Concrete Pumping Holdings, Inc. — Q1 FY2022 10-Q
Reporting period: Three months ended January 31, 2022; comparative period ended January 31, 2021. Financial statements are unaudited. The company provides concrete pumping services in the U.S. and U.K. and concrete waste-management services in the U.S. and U.K. Its first quarter is typically seasonally weaker.
Financial performance
| Metric | Q1 FY2022 | Q1 FY2021 |
|---|---|---|
| Revenue | $85.4 million | $70.4 million |
| Gross profit / margin | $34.1 million / 39.9% | $29.9 million / 42.4% |
| Operating income | $7.4 million | $7.4 million |
| Net income (loss) | $1.2 million | ($12.3 million) |
| Income available to common shareholders | $0.7 million | ($12.8 million) |
| Diluted EPS | $0.01 | ($0.24) |
| Operating cash flow | $13.2 million | $12.6 million |
| Capital expenditures | $35.4 million | $9.4 million |
| Adjusted EBITDA | $24.0 million | $22.4 million |
Revenue rose 21.3%. Segment revenue increased 20.6% in U.S. Concrete Pumping, 22.9% in U.K. Operations, and 24.2% in U.S. Concrete Waste Management Services. Adjusted EBITDA increased 7.3%; the company’s non-GAAP measure excludes specified items and should not be viewed as a substitute for GAAP results.
Gross margin contracted 2.5 percentage points as inflation in labor and fuel costs outweighed improved pricing. General and administrative expense rose 19.4% to $26.7 million, including higher labor costs and stock compensation. Net income improved substantially, in part because the prior-year quarter included a $15.5 million loss on extinguishment of debt.
Financial position and liquidity
- At January 31, 2022, cash was $2.8 million, total assets $806.1 million, and stockholders’ equity $263.3 million.
- Gross debt was $391.2 million: $375.0 million of 6.0% senior secured notes due February 2026 and $16.2 million drawn under the asset-based revolving credit facility. Debt net of deferred financing costs was $385.6 million.
- The company reported $105.2 million of available ABL borrowing capacity and total available liquidity of $108.0 million, including cash. It stated existing cash, operating cash flow, and borrowing capacity should meet working-capital and capital-expenditure needs for at least 12 months.
- Operating cash flow was $13.2 million, while investing activities used $34.5 million, primarily for $35.4 million of property and equipment purchases. Financing activities provided $14.7 million, largely reflecting net ABL borrowings. Cash declined $6.5 million during the quarter.
- The company reported compliance with debt covenants at quarter-end. The ABL facility has a $125 million commitment, subject to borrowing-base limits, and includes a springing fixed-charge coverage covenant.
Management commentary, outlook, and risks
U.S. pumping revenue benefited from acquisitions and organic volume and rate improvements; Pioneer and Hi-Tech contributed $6.7 million to the year-over-year increase. U.K. growth reflected recovery from pandemic impacts and higher rates per job. U.S. waste-management growth reflected organic gains, pricing, and continued recovery.
In November 2021, the company acquired Pioneer’s assets for approximately $20.2 million, primarily equipment, with the balance allocated to intangible assets. No impairment indicators were identified through January 31, 2022, though management said future impairment remains possible.
The filing gives no specific financial guidance or quantified outlook. Management identified uncertainty from COVID-19 and variants, qualified-labor availability, inflation and fuel costs, construction-market cyclicality, weather and seasonality, acquisition execution, currency movements, and substantial indebtedness. The company also noted possible adverse effects from Russia-Ukraine hostilities and broader economic conditions. It reported ordinary-course legal matters that management did not believe would materially affect the financial statements, and no material changes to the risk factors in its latest Form 10-K.
Most important facts for investors to verify
- Whether revenue and pricing gains can offset persistent labor and fuel inflation, particularly given the gross-margin decline and U.S. pumping EBITDA pressure.
- Whether unusually high equipment spending is recurring, how it will be funded, and its effect on cash and ABL borrowings.
- Current borrowing-base availability and covenant headroom, alongside the company’s ability to service $375 million of 6.0% notes and variable-rate revolver debt.
- The contribution and integration of Pioneer and Hi-Tech, and whether acquired growth is translating into sustainable returns.
- Potential effects of COVID-related labor constraints, seasonality, foreign exchange, and any future goodwill or intangible-asset impairment.