10-Q 1 bbpp20240430_10q.htm FORM 10-Q bbpp20240430_10q.htm
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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended April 30, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____ to ____

 

Commission File Number: 001-38166

 

CONCRETE PUMPING HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware

83-1779605

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

500 E. 84th Avenue, Suite A-5

80229

Thornton, Colorado

 

(Address of principal executive offices)

(Zip Code)

 

(303) 289-7497

(Registrant's telephone number, including area code)

 

None

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

BBCP

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

As of June 3, 2024, the registrant had 54,119,255 shares of common stock, par value $0.0001 per share, issued and outstanding. 

 

 
 

CONCRETE PUMPING HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

fOR THE PERIOD ENDED April 30, 2024

 

 

 

Page

Part I. Financial Information

 

 

 

 

 

Item 1.

Financial Statements:

 

 

 

Condensed Consolidated Balance Sheets (Unaudited)

3

 

 

Condensed Consolidated Statements of Operations (Unaudited)

4

    Condensed Consolidated Statements of Comprehensive Income (Unaudited). 5
 

 

Condensed Consolidated Statements of Changes in Stockholders Equity (Unaudited)

6
 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

8
 

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

 

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

24

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

 

Item 4.

Controls and Procedures

37

 

 

 

 

Part II. Other Information

 

 

 

 

 

 

Item 1.

Legal Proceedings

38
 

Item 1A.

Risk Factors

38
 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38
 

Item 3.

Defaults Upon Senior Securities

39
 

Item 4.

Mine Safety Disclosures

39
 

Item 5.

Other Information

39
 

Item 6.

Exhibits

39
 

 

 

 

  Signatures   40

 

 

PART I

 

ITEM 1.     Financial Statements 

 

Concrete Pumping Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

         
  

As of April 30,

  

As of October 31,

 

(in thousands, except per share amounts)

 

2024

  

2023

 
         

Current assets:

        

Cash and cash equivalents

 $17,956  $15,861 

Receivables, net of allowance for doubtful accounts of $1,056 and $978, respectively

  56,909   62,976 

Inventory

  6,202   6,732 

Prepaid expenses and other current assets

  18,392   8,701 

Total current assets

  99,459   94,270 
         

Property, plant and equipment, net

  426,884   427,648 

Intangible assets, net

  112,756   120,244 

Goodwill

  222,295   221,517 

Right-of-use operating lease assets

  27,226   24,815 

Other non-current assets

  4,506   14,250 

Deferred financing costs

  1,587   1,781 

Total assets

 $894,713  $904,525 
         
         

Current liabilities:

        

Revolving loan

 $16,428  $18,954 

Operating lease obligations, current portion

  4,673   4,739 

Finance lease obligations, current portion

  -   125 

Accounts payable

  8,417   8,906 

Accrued payroll and payroll expenses

  12,804   14,524 

Accrued expenses and other current liabilities

  35,956   34,750 

Income taxes payable

  1,695   1,848 

Warrant liability, current portion

  -   130 

Total current liabilities

  79,973   83,976 
         

Long term debt, net of discount for deferred financing costs

  372,564   371,868 

Operating lease obligations, non-current

  22,819   20,458 

Finance lease obligations, non-current

  -   50 

Deferred income taxes

  80,489   80,791 

Other liabilities, non-current

  5,567   14,142 

Total liabilities

  561,412   571,285 
         

Commitments and contingencies (Note 13)

          
         

Zero-dividend convertible perpetual preferred stock, $0.0001 par value, 2,450,980 shares issued and outstanding as of April 30, 2024 and October 31, 2023

  25,000   25,000 
         

Stockholders' equity

        

Common stock, $0.0001 par value, 500,000,000 shares authorized, 53,741,044 and 54,757,445 issued and outstanding as of April 30, 2024 and October 31, 2023, respectively

  6   6 

Additional paid-in capital

  384,585   383,286 

Treasury stock

  (18,131)  (15,114)

Accumulated other comprehensive loss

  (2,932)  (5,491)

Accumulated deficit

  (55,227)  (54,447)

Total stockholders' equity

  308,301   308,240 
         

Total liabilities and stockholders' equity

 $894,713  $904,525 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Concrete Pumping Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

  

Three Months Ended April 30,

  

Six Months Ended April 30,

 

(in thousands, except per share amounts)

 

2024

  

2023

  

2024

  

2023

 
                 

Revenue

 $107,062  $107,791  $204,773  $201,366 
                 

Cost of operations

  65,295   64,317   129,692   121,438 

Gross profit

  41,767   43,474   75,081   79,928 
                 

General and administrative expenses

  29,712   30,258   61,570   57,299 

Income from operations

  12,055   13,216   13,511   22,629 
                 

Other income (expense):

                

Interest expense and amortization of deferred financing costs

  (6,873)  (7,348)  (13,336)  (14,219)

Change in fair value of warrant liabilities

  -   1,172   130   5,728 

Other income (expense), net

  44   13   84   34 

Total other expense

  (6,829)  (6,163)  (13,122)  (8,457)
                 

Income before income taxes

  5,226   7,053   389   14,172 
                 

Income tax expense

  2,180   1,465   1,169   2,109 
                 

Net income (loss)

  3,046   5,588   (780)  12,063 
                 

Less accretion of liquidation preference on preferred stock

  (430)  (427)  (870)  (868)
                 

Income (loss) available to common shareholders

 $2,616  $5,161  $(1,650) $11,195 
                 

Weighted average common shares outstanding

                

Basic

  53,430   53,330   53,501   53,468 

Diluted

  54,380   54,225   53,501   54,343 
                 

Net income (loss) per common share

                

Basic

 $0.05  $0.09  $(0.03) $0.20 

Diluted

 $0.05  $0.09  $(0.03) $0.20 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Concrete Pumping Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

  

Three Months Ended April 30,

  

Six Months Ended April 30,

 

(in thousands)

 

2024

  

2023

  

2024

  

2023

 
                 

Net income (loss)

 $3,046  $5,588  $(780) $12,063 
                 

Other comprehensive income:

                

Foreign currency translation adjustment

  (1,529)  1,678   2,559   6,730 
                 

Total comprehensive income

 $1,517  $7,266  $1,779  $18,793 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Concrete Pumping Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

 

 

  

Common Stock

  

Additional Paid-In Capital

  

Treasury Stock

  

Accumulated Other Comprehensive Income (Loss)

  

Accumulated Deficit

  

Total

 

(in thousands, except share amounts)

 

Shares

  

Amount

                     

Balance, January 31, 2024

  53,870,084  $6  $383,822  $(16,212) $(1,403) $(58,273) $307,940 

Stock-based compensation expense

  -   -   737   -   -   -   737 

Forfeiture/cancellation of restricted stock

  -   -   -   -   -   -   - 

Shares issued under stock-based program

  124,353   -   26   -   -   -   26 

Treasury shares purchased for tax withholding

  (82,364)  -   -   (650)  -   -   (650)

Treasury shares purchased under share repurchase program

  (171,029)  -   -   (1,269)  -   -   (1,269)

Net income

  -   -   -   -   -   3,046   3,046 

Foreign currency translation adjustment

  -   -   -   -   (1,529)  -   (1,529)

Balance, April 30, 2024

  53,741,044  $6  $384,585  $(18,131) $(2,932) $(55,227) $308,301 

 

  

Common Stock

  

Additional Paid-In Capital

  

Treasury Stock

  

Accumulated Other Comprehensive Income (Loss)

  

Accumulated Deficit

  

Total

 

(in thousands, except share amounts)

 

Shares

  

Amount

                     

Balance, January 31, 2023

  55,407,330  $6  $380,535  $(10,105) $(4,176) $(79,762) $286,498 

Stock-based compensation expense

  -   -   1,064   -   -   -   1,064 

Forfeiture/cancellation of restricted stock

  -   -   -   -   -   -   - 

Shares issued under stock-based program

  15,783   -   -   -   -   -   - 

Treasury shares purchased for tax withholding

  (68,009)  -   -   (467)  -   -   (467)

Treasury shares purchased under share repurchase program

  (339,532)  -   -   (2,322)  -   -   (2,322)

Net income

  -   -   -   -   -   5,588   5,588 

Foreign currency translation adjustment

  -   -   -   -   1,678   -   1,678 

Balance, April 30, 2023

  55,015,572  $6  $381,599  $(12,894) $(2,498) $(74,174) $292,039 

 

 

Concrete Pumping Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

 

  

Common Stock

  

Additional Paid-In Capital

  

Treasury Stock

  

Accumulated Other Comprehensive Income (Loss)

  

Accumulated Deficit

  

Total

 

(in thousands, except share amounts)

 

Shares

  

Amount

                     

Balance, October 31, 2023

  54,757,445  $6  $383,286  $(15,114) $(5,491) $(54,447) $308,240 

Stock-based compensation expense

  -   -   1,273   -   -   -   1,273 

Forfeiture/cancellation of restricted stock

  (750,585)  -   -   -   -   -   - 

Shares issued under stock-based program

  132,849   -   26   -   -   -   26 

Treasury shares purchased for tax withholding

  (191,542)  -   -   (1,500)  -   -   (1,500)

Treasury shares purchased under share repurchase program

  (207,123)  -   -   (1,517)  -   -   (1,517)

Net income

  -   -   -   -   -   (780)  (780)

Foreign currency translation adjustment

  -   -   -   -   2,559   -   2,559 

Balance, April 30, 2024

  53,741,044  $6  $384,585  $(18,131) $(2,932) $(55,227) $308,301 

 

  

Common Stock

  

Additional Paid-In Capital

  

Treasury Stock

  

Accumulated Other Comprehensive Income (Loss)

  

Accumulated Deficit

  

Total

 

(in thousands, except share amounts)

 

Shares

  

Amount

                     

Balance, October 31, 2022

  56,226,191  $6  $379,395  $(4,609) $(9,228) $(86,237) $279,327 

Stock-based compensation expense

  -   -   2,204   -   -   -   2,204 

Forfeiture/cancellation of restricted stock

  (1,312)  -   -   -   -   -   - 

Shares issued under stock-based program

  41,047   -   -   -   -   -   - 

Treasury shares purchased for tax withholding

  (150,365)  -   -   (1,040)  -   -   (1,040)

Treasury shares purchased under share repurchase program

  (1,099,989)  -   -   (7,245)  -   -   (7,245)

Net income

  -   -   -   -   -   12,063   12,063 

Foreign currency translation adjustment

  -   -   -   -   6,730   -   6,730 

Balance, April 30, 2023

  55,015,572  $6  $381,599  $(12,894) $(2,498) $(74,174) $292,039 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Concrete Pumping Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

  

For the Six Months Ended April 30,

 

(in thousands)

 

2024

  

2023

 

Net income (loss)

 $(780) $12,063 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

        

Non-cash operating lease expense

  2,567   2,317 

Foreign currency adjustments

  (451)  (1,106)

Depreciation

  20,565   19,523 

Deferred income taxes

  (590)  1,128 

Amortization of deferred financing costs

  890   957 

Amortization of intangible assets

  7,771   9,647 

Stock-based compensation expense

  1,273   2,204 

Change in fair value of warrant liabilities

  (130)  (5,728)

Net gain on the sale of property, plant and equipment

  (1,147)  (640)

Other operating activities

  65   (70)

Net changes in operating assets and liabilities:

        

Receivables

  6,279   867 

Inventory

  612   (681)

Other operating assets

  (2,420)  (3,216)

Accounts payable

  (1,218)  (1,112)

Other operating liabilities

  (3,841)  (5,061)

Net cash provided by operating activities

  29,445   31,092 
         

Cash flows from investing activities:

        

Purchases of property, plant and equipment

  (28,817)  (34,745)

Proceeds from sale of property, plant and equipment

  5,236   4,416 

Purchases of intangible assets

  -   (800)

Net cash used in investing activities

  (23,581)  (31,129)
         

Cash flows from financing activities:

        

Proceeds on revolving loan

  167,611   174,504 

Payments on revolving loan

  (170,138)  (167,213)

Purchase of treasury stock

  (3,017)  (8,285)

Other financing activities

  1,409   (58)

Net cash used in financing activities

  (4,135)  (1,052)

Effect of foreign currency exchange rate changes on cash

  366   250 

Net increase (decrease) in cash and cash equivalents

  2,095   (839)

Cash and cash equivalents:

        

Beginning of period

  15,861   7,482 

End of period

 $17,956  $6,643 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

Concrete Pumping Holdings, Inc. 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

 

Note 1. Organization and Description of Business

 

Organization

 

Concrete Pumping Holdings, Inc. (the "Company") is a Delaware corporation headquartered in Thornton, Colorado. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries including Brundage-Bone Concrete Pumping, Inc. ("Brundage-Bone"), Camfaud Group Limited ("Camfaud") and Eco-Pan, Inc. ("Eco-Pan").

 

Nature of business

 

Brundage-Bone is a concrete pumping service provider in the United States ("U.S.") and Camfaud is a concrete pumping service provider in the United Kingdom ("U.K."). Their core business is the provision of concrete pumping services to general contractors and concrete finishing companies in the commercial, infrastructure and residential sectors. Most often equipment returns to a "home base" nightly and these service providers do not contract to purchase, mix, or deliver concrete. Brundage-Bone has approximately 100 branch locations across approximately 21 states, with its corporate headquarters in Thornton, Colorado. Camfaud has approximately 30 branch locations throughout the U.K., with its corporate headquarters in Epping (near London), England.

 

Eco-Pan provides industrial cleanup and containment services, primarily to customers in the construction industry. Eco-Pan uses containment pans specifically designed to hold waste products from concrete and other industrial cleanup operations. Eco-Pan has 20 operating locations across the U.S. with its corporate headquarters in Thornton, Colorado. In addition, we have concrete waste management operations under our Eco-Pan brand name in the U.K. and currently operate from a shared Camfaud location.

 

Seasonality

 

The Company’s sales are historically seasonal, with lower revenue in the first quarter and higher revenue in the fourth quarter of each year. Such seasonality also causes the Company’s working capital cash flow requirements to vary from quarter to quarter and primarily depends on the variability of weather patterns with the Company generally having lower sales volume during the winter and spring months.

 

Note 2. Summary of Significant Accounting Policies

 

We describe our significant accounting policies in Note 2 of the notes to condensed consolidated financial statements in our annual report on Form 10-K for the year ended October 31, 2023 ("Annual Report"). During the six months ended April 30, 2024, there were no changes to those accounting policies.

 

Basis of presentation

 

Our condensed consolidated balance sheet as of October 31, 2023, which was derived from our audited condensed consolidated financial statements and our unaudited interim condensed consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The enclosed statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present a fair statement of the interim periods. The consolidated results of operations and cash flows for the first six months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended October 31, 2023.

 

Certain prior period amounts have been reclassified in order to conform to the current year presentation.

 

During the first quarter of fiscal year 2024, certain assets and associated revenues and expenses previously part of the Company's Other activities has now been aggregated into its U.S. Concrete Pumping segment in order to better align its placement with the manner in which the Company now allocates resources and measures performance. As a result, segment results for prior periods have been reclassified to conform to current period presentation. For further discussion, see Note 18.

 

9

 

Use of estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue recognition

 

The Company generates revenues primarily from (1) concrete pumping services in both the U.S. and U.K and (2) the Company’s concrete waste services business, both of which are discussed below. In addition, the Company generates an immaterial amount of revenue from the sales of replacement parts to customers. The Company’s delivery terms for replacement part sales are FOB shipping point. Revenue is disaggregated between two accounting standards: (1) ASC 606, Revenue Recognition ("ASC 606") and (2) ASC 842, Leases ("ASC 842").

 

Leases as Lessor

 

Our Eco-Pan business involves contracts with customers whereby we are a lessor for the rental component of the contract and therefore, such rental components of the contract are recorded as lease revenue. We account for such rental contracts as operating leases. We recognize revenue from pan rentals in the period earned, regardless of the timing of billing to customers. The lease component of the revenue is disaggregated by a base price that is based on the number of contractual days and a variable component that is based on days in excess of the number of contractual days.

 

The table below summarizes our revenues as presented in our unaudited consolidated statements of operations for the periods ended  April 30, 2024 and 2023 by revenue type:

 

  

Three Months Ended April 30,

  

Six Months Ended April 30,

 

(in thousands)

 

2024

  

2023

  

2024

  

2023

 

Service revenue

 $

98,729

  $

100,816

  $

188,686

  $

187,182

 

Lease fixed revenue

  

3,111

   

2,813

   

6,315

   

5,968

 

Lease variable revenue

  

5,222

   

4,162

   

9,772

   

8,216

 

Total revenue

 $

107,062

  $

107,791

  $

204,773

  $

201,366

 

 

Receivables and contract assets and liabilities

 

Receivables are carried at the original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts. Generally, the Company does not require collateral for their accounts receivable; however, the Company may file statutory liens or take other appropriate legal action when necessary on construction projects in which collection problems arise. A receivable is typically considered to be past due if any portion of the receivable balance is outstanding for more than 30 days. The Company does not typically charge interest on past-due receivables.

 

Pursuant to CECL (defined below), Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts, Management’s understanding of the current economic circumstances within the Company’s industry, reasonable and supportable forecasts and Management’s judgment as to the likelihood of ultimate payment based upon available data. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in particular circumstances of individual customers.  Accordingly, the Company may be required to increase or decrease the allowance for doubtful accounts.

 

The Company does not have contract liabilities associated with contracts with customers. The Company’s contract assets and impairment losses associated therewith are not significant. Contracts with customers do not result in amounts billed to customers in excess of recognizable revenue.

 

10

 

Newly adopted accounting pronouncements

 

ASU 2016-13, Financial Instruments Credit Losses (Topic 326) ("ASU 2016-13") - In June 2016, the FASB issued ASU No. 2016-13, which, along with subsequently issued related ASUs, requires financial assets (or groups of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, among other provisions (known as the current expected credit loss ("CECL") model). Under the new guidance, the Company recognizes an allowance for its estimate of expected credit losses over the entire contractual term of its receivables from the date of initial recognition of the financial instrument. Measurement of expected credit losses are based on relevant forecasts that affect collectability. The Company’s receivables are in scope for CECL. At the point that these receivables are recorded, they become subject to the CECL model and estimates of expected credit losses over their contractual life are recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. This ASU is effective for smaller reporting companies with fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted CECL as of November 1, 2023 for fiscal year ending October 31, 2024. The adoption of CECL did not have a material impact on the condensed consolidated financial statements and related disclosures or the existing internal controls because the Company’s accounts receivable are of short duration and there is not a material difference between incurred losses and expected losses.

 

Recently issued accounting pronouncements not yet effective

 

ASU 2023-07, Improvements to Reportable Segment Disclosures ("ASU 2023-07") - In November 2023, the FASB issued ASU No. 2023-07, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. This ASU is effective for public companies with annual periods beginning after December 15, 2023, and interim periods within annual period beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.

 

ASU 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09") - In December 2023, the FASB issued ASU No. 2023-09, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.

 

 

11

 
 

Note 3. Fair Value Measurement 

 

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable and current accrued liabilities approximate their fair value as recorded due to the short-term maturity of these instruments, which approximates fair value. The Company’s outstanding obligations on its asset-backed loan ("ABL") credit facility are deemed to be at fair value as the interest rates on these debt obligations are variable and consistent with prevailing rates. There were no changes since October 31, 2023 in the Company's valuation techniques used to measure fair value.

 

Long-term debt instruments

 

The Company's long-term debt instruments are recorded at their carrying values in the condensed consolidated balance sheet, which may differ from their respective fair values. The fair values of the long-term debt instruments are derived from Level 2 inputs.  The fair value amount of the long-term debt instruments as of  April 30, 2024 and October 31, 2023 is presented in the table below based on the prevailing interest rates and trading activity of the Senior Notes.

 

  

As of April 30,

  

As of October 31,

 
  

2024

  

2023

 

(in thousands)

 

Carrying Value

  

Fair Value

  

Carrying Value

  

Fair Value

 

Senior Notes

 $375,000  $368,438  $375,000  $353,438 
 

Warrants

 

At  October 31, 2023, there were 13,017,677 public warrants and no private warrants outstanding. The warrants expired on December 6, 2023 and there were no amounts outstanding as of April 30, 2024.

 

All other non-financial assets

 

The Company's non-financial assets, which primarily consist of property and equipment, goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis or whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite lived intangibles), non-financial instruments are assessed for impairment and, if applicable, written down to and recorded at fair value.

 

12

 
 

Note 4. Prepaid Expenses and Other Current Assets

 

The significant components of prepaid expenses and other current assets as of April 30, 2024 and  October 31, 2023 are comprised of the following:

 

  

As of April 30,

  

As of October 31,

 

(in thousands)

 

2024

  

2023

 

Expected recoveries related to self-insured commercial liabilities

 $11,150  $3,802 

Prepaid insurance

  3,702   1,611 

Prepaid licenses and deposits

  1,248   810 

Prepaid rent

  117   629 

Other current assets and prepaids

  2,175   1,849 

Total prepaid expenses and other current assets

 $18,392  $8,701 

 

 

Note 5. Property, Plant and Equipment

 

The significant components of property, plant and equipment as of April 30, 2024 and  October 31, 2023 are comprised of the following:

 

  

As of April 30,

  

As of October 31,

 

(in thousands)

 

2024

  

2023

 

Land, building and improvements

 $32,440  $29,338 

Finance leases—land and buildings

  -   828 

Machinery and equipment

  530,255   517,514 

Transportation equipment

  10,311   9,306 

Furniture and office equipment

  3,913   3,817 

Property, plant and equipment, gross

  576,919   560,803 

Less accumulated depreciation

  (150,035)  (133,155)

Property, plant and equipment, net

 $426,884  $427,648 

 

For the three and six months ended April 30, 2024 and 2023, depreciation expense is as follows:

 

  

Three Months Ended April 30,

  

Six Months Ended April 30,

 

(in thousands)

 

2024

  

2023

  

2024

  

2023

 

Cost of operations

 $9,784  $9,261  $19,397  $18,322 

General and administrative expenses

  579   608   1,168   1,201 

Total depreciation expense

 $10,363  $9,869  $20,565  $19,523 

 

 

13

 
 

Note 6. Goodwill and Intangible Assets

 

The Company has recognized goodwill and certain intangible assets in connection with prior business combinations.

 

There were no triggering events during the six months ended April 30, 2024. The Company will continue to evaluate its goodwill and intangible assets in future quarters.

 

The following table summarizes the composition of intangible assets as of  April 30, 2024 and  October 31, 2023:

 

  

As of April 30,

 
  

2024

 
  

Weighted Average

  

Gross

          

Foreign Currency

  

Net

 
  

Remaining Life

  

Carrying

  

Accumulated

  

Accumulated

  

Translation

  

Carrying

 

(in thousands)

 

(in Years)

  

Value

  

Impairment

  

Amortization

  

Adjustment

  

Amount

 

Intangibles subject to amortization:

                        

Customer relationship

  9.6  $195,126  $-  $(137,408) $1,032  $58,750 

Trade name

  4.6   5,097   -   (2,910)  229   2,416 

Assembled workforce

  1.0   1,650   -   (1,247)  -   403 

Noncompete agreements

  3.4   1,200   -   (513)  -   687 

Indefinite-lived intangible assets:

                        

Trade names (indefinite life)

  -   55,500   (5,000)  -   -   50,500 

Total intangibles

     $258,573  $(5,000) $(142,078) $1,261  $112,756 

 

  

As of October 31,

 
  

2023

 
  

Weighted Average

  

Gross

          

Foreign Currency

  

Net

 
   Remaining Life   Carrying   Accumulated   Accumulated   Translation   Carrying 

(in thousands)

 

(in Years)

  

Value

  

Impairment

  

Amortization

  

Adjustment

  

Amount

 

Intangibles subject to amortization:

                        

Customer relationship

  10.1  $195,126  $-  $(130,295) $832  $65,663 

Trade name

  5.1   5,097   -   (2,645)  146   2,598 

Assembled workforce

  1.4   1,650   -   (972)  -   678 

Noncompete agreements

  3.9   1,200   -   (395)  -   805 

Indefinite-lived intangible assets:

                        

Trade names (indefinite life)

  -   55,500   (5,000)  -   -   50,500 

Total intangibles

     $258,573  $(5,000) $(134,307) $978  $120,244 

 

Amortization expense for the three months ended  April 30, 2024 and 2023 was $3.9 million and $4.8 million, respectively. Amortization expense for the six months ended April 30, 2024 and 2023 was $7.8 million and $9.6 million, respectively.

 

The changes in the carrying value of goodwill by reportable segment for the six months ended April 30, 2024 are as follows:

 

(in thousands)

 

U.S. Concrete Pumping

  

U.K. Operations

  

U.S. Concrete Waste Management Services

  

Total

 

Balance at October 31, 2023

 $147,482  $24,902  $49,133  $221,517 

Foreign currency translation

  -   778   -   778 

Balance at April 30, 2024

 $147,482  $25,680  $49,133  $222,295 

 

14

 
 

Note 7. Other Non-Current Assets

 

The significant components of other non-current assets as of  April 30, 2024 and  October 31, 2023 are comprised of the following:

 

  

As of April 30,

  

As of October 31,

 

(in thousands)

 

2024

  

2023

 

Expected recoveries related to self-insured commercial liabilities

 $4,124  $13,822 

Other non-current assets

  382   428 

Total other non-current assets

 $4,506  $14,250 

 

 

Note 8. Long Term Debt and Revolving Lines of Credit

 

The table below is a summary of the composition of the Company’s debt balances as of  April 30, 2024 and October 31, 2023:

 

       

April 30,

  

October 31,

 

(in thousands)

 

Interest Rates

 

Maturities

 

2024

  

2023

 

ABL Facility - short term

 

Varies

 

June 2028

 $16,428  $18,954 

Senior notes - all long term

  6.0000% 

February 2026

  375,000   375,000 

Total debt, gross

       391,428   393,954 

Less: Unamortized deferred financing costs offsetting long term debt

       (2,436)  (3,132)

Less: Current portion

       (16,428)  (18,954)

Long term debt, net of unamortized deferred financing costs

      $372,564  $371,868 

 

On January 28, 2021, Brundage-Bone Concrete Pumping Holdings Inc., a Delaware corporation (the "Issuer") and a wholly-owned subsidiary of the Company (i) completed a private offering of $375.0 million in aggregate principal amount of its 6.000% senior secured second lien notes due 2026 (the "Senior Notes") issued pursuant to an indenture, among the Issuer, the Company, the other Guarantors (as defined below), Deutsche Bank Trust Company Americas, as trustee and as collateral agent (the "Indenture") and (ii) entered into an amended and restated ABL Facility (as subsequently amended, the "ABL Facility") by and among the Company, certain subsidiaries of the Company, Wells Fargo Bank, National Association, as agent, sole lead arranger and sole bookrunner, the other lenders party thereto, which originally provided up to $125.0 million of asset-based revolving loan commitments to the Company and the other borrowers under the ABL Facility. The Senior Notes are jointly and severally guaranteed on a senior secured basis by the Company, Concrete Pumping Intermediate Acquisition Corp. and each of the Issuer’s domestic, wholly-owned subsidiaries that is a borrower or a guarantor under the ABL Facility (collectively, the "Guarantors").

 

On June 1, 2023, the ABL Facility was amended to, among other changes, (1) increase the maximum revolver borrowings available to be drawn thereunder to $225.0 million, (2) increase the letter of credit sublimit to $22.5 million and (3) extend the maturity of the ABL Facility to the earlier of (a) June 1, 2028 or (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable. The ABL Facility also provides for an uncommitted accordion feature under which the borrowers under the ABL Facility can, subject to specified conditions, increase the ABL Facility by up to an additional $75.0 million. The amended ABL Facility was treated as a debt modification. The Company capitalized an additional $0.5 million of debt issuance costs related to the June 1, 2023, ABL Facility amendment. The preexisting unamortized deferred costs of $1.4 million and the additional costs of $0.5 million will be amortized from June 1, 2023 through June 1, 2028.

 

The outstanding principal amount of the Senior Notes as of April 30, 2024 was $375.0 million and as of that date, the Company was in compliance with all covenants under the Indenture.

 

 

 

15

 

The outstanding balance under the ABL Facility as of  April 30, 2024 was $16.4 million and as of that date, the Company was in compliance with all debt covenants. Borrowings are generally in the form of short-term fixed rate loans that can be extended to mature on the earlier of (a) June 1, 2028 or (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable. Amounts borrowed may be repaid at any time, subject to the terms and conditions of the agreement.

 

The Company utilizes the ABL Facility to support its working capital arrangement.

 

In addition, as of April 30, 2024 the Company had $1.1 million in credit line reserves and a letter of credit balance of $8.5 million.

 

As of April 30, 2024 we had $198.9 million of available borrowing capacity under the ABL Facility. Debt issuance costs related to revolving credit facilities are capitalized and reflected as an asset in deferred financing costs in the accompanying condensed consolidated balance sheets. The Company had debt issuance costs related to the revolving credit facilities of $1.6 million as of April 30, 2024.

 

As of  April 30, 2024 and October 31, 2023, the weighted average interest rate for borrowings under the ABL Facility was 8.9% and 7.9% respectively.  

 

Note 9. Accrued Payroll and Payroll Expenses

 

The following table summarizes accrued payroll and expenses as of  April 30, 2024 and October 31, 2023:

 

  

As of April 30,

  

As of October 31,

 

(in thousands)

 

2024

  

2023

 

Accrued vacation

 $3,224  $2,982 

Accrued payroll

  3,910   3,960 

Accrued bonus

  4,302   5,368 

Accrued employee-related taxes

  1,333   1,892 

Other accrued

  35   322 

Total accrued payroll and payroll expenses

 $12,804  $14,524 

 

 

Note 10. Accrued Expenses and Other Current Liabilities

 

The following table summarizes accrued expenses and other current liabilities as of April 30, 2024 and October 31, 2023

 

  

As of April 30,

  

As of October 31,

 

(in thousands)

 

2024

  

2023

 

Accrued self-insured commercial liabilities

 $18,600  $11,087 

Accrued self-insured health liabilities

  2,526   2,269 

Accrued interest

  5,764   5,775 

Accrued equipment purchases

  1,700   8,545 

Accrued property, sales and use tax

  2,974   1,791 

Accrued professional fees

  1,058   1,429 

Other

  3,334   3,854 

Total accrued expenses and other liabilities

 $35,956  $34,750 

 

16

 
 

Note 11. Other Liabilities, Non-Current

 

The following table summarizes other non-current liabilities as of April 30, 2024 and October 31, 2023

 

  

As of April 30,

  

As of October 31,

 

(in thousands)

 

2024

  

2023

 

Self-insured commercial liability

 $4,349  $14,140 

Other

  1,218   2 

Total other non-current liabilities

 $5,567  $14,142 

 

 

Note 12. Income Taxes

 

The following table summarizes income before income taxes and income tax expense for the three and six months ended April 30, 2024 and 2023:

 

  

Three Months Ended April 30,

  

Six Months Ended April 30,

 

(in thousands)

 

2024

  

2023

  

2024

  

2023

 
                 

Income before income taxes

 $5,226  $7,053  $389  $14,172 
                 

Income tax expense

 $2,180  $1,465  $1,169  $2,109 

 

The effective tax rate for the three and six months ended April 30, 2024 and 2023 was primarily impacted by excess tax deficiencies from share-based compensation and the change in fair value of warrant liabilities, respectively.

 

 

17

 
 

Note 13. Commitments and Contingencies

 

Insurance

 

Commercial Self-Insured Losses

 

The Company retains a significant portion of the risk for workers' compensation, automobile, and general liability losses ("self-insured commercial liability"). Reserves have been recorded that reflect the undiscounted estimated liabilities including claims incurred but not reported. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability. Amounts estimated to be paid within one year have been included in accrued expenses and other current liabilities, with the remainder included in other liabilities, non-current on the condensed consolidated balance sheets. Insurance claims receivables that are expected to be received from third-party insurance within one year have been included in prepaid expenses and other current assets, with the remainder included in other non-current assets on the condensed consolidated balance sheets.

 

The following table summarizes as of  April 30, 2024 and  October 31, 2023 for (1) recorded liabilities, related to both asserted as well as unasserted insurance claims and (2) any related insurance claims receivables:

 

   

As of April 30, 2024

  

As of October 31, 2023

 

(in thousands)

Classification on the Condensed Consolidated Balance Sheets

        

Self-insured commercial liability, current

Accrued expenses and other current liabilities

 $18,600  $11,087 

Self-insured commercial liability, non-current

Other liabilities, non-current

  4,349   14,140 

Total self-insured commercial liabilities

 $22,949  $25,227 
          

Expected recoveries related to self-insured commercial liabilities, current

Prepaid expenses and other current assets

 $11,150  $3,802 

Expected recoveries related to self-insured commercial liabilities, non-current

Other non-current assets

  4,124   13,822 

Total expected recoveries related to self-insured commercial liabilities

 $15,274  $17,625 
          

Total self-insured commercial liability, net of expected recoveries

 $7,675  $7,602 

 

Medical Self-Insured Losses

 

The Company offers employee health benefits via a partially self-insured medical benefit plan. Participant claims exceeding certain limits are covered by a stop-loss insurance policy. The Company contracts with a third-party administrator for tasks including, but not limited to, processing claims and remitting benefits. As of  April 30, 2024 and  October 31, 2023, the Company had accrued $1.5 million and $1.2 million, respectively, for estimated health claims incurred but not reported based on historical claims amounts and average lag time. These accruals are included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets. The Company contracts with a third-party administrator to process claims and remit benefits. The third-party administrator requires the Company to maintain a bank account to facilitate the administration of claims.

 

Litigation

 

The Company is currently involved in certain legal proceedings and other disputes with third parties that have arisen in the ordinary course of business. Management believes that the outcomes of these matters will not have a material impact on the Company’s financial statements and does not believe that any amounts need to be recorded for contingent liabilities in the Company’s condensed consolidated balance sheet.

 

18

 

Washington Department of Revenue Sales Tax Issue

 

Historically, the Company has not charged sales tax to its Washington State customers that provide a reseller certificate, treating this as a wholesale transaction rather than as a retail sale. Effective April 1, 2020, the state of Washington Department of Revenue ("DOR") published a rule which amended Washington Administrative Code 458-20-211, otherwise known as Rule 211, by designating sales of stand-alone concrete pumping services as solely retail transactions. The Company sought to strongly defend its position that no sales tax should be charged for customers that provide a reseller certificate. As such, for the period from April 1, 2020 through January 31, 2024, the Company did not charge sales tax where its customers provide a reseller certificate and petitioned for declaratory relief from the amended rule.

 

In February 2023, the Company received an adverse ruling from the Thurston County superior court regarding its position, which it appealed. In February 2024, oral arguments were heard in the Court of Appeals in Tacoma and the Company received an unfavorable judgement during the same month. As of October 31, 2023, no liability had been recorded in connection with this contingency as a loss was not deemed probable at that time. However, as a result of the unfavorable judgment in February 2024, the Company concluded loss is probable and therefore recorded a loss of $3.5 million in the quarter ended January 31, 2024. The loss is included in general and administrative expenses in the Company’s condensed consolidated financial statements for the six months ended April 30, 2024. During the quarter ended January 31, 2024, the Company made a payment of $1.8 million to the DOR. Beginning with the second quarter of fiscal year 2024, the Company started assessing sales tax related to its customers in the state of Washington.

 

Letters of credit

 

The ABL Facility provides for up to $22.5 million of standby letters of credit. As of April 30, 2024, total outstanding letters of credit totaled $8.5 million, the vast majority of which had been committed to the Company’s general liability insurance provider.

 

 

Note 14. Stockholders Equity

 

Share Repurchase Program

 

In March 2024, the board of directors of the Company approved a $15.0 million increase to the Company’s share repurchase program. This authorization will expire on March 31, 2025 and is in addition to the repurchase authorization of up to $10.0 million to expire March 31, 2025 that was previously approved in January 2023. In January 2023, the board of directors of the Company approved a $10.0 million increase to the Company’s share repurchase program that was set to expire on March 31, 2024. On January 4, 2024, the board of directors approved an extension of this authorization through March 31, 2025. 

 

The repurchase program permits shares to be repurchased in the open market, by block purchase, in privately negotiated transactions, in one or more transactions from time to time, or pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the Exchange Act and other applicable legal and regulatory requirements. The repurchase program may be suspended, terminated, extended or otherwise modified by the Board without notice at any time for any reason, including, without limitation, market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, capital and liquidity objectives, and other factors deemed appropriate by the Company's management.

 

The following table summarizes the shares repurchased, total cost of shares repurchased and average price per share for the three and six months ended April 30, 2024 and 2023:

 

  

Three Months Ended April 30,

  

Six Months Ended April 30,

 

(in thousands, except price per share)

 

2024

  

2023

  

2024

  

2023

 

Shares repurchased

  171   340   207