Earnings call transcript: Concrete Pumping Q1 2025 sees revenue dip

Concrete Pumping Holdings (BBCP), with a market capitalization of $321 million, reported its first-quarter financial results for 2025, showing a decline in revenue and net loss improvement. The company experienced a revenue drop to $86.4 million from $97.7 million in the previous year. Despite the revenue decline, the net loss improved to $3.1 million, or $0.06 per diluted share, compared to a $4.3 million loss, or $0.08 per share, last year. The stock price reacted negatively in after-hours trading, falling by 4.14% to $5.79. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment.

Key Takeaways

• Revenue decreased by $11.3 million year-over-year.
• Net loss improved by $1.2 million.
• Gross margin increased by 200 basis points to 36.1%.
• The company reduced net debt by $33 million.
• Stock price declined by 4.14% in after-hours trading.

Company Performance

Concrete Pumping Holdings faced a challenging first quarter in 2025, with revenue declining by 11.6% compared to the same period last year. The decrease was attributed to weather impacts, which reduced revenue by an estimated $5 million. Despite these challenges, the company improved its net loss and increased its gross margin, indicating better cost management and operational efficiency.

Financial Highlights

• Revenue: $86.4 million, down from $97.7 million year-over-year.
• Net Loss: $3.1 million, improved from $4.3 million.
• Earnings per share: -$0.06, improved from -$0.08.
• Gross Margin: 36.1%, up 200 basis points.
• General and Administrative Expenses: $27.8 million, down 13%.

Market Reaction

Following the earnings release, Concrete Pumping Holdings’ stock declined by 4.14% in after-hours trading, closing at $5.79. This movement contrasts with a 1.43% rise during regular trading hours. The stock remains within its 52-week range of $5.05 to $9.68, reflecting investor concerns over the revenue decline and broader market conditions. InvestingPro data shows the stock’s RSI suggests oversold territory, while analyst targets range from $6.25 to $9.50, indicating potential upside. Get access to 6 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Outlook & Guidance

The company revised its full-year revenue guidance to $400 million-$420 million, reflecting a more cautious outlook compared to previous forecasts. With trailing twelve-month EBITDA of $109.4 million and a healthy current ratio of 1.99, the company maintains strong operational efficiency. Adjusted EBITDA is projected to be between $105 million and $115 million, with an expected free cash flow of approximately $60 million. InvestingPro’s Financial Health Score indicates FAIR overall health, with particularly strong scores in growth and relative value metrics. Access the full Pro Research Report for detailed analysis of BBCP’s financial position among 1,400+ US stocks. While the commercial construction market shows signs of softness, Concrete Pumping Holdings remains optimistic about a recovery and is focusing on mergers and acquisitions to drive growth.

Executive Commentary

CEO Bruce Young emphasized the company’s readiness for a commercial market recovery, stating, "We are well positioned for commercial market recovery." CFO Ian Humphries highlighted the company’s operational efficiency, noting, "Our ability to drive robust free cash flow stems from optimizing equipment utilization." Young also indicated a strategic shift, saying, "We are more focused on M&A now than in past years."

Risks and Challenges

• Weather-related disruptions may continue to impact revenue.
• Commercial construction market softness poses a risk to growth.
• Increased focus on M&A could divert resources from core operations.
• Market volatility and economic uncertainties may affect investor sentiment.

Q&A

During the earnings call, analysts inquired about the impact of weather on different segments and the company’s capital allocation priorities. Management clarified its strategy to maintain current CapEx levels and discussed margin maintenance strategies, emphasizing flexibility in managing its equipment fleet.

Full transcript - Concrete Pumping Holdings Class A (BBCP) Q1 2025:

Shamali, Conference Call Moderator: 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 01/31/2025. Joining us today are Concrete Pumping Holdings’ CEO, Bruce Young CFO, Ian Humphries and the company’s External Director of Investor Relations, Cody Sla. Before we go further, I would like to turn the call over to Mr. Slaugh 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.

Cody Sla, External Director of Investor Relations, Concrete Pumping Holdings: Thanks, Shamali. 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 SEC. The company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events or otherwise.

On today’s call, we will also reference certain non GAAP financial measures, including adjusted EBITDA, net debt and free cash flow, which we believe provide useful information for investors. We provide further information about these non GAAP financial measures and reconciliations to the comparable GAAP measures in our press release issued today or the investor presentation posted on the company’s website. I’d like to remind everyone that this call will be available for replay later this evening. A webcast replay will also be available via the link provided in today’s press release as well as on the company’s website. Additionally, we have posted an updated investor presentation to the company’s website.

Now, I would like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

Bruce Young, CEO, Concrete Pumping Holdings: 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 $5,000,000 in the quarter. In The UK, 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. 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 twenty twenty five 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 remained 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. 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 twelve 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 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 end markets growth. 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 U.

S. National footprint has allowed us to win more publicly funded projects. We expect our infrastructure business to grow in fiscal twenty twenty five 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. I will now let Ian address our financial results in more detail before I return to provide some concluding remarks. Ian?

Ian Humphries, CFO, Concrete Pumping Holdings: Thanks, Bruce, and good afternoon, everyone. Moving right into our results for the first quarter, revenue was $86,400,000 compared to $97,700,000 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 $56,900,000 compared to $66,700,000 in the prior year quarter. As Bruce mentioned, we estimate the severe weather impacted our first quarter revenue by approximately $5,000,000 For our UK operations, operating largely under the Camfr brand, revenue was $12,800,000 compared to $15,400,000 in the same year ago 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 EcoPam brand continues to perform well against a challenging market backdrop and increased 7% to $16,700,000 dollars compared to $15,600,000 in the prior year quarter. 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 $27,800,000 compared to $31,900,000 in the prior year quarter, primarily due to the non recurring $3,500,000 sales tax charge that occurred in the first quarter of twenty twenty four. As a percentage of revenue, G and A 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 $3,100,000 or $0.06 per diluted share compared to a net loss of $4,300,000 or $0.08 per diluted share in the prior year quarter.

Consolidated adjusted EBITDA in the first quarter was $17,000,000 compared to $19,300,000 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 cost and a disciplined approach to managing our fleet. In our U. S.

Concrete Pumping business, adjusted EBITDA declined to $9,200,000 compared to $11,600,000 in the same year ago quarter. In our UK business, adjusted EBITDA was $2,800,000 compared to $3,200,000 in the same year ago quarter. And for our U. S. Concrete Waste Management Services business, adjusted EBITDA increased to $5,000,000 compared to $4,500,000 in the same year ago quarter.

Now turning to liquidity. At 01/31/2025, we had total debt outstanding of $425,000,000 and net debt of $340,000,000 which is a decrease of $33,000,000 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 are approximately $410,000,000 of liquidity as of 01/31/2025, which includes cash on the balance sheet and availability from our ABL facility. On 01/31/2025, we successfully closed a private offering of $425,000,000 in aggregate principal amount of senior secured second lien notes that mature in 02/1932.

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

Now moving into our share buyback plan. During the first quarter, we repurchased approximately 296,000 shares for $1,900,000 or an average share price of $6.53 Since the buyback was initiated in 2022, we have repurchased approximately $20,000,000 of our stock and we have an additional $15,000,000 authorized through December of twenty twenty six. We believe our share buyback plan demonstrates both our commitment to delivering enhanced value to shareholders and our confidence in our strategic growth plan. Moving now onto our 2025 full year guidance. While we had expected some recovery and an improved project funding particularly in our commercial end market.

As we navigate lower commercial project volumes, we are adjusting our financial outlook for fiscal year twenty twenty five. We now expect fiscal year revenue to range between $400,000,000 and $420,000,000 and adjusted EBITDA to range between $105,000,000 and $115,000,000 We expect free cash flow, which we define as adjusted EBITDA less net replacement CapEx less cash paid for interest to be approximately $60,000,000 which is in line with our previous 2025 guidance when adjusted for our new capital structure. Our ability to drive this robust free cash flow 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. With that, I will now turn the call back over to Bruce.

Bruce Young, CEO, Concrete Pumping Holdings: 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 net 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 and 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.

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 UK, our team continues to secure nationally critical energy road and rail projects in addition to the well documented HS2 project as the new UK government seeks to drive broader economic and productivity growth. The fundamental strength and underlying drivers of our resilient business model, proven strategic plans, 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.

With that, I would now like to turn the call back over to the operator for Q and A. Shamali?

Shamali, Conference Call Moderator: Thank you, sir. We will now be conducting a question and answer session. And our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Tim Mulrooney, Analyst, William Blair: Hi, Steve. Good afternoon.

Bruce Young, CEO, Concrete Pumping Holdings: Hi, Tim.

Tim Mulrooney, Analyst, William Blair: First on the guide, it looks like you reduced your annual revenue guide by about $25,000,000 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?

Ian Humphries, CFO, Concrete Pumping Holdings: Yes. 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 measured look at the entire year and where we think that the cadence of the remaining quarters to perform for the remainder of the year.

Tim Mulrooney, Analyst, William Blair: Okay. And do you still expect that split first half, second half split kind of 40 five-fifty five? Or should we be looking for a little bit different cadence?

Ian Humphries, CFO, Concrete Pumping Holdings: Yes. 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 $25,000,000 It still centers around $45,000,000.55000000 dollars

Tim Mulrooney, Analyst, William Blair: That’s helpful. And just on that weather disruption, Ayan, if you don’t mind me just to keep going here for a sec, that $5,000,000 weather related disruption in the first quarter, I noticed that you called out a $7,000,000 weather headwind in the first quarter of last year. So to me, all else equal, that implies you had a $7,000,000 easier comp in the first quarter of this year. So I guess, does that mean that weather related disruptions were really closer to $12,000,000 in the first quarter of this year relative to your expectations?

Ian Humphries, CFO, Concrete Pumping Holdings: Yes, that’s right. And you can actually see that in the year over year performance. A lot of it translates. And we got some like heavy rainfall in November and January was like severe low temperatures all across the country. So a lot of that came in January.

But yes, you’re right, it was more severe weather on top of quite extreme weather in the prior year.

Tim Mulrooney, Analyst, William Blair: Okay.

Ian Humphries, CFO, Concrete Pumping Holdings: Which really led to which really led and that’s what led to the volume it’s really a volume change based on that weather impact then.

Tim Mulrooney, Analyst, William Blair: Yes. That makes sense. Two more quick ones on capital allocation. Just to clarify, that net debt of $340,000,000 I think in the press release it said it includes the $53,000,000 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 $53,000,000 to that $340,000,000 number to correctly adjust for the dividend?

Ian Humphries, CFO, Concrete Pumping Holdings: You should add it to the $340,000,000

Tim Mulrooney, Analyst, William Blair: Okay. So that gets me to my last question. I just want to ask a little bit more about your capital allocation priorities. Given the special dividend that was announced and it looks like your leverage ratio is going to go back up a little bit here. 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.

Ian Humphries, CFO, Concrete Pumping Holdings: Yes. So maybe I’ll start with free cash flow. I mean, maybe I’ll just revert back to our prepared remarks, Tim, on the guide. I mean, it’s $60,000,000 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. We mentioned in our remarks, whether it’s between debt reduction, share buybacks, organic and M and A growth, the special dividend augments that. We’ll continue to consider what we think drives the most optimal value as we go forward. But we will you’ve seen us being committed to the balance sheet and discipline around leverage, and you can expect that same commitment going forward.

Bruce Young, CEO, Concrete Pumping Holdings: Tim, what I would add to that is that we are more focused on M and 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.

Tim Mulrooney, Analyst, William Blair: Got it. That’s helpful color. Thank you, Bruce. Thanks, Ayn.

Ian Humphries, CFO, Concrete Pumping Holdings: Thanks. Thanks, Tim.

Shamali, Conference Call Moderator: Thank you. Our next question comes from the line of Brent Thielman with D. A. Davidson. Please proceed with your question.

Brent Thielman, Analyst, D.A. Davidson: Hey, thanks guys. Good afternoon. Hey, Ian, just want to ask real quick on Eco Pan if there was

Bruce Young, CEO, Concrete Pumping Holdings: a weather impact there as well.

Brent Thielman, Analyst, D.A. Davidson: Yes, I didn’t hear you call that out.

Ian Humphries, CFO, Concrete Pumping Holdings: Yes. So I mean, they’re dealing with the same challenging weather. I mean, you will recall, as opposed to just the pure service, Eco Pan 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. Business.

Tim Mulrooney, Analyst, William Blair: Okay.

Brent Thielman, Analyst, D.A. Davidson: And I guess, Bruce, I mean, I guess as the industry goes right now, what markets or sectors, are you seeing sort of excess equipment capacity focused, maybe how that’s impacting pricing dynamics in the market right now and how you’re working around that?

Bruce Young, CEO, Concrete Pumping Holdings: 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 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.

Brent Thielman, Analyst, D.A. Davidson: Okay. I guess just the last one would be, you held CapEx relatively low for a few quarters now, including the first quarter. Ian, I mean, should 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?

Ian Humphries, CFO, Concrete Pumping Holdings: Our CapEx I mean, as you know, Brian, 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 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. So you want to don’t expect to see a meaningful change in our investment in that replacement fleet as we go forward.

Bruce Young, CEO, Concrete Pumping Holdings: Yes. What I would add to that is as we start looking into more M and A, as you know, 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 will play into that capital policy going forward as well.

Justin Hauck, Analyst, Baird: Got it.

Brent Thielman, Analyst, D.A. Davidson: Makes sense. Thanks guys.

Ian Humphries, CFO, Concrete Pumping Holdings: Thanks.

Shamali, Conference Call Moderator: Thank you. Our next question comes from the line of Justin Hauck with Baird. Please proceed with your question.

Justin Hauck, Analyst, Baird: Yes. Thanks. Good afternoon, everyone. I just wanted to ask about, I guess, the puts and takes on the margins being flat year over year. Could you quantify maybe the positives on like the fuel cost side, concrete side, labor side versus the declines on the volume side?

Just to kind of understand the moving pieces that got that back to flat.

Ian Humphries, CFO, Concrete Pumping Holdings: Yes, absolutely, Justin. I mean, as you know, a large percent I mean, between 7580% 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 0.5 percentage point move on the fuel. We’ve seen some abatement on that fuel and placement replacement. And then really on the repair and maintenance, I mean, good control on that variable cost, obviously, with our lower demand and there’s less steps being put on the equipment, which allows us to control that repair and maintenance component.

So early between repair, maintenance and fuel and good operator efficiency is really what contribute to keeping that margin in line, which again is a good testament to that variable cost structure that we’ve got.

Justin Hauck, Analyst, Baird: Okay, great. And I guess my second question just given a lot of the guidance have 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. It was up 7% in the 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?

Bruce Young, CEO, Concrete Pumping Holdings: 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 Eco Pan that you had experienced in the past.

Justin Hauck, Analyst, Baird: Okay, great.

Brent Thielman, Analyst, D.A. Davidson: Thank you

Justin Hauck, Analyst, Baird: so much.

Brent Thielman, Analyst, D.A. Davidson: Thank you.

Ian Humphries, CFO, Concrete Pumping Holdings: Thanks, Justin.

Shamali, Conference Call Moderator: 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.

Bruce Young, CEO, Concrete Pumping Holdings: 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 twenty twenty five results in June.

Shamali, Conference Call Moderator: And ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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