crete Pumping (US:BBCP)2020-06-11 20:48Financial Performance - For the three months ended April 30, 2020, the net loss was $59.0 million, an increase of $49.3 million compared to a net loss of $9.6 million in the same period last year, primarily due to goodwill and intangible impairment charges of $57.9 million [193]. - Revenue for the three months ended April 30, 2020, was $74.0 million, representing a 19.4% increase year-over-year, driven by the acquisition of Capital and organic revenue improvements [197]. - The U.S. Concrete Pumping segment saw a revenue increase of 35.0%, or $14.9 million, from $42.5 million in the second quarter of 2019 to $57.5 million in the second quarter of 2020 [199]. - The U.K. Operations segment experienced a revenue decline of 33.8%, or $4.3 million, from $12.7 million in the second quarter of 2019 to $8.4 million in the second quarter of 2020, largely due to COVID-19 lockdowns [202]. - For the six months ended April 30, 2020, the net loss was $61.7 million, an increase of $25.9 million compared to a net loss of $35.9 million in the same period last year [194]. - Total assets decreased from $871.4 million as of October 31, 2019, to $804.2 million as of April 30, 2020, primarily due to impairment charges [195]. - The U.S. Concrete Waste Management Services segment reported a revenue increase of 23.0%, or $1.6 million, from $6.8 million in the second quarter of 2019 to $8.3 million in the second quarter of 2020 [203]. - The company recorded a goodwill and intangibles impairment of $57.9 million in Q2 2020, including a $38.5 million impairment for U.S. Concrete Pumping [211]. - The company had a net loss of $13.3 million during the Successor Period, which included significant non-cash charges totaling $22.3 million [235]. - Net cash provided from financing activities was $247.1 million for the Successor Period, driven by $357.0 million in proceeds from the new Term Loan Agreement [237]. Acquisitions and Operations - The Company acquired Capital Pumping for a purchase price of $129.2 million, significantly expanding its operations in Texas [181]. - The Company operates approximately 90 branch locations across 22 states in the U.S. through its subsidiaries Brundage-Bone and Capital [180]. - The U.K. operations consist of 28 branch locations and include concrete pumping and waste management services [182]. - Eco-Pan, a subsidiary, operates 16 locations in the U.S. providing industrial cleanup and containment services [183]. - The acquisition of Capital contributed $24.9 million to the revenue increase in the U.S. Concrete Pumping segment for the six months ended April 30, 2020 [200]. COVID-19 Impact - The Company reported a significant impairment of $57.9 million due to the COVID-19 pandemic, including a $38.5 million goodwill impairment for its U.S. Concrete Pumping reporting unit [187]. - The Company implemented short-term cost reductions, including headcount reductions and modified work schedules, in response to COVID-19 [186]. - The Company has implemented various employee safety measures to mitigate the spread of COVID-19, including travel restrictions and enhanced cleaning protocols [188]. - The Company’s stock price experienced a sustained decline during the fiscal 2020 second quarter due to the pandemic [187]. - The impact of the COVID-19 pandemic on the company's business and operations remains highly uncertain, influenced by various factors including government measures and customer demand [270]. - Customers may slow down decision-making, delay planned work, or seek to terminate existing agreements, potentially adversely affecting the company's financial condition and stock price [270]. - The ability of customers to pay for services rendered may be compromised due to the pandemic, which could lead to further project delays or shutdowns [270]. - The pandemic may lead to a material adverse effect on the company's results of operations and overall financial health [270]. - The company is closely monitoring the duration and extent of the pandemic and its effects on economic activity, particularly in construction projects [270]. - Future performance may be significantly impacted by the effectiveness of government stabilization and recovery efforts [270]. Financial Metrics and Ratios - Gross margin for Q2 2020 increased by 370 basis points to 43.0% from 39.3% in Q1 2019, and for the first six months of 2020, it increased by 380 basis points to 43.3% from 39.5% in the same period of 2019 [205]. - G&A expenses for Q2 2020 were $26.4 million, up $4.5 million from $21.9 million in Q2 2019, representing 35.6% of revenue compared to 35.3% in the prior year [206]. - Adjusted EBITDA for U.S. Concrete Pumping segment was $16.3 million for Q2 2020, up 51.1% from $10.8 million in Q2 2019, driven by acquisition of Capital and volume growth [217]. - Adjusted EBITDA for U.K. Operations segment was $2.5 million for Q2 2020, down 38.3% from $4.1 million in Q2 2019, primarily due to revenue changes [219]. - Adjusted EBITDA for U.S. Concrete Waste Management Services segment was $4.1 million for Q2 2020, up 36.2% from $3.0 million in Q2 2019 [220]. - Interest expense, net for Q2 2020 was $8.8 million, down $0.6 million from the same period last year, while for the first six months, it was $18.3 million, up $1.7 million [210]. - G&A expenses for the first six months of 2020 were $53.0 million, an increase of $12.5 million from $40.5 million in the same period of 2019, representing 35.8% of revenue compared to 33.6% a year ago [207]. Liquidity and Capital Resources - As of April 30, 2020, the company had $18.0 million in cash and cash equivalents and $15.1 million available under the ABL Credit Agreement, totaling $33.1 million in liquidity [221]. - The company expects existing cash and cash equivalents, cash flow from operations, and borrowing capacity to meet working capital and capital expenditure needs for at least the next 12 months [223]. - The outstanding balance under the Term Loan Agreement as of April 30, 2020 was $391.7 million, with the Company in compliance with all debt covenants [226]. - The outstanding balance under the ABL Credit Agreement as of April 30, 2020 was $39.2 million, and the Company was also in compliance with all debt covenants [229]. - Net cash provided by operating activities during the six months ended April 30, 2020 was $27.0 million, despite a net loss of $61.7 million [232]. - The Company used $19.7 million to fund investing activities during the six months ended April 30, 2020, primarily for the purchase of property, plant, and equipment [233]. - Net cash provided by financing activities was $4.4 million for the six months ended April 30, 2020, including $16.2 million in net borrowings under the ABL Credit Agreement [234]. Internal Controls and Governance - The company experienced a material weakness in internal control over financial reporting, affecting the goodwill impairment analysis [265]. - The company evaluated its disclosure controls and procedures and concluded they were not effective as of April 30, 2020, due to the identified material weakness [265]. - The company is subject to income taxes in multiple jurisdictions, including the U.S. and U.K., requiring significant judgment in tax provision determinations [259]. - The company utilizes a discounted cash flow (DCF) model and market approach for fair value determinations of reporting units [257]. - EBITDA and Adjusted EBITDA are calculated to provide useful information regarding financial and business trends, although they have limitations and should not be considered in isolation [243].