Good afternoon, everyone. And thank you for participating in today's conference call to discuss Concrete Pumping Holdings Financial Results for the Fourth Quarter and Fiscal Year Ended October 31, 2020.

Joining us today are, Concrete Pumping Holdings CEO, Bruce Young, CFO, Iain Humphries, and the Company's External Director of Investor Relations, Cody Slach. Before we go further, I would like to turn the call over to Mr.

Slach to read the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important caution regarding forward-looking statements. Cody, please go ahead..

Thanks, Shemali. I'd like to remind everyone that in the course of this call, to give you a better understanding of our operations, we will be making certain forward-looking statements. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from such statements.

For information concerning these risks and uncertainties, see Concrete Pumping Holdings, Inc. publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

On today's call, we will also discuss adjusted EBITDA, net debt and free cash flows which are non-GAAP financial measures. Adjusted EBITDA, adjusted reported EBITDA for certain items.

We believe the presentation of this non-GAAP financial measure is useful, because it provides investors and industry analysts the same information that we use internally for purposes of assessing our core operating performance. Net debt reflects all principal amounts outstanding under debt agreements less cash.

Cash is subtracted from the GAAP measure, because it could be used to reduce the company's debt obligations. 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.

Free cash flow is defined as adjusted EBITDA less net CapEx and cash paid for interest. This measure is not a substitute for cash flow from operations and does not represent the residual cash flow available for discretionary expenditures since certain non-discretionary expenditures such as debt servicing payments are not deducted from the measure.

CPH believes this non-GAAP measure provides useful information to management and investors in order to monitor and evaluate the cash flow yield of the business.

For reconciliation and historical adjusted EBITDA in net debt to their most directly comparable GAAP financial measure, please refer to the press release issued today or the investor presentation posted on the company's website.

However, the company is not reconciled the forward-looking adjusted EBITDA guidance range and free cash flow range discussed to the most directly comparable forward-looking GAAP measures because this cannot be done without reasonable effort due to the lack of predictability regarding the various reconciling items, such as provision for income taxes and depreciation and amortization..

Thank you, Cody and good afternoon everyone. Our performance throughout the fourth quarter and the fiscal year 2020 has been a testament to our continued operational resiliency and solid financial foundation.

The hard work of our team has allowed us to maintain the quality and efficiency of our operations as we navigated and continue to navigate the lingering COVID-19 headwinds across our markets. Our team members have swiftly adapted to evolving health protocols throughout the regions in which we operate.

We’re deeply grateful for their flexibility and resourcefulness and we continue to prioritize their safety as we monitor further changes in health guidelines. Despite the pandemic, we maintained our position of financial strength in the fourth quarter.

We continue to benefit from our highly variable cost structure and maintained year-over-year adjusted EBITDA margin expansion. In addition, generated double-digit revenue growth in our concrete waste management services business, sustained a strong momentum that we have delivered throughout the year.

For our full-year, revenue increased approximately 8% to $304.3 million when compared to fiscal 2019 demonstrating the resiliency of our business model throughout the challenging market backdrop. Gross margin was up 80 basis points to 45.1% and adjusted EBITDA increased 12% to $107.3 million.

Further as Iain will highlight shortly, we made significant progress strengthening our balance sheet. Net debt has been reduced by $42 million since we ended fiscal 2019 and we have reached our 2020 targeted year-end leverage ratio of 3.5 times. In fact, we have executed on all the key priorities we established in May to respond to the pandemic.

Along with meeting our pre-COVID 2020 leverage targets, we invested approximately $36 million into our fleet of equipment. We have kept our workers safe, maintained strong operations demonstrated our businesses agility and resilience, which today's results support and controlled costs due to our roughly 70% variable costs operating model.

Our ability to execute on our year-long strategic objectives during this difficult period proves that our robust foundation will not only see us through these challenging times, but also sustain our long-term growth throughout fiscal 2021 and beyond..

Thanks, Bruce and good afternoon, everyone. Moving right into our fourth quarter 2020 results, we generated revenue of $79.2 million compared to $84 million in the same year-ago quarter. The slight decline was due to lingering volume impacts of COVID-19 across the U.K. markets. In addition, while we generated organic growth in many of our U.S.

markets, as Bruce mentioned, this growth was more than offset by COVID-19 related volume declines in certain markets. As such revenue in the U.S. Concrete Pumping segment mostly operate under the Brundage-Bone brand was $58.5 million compared to $62.1 million in the same year-ago quarter. Q4 revenue in our U.K.

operations, operating largely under the Camfaud brand was $10.9 million, compared to $13 million in the same year-ago quarter. As we've experienced over the past few quarters, this decline was driven by construction volume reductions, due to a slow recovery from COVID-19, particularly with an infrastructure. The U.K.

is currently running at approximately 85% of our pre-COVID revenue run rate. As we continue to monitor the U.K. regional recovery trends, and anticipate a tempered return to full revenue capacity, we continue to believe we have ample runway for long-term market share expansion, including the multi-year high-speed rail project HS2. Revenue in our U.S.

Concrete Waste Management Services segment, operating under the Eco-Pan brand increased 11% to $9.9 million in the fourth quarter, compared to $9 million in the same year-ago quarter.

This was driven by robust organic growth in the majority of our markets, and higher utilization of our assets, as well as the sustained beneficial pricing improvements and additional service volumes from our expanded roll-off offerings.

We have continued to optimize our Eco-Pan operations through our investments in our roll-off services in several locations, as this service allows us to accommodate larger volumes in our established small and large Pan services.

At the end of Q4 2020, pans in the field, which is a leading indicator for future pickups are approximately 6% higher when compared to the same year-ago quarter. We see tremendous potential for further increasing our Eco-Pan penetration across the existing concrete pumping footprint.

In fact, without entering new markets, we would still expect to generate double-digit full-year revenue growth in this segment. Turning back to our consolidated results, gross profit in the fourth quarter was $35.5 million, compared to $38.8 million in the same year-ago quarter and gross margin was 44.8% compared to 46.3%.

This slight decrease was primarily driven by higher depreciation expenses. Across our organization, we have continued to prudently manage available cost to support the health and resiliency of our business.

General and admin expenses in Q4 are $31.1 million compared to $28.2 million in the same year-ago quarter and increase was largely due to the non-cash effects of higher stock based compensation expense, which was partially offset by lower amortization expense in the fourth quarter..

Thanks, Iain. We’re now into our 2021 fiscal year and remain focused on applying our momentum and strong financial foundation to continue capitalizing on our highly diversified business in areas where we have been experienced market share gains.

While some of our customers projects are still delayed due to COVID-19 impacts and restrictions, we have not seen any new major changes or delays to our project schedule or overall fitting environment. We continue to closely monitor the pace of recovery within regions that were more heavily impacted by the pandemic.

As we stated last quarter, we expect U.K.’s recovery to continue into 2021 given its slower pace relative to the U.S. However, our diligent focus on managing cash flow and proactively and reinforcing our variable cost structure makes us well positioned for the U.K.’s markets eventual stabilization.

In the U.S., we continue to view residential construction as an area of strength for our business and we expect residential demand to remain robust going into 2021.

Additionally, we expect that other sectors including wastewater treatment plants, data centers, warehouses, distribution centers, and healthcare projects will continue to experience positive trends.

In Eco-Pan, we remain focused on increasing our penetration among our existing concrete pumping footprint and developing opportunities to introduce new service to new markets. As Iain mentioned, increasing penetration alone will allow us to sustain double-digit revenue growth for the segment even without new market entry.

We're proud of the progress that we have made in the business during 2020 and we greatly look forward to accelerating our momentum further in the coming year. We have a solid financial and operational framework in place for the year ahead.

The fact that we have improved our liquidity have covenant light debt facilities and no near-term debt maturities and are now operating at our near-term target leverage ratio of 3.5 times provides greater flexibility for us to pursue growth enhancing investment opportunities.

As we pursue opportunities to increase our penetration across your existing geographic footprint and even enter into new markets, our strong balance sheet and highly variable cost structure will allow us to develop capital allocation strategy in ways that maximize returns and shareholder value.

Throughout our organization, we're taking a cautious but optimistic approach to these and other growth opportunities given this dynamic macro economic environment. We’re grateful for the support of our team members and our shareholders throughout these unprecedented times and look forward to executing on our strategic plan in fiscal 2021.

With that, I'd like to now turn the call back over to Shemali for Q&A..

At this time, we'll be conducting a question-and-answer session. Our first question is from Tim Mulrooney with William Blair. Please proceed with your question..

Good afternoon, Bruce and Iain..

Hi, Tim, how are you?.

Doing well, thanks. Couple of questions this afternoon. So the first I wanted to ask about the market outlook. If I look at the last recession, it took a few years, I think for commercial construction to come back. But I know every cycle is different. So how do you think about your markets as we move into 2021? I appreciate the color you've given so far.

But is there typically a lag for commercial construction following a downturn? And then on the residential construction side, do you expect that to hold steady and remain strong? Or do you think it'll slow down at some point or accelerate? Any thoughts here would be helpful..

Yes, so I'll take it in the U.K. first. And the U.K. was off quite a lot and 2020 is, as you saw from the results, while it's been slowly coming back, the latest shutdown has affected it slightly but not significantly, it had continued to grow through December as we as expected.

We believe that once we get through the vaccination and get more confidence in that market, that the infrastructure portion of that will come back very quickly. There has been quite a lot of activity on the commercial market in the U.K. And we expect that to be not too far behind us. We're very optimistic about the U.K. for 2021. In the U.S.

with our Eco-Pan business, it’s really telling the story and growing penetration through education. And we expect that to continue regardless of market conditions. And with our U.S. Concrete Pumping business, our residential market remains strong in several areas within the U.S. and it is offset.

It's more than offset what we have lost in commercial or our infrastructure during 2020. And then we expect that to continue on. In the commercial markets, we’re starting to bid more work than what we had in the past. There are several projects that were put on hold that we expected will be started later in the year.

And so we expect the second half of 2020 to look quite good for us with the commercial market or the non-res market. And in the infrastructure market, we have several projects that have been put on hold based on funding challenges.

We're hopeful and the things that we're hearing about an infrastructure bill being rapidly run through or the administration is we'll hopefully get those things back online. And we believe the infrastructure work will start picking up in the second half of the year as well..

Thanks, Bruce. That's good color and is a good segue to my other question, we're kind of unexpectedly maybe entering a period with a unified government once again, and the conversation around infrastructure spending is definitely heating up.

I'm wondering if you could provide investors provide us with a few examples of how you might benefit from an infrastructure package.

I know, for example, that concrete pumping isn't typically used for building roads and highways, but I have to think there will be some major opportunities for you, and was hoping you could help walk us through what that might look like?.

Yes, so infrastructure, I know, there's a lot of focus on roads and highways. But there is also bridge structures on those as well. And those bridge structures will use concrete pumping.

We have in our investor presentation, you'll see an illustration of basically how our infrastructure is graded across the different states of the country, and it's graded very poorly. And that comes from wastewater from water from bridge structures.

And largely, anything that goes through an infrastructure bill is really highly affected or for us there's a lot of concrete in all those projects. And so we were actually quite excited about that.

And with Eco-Pan, I think there'll be an opportunity there with new environmental enforcement that may come along with that that may help Eco-Pan along the way as well..

Understood. Thank you for taking my questions..

Thanks, Tim..

And our next question is from Andrew Wittmann with Robert W. Baird. Please proceed with your questions..

Great, thanks. Good afternoon, guys. I thought I would just take a little time here and ask questions around the guidance. As you look at it, it's basically saying flat revenues and kind of margins for ‘21.

But in fact talked already about some of the puts and takes by segment, it sounds like secular growth in Eco-Pain to continue, to say double-digit for the years kind of your view. U.K. soft, it's running down about 85. You said it's only 85% of volumes, or maybe down about 15%. Kind of suggesting maybe that the U.S.

is, I don't know, I guess up slightly? Is that the way to think about the top line guidance inside of that, maybe Iain for you?.

Yes, that's exactly how we think about it..

Okay.

And then I guess, just as it relates to the margin side of that equation, you guys talked a lot in the prepared remarks about having the variable cost structure and how that's allowed you to deliver good EBITDA, kind of making EBITDA numbers here, even if the top line was a little bit soft, I guess, as you address the cost structures, sometimes the second wave or third wave, whatever wave it is, in terms of adjusting costs is harder to come by.

So as you move into ‘21 and think about the guidance, if the revenues do come in kind of soft, like they did in ’20 because of COVID.

If they're continuing to remain soft, do you feel like there's still enough nods to deliver the EBITDA guidance, kind of irrespective of the top line environment as long as the world doesn't drastically change, Bruce if you could comment on that?.

Yes, I would say that the amount of discipline within our Concrete Pumping operations that we created over the last year with our variable costs, we'll be able to continue that into 2021 and into the future. And with our Eco-Pan business, as we create more route density or as you see our margins increased with that.

So I do believe we'll be able to maintain our margins into 2021..

Got it. Okay, and then, I guess just quickly on Eco-Pan here, you're talking about double-digit growth, pans in the field up 6% right now. I guess pans in the field, I guess the compares get tougher.

Is there anything else in there as to why the top line in the Eco-Pan segment can be double-digit with pans not up double-digits?.

Yes, one thing I would mention to that, adjusted volume growth in the pan side, I mean as you've heard us talk about the geographical expansion of our roll-off service. There's higher pricing on that piece as well.

So there's volume from the traditional times in the field count, but you're also we're getting a bit more velocity from that and higher price increase on the roll-off service..

Got it, okay. I'll leave it there. Maybe I'll turn back in later, something else comes up. Thanks, guys..

Thanks..

Thanks, Andy..

And our next question is from Steven Fisher with UBS. Please proceed with your question..

Thanks, good afternoon, guys. I wonder if you could just talk a little bit more about the cadence of the slight growth that you assume in the U.S.

business over the course of 2021 including what trends have you seen in the first quarter? Already, should we anticipate is something similar on a year-over-year decline for the first couple of quarters and then an offsetting growth rate in the second half of the year? How should we think about that? And so kind of what have you seen in the first quarter as well?.

Yes, I think that's fair to see, I think that's fair where, if you look at the mix of H1, H2, I mean, typically, we would guide into sort of 45:55 is the way the pace of our business trends, I mean we do expect to see a slight shift in that in 2021, we're likely to see a higher pickup in the back half of the year, as opposed to the 45:55 and we might see them at 43, 44, again 57, 56.

So change, so we do expect to see, as you mentioned, a higher pickup in the back half of the year, as there's some stabilization in those construction markets. And outside of that, the assumption we would make is that our organic pace in our business will continue..

Okay.

And I know you talked about the potential for infrastructure stimulus, how much visibility? And how would you describe the visibility that you have to the revenue growth at this point for the year?.

Yes, as far as infrastructure, we haven't tied too much infrastructure growth into our projections, because we expect it that will happen later in the year and maybe after our fiscal year-ends. .

Okay, I mean do you have and can you just remind me backlog or how much, how many months of visibility do you have and I would say your U.S. business at this point..

So typically, 50% of the year. And so as you know, we are a quick term business, but we typically see and we continue to see about 50% of that annual revenue through the backlog commitments that we've got..

Okay, that's helpful. And can you just talk a little bit about how your rates, your pricing overall, and again focusing on the U.S. business Brundage-Bone, the Concrete pump.

How were your rates year-over-year in the quarter? What was your utilization like? And what do you embed for assumptions there in 2021?.

Yes, so our rate stayed really strong through 2020. Our industry in general was fairly healthy. And so there wasn't a lot of pressure on rates. Utilization, we didn't get the bump in build hours that we would have expected in a typical second half of the year in 2020.

That, that we would normally have gotten, so that we have more capacity than, than what we were able to get utilization for, which just puts us in a better position for gross into 2021..

And sorry, what was the rate expectation for ’21 flat, up, down?.

The rate we probably got 2% or 3%..

Up, 2% or 3%?.

Yes, and obviously that mean that will depend on any sort of end market changing, there is trends on the residential side. So want to see how that plays out. But across the business, that would be the organic piece we would expect to see..

Got it.

And last question, not sure if I missed this, but did you give a CapEx, gross CapEx expectation for ‘21 compared to the $39 million in 2020?.

No, we never. So we’ve provided free cash flow guidance and the net CapEx in 2020 was actually $36 million, not $39 million..

Yes, thank you. I think the gross is about $39 million. So curious to see we’re planning to keep that relatively steady. I can follow-up offline. Thank you..

Thank you..

Our next question is from Brent Thielman with D.A. Davidson. Please proceed with your question..

Hey, thank you. Good afternoon..

Hey, good afternoon Brent..

Hey, Bruce. I was wondering if you could comment a little more on your ability to move resources and equipment around. I think it's one of the unique levers of the business to sort of take advantage of these markets in the U.S.

and is impacted where you’re able to find some healthy pockets? I guess I'm just wondering if your ability to do that could manifest into some of the growth that you're talking about in the U.S. markets and the New Year.

How, how does should I elaborate that for you?.

Yes, thanks for asking my question, Brent. That's a big lever for us, every one of our units is truck mounted. And so they're very easily driven from one location to another, small units for about $3 a mile to drive them larger units are a little more than that.

But, we monitor utilization in each market every month, and every month, we typically move a couple of machines just to where we can get better utilization out of it. We may see more of that into 2021. But currently, we have enough capacity in most of our locations that we don't have to move a lot of equipment..

And out of curiosity, which I mean, which markets in the U.S.

have you seen more slowness delays versus the ones that are really strong right now?.

Yes, so we've seen a little softness in Colorado, in parts of Oklahoma, and Kansas, a little bit in the Southeast. Stronger markets for us have been more in the West, the Mountain region in the West Coast. Texas has been fairly strong for us as well..

Yes, okay and I guess, Bruce, that mean the bidding competitive environment, that sort of thing conducive to the commentary you've offered about margins in the U.S.

market into ’21 still staying pretty healthy?.

Yes, yes, I believe it'll stay healthy into 2021 and beyond..

Okay, and Iain on SG&A, I guess if we back out some of these items.com, P&A.

Is this the run rate we should sort of expect into 2021?.

Yes, Brent as you know, when you take out all the non-cash items, the run rate is around 18%, 19%. So we keep that fairly consistent..

Okay, that's a good benchmark in the New Year. Okay, great, thank you guys..

Thank you..

Thanks, Brent..

And our next question is from Stanley Elliott with Stifel. Please proceed with your question..

Hi, Bruce, Iain. Thank you guys for taking the call. Happy New Year. He will talk a little bit about the M&A environment. I mean, it feels like you’ve been able to navigate, all the disruption from COVID. Chances are we'll get some stimulus in some way shape or form, vaccines, economy should start to pick up through the rest of the year.

If you guys are going to generate, let's call it $50 million of free cash flow.

What are the thoughts right now about putting that to work maybe ahead of you’re seeing the full turn to try to capitalize on the upswing?.

Yes, thanks for the question. So M&A has been a big part of our business in the past, we did put M&A on hold during the Pandemic just to strengthen our balance sheet and better position us, we are in a much better position, as you know, going into 2021. And so we’re more interested in some accretive M&A opportunities.

We do want to get visibility on the markets that they're in where we expect them to go making sure that we get the right value on them, get the right synergies in place, that sort of thing. But those conversations are certainly things that we're starting to think through now. And we'll see how that plays out for 2021..

Coming back to the CapEx piece, looks like there is some growth CapEx kind of coming off of a lower base, or we do assume that all of that is going to the Eco-Pan business to try to build that out, or are there some other entering into new markets or just high level would love to kind of hear where your head is out there?.

Yes, so I mean we do have growth in the three components. And as you've heard in our self prepared remarks, we want to make sure that we also keep up with the pace of replenishing our fleet. So we would expect that to continue.

I mean as you know back in Q2 of this year, we pause briefly and but with the continued performance of our business, we quickly went back to investing in our fleet. So we would expect to see that continue in 2021..

And then lastly if we do get an infrastructure bill or highway bill whatever, how quickly does that start to flow through the year numbers?.

Yes, so, if it fund some of the states that have projects put on hold currently, that could go fairly quickly for us. If it's new construction, that typically is going to take six months to a year before actually put concrete in place..

Great guys, thanks for the time. Appreciate it. And best of luck..

Thanks Stanley..

And our next question is from Alex Rygiel with B. Riley FBR. Please proceed with your questions..

Thank you and Happy New Year, gentlemen..

Hi, Alex, how are you?.

Hi, Alex..

Pretty good. My question is around your residential exposure. So in your slide deck, you identify that 30% of your business is exposed to residential. Is that 30% just your U.S. Pumping business or is that 30% of the total? Just for clarification..

I’m sorry, go ahead, Alex..

And then can you talk a little bit about regional strengths and weaknesses in that business?.

Sure. So it's 30% of U.S. Pumping, markets where we have a higher percentage of residential would be in the Mountain region and the Texas region and Colorado. But that kind of ebbs and flows, but it is a market that we're, it's not new to us is something that's always been very important to us..

Could you sort of guesstimate sort of the growth rate of that business in 2020? And what you might think it will deliver in 2021?.

Yes, I mean the growth rate is probably 2% or 3%. I think we would expect probably something for 2021..

Yes, I think what I would add to that is so as we look at end-market in U.S. Concrete Pumping, the residential has taken up about 2% of total revenue of over non-Res in the last several months. That may increase slightly, but it's not going to be that significant of a shift..

Thank you..

Thanks, Alex..

We have reached the end of our question-and-answer session. Now turn it back forward. I apologize, I'll turn it back over to Mr. Young for closing remarks..

Thanks, Shemali. We'd like to thank everyone for listening to today's call and we look forward to speaking with you when we report our first quarter fiscal 2021 results in March..

Ladies and gentlemen, thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..