Stock Story -
Concrete and waste management company Concrete Pumping (NASDAQ:BBCP) fell short of analysts’ expectations in Q2 CY2024, with revenue down 9.2% year on year to $109.6 million. The company’s full-year revenue guidance of $425 million at the midpoint also came in 7.1% below analysts’ estimates. It made a GAAP profit of $0.13 per share, down from its profit of $0.18 per share in the same quarter last year.
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Concrete Pumping (BBCP) Q2 CY2024 Highlights:
- Revenue: $109.6 million vs analyst estimates of $125.5 million (12.6% miss)
- EPS: $0.13 vs analyst expectations of $0.19 (31% miss)
- The company dropped its revenue guidance for the full year to $425 million at the midpoint from $460 million, a 7.6% decrease
- EBITDA guidance for the full year is $110.5 million at the midpoint, below analyst estimates of $120.9 million
- Gross Margin (GAAP): 40.6%, in line with the same quarter last year
- EBITDA Margin: 28.9%, in line with the same quarter last year
- Free Cash Flow Margin: 24%, up from 22.1% in the same quarter last year
- Market Capitalization: $332.8 million
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 ServicesConstruction 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 GrowthExamining a company’s long-term performance can provide clues about its business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Concrete Pumping grew its sales at a solid 10.3% compounded annual growth rate. This shows it was successful in expanding, a useful starting point for our analysis.
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 annualized revenue growth of 7.8% over the last two years is below its five-year trend, but we still think the results were respectable.
This quarter, Concrete Pumping missed Wall Street’s estimates and reported a rather uninspiring 9.2% year-on-year revenue decline, generating $109.6 million of revenue. Looking ahead, Wall Street expects sales to grow 8.5% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating 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 expenses over the last five years. The company has produced an average operating margin of 8.5%, higher than the broader industrials sector.
Analyzing the trend in its profitability, Concrete Pumping’s annual operating margin rose by 19.6 percentage points over the last five years, as its sales growth gave it immense operating leverage.
This quarter, Concrete Pumping generated an operating profit margin of 15.2%, down 1 percentage points year on year. Since Concrete Pumping’s operating margin decreased more than its gross margin, we can assume the company was recently less efficient because expenses such as sales, marketing, R&D, and administrative overhead increased.
EPSAnalyzing long-term revenue trends tells us about a company’s historical growth, but the long-term change in its earnings per share (EPS) points to the profitability of that growth–for example, a company could inflate its sales through excessive spending on advertising and promotions.
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.
Like with revenue, we also analyze EPS over a more recent period because it can give insight into an emerging theme or development for the business. Sadly for Concrete Pumping, its EPS declined by 18.2% annually over the last two years while its revenue grew 7.8%. However, its operating margin actually expanded during this timeframe, telling us non-fundamental factors affected its ultimate earnings.
In Q2, Concrete Pumping reported EPS at $0.13, down from $0.18 in the same quarter last 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 grow its earnings. Analysts are projecting its EPS of $0.26 in the last year to climb by 156% to $0.66.
Key Takeaways from Concrete Pumping’s Q2 Results We struggled to find many strong positives in these results. Revenue and EPS both missed. Its full-year revenue guidance was lowered and also missed expectations. Overall, this was a weaker quarter. The stock traded down 12.9% to $5 immediately following the results.
