Release Date: September 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Concrete waste management business continued to grow organically at a double-digit rate.
- Strengthened balance sheet by paying down debt and preserving robust free cash flow.
- Improved adjusted EBITDA margin despite volume declines.
- Infrastructure market revenue grew year over year by 5%.
- Strong liquidity position with $236.3 million of liquidity as of July 31, 2024.
Negative Points
- Consolidated revenue decreased to $109.6 million from $120.7 million year-over-year.
- US concrete pumping segment revenue decreased by 14% due to lower volumes.
- UK operations revenue decreased by 8%, impacted by higher interest rates.
- Net income available to common shareholders decreased to $7.1 million from $9.9 million year-over-year.
- Weather-related delays caused approximately $6 million of project revenue delays.
Q & A Highlights
Q: Can you provide more detail on the actions you're taking to manage costs, particularly regarding repair and maintenance expenses?
A: We are not deferring any maintenance on our assets. We've improved our purchasing of parts, seen some deflation in parts prices, and managed labor more efficiently. Our preventative maintenance program, started a year ago, is now yielding benefits. Despite challenging weather and commercial markets, we are focused on maintaining our business strength for market recovery. (Bruce Young, CEO)
Q: Given the trends in the quarter, do you expect 2025 to be an up or down year, and how do you see margins evolving?
A: We expect the first half of 2025 to be similar to current conditions, with potential improvement in the second half. Margins should improve with better weather and increased efficiency. Despite current challenges, we are positioned for recovery and margin growth as market conditions improve. (Bruce Young, CEO)
Q: How do you view the potential impact of future interest rate cuts on your business over the next 6 to 12 months?
A: While Dodge data shows early signs of improvement in non-residential construction, the impact on our business will be seen in the second half of next year as projects progress to the concrete stage. Rate cuts could make conditions more accommodative for project starts. (Bruce Young, CEO)
Q: Can you provide an update on recent utilization rates and how you're managing equipment oversaturation?
A: Our utilization currently runs around 70%, with efficiency possible up to 80%. We are managing our fleet to maintain capacity for future opportunities. Despite oversaturation in the market, we have maintained our pricing and market share. (Bruce Young, CEO; Iain Humphries, CFO)
Q: Where are you seeing oversaturation of equipment, and how are you responding to competitive pricing pressures?
A: Oversaturation is due to equipment from Germany, China, and South Korea entering the market based on previous forecasts. This has created pricing pressure, but we have maintained our pricing and market share. We are focused on managing our fleet and maintaining efficiency. (Bruce Young, CEO)
Q: Can you expand on the impact of large project delays and the current demand environment?
A: Large projects like EV plants, battery plants, and chip plants are not progressing as expected. Infrastructure projects are also slower than anticipated. We expect more activity in the second half of next year and beyond. (Bruce Young, CEO)
Q: Are you concerned about sustaining growth in Eco-Pan given the slower industry activity?
A: Despite a softer environment, Eco-Pan has maintained strong growth by demonstrating efficiency and cost benefits to customers. We are revolutionizing the industry by replacing inefficient historical methods. (Bruce Young, CEO)
Q: How are you managing your balance sheet and liquidity in the current environment?
A: We have a strong liquidity position with $236.3 million available. We are focusing on free cash flow and maintaining sufficient capacity in our fleet. Our share repurchase program demonstrates our commitment to long-term shareholder value. (Iain Humphries, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
