BBCP - Concrete Pumping Holdings Reports Fourth Quarter and Fiscal Year 2019 Results Provides Financial Outlook for Fiscal Year 2020

DENVER, Jan. 14, 2020 (GLOBE NEWSWIRE) -- Concrete Pumping Holdings, Inc. (Nasdaq: BBCP) (the “Company” or “CPH”), a leading provider of concrete pumping services and concrete waste management services in the U.S. and U.K., today reported financial results for its fourth quarter and fiscal year ended October 31, 2019. 

Fourth Quarter Fiscal Year 2019 Summary

• Revenue increased 25% to $84.0 million as compared to the fourth quarter of fiscal year 2018.
• Gross margin increased 340 basis points to 46.3% as compared to the fourth quarter of fiscal year 2018.
• Net income attributable to common shareholders was $0.1 million or $0.00 per diluted share.
• Adjusted EBITDA¹ increased 33% to $29.6 million with Adjusted EBITDA margin¹ increasing 260 basis points to 35.2% as compared to the fourth quarter of fiscal year 2018.
• Net debt¹ decreased $15.9 million from $434.1 million as of July 31, 2019 to $418.2 million as of October 31, 2019.

Fiscal Year 2019 Financial Summary

• Revenue increased 16% to $283.0 million as compared to fiscal year 2018.
• Gross margin was up 60 basis points to 44.3% as compared to fiscal year 2018.
• Net loss attributable to common shareholders was $34.2 million.
• Adjusted EBITDA¹ increased 21% to $95.5 million with Adjusted EBITDA margin¹ increasing 120 basis points to 33.8% as compared to fiscal year 2018.

Management Commentary

“We ended the year on a strong note, with 25% revenue growth in the fourth quarter of fiscal year 2019 translating to a 33% increase in Adjusted EBITDA,” said Bruce Young, CEO of CPH. “These results were driven by our margin-enhancing acquisition of Capital Pumping in May 2019, broad end-market strength in the U.S. and accelerated growth in Eco-Pan. We also continued to gain efficiencies in our supply chain while realizing the expected synergies from the Capital Pumping acquisition.

“These results were achieved despite roughly 40% of our U.S. operations being shut down in the final week of the quarter due to a severe, early winter storm that delivered snow and rain from Idaho to Texas. While we estimate the Q4 2019 revenue impact from this event was approximately $1.5 million, we expect the delayed work will be re-captured in early fiscal 2020.

“As we look to the next fiscal year, we believe our positive momentum will continue. While we remain cautious in our U.K. outlook, expecting concrete pumping in the region to be somewhat flat in fiscal 2020, we expect U.S. construction activity to remain robust, particularly in our commercial and infrastructure projects, which accounted for nearly 70% of our total revenue in fiscal 2019. Combining this with our pricing initiatives, margin-enhancing opportunities from Eco-Pan and Capital Pumping, as well as overall economies of scale, we believe we are well-positioned for success and shareholder value creation in fiscal 2020.”

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¹ Adjusted EBITDA and Adjusted EBITDA margin are financial measures that are not calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). Net debt is also a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for a discussion of the definition of these measures and a reconciliation of Adjusted EBITDA and net debt to their most comparable GAAP measure.

Fourth Quarter Fiscal Year 2019 Financial Results

Revenue in the fourth fiscal quarter increased 25% to $84.0 million compared to $67.4 million in the year-ago quarter. The increase was largely attributable to the acquisition of Capital Pumping, coupled with growth in many of the Company’s existing core markets. This increase was offset by the effect of inclement weather on our U.S. operations at the end of the quarter. On a pro forma basis, which includes the results of recent acquisitions both pre- and post-transaction, revenue increased 5% over the previous year. Adjusting the pro forma revenue for a constant currency exchange rate, revenue increased 6% in the fourth quarter as compared to the prior year.

Gross profit in the fourth fiscal quarter increased 34% to $38.8 million compared to $28.9 million in the year-ago quarter. Gross margin increased 340 basis points to 46.3% compared to 42.9% in the year-ago quarter. The increase in gross margin was primarily due to the post-acquisition contribution from Capital Pumping, more favorable fuel pricing and better procurement costs. This was partially offset by the step-up in depreciation related to the business combination with Industrea Acquisition Corp. in December 2018 (the “Business Combination”), as depreciation expense related to pumping equipment is included in the Company’s cost of operations.

General and administrative expenses in the fourth fiscal quarter were $28.2 million compared to $15.9 million in the year-ago quarter. As a percent of revenue, general and administrative expenses were 33.6% compared to 23.6% in the year-ago quarter. The increase was largely due to a $7.9 million increase in amortization expense primarily due to the Business Combination. The remainder of the increase was largely attributable to stock-based compensation and headcount growth, the latter being a combination of (1) new team members added to assist with our public company requirements and (2) the continuing employment of Capital Pumping team members who moved over from the Capital acquisition. General and administrative expenses as a percent of revenue excluding amortization of intangible assets and stock-based compensation expense would have been 19.6% in the fourth fiscal quarter of 2019 compared to 20.4% in the same year-ago quarter.

Net income attributable to common shareholders in the fourth fiscal quarter was $0.1 million, or $0.00 per diluted share. Adjusted EBITDA¹ in the fourth fiscal quarter increased 33% to $29.6 million compared to $22.0 million in the year-ago quarter. Adjusted EBITDA margin increased 220 basis points to 35.2% compared to 33.0% in the year-ago quarter. The increase in revenue, combined with a 340 basis point increase in gross margin, were the primary factors responsible for the strong growth in Adjusted EBITDA.

As of October 31, 2019, the Company had $7.5 million of cash, $425.7 million of total outstanding debt and $29.2 million of available borrowing capacity under its ABL Credit Agreement.

Fiscal Year 2019 Financial Results

Revenue in fiscal year 2019 increased 16% to $283.0 million compared to $243.2 million in fiscal year 2018. The increase was largely attributable to the acquisition of Capital Pumping. On a pro forma basis, which includes the results of recent acquisitions both pre- and post-transaction, revenue increased 3% over the previous year. Adjusting the pro forma revenue for a constant currency exchange rate, revenue increased 4% in fiscal year 2019 as compared to the prior year.

Gross profit in fiscal year 2019 increased 18% to $125.4 million compared to $106.3 million in fiscal year 2018. Gross margin increased 60 basis points to 44.3% compared to 43.7% in fiscal year 2018, primarily due to the contribution from Capital Pumping, more favorable fuel pricing and improved procurement costs.

General and administrative expenses in fiscal year 2019 were $96.9 million compared to $58.8 million in fiscal year 2018. As a percent of revenue, general and administrative expenses were 34.2% compared to 23.6% in fiscal year 2018. The increase was largely due to a $25.1 million increase in amortization expense primarily related to the Business Combination, higher stock-based compensation of $3.3 million, and the addition of Capital Pumping personnel. In addition, the Company incurred a $4.1 million increase in legal, accounting and director-related costs due to being a public company, with approximately $1.6 million of these costs not expected to recur.

Net loss attributable to common shareholders in fiscal year 2019 was $34.2 million. Adjusted EBITDA¹ in fiscal year 2019 increased 21% to $95.5 million compared to $79.1 million in fiscal year 2018. Adjusted EBITDA margin increased 120 basis points to 33.7% compared to 32.5% in fiscal year 2018. The increase in revenue, combined with a 60-basis point increase in gross margin, were the primary factors responsible for the strong growth in Adjusted EBITDA.

Segment Results

U.S. Concrete Pumping. Revenue in the fourth fiscal quarter increased 35% to $62.1 million compared to $45.9 million in the year-ago quarter. The incremental benefit of the Capital Pumping acquisition, which added additional pumping capacity in Texas, represented $13.4 million of the increase. This segment also had notable improvements in revenue in most markets. Adjusted EBITDA in the fourth fiscal quarter increased 48% to $19.4 million compared to $13.1 in the year-ago quarter due to post-acquisition contributions from Capital Pumping, better fuel pricing and procurement costs.

Revenue in fiscal year 2019 increased 24% to $203.7 million compared to $164.3 million in fiscal year 2018. The increase was primarily due to the acquisition of Capital Pumping, which added approximately $25.2 million, and the continued organic volume expansion in our other U.S. regions. This segment also had notable improvements in Oklahoma where several special projects required placing booms and Idaho where there was an increase in billable hours. Adjusted EBITDA in fiscal 2019 increased 34% to $62.8 million compared to $46.8 in fiscal year 2018. This was largely due to the acquisition of Capital Pumping, improved gross margin and volume growth across most U.S. markets.

U.K. Operations. Revenue in the fourth fiscal quarter was $13.0 million compared to $13.7 million in the year-ago quarter. The decline in revenue was largely attributable to the strengthening of the U.S. dollar relative to the British Pound Sterling. Excluding any impact from foreign exchange rates, revenue for this segment was essentially flat due to uncertainties in the U.K. economy attributable to Brexit. Adjusted EBITDA in the fourth fiscal quarter decreased 6% to $4.3 million over the previous year primarily due to the currency translation.

Revenue in fiscal year 2019 was $49.2 million compared to $50.4 million in fiscal year 2018. The decline in revenue was largely attributable to the strengthening of the U.S. dollar relative to the British Pound Sterling. Excluding any impact from foreign exchange rates, revenue was up 2% year-over-year due to improved equipment utilization rates. Adjusted EBITDA in fiscal year 2019 decreased by 6% to $15.7 million over fiscal year 2018 primarily due to higher fuel prices and the impact of the strong U.S. dollar.

U.S. Concrete Waste Management Services. Revenue in the fourth fiscal quarter increased 18% to $9.0 million compared to $7.6 million in the year-ago quarter. The increase was driven primarily by higher volumes. Adjusted EBITDA in the fourth fiscal quarter increased 21% to $4.9 million over the year-ago quarter due to higher revenue and greater volume related efficiencies.

Revenue in fiscal year 2019 increased 7% to $30.4 million compared to $28.5 million in fiscal year 2018. The increase was primarily driven by higher volumes. Adjusted EBITDA in fiscal year 2019 increased 7% to $14.2 million compared to fiscal year 2018 due to the higher revenue and improved operating performance.

Fiscal Year 2020 Outlook

The Company expects fiscal year 2020 revenue to range between $315 million and $330 million, Adjusted EBITDA¹ to range between $110 million and $115 million and has targeted a net debt-to-Adjusted EBITDA leverage ratio of ~3.5x by the end of the 2020 fiscal year.   
  
Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its fourth quarter and fiscal year 2019 results.

Date: Tuesday, January 14, 2020
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-877-407-9039
International dial-in number: 1-201-689-8470
Conference ID: 13697693

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.concretepumpingholdings.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through February 4, 2020.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13697693

About Concrete Pumping Holdings

The Company is the leading provider of concrete pumping services and concrete waste management services in the fragmented U.S. and U.K. markets, primarily operating under what we believe are the only established, national brands in both geographies – Brundage-Bone for concrete pumping in the U.S., Camfaud in the U.K., and Eco-Pan for waste management services in both the U.S. and U.K. The Company’s large fleet of specialized pumping equipment and trained operators position it to deliver concrete placement solutions that facilitate substantial labor cost savings to customers, shorten concrete placement times, enhance worksite safety and improve construction quality. Highly complementary to its core concrete pumping service, Eco-Pan provides a full-service, cost-effective, regulatory-compliant solution to manage environmental issues caused by concrete washout. As of October 31, 2019, the Company provided concrete pumping services in the U.S. from a footprint of approximately 90 locations across 22 states, concrete pumping services in the U.K. from 28 locations, and route-based concrete waste management services from 16 locations in the U.S. and 1 location in the U.K. For more information, please visit www.concretepumpingholdings.com or the Company’s brand websites at www.brundagebone.com,  www.camfaud.co.uk, or www.eco-pan.com.

Forward?Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: the outcome of any legal proceedings that may be instituted against the Company or its subsidiaries; the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably and retain its key employees, and realize the expected benefits from the acquisition of Capital Pumping; changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission. The Company cautions that the foregoing list of factors is not exclusive. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

Non-GAAP Financial Measures

Adjusted EBITDA is a financial measure that is not calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). The Company believes that this non-GAAP financial measure provides useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. The Company’s management also uses this non-GAAP financial measure to compare the Company’s performance to that of prior periods for trend analyses, determining incentive compensation and for budgeting and planning purposes. Adjusted EBITDA is also used in quarterly and yearly financial reports prepared for the Company’s board of directors. The Company believes that this non-GAAP measure provides an additional tool for investors to use in evaluating the Company’s ongoing operating results and in comparing the Company’s financial results with competitors who also present similar non-GAAP financial measures.

Adjusted EBITDA is defined as net income calculated in accordance with GAAP plus interest expense, income taxes, depreciation, amortization, transaction expenses, gain (loss) on sale of assets, non-recurring adjustments, management fees and other one-time and non-operational expenses. Adjusted EBITDA is not pro forma for acquisitions. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenue for the period presented.

See “Non-GAAP Measures (Adjusted EBITDA)” below for a reconciliation of Adjusted EBITDA to net income (loss) calculated in accordance with GAAP. With respect to our expectations under “Fiscal Year 2020 Outlook” above, the Company has not provided a reconciliation of forward-looking non-GAAP measures, primarily due to the variability and difficulty in making accurate forecasts and projections, as not all of the information necessary for a quantitative reconciliation is available to the Company without unreasonable efforts. Current and prospective investors should review the Company’s audited annual and unaudited interim financial statements, which are filed with the U.S. Securities and Exchange Commission, and not rely on any single financial measure to evaluate the Company’s business. Other companies may calculate Adjusted EBITDA differently and therefore this measure may not be directly comparable to similarly titled measures of other companies.

Net debt is calculated as all amounts outstanding under debt agreements (currently this includes the Company’s term loan and revolving line of credit balances, excluding any offsets for capitalized deferred financing costs) measured in accordance with GAAP less cash. Cash is subtracted from the GAAP measure because it could be used to reduce the Company’s debt obligations. A limitation associated with using net debt is that it subtracts cash and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. We believe this non-GAAP measure provides useful information to management and investors in order to monitor the Company's leverage and evaluate the Company's consolidated balance sheet. See “Non-GAAP Measures (Net Debt)” below for a reconciliation of net debt to total debt calculated in accordance with GAAP.

As the underlying business and financial results of the Successor and Predecessor entities are expected to be largely consistent, excluding the impact on certain financial statement line items that were impacted by the Business Combination, management has combined the fiscal year 2019 results of the Predecessor and Successor periods for comparability in certain tables below. Accordingly, in addition to presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, the tables below present the non-GAAP combined results for the fiscal year 2019.

Presentation of Predecessor and Successor Financial Results

As a result of the Business Combination, the Company is the acquirer for accounting purposes and CPH is the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes the Company’s presentations into two distinct periods, the period up to the Business Combination closing date (labeled “Predecessor”) and the period including and after that date (labeled “Successor”). The Business Combination was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. As a result of the application of the acquisition method of accounting as of the effective time of the Business Combination, the accompanying Consolidated Financial Statements include a black line to distinguish the results for Predecessor and Successor reporting entities shown, as they are presented on a different basis and are therefore, not comparable.

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NON-GAAP MEASURES (ADJUSTED EBITDA)

We calculate EBITDA by taking GAAP net income and adding back interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by taking EBITDA and adding back transaction expenses, other adjustments, management fees and other expenses. We believe these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends related to our financial condition and results of operations, as a tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial measures with competitors who also present similar non-GAAP financial measures. In addition, these measures (1) are used in quarterly and yearly financial reports prepared for management and our board of directors and (2) help management to determine incentive compensation. EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated under GAAP. This non-GAAP measure excludes certain cash expenses that we are obligated to make. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently or may not calculate it at all, which limits the usefulness of EBITDA and Adjusted EBITDA as comparative measures. Transaction expenses represent expenses for legal, accounting, and other professionals that were engaged in the completion of various acquisitions. Other adjustments include severance expenses, director fees, and other significant non-recurring costs. See also “Non-GAAP Financial Measures” above.