastructure IIJA to see aggressively continue as beyond phase, to we

a X project projects Hinkley the $X such to U.K., to supported. already power develop funding power of government approximately originally the U.S. in is has plans has investment. the nuclear X domestic along project Sizewell Camfaud has time as has U.K., is HSX being concrete-intensive than Phase This infrastructure U.K. our at infrastructure spending C, in with In for as to government lines which continued similar as growth billion. Point, nuclear deployed investments project continued faster planned as station net a team scale committed

once previous As result Camfaud's in are is believe further a well involvement Sizewell Hinkley Point, project involvement approved. with the C for we positioned we of

Moving of to cost the side our business.

profitability reflects Our margin lower Persistent from revenue U.S. our headwinds in along to second we what inflation, expected largely volumes commercial with labor have a downstream affecting business. our of QX. remained, in quarter similar insurance, performance and impacts pumping consolidated mix performance

XXXX, headwinds cost with across conjunction to improvement half second markets are rate expected these take improved margins. we should which be see initiatives present control While of in end our in recalibration to the beginning hold, yield expect our we

navigate end initially we our project range. to commercial As volumes, lower our we tightening are stated lower financial outlook of the

we control a fleet, placed our utilization maintain confidence our existing $XX our significant free flexibility, the over we as of at years, fleet cash in flow. are target with unlocking of result concrete to several last can the us cash least well million. other XXXX cost This Additionally, combined that we original free initiatives, flow pumping the made optimize the investments of gives

use leverage to the free net our by to pay X.XXx year, tracking of debt, on fiscal our long-term this to X.Xx. target approximately cash towards to down of track generation we end flow reduce continue steadily are this We and

of let remarks. through walk our results more to details I return Iain now some before Iain? will I concluding provide financial

and the ago million revenue Bruce, quarter, Thanks, in year $XXX.X million quarter. afternoon, second the was same to compared consolidated good everyone. In $XXX.X

slight the was year-over-year projects unseasonably mentioned, in in events. U.S. segment, strong by that Bruce attributable by Pumping was offset weather impacted a than Concrete to Management As commercial and and specifically decrease Waste our Services, continued Concrete volume decline growth more U.S.

our $XX.X million the in As on operating Concrete mostly decreased the brand year Pumping quarter. compared to such, revenue million to $XX.X in segment X% U.S. Brundage-Bone prior

the in Services Eco-Pan U.S. brand, million X% driven improved million $XX.X year second lower the in Waste and under Camfaud quarter revenue the The translation, quarter. to prior foreign prior as U.K. last year increase were robust excluding growth compared Management organic increased $XX.X improvements. to segment offset the operating to from with to the our year revenue Concrete by $XX.X in was our under quarter. impact line Revenue in largely XX% million compared brand by slightly pricing For activity operating pricing volumes $XX.X the was million currency in operations When improvements.

with to and by market the insurance results. margin utilization weather commercial in related was lower primarily volumes, XX.X% impact increases Returning conditions a quarter revenue to premium Gross the year adverse of decreased compared to driven ago rate consolidated in XX% margin quarter lower in the same costs. our second labor

in expense administrative noncash year $XXX,XXX. and million million the of in slightly G&A decreased of decrease second ago to expenses same decrease compared quarter amortization decreased General the $XX.X $XX.X to compared quarter with in in to XX% a the second to quarter as in the year percentage XX.X% the related quarter. same to costs a ago largely revenue

million U.S. the XX.X% volumes, ago pumping EBITDA utilization year in or the per in million common declined was or share diluted margin share cost X% $X.X to quarter. Again, $XX.X labor shareholders market-related same year by revenue commercial second second the decreased in million ago to in were quarter EBITDA quarter. weather-impacted per in million quarter. the available the driven XX.X% income $X.XX $X.XX $XX.X insurance. year $X.X aforementioned compared the Net same impacts to declines ago the adjusted compared to increases from lower Consolidated compared same diluted quarter in to EBITDA to and Adjusted

EBITDA In $XX.X the same to EBITDA X% adjusted U.S. to compared the in Concrete $X.X increased same million million business, $XX.X decreased XX% U.K. year compared to business, million million in our Pumping In our year adjusted quarter. to quarter. ago ago $X.X

compared U.S. business, Concrete our to $X.X increased to EBITDA Management quarter. year the million $X.X in ago million same also For X% adjusted Waste

liquidity as sheet liquidity. of includes net had outstanding total from had we April debt million cash XXXX, debt-to-EBITDA million. We XX, This April $XXX.X Turning availability the facility. to ratio our $XXX.X now balance million or XX, of and $XXX.X approximately of XXXX, on X.Xx. net equates to a At of leverage which at debt ABL

overall near-term have M&A investment remain a equipment investment strategy. growth maturities the responsibly debt with our XXXX. we maturing senior like pursue long-term facility a strong As We to reminder, our asset-based XXXX or position, optionality our to value-added in of liquidity in provides in and in support maturing lending further which opportunities no accretive notes our organic fleet

XXXX, $XX quarter of of $XX an January additional $XX an a authorized the And third of Board million repurchase common approved. XXXX, of shares in buyback In we a of increase. our stock. million During approved to March into that outstanding program entered the additional up million was XXXX, share Directors

per by per and second of in and we million of share through believe an commitment million XX, our quarter a our long-term $XX.X our average is through $X.XX stock program this March and approximately shareholders confidence current of to the of repurchase Board strategic delivering for shares was still under to with program, ship average for we shares share remaining we of stock initiated of value the our of have repurchased at $X.XX XXXX, X total million common or During approximately our an repurchased The authorized common both $XX.X plan. XXX,XXX XXXX, buyback $X.X price demonstrates price Since share. our million our buyback of growth April XXXX, program share. Directors

reduced our million range the fiscal guidance. range impacts expectations million. into half revised Due to first XXXX, the full have $XXX to we our adverse between $XXX adjusted to revenue million project for between commercial volumes and year now $XXX of and and through weather $XXX million Moving XXXX and EBITDA year fiscal

strength ability free EBITDA last will for sheet, improve investments cash mentioned, million given remain based including the from years, we've to utilization. and fleet upon made improve to and X acquisitions demand. equipment flex by the utilization flexibility supported This also our place Bruce and least our is we adjusted CapEx cash put less have in previous cost investments over flow, at less $XX we balance as define initiatives CapEx, which net As replacement our paid control of interest as capacity

a As earlier, result, X.XXx fiscal this as leverage year. and end of a are of we net targeting the mentioned ratio approximately Bruce by

pressures to flexible In foundation. terms of entering XXXX cost rate will initiatives. solid cost cost, and with financially, of working and offset we are we continued half recalibration we a through our Both believe second continue fiscal operationally the inflationary

now Bruce. With that, back I will turn call to the over

Thanks, our residential U.K. operations. remain Services Concrete we the continue. with markets, Management momentum project Iain. in the end pleased summary, along With momentum maintained our infrastructure our of Waste In with and we we expect to have stability

We rate movements our keeping end and project interest on volume a are market. commercial further close patterns eye within

macro at the as pumping improvements business optimized our breadth and challenged remains visibility While our U.S. for agility believe arise. position of has scale, we recovery present,

our by opportunistic Our on work to as flexibility pursue utilization solely positioning equipment more benefited value-driven more than further can and projects. focus rather is operational we approach sustained volume-based

our reduce attracting to while retaining our on efforts focus We cost industry and will best maintaining pressures through the disciplined cost increases. in the talent cost and impact initiatives continued inflationary rate of working our continue optimization through

and optimizing focus drive market growth. top As always, to our end mix remains line towards on bottom

complement to while evaluate growth by to opportunistic organic accretive our leverage. expect strategically continuing initiatives reducing our M&A We

With the like would operator that, over back turn now for time I Shamali? to Q&A. to the

Mulrooney from Blair. with question Tim first comes William our And line the of Instructions] [Operator

is McFadden Luke Tim for on Mulrooney. This

here the the one first guidance. Just on

back revised the project half first the the this the to half saw also quarter does perhaps a of Just and pressures primarily outlook cautionary curious, reflect during incorporate more relates this as activity? year commercial to Or does pertains as that outlook, the it you on it it year? of

question. Thanks that. it's a good Yes, for

first this do little going several some year. think year. the have half that the is weather delays of sluggish same going the the commercial year seen the the of first second through but half We of we've we half that So to a don't we in concerns have that in did the remainder the year feel do like expect, we be market to of is the of

then maybe here. gears And switching Helpful. Understood.

what you come to you early much of through And tied some In opportunity? projects IIJA it rollout first are visibility that from relates of how projects into the types investment as terms infrastructure to of the investment, IIJA? do future have seeing

Yes.

of care, hospitals work As we several really the it's difficult for what are you that work Road nicely. us would airports some from. we across what water doing well country. as large projects U.K. bridge coming -- projects things the is been like any wastewater. where as and health is and in coming know, really quite There identify doing around aren't seeing But few we to are We're those sorts a see is and on

to starting build backlog. little we're little So build the mixed bit starting a of across and -- get momentum, it's but it's more of a a a to bag board,

do and next to for we year years getting anticipate better even that come. year through this So several stronger and

Our with of next line Stanley the Stifel. comes question from Elliott

you a a days Could the how were How prior utilization the did perspective, about talk we weather bit guys impact? guys little year? quarter from even versus like or many maybe this miss, you

Stanley. Yes,

in on we that weather you -- as the the don't see the So we've the second seen typically I mean, in second know, quarter. weather, quarter

So like not did quarter. pick second seen we would prior revenue million of the year that unexpected $X but in quarter. weather lost sequentially, Utilization as up we on as much have in about

just the maybe those with it's X delays. different percentage weather So like year of from some points prior

of in country May May that seen We've what heard has in parts even in kind And difficult you've well. and been comment June? on you into of could weather the as

happens our rest catch encouraged. I would the mean, through in the weather it continued. more in to in Well, Yes. quarter, May, ability it I a mean I say, first -- month when the obviously, is up of

for nice weather we we it's to going. And into projects we the see any such as we the May that and that factor that recover mean shortfall we that break, the the through can through of up I -- anything So catch some the expect on update revised keep quarter. gave would

to kind product? markets? business, you it much And new U.S. of kind Is markets? the with do growth moving Is -- the of there. into of existing have guys cover maybe uptake more waste that are And how better that nice in left you

Yes.

basically currently into So things. we're that from for as in comps few very markets adjacent we're our And a penetration that And only to X% growth markets the X easy are that market. currently there us moved We've service. we still we're in new own in. markets, of to gaining more markets

still quite have runway we we ahead. a believe bit that So of

you M&A on in to about lastly, I those you some sitting a accelerate in how make of we that here some guys you some think Does of rates should kind fairly environment And of competitive M&A concerns? of to the the alleviate environment guess, mentioned terms like markets the Or want cases. of consolidating kind today?

Yes.

on question the for thanks So that.

looking are now. businesses right we at several Now

where inflation out been of to haven't in industry Our has the our front get general point to hurt able been rates we industry has inflation. in --

of last So value years. challenging at it's assets. margin of put not have EBITDA, still issues a couple been challenging where reasonable the when their multiple the we're worth businesses the it's on we of over Most looking

think that at to And will and forward consolidation, next bit. do help the we're and so to could into we year, look that rates. that But We shifting a little certainly with looking that. more things complicates start continuing

UBS. Avi next comes line question of the Jaroslawicz Our from with

-- projects. if on just just slowdown Wondering can Avi kind wondering of could you the commercial of the Iain, for of if in impact Steve you frame Bruce, Fisher. kind

said weather. million you know due $X to of was I lost revenue So about

revenue. the like it us frame So quarter for industry in would terms revenues? of leaves still negative your how But you

Yes.

related I demand to would that slowdown. sort say So the that of balance of the

from as Now end when our we you've And this what the one mix the mix mean change. little put about thing we between I out see seen remarks. the on our change, is comment, in talked we I and volumes prepared that see when markets. in this the would business, you'll earlier a bit

year-over-year, commercial around is So XX%. like now

prior So momentum up from X% been the that's quite has solid. we've and a But residential year. about drop infrastructure, picked in

though as we business this that got, volumes where that's work volumes. even the mean, would agile that on depending model continues, So to the And expect move those I we've change, through market. we project the chase end

is Waste just it. allocation. Can like give margins it the Got down called in a forward? Concrete negative Or Okay. insurance sizable that business? quarter-to-quarter. Eco-Pan, out business the about margins seemed cost moving But then be And like know there was for there? some us more how you in we I color price you Management the corporate cost for and should thinking step

Yes.

the the got mean quite So growth it's was last compelling. think we even and the about there margins year, equipment payback still XX%. the we've I XX%. that Today, margin still the and on that I mean is

which margin a that cash So feeds into right payback our flow. really still in business, compelling on free

still encouraged nicely that. of lines we're ROIs we that the business. that in So the up It growth to really type expect of with from invest

[Operator the Instructions] Ramirez from of with comes D.A. line Davidson. question Our Jean next

-- markets second you of as about markets oversaturation or in the pumps what talk the headwind color to half? Could what company make a plan provide sure cited referring not is doing a are some and And you to? about on what headwind. is You planned this does concrete certain in

Yes.

equipment from in of way our overseas. the the So comes most industry,

what advance trucks going from plan to for those mounted so pumping units a year the manufacturers order the get And overseas then in so and they're or trucks. of on

to would for owners were that are and able more brought up market the it be I pumps ended XXXX being, this find to in concrete meaning those so there they machines. everyone into market stronger anticipated And where that think XXXX

go a volume machines As market what the would order catches think up of markets -- be over. you see are the quite fact, they'll we'll again into going market the in XXXX, few there's as And equipment -- in forward, with XXXX than There'll less here. I XXXX. machines fewer see for that in that

And So certainly, you'll that's spend year. utilization to we'll being over at sure much or being year that there, be And running settle the a see next this down see off to with anticipated less And growth we're our that out. make assets right that why not us. careful is within the that our CapEx business because will own of utilization. we're sell so, we'll benefit

clarify certain you in like the just to are Or So you U.S. certain that markets say overbooked? on when versus to just U.S. you're markets, across referring referring abroad? to

of all saying the I'm Yes. U.S.

So talking the we oversaturation, when the we're country. say about

markets. U.K. but much just an same across the there's the But equipment in the U.S., equipment Now where and the extent. up all ends to not end sees issue similarly, affecting too it largely, it's U.S., that

appreciate had just through back have weather it. Got volumes going a weather and otherwise quarter impact? May if pumping, that. been regarding I post on glimpse favorable you've revenue provide us of And And to weather? seen could the you flat what would U.S. you

Yes.

yes, the So volume be. where largely to with we would have line expect been in would

volume. mix revenue look you X% reduction the came that from down, X% mean, of at on If I --

line to like more first usually is will we've what be. anything really least of up the and quarter we guidance But like and had to rest XX% So the to expect the factored given at into of the trend, the contribution the terms the in year and what be. flat yes, In we specific line where would the in would expect if it of work that call May, looks really that around what the guide, the with we out with early second of mix would for in XX% have in XX% year look half percentage it's between weather QX full which where make in about updated in weather cooperated, and QX half. what been

one And just from then more me. it. Got

that the on Just exceeding citing Is -- that margins. we a primary costs are business? within looking at Or overhang at you're underutilization little as different? the price environment where or looking the at is current

of we work Do that terms you the mean charging the for price in we're do? that

Yes, at looking yes. And guys... just margins, then the you are

our volume we've volume the but when margin The mostly and yes, slowdown, and equipment return doesn't so based payback is or on get -- the margin get there's it change materially you that change really on that got. underutilization, Yes. investment we

investment It's So about we more change think it permanent catch we the an profile not in we've got, from assets a to in the expect for that. as that. that on up

of So from. we are delays, yes, it's in But that causes bit something which familiar utilization. a weather softness certainly with causes recovering

comes question next Fisher UBS. from Our Steven with

Sorry, a on I got little late.

larger just EVs wondered on comments maybe made what about of you clarify relative the of seeing semiconductors of and types think general projects or I the some I kind projects in some projects. batteries. those to you terms you're just But more scale medium-sized elaborate some of on commercial could and of if or smaller

not Yes, projects several just stage seeing canceled. being them We're planning of seeing being pushed are of those Steve, in delayed. we're They're out. large any have that been what are the

And starting or so them year. into do year anticipate the in next later we

So short encouraged the just opportunity the term. affected we are us there. in long-term It's about

market is there sense Is Any what there? particular -- the labor consistency those drivers concerns, of of end any more it demand? delays? Any inflation,

more the thinking the We're it's the total we've cost concerns I Yes. don't labor project. in think past there's of interest the the that had inflation with there along lines and currently. of through

session. I now back like would this at Mr. the question-and-answer turn And concludes to our time, to you. call this Thank over

remarks. Young for closing

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

today's conclude teleconference. does and ladies And gentlemen, this

your for participation. disconnect you time. You lines your this Thank may at