Q1 2021 Brundage-Bone Concrete Pumping Holdings Inc Earnings Call
Good afternoon, everyone and thank you for participating in today's conference call to discuss concrete pumping Holdings' financial results for the first quarter ended January 31 2020.
Joining us today are concrete pumping holdings' CEO, Bruce young CFO, Iain Humphries and the company's external director of Investor Relations Cody floor before we go further I would like to turn the call over to Mr. Slots read the Companys Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 the.
The important precautions 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.
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.
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.
Cash replay will also be available via the link provided in today's press release.
As well as on the Companys website. Additionally.
Additionally.
We have posted an updated presentation of 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. We sincerely hope that you and your families from maintains a healthy at this time on.
And thank our team for their continued commitment to safety and in delivering exceptional service to our customers, while continuing to navigate the lingering effects from COVID-19.
Today's discussion focused on mostly on our first quarter 2021 performance and once again, our headline financial results highlight our continued operational strength and business resilience against COVID-19 disruptions, we continue to execute our plan on capturing market share in a large and growing yet highly fragmented market.
Importantly, our scale diversified regional and end market exposure and our highly variable cost structure and demonstrate the value of our operating business model.
During the first quarter revenue was down slightly when compared to a year ago. As we are still experiencing COVID-19 impacts in our UK and U S markets, whereas the first quarter of last year when completely from what.
Completed entirely before the onset of the COVID-19 pandemic softness on some of our commercial margin largely offset by continued strength in residential construction.
As well as a pickup in our infrastructure markets, which really highlights our agility in the value of being well diversified across end markets and geographically.
Infrastructure has been an area of focus since the election and while the details on timing are unknown at this point President Biden has been clear that this will be a priority for his administration.
And as the economy continues to recover and C. P. H is in a strong position to benefit from an increase on the end market spending including infrastructure.
Infrastructure is a market we have been pursuing more aggressively for the past several quarters and we are seeing success not only in more infrastructure projects and in our infrastructure project heavy UK market, but also on our U S markets. These projects include bridges on schools wastewater treatment plants hospitals or any <unk>.
Sure it'll projects supported by public funding the residential improvement is the same we have discussed in prior calls and that momentum from prior quarters has certainly continued.
On the end market picture in numbers in U S concrete pumping compared to embarking on fiscal 2020, our commercial business loans from 57% on revenue roughly 70%, whereas residential increase from 30% to 34% and infrastructure stepped up from 13% to 16%.
As Ann will address shortly the shift in our business mix has not impacted the disciplines of strength of our gross margin structure is variable costs for lower job chicken such as residential also flex downward.
Our ability to pivot, while maintaining our gross margin and the unique value driver of our business model and we are very pleased on our ability to continue finding opportunities to gain market share.
For our concrete waste management business, our Q1 on winter period is usually a slower growth quarter due to typical seasonal trends however, even with a contracted construction market when compared with our 2021st quarter volume, we were able to drive revenue expansion on continued organic growth price improvements and the expansion of our <unk>.
Roll off service, we have added to our sales force. So that we continue to be focused in what could be a heavier virtual selling environment in the short term.
Last but certainly not least in January we took advantage of our financial strength and favorable capital markets to restructure our debt facilities, we have been closely tracking the capital market trends for some time and following robust fiscal year 2020 results. We believe the timing was right to pursue a refinancing and improve.
Our debt facilities the.
The refinancing transaction has allowed us to substantially improve our liquidity profile and the structural flexibility of our debt facilities and lock in favorable interest rates through 2026.
In 2020, our cash interest costs largely related to repay term loan facility were approximately $30 million and $33 million going forward. The annual cash interest costs related to the high yield bond will be approximately $23 million or $10 million savings by further strengthening.
Our balance sheet, doubling our liquidity from the 2024th quarter and reducing our average cost of debt, we have enhanced our ability to pursue accretive investment opportunities.
This strategic debt modification supports our overall long term growth strategy and we are actively making great progress exploring several accretive growth opportunities and in fact, we currently have multiple N D. As in place with the company suitable for acquisition criteria that we are pursuing across the U S and I will return to discuss more about this on.
Correct later, given our operational momentum and financial strength, we remain committed to executing on our strategic priorities and maximizing shareholder value through fiscal year 2021.
Now I'd like to hand, the call over to Iain. So he can provide a detailed overview on our first quarter 2021 financial results. I will then return to provide some color on our market expectations for this fiscal year end.
Thanks, Bruce on good afternoon, everyone moving.
Moving right into our first quarter 2021 results, we generated revenue of $17 4 million compared to $73 9 million in the same Utica quarter.
Slight decrease was driven by the lingering COVID-19 volume impacts across the U K and certain U S markets.
Revenue in our U S concrete pumping segment, mostly operating under the Brundage bone brand was $52 3 million compared to $55 1 million in the same year ago quarter. We.
We experienced modest organic growth within many of our U S markets.
More than offset by COVID-19 headwinds in other markets.
These headwinds took the shape or modest project delays on job site interruptions on the other hand, we are continuing to see growing demand within our U S residential market and believe this momentum will carry through the fiscal 2021.
And as Bruce mentioned, we have also seen strength across multiple regions over infrastructure end market as well as evidenced by the step up in our infrastructure revenue share.
For our U K operations operating largely under the comfort brand revenue was $9 8 million compared to $10 7 million in the same year ago quarter.
The vaccine rollovers progressing more quickly in the U K than in our U S market and currently the U K. It was running approximately 85% of our pre COVID-19 revenue run rate.
We've reported an increase in this recovery each quarter from 25% on its low in March of 2020% to 60% in June 2020.
85% in January 2021.
Going forward, we are optimistic about our long term market share expansion.
Volume recovery to pre Covid levels on the ongoing multiyear high speed rail project H S too.
Revenue in our U S concrete waste management services segment operating under the Eco Pan brand increased 2% to $8 4 million in the first quarter of 2021 compared to $8 3 million in the same year ago quarter.
The increase was driven by organic growth pricing improvements.
Spine did roll off service offerings.
As Bruce mentioned Q1 is typically a slower growth quarter on it.
Markets in the U S continue to reopen we would expect a return to our prior double digit rate of growth.
Returning to our consolidated results gross profit in the first quarter was $29 9 million compared to $32 1 million in the same year ago quarter on gross margin was $42 four per cent compared to <unk> three five per cent is.
The slight decrease in margin is a reflection of the lower revenue volumes as well as the timing of certain in shootings as expenses.
General and administrative expenses in Q1 improved by approximately 16% to $22 to $22 4 million compared to $26 6 million in the same year ago quarter.
This was primarily attributable to the lower non cash cost related to amortization of intangible assets on.
<unk> based compensation expense.
Cost containment measures put in place during the onset of COVID-19 make up the remainder of the improvement.
When excluding amortization of intangible assets and stock based compensation expense G&A expenses would improve by approximately $1 7 million year over year.
Net loss available to common shareholders in the first quarter was $12 8 million or 24 per diluted share compared to a net loss of $3 2 million or <unk> <unk> per diluted share in the same year ago quarter.
The primary driver of the higher net loss was related to $15 5 million loss on extinguishment of debt due to our January refinancing transaction.
Finally, adjusted EBITDA in the first quarter was $22 4 million compared to $23 $8 million on the same year ago quarter.
Adjusted EBITDA margin was 31 seven per cent compared to starts to two per cent and the same year ago quarter.
And our U S concrete pumping business adjusted EBITDA was $15 3 million compared to $16 8 million in the same year ago quarter. Again. This is primarily being driven by lower revenue volumes related to COVID-19 project delays, particularly in our commercial work.
In our U K business, adjusted EBITDA improved 5% to $2 7 million when compared to $2 6 million in the same quarter there.
This reflects the continued recovery of the UK market and the effect of cost containment measures put in place at the onset of the pandemic.
For our U S concrete waste management business adjusted EBITDA of $3 7 million was largely in line with the prior year quarter.
Turning to liquidity as mentioned earlier, we took advantage of the momentum from our 2020 financial performance on a favorable interest rate environment, we successfully closed a private offering of $375 million senior.
Senior secured second lien notes that matured in 2026.
The notes were issued at par and bear interest at a fixed rate of 6% per annum. In addition, we amended and restated on existing ABL credit agreement and Upsized. This facility to provide up to $125 million of commitments, which replaced the prior $60 million committed facility.
The refinance offering proceeds along with approximately $15 million of borrowings under the ABL facility were used to fully repay all outstanding indebtedness under the prior term loan agreement on pay related fees and expenses.
At January 31, 2021, we had total debt outstanding of $382 7 million, our net debt of $380 4 million.
As of January 31, 2021, we had approximately $118 4 million in liquid quiddity, which includes cash on the balance sheet on availability from our Upsized ABL facility.
This reflects on 800% increase in liquidity since the end of our year ended October 31, 2020, and greatly enhances our ability to pursue accretive investment opportunities like M&A on support our overall long term growth strategy.
Our business continues to generate healthy operating free cash flows we invoice our customers daily for the work, we perform and we have minimal working capital requirements. Since we do not take ownership of the concrete we place.
Even through the current macroeconomic environment, our ability to generate strong operating free cash flows on strong margins allow us to expand our liquidity position and delever in line with our strategic goals.
In line with our replacement Capex schedule, we have been consistently making improvements to our existing concrete pumping fleet age. This is critically important for several reasons.
First by improving the age of our fleet, we inherently enhance the safety and reliability of our equipment, we lower our repair costs and improve that down for repair time, which helps stimulate opportunities to capture project wins with new customers.
Also and enhance fleet helps attract qualified employees and often include improves employee retention.
Our consistent investments in our fleet of equipment also underscores the strength and confidence we have in our business outlook.
The combination of improved repair cost and improved equipment capacity and ensure that our fleet uptime is optimized using our busiest periods.
These are critical factors in driving improved margin performance across the U S on U K concrete pumping segments.
2021 progresses, we will continue to apply a prudent capital allocation and remain opportunistic with strategic and accretive Capex investments.
Our fiscal year 2021 financial outlook remains unchanged on our first quarter results were in line with our expectations as our U S and U K markets continue to recover from the COVID-19 disruptions.
As a reminder of our previously released 2021 guidance, we expect our full year revenue to range between 303 hundred $10 million.
Adjusted EBITDA to range between 105 on $110 million.
On free cash flow, which we define as adjusted EBITDA less net capex less cash interest to range between 47, and a half million to 52 and a half million dollars.
Operationally and financially we remained strong and we are actively working to execute on our growth strategy.
With that I will now turn the call back over to Bruce.
Thanks, Ann overall, we are pleased with our first quarter of 2021, and the trajectory and has set us on for the rest of our fiscal year, we remain focused on driving our scale through organic growth and strategic M&A. Looking ahead. We believe 2021 will be a year on which we see a return to a more normalized state is under.
Your line demand fundamentals reset in the U S and U K economies gained further momentum.
While some of our customers projects are still delayed due to COVID-19 impacts and restrictions we have not seen any new major changes or delays to our project schedule. Our overall bidding environment. We continue to closely monitor the pace of recovery within regions that were more heavily impacted by the pandemic and the.
As we continue to view residential construction is an area of momentum and strength for our business and we expect resin mentioned residential demand to remain robust robust going forward in 2021. Additionally, we expect that other projects within infrastructure will prove resilient and we anticipate some of our regions will continue to experience positive.
Trends following an anticipated increase in infrastructure investment.
In commercial construction, we expect there will be a continued benefit from accelerating e-commerce and remote working trends that require interest investment in heavy industrial warehouses and data centers. Nevertheless, today or we are winning work in these areas and are taking market share light commercial and retail construction will remain comparatively challenged until.
L. A COVID-19 vaccine vaccines are more widely distributed over the longer term, we expect light commercial activity will benefit from the attractive collateral effects of strong single family residential trends. Additionally.
Additionally, while commercial activity has been light due to COVID-19 disruptions. This was expected and we have intentionally focused on capturing additional share in our residential and infrastructure end markets as we track the recovery of commercial construction. We believe this is a strong testament to our scale diversity and ability to service our customers no matter what the.
The end market.
In eco Pan we will focus on driving growth despite pandemic related challenges and greatly look forward to accelerating our momentum in the years to come.
We have a solid financial and operational strategy in place for this foreseeable years ahead, our approval liquidity debt facilities and balance sheet provide greater flexibility for us to pursue accretive investment opportunities as I mentioned earlier, we plan to pursue accretive M&A opportunities to increase our penetration on crossed our existing geographic footprint.
And entering new markets.
We are progressing well with multiple acquisition targets I would like to remind you on the structural advantages of our M&A platform first is the largest player in our fields by far and with several transformational acquisition deal successfully completed and integrated within the last few years, we can confidently say that we are the acquirer of choice.
As mentioned on prior calls we have a strong acquisition pipeline was approximately $100 million of additional adjusted EBITDA identified.
We have consistently been clear in the marketplace that for investment opportunities that meet our acquisition criteria typically pay a purchase price for acquisition that equates to four times EBITDA or 125 times the equipment value given our scale, we have delivered a track record of increasing adjusted EBITDA margins within the first few.
Here's by optimizing service value utilization supply chain discounts and other opex synergies.
From a financial synergy perspective. It is also important to highlight the tax benefits from M&A transactions. They are typically structured as asset purchases, meaning we immediately deduct 100 per cent of the equipment for depreciation purposes.
Our acquisition strategy and appraisal criteria is clear we look for strong management, great customer relationships and he will maintain fleet the varying opportunities we are pursuing need all of these criteria.
Irrespective of this attractive and highly actionable M&A plan, our commitment to drive organic growth to maintain a strong balance sheet and optimize our highly variable cost structure will allow us to maximize returns and shareholder value as we take purposeful steps to grow our business and execute on our strategic plan.
With that I'd now like to turn the call back to the operator for Q&A Paul.
Thank you Sir we will now be conducting a question and answer session. If you would.
Like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is on the question Kim from participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please on what kind of quick question.
Okay.
Yeah.
Thank you. Our first question comes from Tim Mulrooney with William Blair. Please proceed with your question.
Good afternoon.
Afternoon, Ian and Bruce.
Hi, Jim.
A couple of questions. So just.
Just on the guide it looks like the midpoint of your guide implies.
Full year EBITDA margin.
And fiscal 'twenty, one to be very similar to what we saw on fiscal 'twenty.
With EBITDA margin I guess down about 50 basis points on the first quarter I am curious how youre thinking about margin for the remainder of the year is it kind of.
Like a down year over year on the first half, but up versus last year in the second half because it looks like second half margins were actually pretty good last year.
Yeah, Hi, Tim you said you can I'll take that so yes, I mean as you do you typically see on them with this seasonal trends of our revenue over that 45 55 between each one in each to.
And Theres no linear relationship between the the growth on the volume and the pickup in cost. So we do typically see improved margins in the back half of the year from a higher volume with that step up in the seasonal trend.
Minder, when we talked about this on Q4, we didn't get the seasonal bump last year that we typically see but through this year, we will expect them as these markets start to heal and that we'll see that pick up on margin through the financial year.
Yeah, Okay that makes sense. Thanks, Dan.
Are you guys seeing any signs of inflation in the business yet either on the material side or the labor side or anything else really.
Yeah, no not really I mean, the weighted average I breakdown the inflation piece of it and if you think about the cost structure that we have so if you look at the cost of sale footprint on that we've got the largest largest component of that is labor so relative to the employee base and the wages that we pay and the inflation situation is not a new area that we're concerned about.
And obviously something that we will adjust them on.
With our employees.
Side of the employee base I mean, obviously, we watch the changes in things like fuel <unk>.
No we have fuel surcharges on price escalators in place if fuels becomes incompatible but those would probably be the two areas that I would maybe call out from an inflation perspective, and nothing we're concerned about nothing unusual from a normal year over year on the rest of the supply chain as you know with our purchasing scale.
It's an area that we always look to put some.
Competitive and processes on.
Yeah.
Okay. Thanks, and just one more from me I.
I know you maintained guidance.
I know the winter storms hit, Texas pretty hard and you got a decent amount of assets down there. After the capital acquisition. So can you quantify for us if possible the impact that you expect those winter storms and maybe had on your business or just talk about it a walk us through how you're thinking about it.
Sure Tim I'll take that so as you know we you know we we like our geographic footprint, where we're kind of the resilience of our diversified ourselves from getting hit in one particular area with our with the footprint that we have and we do factor in weather into Q1 and Q2, especially.
And we as we look at that and we look at the impact that it has on our business, we really still feel very strong that our outlook for two or for Q2 Hasnt changed.
Okay. Thank you guys.
Thanks, Tim.
Yeah.
Thank you. Our next question comes from Brent Thielman with D. A Davidson. Please proceed with your question.
Hey, great. Thank you good afternoon.
We're very sorry on maybe following up on that last question typically the U S and U K operations see that seasonal pickup into the second quarter last year was obviously an anomaly, but is there anything to date, which would prevent you from doing that again this year.
Yeah, what I would say is now that we're there's light at the end of the tunnel on getting people back to work.
And we expect that will happen sooner in the U K than it does in the U S. By maybe a month that we see projects will be picking up more aggressively than some of the ones that had slowed down last year.
It was difficult to get labor on to sites over Q3, and Q4 for US last year, just because of the restrictions that were in place. When they are lifted we think the markets will become much stronger you might remember that our prior to the pandemic. There were no end markets or in new geographies that were overbuilt and so there is still enough.
A lot of pent up demand. So we felt very good once we get people back to work that our markets will rebound nicely.
Okay.
And on Eco Pan.
You've had tremendous growth all through last fiscal year, it slowed down quite a bit this year at least from a year on year perspective can you just talk a little bit more about what's happening with them that widens slower growth this quarter and sort of what you've got built into guidance for that business through the year.
Yeah, it's up year on year over last year, however, not as much as what we had been experiencing one of the challenges that eco Pan has had is that we're converting our other methods of clean out to our system, which is more difficult to do virtually than it is on on site and so as offices open up and we.
The ability to get into those offices and show them the value of what we do we think that that will accelerate that growth.
We mentioned in our script that we've hired several more people on the sales team to help accelerate that we still feel very good about our opportunity with eco pan.
Okay.
Okay.
Last one day and then the cost actions in the U K continue to be really impressive just in terms of defending margins, presumably that business is going to start to see some I think some healthy growth year on the coming quarters.
Can you talk about how much youre going to have to get back on what we can expect to see or can we expect to see even better leverage in that business as you start to see growth return.
Yeah, you know what I think you're right I mean with with the effect that they had last year. It really just provides the opportunity for for great organic growth. This year as the market recovers and as you can tell from our prepared remarks, they're making some nice progress so getting back to the pre COVID-19 volume so.
And obviously the cost containment measures that we put on at the onset of the pandemic of help from a margin perspective. So we do expect to see that recovery pool through.
On both on the top line and also you'll see that on the margin performance as well.
Okay. Thank you guys.
Thanks Brent.
Yeah.
Thank you. Our next question comes from Andy Wittmann with Baird. Please proceed with your question.
Okay, great. Thanks.
So I guess I wanted to just dig in on the commercial side a little bit on.
I think he mentioned in the script on the slide here seen some delays.
Those delays cleared or are they still continuing on given the given the macro.
Yeah.
The delays that are still there really are more related to transportation and.
Hospitality.
And some of them most of those projects are still on hold now what we're seeing is acceleration in data centers and fulfillment centers that sort of thing and we do have a quite a few office buildings going where we're using our specialty equipment and are placing booms and high rise pumps and that sort of thing.
That market has slowed some and kind.
To put it in perspective, so our fulfillment center like an Amazon fulfillment center has about the same on bound of concrete and under the same revenue for us as say a 25 story building would have so.
As we transfer from one segment to the other segment, where we're recognizing that there's still great opportunity there and we do still have some concern about the timing of getting the hospitality back.
And back on track, where we saw it I think that's the one end market that we're still a little uncomfortable about.
Got it and I'm curious just on that are these like is the whole dog and they broke construction or are they waiting for construction. They still need the whole than you guys are covenant on just kind of curious as to where these types of projects are getting stalled out along the line.
Yeah. So most of them. The site is ready there are somewhere in the whole isn't done yet, but we have several that as soon as it's freed up that they'll start construction.
Okay.
And then I was just wanted to grab a couple of other things here just related to the benefits I think you said it was $1 $7 million in the quarter on kind of SG&A savings as it relates to.
Cost actions due to COVID-19.
Was there anything unusual about that $1.7 million number in this quarter that was that will be reversing itself as things open more up or do you feel like those actions that have taken can remain in place for the balance year.
Yeah.
On the yeah. Those actions will remain in place for the balance of the year. We also got some of it last year, but it will be there for the full term. This year. It was effectively eliminating where we could and that cost that will be permanent and certainly not deferred in the business. So youll see that come through.
And that improvement come through for the subsequent periods.
Okay Super helpful. And then just my last question was back just on eco Pan and wanted to just in the past you've talked about on the number of pans in the field is kind of a leading indicator of what the growth rate might be there. So Bruce I was just wondering if you could comment on.
With the number of pans in the field is telling you about the growth rate here for the balance of the year I heard some optimism about getting back to double digit growth and that's great but depends on the field today support that or do you need things to get incrementally better for that to be the case.
Yeah in the month of thanks for the call or the question on that.
This month in March we're starting now to be back in line with where we expect it to be.
So we're quite.
Quite optimistic that that depends on the field on a new rollout of service that we put in place will get us back to where we expect it to be.
Okay great.
Hum.
I think that's all I had for questions. Thank you very much on that.
Good evening guys.
Thanks, Andy.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is on the question queue.
Our next question comes from Stanley Elliott with Stifel. Please proceed with your question.
Hey, guys. Thank you all for taking the question.
On the eco Pan business have you ever talked about like fleet utilization within that kind of as a metric I know you guys have spent a fair amount of investing in that last year, just trying to kind of see exactly what's happening from a utilization standpoint with the 2% growth.
Good question Stanley.
Stanley. Thank you. So we track utilization more on a dollar utilization on the eco Pan business on revenue per truck that sort of thing. We have added several more units in Q1, and so utilization is down from where it was in Q4, but we expect that to continue out continue to improve as a as a.
The surface builds out over the year.
Perfect. Thanks, that's very helpful.
And you all along the Capex line I mean, you basically held guide book.
The same I guess, the two moving parts are interest and Capex net capex.
But the interest going down or we'd assume that that net capex piece is actually going up.
And if that's the correct what sort of projects where investments are you all are looking to make.
Yeah. So on on the Capex, maybe I'll take that first I mean, though it will be relatively consistent year over year on the interest in that we'd factor that in when we provided the free cash flow guide I mean, obviously the element that was available and there was LIBOR. So thats 15, or 18 bps, it's there's five or 600000 from an interest perspective.
So it's not that the the so that was implied within the guide that we've given from an interest perspective, but that's how we would break down the two component parts suddenly that you mentioned okay perfect.
And in terms of the infrastructure markets you mentioned some of the U S where you're seeing some growth.
Would love to kind of get a little bit of color regionally, where you're seeing.
Our momentum on the infrastructure side.
Yeah. So we started last spring when we recognize that this may last a while and we needed to focus on some markets that we weren't strong and as you know we've always been very strong on the commercial market.
We focus on all areas are on off.
All types of infrastructure projects that were out there and you know I received a report from our team just this morning of the infrastructure.
Projects that we picked up in every one of our regions has done a good job of improving their infrastructure revenues.
Perfect and then lastly.
For me you talk about the M&A pipeline being very active any sense for kind of.
Where did you would one of potentially in next year.
From a leverage standpoint.
Just to kind of get a flavor for the size of deals that potentially could come down the pipe.
Yeah, I mean from a leverage perspective, we ended the.
For the year at the end of last year at three and a half times. When we've said publicly that our long term targets two and a half times.
And so we I mean, we stay true and committed to that piece from from the strength of our balance sheet.
And based on the size of the opportunities. We're looking at I mean, we would expect that.
There'll be a delevering component to that when we look at accretive investments. So we don't expect the growth of our business to impact out long term trajectory of leverage.
No I was just trying to get a flavor for it I mean, if you look if you do $50 million of of.
Free cash that's a half a turn of of of leverage right. There I'm just trying to get a sense for how aggressive you were looking to get in terms of the M&A piece or maybe that's just being opportunistic with with what comes down the pipe.
Stanley what we're trying to do is as you know is by businesses for four times EBITDA, and then put synergies in place and other.
Opportunities that come with that to get us to where ultimately they are still at three five times. So every one of these acquisitions should it at worst keep leverage the same and improve it depending on how well, we do with the synergies and the integration.
Perfect guys. Thank you for the time appreciate it best of luck.
Thank you.
Thank you. Our next question comes from Steven Fisher with UBS. Please proceed with your question.
Thanks, Good afternoon, guys I just wanted to start off coming back to the situation in Texas in February and I know you mentioned the resilience, but I guess I'm just curious did it really have zero impact.
Packed.
Because I'm wondering if you might've been trending towards the upper end of your guidance range. I know you kept it kind of kept it the same but absent any impact on February 18, might've been trending towards the higher end.
Sure. So we came out of Q1 and into Q2 with very good momentum.
And certainly we were shut down in Texas for about a week.
However, as soon as the weather broke of our revenues were much larger than what they were going into the revenue. There is some catch up and so we are very encouraged by that and we see the markets are all of our market share in fairly good position for the remainder of this quarter. So that's where you know well well we never liked it when we're impacted by weather.
Like that we still feel like we're very resilient to deal with that and we can recover very quickly.
Great and then to what extent do you have visibility into your customers' backlogs are.
Are you actually seeing their backlogs up on.
Are they are they down or are they flat.
What are you hearing or seeing from your customers in their actual backlogs.
And so that varies by customer and by end market and by region. On there are some that are extremely optimistic about the next six months, where others are still have some concern, but overall for our businesses. As you see residential has has taken over a larger share of our business by about 4% is very difficult.
To track that but the commercial and infrastructure is very much what we're typically what we typically see.
Okay, and then are you able to give us what your pricing year over year on your utilization was year over year on the quarter.
Yeah, I mean from a from a pricing perspective, I mean as you know.
Our pricing adjustments go into effect in January.
And we're looking forward to two or 3% on pricing and utilization and through the first quarter.
With me around the 70% Mark.
Bush, obviously picks up through the through the year on it's quite consistent year over year.
Okay, and then just lastly.
Seems like you were talking more about M&A.
On this call have we hit some sort of turning point.
And that process is something in the market conditions.
Is there something going on that's making M&A kind of more imminent at the moment.
Yeah, Great question, Thanks for asking that so last year with the pandemic and some uncertainty we really focused on our balance sheet and we were quite successful with that and that led to the to the the debt restructuring that we were able to accomplish in January that put us in a really nice position to go after M&A, where last year we.
We decided that wasn't the right move for us.
Any of those opportunities that would have been there last year are still there and this year. In fact, there are more now so we'll be very selective and we will make sure that they meet all of our criteria and there'll be easily integrated into our systems, but we are more aggressively going after that and we do expect to have some M&A M&A this year.
Terrific best of luck.
Thank you.
Thank you our last question comes from Tim Mulrooney with William Blair. Please proceed with your question.
Okay.
Hey, Thanks for squeezing me back in just a couple more.
And Ian on that annual interest expense you provided the $23 million is that an annual run rate or is that the actual cash interest expense you expect from fiscal 'twenty one.
That's what we expect for fiscal 'twenty one.
So even lower for 'twenty, two I guess, while I got you here I'll ask you one or two more I think you said infrastructure is now 16% of sales over time, I guess would you expect that to increase or decrease or remain pretty static and if.
If an infrastructure bill were to pass this year does that change your answer at all.
Yeah, I think it will slightly go up if there is not an infrastructure bill.
Is this an infrastructure bill that could go up substantially.
Yep Okay.
And then.
Just lastly from me.
Well first of all how much of your Capex is maintenance Capex is it 50 50.
No. So we are on what we've set out on Capex that would typically spend at around 11%, we haven't split out between replacement and growth I'm over simple.
We'll keep an eye on growth opportunities in the business, but what we have said consistently it's around 11%.
Okay.
I mean, you talked about all the benefits of improving the fleet age, which sounds like a very good ROI for you guys can you actually quantify this for us in any way how much has the maintenance capex spend lowered average fleet age I guess over the last couple of years.
Yeah, we can't be precise on it.
In terms of what we share publicly but we I mean, the way we think about it is that all of the things that we mentioned around they're down for a period of time, which improve utilization and improving uptime.
On the lower maintenance costs would obviously come through on the repair cost line was on our income statement. So there's definitely a benefit organically.
Area, two and <unk>.
Investing in the fleet.
Yep, Okay got you. Thanks again.
Thanks, Dan Thanks, Tim.
There are no further questions at this time I would like to turn the floor back over to management for any closing comments.
Thanks, Paul we'd like to thank everyone for listening to today's call and we look forward to speaking with you. When we report our second quarter fiscal 2021 results in June Thank you.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful evening.