crete Pumping (BBCP) - 2023 Q4 - Annual Report

Part I Business CPH is a leading provider of concrete pumping and waste management services in the U.S. and U.K., with operations across three segments and a diverse customer base - CPH is a leading provider of concrete pumping and waste management services in the U.S. and U.K., with an estimated market share of approximately 17% in the U.S. and 30% in the U.K. based on fleet size[17][20] FY 2023 Revenue by Segment | Segment | Revenue Contribution | Key Brands | Fleet/Operations (as of Oct 31, 2023) | | :--- | :--- | :--- | :--- | | U.S. Concrete Pumping | 72% | Brundage-Bone, Capital Pumping | ~1,060 equipment units, ~100 locations | | U.S. Concrete Waste Management | 14% | Eco-Pan | ~115 trucks, >10,000 containers, 19 locations | | U.K. Operations | 14% | Camfaud, Premier, Eco-Pan | ~400 equipment units, ~30 locations | - The company operates a fleet of approximately 1,580 equipment units with an average age of about 9 years and employs around 1,720 people globally[18][28] - CPH serves a diverse base of approximately 12,000 customers. The top ten customers represent less than 10% of total revenue and have an average tenure of over 20 years, indicating strong, long-term relationships[20][29] Risk Factors CPH faces significant risks from construction industry cyclicality, operational challenges, legal disputes, substantial indebtedness, and stock ownership concentration - The business is highly cyclical and dependent on construction spending, which is influenced by inflation, fuel costs, and general economic conditions[38] - An ongoing sales tax dispute with the Washington Department of Revenue could result in an estimated liability of $3.5 million in sales tax, interest, and penalties if the appeal is unsuccessful[78] - The company has significant indebtedness of $394.0 million as of October 31, 2023, which could affect cash flow and operational flexibility[91] - Two major stockholders, CFLL Holdings, LLC and BBCP Investors, LLC, own 28% and 20% of outstanding common stock, respectively, with potential future sales impacting stock price[100] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[109] Properties CPH operates from approximately 130 locations across the U.S. and U.K., with its corporate headquarters leased in Thornton, Colorado - As of October 31, 2023, the company operates from approximately 100 locations in the U.S. and 30 in the U.K., owning 16 U.S. locations and leasing the rest[110] Legal Proceedings The company is not currently a party to any litigation expected to have a material adverse effect on its business or financial condition - The company is not presently a party to any material litigation[111] Mine Safety Disclosures This section is not applicable to the company - Not applicable[112] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities CPH common stock trades on Nasdaq, with the company retaining earnings for business investment and share repurchases, including a recent program increase and extension - The company has not paid cash dividends and does not anticipate doing so, intending to retain earnings for business operations or share repurchases[116] Share Repurchase Activity (Fiscal Years 2022-2023) | Fiscal Year | Shares Repurchased | Total Cost (Millions USD) | Average Price Per Share | | :--- | :--- | :--- | :--- | | 2023 | 1,333,038 | $8.9 | $6.66 | | 2022 | 415,066 | $2.7 | $6.48 | - The board of directors approved a $10.0 million increase to the share repurchase program in January 2023 and extended its authorization to March 31, 2025[120] Management's Discussion and Analysis of Financial Condition and Results of Operations FY2023 saw revenue growth to $442.2 million, driven by U.S. Concrete Waste Management and acquisitions, with net income rising to $31.8 million and Adjusted EBITDA growing to $124.6 million Results of Operations FY2023 revenue increased by 10.2% to $442.2 million, driven by strong segment growth, while gross margin slightly compressed and Adjusted EBITDA rose 7.4% to $124.6 million Revenue by Segment (Fiscal Year Ended Oct 31) | Segment | 2023 Revenue (in thousands) | 2022 Revenue (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | U.S. Concrete Pumping | $317,877 | $296,506 | $21,371 | 7.2% | | U.K. Operations | $62,588 | $54,926 | $7,662 | 13.9% | | U.S. Concrete Waste Management | $62,405 | $50,191 | $12,214 | 24.3% | | Total Reportable Segment Revenue | $442,870 | $401,623 | $41,247 | 10.3% | - Gross margin decreased slightly from 40.8% in FY2022 to 40.3% in FY2023, primarily due to inflationary pressures, mostly in labor[143] Adjusted EBITDA by Segment (Fiscal Year Ended Oct 31) | Segment | 2023 Adj. EBITDA (in thousands) | 2022 Adj. EBITDA (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | U.S. Concrete Pumping | $73,583 | $75,002 | ($1,419) | -1.9% | | U.K. Operations | $18,486 | $15,717 | $2,769 | 17.6% | | U.S. Concrete Waste Management | $30,030 | $22,838 | $7,192 | 31.5% | | Total | $124,600 | $116,056 | $8,544 | 7.4% | Liquidity and Capital Resources As of October 31, 2023, CPH maintained $216.7 million in liquidity, with total debt at $394.0 million, and saw a significant decrease in capital expenditures to $54.5 million - As of October 31, 2023, the company had total available liquidity of $216.7 million, comprising $15.9 million in cash and $200.8 million of available borrowing capacity under the ABL Facility[156] Debt Composition (as of Oct 31, 2023) | Debt Instrument | Amount Outstanding (in thousands) | Interest Rate | Maturity | | :--- | :--- | :--- | :--- | | Senior Notes | $375,000 | 6.000% | Feb 2026 | | ABL Facility | $18,954 | Varies | June 2028 | | Total Debt, Gross | $393,954 | | | - Capital expenditures were $54.5 million in FY2023, a decrease from $101.9 million in FY2022[160] Cash Flow Summary (Fiscal Year Ended Oct 31, 2023) | Cash Flow Category | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $96.9 | | Net cash used in investing activities | ($44.2) | | Net cash used in financing activities | ($44.3) | Critical Accounting Policies and Estimates Critical accounting policies involve significant judgment, especially for goodwill and intangible asset impairment testing, with the U.S. Concrete Pumping unit's fair value showing sensitivity to assumption changes - The company's most critical accounting estimates relate to the impairment testing of goodwill and intangible assets, which requires significant judgment regarding future cash flows, discount rates, and market conditions[183][184][185] - As of the August 31, 2022 impairment test, the fair value of the U.S. Concrete Pumping reporting unit was approximately 7% greater than its carrying value, indicating sensitivity to changes in key assumptions[195] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, CPH is not required to provide information for this item - The company is a smaller reporting company and is not required to provide this information[201] Financial Statements and Supplementary Data FY2023 consolidated financial statements report $904.5 million in total assets, $442.2 million in revenue, and $31.8 million in net income, with an unqualified audit opinion Consolidated Statement of Operations Highlights (Year Ended Oct 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Revenue | $442,241 | | Gross Profit | $178,304 | | Income from Operations | $61,452 | | Net Income | $31,790 | | Diluted EPS | $0.54 | Consolidated Balance Sheet Highlights (As of Oct 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $94,270 | | Property, plant and equipment, net | $427,648 | | Goodwill | $221,517 | | Total Assets | $904,525 | | Total Current Liabilities | $83,976 | | Long term debt, net | $371,868 | | Total Liabilities | $571,285 | | Total Stockholders' Equity | $308,240 | - The company's warrants expired on December 6, 2023, with the warrant liability recorded as $0.1 million as of October 31, 2023[132][328] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding financial disclosure - None[402] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of October 31, 2023, with prior material weaknesses fully remediated - Management concluded that disclosure controls and procedures, as well as internal control over financial reporting, were effective as of October 31, 2023[404][407] - Two material weaknesses identified in the prior year, related to manual journal entries and IT user access, have been successfully remediated as of October 31, 2023[410][411] Part III Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees Information for Items 10 through 14, covering governance, compensation, and related matters, is incorporated by reference from the upcoming definitive proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement to be filed later[417][419][420] Part IV Exhibits and Financial Statement Schedules This section lists financial statements and exhibits filed with or incorporated by reference into the Form 10-K, including key corporate and debt documents - This section contains a list of all exhibits filed with the Form 10-K, including the Amended and Restated ABL Credit Agreement and the Indenture for the Senior Notes[426][427] Form 10-K Summary No summary is provided under this item - None[429]