Q1 2024 Concrete Pumping Holdings Inc Earnings Call

Okay.

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 31st 'twenty 'twenty for joining us today are concrete pumping Holdings' CEO, Bruce Young CFO Jan <unk>.

Operator: Good afternoon, everyone, and thank you for participating in today's conference call. Pumping Holdings, Financial. The first quarter ended January 31st. Terrible.

Cody Slach: Joining us today are Concrete Pumping, the company's external director of investigation. Before we go further, I would like to turn the call over to you, Mr. Wittmann, for a brief discussion of the company's safe harbor state, the meaning of the Private Securities Litigation Reforms Act of 1995 that provides important caution regarding forward. Cody, Thank you.

He's the company's external director of Investor Relations quality slow before we go further I would like to turn the call over to Mister car do you still have to read the company's safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 that provides important cautions.

Regarding forward looking statements Cody. Please go ahead.

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

Cody Slach: 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, These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from such... For information concerning these risks and uncertainties, see Concrete Pumping Holdings' annual report on Form 10-K, quarterly report on Form 10-Q, and other publicly available filings with the S The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, we will also reference certain non-GAAP financial measures, including adjusted EBITDA, net debt, and Free Cash Flow, which we believe provide useful information for investors.

Information concerning these risks and uncertainties see concrete pumping Holdings' annual report on Form 10-K quarterly report on Form 10-Q, and other publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new.

Information future events or otherwise on today's call. We will also reference certain non-GAAP financial measures, including adjusted EBITDA net debt.

And free cash flow, which we believe provide useful information for investors. We provide further information about these non-GAAP financial measures and reconciliation to the comparable GAAP measures in our press release issued today or the investor presentation posted on the company's website.

Cody Slach: We provide further information about these non-GAAP financial measures and reconciliations to the comparable GAAP measures in our press release issued today or the investor presentation posted on the company's website. I'd like to remind everyone that this call will be available for replay later this evening. A webcast replay will also be available via the link provided in today's press release as well as on the company's website. Now I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Thank you, Cody, and good afternoon, everyone.

I'd like to remind everyone that this call will be available for replay later this evening a webcast replay will also be available via the link provided in today's press release as well as on the company's website 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 I'm pleased to report that although we experienced challenging winter weather conditions in our U S operations. During the first quarter, we continued to deliver double digit growth in our concrete waste management services and U K operations and maintain revenue growth on a consolidated basis in.

Bruce F. Young: I'm pleased to report that although we experienced challenging winter weather conditions in our U.S. operations during the first quarter, we continue to deliver double-digit growth in our concrete waste management services and U.K. operations and maintain revenue growth on a consolidated basis. In the month of January, heavy rainfall, snow, and freezing temperatures across the United States brought many of our U.S. concrete pumping projects to a standstill. As a result, many of our customers' projects were delayed, and job sites were closed. We estimate such weather events lowered the expected revenue volume of our concrete pumping work by approximately $7 million in January. However, work in February has recently returned to more normal levels, and we are working closely with our customers to accommodate accelerated project schedules.

In the month of January heavy rainfall snow and freezing temperatures across the United States brought many of our U S concrete pumping projects to a standstill as a result, many of our customers projects were delayed and job sites were closed we estimate such weather events lowered the expected revenue volume of our concrete pumping work by approximately seven.

In January however work in February has recently returned to more normalized levels and were working closely with our customers to accommodate accelerated project skills schedules.

Bruce F. Young: In the first quarter, consolidated revenue increased by 4%, primarily driven by continued strong execution in our concrete waste management and UK operations. In fact, revenues for these segments increased by 14% and 21% year over year, respectively, and maintained their strong adjusted EBITDA margins. The performance of these two segments demonstrates the benefit of our diversification by end market and by service type.

In the first quarter consolidated revenue increased by 4%, primarily driven by continued strong execution in our concrete waste management and U K operations.

<unk> revenues for these segments increased by 14% and 21% year over year, respectively and maintained their strong adjusted EBITDA margins.

Performance of these two segments demonstrates the benefit of our diversification by end market and by service type <unk>.

Bruce F. Young: Additionally, despite the challenges we faced in this quarter, we are pleased with our ongoing efforts to improve the strength of our balance sheet, reducing our revolving AVL loan balance by approximately $6 million while maintaining liquidity at $217 million. Transitioning to our segments by end market, we continue to experience similar trends that we saw in our fourth quarter. In residential, the structural supply-demand imbalance continues to grow, driving strong demand levels and increased activity among homebuilders. From a regional perspective, we see most development residential construction dollars being allocated within the mountain region in Texas, which represents undersupplied regions where single-family construction is prominent.

Additionally, despite the challenges we faced in this quarter. We are pleased with our ongoing efforts to improve the strength of our balance sheet, reducing our revolving ABL loan balances by approximately $6 million, while maintaining liquidity at $217 million.

Transitioning to our segments by end market, we continue to experience similar trends that we saw in our fourth quarter and residential the structural supply demand imbalance continues to grow driving strong demand levels and increased activity among homebuilders.

From a regional perspective, we see most development residential construction dollars being allocated within the mountain region in Texas with the Rep, which represents under supplied regions, where single family construction as prominent while interest rates remain elevated at this point, we see no signs of slowing in this market do.

Bruce F. Young: While interest rates remain elevated, at this point, we see no signs of slowing in this market due to the affordability imbalance that exists between purchasing a new home versus an existing one. We are optimistic that with expected interest rate cuts in 2024, we will capture additional tailwinds. In infrastructure, our expanded U.S. national footprint continued to drive strong results as we captured more revenue from public project investments. We continue to see more investment flowing to numerous projects where we operate, and we plan to aggressively pursue these project opportunities. In particular, growth across the U.K. continues to develop as HS2 and energy-related infrastructure spending accelerates, and capital is being deployed at faster timelines than domestic U.S. government funding.

The affordability imbalance at ex <unk>.

Just between purchasing a new home versus an existing one we are optimistic that with expected interest rate cuts in 2024, we will capture additional tailwind.

And infrastructure, our expanded U S national footprint continued to drive strong results as we captured more revenue from the public project investments, we continue to see more investment flowing to numerous projects, where we operate and we plan to aggressively pursue these project opportunities in particular growth across the U K continues.

Two develop as aegis two in energy related infrastructure spending has accelerated and capital is being deployed at a faster at faster timelines to domestic U S government funding.

Bruce F. Young: Within the commercial and industrial market, momentum in larger commercial projects like distribution centers, warehouses, semiconductor fabrication plants, and electric vehicle and battery manufacturing plants remains strong, underpinned by the growing reshoring trends here in the U.S. However, with regard to concrete pumping demand from light commercial projects, activity continues to be comparatively weaker as interest rate sensitivity and reduced availability of financing from smaller regional banks have stalled some projects. We continue to expect a recovery in the second half of fiscal 2024 as the project funding backdrop improves. Turning to the cost side of the business, the headwinds we experienced in Q4 largely continued into our first quarter. In addition to the downstream impact margins from adverse weather conditions, persistent inflationary pressures driven by a mix of labor and insurance continue to impact our ability to flow through our revenue performance to the bottom line.

Within the commercial end market momentum and larger commercial projects like distribution centers warehouses semiconductor fabrication plants in electric vehicle and battery manufacturing plants remained strong underpinned by the growing reassuring trends here in the U S with regards to concrete pumping demand from light commercial projects.

Activity continues to be comparatively weaker as interest rate sensitivity and reduced availability of financing from smaller regional banks has stalled some projects. We continue to expect a recovery in the second half of fiscal 2024 as the project funding backdrop improves turning to the cost side of the business the headwinds we experienced in.

Q4, largely continued into our first quarter. In addition to the downstream impact margins from adverse weather conditions persistent inflationary pressures driven by a mix of labor and insurance continued to impact our ability to flow through our revenue performance to the bottom line margin such headwinds are expected to continue throughout two.

Bruce F. Young: Such headwinds are expected to continue throughout 2024, but with our continued rate recalibration across all geographies and end markets, we anticipate a positive offset that should drive margin expansion over time. Our measures to recalibrate rates and the systems we are implementing to attract and retain employees are right in step with our business and drive long-term shareholder value. I will now let Iain walk through more details of our financial results before I return to provide some concluding remarks. Thanks, Bruce, and good afternoon, everyone.

2024, but with our continued rate recalibration across all geographies and end markets. We anticipate a positive offset that should drive margin expansion over time.

Our measure Sabriya recalibrate rates and the systems, we are implementing to attract and retain employees are right in step for our business and to drive long term shareholder value I will now now that Ian walk through more details of our financial results before I return to provide some concluding remarks.

Thanks, Bruce and good afternoon, everyone.

Iain Humphries: In the first quarter, consolidated revenue increased 4% to $97.7 million compared to $93.6 billion in the same year-ago quarter. The increase was due to strong growth across our concrete waste management services and UK operations. As Bruce mentioned, this growth will be offset by a decrease in volumes in U.S. concrete pumping due to the harsh winter weather events experienced across the United States, primarily in the month of January. However, revenue in our U.S. The Concrete Pumping segment, mostly operating under the Brundage Bone brand, decreased 1% to $66.7 million compared to $67.2 million in the prior year quarter.

In the first quarter consolidated revenue increased 4% to $97 7 million compared to $93 6 billion in the same year ago quarter. The.

The increase was due to strong growth across our concrete waste management services and UK operations.

As Bruce mentioned this growth offset by a decrease in volumes in U S concrete pumping due to the harsh winter weather events experienced across the United States, primarily in the month of January.

Revenue or you're a concrete pumping segment, mostly operating under the brundage bone brand decreased 1% to $66 7 million compared to $67 2 million in the prior year quarter.

The decrease was due to weather impacts in January as the severe winter temperatures and freezing rainfall stalled many of our customers projects.

Iain Humphries: The decrease was due to weather impacts in January, as severe winter temperatures and freezing rainfall stalled many of our customers' projects. We estimate the extreme weather lowered the expected revenue volume of our U.S. concrete pumping work by approximately $7 million in January. For our UK operations, operating largely under the Camford brand, revenue improved 21.2% to £15.4 million, compared to £12.7 million in the same year-ago quarter. Excluding the impact of foreign currency translation, revenue was up 16% year-over-year.

We estimate the extreme weather Laura do you expect a revenue volume of our U S concrete pumping work by approximately $7 million in January.

For our UK operations are operating largely under the comfort brand revenue improved 21, 2% to $15 4 million compared to $12 7 million in the same year ago quarter.

Excluding the impact from foreign currency translation revenue was up 16% year over year.

Iain Humphries: The increase was primarily due to pricing improvements and operating efficiency. Revenue in our U.S. Concrete Waste Management Services Segment operating under the Ecopamp brand increased 14.2% to $15.6 million compared to $13.7 million in the prior year quarter.

The increase was primarily due to pricing improvements in operating efficiencies.

Revenue in our U S concrete waste management services segment.

Under the Eco Pan brand increased 14, 2% to $15 6 million compared to $13 7 million in the prior year quarter.

Iain Humphries: The increase was driven by strong organic growth and pricing improvements, notwithstanding the first quarter growth rate being hampered by unseasonably harsh January winter weather. Returning to our consolidated results, gross margin in the first quarter was 34.1% compared to 39% in the same year-ago quarter, with a decreased margin primarily related to weather-impacted lower revenue volume and downstream lower equipment and headcount utilization as a result of the extreme winter weather, as well as inflationary increases in insurance costs. General and administrative expenses in the first quarter were $31.9 million, compared to $27 million in the same year-ago quarter.

The increase was driven by strong organic growth and pricing improvements notwithstanding the first quarter growth rate being hampered by unseasonably harsh January winter weather.

Returning to our consolidated results gross margin in the first quarter was 34, 1% compared to 39% in the same quarter with the decreased margin primarily related to the weather impacted lower revenue volume and don't seem lower equipment and head count utilization as a result of the extreme winter weather as well as <unk>.

Inflationary increases in insurance costs.

General and administrative expenses in the first quarter with $31 9 million compared to $27 million in the same year ago quarter.

Iain Humphries: The increase was primarily due to higher headcount and wage inflation and a non-recurring £3.5 million charge as a result of a sales tax rule change dispute in our west region. Excluding the $3.5 million charge, G&A costs as a percent of revenue increased slightly in the first quarter to 29.1% compared to 28.9% in the same year-to-go quarter due to lower revenue volume. Net loss available to common shareholders in the first quarter decreased to $4.3 million or $0.08 per dilute share compared to net income of $6 million or $0.11 per dilute share in the same year-ago quarter. Consolidated adjusted EBITDA in the first quarter decreased to $19.3 million compared to $25 million in the same year-ago quarter.

The increase was primarily due to higher head count and wage inflation and a nonrecurring $3 5 million charge as a result of our sales tax rule change dispute in our West region.

Excluding the $3 5 million charge G&A costs as a percent of revenue increased slightly in the first quarter was 29, 1% compared to 28, 9% in the same year ago quarter due to the lower revenue volume.

Net loss available to common shareholders in the first quarter decreased to $4 3 million or eight cents per diluted share compared to net income of 6 million or 11 cents per diluted share in the same year ago quarter.

Consolidated adjusted EBITDA in the first quarter decreased to $19 3 million compared to $25 million in the same year ago quarter.

Iain Humphries: Adjusted EBITDA margin declined to 19.7 percent compared to 26.8 percent in the same year-ago quarter. Again, EBITDA declines were driven by the aforementioned impacts from extreme U.S. weather conditions and an increase in labor and insurance costs. In our U.S. concrete pumping business, adjusted EBITDA decreased to $10.7 million compared to $16.8 million in the same year-ago quarter. In our U.K. business, adjusted EBITDA increased 32.8% to $3.2 million compared to $2.4 million in the same year-ago quarter. For our U.S. Concrete Waste Management Services business, adjusted EBITDA decreased slightly to $5.4 million compared to $5.8 million in the same year-ago quarter due to the downstream winter weather impact on labor utilization.

Adjusted EBITDA margin declined to 19, 7% compared to 26, 8% in the same year ago quarter again, EBITDA client declines were driven by the aforementioned impacts from extreme U S whaler condition, and an increase in labor and insurance costs.

In our U S concrete pumping business adjusted EBITDA decreased $10 7 million compared to $16 8 million in the same year ago quarter.

In our U K business adjusted EBITDA increased 32, 8% to $3 2 million compared to $2 4 million in the same year ago quarter.

For our U S concrete waste management services business, adjusted EBITDA decreased slightly to $5 4 million compared to $5 8 million in the same year ago quarter due to the downstream winter weather impact on labor utilization.

Turning to liquidity.

January 31, 2024, we had a total debt outstanding of $388 million or net debt of $373 3 million.

Iain Humphries: Turning to liquidity, at January 31, 2024, we had a total debt outstanding of $388 million, or net debt of $373.3 million. This equates to a net debt to EBITDA leverage ratio of 3.1 times. We had approximately $217 million of liquidity as of January 31, 2024, which included cash on the balance sheet and availability from our ABL facility. As a reminder, we have no near-term debt maturities, with our senior notes maturing in 2026 and our asset-based lending facility maturing in 2028. We remain in a strong liquidity position, which provides the ability to responsibly pursue value-added investment opportunities like accretive M&A or the organic investment in our fleet of equipment to support our overall long-term growth strategy. In the third quarter of 2022, we entered into a share repurchase program that authorized the buyback of up to $10 million of our outstanding shares of common stock.

This equates to a net debt to EBITDA leverage ratio of three one times.

We had approximately $217 million of liquidity as of January 31, 2024, which includes cash on the balance sheet and availability from our ABL facility.

As a reminder, we have no near term debt maturities with our senior notes maturing in 2026.

Our asset based lending facility maturing in 2028.

We remain in a strong liquidity position, which provides the ability to responsibly pursue value added investment opportunities like accretive M&A.

The organic investment in our fleet of equipment to support our overall long term growth strategy.

During the third quarter of 2022, we entered into a share repurchase program authorized the buyback of up to $10 million of our outstanding shares of common stock.

In 2023, the board of directors improved an additional $10 million increase in March of 2020 for an additional $15 million was approved.

During the first quarter of 2024 under our share repurchase program, we repurchased approximately 36000 shares of our common stock for 204 to $8000 or an average price of $6 eight to eight cents per share.

Iain Humphries: In 2023, the Board of Directors approved an additional $10 million increase, and in March of 2024, an additional $15 million was approved. During the first quarter of 2024, under our share repurchase program, we repurchased approximately 36,000 shares of our common stock for $248,000, or an average price of $6.88 per share. Since our buyback program was initiated, we have repurchased approximately 1.8 million shares of our common stock for a total of $11.8 million, or an average price of $6.61 per share.

Since our buyback program was initiated we have repurchased approximately one 8 million shares of our common stock for a total of $11 $8 million or an average price of $6 61 per share.

The current share back share buyback program was $23 2 million remaining as authorized by the board of directors through March of 2025, and we believe this demonstrates both our commitment to delivering long term value to shareholders and our confidence in our strategic growth plan.

Moving now to our 2020 for full year guidance due to the weather impacted year to date start in fiscal 2024, we have revised our expectations for fiscal year revenue to range between 460, <unk> and $408 million in.

Iain Humphries: The current share buyback program, with $23.2 million remaining, is authorized by the Board of Directors through March 2025, and we believe this demonstrates both our commitment to delivering long-term value to shareholders and our confidence in our strategic growth plan. Moving now to our 2024 full-year guidance. Due to the weather-impacted year-to-date start in fiscal 2024, we have revised our expectations of fiscal year revenue to range between $460 and $480 million and adjusted EBITDA to range between $122 and $130 million. The target guidance for free cash flow, which we define as adjusted EBITDA, less net replacement capex, and less cash paid for interest, will remain unchanged at at least $75 million.

And adjusted EBITDA to range between 122 on $130 million.

The target guidance for free cash flow, which we define as adjusted EBITDA less net replacement capex unless cash paid for interest will remain unchanged of at least $75 million.

This reflects our ability to control capex investments given the current utilization capacity and our fleet due to the previous investments over the last three years, including acquisitions to improve the age of our fleet.

Operationally and financially we continue to have a solid foundation and we have confidence in king continuing to execute our growth strategy with that I would know call turn the call back over to Bruce.

Thanks, Ian in summary, we are pleased with the revenue growth in our country waste management services and U K operations and are optimistic U S pumping will recover through the remainder of the year under normalized weather conditions as evidenced by a stronger February performance. We anticipate continued momentum in our residential and infrastructure end markets near term.

Bruce F. Young: This reflects our ability to control CapEx investments, given the current utilization capacity in our fleet due to previous investments over the last three years, including acquisitions, to improve the age of our fleet. Operationally and financially, we continue to have a solid foundation, and we have confidence in continuing to execute our growth strategy. With that, I will now turn the call back over to Bruce. Thanks, Iain.

And we are optimistic that interest rate reductions in the back half of fiscal year, well improve the starts of various commercial projects in the meantime, we continue to maintain our opportunistic approach to equipment utilization, enabling our fleet management strategy that allows us to capture value driven where it can deliver our expected return on invested.

Bruce F. Young: In summary, we are pleased with the revenue growth in our Concrete Waste Management Services and UK operations and are optimistic U.S. pumping will recover through the remainder of the year under normalized weather conditions, as evidenced by a stronger February performance. We anticipate continued momentum in our residential and infrastructure and markets in the near term, and we are optimistic that interest rate reductions in the back half of fiscal year will improve the starts of various commercial projects. In the meantime, we continue to maintain our opportunistic approach to equipment utilization, enabling our fleet management strategy that allows us to capture value-driven work and deliver our expected return on invested capital. On the cost side of the equation, we remain focused on attracting and retaining the best talent in the industry while reducing the impact from inflationary cost pressures through continued rate increases.

Capital on the cost side of the equation, we remain focused on attracting and retaining the best talent in the industry, while reducing the impact from inflationary cost pressures through continued rate increases as always our focus remains on optimizing end market mix to continue to deliver strong top and bottom line growth looking ahead, we believe our end market diversity.

And mission critical services in the construction industry positions us well for continued growth, we expect to complement organic growth by continuing to evaluate opportunistic accretive M&A, while strategically reducing our leverage with that I would now like to turn the call back over to the operator for Q&A.

Thank you.

Now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Cancellation tone will indicate your line isn't the question queue.

Operator: As always, our focus remains on optimizing end-market mix to continue to deliver strong top and bottom-line growth. Looking ahead, we believe our end-market diversity and mission-critical services in the construction industry position us well for continued growth. We expect to complement organic growth by continuing to evaluate opportunistic accretive M&A while strategically reducing our leverage. With that, I would now like to turn the call back over to the operator for Q&

You May press Star two if you would like to move your questions from the Q4.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock East one moment. Please poll for questions.

The first question comes from the line of Andrew Wittmann with Baird. Please go ahead.

Great Good evening and thanks for taking my question guys.

I guess I wanted to understand the revision to your guidance to begin with here.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. The confirmation tone will indicate your line is in the... You may press start. I would like to remove your questions. At your discretion, it may be necessary to pick up your handset before pressing the start button.

I understand the $7 million shortfall here in the first quarter I guess given that there's so much the year remaining I would've thought that you would have probably been able to make that up in the balance of the year. I mean that is about the magnitude of the guidance reduction. So is there something else that is being considered in the guidance cut through it should.

Andrew John Wittmann: One moment, please, while we pull. The first question comes from the line of... Man. Great. Good evening, and thanks for taking my question, guys. I guess I wanted to understand the revision to your guidance to begin with here. I understand the $7 million shortfall here in the first quarter. I guess, given that there is so much of the year remaining, I would have thought that you would probably have been able to make that up in the balance of the year. I mean, that is about the magnitude of the guidance reduction.

No about or is that purely just timing and it actually gets pushed into your next fiscal year.

Yeah, Andy Thanks for the question so our concern is that.

And many of the contractors have had their projects pushed because of the weather conditions that we had that went beyond the three or four weeks that we had the bad weather and so while they're starting up now and with the lack of labor to accelerate the startup of these projects were a little cautious on how the remainder of the year might play out that way.

So we thought that it was best to address that now.

Got it.

Is it.

So.

Bruce F. Young: So, is there something else that is being considered in the guidance cut that we should know about, or is that purely just timing, and it actually gets pushed into your next fiscal year? Yeah, Andy, thanks for the question. So our concern is that many of the contractors have had their projects pushed because of the weather conditions that we had that went beyond the three or four weeks that we had the bad weather. And so while they're starting up now, and with the lack of labor to accelerate the start of these projects, we're a little cautious about how the remainder of the year might play out that way. So we thought that it was best to address that now. Got it. Okay, is it...

It was the weather affecting like newly starting projects or was it affecting in flight projects projects. It kind of sounds like from your answer there that it was affecting.

Projects that would have otherwise started and now they're not starting or it's been delayed substantially enough that you don't want to put it in your view I guess, just a little bit more color on that would be helpful to understand yeah. Yeah. So it affects both so are the projects that we're currently on its very difficult to pour concrete and extreme weather conditions. So the concrete placement gets.

<unk> and then the new projects get delayed because of the concrete comes right. After the estimation and the excavation gets delayed because of the weather conditions as well.

Okay.

Bruce F. Young: So. Was the weather affecting, like, newly starting projects, or was it affecting in-flight projects? It kind of sounds like, from your answer there, that it was affecting projects that would otherwise have started, and now they're not starting or have been delayed substantially enough that you don't want to put it in your view. I guess just a little bit more color on that would be helpful to understand. Yeah, so it affects both. So the projects that we're currently on, it's very difficult to pour concrete in extreme weather conditions, so the concrete placement gets delayed.

For my follow up question I wanted to ask on <unk>.

Excuse me on your M&A outlook I heard your comments here at the end of your prepared remarks, but obviously you guys have been a little bit more patients I think with M&A.

The environment that that changed the demand picture that would change the financing picture for for the people, who you might be buying there's lots of ramifications from the macro we've been living in here for the past year couple of years. So.

I guess Bruce.

Is there is the patients changing or do you still feel like.

Bruce F. Young: And then the new projects get delayed because the concrete comes right after the excavation, and the excavation gets delayed because of the weather conditions as well. I guess for my follow-up question, I wanted to ask you about your M&A outlook. I heard your comments here at the end of your prepared remarks, but obviously, you guys have been a little bit more patient. I think with M&A, given the environments, that changes the demand picture, that changes the financing picture for the people who you might be buying. There are lots of ramifications from the macro we've been living in here for the past year or couple of years. I guess Bruce is there too.

Or do you or do you feel like it's getting more visibility more certainty that you feel like you can start maybe being a little bit more aggressive with M&A than you've been in the past 12 months.

Well certainly we can get a little more aggressive I think what we've talked about in the past with the most.

Mostly family owned businesses and in our industry and their lack of confidence in getting rates up ahead of inflation. There margins have been affected severely so as we look at the values that those businesses bring to us and and and then what's the value of the assets continuing to increase it to increase in price most of the business as we look at aren't worth the value of their assets and so that's really.

Bruce F. Young: Is the patience changing, or do you still feel like it's getting more visibility, more certainty that you feel like you can start maybe being a little bit more aggressive with M&A than you've been in the past 12 months? Yeah, certainly we can get a little more aggressive. I think what we've talked about in the past, with mostly family-owned businesses in our industry and their lack of confidence in getting rates up ahead of inflation, their margins have been affected severely. So as we look at the value that those businesses bring to us, and then with the value of the assets continuing to increase in price, most of the businesses we look at aren't worth the value of their assets. So that's really where we're waiting for that shift to happen, but we're certainly aggressively looking at each one, and when the opportunity looks right, we'll certainly jump on it. Okay, I'm gonna leave it there, guys. Have a good night.

Where where I'm waiting for that shift to happen, but we're certainly aggressively looking at each one and when the opportunity.

Right well certainly jump on it.

Okay, I'm going to leave it there guys have a good night.

Thanks, Andy.

Yeah.

Thank you.

Next question comes from the line of Chi into maintenance with D. A Davidson. Please go ahead.

And this is Jeremy just for Brent Thielman.

I'll start with the.

Question can you provide some color on your outlook.

Regarding labor and energy costs for the remaining of the year and I guess as a follow up after the slow first quarter, how should we think about the inflection on margins or the concrete the U S.

Concrete pumping segment.

Yeah, I guess I'll start with the first half.

John Ramos: Thanks, Andy. Thank you. The next question comes from the line of Jean Ramirez. D.A. And this is John Ramos for Brent Thielman.

Yeah. So on the on the labor and energy costs, they're quite stable right now and feel has been volatile of lately, but it's but it's less than where it was maybe 18 months ago, but there there's relative stability in the and the fuel side of things, we still have wage inflation that we're working through.

Iain Humphries: I'll start with the question. Can you provide some color on your outlook regarding labor and energy costs for the remaining year? And I guess the follow-up after the slow first quarter: how should we think about the inflection on margins for the concrete pumping segment in the US?

As Bruce mentioned on Recalibrating rates, but.

That's something that we'll work on through the rest of the year as we offset that through rate increases.

Iain Humphries: Yeah, I guess we'll start with the first half. Yeah, so on the labor and energy costs, they're quite stable right now. I mean, fuel has been volatile lately, but it's less than where it was maybe 18 months ago. But there's relative stability on the fuel side of things.

And on the U S pumping margins for the back half for the remaining quarters in this year.

As we mentioned on our on our original guidance, we're working on at.

Recalibrating a lot of cost initiatives. So we would expect to at least get back to in the U S margins that we've seen in the past them and expect to outperform that as well so other than the Q1 that was impacted more on the operating leverage from the volume.

Iain Humphries: We still have wage inflation that we're working through, as Bruce mentioned, on recalibrating rates. But that's something that we'll work on through the rest of the year as we offset that through rate increases. On the U.S. pumping margins for the back half or remaining quarters of this year, as we mentioned in our original guidance, we're working on recalibrating a lot of cost initiatives, so we would expect to at least get back to the U.S. margins that we've seen in the past and expect to outperform that as well. So other than Q1 that was impacted more by operating leverage from the volume of weather that came through, you can expect at least the margins that we've seen before, if not better, in the back half of the year.

Although that came through and you can expect at least in the margins that we've seen before if not better in the back half of the year.

And in terms of our full year.

Do we expect.

Excuse me do we expect the margins.

For the full year and to be.

You know greater than fiscal year, 'twenty, three or around do you mind, providing a little more color on that yeah. So I mean based on this let's start with the weather and our updated guidance they would be at least compatible.

Thank you and if I could one more could.

Could you provide an update on the bidding.

Bidding environment, right now and how you're working through these large projects.

Iain Humphries: And in terms of a full year, do we expect, excuse me, do we expect the margins for the full year end to be, you know, greater than fiscal year 23, or around? Would you mind providing a little more color? Yeah, so, I mean, based on the slow start with the weather and our updated guidance, they would be at least compatible. And if I could one more, could you provide an update on the bidding environment right now and how you're working through these large projects that you know, and the work that you want?

Thank you.

And the work that you won.

Yeah as you know on the larger projects, we don't have near as many people as we're competing against US we would smaller projects and so the bid environment well it's active.

And on the larger commercial projects, it's very much the same as what we have seen in the past.

Thank you I appreciate the time.

Thank you.

Thank you next question comes from the line of Stanley Elliott.

Steve. Please go ahead.

Yeah.

Hey, everybody. Thank you guys for the question.

Could you go back and talk a little bit more about kind of the decision to lower the full year.

Bruce F. Young: Yeah, as you know, on the larger projects, we don't have nearly as many people as we're competing against as we would on the smaller projects. And so the bid environment, while it's active, and on the larger commercial projects, it's very much the same as what we have seen in the past. Thank you. I appreciate the time.

At what point do you I thought you guys said.

There are certain types of projects that maybe we're not.

You're seeing some level of softness is that is that because of financing cost I'm just trying to get a little more color. Since you were really at the seasonally weak as part of your your fiscal year.

Operator: Thank you. Thank you. The next question comes from the line of Stanley Elliott. Thank you, everybody.

Yeah, and certainly Theres, a little caution with with our response as well the area that we're seeing the most challenging would be light commercial that is more sensitive to interest rates and inflation.

Stanley Stoker Elliott: Thank you guys for the question. Could you all go back and talk a little bit more about the decision to kind of lower the full year? At one point, I thought you guys said there were certain types of projects, and maybe we're not. You're seeing some level of softness.

In relying on more regional banks are those projects are have either been pushed out our shelf entirely and so we're waiting to see that come back and then we believe as a as the economy improves there are new projects that will come on in that in that sector that will give us opportunities for growth as well, but the infrastructure is growing we're seeing more visibility there.

Bruce F. Young: Is that because of financing costs? Just trying to get a little more color since, you know, we're really at the seasonally weakest part of your fiscal year. Yeah, and certainly there's a little caution with our response as well. The area that we're seeing the most challenge in would be commercial real estate, which is more sensitive to interest rates and inflation and relying on more regional banks.

Residential has been very stable for us and we see that continuing the large projects are fairly stable. It's just that that light commercial that's a that's causing concern.

Bruce F. Young: Those projects have either been pushed out or shelved entirely, and so we're waiting to see that come back, and then we believe as the economy improves, there will be new projects that will come on in that sector that will give us opportunities for growth as well. But the infrastructure is growing, we're seeing more visibility there, and residential has been very stable for us, and we see that continuing. The large projects are fairly stable; it's just that light commercial that's causing concern.

And.

Can you talk about like a backlog of business, maybe where it is now how that changed you mentioned it sounds like the order environment and instead of the quoting activity is still pretty strong.

But would also seem to imply that you're working through some of the existing book of business.

Bruce F. Young: And we'll talk about like a backlog of business, maybe where it is now, how that's changed. You mentioned it sounds like the order environment and kind of the quoting activity is still pretty strong, but it would also seem to imply that you're working through some of the existing book of business you've been building up. Yeah, that's right, and as you remember, about 50% of our business we can track as backlog, and that's the larger commercial projects and the infrastructure projects. That really hasn't changed.

Building up.

Yeah, that's right and as you remember about 50% of our business, we can track as backlog and that's the larger commercial projects in the infrastructure projects that really hasn't changed it's the it's the the light commercial projects that are that are more difficult to track that we're seeing the softness in.

And could you talk a little bit about the restatement piece that you had in the U S. Pumping that's exactly what was that for why they remind US again, why you decided to do it now.

Yeah. So every year, it's not only we're looking at the the allocation of resources.

Iain Humphries: It's the light commercial projects that are more difficult to track that we're seeing the softness in. And could you talk a little bit about the restatement piece that you had in the U.S. pumping business? exactly what was that for, and remind us again why you decided to do it now? Yes, so every year, Stanley, we're looking at the allocation of resources across all the segments. So really, the adjustment is really a true-up of those central resources that we have within our business and allocating them based on the business segment, growth, and use of capital. So it's really the update on that allocation that we've revised. And then, kind of, what are exactly your plans for the buyback? I know you put some time frames around how long it extends out. I think it was March 2025, but do you plan on being more active? Just, you know, any hope of contact there would be great.

From across all the segments. So really the adjustment is really a true up of the those central resources that we have within our business and allocation allocating them based on the business segment and growth in use of capital.

So it's really the update of the allocation that we've revised.

And then and then lastly kind of what what are exactly to your plans for the buyback.

I know you put in some timeframe around how long it extends out I think it was March 2025, but you play and I'll be more active just you know any any help with a contact there would be great.

Well, obviously, we continue to feel like our stock is undervalued and some of the use of our capital if the if we're not using it to buy businesses or equipment are maybe the best use of capital is buying shares at values that we think are reasonable for us.

Great guys. Thanks, so much that's all thanks Stanley.

Yeah.

Bruce F. Young: Well, obviously, we continue to feel like our stock is undervalued, and some of the use of our capital, if we're not using it to buy businesses or equipment, maybe the best use of the capital is buying shares at values that we think are reasonable for us. Great guys. Thanks so much.

Thank you next question comes from the line of Tim Mulrooney.

William Blair. Please go ahead.

Bruce and good afternoon.

Jim how are you.

I'm doing alright, thank you.

Let's start with.

Your.

Your your outlook here.

Stanley Stoker Elliott: Thanks, Stanley. Thank you. The next question comes from the line of Tim Mulrooney, a brilliant player.

It looks like your your guidance, calling for about 6% revenue growth at the midpoint can you kind of break that down cross between your growth expectation for U S concrete versus the the U K business and eco Pan.

Timothy Michael Mulrooney: Peace. Bruce, Iain, good afternoon. Hi Tim, how are you?

Operator: Doing all right. Thank you. Let's start with your outlook here. You know, it looks like.

Iain Humphries: Your guides call in for about 6% revenue growth at the midpoint. Can you kind of break that down for us between your growth expectation for U.S. concrete versus the U.K. business in Ecopad? Yeah, so on the organic side, if you look at the midpoint, it's really two or three percent on growth and on volume and two or three percent on price. What I would say beyond that is, at the lower end of that range, there would be an assumption that price and volume are on the flatter side, and on the higher end, we would expect to capture more share and more price and more volume on the top end.

Okay.

Yeah. So on the on the organic side and if you look at the midpoint, it's really two or 3% on growth on volume in two or 3% on price, but I would say beyond that it was on the lower end of that range and that would be an assumption that like price and volume is on the flatter side.

The higher end, we would expect to capture more share and more price and more volume on the top end.

Okay.

Is that the total there.

There or is that for the U S pumping specifically yeah, yeah. That's why the total business. What are you what you can expect.

Iain Humphries: Is that the total business there, or is that for the U.S. pumping business specifically, Iain? Yeah, that's for the total business. What you can expect to see in the year-over-year change for Ecopan and the UK business. I mean, Ecopan, as you know, has been growing north of 20% year-over-year. The first quarter was a little softer on that based on the volume of weather they had to deal with. Obviously, we've guided consistently to at least double-digit growth, and we would expect to continue that for the Ecopan business. As you can see, the organic growth in the UK is continuing to move along at quite a nice pace. In the quarter, they had 20% year-over-year growth.

<unk> see on the on the year over year change for the eco Pan.

The the UK business in Munich Opine as you know, we've been growing north of 20% year over year.

The first quarter was a little soft on that based on the volume of whether they have to deal with and obviously, we've guided consistently to at least double digit growth and we would expect to continue that for the coupon business. As you can see that the organic growth on the U K and it's continuing to move along quite a nice piece of it too and the.

And the core or the 20% year over year growth.

Hum.

Iain Humphries: So that's moving along, I mean, as we would expect towards the back end of the year. Okay, so no real change there. Continued strong growth in those businesses. Um, on that Ecopen business, you know, I saw that revenue was higher, but I even thought it was a little lower. It sounds like it was caused by a weather-related impact.

Just moving along as we would expect them towards the back end of the year.

Okay. So no real change there. It's a continued strong growth in those businesses I'm at eco Pan business I saw that.

Revenue was higher with EBITDA was a little lower it sounds like from weather related impacts I mean, do you expect margins to be up year over there for the remainder of the year or are there other factors at play here for eco Pan.

Iain Humphries: I mean, do you expect margins to be up year over year for the remainder of the year, or are there other factors at play here for Eco? Yeah, the impact in Q1 was really that downstream impact of where they've got weather. I mean, they're less sensitive to it than the U.S. pumping business, but not immune to that.

Yeah, the impact in Q1, it Fortunately the downstream impact of where they've got weather I mean, they're less sensitive to it in the U S pumping business.

But not immune to that so there's a little about softness in the operating leverage from that downstream effect of labor utilization.

When there is difficult weather.

Okay. So otherwise, though you'd expect continued margin accretion in that business as we continue to build out that pretty etc.

Bruce F. Young: So there's a little bit of softness in the operating leverage just from that downstream effect of labor utilization when there's difficult weather. Okay, so otherwise, though, you'd expect continued margin accretion in that business as you continue to build out density, etc. Yeah, yeah, we'd expect to continue strong margins on the EcoPound business for sure. Okay, cool. Last one from me. I think I recall you talking in your fourth quarter earnings call about some undisciplined pricing from industry competitors, which crimps your ability a little bit to take rates higher. Did you see that dynamic carryover into this quarter? We have seen some of it carry over, but it is improving as equipment prices go up and companies aren't doing quite as well as they have in the past.

Yeah, well, yeah, we would expect to continue strong margins on the eco Pan business yet for sure.

Okay Cool last one for me I think I recall you were talking on your fourth.

Fourth quarter earnings call about some undisciplined pricing from industry competitors, which crimp stability, a little bit to take rates higher did you see that dynamic carryover. So this quarter.

We have seen some of it carryover, but it is improving as the equipment prices go up and companies aren't doing quite as well as what they had in the past we're seeing them.

Looking being more thoughtful about how they bid work as well and certainly that helps us out as well.

Okay. That's it for me thank you very much.

Yeah.

Yeah.

Thank you.

Linda to all the participants that you May press star one to ask a question.

Timothy Michael Mulrooney: We're seeing them being more thoughtful about how they bid works as well, and certainly that helps us out as well. Okay, that's it for me. Thank you very much. Thank you. Thank you. A reminder to all the participants that you may press star and 1 to ask a question. Next question comes on the line from Avi Yaroslav, BS. Hey guys, thank you. Steve Fisher.

Question comes from the line of Avi that'll slavik.

With UBS. Please go ahead.

Hey, guys. Thank you.

On for Steve Fisher.

So I'm just trying to understand some of the math.

And the implications around what happened in the first quarter in U S pumping revenues.

7 million dollar impact from weather and the adjusted EBITDA was down about $6 million.

Steven Fisher: So I'm just trying to understand some of the math and implications around what happened in the first quarter of U.S. pumping. Revenue had a $7 million-ish impact from weather, and adjusted EBITDA was down about $6 million. So, should we kind of be considering that as roughly what you guys expected in the margin for the first quarter, as in, were you expecting Adjusted Lubica to be down for this segment year over year? If you didn't, then it sounds like that $7 million was expected to come from a very high incremental margin. I'm just trying to understand if I'm missing something.

So.

Should we kind of be.

Considering that.

Roughly what you guys expected in the margin or.

The first quarter has been like.

You anyway is expecting adjusted EBITDA to be down for the segment year over year.

Regardless because.

If you if you didn't but it sounds like that $7 million was expected to come in with it.

Very high incremental margins, so just trying to understand if I'm missing something there.

Yeah first of all I mean, that's not the margin takes back for the U S pumping business and going forward I mean, when we have weather events, obviously, the downstream effects from interrupted volume reduces the operating leverage so yeah, I don't expect that margin performance going forward and it's going to be more consistent if not improving like I said earlier.

Iain Humphries: Yeah, first of all, I mean, that's not the margin to expect for the U.S. pumping business going forward. I mean, when we have weather events, obviously, the downstream effect from interrupted volume reduces the operating leverage, so, yeah, don't expect that margin performance going forward. It's going to be more consistent, if not improving, like I said earlier, through the rest of the year. So as we accelerate where we can, the volume of work, clearly, we get operating leverage, which improves margin, and it improves the utilization of our equipment and our people. So certainly, the Q1 event and the effect of that are more amplified than the normal run rate. And as we become more efficient, then, like I said, the margin will improve.

And through the rest of the year, so as we accelerate where we can.

The volume of work clearly, we get operating leverage which improves margin it improved utilization of our equipment and our people and so certainly the Q1 event and the effect of that.

It's more amplified than the normal run rate and as we become more efficient. They don't like I said the margin will improve yeah, and what I would add to that as you know, we have variable costs, and labor and fuel and repair and maintenance, but and in January we still did the normal repair and maintenance that we would've done on that equipment just because it was scheduled in the end.

Yeah.

The people and equipment were there to do it and in the parts supply, but that'll that'll actually.

Iain Humphries: And what I would add to that is, you know, we have variable costs in labor and fuel and repair and maintenance, but in January, we still did the normal repair and maintenance that we would have done on that equipment just because it was scheduled and the people and equipment were there to do it, and the parts supply, but that will actually be offset through the remainder of the year because it is ultimately variable to our total cost.

Offset through the remainder of the year because it is ultimately variable to our total cost.

Okay got it that makes sense to me.

That's all I had thank you.

Thank you.

Okay.

Thank you.

This time this concludes our question and answer session.

Now I'd like to turn the call back over to Mr. Young for closing remarks.

Bruce F. Young: Okay, got it. That makes sense. That's all I have. Thank you. Thank you. Thank you. At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Young for closing.

Thank you Ren June we'd like to thank everyone for listening to today's call and we look forward to speaking to you. When we report our second quarter fiscal results fiscal 2024 results in June Thank you.

Bruce F. Young: Thank you, Renju. We'd like to thank everyone for listening to today's call, and we look forward to speaking to you when we report our second quarter fiscal results, fiscal 2024 results, in June. Thank you. Thank you. Ladies and gentlemen, this concludes today's teleconference. Please connect your lines at this time. Thank you for your participation.

Thank you ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

[music].

Operator: BF-WATCH TV 2021, Thank you for With The Greats Anyone Who Likes To Have a Little Revenge Iain Humphries, Samuel Kusswurm, Bruce Young, Steven Fisher, Stanley Elliott, Cody Slach, Samuel Kusswurm, Bruce Young, Iain Humphries, Concrete Pump, Please consider subscribing! And I'm... I'm... I'm... I'm... I'm... Iain Humphries, Samuel Kusswurm, Bruce Young, Cody Slach, Samuel Kusswurm, Bruce Young, Iain Humphries, Concrete Pump, Ya know, I'll see you in the river near Cessel. The Ultimate Parody Site! www.multi-multi-multi-channel.com FACEBOOK.COM, www.globalonenessproject.org BF-WATCH TV 2021, transcript Emily Beynon, BF-WATCH TV 2021