Q3 2026 Concrete Pumping Holdings Inc Earnings Call

September 3, 2026

Speaker #1: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings' financial results for the third quarter ended July 31, 2026.

Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings' financial results for Q3 ended 31 July 2026. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Iain Humphries, and the company's External Director of Investor Relations, Cody Slach. Before we go further, I would like to turn the call over to Mr. Slach 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.

Speaker #1: Joining us today are our Concrete Pumping Holdings CEO, Bruce Young, CFO, Iain Humphries, and the company’s external director of investor relations, Cody Slach. Before we go further, I would like to turn the call over to Mr. Slach 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.

Speaker #1: Cody, please go ahead.

Speaker #2: Thank you. I'd like to remind everyone that during this call, to give you a better understanding of our operations, we will be making certain forward-looking statements regarding our business and outlook.

Cody Slach: Thank you. I'd like to remind everyone that during 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 SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether because 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.

Speaker #2: 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 SEC.

Speaker #2: The company disclaims any intention or obligation to update or revise any forward-looking statements, whether because 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.

Speaker #2: We provide further information about these non-GAAP financial measures and reconciliations with 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 of 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. Additionally, we have posted an updated investor presentation to the company's website. Now I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

Speaker #2: 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.

Speaker #2: Additionally, we have posted an updated investor presentation to the company's website. Now, I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young.

Speaker #2: Bruce?

Speaker #3: Thank you, Cody, and good afternoon, everyone. 2026 remains on track to be a strong year for our company as we continue to execute our strategy and prove ourselves to be the partner of choice for our customers, particularly in large, more complex projects.

Bruce Young: Thank you, Cody, and good afternoon, everyone. 2026 remains on track to be a strong year for our company as we continue to execute our strategy and prove ourselves to be the partner of choice of our customers, particularly in large, more complex projects. I am pleased to report that we delivered another strong quarter with revenue increasing 13% year-over-year and adjusted EBITDA also growing 13%, reflecting continued momentum across our US operations, disciplined operational execution, and healthy demand across several of our key end markets. Our performance during the quarter continued to be led by large-scale commercial and infrastructure construction activity. As we have discussed in the last couple of quarters, data centers and other large-scale commercial projects remain the primary driver of growth. In addition, we are also seeing encouraging activity across education, utilities, energy, and other infrastructure-related projects.

Speaker #3: I'm pleased to report that we delivered another strong quarter, with revenue increasing 13% year over year and adjusted EBITDA also growing 13%, reflecting continual momentum across our U.S. operations, disciplined operational execution, and healthy demand across several of our key end markets.

Speaker #3: Our performance during the quarter continued to be led by large-scale commercial and infrastructure construction activity. As we have discussed in the last couple of quarters, data centers and other large-scale commercial projects remain the primary driver of growth.

Speaker #3: In addition, we are also seeing encouraging activity across education, utilities, energy, and other infrastructure-related projects. These larger, more complex projects continue to support healthy fleet utilization across both our Brundage-Bone and Eco-Pan businesses and reinforce the competitive advantages created by our national footprint, scale, and operational expertise.

Bruce Young: These larger, more complex projects continue to support healthy fleet utilization across both our Brundage-Bone and Eco-Pan businesses and reinforce the competitive advantages created by our national footprint, scale, and operational expertise. We remain optimistic about the continued growth in these segments for the foreseeable future. The broader construction backdrop remains largely unchanged. Heavy commercial construction has remained relatively resilient, while light commercial activity continues to be pressured by elevated interest rates and economic uncertainty. Residential construction also remains soft as affordability challenges continue to weigh on new home construction, despite favorable long-term housing fundamentals. Our Eco-Pan Concrete Waste Management Services business again delivered an excellent quarter and remains on track for another record year, benefiting from continued strength in commercial construction activity, pricing execution, and ongoing penetration into new customer accounts.

Speaker #3: We remain optimistic about the continued growth in these segments for the foreseeable future. The broader construction backdrop remains largely unchanged. Heavy commercial construction has remained relatively resilient, while light commercial activity continues to be pressured by elevated interest rates and economic uncertainty.

Speaker #3: Residential construction also remains soft, as affordability challenges continue to weigh on new home construction, despite favorable long-term housing fundamentals. Our Eco-Pan concrete waste management services business again delivered an excellent quarter and remains on track for another record year, benefiting from continued strength in commercial construction activity, pricing execution, and ongoing penetration into new customer accounts.

Speaker #3: Ecopan continues to demonstrate the attractive operating characteristics of the business and remains an important differentiator for our overall platform. Turning to our UK operations, market conditions remain more challenging than those in the US, with inflation, elevated interest rates, and slower commercial construction environment continuing to pressure demand.

Bruce Young: Eco-Pan continues to demonstrate the attractive operating characteristics of the business and remains an important differentiator for our overall platform. Turning to our UK operations, market conditions remain more challenging than those in the US, with inflation, elevated interest rates, and slower commercial construction environment continuing to pressure demand. That said, we were encouraged to see commercial activity improve during the months of July and August, and while it is too early to call an inflection point, the trends are encouraging. In addition to our recent expansion into the temporary power market, Templant is performing well as executing in line with our strategy to build a diversified multi-service platform supporting the construction and infrastructure sectors. Along with our Republic of Ireland expansion, these strategic growth investments continue to strengthen our long-term platform. Overall, we are pleased with our performance through the first 9 months of fiscal 2026.

Speaker #3: That said, we were encouraged to see commercial activity improve during the months of July and August, and while it's too early to call an inflection point, the trends are encouraging.

Speaker #3: In addition, our recent expansion into the temporary power market is performing well and is executing in line with our strategy to build a diversified, multi-service platform supporting the construction and infrastructure sectors.

Speaker #3: Along with our Republic of Ireland expansion, these strategic growth investments continue to strengthen our long-term platform. Overall, we are pleased with our performance through the first nine months of fiscal 2026.

Speaker #3: We continue to grow profitably and generate meaningful free cash flow, and our balance sheet is in an excellent position as we have driven net leverage down to 3.6 times on track towards our near-term target of 3 times.

Bruce Young: We continue to grow profitably and generate meaningful free cash flow, and our balance sheet is in an excellent position as we have driven net leverage down to 3.6 times, on track towards our near-term target of 3 times. Liquidity is also very strong at about $357 million, giving us tremendous flexibility to grow shareholder value through accelerated organic growth opportunities, M&A, and other capital allocation strategies. The consistency of our execution, the durability of demand across large commercial and infrastructure projects, and the strength of our operating model give us confidence as we enter the final quarter of fiscal 2026. As a result, we are once again raising our full-year revenue, adjusted EBITDA, and free cash flow outlook while remaining focused on disciplined execution, free cash flow generation, and long-term value creation for our shareholders.

Bruce Young: We continue to grow profitably and generate meaningful free cash flow, and our balance sheet is in an excellent position as we have driven net leverage down to 3.6x, on track towards our near-term target of 3x. Liquidity is also very strong at about $357 million, giving us tremendous flexibility to grow shareholder value through accelerated organic growth opportunities, M&A, and other capital allocation strategies. The consistency of our execution, the durability of demand across large commercial and infrastructure projects, and the strength of our operating model give us confidence as we enter the final quarter of fiscal 2026. As a result, we are once again raising our full-year revenue, adjusted EBITDA, and free cash flow outlook while remaining focused on disciplined execution, free cash flow generation, and long-term value creation for our shareholders.

Speaker #3: Liquidity is also very strong at about $357 million, giving us tremendous flexibility to grow shareholder value through accelerated organic growth opportunities, M&A, and other capital allocation strategies.

Speaker #3: The consistency of our execution, the durability of demand across large commercial and infrastructure projects, and the strength of our operating model give us confidence as we enter the final quarter of fiscal 2026.

Speaker #3: As a result, we are once again raising our full-year revenue, adjusted EBITDA, and free cash flow outlook, while remaining focused on disciplined execution, free cash flow generation, and long-term value creation for our shareholders.

Speaker #3: Looking out longer term, we are excited about the opportunities we see in front of us. We believe these opportunities coupled with our differentiated business model will translate to profitable growth across all segments, both organically and through potential M&A.

Bruce Young: Looking out longer term, we are excited about the opportunities we see in front of us. We believe these opportunities, coupled with our differentiated business model, will translate to profitable growth across all segments, both organically and through potential M&A. Today, we made an important update regarding capital allocation, and we are pleased to announce that our board of directors has approved the initiation of a regular quarterly cash dividend. The first expected payment of $0.13 per share is to be paid on 2 October 2026, and on an annualized basis, this equates to $0.52 per share, representing a yield of approximately 5.6% based on our current stock price. The dividend does not change our growth investment priorities and our ability to pursue strategic initiatives.

Speaker #3: Today, we made an important update regarding capital allocation, and we are pleased to announce that our board of directors has approved the initiation of a regular quarterly cash dividend.

Speaker #3: The first expected payment of $0.13 per share is to be paid on October 2, 2026, and on an annualized basis, this equates to $0.52 per share, representing a yield of approximately 5.6% based on our current stock price.

Speaker #3: The dividend does not change our growth investment priorities or our ability to pursue strategic initiatives. Rather, it reflects our confidence in the durability of our free cash flow and our commitment to returning capital to shareholders through multiple channels.

Bruce Young: Rather, it reflects our confidence in the durability of our free cash flow and our commitment to returning capital to shareholders through multiple channels. I will now turn the call over to Iain to walk through financial results in more detail. Iain?

Speaker #3: I will now turn the call over to Iain to walk through the financial results in more detail. Iain?

Speaker #2: Thanks, Bruce. And good afternoon, everyone. Moving directly into our third quarter results, revenue increased 13% to 116.8 million compared to 103.7 million in the prior year quarter.

Iain Humphries: Thanks, Bruce, and good afternoon, everyone. Moving directly into our Q3 results. Revenue increased 13% to $116.8 million compared to $103.7 million in the prior year quarter. The increase was driven by continued strength in US commercial and infrastructure activity, particularly large-scale data center and infrastructure projects, along with pricing improvement and mostly stable weather conditions across our US markets. Revenue in our US Concrete Pumping segment increased 10% to $76.2 million, compared to $69.3 million in the prior year quarter. Commercial and infrastructure activity remained healthy, led by continued demand from data centers, while utilities, education, and energy-related projects also contributed to growth. These gains were partially offset by continued softness in light commercial construction and subdued residential demand resulting from elevated interest rates and ongoing economic uncertainty.

Speaker #2: The increase was driven by continued strength in U.S. commercial and infrastructure activity, particularly large-scale data center and infrastructure projects, along with pricing improvement and mostly stable weather conditions across our U.S. markets.

Speaker #2: Revenue in our U.S. Concrete Pumping segment increased 10% to $76.2 million, compared to $69.3 million in the prior-year quarter. Commercial and infrastructure activity remained healthy, led by continued demand from data centers, while utilities, education, and energy-related projects also contributed to growth.

Speaker #2: These gains were partially offset by continued softness in light commercial construction and subdued residential demand resulting from elevated interest rates and ongoing economic uncertainty.

Speaker #2: Revenue in our Eco-Pan concrete waste management services business increased 14% to $21.9 million, compared to $19.3 million in the prior year quarter. Growth was driven by organic volume increases, pricing improvements, and continued success expanding relationships with new customers, demonstrating the scalability and resiliency of the business.

Iain Humphries: Revenue in our Eco-Pan Concrete Waste Management Services business increased 14% to $21.9 million compared to $19.3 million in the prior year quarter. Growth was driven by organic volume increases, pricing improvements, and continued success expanding relationships with new customers, demonstrating the scalability and resiliency of the business. Turning to our UK operations, revenue increased 24% to $18.7 million. The increase primarily reflected the contribution from the Templant temporary power acquisition, while underlying commercial construction activity remained relatively soft. Although inflationary pressures continued to impact fuel costs, we were encouraged by the improving commercial demand activity during July and August and continue to believe our strategic investments are positioning the business for long-term growth. At a consolidated level, gross margin was 38.7%, compared to 39% in the prior year quarter. Pricing execution largely offset inflationary pressures, with a modest decline primarily reflecting higher fuel costs during the quarter.

Speaker #2: Turning to our UK operations, revenue increased 24% to $18.7 million. The increase primarily reflected the contribution from the 10-plant temporary power acquisition, while underlying commercial construction activity remained relatively soft.

Speaker #2: Although inflationary pressures continue to impact fuel costs, we were encouraged by the improving commercial demand activity during July and August, and continue to believe our strategic investments are positioning the business for long-term growth.

Speaker #2: At a consolidated level, gross margin was 38.7%, compared to 39% in the prior-year quarter. Pricing execution largely offset inflationary pressures, with a modest decline primarily reflecting higher fuel costs during the quarter.

Speaker #2: General and administrative expenses increased to 30.1 million compared to 27.5 million in the prior year quarter, reflecting higher stock compensation and costs from recent acquisitions.

Iain Humphries: General and administrative expenses increased to $30.1 million, compared to $27.5 million in the prior year quarter, reflecting higher stock compensation and costs from recent acquisitions. However, G&A as a percentage of revenue improved to 25.8% from 26.5%, demonstrating continued operating leverage. Net income attributable to common shareholders increased to $4.5 million, or $0.09 per diluted share, compared to $3.3 million or $0.07 per diluted share last year. Adjusted EBITDA increased 13% to $30.4 million, with margin improving to 26%. Within U.S. Concrete Pumping, adjusted EBITDA increased 18% to $18.4 million, while Eco-Pan adjusted EBITDA increased 19% to $8.8 million, reflecting continued operating leverage from higher volumes and improved pricing.

Speaker #2: However, G&A as a percentage of revenue improved to 25.8% from 26.5%, demonstrating continued operating leverage. Net income attributed to common shareholders increased to $4.5 million, or $0.09 per diluted share, compared to $3.3 million, or $0.07 per diluted share, last year.

Speaker #2: Adjusted EBITDA increased 13% to $30.4 million, with margin improving to 26%. Within U.S. concrete pumping, adjusted EBITDA increased 18% to $18.4 million, while Eco-Pan adjusted EBITDA increased 19% to $8.8 million, reflecting continued operating leverage from higher volumes and improved pricing.

Speaker #2: Turning to liquidity, and as Bruce mentioned earlier, we ended the quarter with total debt of $425 million and net debt of approximately $382 million, reducing our net leverage ratio to approximately 3.6 times adjusted EBITDA, compared to 3.8 times last quarter.

Iain Humphries: Turning to liquidity, as Bruce mentioned earlier, we ended the quarter with total debt of $425 million and net debt of approximately $382 million, reducing our net leverage ratio to approximately 3.6x adjusted EBITDA compared to 3.8x last quarter. We also ended the quarter with approximately $357 million of available liquidity. The continued reduction in leverage reflects our strong free cash flow generation and disciplined capital allocation strategy and positions us well to continue investing in the business while maintaining balance sheet flexibility. Turning now to our outlook for fiscal 2026. Based on our continued strong performance through the first nine months of the year, we are once again increasing our 2026 full year guidance. We now expect revenue between $425 and $435 million, compared to our prior range of $410 to $425 million.

Speaker #2: We also ended the quarter with approximately $357 million of available liquidity. The continued reduction in leverage reflects our strong free cash flow generation and disciplined capital allocation strategy, and positions us well to continue investing in the business while maintaining balance sheet flexibility.

Speaker #2: Turning now to our outlook for fiscal 2026: Based on our continued strong performance through the first nine months of the year, we are once again increasing our 2026 full-year guidance.

Speaker #2: We now expect revenue between $425 million and $435 million, compared to our prior range of $410 million to $425 million. We are also raising our adjusted EBITDA outlook to a range of $103 million to $108 million, from our prior range of $98 million to $105 million.

Iain Humphries: We are also raising our adjusted EBITDA outlook to a range of $103 to $108 million from our prior range of $98 to $105 million. Lastly, we are also increasing our free cash flow expectation to approximately $50 million from our prior expectation of at least $45 million. Turning to capital allocation. Over the last four years, we have returned approximately $91 million to shareholders through share repurchases and a special dividend. As Bruce mentioned earlier, today we have added to our capital allocation strategy by initiating a regular quarterly cash dividend program. The first expected payment of $0.13 per share is to be paid on 2 October 2026, to shareholders of record as of 18 September 2026. On an annualized basis, this equates to $0.52 per share, representing a yield of approximately 5.6% based on our current stock price.

Speaker #2: And lastly, we are also increasing our free cash flow expectation to approximately $50 million, up from our prior expectation of at least $45 million.

Speaker #2: Turning to capital allocation, over the last four years we have returned approximately $91 million to shareholders through share repurchases and a special dividend.

Speaker #2: As Bruce mentioned earlier, today we have added to our capital allocation strategy by initiating a regular quarterly cash dividend program. The first expected payment of 13 cents per share is to be paid on October 2nd, 2026 to shareholders of record as of September 18th, 2026.

Speaker #2: On an annualized basis, this equates to $0.52 per share, representing a yield of approximately 5.6% based on our current stock price. As always, the declaration and payment of any future dividends remain subject to the discretion and approval of our board of directors each quarter, based on our financial position, cash flow generation, and capital needs at the time.

Iain Humphries: As always, the declaration and payment of any future dividends remains subject to the discretion and approval of our board of directors each quarter based on our financial position, cash flow generation, and capital needs at the time. As a reminder from last quarter, since the initiation of our share repurchase program in 2022, we have repurchased approximately 5.9 million shares for $38.1 million. There is $11.9 million remaining under the current authorization, and the board of directors recently extended its authorization through 30 November 2028. These items, in addition to our strategic growth initiatives, reflects our confidence in our business model and ability to generate healthy free cash flow as we remain committed to our near-term net leverage target of three times. With that, I will turn the call back to Bruce.

Speaker #2: As a reminder from last quarter, since the initiation of our share repurchase program in 2022, we have repurchased approximately 5.9 million shares for $38.1 million.

Speaker #2: There is $11.9 million remaining under the current authorization, and the board of directors recently extended its authorization through November 30, 2028. These items, in addition to our strategic growth initiatives, reflect our confidence in our business model and our ability to generate healthy free cash flow, as we remain committed to our near-term net leverage target of three times.

Speaker #2: With that, I'll turn the call back to Bruce.

Speaker #3: Thanks, Iain. As we look towards the remainder of the year, we remain encouraged by both the consistency of our execution and the resilience of our business. Demand across large commercial and infrastructure projects continues to provide a solid foundation for growth, while our diversified service offering and disciplined operating model continue to differentiate us in the marketplace.

Bruce Young: Thanks, Iain. As we look toward the remainder of the year, we remain encouraged by both the consistency of our execution and the resilience of our business. Demand across large commercial and infrastructure projects continues to provide a solid foundation for growth, while our diversified service offering and disciplined operating model continues to differentiate us in the marketplace. Our priorities remain unchanged. We will continue to execute with discipline, investing strategically in our fleet, expanding complementary service offerings, and maintaining a strong balance sheet. The progress we have made reducing leverage to 3.6x while continuing to invest in the business demonstrates the strength of our cash generation and provides additional flexibility to pursue active growth opportunities. Our newly established regular dividend program sits alongside our disciplined capital allocation commitment to continued investment in growth opportunities, providing superior shareholder value and lower leverage.

Speaker #3: Our priorities remain unchanged. We will continue to execute with discipline, investing strategically in our fleet, expanding complementary service offerings, and maintaining a strong balance sheet.

Speaker #3: The progress we've made reducing leverage to 3.6x, while continuing to invest in the business, demonstrates the strength of our cash generation and provides additional flexibility to pursue active growth opportunities.

Speaker #3: Our newly established regular dividend program sits alongside our disciplined capital allocation commitment to continued investment in growth opportunities, providing superior shareholder value and lower leverage.

Speaker #3: While remaining mindful of ongoing softness in residential construction and the uncertainty that persists in portions of the UK market, we believe our diversified end markets, operational discipline, and strategic investment position us well to continue delivering long-term value for our customers and shareholders.

Bruce Young: While remaining mindful of ongoing softness in residential construction and the uncertainty that persists in portions of the UK market, we believe our diversified end markets, operational discipline, and strategic investment positions us well to continue delivering long-term value for our customers and shareholders. With that, I would like to turn the call back over to the operator for Q&A. Shamali?

Speaker #3: With that, I'd like to turn the call back over to the operator for Q&A. Jamali?

Speaker #4: Thank you, sir. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you, sir. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question comes from the line of Andy Wittmann with Baird. Please proceed with your question.

Speaker #4: A confirmation tone will indicate your line is in the question queue. You may press star two (*) to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker #4: And our first question comes from the line of Andy Whitman with Baird. Please proceed with your question.

Speaker #5: Great. Good afternoon. Thanks, guys, for taking my questions. Iain, I guess I wanted to just start a little bit on the cash flow, dividend here.

Andy Wittmann: Great. Good afternoon. Thanks, guys, for taking my questions. Iain, I guess I wanted to just start a little bit on the cash flow dividend here, was interesting news. Was a little surprised by it, but I am sure the market will like that. I am not sure, but I think it will. We will see. I guess my question has to do with the free cash flow guidance here. Year to date, you are already free cash flow, like $40 million. So Q4 is like $10 million. I guess you paid a coupon on some of the debt, or paid it in August. It kind of feels like that is not just a lot of cash flow in the fourth quarter. Can you maybe talk through some of the moving pieces?

Andy Wittmann: Great. Good afternoon. Thanks, guys, for taking my questions. Iain, I guess I wanted to just start a little bit on the cash flow dividend here, was interesting news. Was a little surprised by it, but I am sure the market will like that. I am not sure, but I think it will. We will see. I guess my question has to do with the free cash flow guidance here. Year-to-date, you are already free cash flow, like $40 million. So Q4 is like $10 million. I guess you paid a coupon on some of the debt, or paid it in August. It kind of feels like that is not just a lot of cash flow in the fourth quarter. Can you maybe talk through some of the moving pieces?

Speaker #5: Was interesting news. I was a little surprised by it, but I'm sure the market will like that. I'm not sure, but I think it will.

Speaker #5: We'll see. I guess my question has to do with the free cash flow guidance here. Year to date, you're already free cash flow—like $40 million.

Speaker #5: So Q4 is, like, $10 million. You know, I guess you paid the coupon on some of the debt, or paid in August.

Speaker #5: It, it kind of feels like, that's not just a lot of cash flow in the fourth quarter. Can you maybe talk through some of the moving pieces and I know you're pulling forward some of the, the I don't know if that if you consider the, the, the, the capex for the, the fleet that you're pulling forward to get ahead of the emissions stuff.

Andy Wittmann: And I know you're pulling forward some of the, I do not know if you consider the CapEx for the fleet that you are pulling forward to get ahead of the emission stuff. Is that the reason why free cash flow is not better? Are you considering that growth or maintenance CapEx? Because I guess your free cash flow definition is only including the maintenance side of that. Anyway, can you just clarify what the Q4 looks like and the CapEx numbers in the Q4, maybe?

Speaker #5: Is that—is that the reason why free cash flow is not better? Are you considering that growth or maintenance capex? Because I guess your free cash flow definition is only including the maintenance side of that.

Speaker #5: So I don't anyway, can you just clarify, what the fourth quarter looks like and, and what the and the, the, the capex numbers in the fourth quarter, maybe?

Speaker #2: Yeah, and thanks for the question, Andy. I'll start with the pull forward of the 2027 CapEx. So it's mostly a replacement that we're pulling forward into 2026.

Iain Humphries: Yeah. Thanks for the question, Andy. I will start with the pull forward of the 2027 CapEx. So it is mostly a replacement that we are pulling forward into 2026. So, that would be reversed in next year's free cash flow update. I guess the best way to think about the free cash flow guide update for the full year, as you know, if you work from the midpoint of the EBITDA guide, so call it 105 or 106, the difference between that and the $50 million is approximately $32 million of interest and about $23 million of replacement CapEx. So there is a small amount of replacement CapEx in the Q4, and that replacement CapEx is about 5% of revenue, which is in line with our normal run rate. So there is probably like $2 or $3 million of replacement CapEx in the Q4.

Speaker #2: So, that would be reversed in next year’s free cash flow update. I guess the best way to think about the free cash flow guide update for the full year, if you— I mean, as you know, if you work from the midpoint of the EBITDA guide, so call it $105 or $106 million, the difference between approximately $32 million of interest...

Speaker #2: And about $23 million of replacement capex. So there's a small amount of replacement capex in the fourth quarter, and that replacement capex is about 5% of revenue, which is in line with our normal run rate.

Speaker #2: So there's probably, like, $2 or $3 million of replacement capex in the fourth quarter.

Speaker #5: Got it. So, as we look forward then, with the pull-forward, what's the right number for replacement capex that you're thinking—kind of broad strokes—for '27?

Andy Wittmann: Got it. So as we look forward then, with the pull forward, what is a right number for replacement CapEx that you are thinking, kind of broad strokes for 2027? I am not looking for decimal points or anything. I know you are not giving 2027 guide. Just want to make sure we are thinking like you are thinking.

Speaker #5: I'm not looking for decimal points—we're not going to hold to that. I know you're not giving '27 guidance. Just want to make sure we're thinking like you're thinking.

Speaker #2: Yeah. So the I mean, excluding the pull forward piece, it'll be a low single digit in, in next year.

Iain Humphries: Yeah. So, excluding the pull forward piece, it will be to a low single digits in next year.

Speaker #5: Excluding the pull-forward. Got it. Okay.

Andy Wittmann: Excluding the pull forward. Got it. Okay.

Speaker #2: Yeah. So if all the—yeah, if all the pull, you might remember, so we had $22 million of forward.

Iain Humphries: You might remember, so we had $22 million of pull forward.

Speaker #5: Yeah.

Speaker #2: About $18 million of that was for U.S. Pumping, and about $4 million for Eco-Pan. So, depending on how much of the replacement comes through in the fourth quarter, the expectation for next year on replacement would be low single-digit percentages for the U.S. Pumping business.

Andy Wittmann: Yeah.

Iain Humphries: About 18 of that was for US Pumping and about 4 for Eco-Pan. Depending on how much of the replacement comes through in Q4, the expectation for next year on replacement would be low percentage single digits for the US Pumping business.

Speaker #5: Yeah. And then with the dividend, how does that work against the Nuveen preferred? Does that preferred conversion ratio change as a result of this?

Andy Wittmann: With the dividend, how does that work against the Nuveen preferred? Does that preferred conversion ratio change as a result of this? Can you just update us on that?

Speaker #5: Can you just update us on that? Because it used to have a mandatory conversion trigger and all these things. And so, does that start moving now that you're paying the dividend on the common?

Iain Humphries: Yeah.

Andy Wittmann: Because it used to have a mandatory conversion trigger and all these things. Does that start moving now that you are paying the dividend on the common?

Speaker #2: It doesn't change anything on the preferred.

Iain Humphries: It does not change anything on the preferred.

Speaker #5: Okay, got it. That makes sense. And then, just as it relates to the 3.0 target—now with a decent-sized dividend here—what’s a realistic time frame to think about, to consider getting down to that 3.0 target?

Andy Wittmann: Okay. Got it. That makes sense. Then just as it relates to the 3.0 target now with a decent sized dividend here, what is a realistic timeframe to think to consider getting down to that 3.0 target? Understanding, obviously, that you are always looking at M&A, but maybe you could look, say, like, if you do not do M&A, X is the date we think is realistic or something like that.

Speaker #5: Understanding, obviously, that you're always looking at M&A, but maybe you could say, like, if we don't do M&A, you know, X is the date we think is realistic, or something like that.

Speaker #2: Yeah, it's a good question. So obviously, it depends on the investments that we make and growth initiatives. But, I mean, as you remember, we've had a healthy share repurchase in prior years.

Iain Humphries: Yeah. It is a good question. Obviously, it depends on the investments that we make in growth initiatives. But as you remember, we have had a healthy share repurchase in prior years. From last year, I want to say it was around $12 million to $14 million. I think in the year prior to that, it was around $10 million. So, depending on where the share price is, it would depend on what goes into share repurchases. From a cash perspective, we have always thought that it is not a stretch for us to turn leverage down by at least half a turn in 12 months. Obviously, it is dependent on what we do on the growth side as well. But a reasonable expectation, I would say, around 18 months, barring anything extraordinary on the investment side.

Speaker #2: So from last year, I want to say it was around $12 to $14 million, I think, in the year prior to that.

Speaker #2: It was around $10 million. So, depending on where the share price is, it would determine what goes into share repurchases. From a cash perspective, we've always thought that it's not a stretch for us to bring leverage down by at least half a turn.

Speaker #2: In 12 months, but obviously, it depends on what we do on the growth side as well. A reasonable expectation, I would say, is around 18 months, barring anything extraordinary on the investment side.

Speaker #5: Okay, and then my last question is just on the margins in the UK segment. It was a lower number than I think I expected here.

Andy Wittmann: Okay. My last question is just on the margins in the UK segment. It was a lower number than I think I expected here. I was just wondering if there was a mix impact from the acquisition in there or something else that we should know about, just because that one just stood out a little bit. I wanted to understand. Thank you.

Speaker #5: And I was just wondering if there was a mix impact from the acquisition in there or something else that we should know about, just because that one just stood out a little bit and I wanted to understand.

Speaker #5: Thank you.

Speaker #2: Yeah. N-nothing really from the acquisition side that would have impacted margin. I mean, as, as you'll know, we've had some demand headwinds in the UK slightly.

Iain Humphries: Yeah. Nothing really from the acquisition side that would have impacted margin. As you will know, we have had some demand headwinds in the UK slightly, so there has been a slight loss of labor efficiency. As Bruce mentioned in his comments, we have seen a bit of a pickup in the volume side in July in demand. So it is slightly from the labor component in Q3, just really based on demand.

Speaker #2: So, there's been a slight loss of labor efficiency, but as Bruce mentioned in his comments, we've seen a bit of a pickup in volume on the demand side in July.

Speaker #2: So it's slightly from the labor component in the third quarter, just really based on demand. Yeah. And I think what I would add to that, Andy, is in the UK, labor isn't as variable as what we see in the US.

Bruce Young: Yeah. I think what I would add to that, Andy, in the UK, labor is not as variable as what we see in the US, so we need to keep our team intact. We pay them while we have them employed for us. We are seeing really strong signs of that market starting to come back, so we think that will improve.

Speaker #2: So we need to keep our team intact, and we pay them while we have them employed for us. But we are seeing really strong signs of that market starting to come back.

Speaker #2: So we think that'll improve.

Speaker #5: Yeah, okay. That's good context. I appreciate you flagging the difference in the labor force there, Bruce. Thank you very much, guys. I'll leave it there.

Andy Wittmann: Yeah. Okay. That is good context. I appreciate you flagging the difference in the labor force there, Bruce. Thank you very much, guys. I will leave it there.

Speaker #2: All right. Thanks, Andy.

Speaker #5: Okay.

Bruce Young: All right. Thanks, Andy.

Bruce Young: All right. Thanks, Andy [crosstalk].

Speaker #3: 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 remarks.

Operator: 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 remarks.

Speaker #2: 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 fourth quarter and full year 2026 results in January.

Bruce Young: Thank you, Shamali. We would like to thank everyone for listening to today's call, and we look forward to speaking with you when we report our Q4 and full year 2026 results in January. Thank you.

Speaker #2: Thank you.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.