Concrete Pumping Holdings, Inc.: Form 10-Q for the period ended Apr 30, 2024

You should read the following management’s discussion and analysis together with Concrete Pumping Holdings, Inc.’s (the "Company", "we", "us" or "our") condensed consolidated financial statements and related notes included 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. All references to "Annual Report" refers to our Form 10-K for the year ended October 31, 2023 filed with the SEC on January 16, 2024.

Cautionary Statement Concerning Forward-Looking Statements and Risk Factors Summary

Certain statements in this Quarterly Report on Form 10-Q ("Report") constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. These forward-looking statements may be identified by terminology such as "likely," "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "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 achievements of the Company to be materially different from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the items in the following:

• the adverse impact of recent inflationary pressures, including significant increases in fuel costs, global economic conditions and events related to these conditions
• 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;
• our ability to maintain effective internal controls necessary to provide reliable financial reports;
• 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 forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be considered.

Business Overview

The Company is a Delaware corporation headquartered in Thornton, Colorado. The unaudited condensed 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"), 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, we have successfully executed on this strategy.

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 21 states with their corporate headquarters in Thornton, Colorado.

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 20 operating locations across the U.S. with its corporate headquarters in Thornton, 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.

Results of Operations

The tables included in the period-to-period comparisons below provide summaries of our revenues and gross profits for our business segments for the three and six months ended April 30, 2024 and 2023.

Three Months Ended April 30, 2024 Compared to the Three Months Ended April 30, 2023

The tables included in the period-to-period comparisons below provide summaries of our revenue, gross profit and net income for our business segments for the three months ended April 30, 2024 and 2023.

Revenue

(in thousands)

*Change is not meaningful

Total revenue. Total revenues were $107.1 million for the three months ended April 30, 2024 compared to $107.8 million for the three months ended April 30, 2023. Revenue by segment is further discussed below.

U.S. Concrete Pumping. Revenue for our U.S. Concrete Pumping segment decreased by 4.8%, or $3.8 million, from $78.4 million in the second quarter of fiscal 2023 to $74.6 million for the second quarter of fiscal 2024 primarily attributable to a decrease in volumes driven by (1) a general slowdown in commercial construction work, mostly due to the impact from rising interest rates, (2) oversaturation of concrete pumps in certain markets and (3) higher than normal precipitation throughout the quarter, specifically in the Company's Texas, Arizona, Nevada, California and Colorado markets.

U.K. Operations. Revenue for our U.K. Operations segment increased by 2.0%, or $0.3 million, from $15.2 million in the second quarter of fiscal 2023 to $15.5 million for the second quarter of fiscal 2024. Excluding the impact from foreign currency translation, revenue was down 1% year-over-year.

U.S. Concrete Waste Management Services. Third-party revenue for the U.S. Concrete Waste Management Services segment improved by 19.3%, or $2.7 million, from $14.2 million in the second quarter of fiscal 2023 to $16.9 million for the second quarter of fiscal 2024. The increase in revenue was driven by robust organic growth and pricing improvements.

Gross Profit and Gross Margin

(in thousands, unless otherwise stated)

Gross margin. Our gross margin for the second quarter of fiscal 2024 was 39.0% compared to 40.3% in the second quarter of fiscal 2023. The slight decrease in our gross margin was primarily related to lower revenue in our U.S. Concrete Pumping segment, decreased labor utilization driven by the reduced revenue in our U.S. Concrete Pumping segment and inflationary increases in commercial insurance premium costs. These amounts were partially offset by improved repair and maintenance costs.

General and administrative expenses

General and administrative expenses ("G&A"). G&A expenses for the second quarter of fiscal 2024 were $29.7 million, a decrease of $0.5 million from $30.2 million in the second quarter of fiscal 2023. G&A expenses as a percent of revenue were 27.7% for the second quarter of fiscal 2024 compared to 28.0% for the same period a year ago. The decrease in G&A expenses was largely due to (1) non-cash decreases in amortization expense of $0.9 million and stock-based compensation of $0.3 million, and (2) higher gain on sales of assets of $0.7 million. These decreases were mostly offset by higher labor costs of approximately $1.1 million as a result of wage inflation in the United States.

For the second quarter of fiscal 2024, excluding amortization of intangible assets of $3.9 million, depreciation expense of $0.6 million, and stock-based compensation expense of $0.7 million, G&A expenses were $24.5 million (22.9% of revenue). For the second quarter of fiscal 2023, excluding amortization of intangible assets of $4.9 million, depreciation expense of $0.6 million and stock-based compensation expense of $1.1 million G&A expenses were $23.7 million (22.0% of revenue). This increase of $0.8 million is primarily due to the increases in labor costs, as discussed above.

Total other income (expense)

Interest expense and amortization of deferred financing costs. Interest expense and amortization of deferred financing costs for the second quarter of fiscal 2024 was $6.9 million, down $0.4 million from $7.3 million in the second quarter of fiscal 2023. The decrease was primarily attributable to a lower average ABL revolver draw during the fiscal 2024 second quarter as compared to the same quarter a year ago.

Change in fair value of warrant liabilities. During the three months ended April 30, 2024 the Company did not recognize a gain or loss on the fair value remeasurement of our liability-classified warrants. During the three months ended April 30, 2023 the Company recognized a $1.2 million gain on the fair value measurement of our liability-classified warrants. The decline in the fair value remeasurement of the public warrants is due to the Company's share price trading below the exercise price as the warrants were closer to expiring in December 2023. On December 6, 2023, we announced the expiration of the Company's 13,017,677 warrants, as such they are no longer recognized as a liability on the condensed consolidated balance sheet as of April 30, 2024.

Income tax expense

Income tax expense. For the second fiscal quarter ended April 30, 2024 the Company recorded income tax expense of $2.2 million on pretax income of $5.2 million. For the same quarter a year ago, the Company recorded an income tax expense of $1.5 million on pretax income of $7.1 million. The comparability of effective tax rates between both periods was primarily impacted by (1) excess tax deficiencies from share-based compensation in the three months ended April 30, 2024 and (2) the warrants fair value activity in the three months ended April 30, 2023, as it is not recognized for tax purposes.

Six Months Ended April 30, 2024 Compared to the Six Months Ended April 30, 2023

The tables included in the period-to-period comparisons below provide summaries of our revenue and gross profit for our business segments for the six months ended April 30, 2024 and 2023.

Revenue

(in thousands)

*Change is not meaningful

Total revenue. Total revenues were $204.8 million for the six months ended April 30, 2024 compared to $201.4 million for the six months ended April 30, 2023. Revenue by segment is further discussed below.

U.S. Concrete Pumping. Revenue for our U.S. Concrete Pumping segment decreased by 2.9%, or $4.3 million, from $145.6 million for the six months ended April 30, 2023 to $141.3 million for the six months ended April 30, 2024 primarily attributable to (1) a general slowdown in commercial construction work, mostly due to the impact from rising interest rates, (2) oversaturation of concrete pumps in certain markets, and (3) higher than normal precipitation for the six months ended April 30, 2024.

U.K. Operations. Revenue for our U.K. Operations segment increased by 10.8%, or $3.0 million, from $27.9 million for the six months ended April 30, 2023 to $30.9 million for the six months ended April 30, 2024. Excluding the impact from foreign currency translation, revenue was up 6.6% year-over-year. The increase in revenue was primarily attributable to pricing improvements.

U.S. Concrete Waste Management Services. Third-party revenue for the U.S. Concrete Waste Management Services segment increased by 16.8%, or $4.7 million, from $27.8 million for the six months ended April 30, 2023 to $32.5 million for the six months ended April 30, 2024. The increase in revenue was driven by robust organic growth and pricing improvements against a backdrop of adverse weather.

Gross Profit and Gross Margin

(in thousands, unless otherwise stated)

Gross margin. Our gross margin for the six months ended April 30, 2024 was 36.7% compared to 39.7% in the six months ended April 30, 2023. The decrease in our gross margin was primarily related to lower revenue in our U.S. Concrete Pumping segment, decreased labor utilization driven by the reduced revenue in our U.S. Concrete Pumping segment and inflationary increases in commercial insurance premium costs. These amounts were partially offset by improved fuel expense and lower repair and maintenance costs.

General and administrative expenses

General and administrative expenses ("G&A"). G&A expenses for the six months ended April 30, 2024 were $61.6 million, an increase of $4.3 million from $57.3 million for the six months ended April 30, 2023. G&A expenses as a percent of revenue were 30.1% for the six months ended April 30, 2024 compared to 28.4% for the same period a year ago. The increase in G&A expenses was largely due to (1) a non-recurring charge of $3.5 million in the first quarter of 2024 as a result of a recent adverse court ruling related to sales tax in Washington State, as further described in Note 13 in Part I, Item 1 of this report for more information, and (2) higher labor and health insurance costs of approximately $3.6 million as a result of wage inflation coupled with limited headcount growth. These increases were partially offset by non-cash decreases in amortization expense of $1.9 million and stock-based compensation expense of $0.9 million.

For the six months ended April 30, 2024, excluding amortization of intangible assets of $7.8 million, depreciation expense of $1.1 million, stock-based compensation expense of $1.3 million and the non-recurring $3.5 million sales tax litigation-related charge, G&A expenses were $47.9 million (23.4% of revenue). For the six months ended April 30, 2023, excluding amortization of intangible assets of $9.6 million, depreciation expense of $1.2 million and stock-based compensation expense of $2.2 million, G&A expenses were $44.3 million (22.0% of revenue). The increase of $3.6 million was primarily due to the higher labor and increased health insurance costs as discussed above.

Total other income (expense)

Interest expense and amortization of deferred financing costs. Interest expense and amortization of deferred financing costs for the six months ended April 30, 2024 was $13.3 million, down $0.9 million from $14.2 million for the six months ended April 30, 2023. The decrease was primarily attributable to a lower average ABL revolver draw during the first and second quarter of fiscal 2024 as compared to the same quarters a year ago.

Change in fair value of warrant liabilities. During the six months ended April 30, 2024, the Company recognized a $0.1 million gain on the fair value remeasurement of our liability-classified warrants. During the six months ended April 30, 2023 the Company recognized a $5.7 million gain on the fair value measurement of our liability-classified warrants. The decline in the fair value remeasurement of the public warrants is due to the Company's share price trading below the exercise price as the warrants were closer to expiring in December 2023. On December 6, 2023, we announced the expiration of the Company's 13,017,677 warrants. As such they were no longer recognized as a liability on the condensed consolidated balance sheet as of April 30, 2024.

Income tax expense

Income tax expense. For the six months ended April 30, 2024, the Company recorded income tax expense of $1.2 million on pretax income of $0.4 million. For the same period a year ago, the Company recorded income tax expense of $2.1 million on pretax income of $14.2 million. The comparability of effective tax rates between both periods was primarily impacted by (1) excess tax deficiencies from share-based compensation in the six months ended April 30, 2024 and (2) the warrants fair value activity in the six months ended April 30, 2023, as it is not recognized for tax purposes.

The effective tax rate for the three and six months ended April 30, 2024 and 2023 was primarily impacted by excess tax deficiencies from share-based compensation and the change in fair value of warrant liabilities, respectively.

Adjusted EBITDA and Net Income/(Loss)

During the first quarter of fiscal year 2024, the Company moved certain assets and associated revenues and expenses, which were previously categorized in the Company's Other activities, into the U.S. Concrete Pumping segment in order to better align its placement with the manner in which the Company allocates its resources and measures performance. As a result, segment results for prior periods have been reclassified to conform to the current period presentation. For further discussion, see Note 18 in Part I, Item 1 of this report for more information. In addition, in order to appropriately distribute the use of corporate resources and better align measures with segment performance, beginning in the first quarter of fiscal year 2024, the Company is no longer adding back intercompany allocations to segment Adjusted EBITDA. The Company recast segment results for the three and six months ended April 30, 2023 are below:

(in thousands)

30

(in thousands, except percentages)

(in thousands)

U.S. Concrete Pumping. Net loss for our U.S. Concrete Pumping segment was $1.0 million for the second quarter of fiscal 2024, versus net income of $0.8 million for the second quarter of fiscal 2023. Adjusted EBITDA for our U.S. Concrete Pumping segment was $17.2 million for the second quarter of fiscal 2024, down 10.7% from $19.3 million for the same period in fiscal 2023.

Net loss for our U.S. Concrete Pumping segment was $7.8 million for the six months ended April 30, 2024, versus net loss of $0.0 million for the six months ended April 30, 2023. Adjusted EBITDA for our U.S. Concrete Pumping segment was $27.9 million for the six months ended April 30, 2024, down 22.6% from $36.1 million for the same period in fiscal 2023.

The decreases in net income and Adjusted EBITDA for both periods were primarily attributable to lower revenue volumes, decreased labor utilization driven by the reduced revenue, and inflationary increases in commercial insurance.

U.K. Operations. Net income for our U.K. Operations segment was $1.0 million for the second quarter of fiscal 2024, versus net income of $0.9 million for the second quarter of fiscal 2023. Adjusted EBITDA for our U.K. Operations segment was $4.1 million for the second quarter of fiscal 2024, up 8.2% from $3.8 million from the same period in fiscal 2023. The increases were primarily attributable to the year-over-year improvement in revenue and reductions in fuel and repair costs.

Net income for our U.K. Operations segment was $1.5 million for the six months ended April 30, 2024, versus net income of $0.8 million for the six months ended April 30, 2023. Adjusted EBITDA for our U.K. Operations segment was $7.3 million for the six months ended April 30, 2024, up 17.7% from $6.2 million for the six months ended April 30, 2023. The increases were primarily attributable to the year-over-year improvement in revenue, improved labor utilization and reductions in fuel and repair costs.

U.S. Concrete Waste Management Services. Net income for our U.S. Concrete Waste Management Services segment was $3.0 million for the second quarter of fiscal 2024, versus net income of $2.7 million for the second quarter of fiscal 2023. Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $6.2 million for the second quarter of fiscal 2024, up 7.9% from $5.7 million for the same period in fiscal 2023. The increases were attributable to the significant increase in revenue that was partially offset by inflationary increases in labor and commercial insurance costs and higher corporate allocations.

Net income for our U.S. Concrete Waste Management Services segment was $5.4 million for the six months ended April 30, 2024, versus net income of $5.5 million for the six months ended April 30, 2023. Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $11.6 million for the six months ended April 30, 2024, up 0.1% from $11.5 million for the six months ended April 30, 2023. The slight increase in Adjusted EBITDA was primarily driven by the increase in revenue that was mostly offset by adverse weather impacts in the first quarter on labor utilization, coupled with commercial insurance cost inflation and higher corporate allocations.

Other. There was no net income for Other activities for the second quarter of fiscal 2024, compared to a net income of $1.2 million for the second quarter of fiscal 2023. The change in net income is related to the change in warrant liability, as discussed above.

Net income for Other activities was $0.1 million for the six months ended April 30, 2024, compared to a net income of $5.7 million for the six months ended April 30, 2023. The change in net income is related to the change in warrant liability, as discussed above.

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 (as defined below) and (4) short-term financing under our ABL Facility (as defined below). 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 (as defined below), 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. As of April 30, 2024, we had $18.0 million of cash and cash equivalents and $198.9 million of available borrowing capacity under the ABL Facility (as defined below), providing total available liquidity of $216.9 million.

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 requirements, contractual restrictions and other factors.

We believe our existing cash and cash equivalent balances, cash flow from operations and borrowing capacity under our ABL Facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, potential acquisitions and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity could result in dilution to our stockholders and the incurrence of additional debt could restrict our operations.

Material Cash Requirements

Our principal uses of cash historically have been to fund 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 meet debt service requirements.

Our working capital surplus as of April 30, 2024 was $19.5 million. We are in compliance with our debt covenants and believe that we have sufficient working capital to meet our material cash requirements.

The amount of our future capital expenditures will depend on 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 six months ended April 30, 2024 and 2023 were approximately $28.8 million and $34.7 million, respectively.

To service our debt, we require a significant amount of cash. Our ability to pay interest and principal on our indebtedness will depend 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 for 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 April 30, 2024 and October 31, 2023:

(in thousands)

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 originally provided up to $125.0 million of asset-based revolving loan commitments to the Company and the other borrowers under the ABL Facility. 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").

On June 1, 2023, the ABL Facility was amended to, among other changes, (1) increase the maximum revolver borrowings available to be drawn thereunder to $225.0 million, (2) increase the letter of credit sublimit to $22.5 million and (3) extend the maturity of the ABL Facility to the earlier of (a) June 1, 2028 or (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 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.

The outstanding balance under the ABL Facility as of April 30, 2024 was $16.4 million and as of that date, the Company was in compliance with all debt covenants. In addition, as of April 30, 2024, the Company had $1.1 million in credit line reserves and a letter of credit balance of $8.5 million. As of April 30, 2024, we had $198.9 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 condensed balance sheets. The Company had debt issuance costs related to the revolving credit facilities of $1.6 million as of April 30, 2024. See Note 8 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 operating assets and liabilities. Generally, we believe our business requires a relatively low level of working capital investment due to low inventory requirements and timely customer payments due to daily billings for most of our services.

Cash 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.

Net cash provided by operating activities during the six months ended April 30, 2024 was $29.4 million. The Company had a net loss of $0.8 million, which included net non-cash expense items of $30.8 million. In addition, we had cash outflows related to an increase in our working capital of $0.6 million. Cash outflows related to working capital activity include a decrease in other operating liabilities of $3.8 million, an increase in other operating assets of $2.4 million, and a decrease of $1.2 million in accounts payable. These were offset by a decrease in receivables of $6.3 million and a decrease in inventory of $0.6 million. The decrease in operating liabilities is due to payments on operating leases of $2.6 million and a decrease in sales and use tax. The increase to other operating assets is primarily due to timing of prepaid insurance. The decrease in accounts payable is driven by the timing of vendor payments. The decrease in receivables is due to seasonal collection of receivables and decrease in sales volumes during the six months ended April 30, 2024.

Net cash provided by operating activities during the six months ended April 30, 2023 was $31.1 million. The Company had net income of $12.1 million, which included net non-cash expense items of $28.2 million. In addition, we had cash outflows related to an increase in our working capital of $9.2 million. Cash outflows related to working capital activity primarily include a decrease in other operating liabilities of $5.1 million, an increase in other operating assets of $3.2 million, a decrease of $1.1 million to accounts payable and an increase in inventory of $0.7 million. These were offset by a decrease in trade receivables of $0.9 million. The decrease in other operating liabilities is primarily related to payments on operating leases of $3.1 million and a decrease in accrued insurance. The increase to other operating assets is primarily due to timing of prepaid insurance, which is generally prepaid during first quarter of a fiscal year. The decrease in accounts payable is driven by timing.

Cash flow used in investing activities. Net cash used in operating activities generally reflects the cash outflows for property, plant and equipment.

We used $23.6 million to fund investing activities during the six months ended April 30, 2024. The Company used $28.8 million for the purchase of property, plant and equipment, which was partially offset by $5.2 million in proceeds from the sale of property, plant and equipment.

We used $31.1 million to fund investing activities during the six months ended April 30, 2023. The Company used $34.7 million for the purchase of property, plant and equipment and $0.8 million for the purchase of intangible assets, which was partially offset by $4.4 million in proceeds from the sale of property, plant and equipment.

Cash flow used in financing activities.

Net cash used in financing activities was $4.1 million for the six months ended April 30, 2024. Cash used in financing activities included $2.5 million in net payments under the Company's ABL Facility and $3.0 million in purchase of treasury stock, which included $1.5 million purchased under the share repurchase program and $1.5 million in outflows from the purchase of shares into treasury stock in order to fund the employee tax obligations for certain vested stock awards.

Net cash used in financing activities was $1.1 million for the six months ended April 30, 2023. Financing activities during this period included $8.3 million in purchase of treasury stock, which included $7.2 million purchased under the share repurchase program and $1.1 million in outflows from the purchase of shares into treasury stock in order to fund the employee tax obligations for certain vested stock awards. In addition, cash used in financing activities included $7.3 million in net proceeds under the Company's ABL Facility.

Accounting and Other Reporting Matters

Non-GAAP Measures (EBITDA and Adjusted EBITDA)

We calculate EBITDA by taking GAAP net income and adding back interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by taking EBITDA and adding back transaction expenses, loss on debt extinguishment, stock-based compensation, changes in the fair value of warrant liabilities, 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 completion 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 non-recurring expenses and non-cash currency gains/losses.

During the first quarter of fiscal year 2024, the Company moved certain assets and associated revenues and expenses that were previously categorized in the Company's Other activities, into the U.S. Concrete Pumping segment in order to better align its placement with the manner in which the Company allocates its resources and measures performance. As a result, segment results for prior periods have been reclassified to conform to the current period presentation. For further discussion, see Note 18 in Part I, Item 1 of this report for more information. In addition, in order to appropriately distribute the use of corporate resources and better align measures with segment performance, beginning in the first quarter of fiscal year 2024, the Company is no longer adding back intercompany allocations to segment Adjusted EBITDA. As a result, segment results for prior periods have been reclassified to conform to our current period presentation. See the section "Adjusted EBITDA and Net Income/(Loss)" above for more information.

We believe these non-GAAP measures of financial results provide useful supplemental information to management and investors regarding certain financial and business trends related to our financial condition and results of operations, and as a supplemental tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial measures with competitors who also present similar non-GAAP financial measures. In addition, these measures (1) are used in quarterly and annual financial reports and presentations prepared for management, our board of directors and investors, and (2) help management to determine incentive compensation. EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated under GAAP. These non-GAAP measures exclude certain cash expenses that we are obligated to make. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently or may not calculate it at all, which limits the usefulness of EBITDA and Adjusted EBITDA as comparative measures.

(in thousands)

1 Other adjustments include the adjustment for non-recurring expenses and non-cash currency gains/losses. For the six months ended April 30, 2024, other adjustments includes a $3.5 million non-recurring charge related to sales tax litigation. See Note 13 in Part I, Item 1 of this report for more information.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in the "Critical Accounting Policies and Estimates" section of our Annual Report. No modifications have been made during the six months ended April 30, 2024 to these policies or estimates except for those noted in Note 2 to the condensed consolidated financial statements included within Item 1 of this report.

New Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 to the condensed consolidated financial statements included within Item 1 of this report for more information.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2024 (as such term is defined in Rule 13a-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Exchange Act 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 management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based upon this evaluation, our Chief Executive Office and Chief Financial Officer concluded that, as of April 30, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended April 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the Risk Factors previously disclosed in our Annual Report. For a detailed discussion of the risks that affect our business, please refer to the section entitled "Risk Factors" in the Annual Report.