Concrete Pumping Holdings, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended October 31, 2020. This is an annual filing; it does not provide a standalone fiscal fourth-quarter result. The filing compares FY2020 with a non-GAAP combined FY2019 period because the 2018 business combination created predecessor and successor accounting periods.
Business context
Concrete Pumping Holdings provides concrete pumping and concrete waste-management services in the U.S. and U.K. Its four reportable segments are U.S. Concrete Pumping, U.S. Concrete Waste Management Services, U.K. Operations, and Corporate. The May 2019 Capital Pumping acquisition expanded its Texas operations. At year-end, the company reported approximately 1,200 equipment units, 1,300 employees, and 140 locations.
Financial performance and liquidity
| Metric | FY2020 | FY2019 comparison |
|---|---|---|
| Revenue | $304.3 million | $283.0 million combined; up 7.5% |
| Gross profit / gross margin | $137.3 million / 45.1% | $125.4 million / 44.3% |
| Operating loss | $31.7 million | $12.9 million operating income |
| Net loss | $61.0 million | $32.5 million combined net loss |
| Adjusted EBITDA | $107.3 million | $95.5 million; up 12.4% |
| Net cash from operating activities | $79.0 million | Not directly comparable in the filing’s combined presentation |
FY2019 figures above use management’s non-GAAP predecessor/successor combined presentation where applicable; reported GAAP periods are not fully comparable. Adjusted EBITDA is a non-GAAP measure and should not be treated as a substitute for GAAP earnings or cash flow.
- Segments: U.S. Concrete Pumping revenue was $229.7 million, up 12.8%; U.S. Waste Management revenue was $35.9 million, up 18.0%; U.K. Operations revenue was $39.1 million, down 20.4%. U.S. pumping benefited substantially from Capital; U.K. results were hurt by COVID-related shutdowns.
- Costs and unusual items: General and administrative expense was $111.1 million, up $14.2 million. The company recorded $57.9 million of goodwill and intangible impairment, including $38.5 million in U.S. Concrete Pumping, $14.4 million in U.K. Operations, and $5.0 million against the Brundage-Bone trade name. The impairment was non-cash and drove the reported operating and net losses.
- Cash and investment: Cash was $6.7 million; operating cash flow was $79.0 million; capital expenditures were $39.3 million, partly offset by $3.5 million of equipment-sale proceeds. Investing cash outflow was $35.9 million and financing cash outflow was $43.9 million.
- Debt and liquidity: Principal outstanding was $381.2 million under the term loan and $1.7 million under the ABL facility, or $382.9 million in total. Term-loan principal due within the next fiscal year was $20.9 million. The company had $52.6 million of available ABL capacity and reported total available liquidity of $59.3 million, including cash. It was in compliance with debt covenants at year-end. Net interest expense was $34.4 million.
- Balance sheet: Total assets were $773.8 million, down from $871.4 million, primarily reflecting impairment and depreciation/amortization. Total liabilities were $474.6 million; stockholders’ equity was $274.1 million. The company also had $25.0 million of zero-dividend convertible perpetual preferred stock.
Changes, outlook, and risks
- Revenue and gross margin improved year over year, with Capital acquisition contributions, modest organic U.S. pumping growth, and favorable fuel pricing. U.S. waste management also grew through organic growth, pricing, and new offerings.
- COVID-19 caused construction-site shutdowns, particularly in Seattle and the U.K., and prompted headcount reductions, modified schedules, and limited furloughs. Most cited shutdown restrictions were lifted during the third quarter, but management said the pandemic’s duration and future effects remained uncertain.
- Management said existing cash, operating cash flow, and ABL capacity were expected to be sufficient for working capital and capital expenditures for at least the next 12 months. The filing gives no quantified revenue or earnings guidance.
- Key risks include renewed COVID-related disruptions, construction-market cyclicality and weather, substantial debt and variable LIBOR-linked rates, foreign-exchange exposure, equipment age and replacement needs, supplier and labor availability, safety and insurance claims, and potential further impairment. Goodwill remaining at year-end was $223.2 million.
- Other notable items: stock-award modifications in October 2020 contributed to higher stock-based compensation; a $2.0 million settlement with former shareholders related to tax refunds was recorded in G&A. Management said ordinary-course legal matters were not expected to have a material financial impact. Management reported disclosure controls and internal control over financial reporting effective at year-end and said a previously identified impairment-review weakness had been remediated.
Most important facts for investors to verify
- Whether operating cash flow and ABL availability remain adequate as construction activity and customer collections evolve.
- Debt repayment, interest-rate exposure, covenant headroom, and the effect of LIBOR transition on borrowing costs.
- Whether COVID-19, U.K. conditions, or other market changes lead to additional impairment or sustained segment weakness.
- Capital spending required to maintain or renew the roughly nine-year-old average fleet, and the resulting effect on free cash flow.
- The treatment of non-GAAP Adjusted EBITDA adjustments and the comparability limits between FY2020 and the combined FY2019 figures.