Q4 2024 Concrete Pumping Holdings Inc Earnings Call
Consolidated adjusted EBITDA in the fourth quarter decreased slightly to $33 7 million compared to $35 8 million in the same year ago quarter. However, adjusted EBITDA margin increased 40 basis points to 32% compared to 29, 8% in the same year ago quarter.
As discussed previously the improvement in margin on lower revenue was driven by strong variable cost control and a disciplined approach to managing our fleet.
And our U S concrete pumping business adjusted EBITDA declined to $19 3 million compared to $23 4 million in the same year ago quarter, and our U K business adjusted EBITDA increased 18% to $5 2 million compared to $4 4 million in the same year ago quarter.
And for our U U S concrete waste management business adjusted EBITDA increased 12% to $9 1 million compared to $8 1 million in the same year ago quarter.
Additionally, free cash flow increased 26% in the fourth quarter, it's $24 million compared to 19 million in the same year ago corner.
This includes proactive steps that we've taken to turn on net replacement capex negative in the fourth quarter, which further highlights the flexibility we have in our fleet investments.
Turning to liquidity at October 31, 2024, we had total debt outstanding of $375 million and net debt of 332 million and this was a decrease of $46 million over the course of the year, which is a testament to our strong free cash flow generation.
This equates to a net debt to EBITDA leverage ratio of three times, which was our guided target for the 2020 for fiscal year.
We had approximately $307 million to $8 million of liquidity as of October 31, 2024, which includes cash on the balance sheet and availability.
Availability from our ABL facility.
We remain in a strong liquidity position, which provides optionality 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.
Now looking at the terms of our credit facilities, our ABL facility will mature in September of 2029, and although our senior notes have more than a year until they come to you in February of 2026, we believe is encouraging momentum in the market that could support an opportunistic it'd be fine us.
Now moving to our share buyback plan during the fourth quarter. When he purchased approximately 426000 shares for $2 $5 million or an average price of $5.89.
Since the buyback was initiated in 2022, we have repurchased approximately $18 million of our stock and have an additional $17 million authorized through March of 2025.
We believe a share buyback plan demonstrates both our commitment to delivering enhanced value to shareholders and our confidence in our strategic growth plan.
Moving now into our 2025 full year guidance, we expect fiscal year revenue to range between 425 and $445 million.
Adjusted EBITDA to range between 115 on $125 million and free cash flow, which we define as adjusted EBITDA less net replacement capex and less cash paid for interest to be at least $65 million.
Please note that this outlook assumes a return to a more normal typical seasonality with roughly 45% of our revenue incurred in the first half of 2025 and the balance in the back half of the year.
With that I will now turn the call back over to Bruce.
Thanks, Ian and summary, well construction markets remain softer in 2024, particularly particularly in the commercial end market. We believe that we are well positioned relative to our competitors to execute in a challenging environment due to our unique value proposition to our customers given our national footprint market diversification.
Patient and the breadth depth and agility of our equipment fleet. Furthermore, our strong balance sheet and healthy liquidity positions us well for continued growth investments and other strategic strategies to deliver superior shareholder value as we look towards 2025 and remain focused on our long term strategies strategic asked.
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<unk> consistent and disciplined execution of our strategic growth plan resolute adherence to our leading commercials strategy and prudent cost control through ongoing operational excellence.
We are hopeful that a return of more seasonal weather patterns, coupled with an expected improvement in commercial construction volumes will stimulate demand in fact, we expect it overall construction volumes in the U S and U K in 2000, and twenty-five will increase by low single digits and pricing will increase the same.
As Ian mentioned, our 2025 outlook is predominantly back half weighted which reflects typical seasonality, but also considers our estimation that the incoming administrations pro growth onshoring agenda combined with the gradual easing of interest rates can accelerate our domestic concrete pumping in eco pan business when he.
Ian: Policies take hold in the U K our team continues to secure nationally.
Ian: Critical Energy Road and rail projects. In addition to the well documented H S. II project as the new government seeks to drive broader economic and productivity growth.
Ian: With that I would now like to turn the call back over to the operator for Q&A.
Ian: Great. Thank you so much would now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Ian: You May press star two to remove yourself from the kids.
Ian: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.
One moment, please pull for questions.
Speaker Change: First question is from Andrew Wittmann from Baird. Please go ahead.
Andrew Wittmann: Oh, great. Thanks for taking my questions and good afternoon guys.
Speaker Change: I guess I just wanted to drill in a little bit on Capex here. So you flipped.
Speaker Change: The net capex year to slightly negative disposing more then you purchased.
Speaker Change: I was just hoping maybe you could just help us think about twenty-five I heard the greater than $65 million of free cash flow under your definition, but maybe can you break it down a little bit how much.
Speaker Change: How much kind of gross Capex do you think is going to go into new fleets and you know where how much or are the sales going to remain elevated I'm. Just if you could help us just understand how you're thinking about that the overall capex budget for <unk> for 25.
And thanks for the question Andy So, yes, just to recap in 'twenty four I mean as you know during the year based on the volume demand we had sufficient capacity in our fleet. So we invested the last one the replacement side and it was roughly around 4% of revenue and more normalized targets and replacement is around six or 7% of revenue and that's what we have.
Speaker Change: Placed in the guidance for 2025 with the expectation that we we feel good about the the fleet that we have and the capacity that we have.
Speaker Change: And so it really and making sure that the the uptime that we would expect is more reflective of more normal six or 7% of revenue and in addition to that we've I would say antibody may have like three or 4 million on the growth side for a coupon, but again it will as we look for for volume and come through the year then.
Speaker Change: Well consider that within the data, especially the starting point.
Speaker Change: That's helpful and on the trade side, and we would expect an unusual trade activity.
Speaker Change: As you know about 5% or a fleet will age out each year, and we don't expect that to change.
Speaker Change: Got it.
Speaker Change: Okay.
Speaker Change: For that I guess, maybe the next thing I wanted to dig into I mean, you kind of had a comment there on the senior notes coming due are about a year from now.
Something about the market and just the market conditions may allow you to refinances are you thinking right now the primary path is refined out senior notes with new senior notes or would you expand the a b all what's kind of the pricing and the way youre approaching that since it sounds like you're kind of thinking about it already.
Yeah. We are I mean, obviously, we have a number of options available to us and really looking for best execution and so yeah. We think the market and has some momentum right. Now. So we think that it's a good time to be considering like that window, and we will be opportunistic as we see that that market. So you have R&D and obviously as you know we upsized the ABL at the end of.
Speaker Change: Last year and so we have we think we have some good structural.
Speaker Change: Cheryl elements for good execution.
Speaker Change: Got it and then Bruce just for you, obviously getting EBITDA margins up year over year on a tough volume as always.
Speaker Change: You know a testament to how you're running the business could you maybe just talk about.
Speaker Change: Some of the major buckets that allowed you to to draw.
Speaker Change: That kind of performance, maybe things like fuel at the time, there was a comment on repair and maintenance as well that you made and maybe if you could drill into like you know how much that helps you and are you starting to get the first stuff because the utilization rates of equipment, maybe aren't as high. So you can defer that and grab it later when the when the equipment is more demand.
Speaker Change: Maybe if you could just address how labor some factoring into.
Ah you're a European L. A as well if you're able to optimized optimize that further.
Speaker Change: Sure.
Speaker Change: As it comes to fuel pricing fuel pricing has gotten better for us over the last several months and so we have had some benefit of that.
Speaker Change: We believe we've done a much better job of managing our labor within the business to improve the margin as well and then pricing on on spare parts for repair and maintenance have gone back to lower.
Speaker Change: Lower levels than what we had seen the previous year and we've been able to take advantage of some large orders to to improve that and there's just been more I'm aware of preventative maintenance and making sure that we get out on on top of things before they become serious issues, we have not deferred any maintenance at all on any units. So we.
Speaker Change: Feel like where we've done a good job of controlling those rates getting those margins down and really preparing ourselves for the future.
Speaker Change: Got it.
Speaker Change: Okay.
Speaker Change: I think I'll leave it there for the good evening. Thank you so much.
Andy: Thanks, Andy.
Speaker Change: Next question is from Tim Mulrooney from William Blair. Please go ahead.
Bruce: Bruce and good afternoon.
Speaker Change: Okay Sam.
Speaker Change: So it looks like your guidance is calling for about 7% EBITA growth at the midpoint for the for the full year and this is kind of following a 7% decline or so in the back half of fiscal 2024, so it sounds like you're expecting a nice inflection here just curious.
Speaker Change: How are you thinking about the cadence of EBITDA growth as you move through the year do you expect it to be pretty steady or is the expectation that this growth will be more front end or back end loaded.
Speaker Change: Yeah, Tim it really ties to that and return to more normal seasonality as we mentioned in our prepared remarks I mean, if you look at 2024, we were more 46, where they've done on the on the front half of the year and we now expect to be more back to the sort of 45 55.
Speaker Change: So the cadence of EBITDA I mean, obviously Q1 is a slower quarter for us obviously been through winter. So we would expect margin to build through the year ultimately, resulting in at least a 1% margin pick up and through the end of the year should we expect some improvement as we go through the year, but it's likely going to be more backend.
Speaker Change: With it just like the change in that revenue phasing.
Speaker Change: Yeah.
Speaker Change: Okay got you. Thank you and kind of building off of the conversation you're having with Andy you mentioned previously.
Previously you I think last quarter, maybe or two quarters ago, you're running at about 70%.
Speaker Change: Utilization down a bit from that 80% target curious where utilization currently stands today.
Speaker Change: Yeah, it's right around at seven 8% and so again it comes back to us.
Speaker Change: The fleet utilization and the the the expectations as we go into 2025, we think Theres an opportunity and there was also a material airplane Tim on margin contribution and we think we have capacity to them through that and is it the mine moves.
Speaker Change: Okay got it and moving to the infrastructure business, which I think you said.
Speaker Change: <unk> grew a little bit in the fourth quarter. It was good to hear but you know now you've got this incoming administration focus on cost reductions do you see any risk to the funding environment for some of the large infrastructure projects that you work on weather.
Speaker Change: Whether it's whether or not they're tied to the AJ a maybe in both cases or is most of that money set.
Speaker Change: Set aside for these projects are.
Speaker Change: They're already kind of set aside are deployed.
Yeah. So so we see this as an opportunity for us to him where they're the money has been set aside for those projects has been allocated to those projects, but it hasn't been awarded to contractors, yet and a lot of that has to do with the amount of the size of.
Speaker Change: Challenges that the car T D.
Speaker Change: The municipalities States have had to get to meet the requirements and we believe is a less at some of those require but that's whether they are environmental or labor that it may accelerate some of those projects that we should see infrastructure pick up this year and into 'twenty six.
Speaker Change: Yeah.
Speaker Change: Alright.
Speaker Change: Thank you very much I'll leave it there and have.
Speaker Change: Have a good night.
Tim Mulrooney: Thanks, Tim.
Speaker Change: Okay.
Speaker Change: The next question is from Steven Fisher from UBS. Please go ahead.
Steven Fisher: Hi, Thanks, Good afternoon I guess.
Steven Fisher: To follow up again on that sort of return to normal seasonality is there a particular quarter that you expect the U S concrete pumping revenues to inflect back to positive year over year growth from what we're seeing now that the declines.
Steven Fisher: Yes, it's likely going to be more and into the third quarter and that's really back to the back half weighting.
And I guess just back to that more normalized 45 55 split that's what I would expect.
Steven Fisher: The inflection to be it'll be close through the end of the second quarter, but and I would say that the start of the third quarter.
Speaker Change: Okay. That's helpful and you mentioned Bruce that the current level of activity.
Speaker Change: Sort of a continuation of trends you've seen for a little while now.
Speaker Change: I'm curious how your customer conversations changed if they did it all after the election.
Speaker Change: The conversation with the customers are a lot more optimistic now there are several things that I think that has to happen before that shifts into.
Speaker Change: More positive results for us and that's why we're thinking more towards the second half of the year than the first half of the year, but.
Speaker Change: There are projects that were delayed that are now ramping up that we should be placing concrete on in the next quarter.
Speaker Change: Sizeable projects, we see other projects that we think are that had been.
Speaker Change: Put on on hold that we think they will be starting as well. So we're starting to be a lot more optimistic about the second half of the year.
Speaker Change: Okay, and you mentioned that there's a imbalance of supply and demand to many concrete pumps in certain markets.
Speaker Change: Can you clarify is that referring to certain geographic markets or is it sort of in vertical markets or maybe both and just maybe some detail on what specifically you're referring to there.
Speaker Change: We've talked about this before but all the concrete pumps come from overseas, whether they come from South Korea, China or Germany.
Speaker Change: And so theyre always ordered well in advance and so the oversupply game when 2023 and 2024 really didn't meet the level of growth that we and the industry entered anticipated or the manufacturers that anticipated. So they had those assets. They you know they did a good job of getting them out of their facilities into.
Speaker Change: Country Pumper sands, but yeah as we've talked to the manufacturers for 2025 their expectations are much much lower and we expect that that will play out it will improve for us this year and into next year.
Speaker Change: Okay. Thank you very much.
Speaker Change: Thanks, Steve Thanks, Dave.
Speaker Change: As a reminder, if you'd like to ask a question. It is star one.
Speaker Change: Next question here is from Jon Ramirez from D. A Davidson. Please go ahead.
Jon Ramirez: Hi, good afternoon. Thank you for the time.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yes following.
Speaker Change: Regarding the.
Speaker Change: U S concrete pumping some question third quarter could you just talk about what sort of demand conditions I've baked in into this outlook.
Speaker Change: Yeah, I mean, it's not.
Speaker Change: Demand conditions I mean, I think this is where we are I mean, Bruce mentioned in some of these prepared remarks are then like manufacturing really showed in and really the new administration coming in on the back of the optimism and really what the federal reserve were doing improving that momentum. We think it will still take in about five to six months for that to cycle through.
Speaker Change: Into new project starts and improve momentum. So that's why we think that it's going to be more backend weighted next year.
Speaker Change: Yeah.
Speaker Change: Got it and regarding the margin for U S concrete pumping.
Speaker Change: Given this some of that over saturating comments as you mentioned.
Speaker Change: Do you expect the margins too.
Speaker Change: Be around the same level of experience in fiscal 2024.
Speaker Change: Yeah, you know and so we've got margin through projected for the consolidated business in to those 25 compared with $2 24, and we've got some nice momentum certainly in Q4 versus Q3 on the U S. On things. So we expect that will continue into 2025. So we would expect margin improvement and three the three of the business next year.
Speaker Change: Including the U S pumping business based on the the the controllable elements that we actually can influence.
Speaker Change: Could you provide some additional color into what this for me it looks like isn't it.
1% increase overall.
Speaker Change: Yeah. If you think I mean, if you just take the midpoint of the guide compared to 24, it's about a 1% improvement year over year.
Speaker Change: I appreciate that.
Speaker Change: And going back to.
Speaker Change: To waste management.
Speaker Change: Forgive me if I missed it but could you talk about what caused the big jump in margins from the third quarter to the fourth quarter there.
Speaker Change: You know it wasn't any one thing in specific I mean, obviously, we continue to invest in the business and to really expand margins over time.
Speaker Change: So you will see some lifestyle slight margin fluctuation as we invest in the business for growth.
Speaker Change: Obviously, if you look at the year over year comparison businesses and I think we grew about 15% year over year.
Speaker Change: And so you might see some small margin in children.
Speaker Change: But obviously, it's still a very healthy margin and are grateful to be free cash flow part of our business and we're going to drive continued organic growth on overtime.
Speaker Change: And just one last.
Speaker Change: That's why for me, but back to U S pumping margins.
Speaker Change: What sort of outlook do you guys see regarding pricing do you expect any sort of pressure.
Speaker Change: Fiscal 'twenty five.
Speaker Change: We do expect there'll be some more some additional pressure in 2025 until the market starts shifting and then that pressure a little.
Speaker Change: He is on us and we do expect that we will get to have success with price increases this year and into the next.
Speaker Change: Is there sort of timing or.
Yeah, I think that's probably going to see windows pressure eases off or is it just a corner by corner cases.
Quarter by quarter.
Speaker Change: Yeah I appreciate it. Thank you so much for the time.
Speaker Change: Thank you.
Speaker Change: This concludes the question and answer session I'd like to turn the floor back to management for any closing comments.
Thank you, Matt we'd like to thank everyone for listening to today's call and we look forward to speaking with you. When we report our first quarter fiscal 2025 results in March. Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.
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