UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017
July 31, 2023
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____
INDUSTREA ACQUISITION CORP.Commission File Number: 001-38166
CONCRETE PUMPING HOLDINGS, INC.
(Exact name of registrantRegistrant as specified in its charter)
Delaware | 83-1779605 | |
(State or other jurisdiction of incorporation or organization) | ( |
500 E. 84th Avenue, Suite A-5 | ||
Thornton, Colorado | ||
(Address of |
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 changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.0001 per share | BBCP | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☒ |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨ ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yesx ☐ No¨ ☒
As of November 13, 2017, 23,000,000September 1, 2023, the registrant had 54,709,742 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 July 31, 2023
PART I
Concrete Pumping Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
As of July 31, | As of October 31, | |||||||
(in thousands except per share amounts) | 2023 | 2022 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,532 | $ | 7,482 | ||||
Trade receivables, net of allowance for doubtful accounts of $887 and $941, respectively | 67,201 | 62,882 | ||||||
Inventory, net | 6,672 | 5,532 | ||||||
Income taxes receivable | - | 485 | ||||||
Prepaid expenses and other current assets | 12,496 | 5,175 | ||||||
Total current assets | 97,901 | 81,556 | ||||||
Property, plant and equipment, net | 427,084 | 419,377 | ||||||
Intangible assets, net | 125,363 | 137,754 | ||||||
Goodwill | 222,998 | 220,245 | ||||||
Right-of-use operating lease assets | 25,487 | 24,833 | ||||||
Other non-current assets | 13,295 | 2,026 | ||||||
Deferred financing costs | 1,878 | 1,698 | ||||||
Total assets | $ | 914,006 | $ | 887,489 | ||||
Current liabilities: | ||||||||
Revolving loan | $ | 35,699 | $ | 52,133 | ||||
Operating lease obligations, current portion | 4,649 | 4,001 | ||||||
Finance lease obligations, current portion | 114 | 109 | ||||||
Accounts payable | 7,247 | 8,362 | ||||||
Accrued payroll and payroll expenses | 15,190 | 13,341 | ||||||
Accrued expenses and other current liabilities | 36,254 | 32,156 | ||||||
Income taxes payable | 737 | 178 | ||||||
Warrant liability, current portion | 391 | - | ||||||
Total current liabilities | 100,281 | 110,280 | ||||||
Long term debt, net of discount for deferred financing costs | 371,520 | 370,476 | ||||||
Operating lease obligations, non-current | 21,177 | 20,984 | ||||||
Finance lease obligations, non-current | 82 | 169 | ||||||
Deferred income taxes | 79,360 | 74,223 | ||||||
Other liabilities, non-current | 12,836 | - | ||||||
Warrant liability, non-current | - | 7,030 | ||||||
Total liabilities | 585,256 | 583,162 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Zero-dividend convertible perpetual preferred stock, $0.0001 par value, 2,450,980 shares issued and outstanding as of July 31, 2023 and October 31, 2022 | 25,000 | 25,000 | ||||||
Stockholders' equity | ||||||||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 54,806,913 and 56,226,191 issued and outstanding as of July 31, 2023 and October 31, 2022, respectively | 6 | 6 | ||||||
Additional paid-in capital | 382,533 | 379,395 | ||||||
Treasury stock | (14,288 | ) | (4,609 | ) | ||||
Accumulated other comprehensive loss | (663 | ) | (9,228 | ) | ||||
Accumulated deficit | (63,838 | ) | (86,237 | ) | ||||
Total stockholders' equity | 303,750 | 279,327 | ||||||
Total liabilities and stockholders' equity | $ | 914,006 | $ | 887,489 | ||||
Item 1. Financial Statements (Unaudited)
INDUSTREA ACQUISITION CORP.
As of September 30, 2017
(Unaudited)
| 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 | ||
(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.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Concrete Pumping Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands, except share and per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 120,671 | $ | 104,469 | $ | 322,037 | $ | 286,398 | ||||||||
Cost of operations | 71,187 | 62,535 | 192,625 | 171,400 | ||||||||||||
Gross profit | 49,484 | 41,934 | 129,412 | 114,998 | ||||||||||||
General and administrative expenses | 29,937 | 27,847 | 87,236 | 83,156 | ||||||||||||
Income from operations | 19,547 | 14,087 | 42,176 | 31,842 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (7,066 | ) | (6,517 | ) | (21,285 | ) | (19,126 | ) | ||||||||
Change in fair value of warrant liabilities | 911 | 7,420 | 6,639 | 9,894 | ||||||||||||
Other income, net | 262 | 16 | 296 | 69 | ||||||||||||
Total other income (expense) | (5,893 | ) | 919 | (14,350 | ) | (9,163 | ) | |||||||||
Income before income taxes | 13,654 | 15,006 | 27,826 | 22,679 | ||||||||||||
Income tax expense | 3,318 | 2,030 | 5,427 | 2,535 | ||||||||||||
Net income | 10,336 | 12,976 | 22,399 | 20,144 | ||||||||||||
Less accretion of liquidation preference on preferred stock | (441 | ) | (441 | ) | (1,309 | ) | (1,309 | ) | ||||||||
Income available to common shareholders | $ | 9,895 | $ | 12,535 | $ | 21,090 | $ | 18,835 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 53,198,637 | 54,012,404 | 53,377,157 | 53,859,874 | ||||||||||||
Diluted | 54,104,738 | 57,286,563 | 54,262,940 | 54,772,441 | ||||||||||||
Net income per common share | ||||||||||||||||
Basic | $ | 0.18 | $ | 0.22 | $ | 0.38 | $ | 0.33 | ||||||||
Diluted | $ | 0.18 | $ | 0.22 | $ | 0.38 | $ | 0.33 | ||||||||
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 notes are an integral part of these unaudited condensed consolidated financial statements.
INDUSTREA ACQUISITION CORP.Concrete Pumping Holdings, Inc.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY For the period from April 7, 2017 (DateCondensed Consolidated Statements of Inception) through September 30, 2017Comprehensive Income
(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 | ||||||||||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
Net income | $ | 10,336 | $ | 12,976 | $ | 22,399 | $ | 20,144 | ||||||
Other comprehensive income (loss): | ||||||||||||||
Foreign currency translation adjustment | 1,835 | (2,303 | ) | 8,565 | (8,727 | ) | ||||||||
Total comprehensive income | $ | 12,171 | $ | 10,673 | $ | 30,964 | $ | 11,417 | ||||||
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 notes are an integral part of these unaudited condensed consolidated financial statements.
INDUSTREA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — DescriptionConcrete Pumping Holdings, Inc.
Condensed Consolidated Statements of Organization and Business OperationsChanges in Stockholders' Equity
(Unaudited)
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total | |||||||||||||||||||||||
(in thousands, except share amounts) | Shares | Amount | ||||||||||||||||||||||||||
Balance, April 30, 2023 | 55,015,572 | $ | 6 | $ | 381,599 | $ | (12,894 | ) | $ | (2,498 | ) | $ | (74,174 | ) | $ | 292,039 | ||||||||||||
Stock-based compensation expense | - | - | 934 | - | - | - | 934 | |||||||||||||||||||||
Forfeiture of restricted stock | (18,459 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Shares issued under stock-based program, net of treasury shares purchased for tax withholding | 8,773 | - | - | - | - | - | - | |||||||||||||||||||||
Treasury shares purchased under share repurchase program | (198,973 | ) | - | - | (1,394 | ) | - | - | (1,394 | ) | ||||||||||||||||||
Net income | - | - | - | - | - | 10,336 | 10,336 | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | 1,835 | - | 1,835 | |||||||||||||||||||||
Balance, July 31, 2023 | 54,806,913 | $ | 6 | $ | 382,533 | $ | (14,288 | ) | $ | (663 | ) | $ | (63,838 | ) | $ | 303,750 | ||||||||||||
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total | |||||||||||||||||||||||
(in thousands, except share amounts) | Shares | Amount | ||||||||||||||||||||||||||
Balance, April 30, 2022 | 56,667,965 | $ | 6 | $ | 377,148 | $ | (1,473 | ) | $ | (2,753 | ) | $ | (107,745 | ) | $ | 265,183 | ||||||||||||
Stock-based compensation expense | - | - | 1,333 | - | - | - | 1,333 | |||||||||||||||||||||
Forfeiture of restricted stock | (5,907 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Shares issued under stock-based program, net of treasury shares purchased for tax withholding | 625 | - | - | - | - | - | - | |||||||||||||||||||||
Treasury shares purchased under share repurchase program | (62,850 | ) | - | - | (383 | ) | - | - | (383 | ) | ||||||||||||||||||
Net income | - | - | - | - | - | 12,976 | 12,976 | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | (2,303 | ) | - | (2,303 | ) | |||||||||||||||||||
Balance, July 31, 2022 | 56,599,833 | $ | 6 | $ | 378,481 | $ | (1,856 | ) | $ | (5,056 | ) | $ | (94,769 | ) | $ | 276,806 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Concrete Pumping Holdings, Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) - (Continued)
| Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total | |||||||||||||||||||||||
(in thousands, except share amounts) | Shares | Amount | ||||||||||||||||||||||||||
Balance, October 31, 2022 | 56,226,191 | $ | 6 | $ | 379,395 | $ | (4,609 | ) | $ | (9,228 | ) | $ | (86,237 | ) | $ | 279,327 | ||||||||||||
Stock-based compensation expense | - | - | 3,138 | - | - | - | 3,138 | |||||||||||||||||||||
Forfeiture of restricted stock | (19,771 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Shares issued under stock-based program, net of treasury shares purchased for tax withholding | (100,545 | ) | - | - | (1,040 | ) | - | - | (1,040 | ) | ||||||||||||||||||
Treasury shares purchased under share repurchase program | (1,298,962 | ) | - | - | (8,639 | ) | - | - | (8,639 | ) | ||||||||||||||||||
Net income | - | - | - | - | - | 22,399 | 22,399 | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | 8,565 | - | 8,565 | |||||||||||||||||||||
Balance, July 31, 2023 | 54,806,913 | $ | 6 | $ | 382,533 | $ | (14,288 | ) | $ | (663 | ) | $ | (63,838 | ) | $ | 303,750 | ||||||||||||
| Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total | |||||||||||||||||||||||
(in thousands, except share amounts) | Shares | Amount | ||||||||||||||||||||||||||
Balance, October 31, 2021 | 56,564,642 | $ | 6 | $ | 374,272 | $ | (461 | ) | $ | 3,671 | $ | (114,913 | ) | $ | 262,575 | |||||||||||||
Stock-based compensation expense | - | - | 4,164 | - | - | - | 4,164 | |||||||||||||||||||||
Forfeiture of restricted stock | (47,548 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Shares issued under stock-based program, net of treasury shares purchased for tax withholding | 145,589 | - | 45 | (1,012 | ) | - | - | (967 | ) | |||||||||||||||||||
Treasury shares purchased under share repurchase program | (62,850 | ) | - | - | (383 | ) | - | - | (383 | ) | ||||||||||||||||||
Net income | - | - | - | - | - | 20,144 | 20,144 | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | (8,727 | ) | - | (8,727 | ) | |||||||||||||||||||
Balance, July 31, 2022 | 56,599,833 | $ | 6 | $ | 378,481 | $ | (1,856 | ) | $ | (5,056 | ) | $ | (94,769 | ) | $ | 276,806 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Concrete Pumping Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended July 31, | ||||||||
(in thousands) | 2023 | 2022 | ||||||
Net income | $ | 22,399 | $ | 20,144 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Non-cash operating lease expense | 3,526 | 1,786 | ||||||
Foreign currency adjustments | (1,421 | ) | - | |||||
Depreciation | 29,541 | 25,547 | ||||||
Deferred income taxes | 4,140 | 2,210 | ||||||
Amortization of deferred financing costs | 1,414 | 1,374 | ||||||
Amortization of intangible assets | 14,336 | 16,958 | ||||||
Stock-based compensation expense | 3,138 | 4,164 | ||||||
Change in fair value of warrant liabilities | (6,639 | ) | (9,894 | ) | ||||
Net gain on the sale of property, plant and equipment | (1,472 | ) | (1,460 | ) | ||||
Provision for bad debt | (93 | ) | 239 | |||||
Net changes in operating assets and liabilities: | ||||||||
Trade receivables | (3,199 | ) | (11,024 | ) | ||||
Inventory | (970 | ) | (265 | ) | ||||
Prepaid expenses and other assets | (875 | ) | (1,239 | ) | ||||
Accounts payable | (2,050 | ) | (2,311 | ) | ||||
Accrued payroll, accrued expenses and other liabilities | 4,457 | 7,498 | ||||||
Net cash provided by operating activities | 66,232 | 53,727 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (43,166 | ) | (80,967 | ) | ||||
Proceeds from sale of property, plant and equipment | 8,043 | 6,197 | ||||||
Purchases of intangible assets | (800 | ) | (1,450 | ) | ||||
Net cash used in investing activities | (35,923 | ) | (76,220 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds on revolving loan | 239,911 | 252,925 | ||||||
Payments on revolving loan | (256,345 | ) | (236,856 | ) | ||||
Payment of debt issuance costs | (550 | ) | (290 | ) | ||||
Purchase of treasury stock | (9,679 | ) | (1,394 | ) | ||||
Other financing activities | (81 | ) | (31 | ) | ||||
Net cash provided by (used in) financing activities | (26,744 | ) | 14,354 | |||||
Effect of foreign currency exchange rate changes on cash | 485 | 1,286 | ||||||
Net increase (decrease) in cash and cash equivalents | 4,050 | (6,853 | ) | |||||
Cash and cash equivalents: | ||||||||
Beginning of period | 7,482 | 9,298 | ||||||
End of period | $ | 11,532 | $ | 2,445 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Concrete Pumping Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
Nine Months Ended July 31, | ||||||||
(in thousands) | 2023 | 2022 | ||||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 14,155 | $ | 12,103 | ||||
Cash paid for income taxes | 258 | 409 | ||||||
Non-cash investing and financing activities: | ||||||||
Equipment purchases included in accrued expenses and accounts payable | 3,737 | 10,129 | ||||||
Operating lease right-of-use assets recorded upon adoption of ASC 842 | - | 18,625 | ||||||
Operating lease liabilities recorded upon adoption of ASC 842 | - | 18,593 | ||||||
Operating lease assets obtained in exchange for new operating lease liabilities | 3,873 | 3,296 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Concrete Pumping Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
Industrea Acquisition Corp.Note 1. Organization and Description of Business
Organization
Concrete Pumping Holdings, Inc. (the “Company”) was incorporatedis a Delaware corporation headquartered in Delaware on April 7, 2017.Denver, Colorado. The Company was formed forConsolidated Financial Statements include the purposeaccounts of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focusand its search on manufacturingwholly owned subsidiaries including Brundage-Bone Concrete Pumping, Inc. (“Brundage-Bone”), Capital Pumping (“Capital”), Camfaud Group Limited (“Camfaud”) 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).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placementEco-Pan, Inc. (“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 Offering 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 respect 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”Eco-Pan”).
INDUSTREA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Nature of business
The Company will provide its holders of the outstanding shares of its Class A common stock, par value $0.0001 (“Class A common stock”), includedBrundage-Bone and Capital are concrete pumping service providers in the Units soldUnited States ("U.S.") and Camfaud is a concrete pumping service provider in the Initial Public Offering (the “public stockholders”United Kingdom (“U.K.”) with. Their core business is the opportunityprovision of concrete pumping services 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 thengeneral contractors and concrete finishing companies in the Trust Account. The per-share amountcommercial, infrastructure and residential sectors. Most often equipment returns to be distributeda “home base” nightly and these service providers do not contract to public stockholders who redeem their Public Shares will not be reduced bypurchase, mix, or deliver concrete. Brundage-Bone and Capital collectively have approximately 100 branch locations across approximately 20 states, with its corporate headquarters in Denver, Colorado. Camfaud has approximately 30 branch locations throughout the deferred underwriting commissionsU.K., with its corporate headquarters in Epping (near London), England.
Eco-Pan provides industrial cleanup and containment services, primarily to customers in the Company will pay to the underwriters. These Public Shares will be recorded at a redemption value and classified as temporary equity upon 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. If a stockholder vote is not required by law and the Company does not decideconstruction industry. Eco-Pan uses containment pans specifically designed to hold a stockholder vote for business orwaste products from concrete and other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules ofindustrial cleanup operations. Eco-Pan has 19 operating locations across the U.S. 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 sharesits corporate headquarters 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.Denver, Colorado. In addition, we have concrete waste management operations under our Eco-Pan brand name in the initial stockholders have agreed to waive their redemption rights with respect to their Founder SharesU.K. and Public Shares in connection with the completion ofcurrently operate from a Business Combination.shared Camfaud location.
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.Seasonality
The Company’s Sponsor, officerssales are historically seasonal, with lower revenue in the first quarter and directors (the “initial stockholders”) have agreed not to propose an amendment tohigher revenue in the Amended and Restated Certificatefourth quarter of Incorporation to modify the substance or timing ofeach year. Such seasonality also causes the Company’s obligationworking capital cash flow requirements 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 opportunityvary from quarter 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 earnedquarter and primarily depends 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 $100,000variability 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.
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 agreementsweather patterns with the Company waiving any right, title, interest or claimgenerally having lower sales volume during the winter and spring months.
Note 2. Summary 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
We describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in our annual report on Form 10-K for the year ended October 31, 2022 ("Annual Report"). During the nine months ended July 31, 2023, there were no significant changes to those accounting policies.
Basis of Presentationpresentation
Our condensed consolidated balance sheet as of October 31, 2022, which was derived from our audited consolidated financial statements and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States generally accepted accounting principlesof America (“U.S. GAAP”) for interim financial information and pursuant tothe rules and regulations of the SEC.Securities and Exchange Commission ("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, all adjustments (consisting of normal accruals) considered forare necessary to present a fair presentation have been included. Operatingstatement of the interim periods. The consolidated results of operations and cash flows for the threefirstnine months ended September 30, 2017 and forof the period from April 7, 2017 (date of inception) through September 30, 2017year are not necessarily indicative of the consolidated results of operations and cash flows that maymight be expected through Decemberfor the entire year. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended October 31, 2017.
INDUSTREA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Emerging Growth Company2022.
Section 102(b)(1) ofCertain prior period amounts have been reclassified in order to conform to 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, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.current year presentation.
This may make comparison
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At September 30, 2017, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
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.
Revenue recognition
The Company generates revenues primarily from (1) concrete pumping services in both the U.S. and U.K and (2) the Company’s concrete waste services business, both of which are discussed below. In addition, the Company generates an immaterial amount of revenue from the sales of replacement parts to customers. The Company’s delivery terms for replacement part sales are FOB shipping point. Revenue is disaggregated between two accounting standards: (1) ASC 606,Revenue Recognition ("ASC 606") and (2) ASC 842,Leases ("ASC 842").
Leases as Lessor
Our Eco-Pan business involves contracts with customers whereby we are a lessor for the rental component of the contract and therefore, such rental components of the contract are recorded as lease revenue. We account for such rental contracts as operating leases. We recognize revenue from pan rentals in the period earned, regardless of the timing of billing to customers. The lease component of the revenue is disaggregated by a base price that is based on the number of contractual days and a variable component that is based on days in excess of the number of contractual days.
The table below summarizes our revenues as presented in our unaudited consolidated statements of operations for the periods ended July 31, 2023 and 2022 by revenue type and by applicable accounting standard:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Service revenue - ASC 606 | 112,340 | 98,288 | 299,521 | 269,425 | ||||||||||||
Lease fixed revenue – ASC 842 | 5,237 | 3,748 | 13,453 | 10,119 | ||||||||||||
Lease variable revenue - ASC 842 | 3,094 | 2,433 | 9,063 | 6,854 | ||||||||||||
Total revenue | 120,671 | 104,469 | 322,037 | 286,398 | ||||||||||||
OfferingNewly adopted accounting pronouncements
Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) - In March 2020, the FASB issued 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 transactions 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. Effective October 1, 2021, the Company transitioned all of its GBP borrowings from LIBOR to the Sterling Overnight Index Average ("SONIA") rate. Effective June 29, 2022, the Company transitioned all of its U.S. Dollar borrowings from LIBOR to the Secured Overnight Financing Rate ("SOFR"). See Note 9 for further discussion.
ASU 2016-02, Leases ("ASU 2016-02") - In February 2016, the FASB issued 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 ("ROU") 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 adopted the guidance for the year ended October 31, 2022, with an effective date of adoption of November 1, 2021.
Recently issued accounting pronouncements not yet effective
ASU 2016-13, Financial Instruments Credit Losses (Topic 326) (“ASU 2016-13”) - In June 2016, the FASB issued ASU No.2016-13, which, along with subsequently issued related ASUs, requires financial assets (or groups of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, among other provisions. This ASU is effective for smaller reporting companies with fiscal years beginning after December 15, 2022, with early adoption permitted. The Company plans to adopt the guidance during the first quarter of the fiscal year ending October 31, 2024. 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.
Note 3. Business Combinations and Asset Acquisitions
The Company completed one asset acquisition during the second quarter of 2023 and five acquisitions during fiscal 2022. All acquisitions either added complementary assets in markets in which the Company already operates or expanded the Company's footprint into adjacent markets. With the exception of the Coastal Carolina Pumping, Inc. ("Coastal") acquisition during the fourth quarter of fiscal 2022, all other transactions qualified as asset acquisitions. Except for the acquisition of Pioneer in the first quarter of fiscal 2022 and Coastal in the fourth quarter of fiscal 2022, these acquisitions were not individually significant to our results of operations. The consideration for the acquisitions in fiscal 2022 consisted of cash and was allocated to the acquired long-lived tangible and intangible assets.
August 2022 (Fiscal 2022) Coastal Acquisition
In August 2022, the Company acquired the property, equipment and intangible assets of Coastal for total purchase consideration of $30.8 million, which was paid for using cash and the ABL Facility (defined below). This transaction expanded our operations in the Carolinas and Florida and qualified as a business combination under ASC 805. Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values. There was no goodwill recognized in this transaction.
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:
| (in thousands) | |||
Consideration paid: | $ | 30,762 | |
Net assets acquired: | |||
Intangible assets | $ | 2,500 | |
Property and equipment | 28,500 | ||
Liabilities assumed | (238 | ) | |
Total net assets acquired | $ | 30,762 |
All assets were valued using level 3 inputs. The equipment was valued using a market approach while the intangible assets were valued using an income approach based on management’s projections.
Identifiable intangible assets acquired consist of customer relationships of $1.7 million and non-compete agreements valued at $0.8 million. The customer relationships were valued using the multi-period excess earnings method. The non-compete agreements were valued using a direct valuation of economic damages approach. The Company determined the useful life of both the customer relationships and non-compete agreements to be 5 years.
Concurrent with closing of the asset purchase agreement, the Company signed five leases directly with the seller. The leases were entered into at market rates and the Company recognized an ROU asset and liability of $6.5 million related to these leases.
November 2021 (Fiscal 2022) Pioneer Acquisition
In November 2021, the Company acquired the assets, no cash, of Pioneer Concrete Pumping Services (“Pioneer”) for total purchase consideration of $20.2 million, of which, $1.0 million was held back (the “Holdback”) to allow for a post-closing joint inspection of Pioneer’s fleet vehicles. The Holdback had not been paid out as of July 31, 2023. This transaction was treated as an asset acquisition. The Company allocated $19.1 million to the purchase of Pioneer's equipment. The remaining $1.1 million was allocated to a definite-lived assembled workforce intangible asset and a definite-lived customer relationships intangible asset. All assets were valued using level 3 inputs. The equipment was valued using a market approach while the intangible assets were valued using an income approach based on management’s projections. The intangible assets will be amortized over 3 to 5 years.
Transaction Costs
OfferingTransaction costs consisted ofinclude expenses for legal, accounting, underwriting fees and other professionals that were incurred in connection with an asset acquisition or business combination and could not be capitalized under ASC 805. There were no significant transaction costs incurred throughin each of the Initial Public Offeringthree and nine months ended July 31, 2023 and 2022.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Coastal business combination discussed above as if it had occurred on November 1, 2020. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that were directlywould have been realized if the Coastal business combination had been completed on November 1, 2020, nor does it purport to project the results of operations of the combined company in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the Initial Public Offeringacquired company.
The unaudited pro forma financial information is as follows:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||
(in thousands) | 2022 | 2022 | ||||||
Revenue | $ | 104,469 | $ | 286,398 | ||||
Pro forma revenue adjustments by Business Combination | ||||||||
Coastal | 5,439 | 15,320 | ||||||
Total pro forma revenue | $ | 109,908 | $ | 301,718 | ||||
Net income | $ | 12,976 | $ | 20,144 | ||||
Pro forma net income adjustments by Business Combination | ||||||||
Coastal | 423 | 933 | ||||||
Total pro forma net income | $ | 13,399 | $ | 21,077 | ||||
Significant pro forma adjustments include:
● | Tangible and intangible assets are assumed to be recorded at their estimated fair values as of November 1, 2021 and are depreciated or amortized over their estimated useful lives; and |
● | The Company incurred approximately $30.0 million on the ABL Facility (defined below) in connection with the acquisition of Coastal. Interest expense has been adjusted as of November 1, 2020. |
Coastal’s contribution to the Company's revenue for the three and totaled approximately $13.3nine months ended July 31, 2023 was $5.6 million inclusiveand $15.0 million, respectively. Coastal's contribution to the Company's net income for the three and nine months ended July 31, 2023 was $1.0 million and $2.1 million, respectively.
Note 4. Fair Value Measurement
The carrying amounts of the Initial Public Offering.Company's cash and cash equivalents, accounts receivable, accounts payable and current accrued liabilities approximate their fair value as recorded due to the short-term maturity of these instruments, which approximates fair value. The Company’s outstanding obligations on its asset-backed loan ("ABL") credit facility are deemed to be at fair value as the interest rates on these debt obligations are variable and consistent with prevailing rates. There were no changes since October 31, 2022 in the Company's valuation techniques used to measure fair value.
Long-term debt instruments
The Company's long-term debt instruments are recorded at their carrying values in the consolidated balance sheet, which may differ from their respective fair values. The fair values of the long-term debt instruments are derived from Level 2 inputs. The fair value amount of the long-term debt instruments as of July 31, 2023 and October 31, 2022 is presented in the table below based on the prevailing interest rates and trading activity of the Senior Notes.
As of July 31, | As of October 31, | |||||||||||||||
2023 | 2022 | |||||||||||||||
(in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Senior Notes | $ | 375,000 | $ | 359,063 | $ | 375,000 | $ | 339,375 | ||||||||
Warrants
At July 31, 2023 and October 31, 2022, there were 13,017,677 public warrants and no private warrants outstanding. Each warrant entitles its holder to purchase one share of Class A Common Stock Subjectcommon stock at an exercise price of $11.50 per share. The warrants expire on December 6, 2023, or earlier upon redemption or liquidation. The Company may call the outstanding public warrants for redemption at a price of $0.01 per warrant, if the last sale price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third business day before the Company sends the notice of redemption to Possible Redemptionthe warrant holders.
The Company accounts for the public warrants issued in connection with its Class A common stockIPO in accordance with ASC 815, under which certain provisions in the public warrant agreements do not meet the criteria for equity classification and therefore these warrants must be recorded as liabilities. The fair value of each public warrant is based on the public trading price of the warrant (Level 2 fair value measurement). Gains and losses related to the warrants are reflected in the change in fair value of warrant liabilities in the consolidated statements of operations.
All other non-financial assets
The Company's non-financial assets, which primarily consist of property and equipment, goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis or whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite lived intangibles), non-financial instruments are assessed for impairment and, if applicable, written down to and recorded at fair value.
Note 5. Prepaid Expenses and Other Current Assets
The significant components of prepaid expenses and other current assets as of July 31, 2023 and October 31, 2022 are comprised of the following:
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Expected recoveries related to self-insured commercial liabilities | $ | 6,032 | $ | - | ||||
Prepaid insurance | 3,661 | 1,550 | ||||||
Prepaid licenses and deposits | 933 | 751 | ||||||
Prepaid rent | 628 | 402 | ||||||
Other current assets and prepaids | 1,242 | 2,472 | ||||||
Total prepaid expenses and other current assets | $ | 12,496 | $ | 5,175 | ||||
Note 6. Property, Plant and Equipment
The significant components of property, plant and equipment as of July 31, 2023 and October 31, 2022 are comprised of the following:
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Land, building and improvements | $ | 29,357 | $ | 28,528 | ||||
Finance leases—land and buildings | 828 | 828 | ||||||
Machinery and equipment | 510,321 | 478,162 | ||||||
Transportation equipment | 8,742 | 7,133 | ||||||
Furniture and office equipment | 3,811 | 3,870 | ||||||
Property, plant and equipment, gross | 553,059 | 518,521 | ||||||
Less accumulated depreciation | (125,975 | ) | (99,144 | ) | ||||
Property, plant and equipment, net | $ | 427,084 | $ | 419,377 | ||||
Depreciation expense for the three and nine months ended July 31, 2023 and 2022 is as follows:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Cost of operations | $ | 9,396 | $ | 8,164 | $ | 27,718 | $ | 23,839 | ||||||||
General and administrative expenses | 622 | 540 | 1,823 | 1,708 | ||||||||||||
Total depreciation expense | $ | 10,018 | $ | 8,704 | $ | 29,541 | $ | 25,547 | ||||||||
Note 7. Goodwill and Intangible Assets
The Company has recognized goodwill and certain intangible assets in connection with prior business combinations.
There were no triggering events during the nine months ended July 31, 2023. The Company will continue to evaluate its goodwill and intangible assets in future quarters.
The following table summarizes the composition of intangible assets as of July 31, 2023 and October 31, 2022:
As of July 31, | ||||||||||||||||||||||||
2023 | ||||||||||||||||||||||||
Weighted Average | Gross | Foreign Currency | Net | |||||||||||||||||||||
Remaining Life | Carrying | Accumulated | Translation | Carrying | ||||||||||||||||||||
(in thousands) | (in Years) | Value | Impairment | Amortization | Adjustment | Amount | ||||||||||||||||||
Intangibles subject to amortization: | ||||||||||||||||||||||||
Customer relationship | 10.3 | $ | 196,310 | $ | - | $ | (126,048 | ) | $ | 34 | $ | 70,296 | ||||||||||||
Trade name | 5.4 | 5,400 | - | (2,515 | ) | 2 | 2,887 | |||||||||||||||||
Assembled workforce | 1.6 | 1,650 | - | (835 | ) | - | 815 | |||||||||||||||||
Noncompete agreements | 4.1 | 1,200 | - | (335 | ) | - | 865 | |||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
Trade names (indefinite life) | - | 55,500 | (5,000 | ) | - | - | 50,500 | |||||||||||||||||
Total intangibles | $ | 260,060 | $ | (5,000 | ) | $ | (129,733 | ) | $ | 36 | $ | 125,363 | ||||||||||||
As of October 31, | ||||||||||||||||||||||||
2022 | ||||||||||||||||||||||||
Weighted Average | Gross | Foreign Currency | Net | |||||||||||||||||||||
Remaining Life | Carrying | Accumulated | Translation | Carrying | ||||||||||||||||||||
(in thousands) | (in Years) | Value | Impairment | Amortization | Adjustment | Amount | ||||||||||||||||||
Intangibles subject to amortization: | ||||||||||||||||||||||||
Customer relationship | 11.0 | $ | 193,710 | $ | - | $ | (112,658 | ) | $ | 1,416 | $ | 82,468 | ||||||||||||
Trade name | 6.1 | 4,836 | - | (2,127 | ) | 239 | $ | 2,948 | ||||||||||||||||
Assembled workforce | 2.1 | 1,450 | - | (444 | ) | - | $ | 1,006 | ||||||||||||||||
Noncompete agreements | 4.6 | 1,000 | - | (168 | ) | - | $ | 832 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
Trade names (indefinite life) | - | 55,500 | (5,000 | ) | - | - | $ | 50,500 | ||||||||||||||||
Total intangibles | $ | 256,496 | $ | (5,000 | ) | $ | (115,397 | ) | $ | 1,655 | $ | 137,754 | ||||||||||||
The changes in the carrying value of goodwill by reportable segment for the nine months ended July 31, 2023 are as follows:
Reportable Segment | As of October 31, 2022 | Foreign Currency Translation | As of July 31, 2023 | |||||||||
(in thousands) | ||||||||||||
U.S. Concrete Pumping | $ | 147,482 | $ | - | $ | 147,482 | ||||||
U.K. Operations | 23,630 | 2,753 | 26,383 | |||||||||
U.S. Concrete Waste Management Services | 49,133 | - | 49,133 | |||||||||
Total | $ | 220,245 | $ | 2,753 | $ | 222,998 | ||||||
Note 8. Other Non-Current Assets
The significant components of other non-current assets as of July 31, 2023 and October 31, 2022 are comprised of the following:
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Expected recoveries related to self-insured commercial liabilities | $ | 12,835 | $ | 1,400 | ||||
Other non-current assets | 460 | 626 | ||||||
Total other non-current assets | $ | 13,295 | $ | 2,026 | ||||
Note 9. Long Term Debt and Revolving Lines of Credit
The table below is a summary of the composition of the Company’s debt balances as of July 31, 2023 and October 31, 2022:
As of July 31, | As of October 31, | |||||||||||
(in thousands) | Interest Rates | Maturities | 2023 | 2022 | ||||||||
Revolving loan - short term | Varies | January 2026 | $ | 35,699 | $ | 52,133 | ||||||
Senior Notes - all long term | 6.0000% | February 2026 | 375,000 | 375,000 | ||||||||
Total debt, gross | 410,699 | 427,133 | ||||||||||
Less: Unamortized deferred financing costs offsetting long term debt | (3,480 | ) | (4,524 | ) | ||||||||
Less: Revolving loan - short term | (35,699 | ) | (52,133 | ) | ||||||||
Long term debt, net of unamortized deferred financing costs | $ | 371,520 | $ | 370,476 | ||||||||
On January 28, 2021, Brundage-Bone Concrete Pumping Holdings Inc., a Delaware corporation (the “Issuer”) and a wholly-owned subsidiary of the Company (i) completed a private offering of $375.0 million in aggregate principal amount of its 6.000% senior secured second lien notes due 2026 (the “Senior Notes”) issued pursuant to an indenture, among the Issuer, the Company, the other Guarantors (as defined below), Deutsche Bank Trust Company Americas, as trustee and as collateral agent (the "Indenture") and (ii) entered into an amended and restated ABL Facility (as subsequently amended, the "ABL Facility") by and among the Company, certain subsidiaries of the Company, Wells Fargo Bank, National Association, as agent, sole lead arranger and sole bookrunner, the other lenders party thereto, which provided up to $125.0 million of asset-based revolving loan commitments to the Company and the other borrowers under the ABL Facility. The proceeds from the Senior Notes, along with certain borrowings under the ABL Facility, were used to repay all outstanding indebtedness under the Company’s then existing Term Loan Agreement (see discussion below), dated December 6, 2018, and pay related fees and expenses.
On July 29, 2022, the ABL Facility was amended to, among other changes, increase the maximum revolver borrowings available to be drawn thereunder from $125.0 million to $160.0 million and increase the letter of credit sublimit from $7.5 million to $10.5 million. The ABL Facility also provides for an uncommitted accordion feature under which the borrowers under the ABL Facility can, subject to possible redemptionspecified conditions, increase the ABL Facility by up to an additional $75.0 million. The $35.0 million in incremental commitments was provided by JPMorgan Chase Bank, N.A.
On June 1, 2023, the ABL Facility was amended to, among other changes, (1) increase the maximum revolver borrowings available to be drawn thereunder from $160.0 million to $225.0 million, (2) increase the letter of credit sublimit from $10.5 million to $22.5 million and (3) extend the maturity of the ABL Facility to the earlier of (a) June 1, 2028 and (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable. The ABL Facility also provides for an uncommitted accordion feature under which the borrowers under the ABL Facility can, subject to specified conditions, increase the ABL Facility by up to an additional $75.0 million. The $65.0 million in incremental commitments were provided by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The amended ABL Facility was treated as a debt modification. The Company capitalized an additional $0.5 million of debt issuance costs related to the June 1, 2023, ABL Facility amendment. The preexisting unamortized deferred costs of $1.4 million and the additional costs of $0.5 million will be amortized from June 1, 2023 through June 1, 2028.
Senior Notes
Summarized terms of the Senior Notes are as follows:
● | Provides for an original aggregate principal amount of $375.0 million; | |
● | The Senior Notes will mature and be due and payable in full on February 1, 2026; | |
● | The Senior Notes bear interest at a rate of 6.000% per annum, payable on February 1st and August 1st of each year; | |
● | The Senior Notes are jointly and severally guaranteed on a senior secured basis by the Company, Concrete Pumping Intermediate Acquisition Corp. and each of the Issuer’s domestic, wholly-owned subsidiaries that is a borrower or a guarantor under the ABL Facility (collectively, the "Guarantors"). The Senior Notes and the guarantees are secured on a second-priority basis by all the assets of the Issuer and the Guarantors that secure the obligations under the ABL Facility, subject to certain exceptions. The Senior Notes and the guarantees will be the Issuer’s and the Guarantors’ senior secured obligations, will rank equally with all of the Issuer’s and the Guarantors’ existing and future senior indebtedness and will rank senior to all of the Issuer’s and the Guarantors’ existing and future subordinated indebtedness. The Senior Notes are structurally subordinated to all existing and future indebtedness and liabilities of the Company’s subsidiaries that do not guarantee the Senior Notes; and | |
● | The Indenture includes certain covenants that limit, among other things, the Issuer’s ability and the ability of its restricted subsidiaries to: incur additional indebtedness and issue certain preferred stock; make certain investments, distributions and other restricted payments; create or incur certain liens; merge, consolidate or transfer all or substantially all assets; enter into certain transactions with affiliates; and sell or otherwise dispose of certain assets. |
The outstanding principal amount of the Senior Notes as of July 31, 2023 was $375.0 million and as of that date, the Company was in compliance with all covenants under the Indenture.
ABL Facility
Summarized terms of the ABL Facility, as amended, are as follows:
● | Borrowing availability in U.S. Dollars and GBP up to a maximum aggregate principal amount of $225.0 million and an uncommitted accordion feature under which the Company can increase the ABL Facility by up to an additional $75.0 million; | |
● | Borrowing capacity available for standby letters of credit of up to $22.5 million and for swing loan borrowings of up to $22.5 million. Any issuance of letters of credit or making of a swing loan will reduce the amount available under the ABL Facility; | |
● | All loans advanced will mature and be due and payable in full on the earlier of (a) June 1, 2028 and (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable; | |
● | Amounts borrowed may be repaid at any time, subject to the terms and conditions of the agreement; | |
● | Through May 31, 2023, borrowings in GBP bore interest at the SONIA rate plus an applicable margin currently set at 2.0326%. After May 31, 2023, borrowings in GBP bear interest at the SONIA rate plus an applicable margin equal to 2.2826%. The applicable margins for SONIA are subject to a step down of 0.25% based on excess availability levels; | |
| ● | Through June 29, 2022, borrowings in U.S. Dollars bore interest at either (1) an adjusted LIBOR rate plus an applicable margin of 2.25% or (2) a base rate plus an applicable margin of 1.25%. After June 29, 2022 and through May 31, 2023, borrowings in U.S. Dollars bore interest at (1) the SOFR rate plus an applicable margin currently set at 2.00% or (2) a base rate plus an applicable margin currently set at 1.00%. After May 31, 2023, borrowings in U.S. Dollars bear interest at (1) the SOFR rate plus an applicable margin currently set at 2.25% or (2) a base rate plus an applicable margin currently set at 1.25%. The applicable margins for U.S. Dollar loans are subject to a step down of 0.25% based on excess availability levels; | |
| ● | U.S. ABL Facility obligations are secured by a first-priority perfected security interest in substantially all the assets of the Issuer, together with Brundage-Bone Concrete Pumping, Inc., Eco-Pan, Inc., Capital Pumping LP (collectively, the "US ABL Borrowers") and each of the Company's wholly-owned domestic subsidiaries (the "US ABL Guarantors"), subject to certain exceptions; | |
| ● | U.K. ABL Facility obligations are secured by a first priority perfected security interest in substantially all assets of Camfaud Concrete Pumps Limited and Premier Concrete Pumping Limited, each of the Company's wholly-owned U.K. subsidiaries, and by each of the US ABL Borrowers and the US ABL Guarantors, subject to certain exceptions; and | |
| ● | The ABL Facility 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 Facility as of July 31, 2023 was $35.7 million and as of that date, the Company was in compliance with all debt covenants.
In addition, as of July 31, 2023 the Company had $1.1 million in credit line reserves and a letter of credit balance of $4.2 million.
As of July 31, 2023 we had $184.0 million of available borrowing capacity under the ABL Facility. Debt issuance costs related to revolving credit facilities are capitalized and reflected as an asset in deferred financing costs in the accompanying consolidated balance sheets. The Company had debt issuance costs related to the revolving credit facilities of $1.9 million as of July 31, 2023.
As of July 31, 2023 and October 31, 2022, the weighted average interest rate for borrowings under the ABL Facility was 7.8% and 4.4%, respectively.
Note 10. Accrued Payroll and Payroll Expenses
The following table summarizes accrued payroll and expenses as of July 31, 2023 and October 31, 2022:
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Accrued vacation | $ | 3,242 | $ | 2,705 | ||||
Accrued payroll | 4,068 | 2,763 | ||||||
Accrued bonus | 5,441 | 4,835 | ||||||
Accrued employee-related taxes | 2,125 | 2,760 | ||||||
Other accrued | 314 | 278 | ||||||
Total accrued payroll and payroll expenses | $ | 15,190 | $ | 13,341 | ||||
Note 11. Accrued Expenses and Other Current Liabilities
The following table summarizes accrued expenses and other current liabilities as of July 31, 2023 and October 31, 2022:
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Accrued self-insured commercial liabilities | $ | 11,876 | $ | 8,396 | ||||
Accrued self-insured health liabilities | 2,098 | 3,337 | ||||||
Accrued interest | 11,677 | 5,996 | ||||||
Accrued equipment purchases | 3,172 | 7,644 | ||||||
Accrued property, sales and use tax | 1,820 | 1,671 | ||||||
Accrued professional fees | 1,243 | 831 | ||||||
Other | 4,368 | 4,281 | ||||||
Total accrued expenses and other liabilities | $ | 36,254 | $ | 32,156 | ||||
Note 12. Income Taxes
The following table summarizes income before income taxes and income tax expense for the three and nine months ended July 31, 2023 and 2022:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Income before income taxes | $ | 13,654 | $ | 15,006 | $ | 27,826 | $ | 22,679 | ||||||||
Income tax expense | $ | 3,318 | $ | 2,030 | $ | 5,427 | $ | 2,535 | ||||||||
The effective tax rate for the three and nine months ended July 31, 2023 and 2022 was primarily impacted by the respective change in fair value of warrant liabilities, which is not recognized for tax purposes.
As of July 31, 2023 and October 31, 2022, the Company had deferred tax liabilities, net of deferred tax assets, of $79.4 million and $74.2 million, respectively. Included in deferred tax assets as of July 31, 2023 and October 31, 2022 were net operating loss carryforwards of $21.9 million and $25.9 million, respectively. The Company has a valuation allowance of $0.1 million as of July 31, 2023 and October 31, 2022 related to foreign and U.S. state tax credit carryforwards where realization is more uncertain at this time due to the limited carryforward periods that exist and state net operating losses that are expected to expire before they can be utilized.
Note 13. Commitments and Contingencies
Insurance
Commercial Self-Insured Losses
The Company retains a significant portion of the risk for workers' compensation, automobile, and general liability losses (“self-insured commercial liability”). Reserves have been recorded that reflect the undiscounted estimated liabilities including claims incurred but not reported. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability. Amounts estimated to be paid within one year have been included in Accrued expenses and other current liabilities, with the remainder included in Other liabilities, non-current on the Consolidated Balance Sheets. Insurance claims receivables that are expected to be received from third-party insurance within one year have been included in Prepaid expenses and other current assets, with the remainder included in Other non-current assets on the Consolidated Balance Sheets.
The following table summarizes as of July 31, 2023 for (1) recorded liabilities, related to both asserted as well as unasserted insurance claims and (2) any related insurance claims receivables.
| Classification on the Condensed | As of July 31, | ||||
(in thousands) | Consolidated Balance Sheets | 2023 | |||
Self-insured commercial liability, current | Accrued expenses and other current liabilities | $ | 11,876 | ||
Self-insured commercial liability, non-current | Other liabilities, non-current | 12,835 | |||
Total self-insured commercial liabilities | 24,711 | ||||
Expected recoveries related to self-insured commercial liabilities, current | Prepaid expenses and other current assets | 6,032 | |||
Expected recoveries related to self-insured commercial liabilities, non-current | Other non-current assets | 12,835 | |||
Total expected recoveries related to self-insured commercial liabilities | 18,867 | ||||
Total self-insured commercial liability, net of expected recoveries | $ | 5,844 | |||
Medical Self-Insured Losses
The Company offers employee health benefits via a partially self-insured medical benefit plan. Participant claims exceeding certain limits are covered by a stop-loss insurance policy. The Company contracts with a third-party administrator for tasks including, but not limited to, processing claims and remitting benefits. As of July 31, 2023, the Company had accrued $2.1 million, for estimated health claims incurred but not reported based on historical claims amounts and average lag time.
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 Facility provides for up to $22.5 million of standby letters of credit. As of July 31, 2023, total outstanding letters of credit totaled $4.2 million, the vast majority of which had been committed to the Company’s general liability insurance provider.
Note 14. Stockholders’ Equity
Share Repurchase Program
In January 2023, the board of directors of the Company approved a $10.0 million increase to the Company’s share repurchase program. This authorization will expire on March 31, 2024 and is in addition to the repurchase authorization of up to $10.0 million through June 15, 2023 that was previously approved in June 2022. The repurchase program permits shares to be repurchased in the open market, by block purchase, in privately negotiated transactions, in one or more transactions from time to time, or pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Open market purchases will be conducted in accordance with the guidancelimitations set forth in Accounting Standards CodificationRule 10b-18 of the Exchange Act and other applicable legal and regulatory requirements. The repurchase program may be suspended, terminated, extended or otherwise modified by the Board without notice at any time for any reason, including, without limitation, market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, capital and liquidity objectives, and other factors deemed appropriate by the Company's management.
The following table summarizes the shares repurchased, total cost of shares repurchased and average price per share for the three and nine months ended July 31, 2023:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||
(in thousands, except price per share) | 2023 | 2023 | ||||||
Shares repurchased | 199 | 1,299 | ||||||
Total cost of shares repurchased | $ | 1,394 | $ | 8,642 | ||||
Average price per share | $ | 7.01 | $ | 6.65 | ||||
Note 15. Stock-Based Compensation
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.
The following table summarizes realized compensation expense related to stock options and restricted stock awards in the accompanying condensed consolidated statements of operations:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Compensation expense – stock options | $ | 116 | $ | 152 | $ | 371 | $ | 488 | ||||||||
Compensation expense – restricted stock awards | 818 | 1,181 | 2,767 | 3,676 | ||||||||||||
Total | $ | 934 | $ | 1,333 | $ | 3,138 | $ | 4,164 | ||||||||
Note 16. Earnings Per Share
The Company calculates earnings per share in accordance with ASC 260,Earnings Per Share. For purposes of calculating earnings per share (“ASC”EPS”) Topic 480 “Distinguishing Liabilities from Equity.” Class, 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 required 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 subject to mandatory redemption (if any)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 classified as liability instruments and are measured at fair value. Conditionally redeemable Class Acomprised of shareholder owned common stock (including Class A common stock 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 A common stock are classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2017, 21,861,181 shares of Class A commonunvested restricted stock subject to possible redemption at the redemption amount are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet.
INDUSTREA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Income (Loss) per Share
Net income (loss) per shareheld by participating security holders. Basic EPS is computedcalculated by dividing netincome or loss attributable to common stockholders by the weighted-averageweighted average number of shares of common stock outstanding, duringexcluding participating shares. Diluted earnings per share is based upon the periods. An aggregateweighted average number of 21,861,181shares as determined for basic earnings per share plus shares potentially issuable in conjunction with unvested restricted stock awards, incentive stock options, non-qualified stock options and shares of Class Azero-dividend convertible perpetual preferred stock outstanding.
The table below shows our basic and diluted EPS calculations for the three and nine months ended July 31, 2023 and 2022:
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands, except share and per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income (numerator): | ||||||||||||||||
Net income attributable to Concrete Pumping Holdings, Inc. | $ | 10,336 | $ | 12,976 | $ | 22,399 | $ | 20,144 | ||||||||
Less: Accretion of liquidation preference on preferred stock | (441 | ) | (441 | ) | (1,309 | ) | (1,309 | ) | ||||||||
Less: Undistributed earnings allocated to participating securities | (323 | ) | (582 | ) | (751 | ) | (932 | ) | ||||||||
Net income attributable to common stockholders (numerator for basic earnings per share) | $ | 9,572 | $ | 11,953 | $ | 20,339 | $ | 17,903 | ||||||||
Add back: Undistributed earnings allocated to participating securities | 323 | 582 | 751 | 932 | ||||||||||||
Add back: Accretion of liquidation preference on preferred stock | - | 441 | - | - | ||||||||||||
Less: Undistributed earnings reallocated to participating securities | (318 | ) | (573 | ) | (739 | ) | (917 | ) | ||||||||
Numerator for diluted earnings per share | $ | 9,577 | $ | 12,403 | $ | 20,351 | $ | 17,918 | ||||||||
Weighted average shares (denominator): | ||||||||||||||||
Weighted average shares - basic | 53,198,637 | 54,012,404 | 53,377,157 | 53,859,874 | ||||||||||||
Weighted average shares - diluted | 54,104,738 | 57,286,563 | 54,262,940 | 54,772,441 | ||||||||||||
Basic earnings per share | $ | 0.18 | $ | 0.22 | $ | 0.38 | $ | 0.33 | ||||||||
Diluted earnings per share | $ | 0.18 | $ | 0.22 | $ | 0.38 | $ | 0.33 | ||||||||
For the three and nine months ended July 31, 2023 and 2022, 13.0 million warrants to purchase shares of common stock subject to possible redemption at September 30, 2017 have beenan exercise price of $11.50 and for the three months ended July 31, 2023 and nine months ended July 31, 2023 and 2022, 2.5 million shares of Series A Preferred Stock were excluded from the calculation of basic income (loss) per ordinary share since such shares, if redeemed, only participate in their pro rata share of 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) and Private Placement to purchase 11,100,000 shares of the Company’s class A common stock in the calculationcomputation of diluted income (loss) per share, sinceEPS because their inclusioneffect would behave been anti-dilutive.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered 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 PronouncementsNote 17. Segment Reporting
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
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 optionrevenues are derived from four reportable segments: U.S. Concrete Pumping, U.K. Operations, U.S. Concrete Waste Management Services and Corporate. Any differences between segment reporting and consolidated results are reflected 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.
The Sponsor 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.
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.Intersegment below. The Company fully repaidevaluates the Noteperformance of each segment based on August 1, 2017.
In addition,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 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 officersCorporate. Corporate assets primarily include cash 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 accruedcash equivalents, prepaid expenses owed to related parties related to these agreements on the accompanying condensed balance sheet as of September 30, 2017.
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 to the terms of the underwriting agreement.
Note 7 — Stockholders’ Equity
Common Stock
Class A Common Stock — The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of September 30, 2017, there were 23,000,000 shares of Class A common stock issued and outstanding, including 21,861,181 shares of Class A common stock subject to possible redemption.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of September 30, 2017, there were 5,750,000 shares of Class B common stock outstanding.
Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). 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 as provided above, at any time.
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 rightscurrent assets, 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
real property. The following table presentsprovides operating information about the Company’s reportable segments for the periods presented.
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | ||||||||||||||||
U.S. Concrete Pumping | $ | 87,323 | $ | 77,352 | $ | 232,896 | $ | 212,189 | ||||||||
U.K. Operations | 17,260 | 14,417 | 45,207 | 39,980 | ||||||||||||
U.S. Concrete Waste Management Services | 16,505 | 12,813 | 44,445 | 34,551 | ||||||||||||
Corporate | 625 | 625 | 1,875 | 1,875 | ||||||||||||
Intersegment | (1,042 | ) | (738 | ) | (2,386 | ) | (2,197 | ) | ||||||||
Total revenue | $ | 120,671 | $ | 104,469 | $ | 322,037 | $ | 286,398 | ||||||||
Income before income taxes | ||||||||||||||||
U.S. Concrete Pumping | $ | 4,835 | $ | 3,773 | $ | 3,893 | $ | 4,030 | ||||||||
U.K. Operations | 2,161 | 594 | 3,280 | 480 | ||||||||||||
U.S. Concrete Waste Management Services | 5,338 | 2,806 | 12,783 | 7,037 | ||||||||||||
Corporate | 1,320 | 7,833 | 7,870 | 11,132 | ||||||||||||
Total income before income taxes | $ | 13,654 | $ | 15,006 | $ | 27,826 | $ | 22,679 | ||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
EBITDA | ||||||||||||||||
U.S. Concrete Pumping | $ | 21,670 | $ | 19,495 | $ | 54,520 | $ | 50,524 | ||||||||
U.K. Operations | 4,769 | 3,197 | 10,957 | 8,619 | ||||||||||||
U.S. Concrete Waste Management Services | 7,452 | 4,976 | 18,997 | 13,398 | ||||||||||||
Corporate | 1,536 | 8,045 | 8,514 | 11,769 | ||||||||||||
Total EBITDA | $ | 35,427 | $ | 35,713 | $ | 92,988 | $ | 84,310 | ||||||||
Consolidated EBITDA reconciliation | ||||||||||||||||
Net income | $ | 10,336 | $ | 12,976 | $ | 22,399 | $ | 20,144 | ||||||||
Interest expense, net | 7,066 | 6,517 | 21,285 | 19,126 | ||||||||||||
Income tax expense | 3,318 | 2,030 | 5,427 | 2,535 | ||||||||||||
Depreciation and amortization | 14,707 | 14,190 | 43,877 | 42,505 | ||||||||||||
Total EBITDA | $ | 35,427 | $ | 35,713 | $ | 92,988 | $ | 84,310 | ||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Depreciation and amortization | ||||||||||||||||
U.S. Concrete Pumping | $ | 10,498 | $ | 9,927 | $ | 31,464 | $ | 29,615 | ||||||||
U.K. Operations | 1,879 | 1,881 | 5,555 | 5,892 | ||||||||||||
U.S. Concrete Waste Management Services | 2,114 | 2,170 | 6,214 | 6,361 | ||||||||||||
Corporate | 216 | 212 | 644 | 637 | ||||||||||||
Total depreciation and amortization | $ | 14,707 | $ | 14,190 | $ | 43,877 | $ | 42,505 | ||||||||
Interest expense, net | ||||||||||||||||
U.S. Concrete Pumping | $ | (6,337 | ) | $ | (5,795 | ) | $ | (19,163 | ) | $ | (16,879 | ) | ||||
U.K. Operations | (729 | ) | (722 | ) | (2,122 | ) | (2,247 | ) | ||||||||
Total interest expense, net | $ | (7,066 | ) | $ | (6,517 | ) | $ | (21,285 | ) | $ | (19,126 | ) | ||||
Total assets by segment for the periods presented are as follows:
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Total assets | ||||||||
U.S. Concrete Pumping | $ | 718,635 | $ | 693,048 | ||||
U.K. Operations | 120,451 | 103,255 | ||||||
U.S. Concrete Waste Management Services | 169,096 | 157,370 | ||||||
Corporate | 29,437 | 27,834 | ||||||
Intersegment | (123,613 | ) | (94,018 | ) | ||||
Total assets | $ | 914,006 | $ | 887,489 | ||||
The U.S. and U.K. were the only regions that are measured on a recurring basisaccounted for more than 10% of the Company’s revenue for the periods presented. Revenue for the periods presented and long-lived assets as of September 30, 2017July 31, 2023 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.October 31, 2022 are as follows:
| 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 | ||||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue by geography | ||||||||||||||||
U.S. | $ | 103,411 | $ | 90,052 | $ | 276,830 | $ | 246,418 | ||||||||
U.K. | 17,260 | 14,417 | 45,207 | 39,980 | ||||||||||||
Total revenue | $ | 120,671 | $ | 104,469 | $ | 322,037 | $ | 286,398 | ||||||||
As of July 31, | As of October 31, | |||||||
(in thousands) | 2023 | 2022 | ||||||
Property, plant and equipment, net | ||||||||
U.S. | $ | 368,935 | $ | 366,814 | ||||
U.K. | 58,149 | 52,563 | ||||||
Total property, plant and equipment, net | $ | 427,084 | $ | 419,377 | ||||
Item 2. Management’sManagement’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 condition and results of operations should be read in conjunctiontogether with the unauditedConcrete Pumping Holdings, Inc.’s (the “Company”, “we”, “us” or “our”) condensed consolidated financial statements and therelated notes thereto containedincluded elsewhere in this Quarterly Report. All references to "Notes" in this Item 2 of Part I refer to the notes to condensed consolidated financial statements included in Item 1 of Part I of this report. Certain information contained inAll references to “Annual Report” refers to our Form 10-K for the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.year ended October 31, 2022 filed with the SEC on January 31, 2023.
Cautionary Note RegardingStatement Concerning Forward-Looking Statements and Risk Factors Summary
ThisCertain statements in this Quarterly Report on Form 10-Q includes forward-looking statements("Report") constitute “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, among other things, 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,” “continue,” or "views" or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained in this Report are reasonable, we cannot guarantee future results.
The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects. These statements involve known and unknown risks, uncertainties (some of which are beyond our control) and other factors that may cause the actual results, performance or other similar expressions. Factors that might causeachievements of the Company to be materially different from those expressed or contribute to such a discrepancyimplied by the forward-looking statements. These risks and uncertainties include, but are not limited to, those describedthe items in our other Securities and Exchange Commission (“SEC”) filings.the following:
Overview
| ● | the adverse impact of recent inflationary pressures, including significant increases in fuel costs, global economic conditions and events related to these conditions, including the ongoing war in Ukraine and the COVID-19 pandemic; |
| ● | general economic and business conditions, which may affect demand for commercial, infrastructure, and residential construction and adverse effects of major endemics or pandemics on our business; | |
| ● | our ability to successfully implement our operating strategy; | |
| ● | our ability to successfully identify, manage and integrate acquisitions; | |
| ● | the restatement of our financial statements for the quarter ended July 31, 2022 and our ability to establish and maintain effective internal control over financial reporting, including our ability to remediate the existing material weakness in our internal controls; | |
| ● | governmental requirements and initiatives, including those related to mortgage lending, financing or deductions, funding for public or infrastructure construction, land usage, and environmental, health, and safety matters; | |
| ● | seasonal and inclement weather conditions, which impede the installation of ready-mixed concrete; | |
| ● | the cyclical nature of, and changes in, the real estate and construction markets, including pricing changes by our competitors; | |
| ● | our ability to maintain favorable relationships with third parties who supply us with equipment and essential supplies; | |
| ● | our ability to retain key personnel and maintain satisfactory labor relations; | |
| ● | disruptions, uncertainties or volatility in the credit markets that may limit our, our suppliers’ and our customers’ access to capital; | |
| ● | personal injury, property damage, results of litigation and other claims and insurance coverage issues; | |
| ● | our substantial indebtedness and the restrictions imposed on us by the terms of our indebtedness; | |
| ● | the effects of currency fluctuations on our results of operations and financial condition; and | |
| ● | other factors as described in the section entitled “Risk Factors” in our Annual Report. |
Our entire activity since inception up to September 30, 2017 was in preparation for our Initial Public Offering. Sinceforward-looking statements speak only as of the offering, our activity has been limited todate of this report or as of the search for a prospective initial business combination,date they are made, and we will not be generatingundertake no obligation to publicly 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 being a public company (for legal, financial reporting, accountingnew information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after this period.8-K should be considered.
Business Overview
The Company is a Delaware corporation headquartered in 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, LP (“Capital”), and Camfaud Group Limited (“Camfaud”), and Eco-Pan, Inc. (“Eco-Pan”).
As part of the Company’s business growth and capital allocation strategy, the Company views strategic acquisitions as opportunities to enhance our value proposition through differentiation and competitiveness. Depending on the deal size and characteristics of the M&A opportunities available, we expect to allocate capital for opportunistic M&A utilizing cash on the balance sheet and the Company's revolving line of credit. In recent years and as further described below, we have successfully executed on this strategy, including (1) our November 2021 acquisition of Pioneer Concrete Pumping Service, Inc. (“Pioneer”) for the purchase consideration of $20.2 million, which provided us with complementary assets and operations in both Georgia and Texas and (2) our acquisition of Coastal Carolina Concrete Pumping, Inc. ("Coastal") in August 2022 for the purchase consideration of $30.8 million, which expanded our operations in the Carolinas and Florida.
U.S. Concrete Pumping
All branches operating within our U.S. Concrete Pumping segment are concrete pumping service providers in the United States ("U.S."). Our U.S. Concrete Pumping 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 these branches do not contract to purchase, mix, or deliver concrete. This segment collectively has approximately 100 branch locations across approximately 20 states with their corporate headquarters in Denver, Colorado.
In recent years, U.S. Concrete Pumping has grown through the acquisitions of Coastal in August 2022 and Pioneer in November 2021, as described above, in addition to its greenfield expansion into Metro Washington DC in fiscal 2022.
U.S. Concrete Waste Management Services
Our U.S. Concrete Waste Management Services segment consists of our U.S. based Eco-Pan business. 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 19 operating locations across the U.S. with its corporate headquarters in Denver, Colorado.
U.K. Operations
Our U.K. Operations segment consists of our Camfaud, Premier and U.K. based Eco-Pan businesses. Camfaud is a concrete pumping service provider in the U.K. Our U.K. core business is primarily 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 does not contract to purchase, mix, or deliver concrete. Camfaud has approximately 30 branch locations throughout the U.K., with its corporate headquarters in Epping (near London), England. In addition, we have concrete waste management operations under our Eco-Pan brand name in the U.K. and currently operate from a shared Camfaud location.
Corporate
Our Corporate segment is primarily related to the intercompany leasing of real estate to certain of our U.S. Concrete Pumping branches.
Impacts of Macroeconomic Factors and COVID-19 Recovery
There have been no material changes to the "Impacts of Macroeconomic Factors and COVID-19 Recovery" previously disclosed in our Annual Report. For a detailed discussion of the risks that affect our business, please refer to the section entitled “Impacts of Macroeconomic Factors and COVID-19 Recovery” in the Annual Report.
Results of Operations
The tables included in the period-to-period comparisons below provide summaries of our revenues, gross profits and net income for our business segments for the three and nine months ended July 31, 2023 and 2022.
Three Months Ended July 31, 2023 Compared to the Three Months Ended July 31, 2022
Revenue
Three Months Ended July 31, | Change | |||||||||||||||
(in thousands, unless otherwise stated) | 2023 | 2022 | $ | % | ||||||||||||
Revenue | ||||||||||||||||
U.S. Concrete Pumping | $ | 87,323 | $ | 77,352 | $ | 9,971 | 12.9 | % | ||||||||
U.K. Operations | 17,260 | 14,417 | 2,843 | 19.7 | % | |||||||||||
U.S. Concrete Waste Management Services | 16,505 | 12,813 | 3,692 | 28.8 | % | |||||||||||
Corporate | 625 | 625 | - | 0.0 | % | |||||||||||
Intersegment | (1,042 | ) | (738 | ) | (304 | ) | 41.2 | % | ||||||||
Total revenue | $ | 120,671 | $ | 104,469 | $ | 16,202 | 15.5 | % | ||||||||
Total revenue. Total revenues were $120.7 million for the three months ended September 30, 2017, we hadJuly 31, 2023 compared to $104.5 million for the three months ended July 31, 2022. Revenue by segment is further discussed below.
U.S. Concrete Pumping. Revenue for our U.S. Concrete Pumping segment increased by 12.9%, or $10.0 million, from $77.4 million in the third quarter of fiscal 2022 to $87.3 million for the third quarter of fiscal 2023 primarily driven from prior acquisitions and improved pricing.Revenue attributable to our acquisition of Coastal was $5.6 million for the third quarter of fiscal 2023.
U.K. Operations. Revenue for our U.K. Operations segment increased by 19.7%, or $2.8 million, from $14.4 million in the third quarter of fiscal 2022 to $ 17.3 million for the third quarter of fiscal 2023. Excluding the impact from foreign currency translation, revenue was up 17.5% year-over-year. The increase in revenue was primarily attributable to improved pricing across the U.K. region.
U.S. Concrete Waste Management Services. Revenue for the U.S. Concrete Waste Management Services segment improved by 28.8%, or $3.7 million, from $12.8 million in the third quarter of fiscal 2022 to $16.5 million for the third quarter of fiscal 2023. The increase in revenue was primarily due to organic volume growth due to an increase in demand and pricing improvements.
Corporate. There was no change in revenue for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment are 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 the Intersegment line item.
Gross Profit and Gross Margin
Three Months Ended July 31, | Change | |||||||||||||||
(in thousands, unless otherwise stated) | 2023 | 2022 | $ | % | ||||||||||||
Gross Profit and Gross Margin | ||||||||||||||||
Gross Profit | 49,484 | 41,934 | 7,550 | 18.0 | % | |||||||||||
Gross Margin | 41.0 | % | 40.1 | % | ||||||||||||
Gross margin. Our gross margin for the third quarter of fiscal 2023 was 41.0% compared to 40.1% in the third quarter of fiscal 2022. The slight increase in our gross margin was primarily related to the strong revenue growth discussed above and the easing of diesel fuel prices, partially offset by inflationary pressures primarily in labor inflation.
General and administrative expenses
General and administrative expenses ("G&A"). G&A expenses for the third quarter of fiscal 2023 were $29.9 million, an increase of $2.1 million from $27.8 million in the third quarter of fiscal 2022. G&A expenses as a percent of revenue were 24.8% for the third quarter of fiscal 2023 compared to 26.6% for the same period a year ago. The dollar increase in G&A expenses was largely due to higher labor costs of approximately $3.0 million as a result of additional headcount from recent acquisitions.
Excluding amortization of intangible assets of $4.7 million, depreciation expense of $0.6 million and stock-based compensation expense of $0.9 million, G&A expenses were $23.7 million for the third quarter of fiscal 2023 (19.6% of revenue), up $3.2 million from $20.5 million for the third quarter of fiscal 2022 (19.6% of revenue). The increase was primarily due to the higher labor costs as discussed above.
Total other income (expense)
Interest expense, net. Interest expense, net for the third quarter of fiscal 2023 was $7.1 million, up $0.5 million from $6.5 million in the third quarter of fiscal 2022. The increase was primarily attributable to a higher average ABL revolver draw during the fiscal 2023 third quarter as compared to the same quarter a year ago.
Change in fair value of warrant liabilities. During the third quarter of fiscal 2023 the Company recognized a $0.9 million gain on the fair value remeasurement of our liability-classified warrants. During the third quarter of fiscal 2022 the Company recognized a $7.4 million gain on the fair value measurement of our liability-classified warrants. The continued decline in the fair value remeasurement of the public warrants for both periods presented is due to the Company's share price trading below the exercise price as the warrants get closer to expiring in December 2023.
Income tax expense
Income tax expense. For the third fiscal quarter ended July 31, 2023 the Company recorded income tax expense of $3.3 million on pretax income of $13.7 million. For the same quarter a year ago, the Company recorded an income tax expense of $2.0 million on a pretax income of $15.0 million. The effective tax rate for the three months ended July 31, 2023 was primarily impacted by the respective change in fair value of warrant liabilities, which is not recognized for tax purposes.
Nine Months Ended July 31, 2023 Compared to the Nine Months Ended July 31, 2022
Revenue
Nine Months Ended July 31, | Change | |||||||||||||||
(in thousands, unless otherwise stated) | 2023 | 2022 | $ | % | ||||||||||||
Revenue | ||||||||||||||||
U.S. Concrete Pumping | $ | 232,896 | $ | 212,189 | $ | 20,707 | 9.8 | % | ||||||||
U.K. Operations | 45,207 | 39,980 | 5,227 | 13.1 | % | |||||||||||
U.S. Concrete Waste Management Services | 44,445 | 34,551 | 9,894 | 28.6 | % | |||||||||||
Corporate | 1,875 | 1,875 | - | 0.0 | % | |||||||||||
Intersegment | (2,386 | ) | (2,197 | ) | (189 | ) | 8.6 | % | ||||||||
Total revenue | $ | 322,037 | $ | 286,398 | $ | 35,639 | 12.4 | % | ||||||||
Total revenue. Total revenues were $322.0 million for the nine months ended July 31, 2023 compared to $286.4 million for the nine months ended July 31, 2022. Revenue by segment is further discussed below.
U.S. Concrete Pumping. Revenue for our U.S. Concrete Pumping segment increased by 9.8%, or $20.7 million, from $212.2 million in the nine months ended July 31, 2022 to $232.9 million primarily driven by revenue contributions from recent acquisitions, coupled with organic growth in certain of our markets, notably in the southeastern region of the U.S. Revenue attributable to our acquisition of Coastal was $15.0 million for the nine months ended July 31, 2023.
U.K. Operations. Revenue for our U.K. Operations segment increased by 13.1%, or $5.2 million, from $40.0 million in the nine months ended July 31, 2022 to $45.2 million. Excluding the impact from foreign currency translation, revenue was up 19.0% year-over-year. The increase in revenue was driven by a robust improvement in pricing across the U.K. region.
U.S. Concrete Waste Management Services. Revenue for the U.S. Concrete Waste Management Services segment improved by 28.6%, or $9.9 million, from $34.6 million in the nine months ended July 31, 2022 to $44.4 million. The increase in revenue was due to robust organic volume growth and pricing improvements.
Corporate. There was no change in revenue for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment are 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 the Intersegment line item.
Nine Months Ended July 31, | Change | |||||||||||||||
(in thousands, unless otherwise stated) | 2023 | 2022 | $ | % | ||||||||||||
Gross Profit and Gross Margin | ||||||||||||||||
Gross Profit | 129,412 | 114,998 | 14,414 | 12.5 | % | |||||||||||
Gross Margin | 40.2 | % | 40.2 | % | ||||||||||||
Gross margin. Our gross margin for the nine months ended July 31, 2023 and 2022 was 40.2%. The margin has remained consistent due to the easing of diesel fuel prices being completely offset by inflationary pressures primarily in labor inflation.
General and administrative expenses
General and administrative expenses ("G&A"). G&A expenses for the nine months ended July 31, 2023 were $87.2 million, an increase of $4.1 million from $83.2 million for the nine months ended July 31, 2022. The increase in G&A expenses was primarily due to (1) higher labor costs of approximately $6.2 million primarily due to additional headcount that joined the Company as a result of recent acquisitions, (2) higher rent, utilities and office expenses aggregating to $1.2 million primarily from recent acquisitions and (3) higher legal and accounting expenses, partially offset by $2.9 million in additional non-cash expense related to fluctuations in the GBP and lower amortization of intangible assets expense of $2.6 million. G&A expenses as a percent of revenue were 27.1% for fiscal 2023 compared to 29.0% for the same period a year ago.
Excluding amortization of intangible assets of $14.3 million, depreciation expense of $1.8 million and stock-based compensation expense of $3.1 million, G&A expenses were $68.0 million for the nine months ended July 31, 2023 (21.1% of revenue), up $7.7 million from $60.3 million for the nine months ended July 31, 2022 (21.0% of revenue). The increase was primarily due to the higher labor costs, legal and accounting costs, rent, utilities, and office expenses, which was partially offset by fluctuations in the GBP as discussed above.
Total other income (expense)
Interest expense, net. Interest expense, net for the nine months ended July 31, 2023 was $21.3 million, up $2.2 million from $19.1 million from the nine months ended July 31, 2022. The increase was primarily attributable to a higher average ABL revolver draw during the (nine months ended July 31, 2023) as compared to the same quarter a year ago.
Change in fair value of warrant liabilities. During the nine months ended July 31, 2023 the Company recognized a $6.6 million gain on the fair value remeasurement of our liability-classified warrants. During the nine months ended July 31, 2022 the Company recognized a $9.9 million gain on the fair value measurement of our liability-classified warrants. The continued decline in the fair value remeasurement of the public warrants for all periods presented is due to the Company's share price trading below the exercise price as the warrants get closer to expiring in December 2023.
Income tax expense
Adjusted EBITDA(1) and Net Income
Net Income | Adjusted EBITDA | |||||||||||||||||||||||
Three Months Ended July 31, | Three Months Ended July 31, | Change | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | $ | % | ||||||||||||||||||
U.S. Concrete Pumping | $ | 3,517 | $ | 2,812 | $ | 20,535 | $ | 19,776 | $ | 759 | 3.8 | % | ||||||||||||
U.K. Operations | 1,616 | 441 | 5,566 | 3,955 | 1,611 | 40.7 | % | |||||||||||||||||
U.S. Concrete Waste Management Services | 3,986 | 2,010 | 8,190 | 5,681 | 2,509 | 44.2 | % | |||||||||||||||||
Corporate | 1,217 | 7,713 | 625 | 625 | - | 0.0 | % | |||||||||||||||||
Total | $ | 10,336 | $ | 12,976 | $ | 34,916 | $ | 30,037 | $ | 4,879 | 16.2 | % | ||||||||||||
Net Income | Adjusted EBITDA | |||||||||||||||||||||||
Nine Months Ended July 31, | Nine Months Ended July 31, | Change | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | $ | % | ||||||||||||||||||
U.S. Concrete Pumping | $ | 2,867 | $ | 3,772 | $ | 52,363 | $ | 52,285 | $ | 78 | 0.1 | % | ||||||||||||
U.K. Operations | 2,449 | 358 | 13,349 | 11,017 | 2,332 | 21.2 | % | |||||||||||||||||
U.S. Concrete Waste Management Services | 9,526 | 5,205 | 21,208 | 15,233 | 5,975 | 39.2 | % | |||||||||||||||||
Corporate | 7,557 | 10,809 | 1,875 | 1,875 | - | 0.0 | % | |||||||||||||||||
Total | $ | 22,399 | $ | 20,144 | $ | 88,795 | $ | 80,410 | $ | 8,385 | 10.4 | % | ||||||||||||
| (1) | See “Non-GAAP Measures (EBITDA and Adjusted EBITDA)” below. As of the first quarter of fiscal 2023, we have modified the method in which adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. The Company recast adjusted EBITDA for U.S. Concrete Pumping in the three and nine months ended July 31, 2022 by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change. See “Non-GAAP Measures (EBITDA and Adjusted EBITDA)” below for more information. |
U.S. Concrete Pumping. Net income for our U.S. Concrete Pumping segment was $3.5 million for the third quarter of fiscal 2023, versus net income of approximately $144,000, which consisted$2.8 million for the third quarter of approximately $436,000fiscal 2022. Adjusted EBITDA for our U.S. Concrete Pumping segment was $20.5 million for the third quarter of fiscal 2023, versus $19.8 million for the same period in interestfiscal 2022. The increases in net income offset by approximately $240,000 in general and administrative costsAdjusted EBITDA were primarily attributable to recent acquisitions and approximately $51,000 in income tax expense.organic growth.
ForNet income for our U.S. Concrete Pumping segment was $2.9 million for the period from April 7, 2017 (date of inception) through September 30, 2017, we hadnine months ended July 31, 2023, versus a net income of approximately $144,000, which consisted of approximately $436,000$3.8 million for the nine months ended July 31, 2022. Adjusted EBITDA for our U.S. Concrete Pumping segment was $52.4 million for the nine months ended July 31, 2023, versus $52.3 million for the same period in interest income, offset by approximately $241,000 in general and administrative costs and approximately $51,000 in income tax expense.fiscal 2022.
U.K. Operations. Net income for our U.K. Operations segment was $1.6 million for the third quarter of fiscal 2023, versus net income of $0.4 million for the third quarter of fiscal 2022. Adjusted EBITDA for our U.K. Operations segment was $5.6 million for the third quarter of fiscal 2023, up 40.7% from $4.0 million from the same period in fiscal 2022. The increases were primarily attributable to the year-over-year improvement in revenue.
Net income for our U.K. Operations segment was $2.4 million for the nine months ended July 31, 2023, compared to a net income of $0.4 million for the nine months ended July 31, 2022. Adjusted EBITDA for our U.K. Operations segment was $13.3 million for the nine months ended July 31, 2023, up 21.2% from $11.0 million from the same period in fiscal 2022. The increases were primarily attributable to the year-over-year improvement in revenue.
U.S. Concrete Waste Management Services. Net income for our U.S. Concrete Waste Management Services segment was $4.0 million for the third quarter of fiscal 2023, versus net income of $2.0 million for the third quarter of fiscal 2022. Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $8.2 million for the third quarter of fiscal 2023, up 44.2% from $5.7 million from the same period in fiscal 2022. The increases were primarily attributable to the year-over-year improvement in revenue as discussed above.
Net income for our U.S. Concrete Waste Management Services segment was $9.5 million for the nine months ended July 31, 2023, up from net income of $5.2 million for the nine months ended July 31, 2022. Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $21.2 million for the nine months ended July 31, 2023, up 39.2% from $15.2 million for the same period in fiscal 2022. The increases were primarily attributable to the year-over-year robust organic growth in revenue as discussed above.
Corporate. Net income for our Corporate segment was $1.2 million for the third quarter of fiscal 2023, compared to a net income of $7.7 million for the third quarter of fiscal 2022. The change in net income is primarily related to the change in warrant liability, as discussed above.
Net income for our Corporate segment was $7.6 million for the nine months ended July 31, 2023, down from net income of $10.8 million for the nine months ended July 31, 2022. The decrease from the nine months ended July 31, 2023 compared to the same period in fiscal 2022 was primarily related to the changes in the warrant liability, as discussed above.
There was no change in Adjusted EBITDA for our Corporate segment for the periods presented.
Liquidity and Capital Resources
Overview
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 Senior Notes and (4) short-term financing under our ABL Facility. Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents and access to our revolving credit facility under our ABL Facility, which provides for aggregate borrowings of up to $225.0 million, subject to a borrowing base limitation. 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 Pioneer, Coastal and others. As indicated in the accompanying unaudited condensed financial statements, at September 30, 2017,of July 31, 2023, we had approximately $986,000 in$11.5 million of cash and marketable securities, approximately $436,000cash equivalents and $184.0 million of interest available to pay for franchise and income taxes (less up to $100,000borrowing capacity under the ABL Facility, providing total available liquidity of interest to pay dissolution expenses) and working capital of approximately $1$195.5 million.
Through September 30, 2017,We may from time to time seek to retire or pay down borrowings on the outstanding balance of our ABL Facility or Senior Notes using cash on hand. Such repayments, if any, will depend on prevailing market conditions, our 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 to the Sponsor, $224,403 in loans from the Sponsor,requirements, contractual restrictions and the proceeds from the consummation of the Private Placement not held in Trust Account. We repaid such loans from the Sponsor in full on August 1, 2017.other factors.
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 completebelieve our initial business combination. We may withdraw interest to pay franchiseexisting cash and income taxes. We estimatecash equivalent balances, cash flow from operations and borrowing capacity under 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 accountABL Facility will be sufficient to paymeet our income taxes.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 capital stockfuture business activities and requirements, we may be required to seek additional equity or debt is used,financing. The sale of additional equity could result in whole ordilution to our stockholders. The incurrence of debt financing would result in part, as considerationdebt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
Material Cash Requirements
Our principal uses of cash historically have been to complete our initial business combination, the remaining proceeds held in the trust account will be used asfund operating activities and working capital, purchases of property and equipment, strategic acquisitions, fund payments due under facility operating and finance leases, share repurchases and to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.meet debt service requirements.
BasedOur working capital deficit as of July 31, 2023 was $2.4 million. We generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to capital markets. We believe we have adequate coverage of our debt covenants.
The amount of our future capital expenditures will depend on the foregoing,a number of factors including general economic conditions and growth prospects. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures by adjusting them (either up or down) to match our actual performance. Our capital expenditures for the nine months ended July 31, 2023 and 2022 were approximately $43.2 million and $81.0 million, respectively.
To service our debt, we require a significant amount of cash. Our ability to pay interest and principal on our indebtedness will have sufficientdepend upon our future operating performance and the availability of borrowings under the ABL Facility and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flow from operations, available cash and available borrowings under the ABL Facility will be adequate to service our debt and meet our future liquidity needs throughfor the foreseeable future. See “Senior Notes and ABL Facility” discussion below for more information.
Future Contractual Obligations
For information regarding our future contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report.
Senior Notes and ABL Facility
The table below is a summary of the composition of the Company’s debt balances as of July 31, 2023 and October 31, 2022:
As of July 31, | As of October 31, | |||||||||||
(in thousands) | Interest Rates | Maturities | 2023 | 2022 | ||||||||
Revolving loan - short term | Varies | January 2026 | $ | 35,699 | $ | 52,133 | ||||||
Senior Notes - all long term | 6.0000% | February 2026 | 375,000 | 375,000 | ||||||||
Total debt, gross | 410,699 | 427,133 | ||||||||||
Less: Unamortized deferred financing costs offsetting long term debt | (3,480 | ) | (4,524 | ) | ||||||||
Less: Revolving loan - short term | (35,699 | ) | (52,133 | ) | ||||||||
Long term debt, net of unamortized deferred financing costs | $ | 371,520 | $ | 370,476 | ||||||||
On June 1, 2023, the ABL Facility was amended to, among other changes, (1) increase the maximum revolver borrowings available to be drawn thereunder from $160.0 million to $225.0 million, (2) increase the letter of credit sublimit from $10.5 million to $22.5 million and (3) extend the maturity of the ABL Facility to the earlier of consummation(a) June 1, 2028 and (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable. The ABL Facility also provides for an uncommitted accordion feature under which the borrowers under the ABL Facility can, subject to specified conditions, increase the ABL Facility by up to an additional $75.0 million. The $65.0 million in incremental commitments were provided by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The amended ABL Facility was treated as a business combination or Augustdebt modification. The Company capitalized an additional $0.5 million of debt issuance costs related to the June 1, 2019. Over this time period, we2023, ABL Facility amendment. The preexisting unamortized deferred costs of $1.4 million and the additional costs of $0.5 million will be using these funds for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to andamortized 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.June 1, 2023 through June 1, 2028.
IfThe outstanding balance under the ABL Facility as of July 31, 2023 was $35.7 million and as of that date, the Company was in compliance with all debt covenants. In addition, as of July 31, 2023, the Company had $1.1 million in credit line reserves and a letter of credit balance of $4.2 million. As of July 31, 2023, we had $184.0 million of available borrowing capacity under the ABL Facility. Debt issuance costs related to revolving credit facilities are capitalized and reflected as an asset in deferred financing costs in the accompanying consolidated balance sheets. The Company had debt issuance costs related to the revolving credit facilities of $1.9 million as of July 31, 2023. See Note 9 for more information on the Senior Notes and ABL Facility.
Cash Flows
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 estimates of the costs of undertaking in-depth due diligenceoperating assets 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 thanliabilities. Generally, we expect as a result of the current interest rate environment, we may have insufficient funds available to operatebelieve our business priorrequires a relatively low level of working capital investment due to our initial business combination. Moreover, we may needlow inventory requirements and timely customer payments due to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant numberdaily billings for most of our public shares upon consummation of our initial business combination, in which case we may issue additional securities 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, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Related Party Transactionsservices.
Founder SharesCash flow provided by operating activities. Net cash provided by operating activities generally reflects the cash effects of transactions and other events used in the determination of net income or loss.
On April 10, 2017,Net cash provided by operating activities during the Sponsor purchased 5,750,000 shares (the “Founder Shares”)nine months ended July 31, 2023 was $66.2 million. The Company had net income of $22.4 million, which included non-cash expense items of $46.5 million. In addition, we had cash outflows related to an increase to our Class B common stock, par value $0.0001 (“Class B common stock”) forworking capital of $2.6 million. Working capital changes primarily include an aggregate purchase priceincrease in accrued payroll, accrued expenses and other current liabilities of $25,000. In April$4.5 million, an increase in trade receivables of $3.2 million, a decrease of $2.1 million to accounts payable, an increase in inventory of $1.0 million and May 2017,an increase in prepaid expenses and other assets of $0.9 million. The increase in accrued payroll, accrued expenses and other current liabilities is primarily related to timing of the Sponsor transferred a totalpayment of 28,750 Founder Sharesaccrued interest. The Company makes semi-annual interest payments in February and August each year. The increase in trade receivables is due to eachstronger revenue growth. The decrease in accounts payable is driven by timing 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 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, the underwriters fully exercised their over-allotment option. As a result, 750,000 Founder Shares were no longer subject to forfeiture.vendor payments.
Our Sponsor, officersNet cash provided by operating activities during the nine months ended July 31, 2022 was $53.7 million. The Company had net income of $20.1 million, which included non-cash expense items of $40.9 million. In addition, we had cash outflows related to an increase to our working capital of $7.3 million. Working capital changes primarily include an increase to trade receivables of $11.0 million, an increase to prepaid expenses and directors (the “initial stockholders”) have agreed, subjectother current assets of $1.2 million an increase in accrued payroll, accrued expenses and other current liabilities of $7.5 million and a decrease of $2.3 million to limited exceptions, notaccounts payable. The increase to transfer, assign or sell anytrade receivables is primarily due to timing of their Founder Shares untilcustomer payments and seasonality of business volume increases during the earlier to occur of: (A) one year after the completionsecond and third quarters of the initial business combination; or (B) subsequentfiscal year. The increase to the initial business combination, (x) if the last sale priceprepaid expenses and other current assets is primarily due to timing of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizationsprepaid insurance, which is generally prepaid during first quarter of fiscal year 2022. The decrease to accounts payable is driven by timing of vendor payments. The increase in accrued payroll, accrued expenses 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 resultscurrent liabilities is primarily related to an increase in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.accrued interest. The Company makes semi-annual interest payments in February and August each year.
Cash flow used in investing activities. Net cash used in operating activities generally reflects the cash outflows for property, plant and equipment.
Private Placement
Concurrently withWe used $35.9 million to fund investing activities during the closingnine months ended July 31, 2023. The Company used $43.2 million for the purchase of property, plant and equipment and $0.8 million for the Initial Public Offering, the Sponsor purchased an aggregatepurchase of 11,100,000 private placement warrants (“Private Placement Warrants”) at $1.00 per Private Placement Warrant, generating gross proceeds of $11.1intangible assets, which was partially offset by $8.0 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 property, plant and equipment.
We used $76.2 million to fund investing activities during the Private Placement Warrants were added tonine months ended July 31, 2022. The Company used $81.0 million for the purchase of property, plant and equipment and $1.5 million for the purchase of intangible assets, which was partially offset by proceeds from the Initial Public Offering to be heldsale of property, plant and equipment of $6.2 million.
Cash flow provided by (used in) financing activities.
Net cash used in financing activities was $26.7 million for the trust account. If we do not complete a Business Combination within 24nine months ended July 31, 2023. Financing activities during this period included $9.7 million in purchase of treasury stock, which included $8.6 million purchased under the share repurchase program and $1.1 million in outflows from the closingpurchase of the Initial Public Offering (the “Combination Period”), the Private Placement Warrants will expire worthless. The Private Placement Warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
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 initial stockholders 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.
Related Party Loans
On August 1, 2017, we repaid in full an aggregate of $224,403 loaned to us by the Sponsor to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing.
In addition,shares into treasury stock in order to finance transaction costsfund the employee tax obligations for certain vested stock awards. In addition, cash used in connection with a business combination,financing activities included $16.4 million in net proceeds under 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 in the trust account would be used to repay the Working Capital Loans. ExceptCompany's ABL Facility.
Net cash provided by financing activities was $14.4 million for the foregoing,nine months ended July 31, 2022. Financing activities during this period primarily included $16.1 million in net borrowings under the termsCompany’s ABL Facility that were partially offset by $1.4 million in outflows from the purchase of such Working Capital Loans, if any, have not been determinedshares into treasury stock in order to fund the employee tax obligations for certain vested stock awards.
Accounting 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.Other Reporting Matters
OfficerNon-GAAP Measures (EBITDA and Director CompensationAdjusted EBITDA)
We have agreed, commencingcalculate 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, goodwill and intangibles impairment and other adjustments. Transaction expenses represent expenses for legal, accounting, and other professionals that were engaged in the effective datecompletion of various acquisitions. Transaction expenses can be volatile as they are primarily driven by the size of a specific acquisition. As such, we exclude these amounts from Adjusted EBITDA for comparability across periods. Other adjustments include the adjustments for warrant liabilities revaluation, non-recurring expenses and non-cash currency gains/losses. As of the Initial Public Offering throughfirst quarter of fiscal 2023, we have modified the earlier of our consummation of a business combinationmethod in which adjusted EBITDA is calculated by no longer including an add-back for director costs and liquidation,public company expenses. Adjusted EBITDA in the three and nine months ended July 31, 2022 is recast by $0.6 million and $1.9 million, respectively, for these expenses to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support.reflect this change.
In addition, we will pay eachWe believe these non-GAAP measures of the five independent directors $50,000 per year commencing on the effective date of the Initial Public Offering through the earlier of our consummation of afinancial results provide useful supplemental information to management and investors regarding certain financial and business combination or liquidation.
Critical Accounting Policies and Estimates
This management’s discussion and analysis oftrends related to our financial condition and results of operations, is based onand as a supplemental 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, we evaluate our estimatesindustry may calculate EBITDA and judgments, including those related to fair valueAdjusted EBITDA differently or may not calculate it at all, which limits the usefulness of financial instrumentEBITDA and accrued expenses. We base our estimates on historical experience, known trendsAdjusted EBITDA as comparative measures.
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Consolidated | ||||||||||||||||
Net income | $ | 10,336 | $ | 12,976 | $ | 22,399 | $ | 20,144 | ||||||||
Interest expense, net | 7,066 | 6,517 | 21,285 | 19,126 | ||||||||||||
Income tax expense | 3,318 | 2,030 | 5,427 | 2,535 | ||||||||||||
Depreciation and amortization | 14,707 | 14,190 | 43,877 | 42,505 | ||||||||||||
EBITDA | 35,427 | 35,713 | 92,988 | 84,310 | ||||||||||||
Transaction expenses | 5 | 20 | 32 | 59 | ||||||||||||
Stock-based compensation | 934 | 1,333 | 3,138 | 4,164 | ||||||||||||
Change in fair value of warrant liabilities | (911 | ) | (7,420 | ) | (6,639 | ) | (9,894 | ) | ||||||||
Other income, net | (262 | ) | (16 | ) | (296 | ) | (69 | ) | ||||||||
Other adjustments(1) | (277 | ) | 407 | (428 | ) | 1,840 | ||||||||||
Adjusted EBITDA | $ | 34,916 | $ | 30,037 | $ | 88,795 | $ | 80,410 | ||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
U.S. Concrete Pumping | ||||||||||||||||
Net income | $ | 3,517 | $ | 2,812 | $ | 2,867 | $ | 3,772 | ||||||||
Interest expense, net | 6,337 | 5,795 | 19,163 | 16,879 | ||||||||||||
Income tax expense | 1,318 | 961 | 1,026 | 258 | ||||||||||||
Depreciation and amortization | 10,498 | 9,927 | 31,464 | 29,615 | ||||||||||||
EBITDA | 21,670 | 19,495 | 54,520 | 50,524 | ||||||||||||
Transaction expenses | 5 | 20 | 32 | 59 | ||||||||||||
Stock-based compensation | 934 | 1,333 | 3,138 | 4,164 | ||||||||||||
Other income, net | (257 | ) | (6 | ) | (273 | ) | (43 | ) | ||||||||
Other adjustments(1) | (1,817 | ) | (1,066 | ) | (5,054 | ) | (2,419 | ) | ||||||||
Adjusted EBITDA | $ | 20,535 | $ | 19,776 | $ | 52,363 | $ | 52,285 | ||||||||
| (1) | Other adjustments include the adjustment for warrant liabilities revaluation, non-recurring expenses and non-cash currency gains/losses. As of the first quarter of fiscal 2023, we modified the method in which adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. The Company recast adjusted EBITDA for U.S. Concrete Pumping in the three and nine months ended July 31, 2022 by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change. |
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
U.K. Operations | ||||||||||||||||
Net income | $ | 1,616 | $ | 441 | $ | 2,449 | $ | 358 | ||||||||
Interest expense, net | 729 | 722 | 2,122 | 2,247 | ||||||||||||
Income tax expense | 545 | 153 | 831 | 122 | ||||||||||||
Depreciation and amortization | 1,879 | 1,881 | 5,555 | 5,892 | ||||||||||||
EBITDA | 4,769 | 3,197 | 10,957 | 8,619 | ||||||||||||
Other income, net | (6 | ) | (5 | ) | (23 | ) | (11 | ) | ||||||||
Other adjustments | 803 | 763 | 2,415 | 2,409 | ||||||||||||
Adjusted EBITDA | $ | 5,566 | $ | 3,955 | $ | 13,349 | $ | 11,017 | ||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
U.S. Concrete Waste Management Services | ||||||||||||||||
Net income | $ | 3,986 | $ | 2,010 | $ | 9,526 | $ | 5,205 | ||||||||
Income tax expense | 1,352 | 796 | 3,257 | 1,832 | ||||||||||||
Depreciation and amortization | 2,114 | 2,170 | 6,214 | 6,361 | ||||||||||||
EBITDA | 7,452 | 4,976 | 18,997 | 13,398 | ||||||||||||
Other expense (income), net | 1 | (5 | ) | - | (15 | ) | ||||||||||
Other adjustments | 737 | 710 | 2,211 | 1,850 | ||||||||||||
Adjusted EBITDA | $ | 8,190 | $ | 5,681 | $ | 21,208 | $ | 15,233 | ||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Corporate | ||||||||||||||||
Net income | $ | 1,217 | $ | 7,713 | $ | 7,557 | $ | 10,809 | ||||||||
Income tax expense | 103 | 120 | 313 | 323 | ||||||||||||
Depreciation and amortization | 216 | 212 | 644 | 637 | ||||||||||||
EBITDA | 1,536 | 8,045 | 8,514 | 11,769 | ||||||||||||
Change in fair value of warrant liabilities | (911 | ) | (7,420 | ) | (6,639 | ) | (9,894 | ) | ||||||||
Adjusted EBITDA | $ | 625 | $ | 625 | $ | 1,875 | $ | 1,875 | ||||||||
Critical Accounting Policies 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 ourEstimates
Our critical accounting policies as discussedand estimates are disclosed in the “Critical Accounting Policies and Estimates” section of our final prospectus and Current Report on Form 8-K filed withAnnual Report. No modifications have been made during the SEC onnine months ended July 27, 2017 and August 1, 2017, respectively.31, 2023 to these policies or estimates.
New Accounting Pronouncements
Off-Balance Sheet ArrangementsFor information regarding recent accounting pronouncements, see Note 2 to the condensed consolidated financial statements included within Item 1 of this report for more information.
As
JOBS 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 electing 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, our financial statements may not be comparable to companies that comply with public company effective dates.
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.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of ourThe Company maintains 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 Exchange Act. Based on this evaluation, our chief executive officer and chief financial officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensureprovide reasonable assurance that information required to be disclosed by us in ourits Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management of the Company, including our principal executive officerits Chief Executive Officer and principal financial officer or persons performing similar functions,Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met. The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of July 31, 2023, the Company’s disclosure controls and procedures were not effective due to the material weaknesses described below.
Material Weaknesses in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Management previously identified and disclosed two material weaknesses in "Item 9A Controls and Procedures" of the Company’s Annual Report. Specifically, material weaknesses were identified related to (1) the review of manual journal entries within the financial statement close process, which was identified in connection with the restatement of the Company’s interim unaudited financial statements as of July 31, 2022 ("MW #1"); and (2) the areas of user access and segregation of duties related to information technology systems that support the financial reporting process specifically related to accounts payable and expenditures ("MW #2").
Additionally, these material weaknesses could result in a misstatement of the accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
Remediation Activities
As of July 31, 2023, management designed and implemented measures that it believes remediate the identified material weaknesses. Specifically, for MW #1, controls were designed and implemented and evidenced to ensure that journal entries are adequately reviewed and approved, and for MW #2, the Company has designed and implemented a review of user activity reports and control activities to ensure appropriate segregation of duties. Notwithstanding these measures, due to the nature of the remediation process, newly implemented controls must operate effectively for a sufficient period of time for a definitive conclusion, validated through testing, that the deficiencies have been fully remediated and, as such, management can give no assurance that the measures it has undertaken have fully remediated the material weaknesses that it has identified or that additional material weaknesses will not arise in the future. Consequently, management will continue to monitor the design and effectiveness of these controls through ongoing tests and will make any further changes that management determines to be appropriate.
Changes in Internal Control overOver Financial Reporting
There washave been no changechanges in our internal control over financial reporting that occurred during theour third fiscal quarter ended September 30, 2017 covered by this Quarterly Report on Form 10-Qof fiscal 2023 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 may have been and may again become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any litigation that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, financial condition, or cash flows.
As of the date of this Quarterly Report on Form 10-Q, thereThere have been no material changes to the risk factorsRisk Factors previously disclosed in our prospectus filed withAnnual Report. For a detailed discussion of the SEC on July 27, 2017.risks that affect our business, please refer to the section entitled “Risk Factors” in the Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered SecuritiesProceeds.
On April 10, 2017,Issuer Purchases of Equity Securities
During the third quarter of 2023, under our share repurchase program, we issuedrepurchased an aggregate of 5,750,000 Class B198,973 shares of our common stock to our Sponsor for a total of $1.4 million at an aggregate purchaseaverage price of $25,000, in connection with our organization pursuant to$ 7.01 per share. The following table reflects issuer purchases of equity securities for the exemption from registration contained in Section 4(a)(2) of the Securities Act.three months ended July 31, 2023:
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.ISSUER PURCHASES OF EQUITY SECURITIES
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.
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (2,3) | ||||||||||||
May 1, 2023 - May 31, 2023 | 130,649 | $ | 7.01 | 130,649 | $ | 9,147,593 | ||||||||||
June 1, 2023 - June 30, 2023 | 68,324 | 7.00 | 68,324 | 8,669,446 | ||||||||||||
July 1, 2023 - July 31, 2023 | - | - | - | 8,669,446 | ||||||||||||
Total | 198,973 | $ | 7.01 | 198,973 | $ | 8,669,446 | ||||||||||
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.
| (1) | In June 2022, our board of directors approved a share repurchase program, which was announced in June, 2022,authorizing us to repurchase up to $10.0 million of our common stock from time to time through June 15, 2023. In January 2023, the board of directors of the Company approved a $10.0 million increase to the Company’s share repurchase program, which was announced in January 2023. This authorization will expire on March 31, 2024. | |
| (2) | Dollar value of shares that may yet be purchased under the repurchase programis as of the end of the period. | |
| (3) | Includes commission cost. |
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
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
Exhibit
| Description | |
| Third Amendment to Amended and Restated ABL Credit Agreement, dated June 1, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on June 5, 2023). | ||
| 31.1 | ||
| 31.2 | ||
| 32.1 | ||
| 32.2 | ||
101.INS | Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
101.SCH | ||
Inline XBRL Taxonomy Extension Schema Document | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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 thereunto duly authorized.
CONCRETE PUMPING HOLDINGS, INC. | ||
By: /s/ Iain Humphries | ||
Name: Iain Humphries | ||
Title: Chief Financial Officer and Secretary | ||
| (Authorized Signatory) | ||
Date: November 13, 2017
Dated: September 7, 2023