BBCP - Concrete Pumping Holdings Reports Strong Second Quarter Fiscal Year 2020 Results

DENVER, June 09, 2020 (GLOBE NEWSWIRE) -- Concrete Pumping Holdings, Inc. (Nasdaq: BBCP) (the “Company” or “CPH”), a leading provider of concrete pumping services and waste management services in the U.S. and U.K., today reported financial results for its second fiscal quarter ended April 30, 2020.

Second Quarter Fiscal Year 2020 Summary vs. Second Quarter of Fiscal Year 2019

Management Commentary

“As indicated in our second quarter pre-announcement and further supported by today’s strong results, our business has shown resilience amongst the COVID-19 pandemic, highlighting the agility of our operations and largely essential nature of our work,” said Bruce Young, CEO of CPH. “During this time, we have prioritized the safety of our employees while continuing to deliver exceptional service that our customers demand. We also continue to demonstrate the attractiveness of our business model with second quarter Adjusted EBITDA growth well outpacing our revenue growth. This has allowed us to reduce our leverage while taking other proactive measures to enhance our liquidity.

“During the second quarter, we reduced net debt² by approximately $20 million compared to the end of the first quarter of fiscal 2020 and instituted various cost saving and cash preservation measures to increase available liquidity to $33 million as of April 30th. These included the suspension of uncommitted 2020 capital expenditures and utilizing our roughly 70% variable cost structure to scale back expenses in markets with softer demand. The combination of these measures, along with our healthy operating cash flow and no near-term debt maturities, has us managing our business from a position of strength during these uncertain times.

“It is important to note that our strong second quarter results were achieved despite COVID-19-imposed construction site shutdowns, primarily in our U.K. and Seattle markets, which partially offset our 19% revenue growth. In the past several weeks, however, these markets have begun to recover. In particular, Seattle is back to pre-COVID-19 revenue levels while our U.K. operations have rebounded from 25% to 60% of pre-COVID-19 revenue levels. We are closely monitoring the velocity of our job volume in all of our markets and are cautiously optimistic in positive demand trends continuing. Nevertheless, we believe the swift actions we have taken in response to the current environment will maximize our financial strength in support of our long-term strategy to drive shareholder value.”

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”). See “Non-GAAP Financial Measures” below for a discussion of the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to its most comparable GAAP measure.
² Net debt is a non-GAAP financial measure. See Non-GAAP Financial Measures below for a discussion of the definition of net debt and a reconciliation to its most comparable GAAP measure.

Second Quarter Fiscal Year 2020 Financial Results

Revenue in the second quarter of fiscal year 2020 increased 19% to $74.0 million compared to $62.0 million in the second quarter of fiscal year 2019. The increase was largely attributable to the acquisition of Capital Pumping in May 2019. In addition, robust organic growth in many of the Company’s existing core markets in both segments in the U.S. was mostly offset by a decline in revenue in the U.K. Operations segment due to COVID-19-imposed construction site closures.

Gross profit in the second quarter of fiscal year 2020 increased 31% to $31.9 million compared to $24.4 million in year-ago quarter. Gross margin increased 370 basis points to 43.0% compared to 39.3% 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.

General and administrative expenses in the second quarter of fiscal year 2020 were $26.4 million compared to $21.9 million in the year-ago quarter. The increase was largely due to the acquisition of Capital Pumping, which drove higher amortization of intangible assets expense of $1.6 million and headcount growth, along with $1.0 million in higher stock-based compensation expense as a result of a stock grant in April 2019. Excluding amortization of intangible assets and stock-based compensation expense, G&A expenses were up 13%. As a percent of revenue, general and administrative expenses were 35.6% compared to 35.3% in the year-ago quarter.

Net loss available to common shareholders in the second quarter of fiscal year 2020 was $59.4 million or $(1.13) per diluted share compared to a net loss of $10.1 million or $(0.35) per diluted share in the second quarter of fiscal year 2019. Net loss attributable to common shareholders in the second quarter of 2020 included a $57.9 million non-cash goodwill impairment charge, which was required due to the COVID-19 impact on the Company’s market capitalization.

Adjusted EBITDA in the second quarter of fiscal year 2020 increased 29% to $23.5 million compared to $18.2 million in the year-ago quarter. Adjusted EBITDA margin increased 240 basis points to 31.8% compared to 29.4% in the year-ago quarter. The increase in revenue, combined with a 370 basis point increase in gross margin, were the primary factors responsible for the strong growth in Adjusted EBITDA.

Liquidity

At April 30, 2020, the Company had net debt of $412.8 million and total available liquidity of $33.1 million. On a sequential basis, net debt improved by $20.1 million from the first quarter of fiscal 2020.

Segment Results

U.S. Concrete Pumping.  Revenue in the second fiscal quarter increased 35% to $57.5 million compared to $42.5 million in the year-ago quarter. The incremental benefit of the Capital Pumping acquisition, which added additional pumping capacity in Texas, represented $12.0 million of the increase. Excluding the contribution from Capital Pumping, revenue on an organic basis improved 7% over the previous year due to notable improvements in most markets. Adjusted EBITDA in the second fiscal quarter increased 51% to $16.3 million compared to $10.8 in the year-ago quarter due to post-acquisition contributions from Capital Pumping, better fuel pricing and procurement costs.

U.K. Operations. Revenue in the second fiscal quarter was $8.4 million compared to $12.7 million in the year-ago quarter. The decline was largely attributable to COVID-19-imposed construction site shutdowns in the month of April. Adjusted EBITDA in the second fiscal quarter was $2.5 million compared to $4.1 million in the year-ago quarter primarily due to the decline in revenue.

U.S. Concrete Waste Management Services. Revenue in the second fiscal quarter increased 23% to $8.3 million compared to $6.8 million in the year-ago quarter. The increase was driven primarily by robust organic growth and improving operational effectiveness across a majority of the markets served. Adjusted EBITDA in the second fiscal quarter increased 36% to $4.1 million compared to $3.0 million over the year-ago quarter, with the increase primarily attributable to the strong revenue growth.
  
Fiscal Year 2020 Outlook

As previously reported in its May 11, 2020 second quarter results pre-announcement, CPH believes it is currently well-positioned to navigate the current COVID-19 environment and is fully prepared to leverage an economic recovery. Given the heightened uncertainty about the duration and timing of the economic recovery associated with the pandemic, the Company has withdrawn its 2020 financial outlook provided on January 14, 2020.

Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its second quarter results.

Date: Tuesday, June 9, 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: 13704097

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 June 30, 2020.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13704097

About Concrete Pumping Holdings

Concrete Pumping Holdings 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 April 30, 2020, 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.

Presentation of Predecessor and Successor Financial Results

As a result of the business combination between our predecessor, Industrea Acquisition Corp., and the private operating company formerly called Concrete Pumping Holdings, Inc. (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.

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 annual 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, loss on debt extinguishment, stock-based compensation, other income, net, and other adjustments. 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.

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. CPH believes 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.

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 and net debt differently and therefore these measures may not be directly comparable to similarly titled measures of other companies.
 
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 first quarter 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 first quarter of 2019.

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