Q4 2020 Brundage-Bone Concrete Pumping Holdings Inc Earnings Call
Ladies and gentlemen, thank you free patients will begin in about one minute I got the can treat patients will get about one minute thing.
[music].
Good afternoon, everyone and thank you for participating on todays conference call to discuss concrete pumping Holdings' financial results for the fourth quarter and fiscal year ended October 31 2020.
When you're sitting on a concrete pumping holdings the CEO boost sales.
Oh, Yeah, no breach and the company's external director of Investor Relations colleagues.
Before we go further I like the turn the call over to make the stock to read the Companys Safe Harbor statement within the meaning of the private Securities Litigation Reform Act like 95 that provides important cautions regarding forward looking statements Cody.
Cody. Please go ahead.
Thanks, Emily 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. 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 holding inc.'s publicly available filings with the FCC the.
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 discuss adjusted EBITDA net debt in free cash flows which are non-GAAP financial measures.
Adjusted EBITDA adjusted reported EBITDA for certain items, we believe the presentation of the non-GAAP financial measure is useful because it provides investors in the industry analysts the same information that we use internally for purposes of assessing our core operating performance.
Net debt reflects all principal amount outstanding under debt agreements less cash cash of subtracted from the GAAP measure because it could be used to reduce the company's debt obligations.
We believe this non-GAAP measure provides useful information of management and investors in order to monitor of the company's leverage and evaluate the company's consolidated balance sheet free cash flow defined as adjusted EBITDA of less net capex and cash paid for interest. This measure is not a substitute for cash flow from operations and does not represent the residual cash flow of.
Eligible for discretionary expenditures since certain non discretionary expenditures such as debt servicing payments are not the deducted from the measure.
The P. H believes this non-GAAP measure provide useful information to management and investors in order to monitor and evaluate the cash flow yield the of the business.
For a reconciliation of the historical adjusted EBITDA and net debt to their most directly comparable GAAP financial measure. Please refer to the press release issued today or the investor presentation posted on the company's website. However, the company is on reconciled the forward looking adjusted EBITDA guidance range.
The free cash flow range discussed to the most directly comparable for the GAAP measures because this cannot be done without unreasonable effort due to the lack of predictability of regarding the various reconciling items, such as provision for income taxes, and depreciation and amortization.
I'd like to remind everyone on this call will be available free play later. This evening webcast replay will also be available via the link provided in todays press release as well as on the company's website. Additionally, we have posted an updated investor presentation to the company's website now.
Now I'd like to turn the call read of the CEO of concrete pumping holdings Bruce Young Bruce.
Thank you Cody and good afternoon, everyone.
Our performance throughout the fourth quarter and the fiscal year 2020 has been a testament to our continued operational results GNC and solid financial Foundation. The hard work of our team has allowed us to maintain the quality and efficiency of our operations as we navigated and continuing to navigate the lingering COVID-19 headwinds across our markets.
Our team members have swiftly adapted to evolving health protocols throughout the regions in the which we operate we are deeply grateful for their flexibility and resourcefulness and we continue to prioritize their safety as we monitor further changes in health guidelines.
Despite the pandemic, we maintained our position of financial strength in the fourth quarter, we continued to benefit from our highly variable cost structure and maintains year over year. Adjusted EBITDA margin expansion. In addition, we generated double digit revenue growth in our concrete waste management services business.
Sustain the strong momentum that we have delivered throughout the year.
For our full year revenue increased approximately 8% to 300 of $4.3 million when compared to fiscal 2019, demonstrating the resiliency of our business model through out the challenging market backdrop on gross margin was up 80 basis points to 45.1% and the.
Adjusted EBITDA increased 12% to the $107.3 million further as the enemy will highlight shortly we made significant progress strengthening our balance sheet net debt has been reduced by $42 million. Since we ended fiscal 2019, and we have reached our 2020 targeted year end.
The leverage ratio of 3.5 times in fact, we have executed on all of the key priorities, we established in day to respond to the pandemic.
Along with the meeting or pre till the 2020 leverage target [noise].
We invested approximately $36 million into fleet, our fleet of equipment. We have kept our workers safe maintains strong operations demonstrated our businesses agility and resilience, which today's results support and control costs due to our roughly 70% variable cost operating model our ability to.
Execute on our year long the strategic objectives. During this difficult period proves that our robust foundation will not the only see us through these challenging times, but also sustain our long term growth throughout fiscal 2021 and beyond.
Turning back to the quarter, our fourth quarter revenue performance reflects COVID-19, driven softness in the UK as well as in several U.S. markets to dive into this a bit further starting with our UK business. We continued to experience COVID-19 related softness within this market as we of course since the onset.
Of the pandemic well the curtailment of our business operations is not as severe as it was during April and May the market's pace of recovery remains slow, particularly across the infrastructure work and new pressure of project starts we continue to monitor changes in lockdown status across the UK region, particularly closely given the.
The recent reinstated restrictions put in place last month.
We expect any easing of these restrictions will be based on the ongoing monitoring of new covert cases, and the success of the vaccine rollout.
The U.K. construction sector has been considered essential work and therefore, we expect it from its the majority of job sites will remove the main open whereas the safe to do so in addition to the multiyear Hs to project continues to represent a strong opportunity for our business and we continue our bidding activity for contracts on this job.
Moving now to our U.S. country pumping business, we experienced modest organic growth within many of our U.S. markets that we were more than that were more than offset by COVID-19 headwinds and the other regional markets. These headwinds took the shape of modest project delays and work interruptions on the other hand, we have continued to see growth.
Growing demand within our U.S. residential market and we believe that the strength will carry through into fiscal 2021 [noise].
The strong demand and utilization trends of our Eagle Pant business also continues the 11% revenue growth in the fourth quarter reflects the operational improvements and increased penetration that we of true achieved throughout the year as we can as well as low as continued positive reception to the geographic expansion of our Eagle Pan roll off service.
As I mentioned last quarter, our role of services intended to handle larger volume pickups, then what our standard Eagle cancer of us kind of comedy as it comes with larger containers that can be moved around job sites with roll off or hook lift trucks.
Having the service available allows us to [noise].
[noise] enhance the value of our concrete pumping service with an expanded waste removal offering.
In summary, we are entering fiscal 2021 from a position of both financial and operational strength of roughly 70% variable cost structure diversified geographic and segment revenue exposure and strengthened balance sheet make us well positioned to address the evolving macroeconomic and industry conditions over the coming months.
As well as seek accretive investment opportunities the support the launch of growth of our company now.
Now I'd like to hand, the call over to Ian So he can provide a detailed overview on our fourth quarter and full year 2020 financial results. I'll, then return to provide some color on our market expectations, we enter fiscal year 2021, Yeah [noise].
Thanks, Bruce on good afternoon, everyone moving right into our fourth quarter of 2020 the results.
We generated revenue of $79.2 million compared to 84 million in the same unit on the quarter.
The slight decline was due to the lingering volume impacts of COVID-19 of costs are UK markets.
The addition of probably in January the organic growth of many of our U.S. markets as Bruce mentioned this growth was more than offset by COVID-19 related volume declines in certain markets.
As such revenue in the U.S. concrete pumping segment most of the operating under the upon the born but on was 58.5 million compared to $62.1 million in the same quarter.
Q4 revenue and our UK operations operating largely on to the comfort brand was 10.9 million compared to $13 million on the same unico corridor.
As we have experienced over the past few quarters. This decline was driven by construction volume reductions due to a slower recovery from COVID-19, particularly within infrastructure.
The UK is currently running at approximately 85% of our pre called on revenue run rate.
As we continue to monitor on the UK regional recovery trends and anticipate a tempered returned to full revenue capacity. We continue to believe we have ample runway for long term market share expansion, including the multiyear high speed rail project Hs too.
Revenue on our U.S. concrete waste management services segment operating under the Eagle pass on brand increased 11% to $9.9 million on the fourth quarter compared to 9 million and the salmon Unico corridor.
This was driven by robust organic growth in the majority of our markets and higher utilization of our assets as well as the sustained benefit of pricing improvements on additional additional service volumes from our expanded role role offerings.
We have continued to all optimize our eco kind of operations sort of your investments in a roll off services in several locations.
This service allows us to accommodate larger volumes on our established small and a lot of large on services.
At the end of Q4 2020 pounds in the field, which is the leading indicator for future pickups are approximately 6% higher when compared to the same unit corridor.
We've seen tremendous potential for further increasing our eco type of penetration across the existing concrete pumping from trend.
In fact, when I was answering you markers, we would still expect to generate double digit so on your revenue growth in the segment.
Turning back to our consolidated results gross profit in the fourth quarter was $35.5 million compared to 38.8 million in the same at universe of corner and gross margin was 44.8 compared to 46.3%.
The slight decrease from Prime line, primarily driven by higher depreciation expenses.
Across the organization, we of contained to prudently manage our variable cost to support the health of the resiliency of our business.
General and admin expenses in Q4 from 31.1 million compared to $28.2 million on the same Euticals corridor and the increase was largely due to non the non cash effects of higher stock based compensation expense, which was partially offset by lower amortization expense in the fourth quarter.
Excluding the non cash items of depreciation amortization of intangibles and stock based compensation general and admin expenses decreased 5% of 15.3 million, which equates to approximately 19% of revenue.
Net loss attributable to common shareholders in the fourth quarter was $2.8 million or five cents per diluted share compared to net income of $2.1 million are no dollars per diluted share in the same unit located.
Finally, adjusted EBITDA on the fourth quarter increased 29.9 million increased to $29.9 million compared to 29.6 million in the same unico corridor.
Adjusted EBITDA margin increased 260 basis points to 37.8% compared to 35.2% in the same unit will corridor.
And our U.S. concrete waste management business adjusted EBITDA increased 3% of $5 billion on the back of 11% organic revenue growth.
We continue to deliver strong results in the segment and University of improvement in revenue and adjusted EBITDA.
This is driven by both on the strength of our asset utilization, which is growing faster than the overhead we have added to the business through 2020 to support our organic growth.
And are you ask on the pumping business adjusted EBITDA was up 6% to 20 $20.6 million against an approximate 4 million drop in revenue from.
Right, the reflecting the continued strength of our variable cost control.
And in our UK business adjusted EBITDA was marginally down about 600000 to $3.7 million with another approximately $2 million decrease in revenue.
<unk> 19 related headwinds persisted in the UK, we continue to be proud of our cost containment initiatives on our teams diligent and agile discipline within the slower volume environment.
Turning to the balance sheet.
We continue to prioritize liquidity and cash preservation as well as driving improvement in 11 of which.
Compared to choose the 2020 net debt in the fourth fiscal quarter was reduced by approximately $19.1 million a year end net debt amount of $376.2 million.
This was comprised of 382.9 million in debt principal and $6.7 million on cash.
We have no near term debt maturities as a reminder, our five year emailed of all of our is in place until December 2023, and our seven year terminal facility matures in December 2025.
These debt instruments are covenant light, we have no financial covenants on the term loan and we continue to believe we have significant headroom in our email which is the spring a one to one the fixed charge ratio based on total excess availability.
As of October 31, 2020, we of accumulated the approximately $59.3 million of total available liquidity, which includes cash on the balance sheet and availability from the ABL revolver.
This reflects both our long term initiatives to strengthen our balance sheet on the Swift actions, we have taken to preserve cash since the onset of the kroner biased on deck.
Our business continues to generate healthy operating free cash flow is as we invoice our customers daily for the work the before and we have minimal working capital requirements as we do not take ownership of the concrete we place.
Even in this current macro economic environment, our ability to generate strong operating free cash flows on strong margins has allowed us to expand our liquidity and de lever in line with our strategic goals.
With our cash on liquidity focus we're very pleased that we've been able to the juice on net debt position by approximately $37 million over the past two quarters as well as reach our targeted year end leverage ratio of three and a half times.
Our diversified geographic and segment revenue streams highly variable cost structure and overall resiliency continue to places and the strong position the both strategically investing on equipment and per se other accretive investment opportunities in support of our long term growth.
As Weve mentioned over the past two quarters, we suspended on committed in 2020, Capex investments, but I believe periods through the height of shooting the height of the COVID-19 pandemic other.
But the continued momentum in our equal kind of business has said in support of strategic capex investments to fulfill demand.
With our selective and improvements to some of our concrete pumping fleet, we of prudently stayed consistent with the replacement Capex schedule.
Oh, the equipment Capex investment reflect our unwavering belief of the strength of our business and we are already delivering improved returns.
As we enter this next fiscal year, we will continue to apply prudent capital allocation on remain opportunistic with other accretive capex investments.
We continue to believe we are well positioned to navigate the evolving impacts on the COVID-19 environment.
I believe that the encouraging demand trends in residential and infrastructure construction and are equal parts segment will continue to hold on.
As such we are reinstating our full year guidance outlook.
In fiscal 2021, we expect revenue to range between 300 and 310 million.
Adjusted EBITDA to range between 105 and 110 million.
Free cash flow, which we defined as adjusted EBITDA less net capex less cash interest to range between 47, and a half million to 52 and a half million dollars.
It is notable that our resilient execution in 2020, and the introduction of our 2021 outlook because against the current market capitalization of approximately $250 million.
Our operational and financial strength and heading into the new fiscal year provides a strong foundation for our performance as we execute on our strategy and contained to monitor of the pace of economic income was 19 recovery across our markets.
With that I will know talked on the call back over to Bruce to provide some additional color on our strategic priorities for 2021.
Thanks, Simeon we're now in our 2021 fiscal year and remain focused on applying our momentum and strong financial foundation to continue capitalizing on our highly diversified business in areas, where we have been experienced market share gains.
While some of our customers project are still delayed due to kill of it 19 impacts the restrictions we have not seen any new major changes or delays to our project schedule of our overall bidding environment. We continue to closely monitor the pace of recovery within regions that were more heavily impacted by the pandemic as we stated last.
The quarter, we expect the ukase recovery to continue into 2021, given its slower pace relative to the U.S.. However, our diligent focus on managing cash flow and proactively and reinforcing our variable cost structure makes us well positioned for the U. case markets eventually in digital stabilization.
In the U.S., we continue to view residential construction as an area of strength for our business and we expect the residential demand to remain robust going into 2021. Additionally, we expect that other sectors, including waste water treatment plants, datacenters warehouses distribution centers and health care projects will continue to experience pause.
The of trends in eco Pan we remain focused on increasing our penetration among our existing concrete pumping footprint in developing opportunities to introduce the new the service to new markets as Ian mentioned, increasing penetration alone will allow us to sustain double digit revenue growth for the segment, even without new market entry.
We are proud of the progress of the <unk> that we have made in the business during 2020, and we greatly look forward to accelerating our momentum further in the coming year we.
We have a solid financial and operational foot framework in place for the year ahead of the fact that we have improved our liquidity have covenant light debt facilities and no near term debt maturities and are now operating at our near term target leverage ratio of three and a half times provides greater flexibility for us to pursue growth in hand.
The scene investment opportunities.
As we pursue opportunities to increase or penetration of crusher existing geographic footprint and even enter into new markets, our strong balance sheet and highly variable cost structure will allow us to develop capital allocation strategy in ways that maximize returns and shareholder value throughout our organization, we are taking a day.
Cautious, but often net optimistic approach to these and other growth opportunities given this dynamic macro economic environment.
We are grateful for the support of our team members and our shareholders throughout the is unprecedented times and look forward to executing on our strategic plan in fiscal 2021.
With that I'd like to now turn the call back over to Shomali of.
For Q on a.
At this time of will be conducting the question and use the session. If you like the asked the question. Please press star one of the <unk>.
On the confirmation total indicate your line of than the question do you.
Let me kind of start to feel like they're moving the question from the Q.
Who participate using speaker equipment, it may be necessary to keep your answer would be from Christmas day.
One moment, please while we pulled from the question.
Our first question is from Tim Mchugh with William Blair. Please proceed with your question.
Good afternoon, Bruce Mann.
Hi, Tim how are you guys are doing.
Doing well thanks, a couple of questions the.
This afternoon. So the first I wanted to ask about the market outlook.
Look at the last recession. It took a few years I think for commercial construction to come back, but I know every cycle of different so how do you think about your market as we move into 2021 I appreciate the color you've given so far but it is there typically a lag for commercial construction following a downturn.
And then on the residential construction side do you expect that the whole study and remain strong or do you think it'll flow down at some point or accelerate any thoughts here would be helpful.
Yes, so I'll take it in the in the UK first the and the UK was off quite a lot in a in a 2020 is as you saw from the results.
While it's been slowly coming back the the latest Oh on.
Shutdown has affected a slightly better but not significantly it. It had continued to grow through December as we had expected we believe that once we get through the the of the the vaccination and get more confidence in that market that the infrastructure portion of that will come back very quickly.
There has been quite a lot of activity on the commercial market a in the UK and we expect that to be not too far behind that so we've very optimistic about the UK for 2021.
In the U.S. with our eco Pant business.
It's really telling the story and growing penetration through education, and we expect that to continue regardless of market conditions.
And with our U.S. concrete pumping business, our residential market remains strong and is in several areas within the U.S. and it is the offset is more than offset what we have the last in the commercial or our infrastructure during the during 2020 and the we expect that to continue on.
On the commercial markets. We we are starting to bid more work than what we had in the past there are several projects that were put on hold the we expect the will be started later in the year and so we expect the second half of 2020 day look quite good for us with the the commercial market or the non resin market and in the infrastructure market. We we.
Of the have several projects that have been put on hold based on funding challenges.
We are hopeful and the things that we're hearing about an infrastructure build being rapidly run through a day or the administration is it will hopefully get those things back on line and we believe the infrastructure work will sort of pick it up in the second half of the year as well.
Thanks, Bruce that's good color and is a good.
Segway into my other question, we're kind of.
Unexpectedly maybe entering a period with the unified government once again and the conversation around infrastructure spending is definitely heating up I'm wondering if you could provide investors provide us with a few examples of how you might benefit from an infrastructure package I know for example, the concrete pumping.
Isn't typically used for building roads and highways, but I have to think there will be some major opportunities for you and was hoping you could help walk us through what that might look like.
Yes, so infrastructure I know theres, a lot of focus on roads and highways, but there's also some bread structures and on on those as well and those brits structures will use country pumping.
We have the inner Investor presentation, you will you will see a.
The illustration of where the you know.
Basically how our infrastructures graded across the different states the of the country and its created very poorly and that comes from from wastewater from water from bridge structures and the largely anything that go through an infrastructure. Bill is the is really highly affected by art for us there's a lot of concrete and all those and all of those projects.
The next and so we were actually quite excited about that and with the eco Pan I think there will be a an opportunity there with the with new environmental enforcement that may come along with that that may help equal amount in the along the way as well.
Understood. Thank you for taking my question.
Thanks, Jim.
And our next question is from Andrew Wittmann, Robert W. Baird. Please proceed with your question.
Great. Thanks, Good afternoon, guys I thought of just take a little time here in the asked some questions around the guidance.
You know if you look at it it's basically saying flat revenues in kind of margin for 21, but inside of this you've talked already about some of the puts and takes by segment. It sounds like secular growth Eagle pass on to continue her.
Or just say double digit.
For the year is kind of your view UK soft you said, it's running down but 85, you said is there any 85% of volumes, maybe down about 15% kind of suggesting maybe that the U.S.
Is I don't know I guess of slightly is that the way to think about the top line guidance and inside of that maybe in for you.
Yeah, that's exactly the way things kind of.
Okay.
And then I guess, just as it relates to the the margin side of of that equation.
You guys talked a lot of in your prepared remarks about having the.
The variable cost structure and how that's allowed you to deliver good EBITDA kind of making EBITDA numbers here, even if the top line of the the little bit soft I guess, you know every day as you address the cost structures, sometimes the the second wave or third way of whatever way of it is in terms of adjusting cost is high.
Ordered the combined so.
As you move into the 21 of the thing about the guidance if the revenue do come in kind of the soft like they didnt 20, because of Kobe. The <unk> due to remain soft do you feel like there's still enough knob the deliver the EBITDA guidance kind of irrespective of the of the top why the environment as long as of the world. The drastically change the if you could comment on that.
Yeah, I would say that the amount of discipline within our country pumping operations of we created over the last year, we'll continue with our variable cost will be able to continue that into 2021 and into the future and with our eco can business as we create more route density are as you see our margins increase with that so.
I do believe we'll be able to maintain our margins into 2021.
Got it.
Okay, and then I.
I guess just quickly on.
On the eco pay on here.
You are talking about double digit growth pins on the field of 6% right now.
I guess it from the field of.
I guess the the compares get tougher is there anything else.
In there.
As to why the.
Top line in the Eagle pin segment can be double digit with and a non up double digits.
Yeah, well one thing I would mention to the just the volume growth from the time, saying I mean, as you've heard us talk about the geographically expansion of our roll off service, there's higher pricing on that pace is also the volume from the traditional ponds in the field configured also we're getting a bit more velocity in from the higher.
Nice increase on the role of servers.
Got it.
Okay I'll leave it there maybe I'll chime back in later something else comes up the Scott. Thanks.
Thanks, Andy.
Our next question is from Steven Fisher, Yes. Please proceed with your question.
Thanks, Good afternoon, guys I Wonder if you could just talk a little bit more about the cadence of the slight growth that you assume a in the out of the U.S. business in the <unk> over the course of 2021.
Including the not what trends have you seen in the first quarter already should we anticipate something similar on a year over year decline from the first couple of quarters and then on.
And the offsetting the growth rate in the second half of the year on.
How should we think about that and then so kind of what are you seeing in the <unk> the first quarter as well.
Yeah, I think that's fair the city and this idea of that's fair, where and if you look at the mix of H, one age too I mean, typically we have guidance of 45 55 of the way the.
The pace of our business and trends I mean of believe we do expect to see a slight shift on that in 2021 were and the slightly to see the higher pickup in the back half of the year. So as opposed to the 45 55.
And we might see them. So far is the fourth for Iga and 50 756, a change. So we do expect to see as you mentioned sort of higher pickup on the back half of the year as there's been some stabilization in those construction markets outside of the average.
The assumption, we would make is that organic growth pace and our business would continue.
Okay.
And.
I know you talked about the.
Potential for infrastructure stimulus.
How much of visibility on how would you describe the visibility that you have to the revenue growth.
At this point for the year.
Yeah as far as infrastructure, we haven't tied too much infrastructure growth into our projections, because we expect that that will happen later in the year and maybe after our fiscal year ends.
Okay. I mean do you have and can you just remind me back.
Backlog or how much.
How many months of visibility do you have in the let's say your U.S. business at this point.
Yeah, So typically examined 50% of a year and so as you know we oughta quick turn business, but we typically see of we continue to see above 50% of the on ULE and revenue through the backlog commitments that we've got low.
Okay. The tell.
Helpful and can you just talk a little bit about how youre rates of your pricing overall and again, the focusing on the U.S. business.
The brand is gone concrete pump.
How are your rates year over year in the quarter on.
What was your utilization like and what what do you embed for assumptions there in 2021.
Yes, so our rates stayed really strong through through 2020, our industry in general was fairly healthy and so there wasn't a lot of pressure on rates on Youtube.
The utilization, we didnt get the of the bump in the build hours that we would have expected in a typical second half of the year in 2020 that debt that we wouldn't normally have gotten so that we had we have more capacity than the than what than what we were able to get utilization for which it just puts us in a better position for growth.
The 2021.
Im sorry, what was the rate expectation for per 21 flat up down.
And the range, we've probably got the two or 3%.
The up to the 3% yes.
No. It was it I mean that will depend on any sort of end market change a middle of the stance on the residential sites of wants to see how that plays out but.
<unk> across the <unk> and the.
The business that would be the organic pace, we would expect to see.
Got it and last question.
Not sure if I missed the but did you give a capex growth capex the expectation for 21 compared to the 39 million in 2020.
No. We never said, we provided them free cash flow guidance and the net capex in 2020, it was actually 36 not very nice.
Got to think growth so what the I think the growth of about 39.
Curious the here.
We're planning to keep that relatively steady.
Right I can follow up offline.
Thank you.
Thank you.
Our next question is from Brent Thielman with the frequency.
Please proceed with your question.
Hey, Thank you good afternoon.
Hey, good afternoon growth.
Hey, Bruce.
I was wondering if you could comment a little more on.
Your ability to move resources and equipment around I think it's one of the unique matters that the business to sort of take advantage of these markets in the U.S. and aren't as impacted where were you able to find some healthy pocket I guess I'm just wondering if your ability to do that could manifest into yes. Some of the growth that you're talking about in the U.S. market.
And the new year.
How much of the lender is that for you.
Yeah. Thanks for asking the question Brendan that's a big lever for US every one of our units is truck mounted and and so they're very easily driven from one location to another small units for about $3 a mile to drive them larger units are a little more than that but we monitor utilization in and in each.
Market every month and every month, we typically move a couple of the machines just to where we can get better utilization out of it we may see more of that into 2021.
But currently we have enough capacity in most of our locations that we don't have to move a lot of equipment.
And out of curiosity, which which markets in the U.S. have you seen the.
The more flow next delays versus the one that.
I really strong right now.
Yeah, So we've seen a little softness in the in Colorado.
In other parts of Oklahoma, and Kansas, a little bit in the southeast a stronger markets for us of been more on the west of the mountain region and the West Coast.
Texas has been fairly strong for us as well.
Yes.
Okay, and I guess, Bruce that the mean, the bidding competitive environment that sort of been conducive to the commentary you offered about margin in the U.S. market and the 21 still stand pretty healthy.
Yes, I expect that yeah.
Yeah. It will I believe it will stay healthy in the 2021 and beyond.
Okay and Ian on on.
Our next DNA I guess, if we back out some of these items.
Hi, then dotcom DNA is this is this the run rate you should.
Sort of expect into 2021.
Yes, I mean as you know when you take out all the non cash items and the run rate is it on 18, 19%, so and we keep the fairly consistent.
Okay. That's the good benchmark for the new year.
Okay, great. Thank you guys. Thanks.
Thank you thanks Brent.
And our next question is from Stanley Elliott.
Please proceed with your question.
Hey, Bruce the N.. Thank you guys for taking the call happy new year.
[noise].
The talk a little bit about the M&A environment I mean, it feels like you know we have you been able to navigate you all the disruption from Cove it.
Chances are we'll get the stimulus in some way shape or form of vaccines economy should start to pick up through the rest of the year.
You know if you guys are going to generate let's call. It 50 million of free cash flow you one of the thoughts right now about putting that the work maybe maybe ahead of you see the seen the the full turn to try to capitalize on the EPS It upswing.
Yeah. Thanks for the question. So M&A has been a big part of our business in the past we did put M&A on hold the during the Pam endemic just to shrink their balance sheet and better position us well.
We are on a much better position as you know going into 2021, and so we are more interested in some accretive M&A opportunities, we do want to get the visibility on the markets that they're in where we expect them to go of making sure that we get the right value one of them get the right synergies in place that sort of thing, but those conversations are are.
We are certainly things that we are starting to think through now and and we'll see how that plays out for 2021.
In the kind of back to the Capex piece, you know looks.
It looks like there is some growth capex kind of coming off of a lower base are we assume that all of that is going to the eco pan business to try to build that out or are there. Some other entering into new markets or just the high level would love to kind of the here where your head is out there.
Yeah. So I mean, we do have growth on their free compiled as you know and on as you've heard in our prepared remarks, we want to make sure that we also keep up with the pace of replenishing our fleet. So we would expect that to continue I mean as you know back in Q2 of this year, we pause briefly and the with the continued.
And performance of our business, we quickly went back to investing in our fleet on the way, we expect to see that continue to 2021.
The and then lastly, you know if we do get an infrastructure bill or a highway bill whatever.
How quickly does that start to flow through the year numbers.
Yeah. So the if it if it helps funds from the states that have projects put it put on hold currently that could go fairly quickly for us if it's new construction on the that typically is going to take a you know six months to a year before actually put concrete in place.
Great guys. Thanks for the time appreciate it and best of luck.
The standpoint.
And again as a reminder, if anyone has any questions. You May proceed star one on your telephone keypad doing so it's true that you joined the question.
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Thank you and happy new year gentlemen.
Hi, Alex salary of islands.
The good my question is around your residential exposure. So in your slide deck, you identify that 30% of your businesses the X.
Those two residential is that 30% of just your U.S. pumping business or is that 30% of the total just for clarification.
And then.
I'm sorry go ahead Alex.
And then can you talk a little bit about regional strength and weaknesses in that business.
Sure. So it's 30% of U.S. pumping markets, where we have a higher percentage of the residential would be in the mountain region, and the Texas region and Colorado.
But that kind of the ebbs and ebbs and flows a bit. It is a market that were you know it's not new to US is something that's always been very important to us.
Okay and could you sort of.
Yes, the me sort of the growth rate of that business in 2020.
And then what you might think it will deliver in 2021.
Yeah, I mean, the growth rate and the.
Well, the two or 3%.
No I think we would expect yeah, the especially some of the saw from 2021, Yeah, I think what I would add to that is so as we look at the end market in the U.S concrete pumping the residential has taken up about 2% of total revenue over the over non resi in the last several months that may.
The increased slightly but it's not going to be that significant other shift.
Thank you.
Thanks, Alex.
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Thanks from only we'd like to thank everyone for listening to today's call and we look forward to speaking with you. When we report our first quarter fiscal 2021 results in March.
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