crete Pumping (BBCP) - 2021 Q1 - Quarterly Report

FORM 10-Q General Information This section provides the registrant's fundamental details, including name, incorporation state, reporting period, and filer status Registrant Details | Detail | Value | | :----- | :---- | | Registrant Name | CONCRETE PUMPING HOLDINGS, INC. | | State of Incorporation | Delaware | | Quarterly Period Ended | January 31, 2021 | | Commission File No. | 001-38166 | | Trading Symbol | BBCP | | Exchange | The Nasdaq Capital Market | | Common Stock Outstanding (as of March 10, 2021) | 56,469,444 shares | Filer Status | Filer Status | Indication | | :------------- | :--------- | | Large Accelerated Filer | ☐ | | Accelerated Filer | ☒ | | Non-Accelerated Filer | ☐ | | Smaller Reporting Company | ☒ | | Emerging Growth Company | ☒ | Part I. Financial Information This part encompasses the company's comprehensive financial statements and management's discussion and analysis of its financial condition and operational results Item 1. Unaudited Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including the balance sheets, statements of operations and comprehensive income, statements of changes in stockholders' equity, and statements of cash flows, along with their accompanying notes, for Concrete Pumping Holdings, Inc. as of and for the quarter ended January 31, 2021 Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity as of January 31, 2021, and October 31, 2020 Consolidated Balance Sheet Summary (in thousands) | Item (in thousands) | Jan 31, 2021 (Unaudited) | Oct 31, 2020 | Change | | :------------------ | :----------------------- | :----------- | :----- | | Cash and cash equivalents | $2,273 | $6,736 | $(4,463) | | Trade receivables, net | $39,179 | $44,343 | $(5,164) | | Total current assets | $55,676 | $60,005 | $(4,329) | | Property, plant and equipment, net | $304,633 | $304,254 | $379 | | Intangible assets, net | $178,000 | $183,839 | $(5,839) | | Goodwill | $224,776 | $223,154 | $1,622 | | Total assets | $766,023 | $773,758 | $(7,735) | | Revolving loan | $7,687 | $1,741 | $5,946 | | Term loans, current portion | $- | $20,888 | $(20,888) | | Total current liabilities | $40,312 | $62,312 | $(22,000) | | Long term debt, net | $368,040 | $343,906 | $24,134 | | Total liabilities | $474,329 | $474,617 | $(288) | | Total stockholders' equity | $266,694 | $274,141 | $(7,447) | Consolidated Statements of Operations and Comprehensive Income This statement details the company's revenues, expenses, net loss, and comprehensive loss for the three months ended January 31, 2021 and 2020 Consolidated Statements of Operations (in thousands) | Item (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :------------------ | :------------------------------ | :------------------------------ | :----- | | Revenue | $70,421 | $73,939 | $(3,518) | | Cost of operations | $40,558 | $41,791 | $(1,233) | | Gross profit | $29,863 | $32,148 | $(2,285) | | General and administrative expenses | $22,388 | $26,607 | $(4,219) | | Income from operations | $7,446 | $5,541 | $1,905 | | Interest expense, net | $(6,900) | $(9,503) | $2,603 | | Loss on extinguishment of debt | $(15,510) | $- | $(15,510) | | Loss before income taxes | $(14,938) | $(3,893) | $(11,045) | | Income tax benefit | $(2,648) | $(1,147) | $(1,501) | | Net loss | $(12,290) | $(2,746) | $(9,544) | | Net loss available to common shareholders | $(12,797) | $(3,219) | $(9,578) | | Basic EPS | $(0.24) | $(0.06) | $(0.18) | | Diluted EPS | $(0.24) | $(0.06) | $(0.18) | Consolidated Statements of Comprehensive Income (in thousands) | Comprehensive Income (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | | Net loss | $(12,290) | $(2,746) | $(9,544) | | Foreign currency translation adjustment | $4,501 | $1,971 | $2,530 | | Total comprehensive loss | $(7,789) | $(775) | $(7,014) | Consolidated Statements of Changes in Stockholders' Equity This statement outlines the changes in the company's equity components, including common stock, paid-in capital, and accumulated deficit, for the period Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Item (in thousands) | Balance at Oct 31, 2020 | Stock-based Compensation | Treasury Stock | Net Loss | Foreign Currency Translation Adjustment | Balance at Jan 31, 2021 | | :------------------ | :---------------------- | :----------------------- | :------------- | :------- | :-------------------------------------- | :---------------------- | | Common Stock | $6 | $- | $- | $- | $- | $6 | | Additional Paid-In Capital | $361,943 | $672 | $- | $- | $- | $362,615 | | Treasury Stock | $(131) | $- | $(330) | $- | $- | $(461) | | Accumulated Other Comprehensive Income (loss) | $(606) | $- | $- | $- | $4,501 | $3,895 | | Accumulated Deficit | $(87,071) | $- | $- | $(12,290) | $- | $(99,361) | | Total | $274,141 | $672 | $(330) | $(12,290) | $4,501 | $266,694 | Consolidated Statements of Cash Flows This statement presents the cash inflows and outflows from operating, investing, and financing activities for the three months ended January 31, 2021 and 2020 Cash Flow Summary (in thousands) | Cash Flow Category (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | | Net cash provided by operating activities | $12,580 | $1,814 | $10,766 | | Net cash used in investing activities | $(7,540) | $(15,692) | $8,152 | | Net cash provided by (used in) financing activities | $(9,200) | $8,154 | $(17,354) | | Effect of foreign currency exchange rate on cash | $(304) | $887 | $(1,191) | | Net decrease in cash and cash equivalents | $(4,463) | $(4,837) | $374 | | Cash and cash equivalents, end of period | $2,273 | $2,636 | $(363) | Supplemental Cash Flow Information (in thousands) | Supplemental Cash Flow Information (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----- | | Cash paid for interest | $5,890 | $11,191 | $(5,301) | | Cash paid (refunded) for income taxes | $614 | $(40) | $654 | | Equipment purchases included in accrued expenses and accounts payable | $781 | $4,110 | $(3,329) | Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and additional information supporting the unaudited consolidated financial statements Note 1. Organization and Description of Business This note describes the company's core business operations, historical seasonality, and the impact of the COVID-19 pandemic - The Company's core business is concrete pumping services in the U.S. (Brundage-Bone, Capital) and U.K. (Camfaud), and industrial cleanup and containment services (Eco-Pan) primarily for the construction industry[30][32][33] - Sales are historically seasonal, with lower revenue volumes in the first half of the fiscal year (winter and spring months) due to weather patterns[34] - The COVID-19 pandemic led to operational adjustments, cost reductions (headcount, modified work schedules, furloughs), and non-cash impairment charges of $43.5 million for U.S. Concrete Pumping and $14.4 million for U.K. Operations goodwill in fiscal 2020[35][37] - The pandemic primarily impacted revenue volumes in the U.K. and certain U.S. markets, with future impacts remaining highly uncertain[38] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and significant management estimates used in preparing the financial statements - Financial statements are prepared in accordance with GAAP and SEC rules, reflecting all normal and recurring adjustments[39][40] - Management makes significant estimates for items such as accrued sales and use taxes, self-insured claims, allowance for doubtful accounts, goodwill impairment, share-based compensation, and business combinations[41] - Goodwill is evaluated for impairment annually or more frequently if circumstances indicate, using a two-step process involving qualitative and quantitative assessments[48] - Revenue is primarily generated from concrete pumping services and waste management services, recognized when services are performed or delivery occurs, price is determinable, and collectability is assured[53] - The Company relies on three significant vendors to purchase concrete pumping boom equipment but has alternate vendors available[65] Note 3. New Accounting Pronouncements This note details the company's adoption plans for new accounting standards, leveraging its emerging growth company status - The Company, as an emerging growth company, has elected to use the extended transition period available for new accounting standards[66] - The Company expects to adopt ASU 2014-09 (Revenue from Contracts with Customers) under the modified retrospective approach during Q4 fiscal year ending October 31, 2021, with no significant impact anticipated[68] - The Company plans to adopt ASU 2016-02 (Leases) and ASU 2016-13 (Financial Instruments—Credit Losses) effective for the year ending October 31, 2022, and is currently evaluating their impacts[71][72] - The Company is evaluating ASU 2020-04 (Reference Rate Reform) which provides optional guidance for accounting for LIBOR transition[73] Note 4. Fair Value Measurement This note discusses the fair value of financial instruments, including term loans, senior notes, and capital lease obligations - Carrying amounts of cash, receivables, payables, current accrued liabilities, and ABL credit facility obligations approximate fair value due to short-term maturity or variable interest rates[75] Fair Value of Financial Instruments (in thousands) | Item (in thousands) | Jan 31, 2021 Carrying Value | Jan 31, 2021 Fair Value | Oct 31, 2020 Carrying Value | Oct 31, 2020 Fair Value | | :------------------ | :-------------------------- | :---------------------- | :-------------------------- | :---------------------- | | Term loans | $- | $- | $381,205 | $365,003 | | Senior notes | $375,000 | $381,563 | $- | $- | | Capital lease obligations | $454 | $454 | $477 | $477 | - The deferred consideration for the Camfaud acquisition, previously valued using Level 3 inputs, was fully paid out during the fiscal 2020 first quarter[77] Note 5. Prepaid Expenses and Other Current Assets This note provides a breakdown of the company's prepaid expenses and other current assets as of January 31, 2021, and October 31, 2020 Prepaid Expenses and Other Current Assets (in thousands) | Item (in thousands) | Jan 31, 2021 | Oct 31, 2020 | Change | | :------------------ | :----------- | :----------- | :----- | | Prepaid insurance | $5,733 | $1,399 | $4,334 | | Prepaid licenses and deposits | $795 | $429 | $366 | | Prepaid rent | $451 | $149 | $302 | | Other current assets and prepaids | $1,103 | $717 | $386 | | Total prepaid expenses and other current assets | $8,082 | $2,694 | $5,388 | Note 6. Property, Plant and Equipment This note details the composition of property, plant, and equipment, along with associated depreciation expenses Property, Plant and Equipment (in thousands) | Item (in thousands) | Jan 31, 2021 | Oct 31, 2020 | Change | | :------------------ | :----------- | :----------- | :----- | | Land, building and improvements | $26,841 | $26,728 | $113 | | Machinery and equipment | $323,732 | $318,029 | $5,703 | | Property, plant and equipment, gross | $356,034 | $349,153 | $6,881 | | Less accumulated depreciation | $(51,401) | $(44,899) | $(6,502) | | Property, plant and equipment, net | $304,633 | $304,254 | $379 | - Depreciation expense for the three months ended January 31, 2021, was $6.9 million, up from $6.5 million in the prior year[83] Note 7. Goodwill and Intangible Assets This note outlines the company's goodwill and intangible assets, including impairment charges and amortization expenses - In Q2 fiscal 2020, the Company recorded non-cash impairment charges of $5.0 million for its Brundage-Bone Concrete Pumping trade name and $38.5 million for U.S. Concrete Pumping goodwill, and $14.4 million for U.K. Operations goodwill, totaling $57.9 million[86][87][209] - The impairment was primarily due to lower anticipated future revenues and earnings, and a higher discount rate resulting from COVID-19 uncertainties[88] - No subsequent triggering events for impairment were identified through January 31, 2021[88] Intangible Assets Net Carrying Amount (in thousands) | Intangible Assets (in thousands) | Jan 31, 2021 Net Carrying Amount | Oct 31, 2020 Net Carrying Amount | Change | | :------------------------------- | :------------------------------- | :------------------------------- | :----- | | Customer relationship | $122,849 | $128,803 | $(5,954) | | Trade name | $4,523 | $4,398 | $125 | | Trade name (indefinite life) | $50,500 | $50,500 | $- | | Noncompete agreements | $128 | $138 | $(10) | | Total intangibles | $178,000 | $183,839 | $(5,839) | Goodwill by Segment (in thousands) | Goodwill by Segment (in thousands) | Oct 31, 2020 Balance | Foreign Currency Translation | Jan 31, 2021 Balance | | :--------------------------------- | :------------------- | :--------------------------- | :------------------- | | U.S. Concrete Pumping | $147,482 | $- | $147,482 | | U.K. Operations | $26,539 | $1,622 | $28,161 | | U.S. Concrete Waste Management Services | $49,133 | $- | $49,133 | | Corporate | $- | $- | $- | | Total | $223,154 | $1,622 | $224,776 | - Amortization expense for intangible assets decreased to $6.9 million for the three months ended January 31, 2021, from $8.6 million in the prior year[90] Note 8. Long Term Debt and Revolving Lines of Credit This note details the company's recent debt refinancing, including the issuance of Senior Notes and the amendment of the ABL Facility - On January 28, 2021, the Company completed a private offering of $375.0 million in 6.000% Senior Secured Second Lien Notes due 2026[93][94] - The ABL Facility was amended and restated, increasing commitments from $60.0 million to $125.0 million, with an accordion feature for an additional $75.0 million, and extending maturity to January 28, 2026[93][97][98] - Proceeds from the Senior Notes and ABL Facility borrowings were used to repay all outstanding indebtedness under the existing term loan agreement, leading to a $15.5 million loss on extinguishment of debt[93][103] Debt Composition (in thousands) | Debt Composition (in thousands) | Jan 31, 2021 | Oct 31, 2020 | Change | | :------------------------------ | :----------- | :----------- | :----- | | Revolving loan | $7,687 | $1,741 | $5,946 | | Short term portion of term loan | $- | $20,888 | $(20,888) | | Long term portion of term loan | $- | $360,317 | $(360,317) | | Senior notes - all long term | $375,000 | $- | $375,000 | | Total debt, gross | $382,687 | $382,946 | $(259) | | Less unamortized deferred financing costs | $(6,960) | $(16,411) | $9,451 | | Total debt, net | $375,727 | $366,535 | $9,192 | Note 9. Accrued Payroll and Payroll Expenses This note provides a breakdown of accrued payroll and related expenses as of January 31, 2021, and October 31, 2020 Accrued Payroll and Payroll Expenses (in thousands) | Item (in thousands) | Jan 31, 2021 | Oct 31, 2020 | Change | | :------------------ | :----------- | :----------- | :----- | | Accrued vacation | $1,665 | $1,667 | $(2) | | Accrued payroll | $1,913 | $1,507 | $406 | | Accrued bonus | $1,561 | $4,752 | $(3,191) | | Other accrued | $5,811 | $5,139 | $672 | | Total accrued payroll and payroll expenses | $10,950 | $13,065 | $(2,115) | Note 10. Accrued Expenses and Other Current Liabilities This note details the composition of accrued expenses and other current liabilities, including accrued insurance and equipment purchases Accrued Expenses and Other Current Liabilities (in thousands) | Item (in thousands) | Jan 31, 2021 | Oct 31, 2020 | Change | | :------------------ | :----------- | :----------- | :----- | | Accrued insurance | $8,666 | $7,806 | $860 | | Accrued interest | $191 | $146 | $45 | | Accrued equipment purchases | $760 | $4,149 | $(3,389) | | Accrued sales and use tax | $2,152 | $311 | $1,841 | | Accrued property taxes | $440 | $882 | $(442) | | Accrued professional fees | $1,474 | $1,213 | $261 | | Accrued due to related party | $459 | $1,765 | $(1,306) | | Other | $1,384 | $2,607 | $(1,223) | | Total accrued expenses and other liabilities | $15,526 | $18,879 | $(3,353) | Note 11. Income Taxes This note presents the company's pretax loss and income tax benefit, along with changes in deferred tax liabilities Income Tax Information (in thousands) | Item (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | | :------------------ | :------------------------------ | :------------------------------ | | Pretax loss | $(14,938) | $(3,893) | | Income tax benefit | $(2,648) | $(1,147) | - Net deferred tax liabilities decreased to $65.6 million at January 31, 2021, from $68.0 million at October 31, 2020, primarily due to current year operating results and reversal of existing deferred tax assets and liabilities[109] - The Company had unrecognized tax benefits of $1.5 million at January 31, 2021, which would not favorably impact income tax expense if recognized[110] Note 12. Commitments and Contingencies This note outlines the company's self-insured liabilities, litigation status, and outstanding letters of credit - The Company is partially insured for automobile, general, and worker's compensation liability, with $5.9 million accrued for claims as of January 31, 2021[112] - The Company offers partially self-insured medical benefits, with $1.2 million accrued for health claims incurred but not reported as of January 31, 2021[113] - The Company is not presently a party to any material litigation and is unaware of any pending or threatened litigation that could have a material adverse effect[114] - As of January 31, 2021, total outstanding letters of credit under the ABL Facility amounted to $2.0 million[115] Note 13. Stockholders' Equity This note details the authorized and outstanding shares of common and preferred stock, including warrant exchanges - The Company's certificate of incorporation authorizes 500,000,000 shares of common stock and 10,000,000 shares of preferred stock[117] - As of January 31, 2021, there were 56,470,594 common shares issued and outstanding, 13,017,777 public warrants outstanding, and 2,450,980 shares of zero-dividend convertible perpetual preferred stock (Series A Preferred Stock) outstanding[10][118][119][122] - The Series A Preferred Stock is convertible into common stock at a 1:1 ratio (effective June 6, 2019) and is classified as temporary equity due to a contingent redemption feature[119][120] - In April 2019, a warrant exchange resulted in the issuance of 2,101,213 common shares for public warrants and 1,707,175 common shares for private warrants[122] Note 14. Stock-Based Compensation This note describes the company's stock-based award programs, including vesting conditions and compensation expense - Stock-based awards include time-based only vesting (equal installments over 3 or 5 years) and market/time-based vesting with price targets ($6, $8, $10, $13, $16, $19)[123][124][127][128] - On October 29, 2020, most outstanding market-based awards were modified, reducing price vesting targets (e.g., $13 to $6) and exchanging awards at a 2-for-1 ratio, leading to $5.9 million in immediate compensation expense[126] Unvested Stock-Based Awards and Unrecognized Compensation Expense | Location | Type of Award | Shares Unvested at Jan 31, 2021 | Unrecognized Compensation Expense at Jan 31, 2021 (in thousands) | | :------- | :------------ | :------------------------------ | :--------------------------------------------------------------- | | U.S. | Time Based Only | 866,953 | $4,321,570 | | U.S. | $6 Market/Time-Based | 580,091 | $3,306,662 | | U.S. | $8 Market/Time-Based | 580,092 | $2,931,121 | | U.S. | $10 Market/Time-Based | 580,106 | $2,593,411 | | U.K. | Time Based Only | 136,685 | $602,123 | | U.K. | $6 Market/Time-Based | 84,591 | $460,006 | | U.K. | $8 Market/Time-Based | 84,591 | $407,212 | | U.K. | $10 Market/Time-Based | 84,602 | $360,018 | | Total | | 3,542,242 | $14,996,911 | - Stock-based compensation expense for the three months ended January 31, 2021, was $0.7 million, a decrease from $1.5 million in the prior year[132] Note 15. Earnings Per Share This note explains the calculation of basic and diluted earnings per share, considering participating securities - EPS is calculated using the two-class method for participating securities (unvested restricted stock and Series A Preferred Stock)[134] EPS Calculation Summary (in thousands, except per share amounts) | EPS Calculation (in thousands, except per share amounts) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | | :------------------------------------------------------- | :------------------------------ | :------------------------------ | | Net loss attributable to common stockholders | $(12,797) | $(3,219) | | Weighted average shares - basic | 53,146,103 | 52,629,214 | | Weighted average shares - diluted | 53,146,103 | 52,629,214 | | Basic loss per share | $(0.24) | $(0.06) | | Diluted loss per share | $(0.24) | $(0.06) | - Warrants, unvested restricted stock, stock options, and Series A Preferred Stock were excluded from diluted EPS calculation for all periods presented because their inclusion would have been anti-dilutive[135] Note 16. Segment Reporting This note provides financial data segmented by the company's primary business operations, including revenue, EBITDA, and total assets - Reportable segments include U.S. Concrete Pumping, U.K. Operations (including Eco-Pan U.K.), U.S. Concrete Waste Management Services (Eco-Pan U.S.), and Corporate[137] Revenue by Segment (in thousands) | Revenue by Segment (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | % Change | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | :------- | | U.S. Concrete Pumping | $52,316 | $55,105 | $(2,789) | -5.1% | | U.K. Operations | $9,780 | $10,685 | $(905) | -8.5% | | U.S. Concrete Waste Management Services | $8,422 | $8,283 | $139 | 1.7% | | Corporate | $625 | $625 | $- | 0.0% | | Intersegment | $(722) | $(759) | $37 | -4.9% | | Total revenue | $70,421 | $73,939 | $(3,518) | -4.8% | EBITDA by Segment (in thousands) | EBITDA by Segment (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :------------------------------- | :------------------------------ | :------------------------------ | :----- | | U.S. Concrete Pumping | $(104) | $14,862 | $(14,966) | | U.K. Operations | $2,079 | $1,958 | $121 | | U.S. Concrete Waste Management Services | $3,200 | $3,250 | $(50) | | Corporate | $625 | $625 | $- | | Total EBITDA | $5,800 | $20,695 | $(14,895) | Total Assets by Segment (in thousands) | Total Assets by Segment (in thousands) | Jan 31, 2021 | Oct 31, 2020 | Change | | :------------------------------------- | :----------- | :----------- | :----- | | U.S. Concrete Pumping | $561,185 | $570,536 | $(9,351) | | U.K. Operations | $104,241 | $109,726 | $(5,485) | | U.S. Concrete Waste Management Services | $140,715 | $140,209 | $506 | | Corporate | $25,678 | $25,517 | $161 | | Intersegment | $(65,796) | $(72,230) | $6,434 | | Total assets | $766,023 | $773,758 | $(7,735) | Note 17. Related Party Transaction This note details the settlement with Predecessor's shareholders regarding tax refunds from NOL carrybacks - The Company settled with Predecessor's shareholders to pay $2.0 million of $4.3 million in tax refunds from NOL carrybacks under the CARES Act[147] - The majority of the $2.0 million liability was paid in Q1 fiscal 2021, with $0.5 million remaining as of January 31, 2021, included in accrued expenses and other current liabilities[147] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition, highlighting key factors affecting revenue, expenses, and liquidity, including the ongoing impact of COVID-19 and recent debt refinancing activities Cautionary Statement Concerning Forward-Looking Statements This statement advises readers that the report contains forward-looking information subject to risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements identified by terms like "likely," "may," "will," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue"[150] - These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied[150] - The Company undertakes no obligation to publicly update any forward-looking statements[150] Business Overview This section identifies the company's primary subsidiaries and their respective business activities in concrete pumping and waste management services - The Company's subsidiaries include Brundage-Bone Concrete Pumping, Inc. and Capital Pumping (U.S. concrete pumping), Camfaud Group Limited (U.K. concrete pumping), and Eco-Pan, Inc. (industrial cleanup and containment services in U.S. and U.K.)[151][152][153][155] - The Corporate segment primarily handles intercompany leasing of real estate to U.S. Concrete Pumping branches[155] Impacts of COVID-19 This section discusses the significant uncertainties and operational adjustments, including impairment charges, resulting from the COVID-19 pandemic - The COVID-19 pandemic has created significant uncertainty, impacting the company's business, results of operations, and financial performance[156] - The company implemented cost reduction initiatives, including headcount reductions, modified work schedules, and furloughs[156] - In Q2 fiscal 2020, non-cash impairment charges of $43.5 million for U.S. Concrete Pumping and $14.4 million for U.K. Operations goodwill were recorded due to COVID-19's impact on stock price and economic conditions[157] - The pandemic has primarily impacted revenue volumes in the U.K. and certain U.S. markets, with the full extent of future impact remaining highly uncertain[158] Notes Offering This section details the company's recent private offering of Senior Notes and the amendment of its ABL credit agreement for debt repayment - In January 2021, the Company closed a private offering of $375.0 million in 6.000% Senior Secured Second Lien Notes due 2026[159] - The existing ABL credit agreement was amended and restated, increasing commitments to $125.0 million (from $60.0 million)[159] - The proceeds from the Senior Notes and ABL Facility borrowings were used to repay all outstanding indebtedness under the existing term loan agreement[159] Results of Operations This section analyzes the company's financial performance, including revenue, net loss, and general and administrative expenses, for the reporting period Consolidated Results of Operations Summary (in thousands) | Item (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :------------------ | :------------------------------ | :------------------------------ | :----- | | Revenue | $70,421 | $73,939 | $(3,518) | | Net loss | $(12,290) | $(2,746) | $(9,544) | | Loss on extinguishment of debt | $(15,510) | $- | $(15,510) | | General and administrative expenses | $22,388 | $26,607 | $(4,219) | | Interest expense, net | $(6,900) | $(9,503) | $2,603 | Revenue by Segment (in thousands) | Revenue by Segment (in thousands) | Jan 31, 2021 | Jan 31, 2020 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | U.S. Concrete Pumping | $52,316 | $55,105 | $(2,789) | -5.1% | | U.K. Operations | $9,780 | $10,685 | $(905) | -8.5% | | U.S. Concrete Waste Management Services | $8,422 | $8,283 | $139 | 1.7% | | Total revenue | $70,421 | $73,939 | $(3,518) | -4.8% | - Gross margin declined by 110 basis points to 42.4% in Q1 fiscal 2021, from 43.5% in Q1 fiscal 2020, due to lower revenue volumes and timing of insurance expenses[168] - G&A expenses decreased by $4.2 million, or 15.8%, primarily due to lower amortization of intangible assets ($1.7 million), lower stock-based compensation ($0.8 million), and cost-containment measures related to COVID-19[170] Adjusted EBITDA and Net Income (Loss) This section presents the company's Adjusted EBITDA by segment and discusses the factors influencing changes in profitability Adjusted EBITDA by Segment (in thousands) | Adjusted EBITDA by Segment (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | % Change | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----- | :------- | | U.S. Concrete Pumping | $15,287 | $16,847 | $(1,560) | -9.3% | | U.K. Operations | $2,746 | $2,612 | $134 | 5.1% | | U.S. Concrete Waste Management Services | $3,700 | $3,750 | $(50) | -1.3% | | Corporate | $625 | $625 | $- | 0.0% | | Total Adjusted EBITDA | $22,358 | $23,834 | $(1,476) | -6.2% | - U.S. Concrete Pumping Adjusted EBITDA decreased by 9.3% due to lower revenue[176] - U.K. Operations Adjusted EBITDA increased by 5.1% due to robust cost-containment measures offsetting revenue decline[177] Liquidity and Capital Resources This section discusses the company's sources of liquidity, capital structure, and ability to meet future financial obligations - Primary liquidity sources are cash generated from operations, available cash and cash equivalents, and access to the revolving credit facility under the ABL Facility[181] - As of January 31, 2021, total available liquidity was $118.4 million, consisting of $2.3 million in cash and cash equivalents and $116.1 million of available borrowing capacity under the ABL Facility[181] - The capital structure is primarily a combination of stockholders' equity, zero-dividend convertible perpetual preferred stock, long-term Senior Notes, and short-term financing under the ABL Facility[182] - Management believes existing cash and cash equivalent balances, cash flow from operations, and borrowing capacity under the ABL Facility will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months[183] Senior Notes and ABL Facility This section provides details on the terms, maturity, interest rates, and covenants of the Senior Notes and ABL Facility - The Senior Notes are for $375.0 million, bear 6.000% interest, mature on February 1, 2026, and are senior secured obligations guaranteed by the Company and certain subsidiaries[185] - The ABL Facility provides up to $125.0 million in borrowing availability (with a $75.0 million accordion feature), matures on January 28, 2026, and bears interest at either an adjusted LIBOR rate or a base rate plus applicable margins[188] - Both the Senior Notes and ABL Facility are secured by company assets and include financial and non-financial covenants, with the company in compliance as of January 31, 2021[185][186][188][189] Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities for the reporting period - Net cash provided by operating activities was $12.6 million in Q1 fiscal 2021, up from $1.8 million in Q1 fiscal 2020, primarily due to non-cash charges (depreciation, amortization, debt extinguishment loss) and a decrease in trade receivables[192][194] - Net cash used in investing activities was $7.5 million in Q1 fiscal 2021, mainly for $9.4 million in property, plant, and equipment purchases, partially offset by $1.9 million from asset sales[193][195] - Net cash used in financing activities was $9.2 million in Q1 fiscal 2021, reflecting $375.0 million in Senior Notes proceeds and $80.9 million in revolving loan proceeds, offset by $381.2 million in term loan payments and $8.5 million in debt issuance costs[193][195] Non-GAAP Measures (EBITDA and Adjusted EBITDA) This section defines EBITDA and Adjusted EBITDA, explaining their calculation and purpose as non-GAAP financial measures - EBITDA is calculated by adding back interest expense, income taxes, depreciation, and amortization to GAAP net income[197] - Adjusted EBITDA further adds back transaction expenses, loss on debt extinguishment, stock-based compensation, other income, net, and other adjustments[197] - These non-GAAP measures provide useful information for management and investors but have limitations and should not be considered in isolation or as a substitute for GAAP measures[197] Consolidated Non-GAAP Measures (in thousands) | Consolidated Non-GAAP Measures (in thousands) | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Change | | :-------------------------------------------- | :------------------------------ | :------------------------------ | :----- | | Net income (loss) | $(12,290) | $(2,746) | $(9,544) | | EBITDA | $5,800 | $20,695 | $(14,895) | | Adjusted EBITDA | $22,358 | $23,834 | $(1,476) | JOBS Act This section explains the company's election to delay the adoption of new accounting standards under the JOBS Act and its implications - The Company has elected to delay the adoption of new or revised accounting standards under the JOBS Act[204] - This election may result in financial statements not being comparable to companies that comply with public company effective dates[204] - A subsequent election to comply with public company effective dates would be irrevocable[204] Critical Accounting Policies and Estimates This section highlights critical accounting policies and estimates, particularly those related to goodwill, intangible assets, and income taxes, which involve subjective judgments - Critical accounting policies involve subjective and complex judgments, especially for goodwill and intangible assets and income taxes[206][207][214] - Goodwill is evaluated for impairment annually or more frequently, using a two-step process involving qualitative and quantitative assessments[207] - Fair value determinations for goodwill and indefinite-lived intangibles are sensitive to assumptions about future plans, industry/economic conditions (including COVID-19 duration/severity), projected revenue, discount rates, and market factors[208][212] - Impairment tests use weighted income (discounted cash flow) and market (guideline public company) approaches, with a $57.9 million goodwill and intangibles impairment charge recorded in Q2 fiscal 2020 due to COVID-19 impacts[209][210][213][214] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - Not applicable[219] Item 4. Controls and Procedures Management, with CEO and CFO participation, concluded that the company's disclosure controls and procedures were effective as of January 31, 2021. There were no material changes in internal control over financial reporting during the first quarter of fiscal 2021 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of January 31, 2021[220] - No material changes in internal control over financial reporting occurred during Q1 fiscal 2021[221] Part II. Other Information This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, and a list of exhibits Item 1. Legal Proceedings The company is not currently a party to any material litigation and is unaware of any pending or threatened litigation that could have a material adverse effect on its business, operating results, financial condition, or cash flows - The Company is not presently a party to any material litigation[223] - No pending or threatened litigation is known that could have a material adverse effect on the business, operating results, financial condition, or cash flows[223] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended October 31, 2020 - No material changes to Risk Factors previously disclosed in the Annual Report on Form 10-K for the year ended October 31, 2020[224] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - None[225] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities - None[225] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Not Applicable[225] Item 5. Other Information This section states that there is no other information to report - None[225] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Indenture for the Senior Notes, the Amended and Restated ABL Credit Agreement, and certifications from the CEO and CFO - Exhibits include the Indenture for the 6.000% Senior Secured Second Lien Notes due 2026 and the Amended and Restated ABL Credit Agreement, both dated January 28, 2021[227] - Certifications from the Chief Executive Officer and Chief Financial Officer (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) are also filed[227] Signatures This section confirms the official signing of the report by the company's Chief Financial Officer and Secretary - The report is signed by Iain Humphries, Chief Financial Officer and Secretary, on behalf of Concrete Pumping Holdings, Inc[228] - The report is dated March 11, 2021[228]