Concrete Pumping Holdings, Inc. — Q1 FY2024 Form 10-Q
Reporting period: Three months ended January 31, 2024; compared with the three months ended January 31, 2023. Amounts below are in U.S. dollars. The company provides concrete pumping and concrete waste-management services in the U.S. and U.K. Its first quarter is typically seasonally weaker.
Financial performance
| Metric | Q1 FY2024 | Q1 FY2023 | Change |
|---|---|---|---|
| Revenue | $97.7 million | $93.6 million | Up 4.4% |
| Gross profit / margin | $33.3 million / 34.1% | $36.5 million / 39.0% | Profit down 8.6%; margin down 4.9 percentage points |
| Operating income | $1.5 million | $9.4 million | Down $8.0 million |
| Net income (loss) | $(3.8) million | $6.5 million | Declined $10.3 million |
| Net income (loss) per diluted share | $(0.08) | $0.11 | — |
| Adjusted EBITDA | $19.3 million | $25.0 million | Down 23.0% |
| Net cash from operating activities | $20.3 million | $17.9 million | Up $2.4 million |
| Capital expenditures | $17.8 million | $17.1 million | Up $0.6 million |
Revenue grew as U.K. Operations and U.S. Concrete Waste Management Services expanded, offsetting a slight decline in U.S. Concrete Pumping. U.K. revenue increased 21.2% (16% excluding foreign-currency translation); U.S. waste-management third-party revenue rose 14.2%; U.S. pumping revenue fell 0.8%.
Segment Adjusted EBITDA was $10.7 million for U.S. Concrete Pumping, down 36.4%; $3.2 million for U.K. Operations, up 32.8%; and $5.4 million for U.S. Concrete Waste Management Services, down 7.5%.
Operating cash flow included seasonal collection of receivables. Cash declined by $1.2 million to $14.7 million. Investing activities used $16.5 million, while financing activities used $5.6 million, mainly reflecting net revolver repayments and treasury-stock purchases.
Balance sheet and liquidity
- Cash and cash equivalents: $14.7 million at January 31, 2024, versus $15.9 million at October 31, 2023.
- Total debt, gross: $388.0 million, comprising $375.0 million of 6.0% senior notes due February 2026 and $13.0 million drawn under the ABL revolving facility. The ABL balance was down from $19.0 million at October 31, 2023.
- ABL availability: $202.3 million; total available liquidity, including cash, was $217.0 million. Outstanding letters of credit were $8.5 million. The company reported compliance with debt covenants.
- Working capital surplus: $7.3 million. Management said cash, operating cash flow and ABL capacity should be sufficient for working capital and capital expenditures for at least the next 12 months.
- Current assets were $79.6 million and current liabilities were $72.4 million. Total liabilities were $561.8 million; stockholders’ equity was $307.9 million. The balance sheet also included $25.0 million of zero-dividend convertible perpetual preferred stock.
Material changes, outlook and risks
- Management attributed weaker U.S. pumping activity and lower gross margin to severe January winter weather, including heavy rain, snow and freezing temperatures, which delayed customer projects and reduced volume and labor utilization. Insurance-cost inflation also pressured margins. Higher labor, health-insurance and rent costs contributed to increased expenses.
- General and administrative expenses rose to $31.9 million from $27.0 million. This included a $3.5 million charge for a Washington sales-tax dispute. After an adverse appellate judgment in February 2024, the company concluded the loss was probable; it paid $1.8 million during the quarter and began assessing Washington sales tax in Q2 FY2024. The company said it is defending its position; the filing does not specify the ultimate total exposure.
- Net results also reflect the absence of the prior-year $4.6 million gain from remeasurement of warrant liabilities; the warrants expired on December 6, 2023. In Q1 FY2024, the warrant remeasurement gain was $0.1 million.
- The company reported no formal earnings or revenue guidance. Management noted that quarterly results are seasonal and the first three months are not necessarily indicative of the full year. Key stated risks include construction-market cycles and demand, weather, inflation and fuel costs, labor and insurance costs, substantial indebtedness, currency fluctuations, litigation and insurance claims, and access to credit.
- After quarter-end, the board authorized an additional $15.0 million for share repurchases in March 2024, on top of an existing authorization. The company repurchased 36,094 shares under the program for $0.2 million during the quarter.
Important facts for investors to verify
- Whether weather-related volume and utilization recover, and whether margin performance improves in subsequent quarters.
- The status and potential remaining cost of the Washington sales-tax litigation and related tax collections.
- Debt-service capacity and refinancing plans for the $375.0 million senior notes due February 2026, alongside ABL availability and covenant compliance.
- Whether the cash-flow benefit from seasonal receivables collections is sustainable and how planned capital expenditures affect liquidity.
- How repurchases and any future acquisitions are balanced against leverage, liquidity and operating investment.