Concrete and waste management company Concrete Pumping (NASDAQ:BBCP) missed Wall Street’s revenue expectations in Q4 CY2024, with sales falling 11.5% year on year to $86.45 million. The company’s full-year revenue guidance of $410 million at the midpoint came in 2.4% below analysts’ estimates. Its GAAP loss of $0.06 per share was significantly below analysts’ consensus estimates.
Revenue: $86.45 million vs analyst estimates of $90.81 million (11.5% year-on-year decline, 4.8% miss)
EPS (GAAP): -$0.06 vs analyst estimates of $0.01 (significant miss)
Adjusted EBITDA: $17.01 million vs analyst estimates of $21.03 million (19.7% margin, 19.1% miss)
EBITDA guidance for the full year is $110 million at the midpoint, below analyst estimates of $113.6 million
Operating Margin: 4%, up from 1.5% in the same quarter last year
Free Cash Flow Margin: 0.2%, down from 2.6% in the same quarter last year
Market Capitalization: $315.6 million
"Despite the challenges presented by a persistent elevated interest rate environment, which continued to affect our commercial construction volume in the first quarter and delayed project starts in both the U.S. and U.K., coupled with severe weather events in our central, mountain and southeastern regions, we remained resilient. Our flexible cost structure and disciplined fleet management strategy allowed us to maintain strong Adjusted EBITDA margins despite the reduced volume” said Bruce Young, CEO of CPH.
Company Overview
Going public via SPAC in 2018, Concrete Pumping (NASDAQ:BBCP) is a provider of concrete pumping and waste management services in the United States and the United Kingdom.
Construction and Maintenance Services
Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years–. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Concrete Pumping grew its sales at a mediocre 6.8% compounded annual growth rate. This was below our standard for the industrials sector and is a rough starting point for our analysis.
Concrete Pumping Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Concrete Pumping’s recent history shows its demand has slowed as its revenue was flat over the last two years.
Concrete Pumping Year-On-Year Revenue Growth
This quarter, Concrete Pumping missed Wall Street’s estimates and reported a rather uninspiring 11.5% year-on-year revenue decline, generating $86.45 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Concrete Pumping has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.7%, higher than the broader industrials sector.
Analyzing the trend in its profitability, Concrete Pumping’s operating margin rose by 22.3 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Concrete Pumping generated an operating profit margin of 4%, up 2.5 percentage points year on year. The increase was encouraging, and since its operating margin rose more than its gross margin, we can infer it was recently more efficient with expenses such as marketing, R&D, and administrative overhead.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Concrete Pumping’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
Concrete Pumping Trailing 12-Month EPS (GAAP)
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
Sadly for Concrete Pumping, its EPS declined by 29.8% annually over the last two years while its revenue was flat. This tells us the company struggled to adjust to choppy demand.
We can take a deeper look into Concrete Pumping’s earnings to better understand the drivers of its performance. While we mentioned earlier that Concrete Pumping’s operating margin improved this quarter, a two-year view shows its margin has declined by 6 percentage points. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q4, Concrete Pumping reported EPS at negative $0.06, up from negative $0.08 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Concrete Pumping to perform poorly. Analysts forecast its full-year EPS of $0.28 will hit $0.43.
Key Takeaways from Concrete Pumping’s Q4 Results
We struggled to find many positives in these results. Its full-year EBITDA guidance missed significantly and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 2.5% to $5.90 immediately after reporting.
Concrete Pumping may have had a tough quarter, but does that actually create an opportunity to invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
