Q1 2025 Concrete Pumping Holdings Inc Earnings Call

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Operator: 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, 2025. Thanks, Jamali.

Good afternoon, everyone and thank you for participating in today's conference call to discuss concrete pumping holdings final financial results for the first quarter ended January 31st 2025.

Many of US today are concrete pumping holdings' CEO, Bruce young CFO, Iain Humphries and the company's external director of Investor Relations Cody slot.

Speaker Change: Before we go further I would like to turn the call over to Mr. Slots to read the Companys Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1095 that provides important cautions regarding forward looking statements Cody. Please go ahead.

Thanks, Jamali 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.

Operator: 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. 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 SBA.

Speaker Change: 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 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.

Operator: 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.

Speaker Change: 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 reconciliations to the comparable GAAP measures in our press release issued today or the investor presentation posted.

Operator: 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 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.

Speaker Change: 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. Additionally, we have posted an updated investor presentation to the company's website.

Operator: 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. Additionally, we have posted an updated investor presentation to the company's website.

Speaker Change: Now I would like to turn the call over to the CEO of concrete pumping holdings Bruce Young Bruce.

Bruce Young: Now I would like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Thank you, Cody, and good afternoon, everyone. Our first quarter was again impacted by volume-driven declines in our U.S. concrete pumping segment, offsetting continued growth in our concrete waste management business. Specifically, lingering higher interest rates from higher than expected monetary policy during our first fiscal quarter affected the timing of commercial projects. Additionally, extreme weather conditions in our Central, Mountain, Southeastern, and South regions, particularly in Texas, further impacted our revenue. In fact, we estimate some of the historic freezing temperatures and wet weather reduced our revenue by approximately $5 million in a quarter.

Bruce Young: Thank you Cody and good afternoon, everyone. Our first quarter was again impacted by volume driven declines in our U S. Concrete pumping segment offsetting continued growth in our concrete waste management business, specifically lingering higher interest rates from higher than expected monetary policy during our first fiscal quarter affected the timing of.

Bruce Young: Projects. Additionally, extreme weather conditions in our central Mountains, South eastern and South regions, particularly in Texas further impacted our revenue in fact, we estimate some of the historic freezing temperatures and wet weather reduced our revenue by approximately $5 million in the quarter.

Bruce Young: In the U.K., the impacts of sustained higher interest rates on commercial project volume largely followed similar trends we experienced domestically. But our infrastructure projects and improved pricing held up well considering the market backdrop. Despite the challenges in our pumping markets, our disciplined fleet management and cost control strategies enable us to increase gross margins and sustain our adjusted EBITDA margin in the first quarter.

Bruce Young: In the U K the impacts of sustained higher interest rates on commercial project volume largely followed similar trends, we experienced domestically, but our infrastructure projects and an improved pricing held up well considering the market backdrop. Despite the challenges are pumping markets, our disciplined fleet management and cost control strategies enable.

Bruce Young: US to increase gross margins and sustain our adjusted EBITDA margin in the first quarter. This flexible capital investment strategy combined with our strong unit economics, expanding liquidity and improving balance sheet strength.

Bruce Young: This flexible capital investment strategy combined with our strong unit economics, expanding liquidity, and improving balance sheet strength positions us well for a market recovery in fiscal 2025 and beyond. Turning to specific comments by end market, within our commercial end market, we continue to experience construction softness across a variety of commercial work, especially in light commercial, warehouse, manufacturing, and office buildings, which tend to be more interest rate sensitive. Larger commercial projects remain mostly durable but continue to move at a slower pace given the economic backdrop. Our residential end market remained resilient, especially considering the interest rate environment.

Bruce Young: <unk> us well for a market recovery in fiscal 2025 and beyond.

Bruce Young: Turning to specific comments by end market within our commercial end markets. We continue to experience construction softness across a variety of commercial work, especially in light commercial warehouse manufacturing and office buildings, which tend to be more interest rate sensitive larger commercial projects remained emotionally durable that continued.

Bruce Young: To move at a slower pace given the economic backdrop are.

Bruce Young: Our residential end market remained resilient, especially considering the interest rate environment in fact, our mix of our U S concrete pumping work in our residential end market was resilient at 33% of total revenue on a trailing 12 month basis, we continue to see residential construction investments within our mountain region and in Texas, which represents.

Bruce Young: In fact, our mix of our U.S. concrete pumping work in the residential end market was resilient at 33% of total revenue on a trailing 12-month basis. We continue to see residential construction investments within our mountain region and in Texas, which represents undersupplied regions where single family construction is prominent. We still expect the structural supply demand and balance in housing will continue to support home building activities, especially as home builders entice customers with creative solutions that include rate buy-downs, and we believe the Federal Reserve's path to interest rate reductions should continue to support this end market's growth.

Bruce Young: Vendor supplied regions, where single family construction as prominent we still expect the structural supply demand imbalance in housing will continue to support homebuilding activities, especially as homebuilders entice customers with creative solutions that include rate buy downs and we believe the federal reserve's path to interest rate reductions should continue to support this and mark.

Bruce Young: That's growth.

Bruce Young: Offsetting some of our commercial market softness revenue share in our infrastructure markets grew slightly year over year in the first quarter in the U K infrastructure growth has continued in our U S. National footprint has allowed us to win more publicly funded projects, we expect our infrastructure business to grow in fiscal 2025 due to the funding.

Bruce Young: Offsetting some of our commercial market softness, revenue share in our infrastructure markets grew slightly year over year in the first quarter. In the UK, infrastructure growth has continued and our US national footprint has allowed us to win more publicly funded projects.

Bruce Young: We expect our infrastructure business to grow in fiscal 2025 due to the funding environment in the UK as well as opportunities domestically from the conversion of allocated budget funding into project starts within our Infrastructure Investment and Jobs Act.

Bruce Young: In the U K as well as opportunities domestically from the conversion of allocated budget funding into projects starts within our infrastructure investment and jobs Act.

Iain Humphries: I will now let Iain address our financial results in more detail before I return to provide some concluding remarks. Thanks Bruce, and good afternoon everyone. Moving right into our results for the first quarter, revenue was $86.4 million compared to $97.7 million in the same year-ago quarter. The decrease is mostly due to a decline in our U.S. concrete pumping segment due to the slowdown in commercial construction volume and severe winter weather in our Central, Mountain, South and Southeastern markets. Revenue in our U.S. concrete pumping segment, mostly operating under the Brundage Bone brand, was $56.9 million compared to $66.7 million in the prior year quarter.

Bruce Young: Now I'll, let Ian address our financial results in more detail before I return to provide some concluding remarks.

Ian: Thanks, Bruce and good afternoon, everyone moving right into our results for the first quarter revenue was $86 4 million compared to $97 7 million in the same year ago quarter.

Ian: The decrease is mostly due to a decline in our U S concrete pumping segment due to the slowdown in commercial construction volume and severe winter weather in our central mountain South and southeastern markets.

Ian: Revenue in our U S concrete pumping segment, mostly operating under the Brundage bone brand was $56 9 million compared to $66 7 million in the prior year quarter.

Iain Humphries: As Bruce mentioned, we estimate the severe weather impacted our first quarter revenue by approximately $5 million. For our U.K. operations, operating largely under the Camford brand, revenue was $12.8 million compared to $15.4 million in the same year-to-go quarter due to lower volumes caused by a general slowdown in commercial construction work that was mostly due to the impact from higher interest rates. Foreign exchange translation had a minimal impact on revenue during the first quarter. Revenue in our U.S. Concrete Waste Management Services segment, operating under the Eco-PAM brand, continues to perform well against a challenging market backdrop and increased 7% to $16.7 million compared to $15.6 million in the prior year quarter.

Ian: Bruce mentioned, we estimate the severe weather impacted our first quarter revenue by approximately $5 million.

Ian: Our U K operations operating largely under the comfort brand.

Ian: When you was $12 8 million compared to $15 4 million in the same Utica corner due to lower volumes caused by a general slowdown in commercial construction work that was mostly due to the impact from higher interest rates.

Ian: Foreign exchange translation had a minimal impact on revenues during the first quarter.

Ian: Revenue in our U S concrete waste management services segment operating under the Eco Pan brand continues to perform well against a challenging market backdrop and increased 7% to $16 7 million compared to $15 6 million in the prior year quarter.

Iain Humphries: This organic increase was driven by increased volumes and sustained improvement in pricing. Now returning to our consolidated results, gross margin in the first quarter increased 200 basis points to 36.1% compared to 34.1% in the same year-ago quarter. The improved margin was primarily due to continued improvement in our cost control initiatives that included improved fuel and repair and maintenance efficiencies. General and administrative expenses in the first quarter declined 13% to $27.8 million compared to $31.9 million in the prior year quarter, primarily due to the non-recurring $3.5 million sales tax charge that occurred in the first quarter of 2024.

Ian: This organic increase was driven by increased volumes and sustained improvement in pricing.

Ian: Now turning to our consolidated results gross margin in the first quarter increased 200 basis points to 36, 1% compared to 34, 1% in the same year ago quarter.

Ian: <unk> margin was primarily due to continued improvement in our cost control initiatives that included improved fuel and repair and maintenance efficiencies.

Ian: General and administrative expenses in the first quarter declined 13% to $27 8 million compared to $31 9 million in the prior year quarter, primarily due to the nonrecurring three and a half million dollar sales tax charge card in the first quarter of 2024.

Iain Humphries: As a percentage of revenue, G&E costs improved to 32.2% in the first quarter compared to 32.7% in the prior year quarter. Net loss available to common shareholders in the first quarter was $3.1 million, or $0.06 per diluted share, compared to a net loss of $4.3 million, or $0.08 per diluted share in the prior year quarter. Consolidated adjusted EBITDA in the first quarter was $17 million compared to $19.3 million in the same year-ago quarter. However, our adjusted EBITDA margin was unchanged at 19.7%. As discussed previously, the improvement in margin on lower revenue was driven by well-controlled variable costs and a disciplined approach to managing our fleet.

Ian: As a percentage of revenue G&A costs improved to 32, 2% in the first quarter compared to 32, 7% in the prior year quarter.

Ian: Net loss available to common shareholders in the first quarter was $3 1 million or six cents per diluted share compared to a net loss of $4 3 million or eight cents per diluted share in the prior year quarter.

Consolidated adjusted EBITDA in the first quarter was $17 million compared to $19 3 million in the same year ago quarter. However, adjusted EBITDA margin was unchanged at 19, 7%.

Ian: As discussed previously the improvement in margin on lower revenue was driven by well controlled variable cost and a disciplined approach to managing our fleet.

Iain Humphries: And our U.S. concrete pumping business suggested EBITDA declined to $9.2 million compared to $11.6 million in the same year ago quarter. In our UK business, adjusted EBITDA was $2.8 million, compared to $3.2 million in the same year-to-go quarter. And for our US Concrete Waste Management Services business, adjusted EBITDA increased to $5 million, compared to $4.5 million in the same year-to-go quarter.

Ian: And our U S concrete pumping business adjusted EBITDA declined to $9 2 million compared to $11 6 million in the same year ago quarter.

Ian: And our U K business adjusted EBITDA was $2 8 million compared to $8 2 million in the same year ago quarter and for our U S concrete waste management services business, adjusted EBITDA increased to $5 million compared to four and a half in the same year ago quarter.

Ian: Now turning to liquidity.

Iain Humphries: Now turning to liquidity, at January 31, 2025, we had total debt outstanding of $425 million and net debt of $340 million, which is a decrease of $33 million over the course of the year, which is a testament to our consistently strong free cash flow generation. This equates to a net debt to EBITDA leverage ratio of 3.1 times. We have approximately $410 million of liquidity as of January 31, 2025, which includes cash on the balance sheet and availability from our ABL facility. On January 31st, 2025, we successfully closed a private offering of $425 million, an aggregate principal amount of senior secured second lien notes that mature in 2032.

Ian: I think if you start at one 2025, we had total debt outstanding of $425 million and net debt was $340 million, which is a decrease of $33 million over the course of the year, which is a testament to our consistently strong free cash flow generation.

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

Ian: We had approximately $410 million of liquidity as of January 31, 2025, which includes cash on the balance sheet and availability from our ABL facility.

Ian: On January 31st 2025, we successfully closed a private offering of 425 million in aggregate principal amount of senior secured second lien notes that mature in 2032.

Iain Humphries: The proceeds were used to pay the redemption price for our outstanding 6% senior secured second lien notes that were due in 2026. In addition, the remainder of the net proceeds, together with cash on hand, were used to pay a special dividend of $1 per share on February 3.

Ian: The proceeds were used to pay the redemption price for outstanding 6% Senior secured second lien notes that were due in 2026.

Ian: In addition, the remainder of the net proceeds together with cash on hand were used to pay a special dividend of $1 per share on February 3rd.

Iain Humphries: Over the years, we have executed a range of capital allocation priorities, including debt reduction, share buybacks, and the investment in organic and M&A growth. The recent Senior Notes refinance represents a significant milestone in our evolution and underscores our consistent operating performance and healthy free cash flow generation. Returning excess capital to our shareholders in the form of a special dividend augments our capital allocation strategy and highlights our commitment to driving superior shareholder value all while maintaining prudent leverage, balance sheet discipline, and ample liquidity to invest in our long-term growth strategy.

Ian: Over the years, we have executed a range of capital allocation priorities, including debt reduction share buybacks and the investment in organic and M&A growth.

Ian: The recent senior notes refinanced represents a significant milestone in our evolution and understood scores, our consistent operating performance and healthy free cash flow generation.

Ian: Returning excess capital to our shareholders in the form of a special dividend dividend augments, our capital allocation strategy and highlights our commitment to driving superior shareholder value, all while maintaining prudent leverage balance sheet discipline and ample liquidity to invest in our long term growth strategy.

Iain Humphries: Now moving into our share buyback plan. During the first quarter, we repurchased approximately 296,000 shares for $1.9 million, or an average share price of $6.53.

Ian: Now moving to our share buyback plan during the first quarter, we repurchased approximately 296000 shares for $1 $9 million or an average share price of $6.53.

Iain Humphries: Since the buyback was initiated in 2022, we have repurchased approximately $20 million of our stock, and we have an additional $15 million authorized through December of 2026. We believe our shared buyback plan demonstrates both our commitment to delivering enhanced value to shareholders and our confidence in our strategic growth plan.

Ian: The buyback was initiated in 2022, we have repurchased approximately $20 million of our stock and we have an additional $15 million authorized through December of 2026.

Ian: We believe our share buyback plan demonstrates both our commitment to delivering enhanced value to shareholders and our confidence in our strategic growth plan.

Ian: Moving now onto our 2025 full year guidance, while we had expected some recovery and an improved project funding landscape in the second half of fiscal year 2025 broader market uncertainty and higher interest rates has weakened the near term demand environment, particularly in our.

Iain Humphries: Moving now onto our 2025 full year guidance, while we had expected some recovery and an improved project funding landscape in the second half of fiscal year 2025, broader market uncertainty and higher foot interest rates has weakened the near-term demand environment, particularly in our commercial end market. As we navigate lower commercial project volumes, we are adjusting our financial outlook for fiscal year 2025. We now expect fiscal year revenue to range between $400 million and $420 million, and adjusted EBITDA to range between $105 million and $115 million. We expect free cash flow, which we define as adjusted EBITDA, less net replacement capex, less cash paid for interest to be approximately $60 million, which is in line with our previous 2025 guidance when adjusted for our new capital structure.

Ian: Commercial end market.

Ian: As we navigate lower commercial project volumes, we are adjusting our financial outlook for fiscal year 2025.

Ian: We now expect fiscal year revenue to range between 400, and $420 million and adjusted EBITDA to range between 105 and $115 million.

Ian: We expect free cash flow, which we define as adjusted EBITDA less net replacement capex less cash paid for interest to be approximately $60 million, which is in line with our previous 2025 guidance when adjusted for our new capital structure.

Iain Humphries: Our ability to drive this robust free cashflow on expected lower volumes stems from our ability to optimize equipment utilization and flex capex investments based upon demand. This flexibility is also supported by previous investments we have made over the last three years, including from acquisitions, to maintain sufficient capacity in our fleet utilization.

Ian: Our ability to drive this robust free cash flow unexpected lower volume stems from our ability to optimize equipment utilization and flex capex investments based upon demand.

Ian: This flexibility is also supported by previous investments we have made over the last three years, including from acquisitions to maintain sufficient capacity in our fleet utilization with that I will now turn the call back over to Bruce.

Bruce Young: With that, I will now turn the call back over to Bruce. Thanks, Iain. Looking ahead to the remainder of the fiscal year, we are well positioned for commercial market recovery. In addition to preserving margins, we have successfully reduced debt and nearly doubled our liquidity year-over-year. This strategic positioning enhances our flexibility for future shareholder value initiatives, including the special dividend paid in February, organic investments, and future M&A investments. We remain focused on the long-term strategic aspects of our business that we can meaningfully influence, including the consistent and disciplined execution of our strategic growth plan, resolute adherence to our leading commercial strategy, and prudent cost control through ongoing operational excellence.

Speaker Change: Thanks, Ian looking ahead to the remainder of the fiscal year, we are well positioned for commercial market recovery. In addition to preserving margins, we have successfully reduced debt debt and nearly doubled our liquidity year over year, the strategic positioning enhances our flexibility for future shareholder value initiatives, including the special dividend paid.

Ian: In February organic investments and future M&A investments.

Ian: We remain focused on our long term strategic aspects of our business that we can meaningfully influence, including the consistent and disciplined execution of our strategic growth plan resolute adherents adherence to our leading commercial strategy and prudent cost controls through ongoing operational excellence equally we are hopeful that a return to a more seasonable weather pattern Cup.

Bruce Young: Equally, we are hopeful that a return to a more seasonable weather pattern, coupled with an expected improvement in the U.S. commercial construction volumes, will stimulate demand. In the U.K., our team continues to secure nationally critical energy, road, and rail projects in addition to the well-documented HS2 project as the new U.K. government seeks to drive broader economic and productivity growth.

Ian: With an expected improvement in the U S. Commercial construction volumes will stimulate demand in the U K. Our team continues to secure national and critical and your energy Road and rail projects. In addition to the well documented H S. Two project as the new U K government seeks to drive broader economic and productivity growth the fundamental strength and underlying.

Bruce Young: The fundamental strength and underlying drivers of our resilient business model, proven strategic plan, strong balance sheet with significant opportunities for growth, and long history of successfully managing through economic cycles, provides us great confidence in our ability to continue delivering robust financial and operational performance.

Ian: Underlying drivers of our resilient business model proven strategic plan strong balance sheet with significant opportunities for growth and long history of successfully managing through economic cycles provides us great comments and our ability to continue delivering robust financial and operational performance with that I would now like to turn the call back over to the op.

Operator: With that, I would now like to turn the call back over to the operator for Q&A. Thank you, sir. We will now be conducting a question and answer session.

Shlomi: Operators for Q&A Shlomi.

Ian: Thank you.

Speaker Change: We will now be conducting a question and answer session.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue.

Ian: Like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate.

Speaker Change: Thank you you May press star two.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: And our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Tim Mulrooney: Oh, Hey, good afternoon.

Timothy Mulrooney: Bruce, and good afternoon. Hi, Tim. Oh, first on the guide, you know, it looks like you reduced your your annual revenue guide by about $25 million at the midpoint. Just curious how much of that's due to the shortfall in the first quarter relative to your expectations, and how much of that is really more related to the remainder of the fiscal year? Yeah, I mean, we're really taking a measured guide for the entire year, Tim. I mean, obviously some of it was the shortfall that we mentioned between weather and market demand in Q1, but it's really a measure look at the entire year and where we think that the cadence of the remaining quarters to perform for the remainder of the year.

Speaker Change: Hey, Tim.

Tim Mulrooney: Oh.

Speaker Change: First on the guide it looks like you reduced your your annual revenue guide by about $25 million at the midpoint just curious how much of that is due to the shortfall.

Speaker Change: The first quarter relative to your expectations and how much of that is really more related to the remainder of the fiscal year.

Speaker Change: Yeah, I mean, we've really taken a measured guide for the entire year, Tim I mean, obviously some of it was the shortfall that we mentioned between weather and market demand in Q1, but it's really a measure to look at the entire year and where we think that.

Speaker Change: The cadence of the remaining quarters to them.

Speaker Change: To perform for the remainder of the year.

Timothy Mulrooney: Oh, okay. And do you still expect that split? And I guess, when you're looking at the first half, second half split, kind of 45, 55? Or should we be looking for a little bit different cadence? Yeah, so I mean we are expecting that the second quarter will be slightly softer. We've seen some weather in February, but it aligns with that, with the lower volume and the bring down in that 25 million. It still centers around 45, 55. That's helpful.

Speaker Change: Oh, Okay, and Andy you still expect.

Speaker Change: That split.

Speaker Change: First half second half split kind of $45 55 or should we be looking for.

Speaker Change: A little bit different.

Speaker Change: Yeah, Yeah. So I mean, we are expecting the second quarter will be slightly.

Speaker Change: Slightly softer we've seen some weather in February, but it aligns with that and with the lower volume and the breakdown in that $25 million, it's still centers around 45 55.

Speaker Change: That's helpful and just on that weather disruption I am if you don't mind me just keep going here.

Timothy Mulrooney: And just on that weather disruption, I am, if you don't mind me... keep going here for a sec, you know, that that $5 million. weather-related disruption in the first quarter. Yeah, I noticed that you called out a $7 million weather headwind in the first quarter of last year. So, you know, to me, all else equal, that implies you had a $7 million easier comp in the first quarter of this year. So I guess, does that mean that weather-related disruptions were really closer to $12 million in the first quarter of this year, relative to your expectations?

Speaker Change: $5 million.

Weather related disruption in the first quarter I noticed that you called out a $7 million what weather headwind in the first quarter of last year. So yeah to me all else equal that implies that you had a $7 million easier comps in the first quarter of this year.

Speaker Change: Does that mean that weather related disruptions, we're really closer to $12 million in the first quarter of this year relative to your expectations yes.

Bruce Young: Yeah, that's right. And you can see that in the year-over-year performance. A lot of it translates, and we got some heavy rainfall in November, and January was severe, low temperatures all across the country. So a lot of that came in January. But yeah, you're right, it was more severe weather on top of quite extreme weather in the prior year. which really led to the volume change based on that weather impact. Yep, that makes sense.

Speaker Change: So we see that.

Speaker Change: So it sounds like.

Speaker Change: We got some like heavy rainfall in November.

Speaker Change: On.

Speaker Change: January was like.

Like severe low temperatures all across the country. So all of that came in January and but yeah Youre right. It was more severe weather on top of him quite extreme weather in the prior year.

Speaker Change: Okay, It's really led to the one which really led and that's what led to the volume it's really a volume change based on that weather impact them.

Speaker Change: Yeah that makes sense two more quick ones on capital allocation just to clarify you know that in that debt of 340 million I think in the press release. It said it includes the $53 million in cash used to pay a special dividend does that mean that you've already incorporated the payment and do that calculation or we should.

Timothy Mulrooney: Two more quick ones on capital allocation.

Timothy Mulrooney: Just to clarify, you know, that net debt of $340 million, I think in the press release it said it includes the $53 million in cash used to pay the special dividend. Does that mean that you've already incorporated the payment into that calculation, or we should add $53 million to that $340 million number to correctly adjust for the dividend? You should add it to the $340 million.

Speaker Change: Bad $53 million to that $340 million number to correctly adjusted for the dividend.

Speaker Change: You should add it to the $340 million.

Timothy Mulrooney: Okay, so that gets me to my last question. I just want to ask a little bit more about your capital allocation priorities. You know, given the special dividend that was announced, and it looks like your leverage ratio is going to go back up a little bit here.

Speaker Change: Okay. So so that gets me to my last question I, just wanted to ask a little bit more about your capital allocation priorities.

Speaker Change: Given the special dividend that was announced and it looks like your leverage ratio is going to go back up a little bit yourself, how should we think about your philosophy or I guess, the board's capital allocation philosophy.

Bruce Young: So how should we think about your philosophy, or I guess the board's capital allocation philosophy around special dividends and the target leverage ratio? And just more broadly, where investors should expect you to apply free cash flow over the coming years? Thank you. Yeah, so maybe I'll start with free cash flow. I mean, maybe I'll just revert back to our prepared remarks on the guide. I mean, it's $60 million of free cash flow. We believe that that's a really consistently high and healthy free cash flow number that we start from. And as you mentioned, we have a range of capital allocation priorities, some that we've invested over the period of being a public company.

Speaker Change: Around special dividends and the <unk>.

Speaker Change: Target leverage ratio and just more broadly where investors should expect suitable why free cash flow over the coming years. Thank you.

Speaker Change: Yeah, So maybe I'll start with free cash flow I mean, and maybe I'll just revert back to our prepared remarks them on the guide I mean, it's $60 million of free cash flow. We believe that that's a really consistently high and healthy free cash flow number that we start from them.

Speaker Change: And as you mentioned, we have a range of capital allocation part of it is something that we've invested over the period of being a public company.

Bruce Young: We mentioned in our remarks, whether it's between debt reduction, charity buybacks, organic and M&E growth, the special needs. We continue to consider what we think drives the most optimal value as we go forward. But we will, you've seen us be committed to the balance sheet and discipline around leverage, and you can expect that same commitment going forward.

Speaker Change: We mentioned our remarks, whether it's between debt reduction share buybacks organic and M&A growth.

Speaker Change: Special dividend augments that we'll continue to consider what we think drives the most optimal value as we go forward, but we well you've seen us be committed to the balance sheet and discipline around leverage and you can expect that same commitment going forward.

Bruce Young: You know, Tim, what I would add to that is that we are more focused on M&A now than we were in the past years. You know, while the market's a little messy right now, we think it's going to start improving maybe later this year and into next year. And so we do have several interesting opportunities we're working on now. And so that could be part of our capital allocation this year that you haven't seen in the last couple of years. Got it. That's helpful color.

Speaker Change: Tim what I would what I would add to that is that we are more focused on M&A now than we were in the past years, while the market's a little messy right now we think it's going to start improving maybe later this year and into next year and so we do have several interesting opportunities. We're working on now and so that could be part of our capital allocation. This year that you haven't seen in the last couple of years.

Speaker Change: Got it that's helpful color. Thank you Bruce Thanks, Ryan.

Timothy Mulrooney: Thank you, Bruce. Thanks, Iain. Thanks, thanks Tim.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of right field.

Speaker Change: With D. A Davidson. Please proceed with your question.

Speaker Change: Hey, Thanks, guys good afternoon, Hey.

Operator: Hey, thanks, guys. Good afternoon.

Operator: Hey, Iain, just want to ask real quick on Ecopan if there was a weather impact there as well. Yeah, I didn't hear you call that out. Yes, so I mean they're dealing with the same challenging weather, I mean you will recall as opposed to just the pure service, Ecopan do get the benefit of one, a wider market than the concrete pumping site from the amount of concrete production, so there's a market share element there, and obviously they'll get rent on the pans that are out there as well. So they had the same challenges in the markets that are in, obviously it's a bit more pronounced than the core part of the U.S.

Speaker Change: Hey, Ian just wanted to ask real quick on the eco Pan if there was a weather impact there as well yeah I didn't hear you call that out.

Speaker Change: Yeah, So I mean, they're dealing with the same challenging weather immune you will recall them as opposed to just the pure service Sam Eco Pan do get the benefit of a one a wider market than the concrete pumping side from the amount of concrete production. So there's a there's a market share element, there and obviously they'll get rent.

Speaker Change: On the Pons as well so they had the same challenges in the markets that are and obviously, it's a bit more pronounced than the the core part of the U S business.

Speaker Change: Okay.

Bruce Young: And I get Bruce, I mean, I guess as the industry goes right now, what markets or sectors are you seeing sort of excess equipment capacity focus, maybe how that's impacting pricing dynamics in the market right now and how you're working around that? So there is still a surplus of equipment in the market. We expect with the softening market this year that will continue. But the only market that really is affecting us would be residential, a little bit like commercial. But those folks that are buying those units are mostly smaller units, and they're not really affecting the infrastructure or the commercial market.

Speaker Change: And I get Bruce I mean, I guess as the industry goes right now what markets or sectors.

Speaker Change: Are you seeing sort of excess equipment capacity focus maybe how thats impacting pricing dynamics in the market right now and how you're working around that.

Speaker Change: So there is still a surplus of equipment in the market.

Speaker Change: <unk> with the softening market. This year that will continue but the only market that really is affecting us it would be residential a little bit of light commercial but those folks that are buying those units are mostly smaller units and they're not really affecting the infrastructure or the commercial market.

Speaker Change: Okay.

Operator: Okay.

Iain Humphries: I guess just the last one would be, you held CapEx relatively low for a few quarters now, including the first quarter.

Speaker Change: I guess, just the last one would be hum.

<unk> capex relatively low for a few quarters now, including the first quarter.

Iain Humphries: Ian, I mean, do we expect to see a ramp up here or catch up in cost and replacement, or do you expect to hold it at these relatively lower levels? Our CAPEX investment and capital allocation has been consistent year over year, and again we don't have any air pockets in that investment. We mentioned on the prepared remarks, we still have some excess capacity in our fleet, and you know that really feeds into that free cash flow number that we talked about. So there's not any significant investments that we're deferring, and we have enough fleet capacity to run what we think the volumes are from here.

Speaker Change: Can we expect to see a ramp up here a catch up in costume replacement or.

Speaker Change: Do you expect to hold it at these relatively lower levels.

Speaker Change: Our our traffic I mean, as you know by our Capex investment and capital allocation has been consistent year over year.

Speaker Change: Again, we don't have any air pockets in our investment.

Speaker Change: We mentioned on the prepared remarks, we still have some excess capacity in our fleet.

Speaker Change: And you know that really feeds into that free cash flow number that we talked about so.

Speaker Change: There was no any significant investments that we are defending and we have enough fleet capacity to run what we think the volumes are.

Speaker Change: From here. So you don't expect to see a meaningful change in our.

Iain Humphries: So you don't expect to see a meaningful change in our investment in that replacement fleet as we go forward.

Speaker Change: Investment in the replacement fleet as.

Speaker Change: As we go forward, yeah, what I would I would add to that is as we start looking into more M&A as you know as Youll remember that nearly every business we buy.

Bruce Young: Yeah, what I would add to that is as we start looking into more M&A, as you'll remember that nearly every business we buy has way more assets, at least 20% more assets than they need for the work that they have, and so that'll play into that capital policy going forward as well. That makes sense. Thanks, guys. Thanks. Thank you.

Speaker Change: Way more assets at least 20% more assets than they need for the work that they have and so that will play into that capital policy going forward as well.

Speaker Change: Got it makes sense thanks, guys.

Speaker Change: Yes.

Yeah.

Speaker Change: Thank you.

Operator: And as a reminder... Uh, yes, uh, thanks.

Speaker Change: As a reminder, if anyone has any questions you May press star one on your telephone keypad to join the queue and ask your question.

Speaker Change: Our next question comes from the line of Justin Hauke with Baird. Please proceed with your question.

Speaker Change: Ah yes.

Operator: Good afternoon, everyone. Um, I just wanted to ask about... Would you quantify maybe the positives? Concrete side, labor side, versus the declines on the volume side, just to give you a sense of what's going on. that got that back to flat. Yeah, absolutely Justin. I mean, as you know, a large percent, I mean, between 75 and 80 percent of our cost of sales base is variable. So really what we've seen in the quarter was good control over labor between operators on the mechanic side and maybe about a half a percentage point move on the fuel.

Justin Hauke: Good afternoon, everyone I just wanted to ask about.

Speaker Change: I guess, the puts and takes in there.

Justin Hauke: Margins being flat year over year.

Speaker Change: Did you quantify it.

Speaker Change: I didn't.

Speaker Change: The fuel costs.

Speaker Change: Our concrete tie labor side.

Speaker Change: The declines on the volume side, just to kind of understand the moving pieces that got that back to flat.

Speaker Change: Yeah, absolutely just I mean as you know.

Speaker Change: A large percentage I mean between 75 and 80% of our cost of sales base is variable so really what we've seen in the in the corner was good control over labor.

Speaker Change: Between operators on the mechanics side maybe.

Speaker Change: Half a percentage point move on the field, we've seen some abatement on the fuel and placement replacement.

Iain Humphries: We've seen some abatement on that fuel replacement. And then really on the repair and maintenance, I mean, good control on that variable cost. Obviously with a lower demand, there's less steps being put on the equipment, which allows us to control that repair and maintenance component. So really between repair, maintenance and fuel and good operator efficiency is really what contributes to keeping that margin in line, which again is a good testament to that variable cost structure that we've got.

Speaker Change: Then really on the repair and maintenance I mean, good control and not variable costs, obviously with a lower demand and theres less steps being too on the equipment, which allows us to control.

Speaker Change: Control that and the player and maintenance component, so I really between repair and maintenance and fuel and good operating efficiency, usually what contribute to keeping that margin in language again is a good testament to the variable cost structure that would go.

Speaker Change: Okay, Great and I guess my second question, just given a lot of that.

Operator: Great.

Iain Humphries: And I guess my second question... given a lot of I've already been answered, but on the concrete waste management services segment. The growth rate has come down a little bit from where it was in the past. I guess I was just curious to understand the volume versus pricing mix there and how that's Yes, so the pricing has been low single digits improvement. The volume issues are more with weather. If we wouldn't have had the weather in Q1 that we had, you would have seen the same type of growth with Ecopan that you had experienced in the past.

Speaker Change: I've already answered, but on the concrete waste management services segment.

Speaker Change: Growth rate has come down a little bit from where it was in the past that.

Speaker Change: 7% quarter, I guess I was just curious to understand the volume versus pricing mix, there and how that's changed maybe over the last year or two.

Speaker Change: Yeah. So the pricing has been low single digits improvement.

Speaker Change: Volume issues or more with weather if we wouldn't have had the weather in Q1 that we had you would've seen the same type of growth with eco Pan that you experienced in the past.

Okay.

Operator: Thank you very much.

Speaker Change: Okay great.

Speaker Change: Thank you.

Speaker Change: Thanks, Susan.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: At this time. This concludes our question and answer session I would now.

Operator: At this time, this concludes our Thank you, Shamali. 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 2025 results in June.

Bruce Young: Now I'll turn the call back over young for closing remarks.

Bruce Young: Thank you sure Molly 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 2025 results in June.

Bruce Young: And ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Bruce Young: Okay.

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