Concrete Pumping Holdings, Inc. (NASDAQ:BBCP) demonstrated its ability to navigate a dynamic market environment, showcasing the resilience and agility of its diversified business model. The company reported its financial results for the second quarter of fiscal year 2024, highlighting its ability to adapt to shifting market conditions while maintaining a strong financial position.

Financials

For the full fiscal year 2023, Concrete Pumping Holdings reported annual revenue of $442,241,000 and net income of $31,790,000. The company's annual operating cash flow was $96,875,000, and its annual free cash flow reached $41,570,000, underscoring its financial strength and flexibility.

In the second quarter of fiscal 2024, the company reported revenue of $107,062,000, compared to $107,791,000 in the same period of the prior year. While the top-line performance was largely in line with the previous year, the company faced some headwinds in its U.S. Concrete Pumping segment, where revenue declined by 4.8% to $74,617,000. This was primarily attributable to a decrease in volumes driven by a general slowdown in commercial construction work, oversaturation of concrete pumps in certain markets, and higher-than-normal precipitation throughout the quarter.

However, the company's U.K. Operations segment saw a 2.0% increase in revenue to $15,547,000, and its U.S. Concrete Waste Management Services segment experienced a robust 19.3% increase in revenue to $16,898,000. The growth in the U.K. Operations segment was driven by pricing improvements, while the U.S. Concrete Waste Management Services segment benefited from strong organic growth and pricing enhancements.

Gross margin for the second quarter of fiscal 2024 was 39.0%, compared to 40.3% in the same period of the prior year. The slight decrease in gross margin was primarily related to lower revenue in the U.S. Concrete Pumping segment, decreased labor utilization driven by the reduced revenue, and inflationary increases in commercial insurance premium costs.

General and administrative (G&A) expenses for the second quarter of fiscal 2024 were $29,712,000, a decrease of $546,000 from the same period in the prior year. The decrease was largely due to non-cash decreases in amortization expense and stock-based compensation, as well as higher gains on the sale of assets, partially offset by higher labor costs.

Net income available to common shareholders in the second quarter of fiscal 2024 was $2,616,000, or $0.05 per diluted share, compared to $5,161,000, or $0.09 per diluted share, in the same period of the prior year. Consolidated adjusted EBITDA for the second quarter of fiscal 2024 decreased 4% to $27,548,000, with adjusted EBITDA margins declining to 25.7% from 26.7% in the same period of the prior year.

The company's U.S. Concrete Pumping segment reported a 10.7% decrease in adjusted EBITDA to $17,223,000, while the U.K. Operations and U.S. Concrete Waste Management Services segments saw 8.2% and 7.9% increases in adjusted EBITDA, respectively.

Liquidity

Concrete Pumping Holdings' liquidity position remained strong, with $216,900,000 in total available liquidity as of April 30, 2024, including $17,956,000 in cash and cash equivalents and $198,900,000 in available borrowing capacity under its ABL facility. The company's net debt-to-EBITDA leverage ratio stood at 3.2 times as of the end of the second quarter.

During the second quarter of fiscal 2024, the company repurchased approximately 171,000 shares of its common stock for $1,269,000 at an average price of $7.42 per share, demonstrating its commitment to delivering long-term value to shareholders.

Outlook

Looking ahead, Concrete Pumping Holdings revised its fiscal year 2024 guidance. The company now expects revenue to range between $455,000,000 and $465,000,000 and adjusted EBITDA to range between $120,000,000 and $125,000,000. This revised guidance reflects the reduced commercial project volumes and adverse weather impacts experienced in the first half of the fiscal year.

Despite the near-term headwinds, the company remained confident in its ability to maintain its original fiscal year 2024 free cash flow target of at least $75,000,000. This confidence is bolstered by the company's operational flexibility, cost control initiatives, and the ability to optimize the utilization of its existing concrete pumping fleet.

Concrete Pumping Holdings is also targeting a net leverage ratio of approximately 2.75 times by the end of the fiscal year, demonstrating its commitment to reducing debt and strengthening its balance sheet. The company continues to evaluate opportunistic accretive M&A opportunities while strategically managing its leverage.

Conclusion

Concrete Pumping Holdings demonstrated its resilience and agility in navigating the current market environment. While facing some near-term challenges in its U.S. Concrete Pumping segment, the company's diversified business model, strong liquidity position, and cost optimization efforts position it well to weather the storm and capitalize on future growth opportunities. Investors should closely monitor the company's progress as it navigates the evolving market conditions and executes on its strategic initiatives.