Concrete Pumping Holdings, Inc. Q4 FY2024 earnings call

• Trends in Q4 largely followed prior quarters with U.S. Pumping volume-driven declines offset by Concrete Waste Management gains. Lingering high interest rates affected commercial projects, but Concrete Waste Management sustained double-digit growth. UK operations had similar trends but infrastructure projects and pricing held up.
• Adjusted EBITDA margins generated strong free cash flow, with a 5% increase in free cash flow and a $42 million reduction in net debt. Flexible capital expenditure strategy and strong unit economics improved balance sheet strength.
• Commercial end market softness in light commercial and offices, but residential end market resilient at 32% of total revenue. Infrastructure revenue share grew slightly, with UK infrastructure growth strong and U.S. expecting growth from Infrastructure Investment and Jobs Act.
• Fourth quarter revenue $111.5M vs $120.2M prior year. Gross margin 41.5% vs 40.7% prior year. General and administrative expenses declined 9%. Net income available to common shareholders $9M or $0.16 per diluted share. Free cash flow $24M vs $19M prior year. Liquidity $378M as of October 31, 2024. Repurchased ~423,000 shares for $2.5M in Q4, with $17M authorized for share buyback through March 2025.

In the fourth quarter, revenue was $111.5 million. The U.S. Pumping segment, operating under the Brundage Bone brand, had revenue of $74.5 million compared to $85 million in the prior year quarter, declining due to slow commercial construction and oversaturation of concrete pumps. The UK operations, operating under the Camfaud brand, had revenue of $17.1 million compared to $17.4 million in the prior year quarter, down ~6% excluding foreign exchange translation effects due to lower construction volumes. The U.S. concrete waste management services segment operating under the Eco-Pan brand had revenue of $19.8 million, up 11% compared to $17.8 million in the prior year quarter, driven by increased volumes and pricing. Gross margin increased 80 basis points to 41.5%. Adjusted EBITDA in the fourth quarter was $33.7 million, with adjusted EBITDA margin increasing 40 basis points to 30.2%. Free cash flow increased 26% to $24 million. Net debt decreased by $46 million to $332 million, with a net debt to EBITDA leverage ratio of 3 times.

• Fiscal year 2025 revenue expected to range between $425 million and $445 million.
• Adjusted EBITDA expected to range between $115 million and $125 million.
• Free cash flow to be at least $65 million, assuming return to normal seasonality with 45% of revenue in first half and balance in back half.
• Expect overall construction volumes in U.S. and UK in 2025 to increase by low single digits and pricing to increase the same.

• Lingering high interest rates affecting timing of rate-sensitive commercial projects and delaying new construction.
• Oversaturation of concrete pumps in certain markets impacting U.S. Pumping segment.
• Uncertainty around refinancing senior notes due in February 2026 and market conditions affecting execution.

Q: Please drill in on CapEx for 2025, breaking down gross CapEx for new fleets, sales remaining elevated.

A: In 2024, CapEx was ~4% of revenue. Normalized replacement CapEx target is 6-7% of revenue for 2025. May have $3-4M on growth side for CapEx. Unusual trade activity expected as ~5% of fleet ages out each year.

Q: Thoughts on refinancing senior notes, primary path, pricing approach.

A: Have options available, looking for best execution. Market has momentum, will be opportunistic. Upsized ABL at end of last year, has good structural elements.

Q: Major buckets driving EBITDA margin improvement, fuel, repair and maintenance, labor.

A: Fuel pricing improved. Better labor management. Repair and maintenance parts pricing lower. No deferred maintenance. Labor optimized to improve P&L.

Q: Cadence of EBITDA growth, front-end or back-end loaded.

A: Ties to return to normal seasonality, more back-end weighted. Q1 slower, margin expected to build through year, 1% margin pickup expected by end of year.

Q: Fleet utilization currently and outlook for U.S. Concrete Pumping revenue inflection in third quarter.

A: Fleet utilization right around 70%. U.S. Concrete Pumping revenue inflection expected in third quarter due to back-half weighting and market momentum from manufacturing reshoring, new administration, and Fed actions.

Q: Risk to infrastructure funding environment and deployment of IIJA money.

A: Money set aside for projects but not awarded yet. Lessening of environmental/labor requirements could accelerate projects, expecting infrastructure pickup in 2025 and 2026.

Q: Demand conditions baked into U.S. Concrete Pumping's third quarter inflection outlook.

A: Driven by manufacturing reshoring, new administration optimism, and Fed actions, with momentum taking 5-6 months to cycle into new project starts.

Q: Margin outlook for U.S. concrete pumping and waste management margin jump.

A: Expect margin improvement for consolidated business in 2025, including U.S. pumping. Waste management margin fluctuation due to growth investments. U.S. pumping expects margin improvement through controllable elements. Waste management grew ~15% year over year with slight margin enhancement.

Q: Pricing outlook for U.S. pumping in fiscal 2025.

A: Expect additional pressure in 2025 until market shifts, with price increases expected this year and next, on a quarter-by-quarter basis