Concrete Pumping Holdings, Inc. ($BBCP)

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings' financial results for the second quarter ended April 30, 2026. 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 cautions regarding forward-looking statements. Cody, please go ahead.

Thank you. I'd like to remind everyone that during this call, to give you a better understanding of our operations, we will be making certain forward-looking statements regarding our business and outlook. 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' annual report on Form 10-K, quarterly report on Form 10-Q and other publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise. On today's call, we will also reference certain non-GAAP financial measures, including adjusted EBITDA, net debt and free cash flow, which we believe provide useful information for investors. We provide further information about these non-GAAP financial measures and reconciliations to the comparable GAAP measures in our press release issued today with the investor presentation posted on the company's website. I'd like to remind everyone that this call will be available for replay later this evening. A webcast replay will also be available via the link provided in today's press release as well as on the company's website. Additionally, we have posted an updated investor presentation to the company's website. Now I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

Thank you, Cody, and good afternoon, everyone. We were pleased with our strong second quarter with revenue increasing 14% year-over-year and adjusted EBITDA growing 17% driven by continued momentum across our U.S. operations, disciplined operational execution throughout the organization and favorable end market activity in several of our key geographies. This quarter was also highlighted by the early April closing on the [indiscernible] plant hire acquisition in the U.K. Importantly, this acquisition represents an important step in executing our strategy to build a diversified multi-service platform supporting construction and infrastructure sectors. Templant is a high-quality business with strong leadership, and we see clear opportunities to accelerate growth and provide long-term sustainable value for our shareholders. Returning to our execution in the second quarter, our performance was led by continued strength in commercial and infrastructure construction activity across a wide variety of industries, including education, health care, energy, infrastructure and of course, data centers. Growth across these projects, particularly in data centers remains healthy and continues to support improved utilization levels throughout our U.S. Concrete Pumping and Eco-Pan operations. In addition to the growing data center activity, we are also seeing solid demand across public infrastructure-related projects including roads, bridges and education construction. Overall, the environment for larger scale commercial and infrastructure projects remains exciting and continues to play into our competitive advantage as the largest concrete pumping service provider in the U.S. We also benefited from generally favorable weather conditions across our U.S. markets during the first half of the year, which supported improved activity levels compared to the prior year period. Combined with continued price discipline and solid operational execution, these factors contributed to a strong margin performance and another quarter of healthy free cash flow generation. Outside of these areas of strength, broader construction trends remain relatively consistent with what we had discussed last quarter. Heavy commercial activity continues to hold up reasonably well, while more interest rate-sensitive segments, including office and portions of light commercial construction remains subdued as customers continue to navigate elevated finance cost and economic uncertainty. Residential construction activity also remains challenged. Elevated mortgage rates and affordability pressures continue to weigh on new home construction activity and while we continue to believe the long-term housing fundamentals remain favorable, near-term demands remain soft. Infrastructure activity in the U.S. continues to be generally strong as the underlying bidding environment and project activity remained healthy, particularly across larger scale and longer-duration projects. Our Eco-Pan Concrete Waste Management Services business again delivered a strong quarter, continuing to benefit from healthy underlying construction activity, pricing execution and ongoing penetration into new customer accounts. Eco-Pan remains a highly complementary service offering to our concrete pumping operations and continues to demonstrate active through-cycle characteristics. Turning to our U.K. operations. Market conditions remain more challenging. Elevated interest rates, inflationary pressures and broader economic uncertainty continue to impact commercial construction activity while public infrastructure funding dynamics also remain less favorable than what we experienced in the U.S. Despite these conditions, infrastructure-related activity in areas such as energy projects and HS2 construction, remains relatively resilient, and we continue to focus on disciplined cost management and operational execution within the region. We are also pleased with the progress of our recent strategic acquisitions, including our Republic of Ireland expansion and entry into the U.K. temporary power market. While the near-term acquisition revenue contribution remains modest, we are encouraged by the strategic positioning these investments provide in the opportunities they create to further expand our platform and grow organically over time. Overall, we are encouraged by our first half performance, and we believe the second quarter further demonstrates the strength of our operating model, our disciplined execution and the benefits of our scale and marketing position. As a result of our performance and current market trends, we are raising our full year outlook while remaining focused on operational discipline, free cash flow generation and long-term value creation. I will now turn the call over to Iain to walk through the financial results in more detail. Iain?

Thanks, Bruce, and good afternoon, everyone. Moving directly into our second quarter results. Revenue increased 14% to $106.8 million compared to $94 million in the prior year quarter. The increase was driven by higher U.S. commercial and infrastructure activity, particularly related to large-scale data center and infrastructure projects along with pricing improvements, organic volume growth in Eco-Pan and generally more favorable weather conditions across our U.S. markets. Revenue in our U.S. Concrete Pumping segment, which operates primarily under the Brundage-Bone brand, increased 15% to $71.5 million compared to $62.1 million in the prior year quarter. Commercial and infrastructure activity benefited from continued strength in large-scale projects, including data centers, roads, bridges, education, warehousing and energy-related projects. These gains were partially offset by continued softness in light commercial construction and subdued residential demand due to elevated interest rates and broader economic uncertainty. Revenue in our Concrete Waste Management Services segment, operating under the Eco-Pan brand increased 13% to $20.3 million compared to $18.1 million in the prior year quarter. Growth was driven by organic volume increases, continued penetration into new customer accounts and pricing improvements, reflecting the continued strength and scalability of the business. Turning to our U.K. operations. Revenue increased 8% to $14.9 million compared to $13.8 million in the prior year quarter. Excluding the $600,000 beneficial impact of foreign currency translation and the $1.4 million contribution from recent acquisitions, underlying commercial construction activity remains soft amid elevated interest rates, inflationary pressures and economic uncertainty in the U.K. At a consolidated level, second quarter gross margin increased modestly to 38.6% compared to 38.5% in the prior year quarter. Strong revenue growth and pricing execution helped offset continued inflationary pressures, including higher repair and maintenance costs, wear part inflation and the impact of tariffs on certain replacement parts. General and administrative expenses increased to $29.2 million compared to $27.9 million in the prior year quarter. However, as a percentage of revenue, G&A improved to 27.3% compared to 29.7% in the prior year quarter, reflecting continued operating leverage and disciplined cost management. Net income attributable to common shareholders in the second quarter increased to $2.1 million or $0.04 per diluted share compared to a net loss of $400,000 or $0.01 per diluted share in the prior year quarter. Consolidated adjusted EBITDA increased 17% to $26.4 million compared to $22.5 million in the year ago quarter. Adjusted EBITDA margin improved 80 basis points to 24.7% from 23.9% and the increase was primarily driven by higher revenue and improved operating leverage. Within our U.S. Concrete Pumping business, adjusted EBITDA increased 23% to $15.6 million compared to $12.7 million in the prior year quarter. In the U.K. business, adjusted EBITDA was $3.1 million compared to $3.2 million, reflecting inflationary pressures in labor, fuel and repair maintenance costs. In our U.S. Concrete Waste Management Services business, adjusted EBITDA increased 16% to $7.7 million, driven by strong operating leverage on higher volumes and pricing. Turning to liquidity. As of April 30, 2026, total debt outstanding was $425.6 million, with net debt of $386.9 million representing a net leverage ratio of approximately 3.8x adjusted EBITDA. We ended the quarter with approximately $346.3 million of available liquidity, which includes cash on hand and availability under our ABL facility and provides substantial financial flexibility. Regarding capital allocation. During the second quarter, we repurchased approximately 392,000 shares for $2.6 million at an average price of $6.68 per share. Since initiating the program in 2022, we have repurchased approximately 5.9 million shares for $38.1 million with $11.9 million remaining under the current authorization through December of 2026. We continue to view the share repurchase program as a flexible and opportunistic use of capital. Turning to our outlook for fiscal 2026. And based on our strong first half performance and continued momentum across our U.S. operations, we are raising our full year revenue outlook to a range of $410 million to $425 million compared to our prior range of $390 million to $410 million. We are also raising our adjusted EBITDA outlook to a range of $98 million to $105 million from our prior range of $90 million to $100 million. And lastly, we are also increasing our free cash flow expectation to be at least $45 million from our prior expectation of approximately $40 million. While we remain encouraged by activity levels in large-scale commercial and infrastructure projects, particularly data center-related activity, it is important to note that we began experiencing accelerated growth from these projects during the third quarter of last year. As a result, we expect year-over-year comparisons to reflect some tempered growth during the second half of fiscal 2026. In addition, based on our first half performance and current project visibility, we expect revenue and adjusted EBITDA seasonality during fiscal 2026 to be more balanced relative to historical trends with revenue expectations and to show about a 47% and a 53% split compared to our traditional 45% and 55% split. Importantly, our outlook continues to assume no meaningful recovery in the broader residential or light commercial construction activity during fiscal 2026. We expect free cash flow, defined as adjusted EBITDA less net replacement CapEx and and less net cash paid for interest to be at least $45 million. This outlook assumes approximately $23 million of net replacement CapEx and $32 million of net cash paid for interest, and this excludes the accelerated CapEx pull forward from fiscal 2026. Our balance sheet and liquidity position comfortably support this investment strategy. We remain committed to a disciplined capital deployment, maintaining leverage within our target range and prioritizing returns on invested capital. We believe we are well positioned to strengthen our service offering in anticipation of a market recovery. With that, I will now turn the call back over to Bruce.

Thanks, Iain. As we move through the remainder of fiscal 2026, we remain encouraged by the momentum we are seeing across the business and the continued resilience of our U.S. markets. While broader construction activity remains mixed, particularly in residential and certain commercial segments, demand tied to large-scale infrastructure and commercial projects continues to support healthy activity levels across our platform. Our focus remains on disciplined execution, operational efficiency, pricing discipline and strategic capital allocation. We believe the actions we have taken over the past several years to strengthen the business, optimize the fleet and maintain financial flexibility, continue to position us well to perform across varying market conditions. We are also pleased with the progress we are making on our strategic growth initiatives, including investing in our fleet and recent acquisitions that expand our geographic reach and service capabilities. Combined with our strong balance sheet and continued free cash flow generation, we believe we remain well positioned to invest in the business, pursue disciplined growth opportunities and continue creating long-term shareholder value. With that, I would now like to turn the call back over to the operator for Q&A. Paul?

[Operator Instructions] Our first question is from Sam Kusswurm with William Blair.

Bruce and Iain, first, congrats on a really strong quarter. That was great to see. In your prepared remarks, you pointed to data centers as kind of being a big contributor to that. I guess I wanted to ask what percent of your revenue are you currently generating from data centers today? And how that compares to both this time last year as well as where you think you can land maybe next year or even by the end of the year?

Yes. Sam, good question. So you might remember, last year, the data center activity was quite slow to grow in the first half of the year. So we're probably doing maybe 4% or 5% of our work on either chip plants or data center in the first half of last year. And you probably heard it in our prepared remarks, that grew quite nicely through the back half of last year. Today, between data centers and chip plant work, we're probably doing 10% to 12% of revenue on that type of work. So there's been some nice growth acceleration. And obviously, as we mentioned, consistent weather really helps with the continuity of that work and execution.

Got it. That's very helpful. Obviously, that contributed the top line, but I also wanted to ask regarding your margins, they also took a pretty nice step up. I was wondering if this is really just due to better leverage on your fleet or the data center work itself carries a higher margin. Could you maybe just compare that margin for that type of work versus your other commercial work as well as maybe against residential and infrastructure?

Yes, sure. So on the margin front, I mean, you're right, with improved volume comes improved operating leverage and through the better utilization of our fleet. And as you all know, a lot of this work tends to be in remote locations. So it is especially in nature requiring longer equipment. So the pricing reflects that, which helps the margin profile, but again, it's underpinned by a lot of the work that we've done in prior years on that cost base and some real operational discipline to make sure that we can get the right pricing and margin profile. I mean as you heard in our prepared remarks, there's still a challenge around inflation. But the team has done a really nice job getting the pricing right on these projects and making sure we can optimize the operating leverage of the execution that we're delivering.

Our next question is from Rohan Bakeeba with Baird.

I think my last question is taken, but I wanted to talk about the acquisition of [indiscernible]. Can you talk about the multiple you guys made for it and now [indiscernible] looks to be a bit different than the traditional quarter if you could talk about EBITDA margin and the mix benefit from that acquisition.

Yes. So while we don't give the multiple out. It's consistent with what we would have been paying for acquisitions of concrete pumps into the future. Now with the U.K. being soft with commercial market, and we have a really team of people over there. We looked out to other areas. With the last call, we talked about going into Ireland and expanding our footprint into there with some opportunities there. We see this [indiscernible] as an opportunity to leverage the service side of the temporary power business. We have really strong leadership in a business that fits very well with us, and we do expect to be able to rapidly grow the temporary power business in the U.K. going forward.

Got it. And then my second one was, you have the approval for the $22 million of claims investments that [indiscernible] quarters in 2027, you haven't incurred it. And is that -- should we expect that that will all $22 million will happen in the second half if you just more color around the cadence of those investments?

Yes. We're still working on that. Now we are trying to move forward as much equipment into this year and maybe even later next year, at least buying the chassis so that we can -- I think we've talked on calls in the past about the complications of the new emissions and reliability and getting the type of horsepower, we need to run our big units. We're fearful that, that will take a little while for them to run that out. So we're trying to pull forward as much of that as we possibly can. We're still trying to sort through how much of that will fall into this year and how much will fall into next year. We'll have more color on that on our -- when we announce in Q3.

Thank you. There are no further questions at this time. I would like to hand the floor back over to Bruce Young for any closing remarks.

Thank you, Paul. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you when we report our third quarter results in September. Thank you.

Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.