Concrete Pumping (BBCP)

Concrete and waste management company Concrete Pumping (NASDAQ:BBCP) fell short of the market’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.

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 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.

Concrete Pumping’s competitors include United Rentals (NYSE:URI), Cemex (NYSE:CX), and Vulcan Materials (NYSE:VMC).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Concrete Pumping’s sales grew at a mediocre 6.8% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Concrete Pumping’s recent history shows its demand has slowed as its revenue was flat over the last two years.

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. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

Concrete Pumping’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 41.1% gross margin over the last five years. Said differently, roughly $41.11 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

This quarter, Concrete Pumping’s gross profit margin was 36.1%, up 2 percentage points year on year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

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.

Looking at 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.

In Q4, 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.

Revenue trends explain a company’s historical growth, but the long-term change in 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 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.

Diving into the nuances of Concrete Pumping’s earnings can give us a better understanding 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.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Concrete Pumping has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6.8% over the last five years, slightly better than the broader industrials sector.

Taking a step back, we can see that Concrete Pumping’s margin dropped by 9.7 percentage points during that time. If its declines continue, it could signal higher capital intensity and investment needs.

Concrete Pumping broke even from a free cash flow perspective in Q4. The company’s cash profitability regressed as it was 2.4 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Concrete Pumping historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.4%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Concrete Pumping’s ROIC has increased over the last few years. This is a good sign, and we hope the company can continue improving.

Concrete Pumping reported $85.13 million of cash and $443.1 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $109.9 million of EBITDA over the last 12 months, we view Concrete Pumping’s 3.3× net-debt-to-EBITDA ratio as safe. We also see its $19.52 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

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 was a weaker quarter. The stock traded down 2.5% to $5.90 immediately following the results.

Updated: May 16, 2025 at 10:03 PM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Concrete Pumping’s business quality ultimately falls short of our standards. For starters, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its expanding operating margin shows the business has become more efficient, the downside is its cash profitability fell over the last five years. On top of that, its flat organic revenue disappointed.

Concrete Pumping’s P/E ratio based on the next 12 months is 15.7x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $7.25 on the company (compared to the current share price of $6.95).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

To get the best start with StockStory, check out our most recent stock picks, and then sign up for our earnings alerts by adding companies to your watchlist. We typically have quarterly earnings results analyzed within seconds of the data being released, giving investors the chance to react before the market has fully absorbed the information. This is especially true for companies reporting pre-market.