Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings Financial Results for the Third Quarter ended July 31, 2024. Joining us today are Concrete Pumping Holdings' CEO, Bruce Young; CFO, Iain Humphries; and the company's External Investor Relations Director, Cody Slach. Before we go further, I would like to turn the call over to Mr. Slach to read the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thank you. I'd like to remind everyone that in the course of this call, to give you a better understanding of our operations, we will be making certain forward-looking statements regarding our business and outlook. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties see Concrete Pumping Holdings' annual report on Form 10-K, quarterly report on Form 10-Q and other publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. On today's call, we will also reference certain non-GAAP financial measures, including adjusted EBITDA, net debt, leverage ratio and free cash flow, which we believe provide useful information for investors. We provide further information about these non-GAAP financial measures and reconciliations to the comparable GAAP measures in our press release issued today or the investor presentation posted on the company's website. I'd like to remind everyone this call will be available for replay later this evening. A webcast replay will also be available via the link provided in today's press release as well as on the company's website. Now, I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

Thank you, Cody, and good afternoon, everyone. In the third quarter, continued organic growth in our U.S. Concrete Waste Management business was offset by a series of factors that impacted volume-driven declines in our U.S. Concrete Pumping segment. Historic rainfall in Texas and across the Southeast region, together with ongoing restrictive monetary policy curtailed construction volumes for the quarter. Higher for longer interest rates have impacted the timing of more rate sensitive commercial projects and higher commercial building vacancy rates have delayed project starts on new build projects. While we believe these circumstances are temporary, they nonetheless have had a negative impact on our financial results. In the U.K., the impacts of sustained higher interest rates on volume largely followed the trends we experienced domestically, but our infrastructure projects still held up well considering the market backdrop. Meanwhile, we are quite pleased with our Concrete Waste Management business continued to grow organically at a double-digit rate, driven by healthy market share growth and continued price improvements in the face of the challenging construction market. We expect the tailwinds in this business to continue for the remainder of this year and beyond. In the third quarter, we continued to strengthen our balance sheet by paying down debt, preserving our robust free cash flow and improving our adjusted EBITDA margin, which speaks to our strong financial profile and unit economics, as well as our disciplined approach to fleet management, improving cost initiatives and capital investments. Turning to specific comments by end market. We largely experienced similar trends to what we saw in our second quarter. With our commercial market, we continue to experience softness across a variety of commercial work, especially light commercial and manufacturing projects, which tend to be more sensitive to the prolonged high interest rate environment we are currently…

Thanks, Bruce, and good afternoon, everyone. In the third quarter, our consolidated revenue was $109.6 million compared to $120.7 million in the same year ago quarter. As Bruce mentioned, the decline in revenue was mostly driven by a volume decline in our U.S. Concrete Pumping segment, partially offset by continued strong organic growth in Concrete Waste Management Services. As such, revenue in our U.S. Concrete Pumping segment mostly operating under the Brundage-Bone brand decreased 14% to $75.2 million compared to $87.3 million in the prior year quarter. The decrease is primarily attributable to lower volumes caused by a general slowdown in commercial construction work, mostly due to the impact from higher interest rates, oversaturation of concrete pumps in certain markets and higher-than-normal rainfall throughout the quarter, specifically in our Texas and Southeast regions. We estimate that the impact of adverse weather in the third quarter caused approximately $6 million of project revenue delays. For our U.K. operations, operating under the Camfaud brand, revenue decreased 8% to $15.9 million compared to $17.3 million in the prior year quarter. Excluding the impact from foreign currency translation, revenue was down 9% year-over-year. Strength in the U.K.'s infrastructure work did not outweigh a volume-driven slowdown in other commercial projects due to higher interest rates. Revenue in our U.S. Concrete Waste Management Services segment, operating under the Eco-Pan brand increased 15% to $18.5 million compared to $16.1 million in the prior year quarter. The increase was driven by robust organic growth and pricing improvements. Returning to our consolidated results. Gross margin in the third quarter was 40.6% compared to 41% in the same year ago quarter. Given the volume declines, we are pleased to have preserved our gross margin, and this was achieved through continued focus on cost initiatives that include labor cost efficiency and…

Thanks, Iain. Turning to the final quarter of our fiscal year. As I mentioned previously, we still expect the demand environment to be variable in our Concrete Pumping business given current market conditions. However, we believe the scale, breadth and agility of this business has optimized our position for recovery as macro improvement like lower interest rates rise. We are encouraged by our performance in our infrastructure business and believe underlying demand trends will continue into fiscal year 2025. The same goes for residential as market imbalances favor the development of new housing. On the cost side of the equation, we are beginning to see our cost control initiatives take hold, which should drive growth -- margin growth as our commercial end market improves. Our positioning is further benefited by our operational flexibility and sustained opportunistic approach to equipment utilization as we can pursue more value-driven work rather than focus solely on more volume-based projects. And as always, our focus remains on optimizing end market mix to maximize top and bottom line growth. Today's market environment does not deter our long-term approach to growing our business. We still expect to complement our organic growth initiatives by continuing to evaluate opportunistic accretive M&A, while strategically reducing our leverage. With that, I would now like to turn the call back over to the operator for Q&A. Shamali?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] And our first question comes from the line of Andy Wittmann with Baird. Please proceed with your question.

Great. Good afternoon, guys and thank you for taking my questions here. I guess I wanted to dig in a little bit to kind of current market conditions and some of the actions you're taking to react to those. When I look at the revenue guidance that's implied for the fourth quarter and compare it to the EBITDA that's also implied in the fourth quarter. I guess the revenue is seeing more impact than the EBITDA line. And you mentioned, Bruce, that you're taking actions that are taking hold on your cost structure. I thought it would be helpful for us to hear a little bit more detail about what you're doing to achieve that. And particularly, among other things, if you could also address specifically how you're managing the repair and maintenance expense on your units today. Are you deferring some of that now, just recognizing that the demand isn't as strong? Or are you still staying kind of up-to-date on that stuff? Thanks.

Yes. Thanks, Andy. I would start with, we are not deferring any maintenance on our assets. We keep them to the same standard that we always have. We have done a lot better job of purchasing parts that we've seen a little deflation in parts. We've done a better job of managing the labor to maintain that equipment and really staying on top of that with better preventative maintenance out in front of that, which we started a year or so ago, and now we're starting to see some of the benefit of that. On the revenue side of the business, while we're quite disappointed on where the summer has been for us, where we expected Q3 to come out with a little better start as summer weather. While we hope for summer weather improvement, which turned out to be quite challenging in Q3. But even with that, the commercial markets just didn't react like we had expected them to. We've done an awful lot of analysis on our market share with concerns that we might be losing share during that period of time. We're very comfortable that we are not losing share during that period of time. But what we are seeing is that, a lot of the major projects that would use our specialty type equipment, placing booms, high-rise pumps, that sort of thing. We're not getting near the utilization out of that, that we would have expected this summer, meaning that a lot of those larger projects are either delayed or are just aren't being planned at all. So those are some of the things that we're seeing. However, we really are focused on making sure that our business is really strong and better positioned for the recovery of the markets.

That's helpful color. I appreciate that. And just for my follow-up question, I know you guys are probably planning for 2025 and obviously, after next quarter, you'll probably guide for that. But just for early thinking here, given that the trends were what they were in the quarter, I mean, do you feel like, overall, that 2025 is a -- is it an up year, is it a down year? And then maybe even more specifically on -- as you think about the margins in 2025, you guys talked about weather in all three quarters so far this year. Regardless of the outcome, is it fair to think that your gross margins could be flat to up?

Yes. Well, certainly, weather has an impact on our margins and with better weather, which this has to be one of the worst years for weather we've seen in my history in the business, which is lengthy. So with that, we expect margins to improve. But just becoming more efficient, as markets slow down, you find ways to be much better at what you do, where you're not constantly chasing after work. And so we think those things will improve the margins as well over time. Looking at the forecast, the ABI, the Architectural Building Index and seeing some softness there. We really expect the first half of our 2025, which starts in November to be very similar to what we're seeing now. And then hopefully, things will start picking up towards the second half of next year.

Thank you very much for the insight. Appreciate it.

Thanks, Andy.

Thank you. Our next question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Hi, Bruce and Iain, this is Luke McFadden on for Tim Mulrooney. Thanks for taking our questions today. So I guess just starting here, some recent data from Dodge pointed towards early signs of potential improvement in the non-residential construction market. They also called out that a September rate cut would likely make conditions even more accommodative from projects starts going forward here. Curious just to get your viewpoint on that and how future rate cuts could impact your business over the next six to 12 months?

Thanks for the question, Luke. Now with Dodge, they load up all the project value in the beginning of the project, which means, they still need to do the excavation and other such things before they get to the concrete stage. While we do see some activity in bidding by the time it gets to the concrete stage of the project, we see that coming into our second half of next year.

Very helpful. And then if I can just follow up here related to utilization rates. Could you just provide some color there as it relates to recent utilization rates in the business? It seems like some of those headwinds from last quarter like weather and equipment over saturation, were present again here this quarter. But just on maybe get an update on what you're seeing from the utilization standpoint in the business today.

Thanks for that. We are very focused on utilization. Our utilization currently runs around 70%, where we can be efficient running as with high utilization as 80%. So we're looking at getting our fleet right still to have a few older machines that we'll sell is that we're waiting for the markets to come back around. But yes, we have an awful lot of capacity for opportunity as it comes as well.

Yes. Luke, one thing I'd add to that. I mean, and that's what you've seen, we've talked a lot about our free cash flow, and you've seen us protect that free cash flow this year for the utilization rates that Bruce mentioned. So I mean, as we mentioned in our prepared remarks, we have sufficient capacity in our fleet right now. So that's why you're probably seeing lesser investment this year as we focus on the balance sheet because we still have a good amount of capacity to use in that fleet utilization today. So as we see that pick up with volumes, then obviously, we'll see some extra utilization come through on the fleet of equipment.

Understood. Thank you very much.

Thank you. [Operator Instructions] Our next question comes from the line of Brent Thielman with D.A. Davidson. Please proceed with your question.

Hey, Bruce. Hey, Iain. Bruce, maybe just to start, where are you seeing this oversaturation of equipment? And I guess, in the spirit of protecting your margins, what what's your response as a company to potentially more competitive pricing or sort of bidding conditions out there?

Yes. So with the manufacturers, all the equipment that is used in our industry in the U.S. either comes from Germany, China or South Korea. And so, it takes several years of planning to get equipment sold into the U.S. And with the forecast, with the infrastructure bill and commercial forecast for them a couple of years ago, I think, we expected as an industry that the volumes would be greater. And so that equipment did come into the market. It did go into the hands of those that might become competitors of ours or those that are competitor of ours creating an oversaturation of equipment in the market. Folks are trying to get that equipment out into the field. And with that, there's some pricing pressure that we've dealt with this year, we've been able to maintain our pricing in our concrete pumping service this year, but we haven't been able to increase it. And we think a lot of that has to do with the oversaturation. But again, as I mentioned earlier, we're focused on market share as well, making sure we maintain our market share as we're dealing with that pressure.

Okay. Appreciate that, Bruce. And then, I guess coming back to just how things have evolved maybe over even the last few months, particularly this demand environment and the progression and it sounds like some of these interest rate sensitive sectors, it sort of moderated even more, Bruce, than what you thought a few months ago. I thought I heard you made a comment about some of the large projects potentially losing a little momentum. Can you expand on that and what you're seeing there?

Yes. So things with large manufacturing plants, whether it's EV plants, battery plants, chip plants, those things aren't going at the rate that we would have anticipated. There's still an awful lot in the planning and bidding stage that we expect to come into the second half of next year and beyond. You also have the infrastructure bill, which we did expect that, that -- again, that we would get larger infrastructure projects that we would be in the process of working on currently. We're starting to see a little more activity there. We are bidding on some fairly substantial infrastructure projects that would take us late into next year and beyond. But we just kind of -- I think as an industry, in our business, we expect to do more activity on that this year.

Got it. Maybe just last one, Bruce, any concern in your ability to sustain the sort of rate of growth in Eco-Pan with -- guess just with slower overall industry activity.

It's an interesting question. We have been able to maintain fairly strong growth with Eco-Pan even in a softer environment, just with the idea that we've been able to show people that we can keep their sites clean for largely the same cost as what they're using now and make it more efficient for them. So while in the concrete pumping business, we're really not taking on any new industry type work. Eco-Pan is kind of revolutionizing an industry where we're showing people the benefit of it in replacing historical method that we've been able to prove out to be inefficient.

Okay. Very good. Thank you.

Thanks, Brent.

Thank you. At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Young for closing remarks.

Thanks, Shamali. I would like to thank everyone for listening to today's call, and we look forward to speaking with you when we report our fourth quarter fiscal 2024 results in January of 2025. Thank you.

And ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.