Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

x

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

 

For the quarterly period ended SeptemberApril 30 2017

, 2020

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 No. 001-38166

 

INDUSTREA ACQUISITION CORP.CONCRETE PUMPING HOLDINGS, INC.

(Exact name of registrantRegistrant as specified in its charter)

 

Delaware

001-3816682-1114958

83-1779605

(State or other jurisdiction of incorporation or organization)

(CommissionI.R.S. employer identification no.)

(IRS Employer

500 E. 84th Avenue, Suite A-5

Thornton, Colorado 80229

(Address of incorporation)

File Number)Identification No.)principal executive offices, including zip code)

 

28 West 44th Street, Suite 501, New York, NY 10036(303) 289-7497

(Address of principal executive offices, including zip code)

Registrant’sRegistrant's telephone number, including area code: (212) 871-1107code)

Not ApplicableNone

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

BBCP

The Nasdaq Capital Market

 

Indicate by check mark whether the registrantRegistrant (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 registrantRegistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yesx No¨

 

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

 

Large accelerated filerAccelerated Filer

¨

Accelerated filerFiler

¨

Non-accelerated filer  (Do not check if smaller reporting company)

Non-Accelerated Filer

x

Smaller reporting companyReporting Company

¨

Emerging growth company

x

 

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 registrantRegistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yesx No¨

 

As of November 13, 2017, 23,000,000June 5, 2020, the registrant had 58,221,934 shares of Class A common stock par value $0.0001 per share, and 5,750,000 shares of Class B common stock, par value $0.0001 per share, were issued and outstanding, respectively.outstanding. 

 

 


INDUSTREA ACQUISITION CORP.

Form 10-Q

For the Period from April 7, 2017 (date of inception) through September 30, 2017

CONCRETE PUMPING HOLDINGS, INC.

FORM 10-Q

FOR THE QUARTER ENDED APRIL 30, 2020

 

Page

PARTPart I. FINANCIAL INFORMATIONFinancial Information

Item 1.

Unaudited Consolidated Financial Statements (Unaudited)  Statements:

Consolidated Balance Sheets

3

Unaudited Condensed Balance Sheet as of September 30, 2017

F-1
Unaudited CondensedConsolidated Statements of Operations for the three months ended September 30, 2017 and for the period from April 7, 2017 (date of inception) to September 30, 2017Comprehensive Income

F-2

4

Unaudited Condensed StatementConsolidated Statements of Changes in Stockholders’ Equity for the period from April 7, 2017 (date of inception) to September 30, 2017

F-3

6

Unaudited Condensed StatementConsolidated Statements of Cash Flows for the period from April 7, 2017 (date of inception) to September 30, 2017

F-4

8

Notes to Unaudited CondensedConsolidated Financial Statements

F-5

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

39

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16

59

Item 4.

Controls and Procedures

16

59

PARTPart II. OTHER INFORMATIONOther Information

Item 1.

Legal Proceedings

17

60

        Item 1A.

Risk Factors

60

Item 1A.Risk Factors17

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17

60

Item 3.

Defaults Upon Senior Securities

17

60

Item 4.

Mine Safety Disclosures

17

60

        Item 5.

Other Information

60

Item 5.6.

Other InformationExhibits

17

61

Item 6.Signatures

Exhibits17

62

 

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)PART I

INDUSTREA ACQUISITION CORP.

 

CONDENSED BALANCE SHEETITEM 1.     Unaudited Consolidated Financial Statements 

As of September 30, 2017

(Unaudited)

 

Concrete Pumping Holdings, Inc.

Assets   
Current assets    
Cash $986,471 
Prepaid expenses  234,456 
Total current assets  1,220,927 
Cash and marketable securities held in Trust Account  235,035,755 
Total assets $236,256,682 
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $104,651 
Accrued expenses - related parties  66,751 
Income tax payable  51,226 
Total current liabilities  222,628 
Deferred underwriting commissions  8,050,000 
Total liabilities  8,272,628 
     
Commitments    
Class A common stock, $0.0001 par value; 21,861,181 shares subject to possible redemption (at redemption value of approximately $10.20 per share)  222,984,046 
     
Stockholders' Equity    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding  - 
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 1,138,819 shares issued and outstanding (excluding 21,861,181 shares subject to possible redemption)  114 
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding (1)  575 
Additional paid-in capital  4,855,755 
Retained earnings  143,564 
Total stockholders' equity  5,000,008 
Total Liabilities and Stockholders' Equity $236,256,682 

Consolidated Balance Sheets

 

(1) This number included up to 750,000 shares subject to forfeiture if the over -allotment was not exercised in full or in part by the underwriters. On August 1, 2017, to the underwriters fully exercised their over-allotment option. As a result, these shares were no longer subject to forfeiture.

  

(Unaudited)

     
  

April 30,

  

October 31,

 

(in thousands except per share amounts)

 

2020

  

2019

 

ASSETS

        
         

Current assets:

        
Cash and cash equivalents $18,048  $7,473 
Trade receivables, net  41,739   45,957 
Inventory  5,094   5,254 
Income taxes receivable  421   697 
Prepaid expenses and other current assets  6,967   3,378 

Total current assets

  72,269   62,759 
         
Property, plant and equipment, net  307,113   307,415 
Intangible assets, net  199,601   222,293 
Goodwill  222,475   276,088 
Other non-current assets  1,839   1,813 
Deferred financing costs  875   997 

Total assets

 $804,172  $871,365 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

        
         

Current liabilities:

        
Revolving loan $39,211  $23,555 
Term loans, current portion  20,888   20,888 
Current portion of capital lease obligations  94   91 
Accounts payable  7,220   7,408 
Accrued payroll and payroll expenses  9,150   9,177 
Accrued expenses and other current liabilities  20,642   28,106 
Income taxes payable  1,148   1,153 
Deferred consideration  -   1,708 

Total current liabilities

  98,353   92,086 
         
Long term debt, net of discount for deferred financing costs  352,448   360,938 
Capital lease obligations, less current portion  430   477 
Deferred income taxes  65,335   69,049 

Total liabilities

  516,566   522,550 
         
Zero-dividend convertible perpetual preferred stock, $0.0001 par value, 2,450,980 shares issued and outstanding as of April 30, 2020 and October 31, 2019�� 25,000   25,000 
         

Stockholders' equity

        
Common stock, $0.0001 par value, 500,000,000 shares authorized, 58,221,934 and 58,253,220 issued and outstanding as of April 30, 2020 and October 31, 2019, respectively  6   6 
Additional paid-in capital  353,339   350,489 
Treasury stock  (131)  - 
Accumulated other comprehensive income (loss)  (2,813)  (599)
(Accumulated deficit)  (87,795)  (26,081)

Total stockholders' equity

  262,606   323,815 
         

Total liabilities and stockholders' equity

 $804,172  $871,365 

 

The accompanying notesNotes are an integral part of these unaudited condensed financial statements.Unaudited Consolidated Financial Statements

F-1

 

3

Concrete Pumping Holdings, Inc.

Consolidated Statements of Operations

(Unaudited)

  

Successor

  

Predecessor

 

(in thousands, except share and per share amounts)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 
                     
Revenue $74,041  $61,988  $147,980  $95,958  $24,396 
                     
Cost of operations  42,174   37,628   83,965   58,731   14,027 
Gross profit  31,867   24,360   64,015   37,227   10,369 
                     
General and administrative expenses  26,381   21,853   52,988   35,534   4,936 
Goodwill and intangibles impairment  57,944   -   57,944   -   - 
Transaction costs  -   1,282   -   1,282   14,167 
Income (loss) from operations  (52,458)  1,225   (46,917)  411   (8,734)
                     

Other income (expense):

                    
Interest expense, net  (8,765)  (9,318)  (18,268)  (14,910)  (1,644)
Loss on extinguishment of debt  -   -   -   -   (16,395)
Other income, net  34   20   103   31   6 
Total other expense  (8,731)  (9,298)  (18,165)  (14,879)  (18,033)
                     
Loss before income taxes  (61,189)  (8,073)  (65,082)  (14,468)  (26,767)
                     
Income tax expense (benefit)  (2,221)  1,572   (3,368)  (1,193)  (4,192)
                     
Net loss  (58,968)  (9,645)  (61,714)  (13,275)  (22,575)
                     
Less accretion of liquidation preference on preferred stock  (470)  (434)  (943)  (703)  (126)
                     
Loss available to common shareholders $(59,438) $(10,079) $(62,657) $(13,978) $(22,701)
                     

Weighted average common shares outstanding

                    
Basic  52,782,663   29,166,165   52,752,884   29,043,174   7,576,289 
Diluted  52,782,663   29,166,165   52,752,884   29,043,174   7,576,289 
                     

Net loss per common share

                    
Basic $(1.13) $(0.35) $(1.19) $(0.48) $(3.00)
Diluted $(1.13) $(0.35) $(1.19) $(0.48) $(3.00)

 

INDUSTREA ACQUISITION CORP.

CONDENSED STATEMENTS OF OPERATIONS 
(Unaudited)

     For the period from April 7, 2017 
  For the three months ended  (date of inception) through 
  September 30, 2017  September 30, 2017 
       
Formation and operating costs $195,091  $195,965 
State franchise taxes  45,000   45,000 
Loss from operations  (240,091)  (240,965)
Interest income  435,755   435,755 
Income before income tax expense  195,664   194,790 
Income tax expense  (51,226)  (51,226)
Net income $144,438  $143,564 
         
Weighted average shares outstanding(1)        
Basic  6,514,940   6,161,547 
Diluted  21,000,000   13,954,678 
         
Net earnings per share        
Basic $0.02  $0.02 
Diluted $0.01  $0.01 

(1) This number excludes an aggregate of up to 21,861,181 shares of Class A common stock subject to possible redemption at September 30, 2017.

The accompanying notesNotes are an integral part of these unaudited condensed financial statements.Unaudited Consolidated Financial Statements

 

F-2
4

Concrete Pumping Holdings, Inc.

INDUSTREA ACQUISITION CORP.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY 
For the period from April 7, 2017 (DateConsolidated Statements of Inception) through September 30, 2017Comprehensive Income (Loss)

(Unaudited)

 

  Common Stock  Additional     Total 
  Class A  Class B   Paid-In  Retained  Stockholders' 
  Shares  Amount  Shares  Amount  Capital  Earnings  Equity 
Balance - April 7, 2017 (Date of Inception) -  $-  -  $-  $-  $-  $- 
Issuance of Class B common stock to Sponsor  -   -   5,750,000   575   24,425   -   25,000 
Sale of units in initial public offering, net of offering costs  23,000,000   2,300       -   216,713,190   -   216,715,490 
Sale of private placement warrants to Sponsor in private placement  -   -   -   -   11,100,000   -   11,100,000 
Common stock subject to possible redemption  (21,861,181)  (2,186)  -   -   (222,981,860)  -   (222,984,046)
Net income  -   -   -   -   -   143,564   143,564 
Balance - September 30, 2017  1,138,819  $114   5,750,000  $575  $4,855,755  $143,564  $5,000,008 

F-3

  

Successor

  

Predecessor

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 
                     
Net loss $(58,968) $(9,645) $(61,714) $(13,275) $(22,575)
                     

Other comprehensive income:

                    
Foreign currency translation adjustment  (4,185)  (1,349)  (2,214)  (1,906)  (674)
                     
Total comprehensive loss $(63,153) $(10,994) $(63,928) $(15,181) $(23,249)

 

INDUSTREA ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS 
For the period from April 7, 2017 (date of inception) through September 30, 2017

(Unaudited)

Cash Flows from Operating Activities:   
Net income $143,564 
Adjustments to reconcile net income to net cash used in operating activities:    
Interest earned on investments and marketable securities held in Trust Account  (435,755)
Changes in operating assets and liabilities:    
Prepaid expenses  (234,456)
Accounts payable  89,651 
Accrued expenses - related parties  66,751 
Income tax payable  51,226 
Net cash used in operating activities  (319,019)
     
Cash Flows from Investing Activities    
Principal deposited in Trust Account  (234,600,000)
Net cash used in investing activities  (234,600,000)
     
Cash Flows from Financing Activities:    
Proceeds from issuance of Class B common stock to Sponsor  25,000 
Proceeds received under loan from related parties  224,403 
Repayment of loan from related parties  (224,403)
Proceeds received from initial public offering, net of offering costs  224,780,490 
Proceeds received from private placement  11,100,000 
Net cash provided by financing activities  235,905,490 
     
Net increase in cash  986,471 
     
Cash - beginning of the period  - 
Cash - ending of the period $986,471 
     
Supplemental disclosure of noncash investing and financing activities:    
Offering costs included in accounts payable and accrued expenses $15,000 
Deferred underwriting commissions in connection with the initial public offering $8,050,000 
Value of Class A ordinary shares subject to possible redemption $222,984,046 

The accompanying notesNotes are an integral part of these unaudited condensed financial statements.

Unaudited Consolidated Financial Statements

 

5

Concrete Pumping Holdings, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

(PREDECESSOR)

F-4

October 31, 2018 through December 5, 2018

(in thousands)

 

Common Stock

  

Additional Paid-In Capital

  

Accumulated Other Comprehensive Income

  

Retained Earnings (Accumulated Deficit)

  

Total

 

Balance at October 31, 2018

 $8  $18,724  $584  $26,704   46,020 

Net loss

  -   -   -   (22,575)  (22,575)

Stock-based compensation

  -   27   -   -   27 

Foreign currency translation adjustment

  -   -   (674)  -   (674)

Balance at December 5, 2018

 $8  $18,751  $(90) $4,129  $22,798 


(SUCCESSOR)

December 6, 2018 through April 30, 2019

  

Common Stock

  

Additional Paid-In

  

Accumulated Other Comprehensive

         

(in thousands)

 

Class A

  

Class B

  

Capital

  

Income

  

Accumulated Deficit

  

Total

 

Balance at December 6, 2018

 $-  $1  $12,433  $-  $(7,434) $5,000 

Redemption of Class A common stock

  -   -   (12,433)  -   (3,577)  (16,010)

Issuance of Class A common stock

  1   -   96,900   -   -   96,901 

Rollover of Class A common stock as a result of the Business Combination

  1   -   164,908   -   -   164,909 

Conversion of Class B common stock

  1   (1)  -   -   -   - 

Net loss

  -   -   -   -   (3,630)  (3,630)

Foreign currency translation adjustment

  -   -   -   (557)  -   (557)

Balance at January 31, 2019

 $3  $-  $261,808  $(557) $(14,641) $246,613 
Shares issued to acquire business  -   -   1,150   -   -  $1,150 
Stock-based compensation expense  -   -   361   -   -   361 
Shares issued upon exercise of stock options and warrants  -   -   1,370   -   -   1,370 
Shares issued upon awards of restricted stock  1   -   (1)  -   -   - 
Issuance of shares in exchange for warrants  -   -   5,158   -   (5,158)  - 
Net loss  -   -   -   -   (9,645)  (9,645)
Foreign currency translation adjustment  -   -   -   (1,349)  -   (1,349)
Balance at April 30, 2019 $4  $-  $269,846  $(1,906) $(29,444) $238,500 

6

(SUCCESSOR)

October 31, 2019 through April 30, 2020

(in thousands)

 

Common Stock

  

Additional Paid-In Capital

  

Treasury Stock

  

Accumulated Other Comprehensive Income

  

Accumulated Deficit

  

Total

 

Balance at October 31, 2019

 $6  $350,489  $-  $(599) $(26,081) $323,815 

Stock-based compensation expense

  -   1,467   -   -   -   1,467 

Shares issued upon exercise of stock options, net of shares used for tax withholding

  -   -   (131)  -   -   (131)

Net loss

  -   -   -   -   (2,746)  (2,746)

Foreign currency translation adjustment

  -   -   -   1,971   -   1,971 

Balance at January 31, 2020

 $6  $351,956  $(131) $1,372  $(28,827) $324,376 
Stock-based compensation expense  -   1,383   -   -   -   1,383 
Net loss  -   -   -   -   (58,968)  (58,968)
Foreign currency translation adjustment  -   -   -   (4,185)  -   (4,185)
Balance at April 30, 2020 $6  $353,339  $(131) $(2,813) $(87,795) $262,606 

The accompanying Notes are an integral part of these Unaudited Consolidated Financial Statements

7

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

Concrete Pumping Holdings, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

  

Successor

  

Predecessor

 

(in thousands)

 

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 
Net loss $(61,714) $(13,275) $(22,575)

Adjustments to reconcile net income to net cash provided by operating activities:

            
Goodwill and intangibles impairment  57,944   -   - 
Depreciation  13,015   8,668   2,060 
Deferred income taxes  (3,515)  475   (4,355)
Amortization of deferred financing costs  2,076   1,832   152 
Write off deferred debt issuance costs  -   -   3,390 
Amortization of debt premium  -   -   (11)
Amortization of intangible assets  17,147   11,838   653 
Stock-based compensation expense  2,850   361   27 
Prepayment penalty on early extinguishment of debt  -   -   13,004 
Gains, net of losses, on the sale of property, plant and equipment  (477)  (137)  (166)
Payment of contingent consideration in excess of amounts established in purchase accounting  (526)  -   - 

Net changes in operating assets and liabilities (net of acquisitions):

            
Trade receivables, net  4,009   1,235   485 
Inventory  127   147   (294)
Prepaid expenses and other current assets  (5,209)  (2,869)  (1,283)
Income taxes payable, net  301   1,836   203 
Accounts payable  (101)  (7,850)  (654)
Accrued payroll, accrued expenses and other current liabilities  1,060   (6,351)  17,280 
Net cash provided by (used in) operating activities  26,987   (4,090)  7,916 
             

Cash flows from investing activities:

            
Purchases of property, plant and equipment  (23,305)  (25,007)  (503)
Proceeds from sale of property, plant and equipment  3,607   1,031   364 
Cash withdrawn from Industrea Trust Account  -   238,474   - 
Acquisition of net assets, net of cash acquired - CPH acquisition  -   (449,434)  - 

Acquisition of net assets, net of cash acquired - Other Business Combinations

  -   (2,257)  - 

Net cash (used in) investing activities

  (19,698)  (237,193)  (139)

8

Concrete Pumping Holdings, Inc.

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

  

Successor

  

Predecessor

 

(in thousands)

 

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 

Cash flows from financing activities:

            
Proceeds on long term debt  -   357,000   - 
Payments on long term debt  (10,444)  (4,463)  - 
Proceeds on revolving loan  143,559   73,659   4,693 
Payments on revolving loan  (127,404)  (41,810)  (20,056)
Payment of debt issuance costs      (21,049)  - 
Redemption of common shares  -   (231,415)  - 
Payments on capital lease obligations  (45)  (34)  (7)
Purchase of treasury stock  (131)  -   - 
Issuance of preferred shares  -   25,000   - 
Payment of underwriting fees  -   (8,050)  - 
Issuance of common shares  -   96,901   - 
Payment of contingent consideration established in purchase accounting  (1,161)  -   - 

Proceeds on exercise of rollover incentive options

  -   1,370   - 

Net cash provided by (used in) financing activities

  4,374   247,109   (15,370)
Effect of foreign currency exchange rate on cash  (1,088)  (2,894)  (70)
Net increase (decrease) in cash  10,575   2,932   (7,663)

Cash:

            
Beginning of period  7,473   4   8,621 
End of period $18,048  $2,936  $958 

The accompanying Notes are an integral part of these Unaudited Consolidated Financial Statements

9

Concrete Pumping Holdings, Inc.

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

  

Successor

  

Predecessor

 

(in thousands)

 

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 

Supplemental cash flow information:

            
Cash paid for interest $16,673  $11,081  $201 
Cash paid for income taxes $212  $265  $- 
             

Non-cash investing and financing activities:

            
Fair value of rollover equity for Business Combination $-  $164,909  $- 
Equipment purchases included in accrued expenses and accounts payable $4,557  $4,679  $- 
Shares issued to acquire a business $-  $1,150  $- 
Holdbacks related to the acquisition of a business $-  $181  $- 

The accompanying Notes are an integral part of these Unaudited Consolidated Financial Statements

10

Note 1 —1. Organization and Description of Organization and Business Operations

 

Organization

Industrea

Concrete Pumping Holdings, Inc. (the “Company” or “Successor”) is a Delaware corporation headquartered in Thornton (near Denver), Colorado. The Consolidated Financial Statements include the accounts of Concrete Pumping Holdings, Inc. and its wholly owned subsidiaries including Brundage-Bone Concrete Pumping, Inc. (“Brundage-Bone”), Capital Pumping (“Capital”), Camfaud Group Limited (“Camfaud”), and Eco-Pan, Inc. (“Eco-Pan”).

On December 6, 2018 (the "Closing Date"), the Company, formerly known as Concrete Pumping Holdings Acquisition Corp. (the “Company”) was incorporated in Delaware on April 7, 2017. The Company was formed for the purpose of effecting, consummated a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businessestransaction (the “Business Combination”) pursuant to which it acquired (i) the private operating company formerly called Concrete Pumping Holdings, Inc. (“CPH”) and (ii) the former special purpose acquisition company called Industrea Acquisition Corp (“Industrea”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search on manufacturing and service companies in the industrial sector. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

As of September 30, 2017, the Company had not commenced any operations. All activity for the period from April 7, 2017 (date of inception) through September 30, 2017 relates to the Company’s formation and the Initial Public Offering (as defined below). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.

The registration statement for the Company’s Initial Public Offering was declared effective on July 26, 2017. On August 1, 2017, the Company consummated its initial public offering (the “Initial Public Offering”) of 23,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units offered, the “Public Shares”), including the issuance of 3,000,000 Units as a result of the underwriters’ exercise of their over-allotment option in full, at $10.00 per Unit, generating gross proceeds of $230 million and incurring offering costs of approximately $13.3 million, inclusive of $8.05 million in deferred underwriting commissions (Note 6).

SimultaneouslyIn connection with the closing of the Initial Public Offering,Business Combination, the Company consummatedchanged its name to Concrete Pumping Holdings, Inc. The financial results described herein for the private placement (“Private Placement”) of 11,100,000 warrants (the “Private Placement Warrants”), at a price of $1.00 per Private Placement Warrant, with the Company’s sponsor, Industrea Alexandria LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $11.1 million (Note 4).

Upon the closing of the Initial Public Offeringdates and Private Placement, $234.6 million ($10.20 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A, maintained by Continental Stock Transfer & Trust Company, acting as trustee (“Trust Account”). The proceeds held in the Trust Account will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

At September 30, 2017, the Company had approximately $986,000 in cash held outside of the Trust Account. The Company’s management has broad discretion with respectperiods prior to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).

F-5

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company will provide its holders of the outstanding shares of its Class A common stock, par value $0.0001 (“Class A common stock”), included in the Units sold in the Initial Public Offering (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account. The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will payrelate to the underwriters. These Public Shares will be recorded at a redemption value and classified as temporary equity uponoperations of CPH prior to the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. IfSee Note 4 – Business Combinations for further discussion.

Nature of business

Brundage-Bone and Capital are concrete pumping service providers in the United States ("U.S.") and Camfaud is a stockholder voteconcrete pumping service provider in the United Kingdom (“U.K.”). Their core business is not required by lawthe 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 neither company contracts to purchase, mix, or deliver concrete. Brundage-Bone and Capital collectively have approximately 90 branch locations across 22 states, with its corporate headquarters in Thornton (near Denver), Colorado. Camfaud has 28 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 in the U.S. and the Company does not decideU.K. Eco-Pan uses containment pans specifically designed to hold a stockholder vote for business orwaste products from concrete and other legal reasons,industrial cleanup operations. Eco-Pan has 16 operating locations across the U.S. and 1 operating location in the U.K., with its corporate headquarters in Thornton (near Denver), Colorado.

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 will, pursuantgenerally having lower sales volume during the winter and spring months. 

Impacts of COVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged and has spread around the world. On March 11, 2020, the World Health Organization declared COVID-19 to its Amendedbe a global pandemic and Restated Certificate of Incorporation (the “Amendedrecommended containment and Restated Certificate of Incorporation”), conduct the redemptions pursuantmitigation measures worldwide. On March 13, 2020, U.S. President Trump announced a National Emergency relating to the tender offer rulespandemic. Government authorities in the U.S. and U.K. have recommended or imposed various social distancing, quarantine, and isolation measures on large portions of the U.S.population, which include limitations on travel and mandatory cessation of certain business activities. Both the outbreak and the containment and mitigation measures have had and may continue to have a serious adverse impact on the global economy, the severity and duration of which are uncertain. It is likely that government stabilization efforts will only partially mitigate the consequences to the economy. The extent to which the COVID-19 pandemic will impact the Company’s business, financial condition, and results of operations is highly uncertain and will be affected by a number of factors. These include the duration and extent of the pandemic; the duration and extent of imposed or recommended containment and mitigation measures; the extent, duration, and effective execution of government stabilization and recovery efforts; the impact of the pandemic on economic activity, including on construction projects and the Company’s customers’ demand for its services; the Company’s ability to effectively operate, including as a result of travel restrictions and mandatory business and facility closures; the ability of the Company’s customers to pay for services rendered; any further closures of the Company’s and the Company’s customers’ offices and facilities; and any additional project delays or shutdowns. Customers may also slow down decision-making, delay planned work or seek to terminate existing agreements. Any of these events may have a material adverse effect on the Company’s business, financial condition, and/or results of operations, including further impairment to our goodwill and intangible assets.

In the final month of the second quarter of fiscal 2020, operations in the Seattle and U.K. markets were negatively impacted due to COVID-19-imposed construction site shutdowns. In Seattle, the restrictions were eased in the beginning of May and in the U.K., the Prime Minister announced on May 10 that restarting construction and manufacturing is explicitly encouraged. As a result of the pandemic, the Company has implemented certain short-term cost reductions, including suspension of any remaining uncommitted 2020 capital expenditure investment, headcount reductions, modified work schedules reducing hours where needed, and furloughs in limited locations. While the Company believes these disruptions will be temporary, it is difficult to predict how long they will last and the impact they will have on the Company in future periods. The Company will continue to evaluate the effect of COVID-19 on its business.

In addition, the COVID-19 pandemic drove a sustained decline in the Company's stock price and a deterioration in general economic conditions in the fiscal 2020 second quarter, which qualified as a triggering event necessitating the evaluation of its goodwill and long-live assets for indicators of impairment. As a result of the evaluation, the Company conducted a quantitative interim impairment test as of April 30, 2020. Refer to Notes 2 and 8 for further discussion.

Note 2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying Unaudited Consolidated Financial Statements have been prepared, without audit, in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote its Founder Shares (as defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

Notwithstanding the foregoing, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the Initial Public Offering, without the prior consent of the Company.

The Company’s Sponsor, officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the Amended and Restated Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their shares of Class A common stock in conjunction with any such amendment.

If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

F-6

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to its deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.20 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Liquidity

As of September 30, 2017, the Company had approximately $986,000 in its operating bank account, approximately $436,000 of interest available to pay for franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses) and working capital of approximately $1 million.

Through September 30, 2017, the Company’s liquidity needs have been satisfied through receipt of a $25,000 capital contribution from the Sponsor in exchange for the issuance of the Founder Shares (Note 5) to the Sponsor, $224,403 in loans from the Sponsor, and the proceeds from the consummation of the Private Placement not held in Trust resulted. The Company repaid the loans from the Sponsor in full on August 1, 2017.

Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet the Company's needs through the earlier of the consummation of a Business Combination or August 1, 2019. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

Note 2 — Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. InGAAP for complete financial statements. The enclosed statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company at April 30, 2020 and for all adjustments (consisting of normal accruals) considered for a fair presentationperiods presented. All intercompany balances and transactions have been included. Operating results for the three months ended September 30, 2017 and for the period from April 7, 2017 (date of inception) through September 30, 2017 are not necessarily indicativeeliminated in consolidation.

As a result of the results that may be expected through December 31, 2017.

F-7

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies,Combination, the Company as an emerging growth company, can adoptis the new or revised standard atacquirer for accounting purposes and CPH is the time private companies adopt the new or revised standard.

This may make comparison ofacquiree and accounting predecessor. The Company’s financial statement presentation distinguishes the Company’s financial statement with another public companyperformance into two distinct periods, the period up to the Closing Date (labeled “Predecessor”) and the period including and after that date (labeled “Successor”).

The Business Combination was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is neither an emerging growth company nor an emerging growth company that has opted out of usingbased on the extended transition period difficult or impossible becausefair value of the potential differences in accounting standards used.

Concentration of Credit Risknet assets acquired.

 

Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. See Note 4 – Business Combinations for a discussion of the estimated fair values of assets and liabilities recorded in connection with the Company’s acquisition of CPH.

As a result of the application of the acquisition method of accounting as of the Closing Date of the Business Combination, the accompanying Consolidated Financial instrumentsStatements include a black line division which indicates that potentially subjectthe Predecessor and Successor reporting entities shown are presented on a different basis and are therefore, not comparable.

The historical financial information of Industrea prior to the Business Combination (a special purpose acquisition company, or “SPAC”) has not been reflected in the Predecessor financial statements as these historical amounts have been determined to be not useful information to a user of the financial statements. SPACs deposit the proceeds from their initial public offerings into a segregated trust account until a business combination occurs, where such funds are then used to pay consideration for the acquiree and/or to pay stockholders who elect to redeem their shares of common stock in connection with the business combination. The operations of a SPAC, until the closing of a business combination, other than income from the trust account investments and transaction expenses, are nominal. Accordingly, no other activity in the Company was reported for periods prior to concentrationsDecember 6, 2018 besides CPH’s operations as Predecessor.

Financial InstrumentsPrinciples of consolidation

 

The fair valueSuccessor Consolidated Financial Statements include all accounts of the Company’s assetsCompany and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurementsits subsidiaries. The Predecessor Consolidated Financial Statements include all accounts of CPH and Disclosures,” approximates the carrying amounts represented in the balance sheet.its subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimatesestimates

 

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

Significant estimates include accrued sales and use taxes, the liability for incurred but unreported claims under various partially self-insured polices, allowance for doubtful accounts, goodwill impairment analysis, valuation of share-based compensation and accounting for business combinations. Actual results may differ from those estimates, and such differences may be material to the Company’s consolidated financial statements.

Offering CostsTrade receivables

 

OfferingTrade 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 trade 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 charge interest on past-due trade receivables.

Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. The allowance for doubtful accounts was $0.7 million and $0.6 million as of April 30, 2020 and October 31, 2019, respectively. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received.

Inventory

Inventory consists primarily of replacement parts for concrete pumping equipment. Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The Company evaluates inventory and records an allowance for obsolete and slow- moving inventory to account for cost adjustments to market. Based on management’s analysis, no allowance for obsolete and slow-moving inventory was required as of April 30, 2020 or October 31, 2019.

Fair Value Measurements

The Financial Accounting Standard Board's (the “FASB”) standard on fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This standard establishes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities.

Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.


Deferred financing costs consisted

Deferred financing costs representing third-party, non-lender debt issuance costs are deferred and amortized using the effective interest rate method over the term of legal,the related long-term-debt agreement, and the straight-line method for the revolving credit agreement.

Debt issuance costs, including any original issue discounts, related to term loans are reflected as a direct deduction from the carrying amount of the long-term debt liability that is included in long term debt, net of discount for deferred financing costs in the accompanying consolidated balance sheets. Debt issuance costs related to revolving credit facilities are capitalized and reflected in deferred financing in the accompanying consolidated balance sheets. 

Goodwill

In accordance with ASC Topic 350, Intangibles–Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses a two-step process to assess the realizability of goodwill. The first step is a qualitative assessment that analyzes current economic indicators associated with a particular reporting unit. For example, the Company analyzes changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there are indicators of a significant decline in the fair value of a particular reporting unit. If the qualitative assessment indicates a stable or improved fair value, no further testing is required. If a qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed to the quantitative second step where the fair value of a reporting unit is calculated based on weighted income and market-based approaches. If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.

During the second quarter of fiscal year 2020, the Company identified a triggering event from the recent decline in its stock price resulting from the COVID-19 pandemic (“COVID-19”). As a result, the Company performed an interim step one goodwill impairment analysis in accordance with ASU 2017-04, Intangibles — Goodwill and Other (ASC 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). Refer to Note 8 for further discussion.

Property, plant and equipment

Property, plant and equipment are recorded at cost. Expenditures for additions and betterments are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred; however, maintenance and repairs that improve or extend the life of existing assets are capitalized. The carrying amount of assets disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains or losses from property and equipment disposals are recognized in the year of disposal. Property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:

Buildings and improvements15 to 40 years

Capital lease assets—buildings

40 years

Furniture and office equipment

2 to 7 years

Machinery and equipment

3 to 25 years

Transportation equipment3 to 7 years

Intangible assets

Intangible assets are recorded at cost or their estimated fair value (when acquired through a business combination) less accumulated amortization (if finite-lived).

Intangible assets with finite lives, except for customer relationships, are amortized on a straight-line basis over their estimated useful lives. Customer relationships are amortized on an accelerated basis over their estimated useful lives. Intangible assets with indefinite lives are not amortized but are subject to annual reviews for impairment. As noted above, the Company identified a triggering event from the recent decline in its stock price and elected to perform an interim impairment test on its indefinite-lived trade names. Refer to Note 8 for further discussion.

Impairment of long-lived assets

ASC 360, Property, Plant and Equipment (ASC 360) requires other long-lived assets to be evaluated for impairment when indicators of impairment are present. If indicators are present, assets are grouped to the lowest level for which identifiable cash flows are largely independent of other asset groups and cash flows are estimated for each asset group over the remaining estimated life of each asset group. If the undiscounted cash flows estimated to be generated by those assets are less than the asset’s carrying amount, impairment is recognized in the amount of the excess of the carrying value over the fair value. No indicators of impairment were identified as of April 30, 2020. As noted above, the Company identified a triggering event from the recent decline in its stock price and assessed its long-lived assets for impairment.  Based on the results of the Company’s analysis, long-lived assets were not impaired.

Revenue recognition

The Company generates revenues primarily from concrete pumping services in both the U.S. and U.K. Additionally, revenue is generated from the Company’s waste management business which consists of service fees charged to customers for the delivery of its pans and containers and the disposal of the concrete waste material.

The Company recognizes revenue from these businesses when all of the following criteria are met: (a) persuasive evidence of an arrangement exists, (b) the service has been performed or delivery has occurred, (c) the price is fixed or determinable, and (d) collectability is reasonably assured. The Company’s delivery terms for replacement part sales are FOB shipping point.

The Company imposes and collects sales taxes concurrent with its revenue-producing transactions with customers and remits those taxes to the various governmental authorities as prescribed by the taxing jurisdictions in which it operates. The Company presents such taxes in its consolidated statement of operations on a net basis. 

Stock-based compensation

The Company follows ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors. The Company expenses the grant date fair value of the award in the consolidated statements of operations over the requisite service periods on a straight-line basis. The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation—Stock Compensation (ASC 718): Improvements to Employee Share-Based Payment Accounting.

Income taxes

The Company complies with ASC 740, Income Taxes, which requires a liability approach to financial reporting for income taxes.

The Company computes deferred income tax assets and liabilities annually for differences between the financial statements and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback opportunities, and tax planning strategies in making the assessment. Income tax expense includes both the current income taxes payable or refundable and the change during the period in the deferred tax assets and liabilities. The tax benefit from an uncertain tax position is only recognized in the consolidated balance sheet if the tax position is more likely than not to be sustained upon an examination.

The Company's U.K. Operations segment files income tax returns in the U.K. and national statutes are generally open for one year following the statutory filing period.


Foreign currency translation

The functional currency of Camfaud is the Pound Sterling (GBP). The assets and liabilities of the Company's foreign subsidiaries are translated into U.S. Dollars using the period end exchange rates for the periods presented, and the consolidated statements of operations are translated at the average exchange rate for the periods presented. The resulting translation adjustments are recorded as a component of comprehensive income on the consolidated statements of comprehensive income and accumulated in other comprehensive income. The functional currency of our other subsidiaries is the United States Dollar.

Earnings per share

The Company calculates earnings per share in accordance with ASC 260, Earnings per Share. The two-class method of computing earnings per share is required for entities that have participating securities. The two-class method is an earnings allocation formula that determines earnings per share for participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company has two classes of stock: (1) Common Stock (comprised of shareholder owned common stock and shares of unvested restricted stock held by participating security holders) and (2) Participating Preferred Stock (“Preferred Stock”).

Basic earnings (loss) per common share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of shares of Common Stock outstanding each period. Diluted earnings (loss) per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options outstanding using the treasury stock method and the average market price per share during the period. Common stock equivalents are not included in the diluted earnings (loss) per share calculation when their effect is antidilutive.

An anti-dilutive impact is an increase in earnings per share or a reduction in net loss per share resulting from the conversion, exercise, or contingent issuance of certain securities.

Business combinations

The Company applies the principles provided in ASC 805, Business Combinations (“ASC 805”), when a business is acquired. Tangible and intangible assets acquired and liabilities assumed are recorded at fair value and goodwill is recognized for any differences between the fair value of consideration transferred and the fair value of net assets acquired. Transaction costs for business combinations are expensed as incurred in accordance with ASC 805.

Concentrations

As of April 30, 2020, and October 31, 2019, there were two significant vendors that the Company relied upon to purchase concrete pumping boom equipment. However, should the need arise, there are alternate vendors who can provide concrete pumping boom equipment.

Cash balances held at financial institutions may, at times, be in excess of federally insured limits. The Company places its temporary cash balances in high-credit quality financial institutions.

The Company’s customer base is dispersed across the U.S. and U.K. The Company performs ongoing evaluations of its customers’ financial condition and requires no collateral to support credit sales. During the Predecessor and Successor periods described above, no customer represented 10 percent or more of sales or trade receivables.

Note 3. New Accounting Pronouncements

The Company has opted to take advantage of the extended transition period available to emerging growth companies pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) for new accounting underwriting feesstandards.

Newly adopted accounting pronouncements

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (ASC 805): Clarifying the Definition of a Business (“ASU 2017-01”), which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. The new standard will be applied prospectively to any transactions occurring within the period of adoption and is effective for entities other than public business entities for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company adopted this ASU in the first quarter of 2020. As there have been no new business combinations, this ASU has not had an effect on the Company’s consolidated financial statements. The Company will continue to evaluate this ASU as new business combinations occur.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) related to how certain cash receipts and payments are presented and classified in the statement of cash flows. These cash flow issues include debt prepayment or extinguishment costs, settlement of zero-coupon debt, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows. ASU 2016-15 is effective for emerging growth companies in annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company early adopted this ASU in the first quarter of 2020 on a retrospective basis and the adoption did not have a material impact on the consolidated financial statements.

Recently issued accounting pronouncements not yet effective

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606) (“ASU 2014-09”), which is a comprehensive new revenue recognition model.

Under ASU 2014-09 and the related clarifying ASUs, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. Following the issuance of ASU 2020-05 that deferred the effective date for certain companies, ASU 2014-09 is effective for emerging growth companies that have elected to use private company adoption dates in annual reporting periods beginning after December 15, 2019 and interim reporting periods within annual reporting periods beginning after December 15, 2020 and is to be adopted using either a full retrospective or modified retrospective transition method. The Company expects to adopt the guidance under the modified retrospective approach during the fourth quarter of the fiscal year ending October 31, 2021. The Company is currently evaluating the impact of the pending adoption of the new standard but does not expect a significant impact on the consolidated financial statements. 

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which is codified in ASC 842, Leases (“ASC 842”) and supersedes current lease guidance in ASC 840, Leases. ASC 842 requires a lessee to recognize a right-of-use asset and a corresponding lease liability for substantially all leases. The lease liability will be equal to the present value of the remaining lease payments while the right-of-use asset will be similarly calculated and then adjusted for initial direct costs. In addition, ASC 842 expands the disclosure requirements to increase the transparency and comparability of the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-11, Leases ASC 842: Targeted Improvements, which allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

The new standard is effective for emerging growth companies that have elected to use private company adoption dates for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company plans to adopt the new standard effective for the year ending October 31, 2022. The Company is currently evaluating the impact of the pending adoption of the new standard on the consolidated financial statements. 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), This ASU, 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. This ASU is effective for emerging growth companies that have elected to use private company adoption dates with annual and interim periods beginning after December 15, 2022, with early adoption permitted. The Company plans to adopt the new standard effective for the year ending October 31, 2022. The amendments of this ASU should be applied on a modified retrospective basis to all periods presented. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting for contracts, hedging relationships, and other costs incurredtransactions that reference the London Interbank Offered Rate (“LIBOR”). Specifically, to the extent the Company's debt agreements are modified to replace LIBOR with another interest rate index, ASU 2020-04 will permit the Company to account for the modification as a continuation of the existing contract without additional analysis. Companies may generally elect to apply the guidance for periods that include March 12, 2020 through December 31, 2022. The Company is evaluating the Initial Public Offering thatanticipated impact of this standard on its condensed consolidated financial statements as well as timing of adoption.

Note 4. Business Combinations

May 2019 Acquisition of Capital Pumping

On May 15, 2019, the Company acquired Capital Pumping, LP and its affiliates (“Capital”), a concrete pumping provider based in Texas for a purchase price of $129.2 million, which was paid using proceeds from the Company’s public offering of common stock and additional borrowings on its term loan facility. This acquisition qualified as a business combination under ASC 805. Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill. Goodwill recorded from the transaction represents expected synergies from combining operations and the assembled workforce.

The following table represents the final allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values with any measurement-period adjustments included:

Consideration paid:

 $129,218 
     

Net assets acquired:

    

Current assets

 $748 

Intangible assets

  45,500 

Property and equipment

  56,467 

Liabilities assumed

  (63)

Total net assets acquired

  102,652 
     

Goodwill

 $26,566 

Identifiable intangible assets acquired consist of customer relationships of $40.0 million and a trade name valued at $5.5 million. The customer relationships were directlyvalued using the multi-period excess earnings method. The Company determined the useful life of the customer relationships to be 15 years. The trade name was valued using the relief-from-royalty method and the Company determined the trade name associated with Capital to be indefinite.

December 2018 Acquisition of CPH

On December 6, 2018, the Company consummated the Business Combination. This acquisition qualified as a business combination under ASC 805. Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill. Goodwill recorded from the transaction represents the value provided by the Company’s leading market share in a highly-fragmented industry. 

The following table represents the final allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values with any measurement-period adjustments included (see paragraph below for any measurement-period adjustments included):

Consideration paid:

    

Cash

 $445,386 

Fair value of rollover equity

  164,908 

Net working capital adjustment

  4,050 

Total consideration paid

 $614,344 
     

Net assets acquired:

    

Current assets

 $48,912 

Intangible assets

  208,063 

Property and equipment

  219,467 

Liabilities assumed

  (110,245)

Total net assets acquired

  366,197 
     

Goodwill

 $248,147 

Note: Cash in table above is net of $1.0 million in cash acquired

Identifiable intangible assets acquired consist of customer relationships of $152.7 million and trade names of $55.4 million. The customer relationships were valued using the multi-period excess earnings method. The Company determined the useful life of the customer relationships to be 15 years. The trade names were valued using the relief-from-royalty method. The Company determined the useful life of the trade name associated with Camfaud to be 10 years. The Company determined the trade names associated with Brundage-Bone and Eco-Pan to be indefinite.

During the Successor period from December 6, 2018 through October 31, 2019, the Company recorded an out of period adjustment related to the Initial Public Offeringreduction of sales tax accrual of $3.4 million that resulted in changes to goodwill and totaled approximately $13.3liabilities assumed in the transaction. The impact of the adjustment was not considered material to the Company's previously issued financial statements.

CPH incurred transaction costs of $14.2 million inclusiveand debt extinguishment costs of $8.05$16.4 million independently prior to the Business Combination.

Additional costs consisting of stock option and other compensation related expenses were recorded in deferred underwriting commissions. Offeringconnection with the Business Combination. These costs were charged to stockholders’ equitysolely contingent upon the completion of the Initial Public Offering.business combination and did not include any future service requirements. As such, these costs will be presented “on the line” and are not reflected in either Predecessor or Successor financial statements.  “On the line” describes those expenses triggered by the consummation of a business combination that were incurred by the acquiree, i.e. CPH, that are not recognized in the Statement of Operations of either the Predecessor or Successor as they are not directly attributable to either period but instead were contingent on the Business Combination.

 

In conjunction with the Business Combination, there were $15.6 million of transaction bonuses and, as a result of a change in control provision for stock-based awards, certain unvested stock-based awards immediately vested, resulting in the recognition of compensation expense of approximately $0.6 million. These expenses were not reflected in either the Predecessor or Successor consolidated statement of operations and comprehensive loss periods.

Class A Common Stock SubjectUnaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to Possible Redemptionthe CPH and Capital business combinations discussed above as if they had occurred on November 1, 2018. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the CPH and Capital business combinations had been completed on November 1, 2018, nor does it purport to project the results of operations of the combined company in future periods. The unaudited pro forma financial information does not give effect to any anticipated integration costs related to the acquired company.

The unaudited pro forma financial information is as follows:

(in thousands)

 

Six Months Ended April 30, 2020

  

Six Months Ended April 30, 2019

Revenue $147,980  $24,396  

Pro forma revenue adjustments by Business Combination

Capital  -   24,765  
CPH  -   95,958  
Total pro forma revenue $147,980  $145,119  

(in thousands) Six Months Ended April 30, 2020  Six Months Ended April 30, 2019 
Net loss $(61,714) $(22,575)

Pro forma net income (loss) adjustments by Business Combination

        
Capital  -   2,354 
CPH  -   (13,275)
Total pro forma net loss $(61,714) $(33,496)

Note 5.     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 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. The Company believes the carrying values of its capital lease obligations represent fair value.

The Company's long-term debt instruments are recorded at their carrying values in the 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 at April 30, 2020 and at October 31, 2019 is presented in the table below based on the prevailing interest rates and trading activity of the Term loans.

  

April 30,

  

October 31,

 
  

2020

  

2019

 

(in thousands)

 

Carrying Value

  

Fair Value

  

Carrying Value

  

Fair Value

 

Term loans

 $391,650  $347,345  $402,094  $394,052 

Capital lease obligations

  524   524   568   568 

 In connection with the acquisition of Camfaud in November 2016, former Camfaud shareholders were eligible to receive earnout payments (“deferred consideration”) of up to $3.1 million if certain Earnings before interest, taxes, depreciation, and amortization ("EBITDA") targets were met. In accordance with ASC 805, the Company reviewed the deferred consideration on a quarterly basis in order to determine its fair value. Changes in the fair value of the liability are recorded within general and administrative expenses in the consolidated statement of income in the period in which the change was made. The Company estimated the fair value of the deferred consideration based on its probability assessment of Camfaud’s EBITDA achievements during the 3 year earnout period. In developing these estimates, the Company considered its revenue and EBITDA projections, its historical results, and general macro-economic environment and industry trends. This fair value measurement was based on significant revenue and EBITDA inputs not observed in the market, which represents a Level 3 measurement. The fair value of the deferred consideration was $1.7 million at October 31, 2019, which also represented the date at which the 3-year earnout period ended. The deferred consideration was paid out during the fiscal 2020 first quarter and as such, the liability no longer exists at April 30, 2020.

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.

Note 6. Prepaid Expenses and Other Current Assets

The significant components of prepaid expenses and other current assets at April 30, 2020 and at October 31, 2019 are comprised of the following:

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 
Prepaid insurance $4,165  $1,416 
Prepaid licenses and deposits  609   528 
Prepaid rent  495   485 
Other prepaids  1,698   949 

Total prepaid expenses and other current assets

 $6,967  $3,378 

Note 7. Property, Plant and Equipment

The significant components of property, plant and equipment at April 30, 2020 and at October 31, 2019 are comprised of the following:

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 
Land, building and improvements $26,572  $26,085 
Capital leases—land and buildings  828   828 
Machinery and equipment  304,206   295,741 
Transportation equipment  2,156   2,223 
Furniture and office equipment  1,075   1,209 
Property, plant and equipment, gross  334,837   326,086 
Less accumulated depreciation  (27,724)  (18,671)

Property, plant and equipment, net

 $307,113  $307,415 

Depreciation expense for the three and six-month periods ended April 30, 2020 was $6.5 million and $13.0 million, respectively. Depreciation expense for the Successor for the three-month period ended April 30, 2019 and the period from December 6, 2018 to April 30, 2019 was $5.2 million and $8.7 million, respectively. Depreciation expense for the Predecessor from November 1, 2018 to December 5, 2018 was $2.1 million. Depreciation expense related to revenue producing machinery and equipment is recorded in cost of operations and an immaterial amount of depreciation expense related to the Company's capital leases and furniture and fixtures is included in general and administrative expenses.

Note 8. Goodwill and Intangible Assets

The Company recognized goodwill and certain intangible assets in connection with business combinations (see Note 4 - Business Combinations).

During the second quarter of fiscal year 2020, the Company identified a triggering event from the recent sustained decline in its stock price and deterioration in general economic conditions resulting from COVID-19. As a result, the Company, with the assistance of a third party valuation specialist, performed an interim impairment test on its indefinite-lived trade name intangible assets and goodwill as of April 30, 2020.

The valuation methodology used to value the trade-names was based on the relief-from-royalty method which is an income based measure that derives the value from total revenue growth projected and what percentage is attributable to the trade name. As a result of the analysis, the Company identified that the fair value of its Brundage-Bone Concrete Pumping trade name was approximately 11.8% below its carrying value and as such, recorded a non-cash impairment charge of $5.0 million in intangibles impairment in its consolidated statements of operations for both the three and six-month periods ended April 30, 2020. The impaired trade name has a remaining value of $37.3 million. In addition, the Company concluded that the fair values of its Eco-Pan and Capital Pumping trade names exceeded their carrying values by approximately 7.8% and 109.1%, respectively, and their remaining values are $7.7 million and $5.5 million, respectively.

The goodwill impairment test was performed on the Company’s U.S. Concrete Pumping, U.S. Concrete Waste Management Services, and U.K. Operations reporting units. The valuation methodologies used to value the reporting units included the discounted cash flow method (income approach) and the guideline public company method (market approach). As a result of the goodwill impairment analysis, the Company identified that the fair values of its U.S. Concrete Pumping and U.K. Operations reporting units were approximately 6.9% and 14.8% below their carrying values, respectively. As such, the Company recorded non-cash impairment charges of $38.5 million and $14.4 million to its U.S. Concrete Pumping and U.K. Operations reporting units, respectively, in goodwill impairment in its consolidated statements of operations for both the three and six-month periods ended April 30, 2020. In addition, the Company concluded that the fair value of its U.S. Concrete Waste Management Services reporting unit exceeded its carrying value by approximately 4.5% and, as such, no impairment charge was recorded. The Company will continue to evaluate its goodwill and intangible assets in future quarters and note that the Company could record additional impairments based on events and circumstances, including those related to COVID-19 discussed in Note 1.

The factors leading to the impairment of the Company's goodwill and intangibles were primarily due to (1) lower anticipated future net revenues and earnings in its estimate of future cash flows resulting from COVID-19 and (2) a higher discount rate applied to future cash flows as a result of uncertainties of the overall economic impact from COVID-19. There is inherent uncertainty associated with key assumptions used by the Company in its impairment analyses including the duration of the economic downturn associated with COVID-19 and the recovery period.

The following table summarizes the composition of intangible assets at April 30, 2020 and at October 31, 2019:

  

April 30,

  

October 31,

 
  

2020

  

2019

 
  

Gross

          

Foreign Currency

  

Net

  

Gross

      

Foreign Currency

  

Net

 
  

Carrying

      

Accumulated

  

Translation

  

Carrying

  

Carrying

  

Accumulated

  

Translation

  

Carrying

 

(in thousands)

 

Value

  

Impairments

  

Amortization

  

Adjustment

  

Amount

  

Value

  

Amortization

  

Adjustment

  

Amount

 

Customer relationship

 $193,042  $-  $(48,719) $70  $144,393  $193,594  $(31,861) $(62) $161,671 

Trade name

  5,293   -   (752)  9   4,550   5,434   (483)  (7)  4,944 

Trade name (indefinite life)

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

Noncompete agreements

  200   -   (42)  -   158   200   (22)  -   178 

Total intangibles

 $254,035  $(5,000) $(49,513) $79  $199,601  $254,728  $(32,366) $(69) $222,293 

Amortization expense for the three and six-month periods ended April 30, 2020 was $8.6 million and $17.1 million, respectively. Amortization expense for the Successor for the three-month period ended April 30, 2019 and the period from December 6, 2018 to April 30, 2019 was $7.0 million and 11.8 million, respectively. Amortization expense for the Predecessor from November 1, 2018 to December 5, 2018 was $0.7 million. The estimated aggregate amortization expense for intangible assets over the next five fiscal years ending October 31 and thereafter is as follows:

(in thousands)

    
2020 (excluding the period from November 1, 2019 to April 30, 2020) $16,249 
2021  26,855 
2022  21,609 
2023  17,176 
2024  13,794 
Thereafter  53,418 

Total

 $149,101 

The changes in the carrying value of goodwill by reportable segment for the quarter ended April 30, 2020 are as follows:

(in thousands)

 

U.S. Concrete Pumping

  

U.K. Operations

  

U.S. Concrete Waste Management Services

  

Corporate

  

Total

 

Balance at October 31, 2019

 $185,782  $41,173  $49,133  $-  $276,088 
Measurement-period adjustments  200   -   -   -   200 
Impairments  (38,500)  (14,240)  -   -   (52,740)
Foreign currency translation  -   (1,073)  -   -   (1,073)
Balance at April 30, 2020 $147,482  $25,860  $49,133  $-  $222,475 

Note 9. Long Term Debt and Revolving Lines of Credit

Successor

As part of the Business Combination, the Predecessor’s Revolver, U.K. Revolver, Senior secured notes, and Seller notes (see Predecessor section below for a discussion of these agreements) were all extinguished and the Company entered into (i) a term loan agreement, dated December 6, 2018, among the Company, certain subsidiaries of the Company, Credit Suisse AG, Cayman Islands Branch as administrative agent and Credit Suisse Loan Funding LLC, Jefferies Finance LLC and Stifel Nicolaus & Company Incorporated LLC as joint lead arrangers and joint bookrunners, and the other Lenders party thereto and (the “Term Loan Agreement”) (ii) a Credit Agreement, dated December 6, 2018, 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, and the other parties thereto (“ABL Credit Agreement”). In addition, in order to finance the acquisition of Capital, the Company added $60.0 million of incremental term loans under the Term Loan Agreement in May 2019. Summarized terms of these facilities are included below.

 

Term Loan Agreement

Summarized terms of the Term Loan Agreement are as follows:

Provides for an original aggregate principal amount of $357.0 million. This amount was increased in May 2019 by $60.0 million in connection with the acquisition of Capital;

The initial term loans advanced will mature and be due and payable in full seven years after the Closing Date, with principal amortization payments in an annual amount equal to 5.00% of the original principal amount;

Borrowings under the Term Loan Agreement, will bear interest at either (1) an adjusted LIBOR rate or (2) an alternate base rate, plus an applicable margin of 6.00% or 5.00%, respectively;

The Term Loan Agreement is secured by (i) a first priority perfected lien on substantially all of the assets of the Company and certain of its subsidiaries that are loan parties thereunder to the extent not constituting ABL Credit Agreement priority collateral and (ii) a second priority perfected lien on substantially all ABL Credit Agreement priority collateral, in each case subject to customary exceptions and limitations;

The Term Loan Agreement includes certain non-financial covenants.

The outstanding balance under the Term Loan Agreement as of April 30, 2020 was $391.7 million and as of that date, the Company was in compliance with all debt covenants. The Company’s interest on borrowings under the Term Loan Agreement bear interest using the London Interbank Offered Rate (LIBOR) as the base rate plus an applicable margin in line with the summarized terms of the Term Loan Agreement as described above.

Future maturities of the term loans for fiscal years ending October 31 and thereafter is as follows:

(in thousands)

    

2020 (excluding the period from November 1, 2019 to April 30, 2020)

 $15,666 
2021  20,888 
2022  20,888 
2023  20,888 
2024  20,888 

Thereafter

  292,432 

Total

 $391,650 

ABL Credit Agreement

Summarized terms of the ABL Credit Agreement are as follows:

Borrowing availability in U.S. Dollars and GBP up to a maximum of $60.0 million;

Borrowing capacity available for standby letters of credit of up to $7.5 million and for swingline loan borrowings of up to $7.5 million. Any issuance of letters of credit or making of a swingline loan will reduce the amount available under the ABL Facility;

All loans advanced will mature and be due and payable in full five years after the Closing Date;

Amounts borrowed may be repaid at any time, subject to the terms and conditions of the agreement;

Borrowings in U.S. Dollars and GBP under the ABL Credit Agreement will bear interest at either (1) an adjusted LIBOR rate or (2) a base rate, in each case plus an applicable margin currently set at 2.25% and 1.25%, respectively. The ABL Credit Agreement is subject to two step-downs of 0.25% and 0.50% based on excess availability levels;

U.S. ABL Credit Agreement obligations will be secured by (i) a perfected first priority security interest in substantially all personal property of the Company and certain of its subsidiaries that are loan parties thereunder consisting of all accounts receivable, inventory, cash, intercompany notes, books and records, chattel paper, deposit, securities and operating accounts and all other working capital assets and all documents, instruments and general intangibles related to the foregoing (the “U.S. ABL Priority Collateral”) and (ii) a perfected second priority security interest in substantially all Term Loan Agreement priority collateral, in each case subject to customary exceptions and limitations;

U.K. ABL Credit Agreement obligations will be secured by (i) a perfected first-priority security interest in (A) the U.S. ABL Priority Collateral, (B) all of the stock (or other ownership interests) in, and held by, the U.K. borrower subsidiaries of the Company, and (C) all of the current and future assets and property of the U.K subsidiaries of the Company that are loan parties thereunder, including a first-ranking floating charge over all current and future assets and property of each U.K. subsidiary of the Company that is a loan party thereunder; and (ii) a perfected, second-priority security interest in substantially all Term Loan Agreement priority collateral, in each case subject to customary exceptions and limitations; and

The ABL Credit Agreement also includes (i) a springing financial covenant (fixed charges coverage ratio) based on excess availability levels that the Company must comply with on a quarterly basis during required compliance periods and (ii) certain non-financial covenants.

The outstanding balance under the ABL Credit Agreement as of April 30, 2020 was $39.2 million and as of that date, the Company was in compliance with all debt covenants.

Predecessor

Revolving line of credit

The Predecessor had a revolving loan agreement (the "Revolver"). Summarized terms of the Revolver were as follows:

Maximum borrowing capacity of $65.0 million with a maturity date of September 8, 2022;

Borrowings bear interest at the LIBOR rate plus an applicable margin that resets quarterly and is (a) 2.00%, (b) 2.25% or (c) 2.50% if the quarterly average excess availability is (a) at least 66.67%, (b) less than 66.67% and at least 33.33% and (c) less than 33.33%, respectively;

Interest is due monthly and the outstanding principal balance was due upon maturity;

On October 2, 2017, $35.0 million of the Revolver balance was transferred to a 3-month line of credit with a separate LIBOR interest rate; and

Required Predecessor to maintain a maximum ratio of total fixed charges.

U.K. Revolver

The Predecessor had a revolving loan agreement (the “U.K. Revolver”) associated with the acquisition of Camfaud in November 2016. The U.K. Revolver had a maximum borrowing capacity of approximately $28.0 million and bore interest at LIBOR plus 2.00%. The U.K. Revolver required the Predecessor maintain a maximum ratio of total fixed charges.

Senior secured notes

In August 2014, the Predecessor issued $140.0 million in senior secured notes through a high-yield bond offering under SEC Rule 144A (“Senior Notes”). In November 2016, the Predecessor issued additional senior secured notes of $40.0 million as an incremental borrowing with the same terms and form as the original Senior Notes.

Summarized terms of the Senior Notes were as follows:

Maturity date on September 1, 2021. Principal due upon maturity;

Interest rate of 10.375% per annum, payments due every March 1 and September 1 commencing March 1, 2015;

The Senior Notes were secured by substantially all of the assets of the Company and contain various non-financial covenants.

Over the period of January 2016 through September 2017, the Predecessor repurchased and retired approximately $26.0 million, in the aggregate, of principal of the Senior Notes.

In September 2017, the Predecessor completed an exchange of substantially all outstanding existing Senior Notes for newly issued senior secured notes (“New Senior Notes”). The terms of the New Senior Notes were identical to the Senior Notes except that the maturity date was extended to September 1, 2023.

In April 2018, the Predecessor issued additional New Senior Notes with a principal amount of $15.0 million at a 104 percent premium for a total purchase price of $15.6 million. The $0.6 million was recorded by the Predecessor as a debt premium and was amortized over the life of the New Senior Notes using the effective interest method. 

Seller notes

In connection with the acquisitions of the Camfaud and Reilly Concrete Pumping Limited (“Reilly”) in November 2016 and July 2017, respectively, the Predecessor entered into separate loan agreements with the former owners of Camfaud and Reilly for $6.2 million and $1.9 million, respectively (collectively, the “Seller Notes”). The Seller Note with respect to Camfaud bore interest at 5.0% per annum and all principal plus accrued interest was due upon the earlier of; (1) 6 months after the U.K. Revolver is repaid in full, (2) 42 months after the acquisition date (May 2020) or (3) the date on which the Predecessor suffers an insolvency event. The Seller Note with respect to Reilly bore interest at 5.0% per annum and all principal plus accrued interest are due three years after the acquisition date (July 2020). The Seller Notes were unsecured.

In connection with the Business Combination, the Company repaid its existing credit facilities in full and replaced them with the Term Loan Agreement and the ABL Credit Agreement. The Company accountsalso incurred an aggregate of $16.4 million of costs related to the extinguishment of its existing debts, including the write-off of unamortized borrowing costs and an early extinguishment fee paid to its lenders. The amount has been reflected as debt extinguishment costs in the Predecessor’s consolidated statement of income for the period ended December 5, 2018.

The table below is a summary of the composition of the Company’s long-term debt balances at April 30, 2020 and at October 31, 2019.

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 
Short term portion of term loan $20,888  $20,888 
Long term portion of term loan  370,762   381,206 

Total term loan

  391,650   402,094 
Less unamortized deferred financing costs  (18,314)  (20,268)

Total debt

 $373,336  $381,826 

Note 10. Accrued Payroll and Payroll Expenses

The following table summarizes accrued payroll and expenses at April 30, 2020 and at October 31, 2019:

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 
Accrued vacation $4,651  $4,638 
Accrued bonus  1,971   3,177 
Other accrued  2,528   1,362 
Total accrued payroll and payroll expenses $9,150  $9,177 

Note 11. Accrued Expenses and Other Current Liabilities

The following table summarizes accrued expenses and other current liabilities at April 30, 2020 and at October 31, 2019: 

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 

Accrued insurance

 $7,718  $6,105 

Accrued interest

  2,583   3,049 

Accrued equipment purchases

  5,449   15,343 

Accrued sales and use tax

  311   311 

Accrued property taxes

  639   915 

Accrued professional fees

  1,179   1,729 

Other

  2,763   654 

Total accrued expenses and other liabilities

 $20,642  $28,106 

Note 12. Income Taxes

For the second fiscal quarter ended April 30, 2020, the Company recorded an income tax benefit of $2.2 million on a pretax loss of $61.2 million, resulting in an effective tax rate of 3.6%. For the same quarter a year ago, the Company recorded income tax expense of $1.6 million on a pretax loss of $8.1 million. For the first six months of 2020, the Company recorded an income tax benefit of $3.4 million on a pretax loss of $65.1 million, resulting in an effective tax rate of 5.2%. For the Successor period from December 6, 2018 to April 30, 2019, the Company recorded an income tax benefit of $1.2 million on a pretax loss of $14.5 million, resulting in an effective tax rate of 8.3%. For the Predecessor period from November 1, 2018 to December 5, 2018, the Company recorded an income tax benefit of $4.2 million on a pretax loss of $26.8 million, resulting in an effective tax rate of 15.7%.

The factors impacting comparability between our effective tax rates for the periods discussed above are as follows:

(1)

The Predecessor recorded tax expense of $1.4 million for the period ended December 5, 2018 related to nondeductible transaction related costs;

(2)

The Successor included $0.8 million of tax expense in the estimated annual effective rate for the period ended April 30, 2019 related to foreign income inclusions compared to $0.1 million for the period ended April 30, 2020 and $0.0 for the Predecessor period ended December 5, 2018;

(3)

The Successor included $0.9 million of tax expense related to the increase in the deferred statutory U.K. corporate tax rate from 17% to 19% in the period ended April 30, 2020;

(4)Of the $57.9 million of impairments recorded for goodwill and intangibles by the Company, only $11.9 million was deductible for tax purposes ($2.9 million tax benefit to the Company) as the remaining impairment was related to nondeductible goodwill; and

(5)

Differences in our estimated full year income before tax and the related impact on our estimated full year effective tax rate that was applied to year to date losses for the Successor periods ended April 30, 2020 and April 30, 2019.

At April 30, 2020 and October 31, 2019, we had deferred tax liabilities, net of deferred tax assets, of $65.3 million and $69.0 million, respectively. The decrease in our net deferred tax liability is primarily due to current year operating results and reversal of existing deferred tax assets and liabilities during the period ended April 30, 2020. The Company has a valuation allowance of $0.1 million as of both April 30, 2020 and October 31, 2019 related to foreign tax credit carryforwards where realization is more uncertain at this time due to the limited carryforward periods that exist.

The Company had unrecognized tax benefits of $1.7 million as of April 30, 2020 and October 31, 2019. If recognized, none of these benefits would favorably impact the Company's income tax expense.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses (“NOL”) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, accelerate refunds of previously generated corporate alternative minimum tax credits, generally loosen the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax provisions. The Company has performed the analysis of the CARES Act and has concluded that there is no impact as of April 30, 2020. The Company will continue to evaluate how the CARES Act may impact future periods. Also, refer to Note 13.

On March 17, 2020, the House of Commons passed a Budget Resolution under the Provisional Collection of Taxes Act of 1968. The Budget Resolution substantively enacted an increase in the U.K. corporate tax rate for tax periods after March 31, 2020 from 17% to 19%. As a result of the Budget Resolution, the Company recorded tax expense of $0.9 million related to the remeasurement of deferred tax assets and liabilities to reflect the increase in the U.K. corporate tax rate.

The Company received a demand letter on March 31, 2020 alleging that the Company is required to apply for and remit to the Predecessor’s shareholders certain tax refunds from carrying back certain tax net operating loss carryforwards that were made available as a result of the recent passage of the CARES Act. No complaint against the Company has been filed alleging any claims with respect to this matter. The outcome of this issue is still not determinable at this time because the matter is still under review and no action has been taken by the Company with regards to these potential refunds under the CARES Act.

Note 13. Commitments and Contingencies

Insurance

As of April 30, 2020 and October 31, 2019, the Company was partially insured for automobile, general and worker's compensation liability with the following deductibles:

  

Deductible

 

General liability

 $250,000 

General liability (in the case of accident and driver has completed NationsBuilders Insurance Services driver training)

 $125,000 

Automobile

 $100,000 

Workers' compensation

 $250,000 

We had accrued $6.3 million and $5.0 million, as of April 30, 2020 and October 31, 2019, respectively, for claims incurred but not reported and estimated losses reported, which is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

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. As of April 30, 2020 and October 31, 2019, the Company had accrued $1.4 million and $1.1 million, respectively, for 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 consolidated balance sheets. The Company contracts with a third party administrator to process claims, remit benefits, etc. The third party administrator requires the Company to maintain a bank account to facilitate the administration of claims. The account balance was $0.4 million and $0.3 million, as of April 30, 2020 and October 31, 2019, respectively, and is included in cash and cash equivalents in the accompanying consolidated balance sheets.

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 consolidated balance sheet.

Letters of credit

The ABL Credit Agreement provides for up to $7.5 million of standby letters of credit. As of April 30, 2020, total outstanding letters of credit totaled $1.2 million, the vast majority of which had been committed to the Company’s general liability insurance provider.

Note 14. Stockholders’ Equity

In conjunction with the Business Combination, all common and preferred shares that were in existence for the Predecessor were settled and no longer outstanding subsequent to December 5, 2018. On December 6, 2018, in connection with the closing of the Business Combination, the Company redeemed a total of 22,337,322 shares of its Class A common stock subjectpursuant to possible redemptionthe terms of its certificate of incorporation, resulting in accordancea total cash payment from the Company’s trust account to redeeming stockholders of $231.4 million.

The Company’s amended and restated certificate of incorporation authorizes the issuance of 500,000,000 shares of common stock, par value $0.0001, and 10,000,000 shares of preferred stock, par value $0.0001. Immediately following the Business Combination, there were:

28,847,707 shares of common stock issued and outstanding;

34,100,000 warrants outstanding, each exercisable for one share of common stock at an exercise price of $11.50 per share; and

2,450,980 shares of zero-dividend convertible perpetual preferred stock (“Series A Preferred Stock”) outstanding, as further discussed below

On May 14, 2019, in order to finance a portion of the purchase price for the acquisition of Capital, the Company completed a public offering of 18,098,166 of its common stock at a price of $4.50 per share, receiving net proceeds of approximately $77.4 million, after deducting underwriting discounts, commissions, and other offering expenses. In connection with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class Aoffering, certain of the Company’s directors, officers and significant stockholders, and certain other related investors, purchased an aggregate of 3,980,166 shares of its common stock subjectfrom the underwriters at the public offering price of $4.50, representing approximately 25% of the total shares issued (without giving effect to mandatorythe underwriters’ option to purchase additional shares).

As discussed below, on April 29, 2019, 2,101,213 shares of common stock were issued in exchange for the Company's public warrants and 1,707,175 shares of common stock were issued in exchange for the Company's private warrants. After the completion of the warrant exchange and as of April 30, 2020, there were 13,017,777 public warrants and no private warrants outstanding.

The Company’s Series A Preferred Stock does not pay dividends and is convertible (effective June 6, 2019) into shares of the Company’s common stock at a 1:1 ratio (subject to customary adjustments). The Company has the right to elect to redeem all or a portion of the Series A Preferred Stock at its election after December 6, 2022 for cash at a redemption (if any) are classified as liability instruments and are measuredprice equal to the amount of the principal investment plus an additional cumulative amount that will accrue at fair value. an annual rate of 7.0% thereon. In addition, if the volume weighted average price of shares of the Company’s common stock equals or exceeds $13.00 for 30 consecutive days, then the Company will have the right to require the holder of the Series A Preferred Stock to convert its Series A Preferred Stock into Company common stock, at a ratio of 1:1 (subject to customary adjustments).

Conditionally redeemable Class A common stockpreferred shares (including Class A common stockpreferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class AThe preferred stock contains a redemption feature contingent upon a change in control which is not solely within the control of the Company, and as such, the preferred stock is presented outside of permanent equity.

Warrant Exchange

On April 1, 2019, the Company commenced an offer to each holder of its publicly traded warrants (the “public warrants”) and private placement warrants that were issued in connection with Industrea’s initial public offering on April 17, 2017 (the “private warrants”) the opportunity to receive 0.2105 shares of common stock are classified as stockholders’ equity. The Company’s Class Ain exchange for each outstanding public warrant tendered and 0.1538 shares of common stock feature certain redemption rights that are consideredin exchange for each private warrant tendered pursuant to be outsidethe offer (the “Offer” or “Warrant Exchange”).

On April 26, 2019, a total of 9,982,123 public warrants and 11,100,000 private warrants were tendered for exchange pursuant to the Offer.  On April 29, 2019, 2,101,213 shares of common stock were issued in exchange for the tendered public warrants and 1,707,175 shares of common stock were issued in exchange for the tendered private warrants. A negligible amount of cash was paid for fractional shares. As no agreement was modified as a result of the Company’s controlexchange, we concluded that the exchange of Company common stock for the warrants was analogous to a share repurchase. The Company recorded a loss on repurchase of the warrants of $5.2 million in the 2019 second quarter, all of which was included as an adjustment to retained earnings. The $5.2 million loss reflects the par value of the warrants in APIC of $21.1 million less the fair value of the common stock that was issued in exchange for the warrants of $26.3 million. After the completion of the Warrant Exchange and subjectas of April 30, 2020, 13,017,777 public warrants and no private warrants were outstanding.

Note 15. Stock-Based Compensation

Successor

The Company rolled forward certain vested options from the Predecessor (see discussion below) to 2,783,479 equivalent vested options in the Successor. No incremental compensation costs were recognized on conversion as the fair value of the options issued were equivalent to the occurrence of uncertain future events. Accordingly, at September 30, 2017, 21,861,181 shares of Class A common stock subject to possible redemption at the redemption amount are presented as temporary equity, outsidefair value of the stockholders’ equity sectionvested options of the Company’s condensed balance sheet.Predecessor. Exercise prices for those options range from $0.87 to $6.09.

 

During 2019, pursuant to the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, the Company granted stock-based awards to certain employees in the U.S. and U.K. All awards in the U.S. are restricted stock awards while awards granted to employees in the U.K. are stock options with exercise prices of $0.01. Regardless of where the awards were granted, the awards vest pursuant to one of the following four conditions:

 F-8

1.

Time-based only – Awards vest in equal installments over a five-year period

 

2.

$13 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $13.00 for 30 consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period.

3.

$16 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $16.00 for 30 consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period.

4.

$19 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $19.00 for 30 consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period.

INDUSTREA ACQUISITION CORP.Included in the table below is a summary of the awards granted, including the location, type of award, fair value of awards, and the date that expense will be recognized through. In accordance with ASC 718, the market-based awards were assigned the fair values in the table below using a Monte Carlo simulation model.  In addition, while the table below provides a date through which expense will be recognized on a straight-line basis, if at such time these market-based stock awards vest under both vesting conditions, expense recognition will be accelerated. Stock-based compensation expense for the three and six-month periods ended April 30, 2020 was $1.4 million and $2.9 million, respectively. Stock-based compensation expense was $0.4 million for the three-month period ending April 30, 2019 and the Successor period from December 6, 2018 through April 30, 2019.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Location

Type of Award

 

Shares Awarded

  

Fair Value of Awards Per Share

  

Total Fair Value of Awards

 

Date Expense will be Recognized Through (Straight-Line Basis)

U.S.

Time Based Only

  1,156,630  $6.67  $7,714,722 

12/6/2023

U.S.

$13 Market/Time- Based

  1,543,044  $4.47  $6,904,032 

5/4/2024

U.S.

$16 Market/Time- Based

  1,543,044  $3.85  $5,940,038 

8/27/2024

U.S.

$19 Market/Time- Based

  1,543,091  $3.34  $5,149,194 

11/19/2024

U.S.

Time Based Only

  25,000  $4.05  $101,250 

12/6/2023

U.S.

$13 Market/Time- Based

  25,000  $2.72  $67,919 

5/4/2024

U.S.

$16 Market/Time- Based

  25,000  $2.34  $58,436 

8/27/2024

U.S.

$19 Market/Time- Based

  25,000  $2.03  $50,654 

11/19/2024

U.K.

Time Based Only

  164,744  $6.67  $1,098,842 

12/6/2023

U.K.

$13 Market/Time- Based

  238,808  $4.46  $1,066,272 

5/4/2024

U.K.

$16 Market/Time- Based

  238,808  $3.84  $917,096 

8/27/2024

U.K.

$19 Market/Time- Based

  238,833  $3.33  $794,772 

11/19/2024

Total

  6,767,002      $29,863,227  

 

Net Income (Loss) per SharePredecessor

 

Net incomeThe Predecessor accounted for share-based awards in accordance with ASC Topic 718 Compensation–Stock Compensation (“ASC 718”), which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at fair value on the date of grant. As a result of the Business Combination, the acceleration clause within the original award agreements was triggered and all unvested awards immediately vested, resulting in an amount of $0.6 million of stock-based compensation expense presented “on the line” (see Note 4 - Business Combinations). Stock-based compensation for the Predecessor period from November 1, 2018 to December 5, 2018 totaled $0.1 million, and has been included in general and administrative expenses on the accompanying consolidated statements of operations. 

Note 16. Earnings Per Share

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share. For purposes of calculating earnings (loss) per share (“EPS”), a company that has participating security holders (for example, holders of unvested restricted stock that have non-forfeitable dividend rights and the Company’s Series A Preferred Stock) is computedrequired to utilize the two-class method for calculating EPS unless the treasury stock method results in lower EPS. The two-class method is an allocation of earnings/(loss) between the holders of common stock and a company’s participating security holders. Under the two-class method, earnings/(loss) for the reporting period is calculated by taking the net income (loss) for the period, less both the dividends declared in the period on participating securities (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) for the period. Our common shares outstanding are comprised of shareholder owned common stock and shares of unvested restricted stock held by participating security holders. Basic EPS is calculated by dividing netincome or loss attributable to common stockholders by the weighted-averageweighted average number of shares of common stock outstanding, duringexcluding participating shares. To calculate diluted EPS, basic EPS is further adjusted to include the periods. An aggregateeffect of 21,861,181potentially dilutive stock options outstanding and Series A Preferred Stock outstanding as of the beginning of the period. 

Successor

At April 30, 2020 (Successor), the Company had outstanding (1) 13,017,777 million warrants to purchase shares of Class A common stock subject to possible redemption at September 30, 2017 have beenan exercise price of $11.50, (2) 5.5 million outstanding unvested restricted stock awards, (3) 1.2 million outstanding vested incentive stock options, (4) 0.8 million outstanding unvested non-qualified stock options, and (5) 2.5 million shares of Series A Preferred Stock, all of which could potentially be dilutive. For the Successor period presented, the weighted-average dilutive impact, if any, of these shares was excluded from the calculation of basic incomediluted earnings (loss) per ordinarycommon share since such shares, if redeemed, only participate inbecause their pro ratainclusion would have been anti-dilutive. As a result, dilutive earnings (loss) per share is equal to basic earnings (loss) per share. 

The table below shows our basic and diluted EPS calculations for the three and six-month periods ended April 30, 2020, the three-month period ended April 30, 2019, and the Successor period from December 6, 2018 through April 30, 2019:

  

Successor

 

(in thousands, except share and per share amounts)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

 

Net loss (numerator):

                
Net loss attributable to Concrete Pumping Holdings, Inc. $(58,968) $(9,645) $(61,714) $(13,275)
Less: Accretion of liquidation preference on preferred stock  (470)  (434)  (943)  (703)
Less: Undistributed earnings allocated to participating securities  -   -   -   - 
Net loss attributable to common stockholders (numerator for basic earnings per share) $(59,438) $(10,079) $(62,657) $(13,978)
                 

Weighted average shares (denominator):

                
Weighted average shares - basic  52,782,663   29,166,165   52,752,884   29,043,174 
Weighted average shares - diluted  52,782,663   29,166,165   52,752,884   29,043,174 
                 
Basic loss per share $(1.13) $(0.35) $(1.19) $(0.48)
Diluted loss per share $(1.13) $(0.35) $(1.19) $(0.48)

Predecessor

Under the trust earnings. The Company has not considered the effect of the warrants sold in the Initial Public Offering (including the consummation of the over-allotment)terms and Private Placement to purchase 11,100,000 sharesconditions of the Company’s class AParticipating Preferred Stock Agreement, the holders of the preferred stock had the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock on a one-for-one per-share basis. Under the two-class method, undistributed earnings was calculated by the earnings for the period less the cumulative preferred stock dividends earned for the period. The undistributed earnings were then allocated on a pro-rata basis to the common and preferred stockholders on a one-for-one per-share basis. The weighted-average number of common and preferred shares outstanding during the period was then used to calculate basic EPS for each class of shares. As a result, the undistributed earnings available to common shareholders was calculated by earnings (loss) for the period less the cumulative preferred stock dividends earned for the period less undistributed earnings allocated to the holders of the preferred stock.

In periods in which the calculation of diluted income (loss)Company had a net loss or undistributed net loss, basic loss per share since their inclusion would be anti-dilutive.was calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method was not used, because the holders of the preferred stock did not participate in losses.

 

Income TaxesThe table below shows our basic and diluted EPS calculations for the Predecessor periods from November 1, 2018 through December 5, 2018:

  

Predecessor

 

(in thousands, except share and per share amounts)

 

November 1, 2018 through December 5, 2018

 

Net loss (numerator):

    

Net loss income attributable to Concrete Pumping Holdings, Inc.

 $(22,575)

Less: Accretion of liquidation preference on preferred stock

  (126)

Less: Undistributed earnings allocated to preferred shares

  - 

Net (loss) available to common shareholders

 $(22,701)
     

Weighted average shares (denominator):

    

Weighted average shares - basic

  7,576,289 

Weighted average shares - diluted

  7,576,289 
     

Antidilutive stock options

  932,746 
     

Basic loss per share

 $(3.00)

Diluted loss per share

 $(3.00)

Note 17. Segment Reporting

 

The Company followsconducts business through the assetfollowing reportable segments based on geography and liability methodthe nature of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributableservices sold:

U.S. Concrete Pumping – Consists of concrete pumping services sold to customers in the U.S. Business in this segment is primarily performed under the Brundage-Bone and Capital trade names.

U.K. Operations – Consists of concrete pumping services and leasing of concrete pumping equipment to customers in the U.K. Business in this segment is primarily performed under the Camfaud Concrete Pumps and Premier Concrete Pumping trade names. In addition to concrete pumping, we recently started operations of waste management services in the U.K. under the Eco-Pan trade name and the results of this business are included in this segment. This represents the Company’s foreign operations.

U.S. Concrete Waste Management Services – Consists of pans and containers rented to customers in the U.S. and the disposal of the concrete waste material services sold to customers in the U.S. Business in this segment is performed under the Eco-Pan trade name.

Any differences between the financial statements carrying amounts of existing assetssegment reporting and liabilities and their respective tax bases. Deferred tax assets and liabilitiesconsolidated results are measured using enacted tax rates expected to apply to taxable incomereflected in the years in which those temporary differences are expected to be recovered Corporate and/or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2017. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties for the period from April 7, 2017 (date of inception) to September 30, 2017. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Recent Accounting PronouncementsIntersegment below.

 

The accounting policies of the reportable segments are the same as those described in Note 2. The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effectChief Operating Decision Maker (“CODM”) evaluates the performance of each segment based on revenue, and measures segment performance based upon EBITDA (earnings before interest, taxes, depreciation and amortization). Non-allocated interest expense and various other administrative costs are reflected in Corporate. Corporate assets primarily include cash and cash equivalents, prepaid expenses and other current assets, and real property. The following provides operating information about the Company’s financial statements.reportable segments for the periods presented:

  

Successor

  

Predecessor

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 

Revenue

                    
U.S. Concrete Pumping $57,459  $42,548  $112,564  $66,615  $16,659 
U.K. Operations  8,401   12,689   19,086   18,504   5,143 
U.S. Concrete Waste Management Services  8,306   6,751   16,589   10,839   2,628 
Corporate  625   -   1,250   -   242 
Intersegment  (750)  -   (1,509)  -   (276)
  $74,041  $61,988  $147,980  $95,958  $24,396 
                     

Income (loss) before income taxes

                    
U.S. Concrete Pumping $(47,054) $(9,472) $(50,928) $(13,896) $(27,354)
U.K. Operations  (15,446)  899   (16,454)  (1,064)  207 
U.S. Concrete Waste Management Services  893   (123)  1,464   (414)  225 
Corporate  418   623   836   906   155 
  $(61,189) $(8,073) $(65,082) $(14,468) $(26,767)

  

Successor

  

Predecessor

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 

EBITDA

                    
U.S. Concrete Pumping $(28,814) $5,812  $(13,952) $11,348  $(24,565)
U.K. Operations  (12,712)  4,298   (10,753)  4,431   1,587 
U.S. Concrete Waste Management Services  3,553   2,580   6,803   4,161   388 
Corporate  625   687   1,250   1,008   180 
  $(37,348) $13,377  $(16,652) $20,948  $(22,410)
                     

Consolidated EBITDA reconciliation

                    
Net loss $(58,968) $(9,645) $(61,714) $(13,275) $(22,575)
Interest expense, net  8,765   9,318   18,268   14,910   1,644 
Income tax benefit  (2,221)  1,572   (3,368)  (1,193)  (4,192)
Depreciation and amortization  15,076   12,132   30,162   20,506   2,713 
EBITDA $(37,348) $13,377  $(16,652) $20,948  $(22,410)

  

Successor

  

Predecessor

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 

Depreciation and amortization

                    
U.S. Concrete Pumping $10,144  $6,706  $20,148  $11,532  $1,635 
U.K. Operations  2,065   2,659   4,261   4,297   890 
U.S. Concrete Waste Management Services  2,660   2,703   5,339   4,575   163 
Corporate  207   64   414   102   25 
  $15,076  $12,132  $30,162  $20,506  $2,713 
                     

Interest expense, net

                    
U.S. Concrete Pumping $(8,096) $(8,578) $(16,828) $(13,712) $(1,154)
U.K. Operations  (669)  (740)  (1,440)  (1,198)  (490)
U.S. Concrete Waste Management Services  -   -   -   -   - 
Corporate  -   -   -   -   - 
  $(8,765) $(9,318) $(18,268) $(14,910) $(1,644)
                     

Transaction costs including transaction-related debt extinguishment

                    
Corporate $-  $1,282  $-  $1,282  $30,562 
  $-  $1,282  $-  $1,282  $30,562 

Total assets by segment for the periods presented are as follows:

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 

Total Assets

        
U.S. Concrete Pumping $593,808  $637,384 
U.K. Operations  127,076   138,435 
U.S. Concrete Waste Management Services  138,725   137,646 
Corporate  24,860   24,223 
Intersegment  (80,297)  (66,323)
  $804,172  $871,365 

The U.S. and U.K. were the only regions that accounted for more than 10% of the Company’s revenue for the periods presented. There was no single customer that accounted for more than 10% of revenue for the periods presented. Revenue for the periods presented and long lived assets as of April 30, 2020 and October 31, 2019 are as follows:

  

Successor

  

Predecessor

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

 

Revenues

                    
U.S. $65,640  $49,299  $128,894  $77,454  $19,253 
U.K.  8,401   12,689   19,086   18,504   5,143 
  $74,041  $61,988  $147,980  $95,958  $24,396 

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 

Long Lived Assets

        
U.S. $265,430  $263,363 
U.K.  41,683   44,052 
  $307,113  $307,415 

Note 18. Related Party Transaction

 

Note 3 — Initial Public Offering

On August 1, 2017, the Company sold 23,000,000 Units, including the issuance of 3,000,000 Units as a result of the underwriters’ exercise of their over-allotment option in full, at a price of $10.00 per Unit in the Initial Public Offering. Each Unit consists of one share of Class A common stock and one Public Warrant. Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).

Note 4 — Private Placement

Concurrently with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 11,100,000 Private Placement Warrants at $1.00 per Private Placement Warrant, generating gross proceeds of $11.1 million in the aggregate in a Private Placement. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.Predecessor

 

The SponsorPredecessor had a Management Services Agreement, as amended from time to time, with PGP Advisors, LLC (“PGP”), the Predecessor’s largest shareholder, to provide advisory, consulting and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.

F-9

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 5 — Related Party Transactions

Founder Shares

On April 10, 2017, the Sponsor purchased 5,750,000 shares (the “Founder Shares”) of the Company’s Class B common stock, par value $0.0001 (“Class B common stock”) for an aggregate price of $25,000. In April and May 2017, the Sponsor transferred 28,750 Founder Shares to each of the Company’s independent director nominees at their original purchase price. The Founder Shares will automatically convert into shares of Class A common stock at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment, at any time. The initial stockholders agreed to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. On August 1, 2017, to the underwriters fully exercised their over-allotment option. As a result, 750,000 Founder Shares were no longer subject to forfeiture.

The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Related Party Loans

Prior to the consummation of the Initial Public Offering, the Sponsor loaned the Company an aggregate of $224,403 to cover expenses related to such offering pursuant to a promissory note (the “Note”). This loan was non-interest bearing. The Company fully repaid the Note on August 1, 2017.

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

Officer and Director Compensation

The Company has agreed, commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support.

In addition, the Company will pay each of the five independent directors $50,000 per year commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination or its liquidation.

The Company recognized an aggregate of approximately $67,000 in accrued expenses owed to related parties related to these agreements on the accompanying condensed balance sheet as of September 30, 2017.

F-10

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 6 — Commitments & Contingencies

Registration Rights

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The Company granted the underwriters a 45-day option from July 26, 2017 to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters exercised this over-allotment in full concurrently with the closing of the Initial Public Offering.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or $8.05 million in the aggregate of deferred underwriting commissions will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject toprofessional services. Under the terms of the underwriting agreement.agreement the annual fee for these services was $4.0 million from September of 2017 through August of 2019, and $2.0 million annually thereafter. For the period from November 1, 2018 through December 5, 2018, the Predecessor incurred no fees related to this agreement and other agreed upon expenses. These expenses were included in general and administrative expenses on the accompanying consolidated statements of operations. In conjunction with the Business Combination, this agreement was terminated. 

 

Note 7 — Stockholders’ Equity

Common Stock

Class A Common Stock — The Company is authorized to issue 200,000,000 shares

38

INDUSTREA ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2017, there were no shares of preferred stock issued or outstanding.

Note 8 — Fair Value Measurements

The following table presents information about the Company’s assets that are measured on a recurring basis as of September 30, 2017 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

  Quoted Prices  Significant Other  Significant Other 
  in Active Markets  Observable Inputs  Unobservable Inputs 
Description (Level 1)  (Level 2)  (Level 3) 
Cash and marketable securities held in Trust Account $235,035,755       

F-12

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

References toYou should read the “Company,” “our,” “us” or “we” refer to Industrea Acquisition Corp. The following management’s discussion and analysis of the Company’s financial conditiontogether with Concrete Pumping Holdings, Inc.’s (the “Company”, “we”, “us”, “our” or “Successor”) Unaudited Consolidated Financial Statements and results of operations should be read in conjunction with the unaudited condensed financial statements and therelated notes thereto containedincluded elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.Quarterly Report.

 

Cautionary Note RegardingStatement Concerning Forward-Looking Statements

 

ThisCertain statements in this Quarterly Report on Form 10-Q includes forward-looking statementsconstitute “forward-looking statements” within the meaning of Section 27A of the Private Securities Litigation Reform Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events.1995. These forward-looking statements are subject to knowninclude statements regarding our business, financial condition, results of operations, cash flows, strategies and unknown risks, uncertaintiesprospects, and assumptions about us thatthe potential impact of the COVID-19 pandemic on our business. These forward-looking statements may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statementsidentified by terminology such as “likely,” “may,” “will,” “should,” “could,“expects,“would,“plans,“expect,“anticipates,“plan,“believes,“anticipate,“estimates,“believe,“predicts,“estimate,”“potential” or “continue,” or the negative of such terms orand other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.

Overview

We are a blank check company incorporated on April 7, 2017 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“business combination”).comparable terminology. Although we are not limited to a particular industry or sector for purposes of consummating a Business Combination, we intend to focus its search on manufacturing and service companiesbelieve that the expectations reflected in the industrial sector. Our sponsor is Industrea Alexandria LLC, a Delaware limited liability company (the “Sponsor”).

forward-looking statements contained in this Report are reasonable, we cannot guarantee future results. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by the forward-looking statements. We consummated our initial public offering (“Initial Public Offering”) on August 1, 2017.

Results of Operations

Our entire activity since inception upundertake no obligation to September 30, 2017 was in preparation for our Initial Public Offering. Since the offering, our activity has been limited to the search for a prospective initial business combination, and we will not be generatingpublicly update any operating revenues until the closing and completion of our initial business combination. We expect to incur increased expensesforward-looking statements, whether as a result of beingnew information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be considered. Additionally, information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained under the caption “Risk Factors” in our Form 10-K filed with the SEC on January 14, 2020.

Business Overview

The Company is a Delaware corporation headquartered in Thornton (near Denver), Colorado. The unaudited consolidated financial statements included herein include the accounts of Concrete Pumping Holdings, Inc. and its wholly owned subsidiaries including Brundage-Bone Concrete Pumping, Inc. (“Brundage-Bone”), Capital Pumping (“Capital”), and Camfaud Group Limited (“Camfaud”), and Eco-Pan, Inc. (“Eco-Pan”).

On December 6, 2018, the Company, formerly known as Concrete Pumping Holdings Acquisition Corp., consummated a business combination transaction (the “Business Combination”) pursuant to which it acquired (i) the private operating company formerly called Concrete Pumping Holdings, Inc. (“CPH”) and (ii) the former special purpose acquisition company called Industrea Acquisition Corp (“Industrea”). In connection with the closing of the Business Combination, the Company changed its name to Concrete Pumping Holdings, Inc. The financial results described herein for the dates and periods prior to the Business Combination relate to the operations of CPH prior to the consummation of the Business Combination.

U.S. Concrete Pumping

Brundage-Bone and Capital are concrete pumping service providers in the United States ("U.S."). Their core business is the provision of concrete pumping services to general contractors and concrete finishing companies in the commercial, infrastructure and residential sectors. Equipment generally returns to a “home base” nightly and neither company contracts to purchase, mix, or deliver concrete. Brundage-Bone and Capital collectively have approximately 90 branch locations across 22 states with their corporate headquarters in Thornton (near Denver), Colorado.

In May 2019, the Company, through its wholly-owned subsidiary Brundage-Bone, acquired Capital Pumping, LP and its affiliates (“Capital”), a concrete pumping provider based in Texas for a purchase price of $129.2 million. The closing of this acquisition provided the Company with complementary assets and operations and significantly expanded its footprint and business in Texas.

U.K. Operations

Our U.K. operations consists of concrete pumping and concrete waste management services. Our concrete pumping services are primarily provided through either our Camfaud brand (operated pumping services) or our Premier Concrete Pumping brand (rental of pumping equipment on a long-term basis without an operator). Camfaud’s core business is primarily the provision of concrete pumping services to general contractors and concrete finishing companies in the commercial, infrastructure and residential sectors. Camfaud currently has 28 branch locations throughout the U.K. In addition, during the 2019 third quarter, we started concrete waste management operations under our Eco-Pan brand name in the U.K. and currently operate from 1 location. The U.K. operations headquarters are in Epping (near London), England. 

U.S. Concrete Waste Management Services

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 16 operating locations across the United States with its corporate headquarters in Thornton, (near Denver), Colorado.

Impacts of COVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged and has spread around the world. On March 11, 2020, the World Health Organization declared COVID-19 to be a global pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, U.S. President Trump announced a National Emergency relating to the pandemic. Government authorities in the U.S. and U.K. have recommended or imposed various social distancing, quarantine, and isolation measures on large portions of the population, which include limitations on travel and mandatory cessation of certain business activities. Both the outbreak and the containment and mitigation measures have had and may continue to have a serious adverse impact on the global economy, the severity and duration of which are uncertain. It is likely that government stabilization efforts will only partially mitigate the consequences to the economy. The extent to which the COVID-19 pandemic will impact our business, financial condition, and results of operations is highly uncertain and will be affected by a number of factors. These include the duration and extent of the pandemic; the duration and extent of imposed or recommended containment and mitigation measures; the extent, duration, and effective execution of government stabilization and recovery efforts; the impact of the pandemic on economic activity, including on construction projects and our customers’ demand for our services; our ability to effectively operate, including as a result of travel restrictions and mandatory business and facility closures; the ability of our customers to pay us for services rendered; any further closures of our and our customers’ offices and facilities; and any additional project delays or shutdowns. Customers may also slow down decision-making, delay planned work or seek to terminate existing agreements. Any of these events may have a material adverse effect on our business, financial condition, and/or results of operations, including further impairment to our goodwill and intangible assets.

In the final month of the second quarter of fiscal 2020, our operations in the Seattle and U.K. markets were negatively impacted due to COVID-19-imposed construction site shutdowns. In Seattle, the restrictions were eased in the beginning of May and in the U.K., the Prime Minister announced on May 10 that restarting construction and manufacturing is explicitly encouraged. As a result of the pandemic, we have implemented certain short-term cost reductions, including suspension of any remaining uncommitted 2020 capital expenditure investment, headcount reductions, modified work schedules reducing hours where needed, and furloughs in limited locations. While we believe these disruptions will be temporary, it is difficult to predict how long they will last and the impact they will have on the Company in future periods. We will continue to evaluate the effect of COVID-19 on its business.

In addition, the COVID-19 pandemic drove a sustained decline in the Company's stock price and a deterioration in general economic conditions in the fiscal 2020 second quarter, which qualified as a triggering event necessitating the evaluation of its goodwill and long-live assets for indicators of impairment. As a result of the evaluation, the Company conducted a quantitative interim impairment test as of April 30, 2020 and recorded $57.9 million in impairments, including a $5.0 million impairment of our Brundage-Bone Concrete Pumping trade-name, a $38.5 million goodwill impairment for our U.S Concrete Pumping reporting unit and a $14.4 million impairment to our U.K. Operations reporting unit.

In an effort to maintain the safety and welfare of our employees and customers, we have implemented various employee safety measures to contain the spread of COVID-19, including domestic and international travel restrictions, the promotion of social distancing and work-from-home practices, extensive cleaning protocols, daily symptom assessments, and enhanced use of personal protective equipment such as masks. We are closely monitoring all guidance provided by public agencies such as the Centers for Disease Control and Prevention in the U.S. and the U.K. department of health to ensure the safety of our employees, vendors, and customers.

Results of Operations

To reflect the application of different bases of accounting as a result of the Business Combination, the tables provided below separate the Company’s results via a black line into two distinct periods as follows: (1) up to and including the Business Combination closing date (labeled “Predecessor”) and (2) the period after that date (labeled “Successor”). The periods after December 5, 2018 are the “Successor” periods while the periods before December 6, 2018 are the “Predecessor” periods.

The historical financial information of Industrea prior to the Business Combination (a special purpose acquisition company, (for legal,or “SPAC”) has not been reflected in the Predecessor financial reporting, accountingstatements as these historical amounts have been determined to be not useful information to a user of the financial statements. SPACs deposit the proceeds from their initial public offerings into a segregated trust account until a business combination occurs, where such funds are then used to pay consideration for the acquiree and/or to pay stockholders who elect to redeem their shares of common stock in connection with the business combination. The operations of a SPAC, until the closing of a business combination, other than income from the trust account investments and auditing compliance)transaction expenses, are nominal. Accordingly, no other activity in the Company was reported for periods prior to December 6, 2018 besides CPH’s operations as Predecessor.

As Industrea’s historical financial information is excluded from the Predecessor financial information, the business, and thus financial results, of the Successor and Predecessor entities, are expected to be largely consistent, excluding the impact on certain financial statement line items that were impacted by the Business Combination. Management believes reviewing our operating results for the six-months ended April 30, 2019 by combining the results of the Predecessor and Successor periods (“S/P Combined”) is more useful in discussing our overall operating performance when compared to the same period in the current year. Accordingly, in addition to presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, the tables below present the non-GAAP combined results for the year.

                      

S/P Combined

 
  

Successor

  

Predecessor

  

(non-GAAP)

 

(dollars in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

 
                         
Revenue $74,041  $61,988  $147,980  $95,958  $24,396  $120,354 
                         
Cost of operations  42,174   37,628   83,965   58,731   14,027   72,758 
Gross profit  31,867   24,360   64,015   37,227   10,369   47,596 

Gross margin

  43.0%  39.3%  43.3%  38.8%  42.5%  39.5%
                         
General and administrative expenses  26,381   21,853   52,988   35,534   4,936   40,470 
Goodwill and intangibles impairment  57,944   -   57,944   -   -   - 
Transaction costs  -   1,282   -   1,282   14,167   15,449 
Income (loss) from operations  (52,458)  1,225   (46,917)  411   (8,734)  (8,323)
                         

Other income (expense):

                        
Interest expense, net  (8,765)  (9,318)  (18,268)  (14,910)  (1,644)  (16,554)
Loss on extinguishment of debt  -   -   -   -   (16,395)  (16,395)
Other income, net  34   20   103   31   6   37 
Total other expense  (8,731)  (9,298)  (18,165)  (14,879)  (18,033)  (32,912)
                         
Loss before income taxes  (61,189)  (8,073)  (65,082)  (14,468)  (26,767)  (41,235)
                         
Income tax expense (benefit)  (2,221)  1,572   (3,368)  (1,193)  (4,192)  (5,385)
                         
Net loss  (58,968)  (9,645)  (61,714)  (13,275)  (22,575)  (35,850)
                         
Less accretion of liquidation preference on preferred stock  (470)  (434)  (943)  (703)  (126)  (829)
Loss available to common shareholders $(59,438) $(10,079) $(62,657) $(13,978) $(22,701) $(36,679)

Three Months Ended April 30, as well as for due diligence expenses. We expect our expenses to increase substantially after this period.2020

 

For the three months ended SeptemberApril 30, 2017,2020, our net loss was $59.0 million, or an increase of $49.3 million when compared to the net loss of $9.6 million in the same period a year ago. The increase in net loss is primarily attributable to goodwill and intangible impairment charges totaling $57.9 million resulting from the significant decline in the Company's stock price driven by the COVID-19 pandemic. Despite the impact from COVID-19, we had neta 19.4% improvement in revenue year-over-year, driven mostly by the additional assets we obtained from the acquisition of Capital, which supported the operations in our Texas market, coupled with organic revenue improvements in many of our markets. Net income in the 2020 second quarter, when compared to the same period a year ago was also positively impacted by lower transaction costs of approximately $144,000,$1.3 million, all of which consistedwere the result of approximately $436,000 inthe acquisition of Capital, and lower interest income,expense of $0.6 million. These amounts were partially offset by approximately $240,000higher amortization expense of $1.6 million and depreciation expense of $1.3 million, most of which are attributable to the acquisition of Capital, and an additional $2.9 million in general and administrative (“G&A”) expenses, which were driven by (1) an increase of $1.0 million in stock-based compensation expense and (2) $1.9 million of labor costs and approximately $51,000 in income tax expense.from increased headcounts due to our acquisition of Capital.

 

Six Months Ended April 30, 2020

For the six months ended April 30, 2020, our net loss was $61.7 million, or an increase of $25.9 million when compared to the net loss of $35.9 million in the S/P combined period a year ago. We had a 23.0% improvement in revenue year-over-year, driven mostly by the additional assets we obtained from the acquisition of Capital, which supported the operations in our Texas market, coupled with organic revenue improvements in many of our markets. Net income for the six-months ended April 7, 2017 (date30, 2020, when compared to the S/P combined period a year ago, was positively impacted by lower transaction costs of inception) through September 30, 2017, we had net income$15.4 million, most of approximately $144,000, which consistedrelated to the Business Combination, and lower loss on extinguishment of approximately $436,000 in interest income,debt of $16.4 million, all of which were the result of the Business Combination. These amounts were offset by approximately $241,000the goodwill and intangible impairment charge discussed above, higher amortization expense of $4.6 million and depreciation expense of $2.2 million, most of which are attributable to the acquisition of Capital, and an additional $7.9 million in general and administrative (“G&A”) expenses, which were driven mostly by (1) an increase of $2.5 million in stock-based compensation expense and (2) $4.5 million of labor costs and approximately $51,000 in income tax expense.from increased headcounts due to our acquisition of Capital.

 

Liquidity and Capital ResourcesTotal Assets

 

As indicatedTotal assets decreased from $871.4 million as of October 31, 2019 to $804.2 million as of April 30, 2020. The decrease is primarily attributable to the goodwill and intangibles impairment charges of $57.9 million that were recorded during the three-months ended April 30, 2020.

  

April 30,

  

October 31,

 

(in thousands)

 

2020

  

2019

 

Total Assets

        
U.S. Concrete Pumping $593,808  $637,384 
U.K. Operations  127,076   138,435 
U.S. Concrete Waste Management Services  138,725   137,646 
Corporate  24,860   24,223 
Intersegment  (80,297)  (66,323)
  $804,172  $871,365 

Revenue

  

Successor

  

Change

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

   $  

%

 

Revenue

                

U.S. Concrete Pumping

 $57,459  $42,548  $14,911   35.0%

U.K. Operations

  8,401   12,689   (4,288)  -33.8%

U.S. Concrete Waste Management Services

  8,306   6,751   1,555   23.0%

Corporate

  625   -   625   NM1 

Intersegment

  (750)  -   (750)  NM1 
  $74,041  $61,988  $12,053   19.4%

(1)Not meaningful

  

Successor

  

Predecessor

  

S/P Combined (non-GAAP)

  

Change

 

(in thousands)

 

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

  $  

%

 

Revenue

                        

U.S. Concrete Pumping

 $112,564  $66,615  $16,659  $83,274  $29,290   35.2%

U.K. Operations

  19,086   18,504   5,143   23,647   (4,561)  -19.3%

U.S. Concrete Waste Management Services

  16,589   10,839   2,628   13,467   3,122   23.2%

Corporate

  1,250   -   242   242   1,008   416.5%

Intersegment

  (1,509)  -   (276)  (276)  (1,233)  446.7%
  $147,980  $95,958  $24,396  $120,354  $27,626   23.0%

U.S. Concrete Pumping

Revenue for our U.S. Concrete Pumping segment increased by 35.0%, or $14.9 million, from $42.5 million in the accompanying unaudited condensed financial statements, at September 30, 2017, we2019 second fiscal quarter to $57.5 million in the 2020 second quarter. The incremental benefit of the acquisition of Capital, which added additional pumping capacity to Texas, drove $12.0 million of the increase in revenue. We also had approximately $986,000improvements in cash and marketable securities, approximately $436,000revenue in many of interest availableour other markets that were partially offset by declines in Seattle due to pay for franchise and income taxes (less up to $100,000construction site closures imposed as a result of interest to pay dissolution expenses) and working capital of approximately $1 million.COVID-19.

 

Revenue for our U.S. Concrete Pumping segment increased by 35.2%, or $29.3 million, from $83.3 million in the S/P combined six months ended April 30, 2019 to $112.6 million in the first six-months of 2020. The incremental benefit of the acquisition of Capital, which added additional pumping capacity to Texas, drove $24.9 million of the increase in revenue. We also had improvements in revenue in many of our other markets.

13

 

U.K. Operations

 

Through SeptemberRevenue for our U.K. Operations segment decreased by 33.8%, or $4.3 million, from $12.7 million in the 2019 second fiscal quarter to $8.4 million in the 2020 second quarter. Excluding the impact from foreign currency translation, revenue was down 31.3% year over year. For the six-months ended April 30, 2017,2020, revenue for our liquidity needs have been satisfiedU.K. Operations segment decreased by 19.3%, or $4.6 million, from $23.6 million in the S/P combined six months ended April 30, 2019 to $19.1 million. Excluding the impact from foreign currency translation, revenue was down 18.3% year over year. The decline in revenue during both periods was largely attributable to complete lockdowns on business operations in the month of April that were imposed as a result of COVID-19.

U.S. Concrete Waste Management Services

Revenue for the U.S. Concrete Waste Management Services segment increased by 23.0%, or $1.6 million, from $6.8 million in the 2019 second fiscal quarter to $8.3 million in the 2020 second quarter. For the six-months ended April 30, 2020, revenue for the U.S. Concrete Waste Management Services segment increased by 23.2%, or $3.1 million, from $13.5 million in the S/P combined six-months ended April 30, 2019 to $16.6 million. The increase in revenue during both periods was primarily due to robust organic growth, pricing improvements, and continuing momentum in the newer branch locations.

Corporate

There was limited movement in revenue for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment was primarily related to the intercompany leasing of real estate to certain of our U.S Concrete Pumping branches. These revenues are eliminated in consolidation through receiptthe Intersegment line included above.

Gross Margin

Gross margin for the 2020 second fiscal quarter increased 370 basis points from 39.3% in the 2019 first quarter to 43.0%. Gross margin for the first six months of 2020 increased 380 basis points from 39.5% in the S/P combined six-months ended April 30, 2019 to 43.3%. The increase in gross margin for both periods was primarily due to the post-acquisition contribution from Capital, more favorable fuel pricing and improvement in the Company’s procurement costs.

General and Administrative Expenses

G&A expenses for the 2020 second fiscal quarter were $26.4 million, an increase of $4.5 million from $21.9 million in the 2019 second quarter. As a percentage of revenue, G&A expenses were 35.6% for the 2020 second quarter compared to 35.3% for the 2019 second quarter. The increase was largely due to higher amortization of intangible assets expense of $1.6 million, most of which was the result of the acquisition of Capital. In addition, we incurred an additional $1.0 million in stock-based compensation expense as a result of a $25,000 capital contributionstock grant in April of 2019. Excluding amortization of intangible assets and stock-based compensation expense, G&A expenses were up $1.9 million year-over-year. The remainder of the year-over-year increase was mostly attributable to headcount growth, predominantly from the Sponsor in exchangenew team members at Capital.

G&A expenses for the issuancefirst six-months of 2020 were $53.0 million, an increase of $12.5 million from $40.5 million in the S/P combined six-months ended April 30, 2019. As a percent of revenue, G&A expenses were 35.8% for the first six-months of 2020 compared to 33.6% for the same period a year ago. The increase was largely due to higher amortization of intangible assets expense of $4.6 million, most of which was the result of the Founder Sharesacquisition of Capital. In addition, we incurred an additional $2.5 million in stock-based compensation expense as a result of a stock grant in April of 2019. Excluding amortization of intangible assets and stock-based compensation expense, G&A expenses were up $5.4 million year-over-year. The remainder of the year-over-year increase was mostly attributable to headcount growth, predominantly from the new team members at Capital.

Transaction Costs & Debt Extinguishment Costs

Transaction costs include expenses for legal, accounting, and other professionals that were engaged in connection with an acquisition. Transaction costs amounted to $1.3 million for the second quarter of 2019, which were associated with the Capital Acquisition. There were no transaction costs or debt extinguishment costs for the first six months of 2020.

During the period from November 1, 2018 through December 5, 2018, the Predecessor incurred transaction costs of $14.2 and debt extinguishment costs of $16.4 million. All costs in this period were related to the Sponsor, $224,403 in loansBusiness Combination.

Interest Expense, Net

Interest expense, net for the three-months ended April 30, 2020 was $8.8 million, down $0.6 million from the Sponsor, andcomparable three-month period from a year ago. Interest expense, net for the proceedssix-months ended April 30, 2020 was $18.3 million, up $1.7 million from the consummation ofS/P combined six-month period from a year ago. The increase was due to having higher net debt for the Private Placement not held in Trust Account. We repaid such loans fromsix-month period presented for 2020 compared to the Sponsor in full on August 1, 2017.S/P combined period presented a year ago.

 

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay franchiseGoodwill and income taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering, to be $180,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from the Initial Public Offering held outside of the trust account or from interest earned on the funds held in our trust account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.Intangibles Impairment

 

Based onDuring the foregoing, we believe we will have sufficient cash to meet our needs through the earliersecond quarter of consummation of a business combination or August 1, 2019. Over this time period, we will be using these funds for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available to us from the trust account is less than we expectfiscal year 2020, as a result of the current interest rate environment,COVID-19 impact on the Company’s market capitalization, with the assistance of a third party valuation specialist, we may have insufficient funds available to operateperformed an interim impairment test over our business priorindefinite-lived trade name intangible assets and goodwill as of April 30, 2020. The analysis resulted in $57.9 million in impairments, including a $5.0 million impairment of our Brundage-Bone Concrete Pumping trade-name, a $38.5 million goodwill impairment for our U.S Concrete Pumping reporting unit and a $14.4 million impairment to our initial business combination. Moreover,U.K. Operations reporting unit.

Income Tax (Benefit) Provision

For the second fiscal quarter ended April 30, 2020, we recorded an income tax benefit of $2.2 million on a pretax loss of $61.2 million, resulting in an effective tax rate of 3.6%. For the same quarter a year ago, we recorded income tax expense of $1.6 million on a pretax loss of $8.1 million. For the first six months of 2020, we recorded an income tax benefit of $3.4 million on a pretax loss of $65.1 million, resulting in an effective tax rate of 5.2%. For the S/P combined six-months ended April 30, 2019, we recorded an income tax benefit of $5.4 million on a pretax loss of $41.2 million, resulting in an effective tax rate of 13.1%.

The factors impacting comparability between our effective tax rates for the periods discussed above are as follows:

(1)

The Predecessor recorded tax expense of $1.4 million for the period ended December 5, 2018 related to nondeductible transaction related costs;

(2)

The Successor included $0.8 million of tax expense in the estimated annual effective rate for the period ended April 30, 2019 related to foreign income inclusions compared to $0.1 million for the period ended April 30, 2020 and $0.0 for the Predecessor period ended December 5, 2018;

(3)

The Successor included $0.9 million of tax expense related to the increase in the deferred statutory U.K. corporate tax rate from 17% to 19% in the period ended April 30, 2020;

(4)Of the $57.9 million of impairments recorded for goodwill and intangibles by the Company, only $11.9 million was deductible for tax purposes ($2.9 million tax benefit to the Company) as the remaining impairment was related to nondeductible goodwill; and

(5)

Differences in our estimated full year income before tax and the related impact on our estimated full year effective tax rate that was applied to year to date losses for the Successor periods ended April 30, 2020 and April 30, 2019.

Adjusted EBITDA(1)

  

Successor

  

Change

 

(in thousands, except percentages)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  $  

%

 
U.S. Concrete Pumping $16,319  $10,803  $5,516   51.1%

U.K. Operations

  2,516   4,081   (1,565)  -38.3%

U.S. Concrete Waste Management Services

  4,055   2,977   1,078   36.2%

Corporate

  625   371   254   68.5%
  $23,515  $18,232  $5,283   29.0%

  

Successor

  

Predecessor

  

S/P Combined (non-GAAP)

  

Change

 

(in thousands)

 

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

  $  

%

 
U.S. Concrete Pumping $33,166  $15,539  $7,627  $23,166  $10,000   43.2%

U.K. Operations

  5,127   4,566   1,396   5,962   (835)  -14.0%

U.S. Concrete Waste Management Services

  7,804   4,681   388   5,069   2,735   54.0%

Corporate

  1,250   1,008   177   1,185   65   5.5%
  $47,347  $25,794  $9,588  $35,382  $11,965   33.8%

(1) Please see “Non-GAAP Measures (EBITDA and Adjusted EBITDA)” below

U.S. Concrete Pumping 

Adjusted EBITDA for our U.S. Concrete Pumping segment was $16.3 million for the three-months ended April 30, 2020, up 51.1% from $10.8 million for the second quarter of 2019. The significant year-over-year increase was primarily attributable to the acquisition of Capital, improved gross margins, and volume growth across many of the U.S. markets.

Adjusted EBITDA for our U.S. Concrete Pumping segment was $33.2 million for the first six months of 2020, up 43.2% from $23.2 million for the S/P combined six-months ended April 30, 2019. The significant year-over-year increase was due primarily to the same factors discussed above.

U.K. Operations

Adjusted EBITDA for our U.K. Operations segment was $2.5 million for the three-months ended April 30, 2020, down 38.3% from $4.1 million for the second quarter of 2019. For the six-months ended April 30, 2020, adjusted EBITDA for our U.K. Operations segment was $5.1 million, down 14.0% from $6.0 million for the S/P combined six-months ended April 30, 2019. The decreases in both periods are primarily attributable to the year-over-year change in revenue discussed previously.

U.S. Concrete Waste Management Services

Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $4.1 million for the three-months ended April 30, 2020, up 36.2% from $3.0 million for the second quarter of 2019. For the six-months ended April 30, 2020, adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $7.8 million, up 54.0% from $5.1 million for the S/P combined six-months ended April 30, 2019. The increases in both periods is primarily attributable to the year-over-year change in revenue discussed previously.

Corporate

There was limited movement in Adjusted EBITDA for our Corporate segment for both periods presented. Any year-over-year changes for our Corporate segment was primarily related to the allocation of overhead costs.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We use our liquidity and capital resources to: (1) finance working capital requirements; (2) service our indebtedness; (3) purchase property, plant and equipment; and (4) finance strategic acquisitions, such as the acquisition of Capital. Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents and access to our revolving credit facility under our Asset-Based Lending Credit Agreement (the “ABL Credit Agreement”), which provides for aggregate borrowings of up to $60.0 million, subject to a borrowing base limitation. As of April 30, 2020, we had $18.0 million of cash and cash equivalents and $15.1 million of available borrowing capacity under the ABL Credit Agreement, providing total available liquidity of $33.1 million.

Capital Resources

Our capital structure is primarily a combination of (1) permanent financing, represented by stockholders’ equity; (2) zero-dividend convertible perpetual preferred stock; (3) long-term financing represented by our Term Loan Agreement (defined below) and (4) short-term financing under our ABL Credit Agreement. We may needfrom time to obtain additional financing eithertime seek to consummate our initial business combinationretire or because we become obligated to redeem a significant numberpay down borrowings on the outstanding balance of our public shares upon consummation of our initial business combination, in which case we may issue additional securitiesABL Credit Agreement or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, ifTerm Loan Agreement using cash on hand is insufficient,hand. Such repayments, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

After consideration of any potential impacts from COVID-19 on our operations, we may need to obtain additional financing in orderbelieve our existing cash and cash equivalent balances, cash flow from operations, borrowing capacity under our ABL Credit Agreement, and cash retained from the suspension of uncommitted 2020 capex investment will be sufficient to meet our obligations.working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, potential acquisitions and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity could result in dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that could restrict our operations.

Term Loan Agreement and ABL Credit Agreement

 

Related Party TransactionsAs part of the Business Combination, the Predecessor’s Revolver, U.K. Revolver, Senior secured notes, and Seller notes (see Predecessor section below for a discussion of these agreements) were all extinguished and the Company entered into (i) a Term Loan Agreement, dated December 6, 2018, among the Company, certain subsidiaries of the Company, Credit Suisse AG, Cayman Islands Branch as administrative agent and Credit Suisse Loan Funding LLC, Jefferies Finance LLC and Stifel Nicolaus & Company Incorporated LLC as joint lead arrangers and joint bookrunners, and the other Lenders party thereto (the “Term Loan Agreement”) (ii) a Credit Agreement, dated December 6, 2018, 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 and the other parties thereto (“ABL Credit Agreement”). Summarized terms of those debt agreements are included below.

 

Founder SharesTerm Loan Agreement

 

On April 10, 2017,Summarized terms of the Sponsor purchased 5,750,000 shares (the “Founder Shares”) of our Class B common stock, par value $0.0001 (“Class B common stock”) for an aggregate purchase price of $25,000. In April and May 2017, the Sponsor transferred a total of 28,750 Founder Shares to each of our five independent director nominees at their original purchase price. The Founder Shares will automatically convert into shares of Class A common stock at the time of our initial business combination andTerm Loan Agreement are subject to certain transfer restrictions. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment, at any time. The initial stockholders agreed to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. On August 1, 2017, the underwriters fully exercised their over-allotment option. As a result, 750,000 Founder Shares were no longer subject to forfeiture.as follows:

 

Our Sponsor, officers and directors (the “initial stockholders”) have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the initial business combination; or (B) subsequent to the initial business combination, (x) if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.

 14

Provides for an original aggregate principal amount of $357.0 million. This amount was increased in May 2019 by $60.0 million in connection with the acquisition of Capital;

 

The initial term loans advanced will mature and be due and payable in full seven years after the issuance, with principal amortization payments in an annual amount equal to 5.00% of the original principal amount;

Borrowings under the Term Loan Agreement, will bear interest at either (1) an adjusted LIBOR rate or (2) an alternate base rate, plus an applicable margin of 6.00% or 5.00%, respectively;

The Term Loan Agreement is secured by (i) a first priority perfected lien on substantially all of the assets of the Company and certain of its subsidiaries that are loan parties thereunder to the extent not constituting ABL Credit Agreement priority collateral and (ii) a second priority perfected lien on substantially all ABL Credit Agreement priority collateral, in each case subject to customary exceptions and limitations;

The Term Loan Agreement includes certain non-financial covenants.   

 

The outstanding balance under the Term Loan Agreement as of April 30, 2020 was $391.7 million and the Company was in compliance with all debt covenants. The Company’s interest on borrowings under the Term Loan Agreement bear interest using the London Interbank Offered Rate (LIBOR) as the base rate plus an applicable margin in line with the summarized terms of the Term Loan Agreement as described above.

 

Private PlacementAsset Based Revolving Lending Credit Agreement

Concurrently with the closingSummarized terms of the Initial Public Offering,ABL Credit Agreement are as follows:

Borrowing availability in U.S. Dollars and GBP up to a maximum of $60.0 million;

Borrowing capacity available for standby letters of credit of up to $7.5 million and for swingline loan borrowings of up to $7.5 million. Any issuance of letters of credit or making of a swingline loan will reduce the amount available under the ABL Facility;

All loans advanced will mature and be due and payable in full five years after the issuance;

Amounts borrowed may be repaid at any time, subject to the terms and conditions of the agreement;

Interest on borrowings in U.S. Dollars and GBP under the ABL Credit Agreement, will bear interest at either (1) an adjusted LIBOR rate or (2) a base rate, in each case plus an applicable margin currently set at 2.25% and 1.25%, respectively. The ABL Credit Agreement is subject to two step-downs of 0.25% and 0.50% based on excess availability levels;

U.S. ABL Credit Agreement obligations will be secured by (i) a perfected first priority security interest in substantially all personal property of the Company and certain of its subsidiaries that are loan parties thereunder consisting of all accounts receivable, inventory, cash, intercompany notes, books and records, chattel paper, deposit, securities and operating accounts and all other working capital assets and all documents, instruments and general intangibles related to the foregoing (the “U.S. ABL Priority Collateral”) and (ii) a perfected second priority security interest in substantially all Term Loan Agreement priority collateral, in each case subject to customary exceptions and limitations;

U.K. ABL Credit Agreement obligations will be secured by (i) a perfected first-priority security interest in (A) the U.S. ABL Priority Collateral, (B) all of the stock (or other ownership interests) in, and held by, the U.K. borrower subsidiaries of the Company, and (C) all of the current and future assets and property of the U.K subsidiaries of the Company that are loan parties thereunder, including a first-ranking floating charge over all current and future assets and property of each U.K. subsidiary of the Company that is a loan party thereunder; and (ii) a perfected, second-priority security interest in substantially all Term Loan Agreement priority collateral, in each case subject to customary exceptions and limitations; and

The ABL Credit Agreement also includes (i) a springing financial covenant (fixed charges coverage ratio) based on excess availability levels that the Company must comply with on a quarterly basis during required compliance periods and (ii) certain non-financial covenants.

The outstanding balance under the Sponsor purchasedABL Credit Agreement as of April 30, 2020 was $39.2 million and the Company was in compliance with all debt covenants.

Cash Flows

Successor

Cash generated from operating activities typically reflects net income, as adjusted for non-cash expense items such as depreciation, amortization and stock-based compensation, and changes in our operating assets and liabilities. Generally, we believe our business requires a relatively low level of working capital investment due to low inventory requirements and customers paying the Company as invoices are submitted daily for many of our services.

Net cash provided by (used in) operating activities generally reflects the cash effects of transactions and other events used in the determination of net income or loss. Net cash provided by operating activities during the six-months ended April 30, 2020 was $27.0 million. The Company had a net loss of $61.7 million that included significant non-cash charges, net totaling $89.5 million as follows: (1) Goodwill and intangibles impairment of $57.9 million, (2) depreciation of $13.0 million, (3) amortization of intangible assets of $17.1 million, (4) amortization of deferred financing costs of $2.1 million, (5) stock-based compensation expense of $2.9 million, and (6) an aggregateincrease of 11,100,000 private placement warrants (“Private Placement Warrants”) at $1.00 per Private Placement Warrant, generating gross proceeds of $11.1$3.5 million in our net deferred income taxes. In addition, we had cash outflows related to the aggregatefollowing activity: (1) a $5.2 million increase in prepaid expenses and other current assets and (2) a private placement. Each Private Placement Warrant is exercisable$0.5 million payment of contingent consideration in excess of amounts established in purchase accounting. These amounts were partially offset by cash inflows related to the following activity: (1) a decrease of $4.0 million in trade receivables, (2) an increase of $1.1 million in accrued payroll, accrued expenses and other current liabilities, (3) a $0.1 million decrease in inventory, and (4) an increase of $0.3 million in income taxes payable.

We used $19.7 million to fund investing activities during the six-months ended April 30, 2020. The Company used $23.3 million for the purchase one share of Class A common stock at $11.50 per share. A portion of theproperty, plant and equipment, which was partially offset by proceeds from the sale of property, plant and equipment of $3.6 million.

Net cash provided by financing activities was $4.4 million for the Private Placement Warrantssix-months ended April 30, 2020. Financing activities during this period included $16.2 million in net borrowings under the Company’s ABL Credit Agreement and was partially offset by payments on the Term Loan Agreement of $10.4 million and the payment of the contingent consideration in connection with the acquisition of Camfaud of $1.2 million.

Net cash used in operating activities during the period from December 6, 2018 through April 30, 2019 (the “Successor Period”) was $4.1 million. The Company had a net loss of $13.3 million that included significant non-cash charges totaling $22.3 million as follows: (1) depreciation of $8.7 million, (2) amortization of intangible assets of $11.8 million, and (3) amortization of deferred financing costs of $1.8 million. These amounts were addedpartially offset by net cash outflows related to the following activity: (1) a $2.9 million increase in prepaid expenses and other current assets, (2) a $7.9 million decrease in accounts payable, and (3) a decrease of $6.4 million in accrued payroll, accrued expenses and other current liabilities. These amounts were partially offset by cash inflows related to the following activity: (1) a decrease of $1.2 million in trade receivables, (2) a decrease of $0.1 million in inventory, (3) a decrease of $0.5 million in our net deferred income taxes, and (4) an increase of $1.8 million in income taxes payable.

We used $237.2 million to fund investing activities during the Successor Period. The Company paid $449.4 million to fund the Business Combination and $2.3 million to fund other business combinations. Additionally, $25.0 million was used to purchase machinery, equipment, and other vehicles to service our business. These cash outflows were partially offset by $238.5 million in cash withdrawn from Industrea trust account in addition to proceeds from the Initial Public Offeringsale of property, plant and equipment of $1.0 million.

Net cash provided from financing activities was $247.1 million for the Successor Period. Financing activities during the Successor Period included $357.0 million in proceeds from our new Term Loan Agreement, $31.8 million in net borrowings under the Company’s new ABL Credit Agreement, $96.9 million from the issuance of common shares, $1.4 million in proceeds from the exercise of stock options and an additional $25.0 million from the issuance of preferred stock. All of these cash inflows were used to be held in the trust account. If we do not complete afund the Business Combination within 24 months fromand other operational activity such as equipment purchases. These cash inflows were offset by payments for redemptions of common stock totaling $231.4 million, $21.0 million for the closingpayment of debt issuance costs associated with the Initial Public Offering (the “Combination Period”), the Private Placement Warrants will expire worthless. The Private Placement Warrants are non-redeemableTerm Loan Agreement and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.new ABL Credit Agreement, and $8.1 million in payments for underwriting fees.

Predecessor

 

Effective August 22, 2017,Net cash provided by operating activities during the Sponsor sold 55,500 Private Placement Warrants at their original purchase priceperiod from November 1, 2018 through December 5, 2018 (the “Predecessor Period”) was $7.9 million. The Company had a net loss of $1.00 per Private Placement Warrant to each$22.6 million that included significant non-cash charges totaling $18.5 million as follows: (1) depreciation of the Company’s five independent directors, or an aggregate$2.1 million, (2) prepayment penalty on early extinguishment of 277,500 Private Placement Warrants for $277,500.

The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell anydebt of their Private Placement Warrants until 30 days after the completion$13.0 million, and (3) write off deferred debt issuance costs of the initial Business Combination.

Related Party Loans

On August 1, 2017, we repaid in full an aggregate of $224,403 loaned to us$3.4 million. These amounts were partially offset by the Sponsor to cover expensesnet cash inflows related to the Initial Public Offering pursuant tofollowing activity: (1) an increase of $0.3 million in inventory, (2) a promissory note (the “Note”). The Note was non-interest bearing.

In addition,$1.3 million increase in order to finance transaction costsprepaid expenses and other current assets, (3) an increase of $4.4 million in connection withour net deferred income taxes, (4) an increase of $17.3 million in accrued payroll, accrued expenses and other current liabilities, and (4) a business combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). If we complete a business combination, we would repay the Working Capital Loans out of the proceeds of the trust account released to us. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the trust account. In the event that a business combination does not close, the Company may use a portion of proceeds held outside the trust account to repay the Working Capital Loans but no proceeds held$0.7 million decrease in the trust account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

Officer and Director Compensationaccounts payable.

 

We have agreed, commencing onused $0.1 million to fund investing activities during the effective datePredecessor Period. We used $0.5 million to fund purchases of machinery, equipment and other vehicles to service our business. This was offset by $0.4 million in proceeds received from the Initial Public Offering through the earliersale of our consummation of a business combinationproperty, plant and liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support.equipment.

 

In addition, we will pay eachWe used $15.4 million to fund financing activities during the Predecessor Period and this activity was driven by $15.4 million of net borrowings under the five independent directors $50,000 per year commencing on the effective date of the Initial Public Offering through the earlier ofRevolver to operate our consummation of a business combination or liquidation.and fund acquisitions.

 

Critical Accounting Policies and EstimatesOff-Balance Sheet Arrangements

 

This management’s discussionWe do not currently have any off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. From time to time, we enter into non-cancellable operating leases that are not reflected on our balance sheet. At April 30, 2020, we had $1.2 million of undrawn letters of credit outstanding.

Non-GAAP Measures (EBITDA and analysisAdjusted EBITDA)

We calculate EBITDA by taking GAAP net income and adding back interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by taking EBITDA and adding back transaction expenses, loss on debt extinguishment, stock-based compensation, other income, net, and other adjustments. We believe these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends related to our financial condition and results of operations, is based onas a tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial statements, whichmeasures with competitors who also present similar non-GAAP financial measures. In addition, these measures (1) are used in quarterly and annual financial reports prepared for management and our board of directors and (2) help management to determine incentive compensation. EBITDA and Adjusted EBITDA have been preparedlimitations and should not be considered in accordance with U.S.isolation or as a substitute for performance measures calculated under GAAP. The preparation of these financial statements requires usThese non-GAAP measures exclude certain cash expenses that we are obligated to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilitiesmake. In addition, other companies in our financial statements. On an ongoing basis,industry may calculate EBITDA and Adjusted EBITDA differently or may not calculate it at all, which limits the usefulness of EBITDA and Adjusted EBITDA as comparative measures. Transaction expenses represent expenses for legal, accounting, and other professionals that were engaged in the completion of various acquisitions. Transaction expenses can be volatile as they are primarily driven by the size of a specific acquisition. As such, we evaluate our estimates and judgments, including thoseexclude these amounts from Adjusted EBITDA for comparability across periods. Other adjustments include severance expenses, director fees, expenses related to fair value of financial instrumentbeing a newly publicly-traded company and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no significant changes in our critical accounting policies as discussed in our final prospectus and Current Report on Form 8-K filed with the SEC on July 27, 2017 and August 1, 2017, respectively.non-recurring costs.

 

15
                      

S/P Combined

 
  

Successor

  

Predecessor

  

(non-GAAP)

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

 

Consolidated

                        

Net loss

 $(58,968) $(9,645) $(61,714) $(13,275) $(22,575) $(35,850)

Interest expense, net

  8,765   9,318   18,268   14,910   1,644   16,554 
Income tax benefit  (2,221)  1,572   (3,368)  (1,193)  (4,192)  (5,385)

Depreciation and amortization

  15,076   12,132   30,162   20,506   2,713   23,219 
EBITDA  (37,348)  13,377   (16,652)  20,948   (22,410)  (1,462)

Transaction expenses

  -   1,282   -   1,282   14,167   15,449 

Loss on debt extinguishment

  -   -   -   -   16,395   16,395 

Stock-based compensation

  1,383   361   2,850   361   -   361 

Other income, net

  (33)  (20)  (103)  (31)  (6)  (37)
Goodwill and intangibles impairment  57,944   -   57,944   -   -   - 
Other adjustments  1,569   3,232   3,308   3,234   1,442   4,676 
Adjusted EBITDA $23,515  $18,232  $47,347  $25,794  $9,588  $35,382 

 

  

Successor

  

Predecessor

  

S/P Combined (non-GAAP)

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

 

U.S. Concrete Pumping

                        
Net loss $(44,303) $(10,900) $(46,790) $(12,962) $(25,252) $(38,214)
Interest expense, net  8,096   8,578   16,828   13,712   1,154   14,866 
Income tax benefit  (2,751)  1,428   (4,138)  (934)  (2,102)  (3,036)
Depreciation and amortization  10,144   6,706   20,148   11,532   1,635   13,167 
EBITDA  (28,814)  5,812   (13,952)  11,348   (24,565)  (13,217)
Transaction expenses  -   1,282   -   1,282   14,167   15,449 
Loss on debt extinguishment  -   -   -   -   16,395   16,395 
Stock-based compensation  1,383   361   2,850   361   -   361 
Other income, net  (7)  (20)  (17)  (31)  (6)  (37)
Goodwill and intangibles impairment  43,500   -   43,500   -   -   - 
Other adjustments  257   3,368   785   2,579   1,636   4,215 
Adjusted EBITDA $16,319  $10,803  $33,166  $15,539  $7,627  $23,166 

  

Successor

  

Predecessor

  

S/P Combined (non-GAAP)

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

 

U.K. Operations

                        
Net income (loss) $(15,955) $789  $(16,848) $(770) $158  $(612)
Interest expense, net  669   740   1,440   1,198   490   1,688 
Income tax expense (benefit)  509   110   394   (294)  49   (245)
Depreciation and amortization  2,065   2,659   4,261   4,297   890   5,187 

EBITDA

  (12,712)  4,298   (10,753)  4,431   1,587   6,018 
Transaction expenses  -   -   -   -   -   - 
Loss on debt extinguishment  -   -   -   -   -   - 
Stock-based compensation  -   -   -   -   -   - 
Other income, net  (26)  -   (86)  -   -   - 
Goodwill and intangibles impairment  14,444   -   14,444   -   -   - 
Other adjustments  810   (217)  1,522   135   (191)  (56)

Adjusted EBITDA

 $2,516  $4,081  $5,127  $4,566  $1,396  $5,962 

  

Successor

  

Predecessor

  

S/P Combined (non-GAAP)

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

 

U.S. Concrete Waste Management Services

                        
Net income (loss) $859  $(96) $1,225  $(387) $2,009  $1,622 
Interest expense, net  -   -   -   -   -   - 
Income tax expense (benefit)  34   (27)  239   (27)  (1,784)  (1,811)
Depreciation and amortization  2,660   2,703   5,339   4,575   163   4,738 

EBITDA

  3,553   2,580   6,803   4,161   388   4,549 
Transaction expenses  -   -   -   -   -   - 
Loss on debt extinguishment  -   -   -   -   -   - 
Stock-based compensation  -   -   -   -   -   - 
Other income, net  -   -   -   -   -   - 
Goodwill and intangibles impairment  -   -   -   -   -   - 
Other adjustments  502   397   1,001   520   -   520 

Adjusted EBITDA

 $4,055  $2,977  $7,804  $4,681  $388  $5,069 

  

Successor

  

Predecessor

  

S/P Combined (non-GAAP)

 

(in thousands)

 

Three Months Ended April 30, 2020

  

Three Months Ended April 30, 2019

  

Six Months Ended April 30, 2020

  

December 6, 2018 through April 30, 2019

  

November 1, 2018 through December 5, 2018

  

Six Months Ended April 30, 2019

 

Corporate

                        
Net income $431  $562  $699  $844  $510  $1,354 
Interest expense, net  -   -   -   -   -   - 
Income tax expense (benefit)  (13)  61   137   62   (355)  (293)
Depreciation and amortization  207   64   414   102   25   127 

EBITDA

  625   687   1,250   1,008   180   1,188 
Transaction expenses  -   -   -   -   -   - 
Loss on debt extinguishment  -   -   -   -   -   - 
Stock-based compensation  -   -   -   -   -   - 
Other income, net  -   -   -   -   -   - 
Goodwill and intangibles impairment  -   -   -   -   -   - 
Other adjustments  -   (316)  -   -   (3)  (3)

Adjusted EBITDA

 $625  $371  $1,250  $1,008  $177  $1,185 

 

Off-Balance Sheet Arrangements

As of September 30, 2017, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.

JOBSJobs Act

 

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electinghave previously elected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such,a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. If we were to subsequently elect instead to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

Critical Accounting Policies and Estimates

In presenting our financial statements in conformity with U.S. GAAP, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material impact to our consolidated and combined results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our business activities are in environments where we are paid a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.

Listed below are those estimates that we believe are critical and require the use of complex judgment in their application.

Goodwill and Intangible Assets

In accordance with ASC Topic 350, Intangibles–Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment annually, generally as of August 31st, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses a two-step process to assess the realizability of goodwill. The first step is a qualitative assessment that analyzes current economic indicators associated with a particular reporting unit. For example, the Company analyzes changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there are indicators of a significant decline in the fair value of a particular reporting unit. If the qualitative assessment indicates a stable or improved fair value, no further testing is required. If a qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed to the quantitative second step where the fair value of a reporting unit is calculated based on weighted income and market-based approaches. If the fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating fair value of individual reporting units and indefinite-lived intangible assets requires us to make assumptions and estimates regarding out future plans, as well as industry and economic conditions including those relating to the duration and severity of COVID-19. These assumptions and estimates include projected revenue, royalty rate, discount rate, tax amortization benefit and other market factors outside of our control. The Company elects to perform a qualitative assessment for the other quarterly reporting periods throughout the fiscal year. During the second quarter of fiscal year 2020, the Company identified a triggering event from the recent decline in its stock price and deterioration in general economic conditions resulting from the COVID-19 pandemic. As a result, the Company performed an interim step one goodwill impairment analysis in accordance with ASU 2017-04, Intangibles — Goodwill and Other (ASC 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) and recorded a goodwill and intangibles impairment charge of $57.9 million.

When we perform any goodwill impairment test, the estimated fair value of our reporting units are determined using an income approach that utilizes a discounted cash flow (“DCF”) model and a market approach that utilizes the guideline public company method (“GPC”), both of which are weighted for each reporting unit and are discussed below in further detail. In accordance with ASC 820, we evaluated the methods for reasonableness and reliability and assigned weightings accordingly. A mathematical weighting is not prescribed by ASC 820, rather it requires judgement. As such, each of the valuation methods were weighted by accounting for the relative merits of each method and considered, among other things, the reliability of the valuation methods and the inputs used in the methods. In addition, in order to assess the reasonableness of the fair value of our reporting units as calculated under both approaches, we also compare the Company’s total fair value to its market capitalization and calculate an implied control premium (the excess sum of the reporting unit’s fair value over its market capitalization). We evaluate the implied control premium by comparing it to control premiums of recent comparable market transactions, as applicable.

Under the income approach, the DCF model is based on expected future after-tax operating cash flows of the reporting unit, discounted to a present value using a risk-adjusted discount rate. Estimates of future cash flows require management to make significant assumptions concerning (i) future operating performance, including future sales, long-term growth rates, operating margins, variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, (ii) the probability of regulatory approvals, and (iii) future economic conditions, including the extent and duration of the COVID-19 pandemic, all of which may differ from actual future cash flows. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The discount rate, which is intended to reflect the risks inherent in future cash flow projections, used in the DCF model, is based on estimates of the weighted average cost of capital (“WACC”) of market participants relative to our reporting unit. Financial and credit market volatility can directly impact certain inputs and assumptions used to develop the WACC. Any changes in these assumptions may affect our fair value estimate and the result of an impairment test. The discount rates and other inputs and assumptions are consistent with those that a market participant would use.

The GPC method provides an estimate of value using multiples derived from the stock prices of publicly traded companies. This method requires a selection of comparable publicly-traded companies on major exchanges and involves a certain degree of judgment, as no two companies are entirely alike. These companies should be engaged in the same or a similar line of business as the reporting units be evaluated. Once comparable companies are selected, the application of the GPC method includes (i) analysis of the guideline public companies' financial and operating performance, growth, intangible asset's value, size, leverage, and risk relative to the respective reporting unit, (ii) calculation of valuation multiples for the selected guideline companies, and (iii) application of the valuation multiples to each reporting unit's selected operating metrics to arrive at an indication of value. Market multiples for the selected guideline public companies are developed by dividing the business enterprise value of each guideline public company by a measure of its financial performance (e.g., earnings). The business enterprise value is calculated taking the market value of equity (share price times fully-diluted shares outstanding) plus total interest bearing debt net of cash, preferred stock and minority interest. The market value of equity is based upon the stock price of equity as of the valuation date, and the debt figures are taken from the most recently available financial statements as of the valuation date. In selecting appropriate multiples to apply to each reporting unit, we perform a comparative analysis between the reporting units and the guideline public companies. In making a selection, we consider the revenue growth, profitability and the size of the reporting unit compared to the guideline public companies, and the overall EBITDA multiples implied from the transaction price. In addition, we consider a control premium for purposes of estimating the fair value of our reporting units as we believe that a market participant buyer would be required to pay a premium for control of our business. The control premium utilized is based on control premiums observed in recent comparable market transactions.

The impairment charges were primarily due to COVID-19, which negatively impacted our market capitalization, drove an increase in the discount rate that is utilized in our DCF models, and negatively impacted near-term cash flow expectations.

Income Taxes

We are subject to income taxes in the U.S., U.K. and other jurisdictions. Significant judgment is required in determining our provision for income tax, including evaluating uncertainties in the application of accounting principles and complex tax laws.

Income taxes include federal, state and foreign taxes currently payable and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the differences between the financial statement balances and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized.

Stock-Based Compensation.

ASC Topic 718, Compensation—Stock Compensation (“ASC 718”) requires that share-based compensation expense be measured and recognized at an amount equal to the fair value of share-based payments granted under compensation arrangements. The fair value of each restricted stock award or stock option awards (with an exercise price of $0.01) that only contains a time-based vesting condition is equal to the market value of our common stock on the date of grant. A substantial portion of the Company's stock awards contain a market condition. For those awards, we estimate the fair value using a Monte Carlo simulation model whereby the fair value of the awards is fixed at grant date and amortized over the longer of the remaining performance or service period. The Monte Carlo Simulation valuation model incorporates the following assumptions: expected stock price volatility, the expected life of the awards, a risk-free interest rate and expected dividend yield. Significant judgment is required in determining the expected volatility of our common stock. Due to the limited history of trading of the Company’s common stock, the Company determined expected volatility based on a peer group of publicly traded companies.

 

Item 3.    Quantitative and Qualitative Disclosures About Market RiskRisk.

 

As of September 30, 2017, we were not subject to any market or interest rate risk.  Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the trust account, may be invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.Not applicable.

 

Item 4.    Controls and ProceduresProcedures.

 

EvaluationConclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

Under the supervision andOur management evaluated, with the participation of our management, including our principal executive officerChief Executive Officer and principal financial and accounting officer, we conducted an evaluation ofChief Financial Officer, the effectiveness of our disclosure controls and procedures, as of the end of the fiscal quarter ended September 30, 2017, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act. Act of 1934, as of April 30, 2020.

Based on this evaluation, our chief executive officerChief Executive Officer and chief financial officer haveChief Financial Officer concluded that, during the period covered by this report,as a result of a material weakness in internal control over financial reporting that is described below, our disclosure controls and procedures were effective.not effective as of April 30, 2020.

 

Disclosure controlsSpecifically, during completion of the Company’s goodwill and procedures are designedintangibles impairment analysis as of April 30, 2020, the Management review control related to ensure that information requiredcertain inputs into the valuation analysis did not operate effectively, resulting in a material reduction to be disclosed by us in our Exchange Act reports is recorded, processed, summarized,the goodwill impairment originally recorded. This error was identified and reported withincorrected prior to release of the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.Company’s fiscal 2020 second quarter Form 10-Q.

 

Management is currently evaluating the steps needed to remediate the material weakness. 

Changes in Internal Control overOver Financial Reporting

 

There wasOther than the discussion above, there have been no changechanges in our internal control over financial reporting that occurred during theour second fiscal quarter ended September 30, 2017 covered by this Quarterly Report on Form 10-Qof 2020 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

 

 

PARTPart II - OTHER INFORMATION

Item 1.  Legal ProceedingsProceedings.

 

None.From time to time we are involved in various claims and lawsuits arising in the ordinary course of our business that we believe will not have a material adverse effect on our business or financial condition, including claims and lawsuits alleging breaches of our contractual obligations.

 

Item 1A. Risk Factors.

  

As of the date of this Quarterly Report on Form 10-Q,Except as set forth below, there have been no material changes to the risk factorsRisk Factors previously disclosed in our prospectusAnnual Report on Form 10-K for the year ended October 31, 2019 filed with the SEC on July 27, 2017.January 14, 2020 (the “Form 10-K”). For a detailed discussion of the other risks that affect our business, please refer to the entire section entitled “Risk Factors” in the Form 10-K

Public health emergencies, epidemics, or pandemics, including the novel coronavirus, could adversely affect our business, results of operations and financial condition

The widespread outbreak of an illness or any other communicable disease, or any other public health emergency that results in economic and trade disruptions could negatively impact our business and the businesses of our customers. In December 2019, a novel strain of coronavirus, COVID-19, was identified and the virus continues to spread globally and the World Health Organization has declared COVID-19 a pandemic. Many countries and localities across the world have implemented orders to slow and limit the transmission of the virus. These orders have limited or prohibited certain economic activity, including, in some jurisdictions in which we operate, the shutdown of construction activity. If such an illness or infectious disease broke out at one or more of our offices, facilities or work sites, our operations, productivity and ability to complete projects in accordance with our contractual obligations may be significantly affected and we may incur increased labor and materials costs. In addition, if the customers with which we contract are affected by an outbreak of infectious disease, their construction and service projects may be delayed or cancelled, and we may incur significant operating losses and increased labor and materials costs.

Furthermore, the extent to which the COVID-19 pandemic will impact our business and results of operations is highly uncertain and will be affected by a number of factors. These include the duration and extent of the pandemic; the duration and extent of imposed or recommended containment and mitigation measures; the extent, duration and effective execution of government stabilization and recovery efforts; the impact of the pandemic on economic activity, including on construction projects and our customers’ demand for our services; our ability to effectively operate, including as a result of travel restrictions and mandatory business and facility closures; the ability of our customers to pay us for services rendered; any further closures of our and our customers’ offices and facilities; and any additional project delays or shutdowns. Customers may also slow down decision-making, delay planned work or seek to terminate existing agreements. Any of these events could have a material adverse effect on our business, financial condition, results of operations, and/or stock price.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered SecuritiesProceeds.

 

On April 10, 2017, we issued an aggregate of 5,750,000 Class B common stock to our Sponsor for an aggregate purchase price of $25,000, in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.None.

On August 1, 2017, we consummated the Initial Public Offering of 23,000,000 units, including the issuance of 3,000,000 units as a result of the underwriter’ exercise of their over-allotment option in full at $10.00 per unit, generating gross proceeds of $230 million and incurring offering costs of approximately $13.2 million, inclusive of $8.05 million in deferred underwriting commissions.

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 11,100,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant with our Sponsor, which generated gross proceeds of approximately $11.1 million. Effective August 22, 2017, the Sponsor sold 55,500 Private Placement Warrants at their original purchase price of $1.00 per Private Placement Warrant to each of the Company’s five independent directors, or an aggregate of 277,500 Private Placement Warrants for $277,500. The sale of the Private Placement Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

For a description of the use of the proceeds generated in our initial public offering, see Part I, Item 2 of this Quarterly Report on Form 10-Q.

 

Item 3.  Defaults Upon Senior SecuritiesSecurities.

 

None.None

 

Item 4. Mine Safety DisclosuresDisclosures.

 

None.Not Applicable.

 

Item 5.  Other InformationInformation.

 

None.(a) None

(b) None

 

Item 6.  Exhibits.

 

The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.

Exhibit

Number No.

Description

31.1

Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302required by Rule 13a-14(b) or Rule15d-14(a).

31.2

Certification of the Sarbanes-Oxley Act of 2002.

31.2Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302required by Rule 13a-14(b) or Rule15d-14(a).

32.1

Certification of the Sarbanes-Oxley Act of 2002.

32.1Certification of Chief Executive Officer Pursuant torequired by Rule 13a-14(b) or Rule15d-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 9061350.

32.2

Certification of the Sarbanes-Oxley Act of 2002.

32.2Certification of Chief Financial Officer Pursuant torequired by Rule 13a-14(b) or Rule15d-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.1350.

101.INS

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

 

 

SIGNATURESSIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereuntohereunto duly authorized.

 

INDUSTREA ACQUISITION CORP.

CONCRETE PUMPING HOLDINGS, INC.

By:/s/ Joseph Del Toro

Joseph Del Toro

By: /s/ Iain Humphries

Name: Iain Humphries

Title: Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)Secretary

 

Date: November 13, 2017

Dated: June 11, 2020

 

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