crete Pumping (BBCP) - 2020 Q4 - Annual Report

Cautionary Statement Concerning Forward-Looking Statements and Risk Factors Summary Cautionary Statement This section highlights that the Annual Report contains forward-looking statements regarding the company's business, financial condition, results of operations, cash flows, strategies, and the potential impact of the COVID-19 pandemic, emphasizing that these statements are based on current expectations but involve known and unknown risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements about business, financial condition, results of operations, cash flows, strategies, and COVID-19 impact[10] - Forward-looking statements are based on current expectations but involve known and unknown risks and uncertainties that may cause actual results to differ materially[10][11] Risk Factors Summary This section provides a summary of principal risks, including the adverse effects of the COVID-19 pandemic on business and markets, general economic and business conditions affecting construction demand, the company's ability to implement strategy and integrate acquisitions, governmental regulations, seasonal weather, cyclical markets, supplier relationships, key personnel retention, credit market volatility, litigation, substantial indebtedness, and currency fluctuations - Key risks include the adverse effects of the COVID-19 pandemic on business, economy, and markets served[12] - General economic and business conditions, including demand for commercial, infrastructure, and residential construction, pose a significant risk[12] - Risks also involve the company's ability to implement operating strategy, identify and integrate acquisitions, and manage governmental requirements and initiatives[12] - Other risks include seasonal and inclement weather, cyclical real estate and construction markets, maintaining supplier relationships, retaining key personnel, credit market disruptions, litigation, substantial indebtedness, and currency fluctuations[12] PART I Item 1. Business Concrete Pumping Holdings, Inc. (CPH) is a leading provider of concrete pumping and waste management services in the U.S. and U.K., operating under brands like Brundage-Bone, Camfaud, and Eco-Pan, emphasizing its large fleet, skilled operators, and focus on commercial and infrastructure projects with significant market share in both regions, operating through four segments: U.S. Concrete Pumping, U.S. Concrete Waste Management Services, U.K. Operations, and Corporate - CPH is a leading provider of concrete pumping and concrete waste management services in the U.S. and U.K., operating under established national brands[15][16] - The company's services offer labor cost savings, shortened placement times, enhanced safety, and efficient waste containment[17] - As of October 31, 2020, CPH operated a fleet of approximately 1,200 units, with 1,300 employees and 140 global locations[17] Market Share (as of October 31, 2020) | Region | Market Share (based on fleet size) | | :----- | :--------------------------------- | | U.S. | Approximately 13% | | U.K. | Approximately 34% | Revenue Contribution by Segment (Year Ended October 31, 2020) | Segment | % of Total Revenue | | :-------------------------------- | :----------------- | | U.S. Concrete Pumping | 75% | | U.S. Concrete Waste Management Services | 12% | | U.K. Operations | 13% | - The concrete pumping industry is highly fragmented, with CPH being the only nationally-scaled provider in the U.S. and U.K. for concrete pumping, and a leading operator of scale in concrete waste management[18][25][26] - The fleet consists of approximately 770 boom pumps, 80 placing booms, 20 telebelts, 240 stationary pumps, and 80 waste management trucks, with an average age of 9 years and useful lives of 20-25 years[27] - The company serves over 14,000 customers with a 92% retention rate for its top 500 customers and 100% for its top 100 customers, with the top ten customers representing less than 10% of total revenue[28] - CPH employs approximately 1,300 individuals, including 900 skilled operators and mechanics, and maintains a comprehensive safety program with a Total Recordable Incident Rate (TRIR) significantly better than industry averages[31][33] Item 1A. Risk Factors This section details various risks that could materially affect the company's business, financial condition, and results of operations, including significant impacts from the COVID-19 pandemic, the cyclical nature of the construction industry, seasonality and adverse weather, competitive pressures, dependence on key suppliers, risks associated with an aging fleet, and potential increases in equipment costs, as well as risks related to acquisitions, IT system disruptions, liability claims, environmental regulations, and compliance with various laws and regulations, including those related to its status as an emerging growth company - The COVID-19 pandemic has caused and may continue to cause decreases in contractor availability, increased costs, construction halts, and declines in demand, materially impacting financial performance[37][38][39][40] - The business is cyclical and highly dependent on commercial, infrastructure, and residential construction markets; a slowdown in economic recovery or decreased activity could adversely affect revenues and operating results[41][42] - Seasonal weather patterns and adverse weather conditions significantly impact outdoor construction activities, leading to reduced demand and operational inefficiencies[43] - The concrete pumping industry is highly competitive and fragmented; increased competition or price decreases could negatively affect revenue, profitability, and cash flow[46] - Dependence on a small group of key equipment manufacturers poses supply shortage risks and potential for increased maintenance costs as the fleet ages[47][49][51] - Acquisitions and expansions into new markets carry risks of significant transaction expenses, integration difficulties, and potential for substantial indebtedness and goodwill impairment[63][64][65] - The company is exposed to liability claims (personal injury, property damage, workers' compensation) that may exceed insurance coverage, and disruptions in IT systems could affect operations and customer relationships[69][70][66][67] - Compliance with numerous federal, state, and local environmental and safety regulations, as well as government contract provisions, can increase costs and lead to penalties for non-compliance[73][74][75][76] - As an 'emerging growth company' under the JOBS Act, the company benefits from certain exemptions but may face challenges in investor attractiveness and comparability of financial statements due to delayed adoption of accounting standards[81][82][83] - Brexit could adversely affect business activity, economic and market conditions in the U.K., and global financial and foreign exchange markets, impacting the value of U.K. assets and financial results[85] - Favorable employee relations are crucial; deterioration, labor shortages, or increased labor costs could disrupt services and adversely affect financial results, particularly with unionized employees and multiemployer pension plans[88][89][94][95] - The company's substantial indebtedness ($382.9 million outstanding as of October 31, 2020) increases vulnerability to adverse economic conditions, limits cash flow for operations, and restricts additional financing[101][102][103] - Variable interest rates tied to LIBOR expose the company to interest rate changes and uncertainty regarding LIBOR's future, potentially increasing interest expense[104] - Thinly traded common stock and potential future sales by existing stockholders could lead to significant price volatility and dilution[110][113][114][115] Item 1B. Unresolved Staff Comments The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[127] Item 2. Properties The company's corporate office is in Thornton, Colorado, and it operates from approximately 90 locations in 22 U.S. states and 30 locations in the U.K. As of October 31, 2020, 16 U.S. locations are owned, while all other U.S. and U.K. locations are leased, with properties deemed suitable for current operating needs - Corporate office is in Thornton, CO, leasing 13,415 square feet[127] - Operates from approximately 90 locations in 22 U.S. states and 30 locations in the U.K. as of October 31, 2020[127] - 16 U.S. locations are owned; all other U.S. and U.K. locations are leased[127] Item 3. Legal Proceedings The company is involved in routine legal proceedings but does not believe any current litigation will have a material impact on its financial statements, operating results, financial condition, or cash flows - The company is involved in ordinary course legal proceedings[128] - Management believes current legal matters will not materially impact financial statements, operating results, financial condition, or cash flows[128] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable[128] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock is listed on Nasdaq under 'BBCP', and public warrants are quoted on the OTC Pink marketplace under 'BBCPW'; as of October 31, 2020, there were 40 holders of record for common stock, and the company has not paid cash dividends, intending to retain earnings for business operations without anticipating future dividends - Common stock is listed on Nasdaq under 'BBCP'; public warrants are on OTC Pink under 'BBCPW'[130] - As of October 31, 2020, there were 40 holders of record for common stock[130] - The company has not paid cash dividends and plans to retain earnings for business operations, not anticipating future dividends[131] Item 6. Selected Financial Data As a smaller reporting company, Concrete Pumping Holdings, Inc. is not required to provide the information typically mandated for this item - As a smaller reporting company, the registrant is not required to provide selected financial data[132] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed analysis of the company's financial condition and results of operations, distinguishing between 'Predecessor' and 'Successor' periods due to a business combination, covering the impact of COVID-19, a 7.5% revenue improvement year-over-year driven by acquisitions and organic growth, and a higher net loss primarily due to goodwill and intangible impairment charges, also including segment-specific performance, gross margin, general and administrative expenses, interest expense, and a reconciliation of non-GAAP Adjusted EBITDA - The financial results are presented for 'Predecessor' (before Dec 6, 2018) and 'Successor' (after Dec 6, 2018) periods due to a business combination[144][145] - The COVID-19 pandemic led to short-term cost reductions, modified work schedules, furloughs, and construction site shutdowns, particularly impacting Seattle and U.K. markets[140][141] - A sustained decline in stock price and economic deterioration due to COVID-19 triggered goodwill and intangibles impairment charges totaling $57.9 million in fiscal 2020[142][148] Key Financial Highlights (Year Ended October 31) | Metric | FY2020 (Successor) | FY2019 (S/P Combined) | Change ($M) | Change (%) | | :---------------------------------------- | :----------------- | :-------------------- | :---------- | :--------- | | Revenue | $304,301 | $282,961 | $21,340 | 7.5% | | Net Loss | $(60,990) | $(32,487) | $(28,503) | 87.7% | | Gross Margin | 45.1% | 44.3% | 0.8% | | | General & Administrative Expenses | $111,087 | $96,850 | $14,237 | 14.7% | | Goodwill & Intangibles Impairment | $57,944 | $0 | $57,944 | N/A | | Interest Expense, Net | $(34,408) | $(36,524) | $2,116 | -5.8% | | Income Tax Benefit | $(4,977) | $(7,495) | $2,518 | -33.6% | | Adjusted EBITDA | $107,301 | $95,494 | $11,807 | 12.4% | Business Overview This section reiterates the company's core business as a Delaware corporation headquartered in Thornton, Colorado, providing concrete pumping and waste management services through its subsidiaries Brundage-Bone, Capital, Camfaud, and Eco-Pan, highlighting the acquisition of Capital Pumping in May 2019, which expanded its Texas footprint, and the start of Eco-Pan operations in the U.K. in fiscal 2019 - CPH is a Delaware corporation providing concrete pumping and waste management services via Brundage-Bone, Capital, Camfaud, and Eco-Pan[134] - Acquired Capital Pumping in May 2019 for $129.2 million, significantly expanding its Texas operations[136] - Started concrete waste management operations under the Eco-Pan brand in the U.K. during the third quarter of fiscal 2019[138] Impacts of COVID-19 The COVID-19 pandemic significantly impacted the company's operations, leading to short-term cost reductions, modified work schedules, and furloughs, with construction site shutdowns in Seattle and the U.K. negatively affecting operations, and the pandemic-driven decline in stock price necessitating a $57.9 million goodwill and intangibles impairment charge in fiscal 2020, with the future impact remaining highly uncertain, dependent on the pandemic's duration, containment measures, and economic recovery efforts - COVID-19 led to short-term cost reductions, modified work schedules, and furloughs[141] - Operations in Seattle and U.K. markets were negatively impacted by COVID-19-imposed construction site shutdowns in fiscal 2020[141] - A $57.9 million goodwill and intangibles impairment charge was recorded in fiscal 2020 due to the pandemic's impact on stock price and economic conditions[142] - The future impact of COVID-19 on business, financial condition, and results of operations remains highly uncertain[143] Results of Operations For the twelve months ended October 31, 2020, the company reported a net loss of $61.0 million, an increase of $28.5 million year-over-year, primarily due to $57.9 million in goodwill and intangible impairment charges; despite this, revenue improved by 7.5% to $304.3 million, driven by the Capital acquisition and strong growth in U.S. Concrete Waste Management Services, partially offset by a decline in U.K. Operations, with gross margin increasing by 80 basis points to 45.1%, while G&A expenses rose due to stock-based compensation and a settlement charge Net Loss and Revenue (Year Ended October 31) | Metric | FY2020 (Successor) | FY2019 (S/P Combined) | Change ($M) | | :------- | :----------------- | :-------------------- | :---------- | | Net Loss | $(60,990) | $(32,487) | $(28,503) | | Revenue | $304,301 | $282,961 | $21,340 | - The higher net loss was primarily due to $57.9 million in goodwill and intangible impairment charges[148] - Revenue improvement was driven by the Capital acquisition, modest organic growth in U.S. Concrete Pumping, and 18.0% growth in U.S. Concrete Waste Management Services[148] - U.K. Operations revenue declined by 20.4% due to COVID-19 construction site shutdowns[148] Revenue by Segment (Year Ended October 31) | Segment | FY2020 ($K) | FY2019 (S/P Combined) ($K) | Change ($K) | Change (%) | | :-------------------------------- | :---------- | :------------------------- | :---------- | :--------- | | U.S. Concrete Pumping | $229,740 | $203,690 | $26,050 | 12.8% | | U.K. Operations | $39,145 | $49,164 | $(10,019) | -20.4% | | U.S. Concrete Waste Management Services | $35,890 | $30,407 | $5,483 | 18.0% | | Corporate | $2,500 | $2,500 | $0 | 0.0% | | Intersegment | $(2,974) | $(2,800) | $(174) | 6.2% | | Total Revenue | $304,301| $282,961 | $21,340 | 7.5% | - Gross margin increased by 80 basis points to 45.1% in fiscal 2020, driven by Capital's contribution and favorable fuel pricing[157] - General and administrative expenses increased by $14.2 million to $111.1 million, primarily due to a $7.8 million increase in stock-based compensation and a $2.0 million settlement charge[158] - Interest expense, net, decreased by $2.1 million to $34.4 million due to lower average debt balances and variable interest rates[161] Adjusted EBITDA by Segment (Year Ended October 31) | Segment | FY2020 ($K) | FY2019 (S/P Combined) ($K) | Change ($K) | Change (%) | | :-------------------------------- | :---------- | :------------------------- | :---------- | :--------- | | U.S. Concrete Pumping | $74,886 | $62,821 | $12,065 | 19.2% | | U.K. Operations | $12,228 | $15,694 | $(3,466) | -22.1% | | U.S. Concrete Waste Management Services | $17,686 | $14,177 | $3,509 | 24.8% | | Corporate | $2,501 | $2,802 | $(301) | -10.7% | | Total Adjusted EBITDA | $107,301| $95,494 | $11,807 | 12.4% | Liquidity and Capital Resources The company's primary liquidity sources are cash from operations, cash equivalents, and its $60.0 million Asset-Based Lending (ABL) Credit Agreement; as of October 31, 2020, total available liquidity was $59.3 million, with the capital structure including stockholders' equity, zero-dividend convertible perpetual preferred stock, and long-term debt under a Term Loan Agreement and the ABL Credit Agreement, believing current liquidity is sufficient for the next 12 months, but future capital needs may require additional financing, with cash flows from operations at $79.0 million in fiscal 2020, while investing activities used $35.9 million and financing activities used $43.9 million - Primary liquidity sources are cash from operations, cash equivalents, and a $60.0 million ABL Credit Agreement[169] Available Liquidity (as of October 31, 2020) | Metric | Amount ($M) | | :--------------------------- | :---------- | | Cash and Cash Equivalents | $6.7 | | Available ABL Borrowing Capacity | $52.6 | | Total Available Liquidity| $59.3 | - The capital structure includes stockholders' equity, zero-dividend convertible perpetual preferred stock, and long-term debt (Term Loan Agreement and ABL Credit Agreement)[170] - Outstanding balance under the Term Loan Agreement was $381.2 million as of October 31, 2020, with annual principal amortization payments of 5.00% of the original amount[174][175] - Outstanding balance under the ABL Credit Agreement was $1.7 million as of October 31, 2020[178] Cash Flow Summary (Year Ended October 31, 2020) | Activity | Amount ($M) | | :------------------------ | :---------- | | Net Cash Provided by Operating Activities | $79.0 | | Net Cash Used in Investing Activities | $(35.9) | | Net Cash Used in Financing Activities | $(43.9) | Critical Accounting Policies and Estimates This section outlines critical accounting policies and estimates that require significant judgment, including goodwill and intangible assets, income taxes, and stock-based compensation, with goodwill and indefinite-lived intangible assets evaluated for impairment annually or more frequently if triggering events occur, using discounted cash flow and market approaches, income tax provisions involving evaluating uncertainties in tax laws, and deferred tax assets assessed for realizability, and stock-based compensation expense measured at fair value, with market-conditioned awards valued using a Monte Carlo simulation model - Goodwill and intangible assets are evaluated for impairment annually or more frequently if triggering events occur, using qualitative and quantitative assessments (DCF and market approaches)[198][199][201] - Fair value determinations for goodwill and intangibles are sensitive to assumptions about future operating performance, economic conditions (including COVID-119 impact), and discount rates[199][202][203] - Income tax provision requires significant judgment in evaluating complex tax laws and assessing the realizability of deferred tax assets[205][206][268] - Stock-based compensation expense is measured at fair value; market-conditioned awards are valued using a Monte Carlo simulation model, requiring significant judgment for expected volatility[207] JOBS Act As an emerging growth company, the company has elected to delay the adoption of new or revised accounting standards, which may affect the comparability of its financial statements with other public companies, and this election is irrevocable - As an emerging growth company, the company has elected to delay the adoption of new or revised accounting standards[195] - This election may make financial statements not comparable to companies complying with public company effective dates[195] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Concrete Pumping Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[209] PART III Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, Section 16(a) filings, and corporate governance is incorporated by reference from the company's definitive proxy statement, and the company has adopted a Code of Business Conduct and Ethics, available on its investor relations website - Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement[4][7][425] - The company has adopted a Code of Business Conduct and Ethics, available on its investor relations website[36][426] Item 11. Executive Compensation Information on executive compensation is omitted from this report and will be incorporated by reference from the company's definitive proxy statement - Executive compensation information is incorporated by reference from the Proxy Statement[7][427] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management, as well as related stockholder matters, is omitted from this report and will be incorporated by reference from the company's definitive proxy statement - Security ownership information is incorporated by reference from the Proxy Statement[7][427] Item 13. Certain Relationships and Related Transactions, and Director Independence Information concerning certain relationships and related transactions, and director independence, is omitted from this report and will be incorporated by reference from the company's definitive proxy statement - Information on related party transactions and director independence is incorporated by reference from the Proxy Statement[7][427] Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services is omitted from this report and will be incorporated by reference from the company's definitive proxy statement - Principal accountant fees and services information is incorporated by reference from the Proxy Statement[7][427] PART IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and schedules included in the Annual Report, along with a comprehensive list of exhibits filed herewith or incorporated by reference, confirming that audited consolidated financial statements are provided under Item 8 and other schedules are omitted if not applicable or already presented - Audited consolidated financial statements are included under Item 8 of this Annual Report[428] - Other schedules are omitted as they are not applicable or the required information is set forth in the consolidated financial statements or notes thereto[428] - A comprehensive list of exhibits, including merger agreements, credit agreements, and incentive plans, is provided[429][430][431][432] Item 16. Form 10-K Summary The company does not provide a Form 10-K summary - No Form 10-K Summary is provided[433] SIGNATURES Signatures and Power of Attorney This section includes the required signatures of the registrant's authorized officers and directors, confirming the filing of the Annual Report on Form 10-K, and also contains a Power of Attorney, granting specific individuals the authority to sign and file amendments to the report on behalf of the undersigned - The report is signed by authorized officers and directors of Concrete Pumping Holdings, Inc[434][438] - A Power of Attorney is granted to Bruce Young and Iain Humphries to sign and file amendments to the Annual Report on Form 10-K[435][436] Item 8. Consolidated Financial Statements Report of Independent Registered Public Accounting Firm BDO USA, LLP, as the independent registered public accounting firm, provided an unqualified opinion on the consolidated financial statements of Concrete Pumping Holdings, Inc. for the periods ended October 31, 2020 and 2019 (Successor), and November 1, 2018 through December 5, 2018 (Predecessor), stating they are presented fairly in all material respects in conformity with GAAP, also noting that it was not required to audit internal control over financial reporting as the company is an emerging growth company - BDO USA, LLP issued an unqualified opinion on the consolidated financial statements[211] - The financial statements present fairly the financial position, results of operations, and cash flows in conformity with GAAP[211] - The audit did not include an opinion on the effectiveness of internal control over financial reporting, as the company is an emerging growth company[213] Consolidated Balance Sheets The consolidated balance sheets show a decrease in total assets from $871.4 million in 2019 to $773.8 million in 2020, primarily due to goodwill and intangibles impairment charges, with total liabilities also decreasing from $522.6 million to $474.6 million, while total stockholders' equity decreased from $323.8 million to $274.1 million Consolidated Balance Sheet Summary (as of October 31, $K) | Metric | 2020 | 2019 | | :------------------------- | :-------- | :-------- | | Total Assets | $773,758 | $871,365 | | Total Current Assets | $60,005 | $62,759 | | Property, Plant & Equipment, Net | $304,254 | $307,415 | | Intangible Assets, Net | $183,839 | $222,293 | | Goodwill | $223,154 | $276,088 | | Total Liabilities | $474,617 | $522,550 | | Total Stockholders' Equity | $274,141 | $323,815 | - Total assets decreased by $97.6 million, primarily due to $57.9 million in goodwill and intangibles impairment charges[151][217] - Total liabilities decreased by $47.9 million, and total stockholders' equity decreased by $49.7 million[217][218] Consolidated Statements of Operations The consolidated statements of operations show a net loss of $61.0 million for the year ended October 31, 2020, compared to a net loss of $9.9 million for the Successor period in 2019, with revenue increasing to $304.3 million in 2020, and the significant loss in 2020 driven by $57.9 million in goodwill and intangibles impairment charges Consolidated Statements of Operations Summary (Year Ended October 31, $K) | Metric | FY2020 (Successor) | FY2019 (Successor) | FY2019 (Predecessor) | | :---------------------------------------- | :----------------- | :----------------- | :------------------- | | Revenue | $304,301 | $258,565 | $24,396 | | Gross Profit | $137,303 | $115,053 | $10,369 | | General and Administrative Expenses | $111,087 | $91,914 | $4,936 | | Goodwill and Intangibles Impairment | $57,944 | $0 | $0 | | Loss from Operations | $(31,728) | $21,618 | $(8,734) | | Interest Expense, Net | $(34,408) | $(34,880) | $(1,644) | | Net Loss | $(60,990) | $(9,912) | $(22,575) | | Loss available to common shareholders | $(62,920) | $(11,535) | $(22,701) | | Basic Loss per Common Share | $(1.19) | $(0.28) | $(3.00) | - Net loss for FY2020 was $61.0 million, significantly higher than the $9.9 million net loss in the Successor period of FY2019, primarily due to impairment charges[222] - Revenue increased to $304.3 million in FY2020 from $258.6 million in the Successor period of FY2019[222] Consolidated Statements of Comprehensive Income The consolidated statements of comprehensive income show a total comprehensive loss of $61.0 million for the year ended October 31, 2020, which includes the net loss and a foreign currency translation adjustment of $(7) thousand, comparing to a total comprehensive loss of $10.5 million for the Successor period in 2019 Consolidated Statements of Comprehensive Loss Summary (Year Ended October 31, $K) | Metric | FY2020 (Successor) | FY2019 (Successor) | FY2019 (Predecessor) | | :------------------------------------ | :----------------- | :----------------- | :------------------- | | Net Loss | $(60,990) | $(9,912) | $(22,575) | | Foreign Currency Translation Adjustment | $(7) | $(599) | $(674) | | Total Comprehensive Loss | $(60,997) | $(10,511) | $(23,249) | - Total comprehensive loss for FY2020 was $(60.997) million, primarily driven by the net loss[225] Consolidated Statements of Changes in Stockholders' Equity The consolidated statements of changes in stockholders' equity reflect the impact of the Business Combination in December 2018, including the redemption and issuance of common stock; for the year ended October 31, 2020, total stockholders' equity decreased from $323.8 million to $274.1 million, primarily due to the net loss of $61.0 million, partially offset by stock-based compensation expense - Total stockholders' equity decreased from $323.8 million at October 31, 2019, to $274.1 million at October 31, 2020[218][229] - The decrease was primarily driven by the net loss of $(60.990) million, partially offset by $11.454 million in stock-based compensation expense[229] - The Business Combination in December 2018 involved redemption of Class A common stock ($231.4 million) and issuance of common stock ($96.9 million and $164.9 million for rollover equity)[228][363] Consolidated Statements of Cash Flows For the year ended October 31, 2020, net cash provided by operating activities was $79.0 million, driven by non-cash charges like goodwill impairment and depreciation; net cash used in investing activities was $35.9 million, mainly for property, plant, and equipment purchases; net cash used in financing activities was $43.9 million, primarily due to net payments on revolving and term loans Consolidated Statements of Cash Flows Summary (Year Ended October 31, $K) | Cash Flow Activity | FY2020 (Successor) | FY2019 (Successor) | FY2019 (Predecessor) | | :-------------------------------- | :----------------- | :----------------- | :------------------- | | Net Cash Provided by Operating Activities | $78,970 | $22,777 | $7,916 | | Net Cash Used in Investing Activities | $(35,853) | $(375,100) | $(139) | | Net Cash Provided by (Used in) Financing Activities | $(43,928) | $361,629 | $(15,370) | | Net Increase (Decrease) in Cash and Cash Equivalents | $(737) | $7,469 | $(7,663) | | Cash and Cash Equivalents, End of Period | $6,736 | $7,473 | $958 | - Operating cash flow of $79.0 million in FY2020 was positively impacted by significant non-cash charges, including $57.9 million goodwill and intangibles impairment[180] - Investing activities in FY2020 primarily involved $39.3 million for property, plant, and equipment purchases, partially offset by $3.5 million from sales[181] - Financing activities in FY2020 included $21.7 million in net payments on the ABL Credit Agreement and $20.9 million on the Term Loan Agreement[181] Notes to Consolidated Financial Statements The notes provide detailed information on the company's organization, significant accounting policies, business combinations, fair value measurements, and various financial statement components, with key disclosures including the impact of COVID-19 on operations and impairment, the accounting treatment for the Business Combination, and details on goodwill, intangible assets, long-term debt, equity, and stock-based compensation, also covering segment reporting and related-party transactions - The notes detail the company's organization, nature of business, and the impact of COVID-19 on operations, including construction site shutdowns and a $57.9 million goodwill and intangibles impairment[238][243][245] - The Business Combination (December 2018) and Capital acquisition (May 2019) were accounted for using the acquisition method, resulting in a new basis of accounting for the Successor entity[239][248][286][289] - Goodwill and intangible assets were subject to impairment testing in fiscal 2020, resulting in charges of $5.0 million for the Brundage-Bone trade name and $38.5 million for U.S. Concrete Pumping and $14.4 million for U.K. Operations reporting units[308][309][310] - Long-term debt includes a Term Loan Agreement ($381.2 million outstanding) and an ABL Credit Agreement ($1.7 million outstanding) as of October 31, 2020, with the company in compliance with all covenants[175][178][319][322] - Stockholders' equity changes reflect the net loss, stock-based compensation, and the warrant exchange in April 2019, which resulted in a $5.2 million loss on repurchase of warrants[229][369] - Stock-based compensation awards were modified in October 2020, leading to a $5.9 million immediate compensation expense[373] - The company recorded an income tax benefit of $5.0 million in FY2020, impacted by non-deductible goodwill impairment, CARES Act NOL carrybacks, and a U.K. corporate tax rate increase[163][341][351][353] - Segment reporting details revenue, income (loss) before income taxes, and EBITDA for U.S. Concrete Pumping, U.K. Operations, U.S. Concrete Waste Management Services, and Corporate segments[403][404][405][406] Note 1. Organization and Description of Business This note describes Concrete Pumping Holdings, Inc. as a Delaware corporation, detailing its subsidiaries (Brundage-Bone, Capital, Camfaud, Eco-Pan) and the Business Combination on December 6, 2018, outlining the company's core concrete pumping and waste management services in the U.S. and U.K., noting the seasonality of sales, and discussing the significant impacts of the COVID-19 pandemic on operations, including cost reductions, site shutdowns, and a goodwill impairment trigger - Concrete Pumping Holdings, Inc. is a Delaware corporation, with subsidiaries including Brundage-Bone, Capital, Camfaud, and Eco-Pan[238] - The company provides concrete pumping services in the U.S. and U.K. and industrial cleanup/containment services (Eco-Pan) in the U.S[240][241] - Sales are historically seasonal, with lower revenue in the first quarter and higher in the fourth quarter[242] - COVID-19 led to cost reductions, modified work schedules, furloughs, and construction site shutdowns, particularly in Seattle and the U.K[243][244] - The pandemic triggered a goodwill and long-lived assets impairment evaluation, resulting in an interim impairment test as of April 30, 2020[245] Note 2. Summary of Significant Accounting Policies This note details the accounting policies, including the basis of presentation distinguishing between 'Predecessor' and 'Successor' periods due to the Business Combination, which was accounted for using the acquisition method, covering the use of estimates, trade receivables, inventory valuation, fair value measurements, deferred financing costs, goodwill impairment, property, plant and equipment depreciation, intangible asset amortization, impairment of long-lived assets, revenue recognition, stock-based compensation, income taxes, and foreign currency translation - Financial statements distinguish between 'Predecessor' (before Dec 6, 2018) and 'Successor' (after Dec 6, 2018) periods due to the Business Combination, which used the acquisition method[248][249] - Significant estimates include accrued sales and use taxes, self-insured claims liability, allowance for doubtful accounts, goodwill impairment, share-based compensation valuation, and business combinations accounting[252] - Goodwill is evaluated for impairment annually or more frequently if triggering events occur, using a two-step process (qualitative then quantitative)[258] - Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives (e.g., machinery and equipment 3 to 25 years)[260][261] - Intangible assets with finite lives are amortized (customer relationships on an accelerated basis), while indefinite-lived intangibles are not amortized but tested for impairment[262] - Revenue is recognized when persuasive evidence of an arrangement exists, service is performed/delivery occurred, price is fixed, and collectability is assured[264] - Stock-based compensation expense is measured at fair value; market-conditioned awards are recognized over service periods; income taxes follow an asset and liability approach[266][267] Note 3. New Accounting Pronouncements The company, as an emerging growth company, has elected to delay the adoption of new accounting standards, adopting ASU 2017-01 (Business Combinations) and ASU 2016-15 (Cash Flows) in fiscal 2020 with no material impact, and is currently evaluating the impact of ASU 2014-09 (Revenue from Contracts with Customers) and ASU 2016-02 (Leases), which it plans to adopt in fiscal 2021 and 2022, respectively, also evaluating ASU 2020-04 (Reference Rate Reform) related to LIBOR transition - The company, as an emerging growth company, has elected to delay the adoption of new accounting standards[275] - Adopted ASU 2017-01 (Business Combinations) and ASU 2016-15 (Cash Flows) in fiscal 2020, with no material impact[276][278] - Evaluating ASU 2014-09 (Revenue from Contracts with Customers) for adoption in Q4 FY2021 and ASU 2016-02 (Leases) for adoption in FY2022, with no significant impact expected yet[280][282] - Evaluating ASU 2020-04 (Reference Rate Reform) for potential impact on debt agreements transitioning from LIBOR[284] Note 4. Business Combinations This note details the May 2019 acquisition of Capital Pumping for $129.2 million, which resulted in $26.6 million in goodwill and identifiable intangible assets (customer relationships and trade name), also covering the December 2018 Business Combination, where the company acquired CPH for $614.3 million, recognizing $247.9 million in goodwill and significant intangible assets, with transaction costs and debt extinguishment costs related to the Business Combination incurred by the Predecessor - Acquired Capital Pumping in May 2019 for $129.2 million, resulting in $26.6 million goodwill[286][287] - Identifiable intangibles from Capital acquisition included $40.0 million in customer relationships (15-year useful life) and a $5.5 million indefinite-lived trade name[287] - The December 2018 Business Combination acquired CPH for $614.3 million, recognizing $247.9 million in goodwill[289][290] - Intangibles from the Business Combination included $152.7 million in customer relationships (15-year useful life) and $55.4 million in trade names (Camfaud 10 years, Brundage-Bone and Eco-Pan indefinite)[290] - Predecessor incurred $14.2 million in transaction costs and $16.4 million in debt extinguishment costs related to the Business Combination[291] Note 5. Fair Value Measurement This note discusses the fair value measurements of financial instruments, noting that current assets and liabilities approximate fair value due to short-term maturity, with long-term debt instruments valued using Level 2 inputs, term loans having a fair value of $365.0 million compared to a carrying value of $381.2 million at October 31, 2020, and the deferred consideration for the Camfaud acquisition, valued at $1.7 million at October 31, 2019, fully paid in fiscal 2020 - Current assets and liabilities, and ABL credit facility obligations, approximate fair value[298] Fair Value of Term Loans (as of October 31, $K) | Metric | 2020 Carrying Value | 2020 Fair Value | 2019 Carrying Value | 2019 Fair Value | | :----------- | :------------------ | :-------------- | :------------------ | :-------------- | | Term Loans | $381,205 | $365,003 | $402,094 | $394,052 | - Deferred consideration for the Camfaud acquisition, valued at $1.7 million at October 31, 2019 (Level 3 measurement), was fully paid in fiscal 2020[300] Note 6. Prepaid Expenses and Other Current Assets This note provides a breakdown of prepaid expenses and other current assets, which totaled $2.7 million at October 31, 2020, down from $3.4 million in 2019, with the main components including prepaid insurance, licenses and deposits, and prepaid rent Prepaid Expenses and Other Current Assets (as of October 31, $K) | Component | 2020 | 2019 | | :---------------------------- | :------ | :------ | | Prepaid insurance | $1,399 | $1,416 | | Prepaid licenses and deposits | $429 | $528 | | Prepaid rent | $149 | $485 | | Other prepaids | $717 | $949 | | Total | $2,694| $3,378| - Total prepaid expenses and other current assets decreased by $0.7 million year-over-year[304] Note 7. Property, Plant and Equipment This note details the composition of property, plant, and equipment, net, which stood at $304.3 million at October 31, 2020, a slight decrease from $307.4 million in 2019, with machinery and equipment representing the largest component, and depreciation expense for the Successor year ended October 31, 2020, at $28.3 million Property, Plant and Equipment, Net (as of October 31, $K) | Component | 2020 | 2019 | | :-------------------------------- | :-------- | :-------- | | Land, building and improvements | $26,728 | $26,085 | | Capital leases—land and buildings | $828 | $828 | | Machinery and equipment | $318,029 | $295,741 | | Transportation equipment | $2,338 | $2,223 | | Furniture and office equipment | $1,230 | $1,209 | | Property, plant and equipment, gross | $349,153 | $326,086 | | Less accumulated depreciation | $(44,899) | $(18,671) | | Property, plant and equipment, net | $304,254| $307,415| - Depreciation expense for the Successor year ended October 31, 2020, was $28.3 million[306] Note 8. Goodwill and Intangible Assets This note details the goodwill and intangible assets, which decreased from $276.1 million and $222.3 million in 2019 to $223.2 million and $183.8 million in 2020, respectively, with a triggering event from the COVID-19 pandemic leading to an interim impairment test as of April 30, 2020, resulting in a $5.0 million impairment of the Brundage-Bone trade name and goodwill impairments of $38.5 million for U.S. Concrete Pumping and $14.4 million for U.K. Operations, driven by lower anticipated revenues and a higher discount rate due to COVID-19 uncertainties - Goodwill decreased from $276.1 million to $223.2 million, and intangible assets decreased from $222.3 million to $183.8 million[217][313] - A COVID-19-driven decline in stock price triggered an interim impairment test as of April 30, 2020[308] Impairment Charges (Year Ended October 31, 2020, $M) | Asset/Reporting Unit | Impairment Charge | | :------------------------ | :---------------- | | Brundage-Bone Trade Name | $5.0 | | U.S. Concrete Pumping Goodwill | $38.5 | | U.K. Operations Goodwill | $14.4 | - Impairments were primarily due to lower anticipated future net revenues and earnings, and a higher discount rate resulting from COVID-19 uncertainties[311] Goodwill Carrying Value by Segment (as of October 31, $K) | Segment | 2020 | 2019 | | :-------------------------------- | :-------- | :-------- | | U.S. Concrete Pumping | $147,482 | $185,782 | | U.K. Operations | $26,539 | $41,173 | | U.S. Concrete Waste Management Services | $49,133 | $49,133 | | Corporate | $0 | $0 | | Total Goodwill | $223,154| $276,088| Note 9. Long-Term Debt and Revolving Lines of Credit This note details the company's debt structure, including the Term Loan Agreement and ABL Credit Agreement, which replaced Predecessor debt facilities; as of October 31, 2020, the Term Loan Agreement had an outstanding balance of $381.2 million, with principal amortization payments of 5.00% annually, and the ABL Credit Agreement had an outstanding balance of $1.7 million and a maximum borrowing capacity of $60.0 million, with both facilities bearing variable interest rates tied to LIBOR and including various covenants, with the company in compliance - The Term Loan Agreement and ABL Credit Agreement replaced Predecessor debt facilities following the Business Combination[317] - Term Loan Agreement: Original principal of $357.0 million, increased by $60.0 million in May 2019 for the Capital acquisition[318] Long-Term Debt Balances (as of October 31, $K) | Debt Component | 2020 | 2019 | | :-------------------------------- | :-------- | :-------- | | Short term portion of term loan | $20,888 | $20,888 | | Long term portion of term loan | $360,317 | $381,206 | | Total term loan | $381,205 | $402,094 | | Less unamortized deferred financing costs | $(16,411) | $(20,268) | | Total Debt | $364,794| $381,826| - ABL Credit Agreement: Maximum borrowing capacity of $60.0 million, with $1.7 million outstanding as of October 31, 2020[321][322] - Both agreements bear variable interest rates (adjusted LIBOR or base rate plus margin) and include non-financial covenants, with the company in compliance[318][319][321][322] Note 10. Accrued Payroll and Payroll Expenses This note provides a breakdown of accrued payroll and payroll expenses, which increased from $9.2 million in 2019 to $13.1 million in 2020, with the increase primarily driven by higher accrued bonuses and other accrued expenses Accrued Payroll and Payroll Expenses (as of October 31, $K) | Component | 2020 | 2019 | | :------------------------ | :-------- | :------ | | Accrued vacation | $1,667 | $1,433 | | Accrued payroll | $1,507 | $3,205 | | Accrued bonus | $4,752 | $3,177 | | Other accrued | $5,139 | $1,362 | | Total | $13,065 | $9,177| - Total accrued payroll and payroll expenses increased by $3.9 million year-over-year[333] Note 11. Accrued Expenses and Other Current Liabilities This note details accrued expenses and other current liabilities, which decreased from $28.1 million in 2019 to $18.9 million in 2020, with the decrease mainly due to lower accrued equipment purchases and accrued interest, partially offset by higher accrued insurance and a new accrued amount due to a related party Accrued Expenses and Other Current Liabilities (as of October 31, $K) | Component | 2020 | 2019 | | :-------------------------------- | :-------- | :-------- | | Accrued insurance | $7,806 | $6,105 | | Accrued interest | $146 | $3,049 | | Accrued equipment purchases | $4,149 | $15,343 | | Accrued sales and use tax | $311 | $311 | | Accrued property taxes | $882 | $915 | | Accrued professional fees | $1,213 | $1,729 | | Accrued due to related party | $1,765 | $0 | | Other | $2,607 | $654 | | Total | $18,879 | $28,106 | - Total accrued expenses and other current liabilities decreased by $9.2 million year-over-year[335] Note 12. Income Taxes This note details the income tax benefit of $5.0 million recorded in fiscal 2020 on a pre-tax loss of $66.0 million, with the tax provision impacted by non-deductible goodwill impairment, a tax benefit from NOL carrybacks under the CARES Act, and a $0.9 million tax expense due to the U.K. corporate tax rate increase; the company has federal NOL carryforwards of $42.6 million and state NOL carryforwards of $30.4 million, and a settlement with Predecessor shareholders regarding CARES Act tax refunds resulted in a $2.0 million charge Income Before Income Taxes by Geography (Year Ended October 31, $K) | Geography | FY2020 (Successor) | FY2019 (Successor) | FY2019 (Predecessor) | | :---------- | :----------------- | :----------------- | :------------------- | | United States | $(49,427) | $(14,875) | $(26,975) | | Foreign | $(16,540) | $1,660 | $207 | | Total | $(65,967) | $(13,215) | $(26,768) | Net Benefit for Income Taxes (Year Ended October 31, $K) | Tax Component | FY2020 (Successor) | FY2019 (Successor) | FY2019 (Predecessor) | | :-------------------------------- | :----------------- | :----------------- | :------------------- | | Total Current Tax Provision (Benefit) | $(3,947) | $1,517 | $165 | | Total Deferred Tax Benefit | $(1,029) | $(4,820) | $(4,357) | | Net Benefit for Income Taxes | $(4,977) | $(3,303) | $(4,192) | - Only $11.2 million of the $57.9 million goodwill and intangibles impairment was deductible for tax purposes, resulting in a $2.7 million tax benefit[163] - A $1.4 million tax benefit was recorded due to the revaluation of NOL carryforwards under the CARES Act, allowing carryback to prior years at a higher tax rate[163][353] - A $0.9 million tax expense was recorded due to the increase in the deferred statutory U.K. corporate tax rate from 17% to 19%[163][351] Tax Carryforwards (as of October 31, 2020, $M) | Type of Carryforward | Balance | | :---------------------------- | :------ | | Federal Net Operating Loss | $42.6 | | State Net Operating Loss | $30.4 | | Foreign Tax | $0.1 | | State Credit | $0.1 | | Interest Expense | $15.8 | | Total Tax Carryforwards | $89.0 | - A $2.0 million charge was recorded in general and administrative expenses for a settlement with Predecessor shareholders regarding CARES Act tax refunds[158][353] Note 13. Commitments and Contingencies This note outlines the company's commitments, including non-cancelable operating leases with future payments totaling $7.2 million through April 2029, and capital lease obligations of $0.5 million; the company is partially self-insured for various liabilities (automobile, general, worker's compensation, and employee health benefits) and has accrued $5.4 million for claims incurred but not reported and $2.4 million for health claims as of October 31, 2020, with legal proceedings not expected to have a material impact, and $1.2 million in undrawn letters of credit outstanding Future Minimum Operating Lease Payments (as of October 31, $K) | Year | Future Payments | | :--------- | :-------------- | | 2021 | $2,139 | | 2022 | $1,868 | | 2023 | $1,370 | | 2024 | $743 | | 2025 | $265 | | Thereafter | $835 | | Total | $7,220 | - Total rental expense for the Successor year ended October 31, 2020, was $6.6 million[355] - Capital lease obligation was $0.5 million as of October 31, 2020[357] - The company is partially self-insured for automobile, general, and worker's compensation liability, with deductibles ranging from $100,000 to $250,000 per occurrence[359][360] - Accrued $5.4 million for claims incurred but not reported and estimated losses, and $2.4 million for health claims as of October 31, 2020[360][361] - No material impact from legal proceedings is expected; $1.2 million in undrawn letters of credit outstanding[362] Note 14. Stockholders' Equity This note details the company's stockholders' equity, including the impact of the December 2018 Business Combination which involved the redemption of 22.3 million Class A common shares for $231.4 million; as of October 31, 2020, there were 56.5 million common shares outstanding, a public offering in May 2019 issued 18.1 million common shares for $77.4 million, a warrant exchange in April 2019 resulted in the issuance of 3.8 million common shares and a