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(Mark One)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38166
CONCRETE PUMPING HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
83-1779605
(I.R.S. Employer Identification No.)
500 E. 84th Avenue, Suite A-5
Thornton, Colorado
(Address of Principal Executive Offices)
80229
(Zip Code)
(303) 289-7497
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.0001 per share
Trading Symbol(s)
BBCP
Name of each exchange on which registered
Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
Emerging growth company
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Accelerated filer
Smaller reporting company
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If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common equity held by non-affiliates of the registrant was $75,239,575 based upon the market price of $2.84 per share on April 30,
2020. As of January 11, 2020, 56,469,294 shares of common stock, par value $0.0001 per share, were issued and outstanding.
Documents Incorporated by Reference: Portions of the registrant’s definitive proxy statement relating to the registrant’s 2021 Annual Meeting of Stockholders to be filed
hereafter are incorporated by reference into Part III of this Annual Report on Form 10-K.
Table of Contents
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
Table of Contents
Concrete Pumping Holdings, Inc.
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
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Cautionary Statement Concerning Forward-Looking Statements and Risk Factors Summary
Certain statements in this Annual Report on Form 10-K (this “Annual 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
operation, cash flows, strategies and prospects, and the potential impact of the COVID-19 pandemic on our business. These forward-looking statements may be identified by
terminology such as “likely,” “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” 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 Annual Report are
reasonable, we cannot guarantee future results. 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.
The forward-looking statements contained in this Annual 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 list, which summarizes some of the principal risks relating to the Company and its business:
● the adverse effects of the COVID-19 pandemic on our business, the economy and the markets we serve;
● the length and severity of, and the pace of recovery following, the novel coronavirus (“COVID-19”) pandemic;
● general economic and business conditions, which may affect demand for commercial, infrastructure, and residential construction;
● our ability to successfully implement our operating strategy;
● our ability to successfully identify, manage and integrate acquisitions;
● 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;
● other factors as described below in the section entitled “Risk Factors.”
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Item 1. Business
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PART I
Concrete Pumping Holdings, Inc. is a Delaware corporation headquartered in Thornton, Colorado. We refer to Concrete Pumping Holdings, Inc. as the “Company,”
“CPH,”, “us”, “we” or “our” in this Annual Report, and these designations include our subsidiaries unless we state otherwise. On December 6, 2018 (the “Closing Date”),
the Company, formerly known as Concrete Pumping Holdings Acquisition Corp., consummated a business combination transaction (the “Business Combination”) pursuant
to which it acquired (i) the private operating company formerly called Concrete Pumping Holdings, Inc. and (ii) the former special purpose acquisition company called
Industrea Acquisition Corp (“Industrea”). In connection with the closing of the Business Combination, the Company changed its name to Concrete Pumping Holdings, Inc.
Our principal executive offices are
located at 500 E. 84th Ave., Suite A-5, Thornton, Colorado, 80229. We maintain a website at
https://www.concretepumpingholdings.com/. The information contained on, or that may be accessed through, our website is not part of, and is not incorporated into, this
Annual Report.
Overview
CPH is a leading provider of concrete pumping services and concrete waste management services in the United States (“U.S.”) and the United Kingdom (“U.K.”)
based on fleet size, primarily operating under what we believe are the only established, national concrete pumping brands in both geographies – Brundage-Bone Concrete
Pumping, Inc. (“Brundage-Bone”) for concrete pumping in the U.S., Camfaud Group Limited (“Camfaud”) in the U.K., and Eco-Pan, Inc. (“Eco-Pan”) for waste
management services in both the U.S. and U.K. The Brundage-Bone business was founded in 1983 in Denver, Colorado. Since then, Brundage-Bone has expanded across the
U.S. through more than 45 acquisitions. Eco-Pan was founded in 1999 and was acquired by CPH in 2014. In November 2016, we entered the U.K. market through the
acquisition of Camfaud and in May 2019, we acquired Capital Pumping LP and its affiliates (“Capital”), a concrete pumping provider based in Texas. The Capital
acquisition provided us with complementary assets and operations and significantly expanded our footprint and business in Texas.
Concrete pumping is a highly specialized method of concrete placement that requires skilled operators to position a truck-mounted, fully-articulating boom for
precise delivery of ready-mix concrete from mixer trucks to placing crews on a construction job site. In addition, proper concrete washout handling has become an
increasing area of focus for our Company given rising awareness of environmental factors. We believe that our large fleet of specialized pumping equipment, washout pans
and trucks, and highly-trained operators enable us to be the trusted provider of concrete placement and waste management solutions to our customers. We deliver and
facilitate substantial labor cost savings, shortened concrete placement times, enhanced worksite safety, and efficient concrete washout containment, and thereby help
improve the overall quality of construction projects. As of October 31, 2020, we operated a fleet of approximately 1,200 units of equipment, with approximately 1,300
employees and approximately 140 locations globally.
With over 35 years of experience, we believe we are the only nationally-scaled provider of concrete pumping services in the U.S. and the U.K., with the most
comprehensive and reliable fleet and highly-skilled operators to provide quality service. We are especially equipped to support large and technically complex construction
projects, which generally command higher price points than smaller projects. In addition, we have actively focused our business on commercial and infrastructure
construction projects, while continuing to pursue profitable residential opportunities. Our fleet is capable of handling multiple large projects concurrently, and can be
deployed on short-notice across the U.S. and the U.K., thereby allowing us to efficiently allocate resources depending on market conditions to more profitable markets. Our
highly complementary Eco-Pan business provides customers with a one-stop solution for their concrete washout needs. We plan to continue establishing additional Eco-Pan
locations across the U.S. and the U.K., and further penetrate our existing concrete pumping customer base by cross-selling our Eco-Pan services.
As of October 31, 2020, we estimate our share of the concrete pumping market to be approximately 13% in the U.S. and approximately 34% in the U.K., based on
fleet size. In the U.S. and U.K. markets, we serve a large and diverse customer base and as of October 31, 2020, our top ten customers represented less than 10% of our total
revenue and had an average tenure of more than 20 years.
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Segments
We operate through the following four reportable segments:
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U.S. Concrete Pumping: Our U.S. concrete pumping services segment represented 75% of our total revenue for the year ended October 31, 2020 and services from
this segment are primarily provided under our Brundage-Bone and Capital Pumping brands, which as of October 31, 2020 operated a total fleet of approximately 750
equipment units from a diversified footprint of approximately 90 locations across 22 states. We provide operated concrete pumping services, for which customers are billed
on a negotiated time and volume basis based on the duration of the job and yards of concrete pumped. Additional charges (such as a fuel surcharge and travel costs) are
frequently added based on specific project requirements. Typically, we send a single operator with each concrete pump. We do not take ownership of the concrete and thus
have minimal inventory or product liability risk. We typically do not engage in fixed-bid work or have surety bonding requirements and operate a daily fee-based revenue
model regardless of overall construction project completion.
U.S. Concrete Waste Management Services: Our U.S. concrete waste management services segment represented 12% of our total revenue for the year ended
October 31, 2020. Through our Eco-Pan business, we are a leading provider of concrete waste management services in the U.S. Eco-Pan provides a full-service, cost-
effective, regulation-compliant solution to manage environmental issues caused by concrete washout. Eco-Pan is a route-based solution that operates approximately
80 trucks and over 6,800 custom metal pans for construction sites from 16 locations in the U.S. as of October 31, 2020. We charge a round-trip delivery fee and a weekly or
monthly rental rate for the pans, which provide a turnkey solution to the customer compared to the alternatives of bagging the waste concrete, pouring it into an on-site lined
pit, or disposing of it into trash dumpsters and arranging for a pick-up. Eco-Pan delivers watertight pans to job sites to collect concrete washwater, and subsequently delivers
it to recycling centers. Disposal fees charged by the recycling centers are passed on to the customer. To the extent that the pans are held at the job site for an extended
number of days or irregular waste is found in the pan, we charge incremental fees. Our trucks are designed to allow for the pick-up and re-delivery of multiple pans, leading
to significant incremental efficiencies as route densities increase.
U.K. Operations: Our U.K. operations represented 13% of our total revenue for the year ended October 31, 2020 and consisted of concrete pumping and concrete
waste management services. Our concrete pumping services are primarily provided through either our Camfaud brand (operated pumping services) or our Premier Concrete
Pumping brand (rental of pumping equipment on a long-term basis without an operator). Mobile equipment is charged to customers under a minimum hire rate, which is
typically five to eight hours. Our concrete pumping business in the U.K. is comprised of a fleet of approximately 360 equipment units that are serviced from 30 locations as
of October 31, 2020. In addition, during the third quarter of fiscal 2019 we started concrete waste management operations under our Eco-Pan brand name in the U.K. and the
results of these operations are included in this segment. Our Eco-Pan business in the U.K. is operated from a shared Camfaud location as of October 31, 2020. In addition,
we bill our customers for our Eco-Pan services in the same manner as our U.S. Eco-Pan services.
Corporate: Our Corporate segment is primarily related to the intercompany leasing of real estate to certain of our U.S Concrete Pumping branches.
Competitive Environment
The concrete pumping industry is highly fragmented in both the U.S. and the U.K. In the U.S., we believe there are approximately 1,000 industry participants, the
majority of which operate with an average of five to ten pumps each, a limited number having a multi-regional presence (average of 50-60 pumps) and no other company
having a national presence. We believe many industry participants are undercapitalized, utilize aged equipment and operate only smaller and significantly fewer boom
pumps. In a typical geographic market, we compete with only one or two other concrete pumping companies that can perform the larger and more complex projects that we
typically target.
In the concrete waste management industry, we compete with local operators who may have a small number of washout pans but are not capable of offering
services across the U.S. We believe we are the only operator of scale with a national footprint in this industry and estimate that there is only one competitor on a national
level. While the technology underlying the washout pans is less sophisticated than that for a concrete pump, we believe having the route density that Eco-Pan has achieved
is a differentiator in terms of profitability. Our U.K. operations is the pioneer of the concrete waste management service in the U.K. and as such, we are not aware of any
equivalent competitor in the U.K.
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Equipment
Our fleet is operated by approximately 800 experienced employees as of October 31, 2020, each of whom is required to complete rigorous training and safety
programs. In addition, we have approximately 100 skilled mechanics who perform in-house equipment servicing. As of October 31, 2020, we owned 100% of our fleet
consisting of approximately 770 boom pumps, ranging in size from 17 to 65 meters, 80 placing booms, 20 telebelts, 240 stationary pumps, and 80 waste management trucks.
As of October 31, 2020, the average age of our fleet was approximately 9 years old and most of our equipment had useful lives of 20 to 25 years.
Customers
We serve a base of more than 14,000 customers (often with several projects per customer) across the U.S. and the U.K. and have an approximate 92% customer
retention rate based on our top 500 customers and 100% customer retention rate of our top 100 customers as of October 31, 2020. In addition, as of October 31, 2020, our
top ten customers represented less than 10% of our total revenue and had an average tenure of more than 20 years. Our customer composition is largely dependent on
geographic location and general economic and construction market trends within individual operating markets. We actively monitor regional trends and target customers in
fast-growing markets through our extensive geographic footprint and knowledge of the local construction markets in each region in which we operate.
Our customer base consists of general contractors or concrete contractors that span across the commercial, infrastructure and residential end markets. We also sell
replacement parts to regional operators that lack the capital and scale to independently maintain a sufficiently stocked replacement parts inventory. Our contractual
arrangements with customers are typically on a project-to-project purchase order basis.
Suppliers
We primarily purchase pumping equipment, replacement parts, and fuel for our day-to-day operations. Concrete pumping equipment is primarily sourced from
three suppliers – Schwing, Putzmeister, and Alliance. There are a number of other suppliers as well and we are not solely dependent upon any single one. We believe we are
the concrete pumping industry’s largest consumer of concrete pumping supplies and, as such, have significant leverage with respect to making purchases. We typically
purchase fuel in bulk at favorable prices and utilize onsite fuel storage facilities.
Employees
As of October 31, 2020, we had approximately 1,300 employees across the U.S. and the U.K., of which approximately 900 are highly-skilled equipment operators
and mechanics, approximately 90 are managers, approximately 50 are in sales, and approximately 60 are dispatchers. The remaining employees include administrative
support, corporate functions, and laborers. Our employees have an average tenure of over five years for pump operators. Additionally, our regional managers have, on
average, approximately 30 years of experience in the concrete pumping industry. We maintain a highly sophisticated, industry recognized training program, which ensures
all operators can meet the requirements of any project. Operators are trained in concrete pumping as well as in basic mechanical repair, while shop managers are trained in
inspection and maintenance of all critical truck systems.
Approximately 120 employees in CPH’s workforce are unionized across California, Oregon and Washington. These individuals are represented by the International
Union of Operating Engineers (“IUOE”) under three separate collective bargaining agreements. We have historically maintained favorable relations with the IUOE and have
not experienced any significant disputes, disagreements, strikes or work stoppages.
Safety
To our knowledge, we are the only concrete pumping company in the U.S. and the U.K. with a comprehensive, active safety program, including an in-house
corporate safety department and a designated safety trainer at each branch. As part of our safety management program, we actively track key safety performance indicators
at each branch location to monitor safety performance and take corrective action when needed. Over the last two years, our Total Recordable Incident Rate (“TRIR”) has
remained significantly better than industry averages.
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Legal Proceedings
The Company is currently involved in certain legal proceedings and other disputes with third parties that have arisen in the ordinary course of business.
Management believes that the outcomes of these matters will not have a material impact on the Company’s financial statements and does not believe that any amounts need
to be recorded for contingent liabilities in the Company’s consolidated balance sheet.
Environmental Matters
We are subject to various federal, state and local and environmental laws and regulations, including those governing the discharge of pollutants into air or water,
the management, storage and disposal of, or exposure to, hazardous substances and wastes, the responsibility to investigate and clean up contamination, and occupational
health and safety. Fines and penalties may be imposed for non-compliance with applicable environmental, health and safety requirements and the failure to have or to
comply with the terms and conditions of required permits. We are not aware of any material instances of non-compliance with respect to environmental regulations.
Available Information
We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, available free of charge on our website as soon as reasonably practicable after we file or furnish
the materials electronically with the Securities and Exchange Commission (“SEC”). To obtain any of this information, go to our investor relations website,
www.ir.concretepumpingholdings.com, and select “SEC Filings”. Our investor relations website includes our Code of Business Conduct and Ethics and charters for the
Audit, Compensation, Corporate Governance/Nominating Committees. These materials may also be obtained, free of charge, at www.ir.concretepumpingholdings.com
(select “Governance”).
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Item 1A. Risk Factors
Risks Related to the Company’s Business and Operations
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The COVID-19 pandemic, including the efforts to mitigate its impact, has had and may continue to have a material adverse effect on our business, liquidity, results of
operations, financial condition and price of our securities.
The COVID-19 pandemic, including the efforts to combat it, has had and may continue to have a widespread effect on our business. In response to the COVID-19
pandemic, many countries and localities across the world have implemented a variety of regulations in order to slow and limit the transmission of the virus.
The COVID-19 pandemic has resulted in a decrease in the availability of, and an increase in the cost of, contractors and subcontractors, including as a result of
infections, recommended self-quarantining or governmental mandates to direct production activities to support public health efforts. Our ability to provide construction
services depend on our customers’ ability to find and maintain skilled contractors, subcontractors and employees. If our customers are unable to keep skilled subcontractors,
contractors and employees due to COVID-19 or other issues, our services may be postponed or cancelled, which could materially affect our financial performance.
In addition, construction activities and land development are subject to extensive government regulations. Such regulations relate to zoning, design and business
standards, as well as land use, health, safety and the environment. Due to the COVID-19 pandemic, construction-related activity has been halted in several locations in which
we operate, in part, due to new government regulations implemented in response to this pandemic. To date, we have experienced declines in demand for our services due to
shelter-in-place orders and mandates to halt all residential and commercial construction. Such regulations can delay construction and negatively impact our cash position in
light of continuing obligations to serve our outstanding debt obligations.
Furthermore, the extent to which the COVID-19 pandemic will impact our business and results of operations is highly uncertain and will be affected by a number of
factors, including: the duration and extent of the pandemic; the duration and extent of imposed or recommended containment and mitigation measures; the extent, duration
and effective execution of government stabilization and recovery efforts; the impact of the pandemic on economic activity, including on construction projects and our
customers’ demand for our services; our ability to effectively operate, including as a result of travel restrictions and mandatory business and facility closures; the ability of
our customers to pay us for services rendered; any further closures of our and our customers’ offices and facilities; and any additional project delays or shutdowns.
Customers may also slow down decision-making, delay planned work or seek to terminate existing agreements. Any of these events could have a material adverse effect on
our business, financial condition, results of operations, and/or stock price.
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Our business is cyclical in nature and a slowdown in the economic recovery or a decrease in general economic activity could have a material adverse effect on our
revenues and operating results.
Substantially all of our customer base comes from the commercial, infrastructure and residential construction markets. A worsening of economic conditions or a
decrease in construction expenditures and/or investments could cause weakness in our end markets, cause declines in construction and industrial activity, and adversely
affect our revenue and operating results.
The following factors, among others, may cause weakness in our end markets, either temporarily or long-term:
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the depth and duration of an economic downturn and lack of availability of credit;
uncertainty regarding general or regional economic conditions;
reductions in corporate spending for plants and facilities or government spending for infrastructure projects;
the cyclical nature of our customers’ businesses, particularly those operating in the commercial, infrastructure and residential construction sectors;
an increase in the cost of construction materials;
a decrease in investment in certain of our key geographic markets;
changes in interest rates and lending standards;
an overcapacity in the businesses that drive the need for construction;
adverse weather conditions, which may temporarily affect a particular region or regions;
reduced construction activity in our end markets;
terrorism or hostilities involving the U.S. or the U.K.;
change in structural construction designs of buildings (e.g., wood versus concrete);
risks of political or economic instability (e.g., negative impact on our U.K. business as a result of Brexit); and
oversupply of equipment or new entrants into the market resulting in pricing uncertainty.
A downturn in any of our end markets in one or more of our geographic markets caused by these or other factors could have a material adverse effect on our
business, financial conditions, results of operations and cash flows.
Our business is seasonal and subject to adverse weather.
Since our business is primarily conducted outdoors, erratic weather patterns, seasonal changes and other weather-related conditions affect our business. Adverse
weather conditions, including hurricanes and tropical storms, cold weather, snow, and heavy or sustained rainfall, reduce construction activity, restrict the demand for our
products and services, and impede our ability to deliver and pump concrete efficiently or at all. In addition, during periods of extended adverse weather or other operational
delays, we may elect to continue to pay certain hourly employees to maintain our workforce, which may adversely impact our results of operations. In addition, severe
drought conditions can restrict available water supplies and restrict production. Consequently, these events could adversely affect our business, financial condition, results of
operations, liquidity and cash flows.
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Our revenue and operating results have varied historically from period to period and any unexpected periods of decline could result in an overall decline in our
available cash flows.
Our revenue and operating results have varied historically from period to period and may continue to do so. We have identified below certain of the factors that
may cause our revenue and operating results to vary:
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seasonal weather patterns in the construction industry on which we rely, with activity tending to be lowest in the winter and spring;
the timing of expenditure for maintaining existing equipment, new equipment and the disposal of used equipment;
changes in demand for our services or the prices we charge due to changes in economic conditions, competition or other factors;
changes in the interest rates applicable to our variable rate debt, and the overall level of our debt;
fluctuations in fuel costs;
general economic conditions in the markets where we operate;
the cyclical nature of our customers’ businesses;
price changes in response to competitive factors;
other cost fluctuations, such as costs for employee-related compensation and benefits;
labor shortages, work stoppages or other labor difficulties and labor issues in trades on which our business may be dependent in particular regions;
potential enactment of new legislation affecting our operations or labor relations;
timing of acquisitions and new branch openings and related costs;
possible unrecorded liabilities of acquired companies and difficulties associated with integrating acquired companies into our existing operations;
changes in the exchange rate between the U.S. dollar and Great Britain pound sterling;
potential increased demand from our customers to develop and provide new technological services in our business to meet changing customer preferences;
our ability to control costs and maintain quality;
our effectiveness in integrating new locations and acquisitions; and
possible write-offs or exceptional charges due to changes in applicable accounting standards, reorganizations or restructurings, obsolete or damaged equipment
or the refinancing of our existing debt.
Accordingly, our operating results in any particular quarter may not be indicative of the results that can be expected for any other quarter or for the entire year.
Furthermore, negative trends in the concrete pumping and waste management industries or in our geographic markets could have material adverse effects on our business,
financial condition, results of operations, liquidity and cash flows.
Our business is highly competitive and competition may increase, which could have a material adverse effect on our business.
The concrete pumping industry is highly competitive and fragmented. Many of the markets in which we operate are served by several competitors, ranging from
larger regional companies to small, independent businesses with a limited fleet and geographic scope of operations. Some of our principal competitors may have more
flexible capital structures or may have greater name recognition in one or more of our geographic markets. We generally compete on the basis of, among other things,
quality and breadth of service, expertise, reliability, price and the size, quality and availability of our fleet of pumping equipment, which is significantly affected by the level
of our capital expenditures. If we are required to reduce or delay capital expenditures for any reason, including due to restrictions contained in, or debt service payments
required by, our credit facilities or otherwise, the ability to replace our fleet or the age of our fleet may put us at a disadvantage to our competitors and adversely impact our
ability to generate revenue. In addition, our industry may be subject to competitive price decreases in the future, particularly during cyclical downturns in our end markets,
which can adversely affect revenue, profitability and cash flow. We may encounter increased competition from existing competitors or new market entrants in the future,
which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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We are dependent on our relationships with key suppliers to obtain equipment for our business.
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We depend on a small group of key manufacturers of concrete pumping equipment to sell equipment to us. We have historically relied primarily on three suppliers
and we cannot provide assurance that our favorable working relationships with our suppliers will continue in the future or that they will continue to provide high-quality
products, service and support. Any deterioration in the quality of such products, service or support could result in additional maintenance costs and operational issues.
In addition, the concrete industry has historically been subject to periods of supply shortages, particularly in a strong economy. We cannot predict the impact on
our suppliers of changes in the economic environment and other developments in their respective businesses. Insolvency, financial difficulties, strategic changes or other
factors may result in our suppliers not being able to fulfill the terms of their agreements with us, whether satisfactorily or at all. Further, such factors may render suppliers
unwilling to extend contracts that provide favorable terms to us or may force them to seek to renegotiate existing contracts with us. Termination of our relationship with any
of our key suppliers, or interruption of our access to concrete pumping equipment, pipe or other supplies, could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
As the average fleet age increases, our offerings may not be as attractive to potential customers and our operating costs may increase, impacting our results of
operations.
As our equipment ages, the cost of maintaining such equipment, if not replaced within a certain period of time or amount of use, will likely increase. We estimate
that our fleet assets generally will have a useful life of up to 25 years depending on the size of the machine, hours in service, yardage pumped, and, in certain instances, other
circumstances unique to an asset. We manage our fleet of equipment according to the wear and tear that a specific machine or type of equipment is expected to experience
over its useful life. As of October 31, 2020, the average age of our equipment was approximately nine years. If the average age of our equipment increases, whether as a
result of our inability to access sufficient capital to maintain or replace equipment in a timely manner or otherwise, our investment in the maintenance, parts and repair for
individual pieces of equipment may exceed the book value or replacement value of that equipment. We cannot provide assurance that costs of maintenance will not
materially increase in the future. Any material increase in such costs could have a material adverse effect on our business, financial condition and results of operations.
Additionally, as our equipment ages, it may become less attractive to potential customers, thus decreasing our ability to effectively compete for new business.
The costs of new equipment we use in our fleet may increase, requiring us to spend more for replacement equipment or preventing us from procuring equipment on a
timely basis.
The cost of new equipment for use in our concrete pumping fleet could increase due to increased material costs to our suppliers or other factors beyond our control.
Such increases could materially adversely impact our financial condition, results of operations and cash flows in future periods. Furthermore, changes in technology or
customer demand could cause certain of our existing equipment to become obsolete and require us to purchase new equipment at increased costs.
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We sell used equipment on a regular basis. Our fleet is subject to residual value risk upon disposition and may not sell at the prices or in the quantities we expect.
We continuously evaluate our fleet of equipment as we seek to optimize our vehicle size and capabilities for our end markets in multiple locations. We therefore
seek to sell used equipment on a regular basis. The market value of any given piece of equipment could be less than its depreciated value at the time it is sold. The market
value of used equipment depends on several factors, including:
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the market price for comparable new equipment;
the time of year that it is sold;
the supply of similar used equipment on the market;
the existence and capacities of different sales outlets;
the age of the equipment, and the amount of usage of such equipment relative to its age, at the time it is sold;
worldwide and domestic demand for used equipment;
the effect of advances and changes in technology in new equipment models;
changing perception of residual value of used equipment by the Company’s suppliers; and
general economic conditions.
We include in income from operations the difference between the sales price and the net book value of an item of equipment sold. Changes in our assumptions
regarding depreciation could change our depreciation expense, as well as the gain or loss realized upon disposal of equipment. Sales of our used concrete pumping
equipment at prices that fall significantly below our expectations or in lesser quantities than we anticipate could have a negative impact on our financial condition, results of
operations and cash flows.
If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our operating results.
Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.
We assess potential impairment of our goodwill at least annually. Impairment may result from significant changes in the manner of use of the acquired assets,
negative industry or economic trends or significant underperformance relative to historical or projected operating results. An impairment of our goodwill may have a
material adverse effect on our results of operations.
During the fiscal year ended October 31, 2020, the COVID-19 pandemic drove a sustained decline in our stock price and a deterioration in general economic
conditions, resulting in us recording goodwill and intangibles impairment charges totaling $57.9 million in the second quarter of fiscal 2020. At October 31, 2020, we had
remaining recorded goodwill of $223.2 million related to multiple acquisitions.
If we are unable to collect on contracts with customers, our operating results would be adversely affected.
We have billing arrangements with a majority of our customers that provide for payment on agreed terms after our services are provided. If we are unable to
manage credit risk issues adequately, or if a large number of customers should have financial difficulties at the same time, our credit losses could increase significantly
above their low historical levels and our operating results would be adversely affected. Further, delinquencies and credit losses increased during the last recession and
generally can be expected to increase during economic slowdowns or recessions.
Fluctuations in fuel costs or reduced supplies of fuel could harm our business.
Fuel costs represent a significant portion of our operating expenses and we are dependent upon fuel to transport and operate our equipment. We could be adversely
affected by limitations on fuel supplies or increases in fuel prices that result in higher costs of transporting equipment to and from job sites and higher costs to operate our
concrete pumps and other equipment. Although we are able to pass through the impact of fuel price charges to most of our customers, there is often a lag before such pass-
through arrangements are reflected in our operating results and there may be a limit to how much of any fuel price increases we can pass onto our customers. Any such limits
may adversely affect our results of operations.
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10
We depend on access to our branch facilities to service our customers and maintain and store our equipment, and natural disasters and other developments could
materially adversely affect our business, financial condition and results of operations.
We depend on our primary branch facilities in the U.S. and U.K., respectively, to store, service and maintain our fleet. These facilities contain most of the
specialized equipment we require to service our fleet, in addition to the extensive secure storage areas needed for a significant number of large vehicles. If any of our
facilities were to sustain significant damage or become unavailable to us for any reason, including natural disasters, our operations could be disrupted, which could in turn
adversely affect our relationships with our customers and our results of operations and cash flow. Any limitation on our access to facilities as a result of any breach of, or
dispute under, our leases could also disrupt and adversely affect our operations. In addition, if natural disasters such as forest fires were to cause significant disruptions to the
construction projects where we focus our business, our operations could be disrupted, which could in turn materially adversely affect our business, financial condition and
results of operations.
Due to the material portion of our business conducted in currency other than U.S. dollars, we have significant foreign currency risk.
Our consolidated financial statements are presented in accordance with GAAP, and we report, and will continue to report, our results in U.S. dollars. Some of our
operations are conducted by subsidiaries in the United Kingdom and the results of operations and the financial position of these subsidiaries are recorded in the relevant
foreign currencies and then translated into U.S. dollars. Any change in the value of the pound sterling against the U.S. dollar during a given financial reporting period would
result in a foreign currency loss or gain on the translation of U.S. dollar denominated revenues and costs. The exchange rates between the pound sterling against the U.S.
dollar have fluctuated significantly in recent years and may fluctuate significantly in the future. Consequently, our reported earnings could fluctuate materially as a result of
foreign exchange translation gains or losses and may not be comparable from period to period.
Potential acquisitions and expansions into new markets may result in significant transaction expense and expose us to risks associated with entering new markets and
integrating new or acquired operations.
We may encounter risks associated with entering new markets in which we have limited or no experience. New operations require significant capital expenditures
and may initially have a negative impact on our short-term cash flow, net income and results of operations, or may never become profitable.
In addition, our industry is highly fragmented, and we expect to consider acquisition opportunities when we believe they would enhance our business and financial
performance. However, acquisitions may impose significant strains on our management, operating systems and financial resources, and could experience unanticipated
integration issues. The pursuit and integration of acquisitions may require substantial attention from our senior management, which will limit the amount of time they have
available to devote to our existing operations. Our ability to realize the expected benefits from any future acquisitions depends in large part on our ability to integrate and
consolidate the new operations with our existing operations in a timely and effective manner. Future acquisitions could also result in the incurrence of substantial amounts of
indebtedness and contingent liabilities (including environmental, employee benefits and safety and health liabilities), accumulation of goodwill that may become impaired,
and an increase in amortization expenses related to intangible assets. Any significant diversion of management’s attention from our existing operations, the loss of key
employees or customers of any acquired business, any major difficulties encountered in the opening of start-up locations or the integration of acquired operations or any
associated increases in indebtedness, liabilities or expenses could have a material adverse effect on our business, financial condition or results of operations.
We may not realize the anticipated synergies, cost savings or profits from acquisitions.
We have completed a number of acquisitions in recent years that we believe present revenue, profit and cost-saving synergy opportunities. However, the integration
of recent or future acquisitions may not result in the realization of the full benefits of the revenue, profit and cost synergies that we expected at the time or currently expect
within the anticipated time frame or at all. Moreover, we may incur substantial expenses or unforeseen liabilities in connection with the integration of acquired businesses.
While we anticipate that certain expenses will be incurred, such expenses are difficult to estimate accurately and may exceed our estimates. Accordingly, the expected
benefits of any acquisition may be offset by costs or delays incurred in integrating the businesses. Failure of recent or future acquisitions to meet our expectations and be
integrated successfully could have a material adverse effect on our financial condition and results of operations.
Disruptions in our information technology systems due to cyber security threats or other factors could limit our ability to effectively monitor and control our operations
and adversely affect our operating results, and unauthorized access to customer information on our systems could adversely affect our relationships with our customers
or result in liability.
Our information technology systems, including our enterprise resource planning system, facilitate our ability to monitor and control our assets and operations and
adjust to changing market conditions and customer needs. Any disruptions in these systems or the failure of these systems to operate as expected could, depending on the
magnitude of the problem, adversely affect our operating results by limiting our capacity to effectively monitor and control our assets and operations and adjust to changing
market conditions in a timely manner. Many of our business records at most of our branches are still maintained manually, and loss of those records as a result of facility
damage, personnel changes or otherwise could also cause such disruptions. In addition, because our systems sometimes contain information about individuals and
businesses, our failure to appropriately safeguard the security of the data it holds, whether as a result of our own error or the malfeasance or errors of others, could harm our
reputation or give rise to legal liabilities, leading to lower revenue, increased costs and other material adverse effects on our results of operations.
We have taken steps intended to mitigate these risks, including business continuity planning, disaster recovery planning and business impact analysis. However, a
significant disruption or cyber intrusion could adversely affect our results of operations, financial condition and liquidity. Furthermore, instability in the financial markets as
a result of terrorism, sustained or significant cyber-attacks, or war could also materially adversely affect our ability to raise capital.
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Legal and Regulatory Risks
11
We are exposed to liability claims on a continuing basis, which may exceed the level of our insurance or not be covered at all, and this could have a material adverse
effect on our operating performance.
Our business exposes us to claims for personal injury, death or property damage resulting from the use of the equipment we operate, rent, sell, service or repair and
from injuries caused in motor vehicle or other accidents in which our personnel are involved. Our business also exposes us to workers’ compensation claims and other
employment-related claims. We carry comprehensive insurance, subject to deductibles, at levels we believe are sufficient to cover existing and future claims; however, future
claims may exceed the level of our insurance, and our insurance may not continue to be available on economically reasonable terms, or at all. Certain types of claims, such
as claims for punitive damages, are not covered by our insurance. In addition, we are self-insured for the deductibles on our policies and have established reserves for
incurred but not reported claims. If actual claims exceed our reserves, our financial condition, results of operations and cash flows would be adversely affected. Whether or
not we are covered by insurance, certain claims may generate negative publicity, which may lead to lower revenues, as well as additional similar claims being filed.
Our business is subject to significant operating risks and hazards that could result in personal injury or damage or destruction to property, which could result in losses
or liabilities to the Company.
Construction sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment and moving
vehicles. Our equipment has been involved in workplace incidents and incidents involving mobile operators of our equipment in transit in the past and may also be involved
in such incidents in the future.
Our profitability and relationships with our customers is dependent on our safety record. If serious accidents or fatalities occur, regardless of whether we were at
fault, or our safety record were to deteriorate, we may be ineligible to bid on certain work, be exposed to possible litigation, and existing service arrangements could be
terminated, which could have a material adverse impact on our financial position, results of operations, cash flows and liquidity. Adverse experience with hazards and
claims could have a negative effect on our reputation with our existing or potential new customers and our prospects for future work.
In any concrete construction environment, our workers are subject to the usual hazards associated with providing construction and related services on construction
sites, including environmental hazards, industrial accidents, hurricanes, adverse weather conditions and flooding. Operating hazards can cause personal injury or death,
damage to or destruction of property, plant and equipment, environmental damage, performance delays, monetary losses or legal liability.
We have operations throughout the United States and the United Kingdom, which subjects us to multiple federal, state, and local laws and regulations. Moreover, we
operate at times as a government contractor or subcontractor which subjects us to additional laws, regulations, and contract provisions. Changes in law, regulations,
government contract provisions, or other legal requirements, or our material failure to comply with any of them, can increase our costs and have other negative impacts
on our business.
Each of our sites exposes us to a host of different local laws and regulations. These requirements address multiple aspects of our operations, such as worker safety,
consumer rights, privacy, employee benefits, antitrust, emissions regulations and may also impact other areas of our business, such as pricing. In addition, government
contracts and subcontracts are subject to a wide range of requirements not applicable in the purely commercial context, such as extensive auditing and disclosure
requirements; anti-money laundering, anti-bribery and anti-gratuity rules; political campaign contribution and lobbying limitations; and small and/or disadvantaged business
preferences. Even when a government contractor has reasonable policies and practices in place to address these risks and requirements, it is still possible for problems to
arise. Moreover, government contracts or subcontracts are generally riskier than commercial contracts, because, when problems arise, the adverse consequences can be
severe, including civil false claims (which can involve penalties and treble damages), suspension and debarment, and even criminal prosecution. Moreover, the requirements
of laws, regulations, and government contract provisions are often different in different jurisdictions. Changes in these requirements, or any material failure by us to comply
with them, can increase our costs, negatively affect our reputation, reduce our business, require significant management time and attention and generally otherwise impact
our operations in adverse ways.
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We are subject to numerous environmental and safety regulations. If we are required to incur compliance or remediation costs that are not currently anticipated, our
liquidity and operating results could be materially and adversely affected.
Our facilities and operations are subject to comprehensive and frequently changing federal, state and local laws and regulations relating to environmental protection
and health and safety. These laws and regulations govern, among other things, occupational safety, employee relations, the discharge of substances into the air, water and
land, the handling, storage, transport, use and disposal of hazardous materials and wastes and the cleanup of properties affected by pollutants. If we violate environmental or
safety laws or regulations, we may be required to implement corrective actions and could be subject to civil or criminal fines or penalties or other sanctions. We cannot
assure you that we will not have to make significant capital or operating expenditures in the future in order to comply with applicable laws and regulations or that we will
comply with applicable environmental laws at all times. Such violations or liability could have a material adverse effect on our business, financial condition and results of
operations.
Environmental laws also impose obligations and liability for the investigation and cleanup of properties affected by hazardous substance or fuel spills or releases.
These liabilities are often joint and several and may be imposed on the parties generating or disposing of such substances or on the owner or operator of affected property,
often without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous substances. We may also have liability for past
contaminated properties historically owned or operated by companies that we have acquired or merged with, even though we never owned or operated such properties.
Accordingly, we may become liable, either contractually or by operation of law, for investigation, remediation, monitoring and other costs even if the contaminated property
is not presently owned or operated by us, or if the contamination was caused by third parties during or prior to our ownership or operation of the property. Contamination
and exposure to hazardous substances can also result in claims for damages, including personal injury, property damage, and natural resources damage claims.
Most of our properties currently have above or below ground storage tanks for fuel and other petroleum products and oil-water separators (or equivalent wastewater
collection/treatment systems). Given the nature of our operations (which involve the use of diesel and other petroleum products, solvents and other hazardous substances) for
fueling and maintaining our equipment and vehicles, and the historical operations at some of our properties, we may incur material costs associated with soil or groundwater
contamination. Future events, such as changes in existing laws or policies or their enforcement, or the discovery of currently unknown contamination, may give rise to
remediation liabilities or other claims or costs that may be material.
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13
The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public
companies that are not emerging growth companies.
We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012,
which we refer to as the “JOBS Act.” As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are
not emerging growth companies for as long as we continue to be an emerging growth company, including (i) the exemption from the auditor attestation requirements with
respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden
parachute voting requirements and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. As a result, our
stockholders may not have access to certain information they deem important. We had revenues during the fiscal year ended October 31, 2020 of $304.3 million. We will
remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) following August 1, 2022, the fifth anniversary of the Industrea IPO, (b) in
which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our
common stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we have issued more
than $1.0 billion in non-convertible debt securities during the prior three-year period.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or
revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can
therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a company can
elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is
irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for
public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
We cannot predict if investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as
a result, there may be a less active trading market for securities and our stock price may be more volatile.
If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act or our internal control over financial reporting is not effective, the reliability of
our financial statements may be questioned, and our stock price may suffer.
Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of
its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we are currently required to document, test and report on our
internal controls over financial reporting. In addition, starting in our 2022 fiscal year (and possibly earlier), our independent auditors will be required to issue an opinion on
our audit of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial
reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of our
testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act.
We may be adversely affected by recent developments relating to Brexit.
On January 31, 2020, the U.K. withdrew from the European Union (“EU”), which is commonly referred to as Brexit. On December 24, 2020, the U.K. and EU
reached an agreement which contains new rules for how the U.K. and EU will live, work and trade together. While almost all of the work performed by our UK Operations
segment is performed domestically in the U.K., the effects of and the perceptions as to the impact from the withdrawal of the U.K. from the EU has and may continue to
adversely affect business activity and economic and market conditions in the U.K., the Eurozone, and globally and could contribute to instability in global financial and
foreign exchange markets, including volatility in the value of the pound sterling and the euro. In addition, Brexit could lead to additional political, legal and economic
instability in the EU. Specifically, we have not identified any additional risk factors under Brexit than those discussed herein. Additionally, we have not identified any trends
or potential changes to critical accounting estimates as a result of Brexit. We will continue to assess risk factors and accounting and reporting considerations. Any of these
effects of Brexit, and others we cannot anticipate, could adversely affect the value of our assets in the U.K., as well as our business, financial condition, results of operations
and cash flows.
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14
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial
condition and results of operations.
We are subject to income taxes in the U.S. and U.K., and our domestic tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our
future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
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expected timing and amount of the release of any tax valuation allowances;
tax effects of stock-based compensation;
costs related to intercompany restructurings;
changes in tax laws, regulations or interpretations thereof; and
lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions
where we have higher statutory tax rates
In addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal and state authorities or by U.K. authorities. Outcomes from
these audits could have an adverse effect on our financial condition and results of operations.
Changes in laws or, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments and results of
operations.
We are subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, we are required to comply with certain
SEC, Nasdaq and other legal or regulatory requirements in the U.S. and U.K. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult,
time consuming and costly. Those laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws, regulations or rules, as interpreted and
applied, could have a material adverse effect on our business and results of operations.
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Employee Related Risks
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Our business depends on favorable relations with our employees. Any deterioration of these relations, including those with our union-represented employees, issues with
our collective bargaining agreements, labor shortages or increases in labor costs could disrupt our ability to serve our customers, lead to higher labor costs or the
payment of withdrawal liability in connection with multiemployer plans, adversely affecting our business, financial condition and results of operations.
As of October 31, 2020, approximately 12% of our employees in the United States (but none of our employees in the United Kingdom) were represented by unions
or covered by collective bargaining agreements. The states in which our employees are represented by unions or covered by collective bargaining agreements are California,
Washington and Oregon. There can be no assurance that our non-unionized employees will not become members of a union or become covered by a collective bargaining
agreement, including through an acquisition of a business whose employees are subject to such an agreement. Any significant deterioration in employee relations, shortages
of labor or increases in labor costs at any of our locations could have a material adverse effect on our business, financial condition or results of operations. A slowdown or
work stoppage that lasts for a significant period of time could cause lost revenues and increased costs and could adversely affect our ability to meet our customers’ needs.
Furthermore, our labor costs could increase as a result of the settlement of actual or threatened labor disputes. In addition, our collective bargaining agreement with
our union in California is effective through June 30, 2022 and will continue on a year-to-year basis after unless parties provide advance written notice to change, amend,
modify, or terminate the Agreement. No such notices have been given or received. Our collective bargaining agreement with our union in Oregon expires in 2024. Our
collective bargaining agreement with our union in Washington expires in 2037. We cannot assure you that renegotiation of these agreements will be successful or will not
result in adverse economic terms or work stoppages or slowdowns.
Under our collective bargaining agreements, we are, and have previously been, obligated to contribute to several multiemployer pension plans on behalf of our
unionized employees. A multiemployer pension plan is a defined benefit pension plan that provides pension benefits to the union-represented workers of various generally
unrelated companies. Under the Employment Retirement Income Security Act of 1974 (“ERISA”), an employer that has an obligation to contribute to an underfunded
multiemployer plan, as well as any other entities that are treated as a single employer with such employer under applicable tax and ERISA rules, may become jointly and
severally liable, generally upon complete or partial withdrawal from a multiemployer plan, for its proportionate share of the plan’s unfunded benefit obligations. These
liabilities are known as “withdrawal liabilities.” Certain of the multiemployer plans to which we are obligated to contribute have been significantly underfunded in the past.
If any of the multiemployer plans were to become significantly underfunded again, and go into an “endangered status,” the trustees of the plan would be required to adopt
and maintain a rehabilitation plan and we may be required to pay a surcharge on top of our regular contributions to the plan.
We currently have no intention of withdrawing, in either a complete or partial withdrawal, from any of the multiemployer plans to which we currently contribute,
and we have not been assessed any withdrawal liability in the past when we have ceased participating in certain multiemployer plans to which we previously contributed. In
addition, we believe that the “construction industry” multiemployer plan exception may apply if we did withdraw from any of our current multiemployer plans. The
“construction industry” exception generally delays the imposition of withdrawal liability in connection with an employer’s withdrawal from a “construction industry”
multiemployer plan unless and until (among other things) that employer continues or resumes covered operations in the relevant geographic market without continuing or
resuming (as applicable) contributions to the multiemployer plan. If this exception applies, withdrawal liability may be delayed or even inapplicable if we cease participation
in any multiemployer plan(s). However, there can be no assurance that we will not withdraw from one or more multiemployer plans in the future, that the “construction
industry exception” would apply if we did withdraw, or that we will not incur withdrawal liability if we do withdraw. Accordingly, we may be required to pay material
amounts of withdrawal liability if one or more of those plans is underfunded at the time of withdrawal and withdrawal liability applies in connection with our withdrawal. In
addition, we may incur material liabilities if any multiemployer plan(s) in which we participate requires us to increase our contribution levels to alleviate existing
underfunding and/or becomes insolvent, terminates or liquidates.
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Labor relations matters at construction sites where we provide services may result in increases in our operating costs, disruptions in our business and decreases in our
earnings.
Labor relations matters at construction sites where we provide services may result in work stoppages, which would in turn affect our ability to provide services at
such locations. If any such work stoppages were to occur at work sites where we provide services, we could experience a significant disruption of our operations, which
could materially and adversely affect our business, financial condition, results of operations, liquidity, and cash flows. Also, labor relations matters affecting our suppliers
could adversely impact our business from time to time.
Turnover of members of our management, staff and pump operators and our ability to attract and retain key personnel may affect our ability to efficiently manage our
business and execute our strategy.
Our business depends on the quality of, and our ability to attract and retain, our senior management and staff, and competition in our industry and the business
world for top management talent is generally significant. Although we believe we generally have competitive pay packages, we can provide no assurance that our efforts to
attract and retain senior management staff will be successful. In addition, the loss of services of certain members of our senior management could adversely affect our
business until suitable replacements can be found.
We depend upon the quality of our staff personnel, including sales and customer service personnel who routinely interact with and fulfill the needs of our
customers, and on our ability to attract and retain and motivate skilled operators and fleet maintenance personnel and other associated personnel to operate our equipment in
order to provide our concrete pumping services to our customers. There is significant competition for qualified personnel in a number of our markets where we face
competition from the oil and gas industry for qualified drivers and operators. There is a limited number of persons with the requisite skills to serve in these positions, and
such positions require a significant investment by us in initial training of operators of our equipment. We cannot provide assurance that we will be able to locate, employ, or
retain such qualified personnel on terms acceptable to us or at all. Our costs of operations and selling, general and administrative expenses have increased in certain markets
and may increase in the future if we are required to increase wages and salaries to attract qualified personnel, and there is no assurance that we can increase our prices to
offset any such cost increases. There is also no assurance that we can effectively limit staff turnover as competitors or other employers seek to hire our personnel. A
significant increase in such turnover could negatively affect our business, financial condition, results of operations and cash flows.
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Risks Related to our Indebtedness
Our financing agreements could limit our financial and operating flexibility.
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Our credit facilities impose, and any future financing agreements could impose, operating and financial restrictions on our activities, including restricting our ability
to incur additional indebtedness, pay dividends or make other payments, make loans and investments, sell assets, incur certain liens, enter into transactions with affiliates and
consolidate, merge or sell assets. These covenants could limit the ability of the respective restricted entities to fund future working capital and capital expenditures, engage in
future acquisitions or development activities, or otherwise realize the value of their assets and opportunities fully because of the need to dedicate a portion of cash flow from
operations to payments on debt. In addition, such covenants limit the flexibility of the respective restricted entities in planning for, or reacting to, changes in the industries in
which they operate.
We have a significant amount of indebtedness, which could adversely affect our cash flow and our ability to operate our business and to fulfill our obligations under our
indebtedness.
We have a significant amount of indebtedness. As of October 31, 2020, we had $382.9 million of indebtedness outstanding in addition to $52.6 million of
availability under our ABL Credit Agreement.
Our substantial level of indebtedness increases the possibility that we may not generate enough cash flow from operations to pay, when due, the principal of,
interest on or other amounts due in respect of, these obligations. Other risks relating to our long-term indebtedness include:
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increased vulnerability to general adverse economic and industry conditions;
higher interest expense if interest rates increase on our floating rate borrowings and our hedging strategies do not effectively mitigate the effects of these
increases;
need to divert a significant portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash to fund
working capital, capital expenditures, acquisitions, investments and other general corporate purposes;
limited ability to obtain additional financing, on terms we find acceptable, if needed, for working capital, capital expenditures, acquisitions and other
investments, which may adversely affect our ability to implement our business strategy;
limited flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate or to take advantage of market
opportunities; and
a competitive disadvantage compared to our competitors that have less debt.
In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course of business. The terms of our Term Loan Agreement
and the ABL Credit Agreement allow us to incur additional debt subject to certain limitations. If new debt is added to current debt levels, the risks described above could
intensify. In addition, our inability to maintain certain leverage ratios could result in acceleration of a portion of our debt obligations and could cause us to be in default if we
are unable to repay the accelerated obligations.
Changes in interest rates may adversely affect our earnings and/or cash flows.
Our indebtedness under our Term Loan Agreement and our ABL Credit Agreement bears interest at variable interest rates that use the London Inter-Bank Offered
Rate (“LIBOR”) as a benchmark rate. On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced that it intends to
stop persuading or compelling banks to submit LIBOR quotations after 2021 (the “FCA Announcement”). The FCA announcement indicates that the continuation of LIBOR
on the current basis cannot and will not be assured after 2021, and LIBOR may cease to exist or otherwise be unsuitable for use as a benchmark. Recent proposals
for LIBOR reforms may result in the establishment of new methods of calculating LIBOR or the establishment of one or more alternative benchmark rates. Although our
revolving credit facility provides for successor base rates, the successor base rates may be related to LIBOR, and the consequences of any potential cessation, modification
or other reform of LIBOR cannot be predicted at this time. If LIBOR ceases to exist, we may need to amend our revolving credit facility and Term Loan, and we cannot
predict what alternative interest rate(s) will be negotiated with our counterparties. As a result, our interest expense may increase, our ability to refinance some or all of our
existing indebtedness may be effected and our available cash flow may be adversely affected.
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18
Our business could be hurt if we are unable to obtain capital as required, resulting in a decrease in our revenue and cash flows.
We require capital for, among other purposes, purchasing equipment to replace existing equipment that has reached the end of its useful life and for growth
resulting from expansion into new markets, completing acquisitions and refinancing existing debt. If the cash that we generate from our business, together with cash that we
may borrow under our credit facilities, is not sufficient to fund our capital requirements, we will require additional debt or equity financing. If such additional financing is
not available to fund our capital requirements, we could suffer a decrease in our revenue and cash flows that would have a material adverse effect on our business.
Furthermore, our ability to incur additional debt is and will be contingent upon, among other things, the covenants contained in our credit facilities. In addition, our credit
facilities place restrictions on our and our restricted subsidiaries’ ability to pay dividends and make other restricted payments (subject to certain exceptions). We cannot be
certain that any additional financing that we require will be available or, if available, will be available on terms that are satisfactory to us. If we are unable to obtain sufficient
additional capital in the future, our business could be materially adversely affected.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under applicable debt
instruments, which may not be successful.
Our ability to make scheduled payments on or to refinance our indebtedness obligations, including our credit facilities, depends on our financial condition and
operating performance, which are subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control. We may
not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund debt service obligations, we may be forced to reduce or delay investments and capital expenditures,
sell assets, seek additional capital or restructure or refinance indebtedness. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital
markets and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and may require us to comply with more onerous
covenants, which could further restrict business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In
addition, any failure to make payments of interest and principal on outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which
could harm our ability to incur additional indebtedness.
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Risks Related to our Securities
19
There can be no assurance that we will be able to comply with Nasdaq’s continued listing standards.
If Nasdaq delists our securities from trading on its exchange for failure to meet the continued listing standards, we and our security holders could face significant
material adverse consequences including:
●
●
●
a limited availability of market quotations for our securities;
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules,
possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;
a decreased ability to issue additional securities or obtain additional financing in the future.
Shares of our common stock have been thinly traded in the past.
Although a trading market for our common stock exists, the trading volume has not been significant and there can be no assurance that an active trading market for
our common stock will develop or, if developed, be sustained in the future. As a result of the thin trading market or “float” for our stock, the market price for our common
stock may fluctuate significantly more than the stock market as a whole. Without a large float, our common stock is less liquid than the stock of companies with broader
public ownership and, as a result, the trading prices of our common stock may be more volatile. In the absence of an active public trading market, an investor may be unable
to liquidate his or her investment in our common stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price for our
stock than would be the case if our public float were larger. We cannot predict the prices at which our common stock will trade in the future.
In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and the release of our financial
reports. Additionally, if our securities become delisted from Nasdaq for any reason, and are quoted on the OTC Markets, the liquidity and price of our securities may be
more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be
established or sustained.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our industry, or if they change their recommendations
regarding our common stock adversely, then the price and trading volume of our common stock could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our
industry, or our competitors. If any of the analysts who may cover the Company change their recommendation regarding our stock adversely, or provide more favorable
relative recommendations about our peers, the price of our common stock would likely decline. If any analyst who covers the Company were to cease coverage of the
Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
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20
Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our common stock to decline.
The sale of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing
market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate.
CFLL Holdings, LLC owns 15,477,138 shares, or 27% of outstanding shares of common stock and BBCP Investors, LLC owns 11,896,411 shares, or 21% of our
outstanding shares of our common stock. These shares are registered for resale and are not subject to any contractual restrictions on transfer. The sale of some or all of these
shares by these investors could put downward pressure on the market price of our common stock.
In addition, the shares of our common stock reserved for future issuance under our Omnibus Incentive Plan will become eligible for sale in the public market once
those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable. Following an amendment to our 2018
Omnibus Incentive Plan on October 29, 2020, a total of 4.8 million shares of common stock were reserved for issuance under our 2018 Omnibus Incentive Plan, of which
0.5 million shares of common stock remain available for future issuance as of October 31, 2020. In the future, we may also issue our securities in connection with
investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our
then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to
holders of our common stock.
Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality, adverse weather
and other factors, some of which are beyond our control, resulting in a decline in our stock price.
Our quarterly operating results may fluctuate significantly because of several factors, including:
●
●
●
●
●
●
●
●
●
●
labor availability and costs for hourly and management personnel;
profitability of our products, especially in new markets and due to seasonal fluctuations;
seasonal weather patterns in the construction industry on which we rely, with activity tending to be lowest in the winter and spring;
changes in interest rates;
impairment of long-lived assets;
macroeconomic conditions, both nationally and locally;
negative publicity relating to products we serve;
changes in consumer preferences and competitive conditions;
expansion to new markets; and
fluctuations in commodity prices.
We may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 65% of the then-outstanding warrants.
As a result, the exercise price of our warrants could be increased, the exercise period could be shortened and the number of shares of common stock purchasable upon
exercise of a warrant could be decreased without a warrant holder’s approval.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The
warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision but
requires the approval by the holders of at least 65% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders.
Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then-outstanding public warrants approve of such
amendment. Although our ability to amend the terms of the warrants with the consent of at least 65% of the then-outstanding public warrants is unlimited, examples of such
amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of
common stock purchasable upon exercise of a warrant or automatically at our option.
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21
Our warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our
stockholders.
As of October 31, 2020, there were 13,017,777 public warrants and no private placement warrants outstanding, respectively. The public warrants have an exercise
price of $11.50 per share. To the extent such warrants are exercised, additional shares of common stock will be issued, which will result in dilution to the holders of
common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely
affect the market price of our common stock.
We are a holding company with no business operations of our own and we depend on cash flow from our wholly owned subsidiaries to meet our obligations.
We are a holding company with no business operations of its own or material assets other than the stock of our subsidiaries, all of which are wholly-owned. All of
our operations are conducted by our subsidiaries and as a holding company, we require dividends and other payments from our subsidiaries to meet cash requirements. The
terms of any credit facility may restrict our subsidiaries from paying dividends and otherwise transferring cash or other assets to us. If there is an insolvency, liquidation or
other reorganization of any of our subsidiaries, our stockholders likely will have no right to proceed against their assets. Creditors of those subsidiaries will be entitled to
payment in full from the sale or other disposal of the assets of those subsidiaries before we, as an equity holder, would be entitled to receive any distribution from that sale
or disposal. If our subsidiaries are unable to pay dividends or make other payments to us when needed, we will be unable to satisfy our obligations.
Anti-takeover provisions contained in the Company's Charter and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
The Charter of the Company contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make more difficult the
removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These
provisions include:
●
●
●
●
●
●
a staggered board of directors providing for three classes of directors, which limits the ability of a stockholder or group to gain control of our Board;
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
the right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director in
certain circumstances, which prevents stockholders from being able to fill vacancies on our Board;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
a prohibition on stockholders calling a special meeting and the requirement that a meeting of stockholders may only be called by members of our Board,
which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a
meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of
directors or otherwise attempting to obtain control of us.
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22
The Charter of the Company designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that
may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or
employees.
The Charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and
exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or our stockholders, (iii) any action asserting
a claim against the Company, our directors, officers or employees arising pursuant to any provision of the DGCL, the Charter or the Bylaws, or (iv) any action asserting a
claim against the Company, our directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim (A) as to
which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not
consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or
forum other than the Court of Chancery, or (C) arising under the Securities Act or for which the Court of Chancery does not have subject matter jurisdiction including,
without limitation, any claim arising under the Exchange Act, as to which the federal district court for the District of Delaware shall be the sole and exclusive forum.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions
of the Charter described in the preceding paragraph. However, stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules
and regulations thereunder. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or
our directors, officers or other employees, which may discourage such lawsuits against us and such persons. Alternatively, a court may determine that the choice of forum
provision is unenforceable. If a court were to find these provisions of the Charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions
or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or
results of operations.
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Item 1B. Unresolved Staff Comments.
23
None.
Item 2. Properties
Our corporate office is located at 500 E. 84th Avenue, Suite A-5, Thornton, CO 80229, where we lease approximately 13,415 square feet of office space in the
building. We operate from a base of approximately 90 locations in 22 states in the U.S. and 30 locations in the U.K. as of October 31, 2020. We own 16 of our locations in
the U.S. and lease the remaining locations and all of our locations in the U.K. are leased. Certain facilities are shared between Brundage-Bone and Eco-Pan and certain
locations operate at construction sites without a formal lease. We believe that our properties are suitable for our current operating needs.
Item 3. Legal Proceedings
From time to time, we have been and may again become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party
to any litigation that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect of
our business, operating result, financial condition or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
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24
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is currently listed on Nasdaq under the symbol “BBCP” and our public warrants are quoted on the OTC Pink marketplace operated by OTC
Markets Group, Inc. under the symbol “BBCPW.” As of October 31, 2020, there were 40 holders of record of shares of our common stock and 1 holder of record of our
public warrants. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total
number of stockholders represented by the record holders of our common stock.
Dividend Policy
The Company has not paid any cash dividends on its common stock to date. It is the present intention of the Company to retain any earnings for use in its business
operations and, accordingly, the Company does not anticipate the Board declaring any dividends in the foreseeable future.
Item 6. Selected Financial Data
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, pursuant to Item 301(c) of Regulation S-K, we are not required to
provide the information required by this Item.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial
Statements and related notes included elsewhere in this Annual Report. In addition to historical information, the following discussion contains forward-looking statements,
such as statements regarding the Company’s expectation for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could
cause actual results to differ materially from the Company's expectations. The Company's actual results may differ materially from those contained in or implied by any
forward-looking statements. Factors that could cause such differences include those identified below and those described in “Cautionary Note Regarding Forward-Looking
Statements,” and in Item 1A “Risk Factors” of this Annual Report on Form 10-K. The Company assumes no obligation to update any of these forward-looking statements.
Business Overview
The Company is a Delaware corporation headquartered in Thornton, Colorado. The audited 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”), Capital Pumping (“Capital”),
and Camfaud Group Limited (“Camfaud”), and Eco-Pan, Inc. (“Eco-Pan”).
On December 6, 2018, the Company, formerly known as Concrete Pumping Holdings Acquisition Corp., consummated a business combination transaction (the
“Business Combination”) pursuant to which it acquired (i) the private operating company formerly called Concrete Pumping Holdings, Inc. (“CPH”) and (ii) the former
special purpose acquisition company called Industrea Acquisition Corp (“Industrea”). In connection with the closing of the Business Combination, the Company changed its
name to Concrete Pumping Holdings, Inc. The financial results described herein for the dates and periods prior to the Business Combination relate to the operations of CPH
prior to the consummation of the Business Combination.
U.S. Concrete Pumping
In May 2019, the Company, through its wholly-owned subsidiary Brundage-Bone, acquired Capital Pumping, LP and its affiliates, a concrete pumping provider
based in Texas for a purchase price of $129.2 million. The closing of this acquisition provided the Company with complementary assets and operations and significantly
expanded its footprint and business in Texas.
Brundage-Bone and Capital are concrete pumping service providers in the United States ("U.S."). Their 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
neither company contracts to purchase, mix, or deliver concrete. Brundage-Bone and Capital collectively have approximately 90 branch locations across 22 states with their
corporate headquarters in Thornton (near Denver), Colorado.
U.S. Concrete Waste Management Services
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 16 operating locations across the United States with its corporate
headquarters in Thornton, Colorado.
U.K. Operations
Camfaud is a concrete pumping service provider in the United Kingdom (“U.K.”). Their 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 30 branch locations throughout the U.K., with its corporate headquarters in Epping (near London),
England. In addition, during the third quarter of fiscal 2019, we started concrete waste management operations under our Eco-Pan brand name in the U.K. and currently
operate from a shared Camfaud location.
Corporate
Our Corporate segment is primarily related to the intercompany leasing of real estate to certain of our U.S Concrete Pumping branches.
26
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Impacts of COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a global pandemic and recommended containment and mitigation
measures worldwide. The COVID-19 pandemic has rapidly changed market and economic conditions globally and may continue to create significant uncertainty in the
macroeconomic environment. Such macroeconomic volatility, in addition to other unforeseen effects of this pandemic, has impacted our business, results of operations and
overall financial performance. The Company actively monitors and responds to developments relating to ongoing COVID-19 pandemic. As part of its actions, the Company
has made adjustments to its operations and executed certain cost reduction initiatives.
As a result of the pandemic, we have implemented certain short-term cost reductions, including headcount reductions, modified work schedules reducing hours
where needed, and furloughs in limited locations. The Company had previously suspended any remaining uncommitted 2020 capital expenditure investments, but that was
lifted as its overall liquidity and operations improved. In the final month of the second quarter of fiscal 2020, our operations in the Seattle and U.K. markets were negatively
impacted due to COVID-19-imposed construction site shutdowns. These restrictions were, for the most part, lifted during the third quarter ended July 31, 2020. While the
Company believes these disruptions will be temporary, it is difficult to predict how long they will last and the impact they will have on the Company in future periods.
In addition, the COVID-19 pandemic drove a sustained decline in the Company's stock price and a deterioration in general economic conditions in the fiscal 2020
second quarter, which qualified as a triggering event necessitating the evaluation of its goodwill and long-lived assets for indicators of impairment. As a result of the
evaluation, the Company conducted a quantitative interim impairment test as of April 30, 2020. There were no triggering events during the remainder of fiscal 2020. Refer
to Notes 2 and 8 of the financial statements for further discussion. The Company will continue to evaluate its goodwill and intangible assets in future quarters. Additional
impairments may be recorded in the future based on events and circumstances, including those related to COVID-19 discussed above.
Despite recent news regarding vaccines, both the outbreak and the containment and mitigation measures have had and are likely to continue to have a serious
adverse impact on the global economy, the severity and duration of which are uncertain. It is likely that government stabilization efforts will only partially mitigate the
consequences to the economy. The extent to which the COVID-19 pandemic will impact the Company’s business, financial condition, and results of operations in the future
is highly uncertain and will be affected by a number of factors. These include the duration and extent of the pandemic; the duration and extent of imposed or recommended
containment and mitigation measures; the extent, duration, and effective execution of government stabilization and recovery efforts, including those from the successful
distribution of an effective vaccine; the impact of the pandemic on economic activity, including on construction projects and the Company’s customers’ demand for its
services; the Company’s ability to effectively operate, including as a result of travel restrictions and mandatory business and facility closures; the ability of the Company’s
customers to pay for services rendered; any further closures of the Company’s and the Company’s customers’ offices and facilities; and any additional project delays or
shutdowns. Customers have and may continue to slow down decision-making, delay planned work or seek to terminate existing agreements. Any of these events may have a
material adverse effect on the Company’s business, financial condition, and/or results of operations, including further impairment to our goodwill and intangible assets. The
Company will continue to evaluate the effect of COVID-19 on its business.
Results of Operations
To reflect the application of different bases of accounting as a result of the Business Combination, the tables provided below separate the Company’s results via a
black line into two distinct periods as follows: (1) up to and including the Business Combination closing date (labeled “Predecessor”) and (2) the period after that date
(labeled “Successor”). The periods after December 5, 2018 are the “Successor” periods while the periods before December 6, 2018 are the “Predecessor” periods.
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27
The historical financial information of Industrea prior to the Business Combination (a special purpose acquisition company, or “SPAC”) has not been reflected in
the Predecessor financial statements as these historical amounts have been determined to be not useful information to a user of the financial statements. SPACs deposit the
proceeds from their initial public offerings into a segregated trust account until a business combination occurs, where such funds are then used to pay consideration for the
acquiree and/or to pay stockholders who elect to redeem their shares of common stock in connection with the business combination. The operations of a SPAC, until the
closing of a business combination, other than income from the trust account investments and transaction expenses, are nominal. Accordingly, no other activity in the
Company was reported for periods prior to December 6, 2018 besides CPH’s operations as Predecessor.
As Industrea’s historical financial information is excluded from the Predecessor financial information, the business, and thus financial results, of the Successor and
Predecessor entities, are expected to be largely consistent, excluding the impact on certain financial statement line items that were impacted by the Business Combination.
Management believes reviewing our operating results for the twelve-months ended October 31, 2019 by combining the results of the Predecessor and Successor periods
(“S/P Combined”) is more useful in discussing our overall operating performance when compared to the same period in the current year. Accordingly, in addition to
presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, the tables below present the non-GAAP combined results
for the year.
(dollars in thousands)
Revenue
Cost of operations
Gross profit
Gross margin
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
$
304,301
$
258,565
$
24,396
$
282,961
166,998
137,303
143,512
115,053
14,027
10,369
45.1%
44.5%
42.5%
157,539
125,422
44.3%
General and administrative expenses
Goodwill and intangibles impairment
Transaction costs
Loss from operations
Other income (expense):
Interest expense, net
Loss on extinguishment of debt
Other income, net
Total other expense
Loss before income taxes
Income tax benefit
Net loss
111,087
57,944
-
(31,728)
(34,408)
-
169
(34,239)
91,914
-
1,521
21,618
(34,880)
-
47
(34,833)
4,936
-
14,167
(8,734)
(1,644)
(16,395)
6
(18,033)
96,850
-
15,688
12,884
(36,524)
(16,395)
53
(52,866)
(65,967)
(13,215)
(26,767)
(39,982)
(4,977)
(3,303)
(4,192)
(7,495)
(60,990)
(9,912)
(22,575)
(32,487)
Less accretion of liquidation preference on preferred stock
Net loss available to common shareholders
$
(1,930)
(62,920) $
(1,623)
(11,535) $
(126)
(22,701) $
(1,749)
(34,236)
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Twelve Months Ended October 31, 2020 and October 31, 2019
28
For the twelve-months ended October 31, 2020, our net loss was $61.0 million, an increase of $28.5 million compared to net loss of $32.5 million in the same
period a year ago. The higher net loss was primarily attributable to goodwill and intangible impairment charges totaling $57.9 million resulting from the significant decline
in the Company’s stock price during the second quarter driven by the COVID-19 pandemic. Despite the impact from COVID-19, we had a 7.5% improvement in revenue
year-over-year, driven mostly by (1) the additional assets we obtained from the acquisition of Capital, which supported the operations in our Texas market, (2) modest
organic growth in most of our U.S. Concrete Pumping markets and (3) strong revenue growth of 18.0% from our U.S. Concrete Waste Management Services segment. Our
improved revenue was slightly offset by a 20.4% year-over-year decline in revenue from our U.K. Operations segment which has been heavily impacted from construction
site shutdowns due to COVID-19. Net income for the twelve-months ended October 31, 2020, when compared to the S/P combined period a year ago, was also impacted by
(1) lower transaction costs of $15.7 million, most of which were related to the Business Combination, (2) lower loss on extinguishment of debt of $16.4 million, all of which
were the result of the Business Combination, and (3) $14.2 million in higher general and administrative expenses primarily due to reporting a full year with Capital and
increased stock based compensation expense.
Total Assets
(in thousands)
Total Assets
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Intersegment
October 31,
2020
October 31,
2019
$
$
570,536 $
109,726
140,209
25,517
(72,230)
773,758 $
637,384
138,435
137,646
24,223
(66,323)
871,365
Total assets decreased from $871.4 million as of October 31, 2019 to $773.8 million as of October 31, 2020. The decrease is primarily attributable to the goodwill
and intangibles impairment charges of $57.9 million that were recorded during the second quarter of fiscal 2020. The remainder is predominately attributable to depreciation
and amortization of long lived assets.
Revenue
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
Change
$
229,740
39,145
35,890
2,500
(2,974)
$
304,301
187,031 $
44,021
27,779
2,258
(2,524)
258,565 $
29
16,659 $
5,143
2,628
242
(276)
24,396 $
203,690 $
49,164
30,407
2,500
(2,800)
282,961 $
26,050
(10,019)
5,483
-
(174)
21,340
$%
12.8%
-20.4%
18.0%
0.0%
6.2%
7.5%
(in thousands)
Revenue
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Intersegment
$
$
Table of Contents
U.S. Concrete Pumping
Revenue for our U.S. Concrete Pumping segment increased by 12.8%, or $26.1 million, from $203.7 million in the S/P combined twelve-months ended October 31,
2019 to $229.7 million for fiscal 2020. The incremental benefit of the acquisition of Capital, which added additional pumping capacity to Texas, drove $22.9 million of the
increase in revenue. The remaining increase was the result of modest organic growth in many of our markets.
U.K. Operations
Revenue for our U.K. Operations segment decreased by 20.4%, or $10.0 million, from $49.2 million in the S/P combined twelve-months ended October 31, 2019 to
$39.1 million for fiscal 2020. The decline in revenue was attributable to the impact of COVID-19, which resulted in job site lockdowns on our U.K. business operations in
the month of April and negatively impacted operations throughout the remainder of fiscal 2020.
U.S. Concrete Waste Management Services
Revenue for the U.S. Concrete Waste Management Services segment improved by 18.0%, or $5.5 million, from $30.4 million in the S/P combined twelve-months
ended October 31, 2019 to $35.9 million for fiscal 2020. The increase in revenue was primarily due to robust organic growth, pricing improvements, new product offerings
(such as our new roll off service, which allows for 100 to 120 concrete truck mixer wash outs), and continuing momentum in the newer branch locations established over the
last year.
Corporate
There was limited movement in revenue for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment was primarily
related to the intercompany leasing of real estate to certain of our U.S Concrete Pumping branches. These revenues are eliminated in consolidation through the Intersegment
line included above.
Gross Margin
Gross margin for the twelve-months ended October 31, 2020 increased 80 basis points from 44.3% in the S/P combined twelve-months ended October 31, 2019 to
45.1%. The increase in gross margin for the twelve-months ended October 31, 2020 was primarily due to the post-acquisition contribution from Capital and more favorable
fuel pricing.
General and Administrative Expenses
G&A expenses for the twelve-months ended October 31, 2020 were $111.1 million, an increase of $14.2 million from $96.9 million in the S/P combined twelve-
months ended October 31, 2019. The overall increase was largely due to (1) a $7.8 million increase in stock-based compensation expense, which was required following a
revaluation and acceleration of expense after most outstanding awards were modified at the end of fiscal 2020 and (2) a $2.0 million charge for a settlement reached at the
end of fiscal 2020 between the Company and our previous shareholders as a result of carrying back certain net operating loss carryforwards and remitting them to the prior
shareholders. The remaining increase in G&A expenses is mostly attributable to having a full year of Capital’s results in G&A expenses.
G&A expenses as a percent of revenue ("G&A rate") were 36.5% for fiscal 2020 compared to 34.2% for the same period a year ago. Excluding non-cash costs for
depreciation expense, amortization of intangibles, and stock-based compensation expense, our G&A rate increased slightly from 20.7% in the S/P combined twelve-months
ended October 31, 2019 to 21.2% in fiscal 2020.
Table of Contents
Transaction Costs & Debt Extinguishment Costs
30
Transaction costs include expenses for legal, accounting, and other professionals that were engaged in connection with an acquisition. There were no transaction
costs or debt extinguishment costs during fiscal 2020. Transaction costs amounted to $1.5 million for the successor period from December 6, 2018 through October 31,
2019, which were associated with the Capital Acquisition.
During the period from November 1, 2018 through December 5, 2018, the Predecessor incurred transaction costs of $14.2 and debt extinguishment costs of $16.4
million. All costs in this period were related to the Business Combination.
Interest Expense, Net
Interest expense, net for the Successor year ended October 31, 2020 was $34.4 million, down $2.1 million from the same S/P combined period from a year ago as a
result of lower average debt balances and lower variable interest rates.
Goodwill and Intangibles Impairment
During the second quarter of fiscal year 2020, as a result of the COVID-19 impact on the Company’s market capitalization, with the assistance of a third party
valuation specialist, we performed an interim impairment test over our indefinite-lived trade name intangible assets and goodwill as of April 30, 2020. The analysis resulted
in $57.9 million in impairments, including a $5.0 million impairment of our Brundage-Bone Concrete Pumping trade-name, a $38.5 million goodwill impairment for our U.S
Concrete Pumping reporting unit and a $14.4 million impairment to our U.K. Operations reporting unit. There were no additional impairments recorded for the remainder of
fiscal 2020.
Income Tax (Benefit) Provision
For the twelve-months ended October 31, 2020, the Company recorded an income tax benefit of $5.0 million on a pretax loss of $66.0 million. Our income tax
provision was mostly impacted by the following factors during fiscal 2020:
(1) Of the $57.9 million of impairments recorded for goodwill and intangibles by the Company during the second quarter of fiscal 2020, only $11.2 million was deductible
for tax purposes ($2.7 million tax benefit to the Company) as the remaining impairment was related to nondeductible goodwill;
(2) We recorded a tax benefit of $1.4 million in the Successor year ended October 31, 2020 related to write-up in the carrying value of certain net operating losses (“NOL”)
carryforwards as it was determined that those NOLs would be carried back to prior years pursuant to the provisions included in the CARES Act;
(3) As a result of the increase in the deferred statutory U.K. corporate tax rate from 17% to 19% in fiscal 2020, we recorded $0.9 million of tax expense
(4) We recorded nondeductible expenses related to a settlement with the Predecessor shareholders that resulted in a $0.4 million permanent tax difference; and
For the S/P Combined twelve months ended October 31, 2019, the Company recorded an income tax benefit of $7.5 million on a pretax loss of $40.0 million,
resulting in an effective tax rate of 18.7%. Our income tax benefit was negatively impacted by $1.4 million of transaction expenses that were not deductible and $0.3 million
in deferred taxes on undistributed foreign earnings.
31
Table of Contents
Adjusted EBITDA1
Net Income
Adjusted EBITDA
(in thousands)
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Year Ended
October 31,
2020
S/P Combined
Year Ended
October 31,
2019
Year Ended
October 31,
2020
S/P Combined
Year Ended
October 31,
2019
$ Change
% Change
$
$
(50,140) $
(16,620)
4,404
1,366
(60,990) $
(36,283) $
1,281
489
2,026
(32,487) $
74,886 $
12,228
17,686
2,501
107,301 $
62,821 $
15,694
14,177
2,802
95,494 $
12,065
(3,466)
3,509
(301)
11,807
19.2%
-22.1%
24.8%
-10.7%
12.4%
1 Please see “Non-GAAP Measures (EBITDA and Adjusted EBITDA)” below for reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA.
U.S. Concrete Pumping
Adjusted EBITDA for our U.S. Concrete Pumping segment was $74.9 million for the twelve-months ended October 31, 2020, up 19.2% from $62.8 million for the
S/P combined twelve-months ended October 31, 2019. The significant year-over-year increase was due primarily to (1) the acquisition of Capital, (2) modest organic revenue
growth in many of our remaining markets and (3) improved gross margins as a result of more favorable fuel pricing.
U.K. Operations
Adjusted EBITDA for our U.K. Operations segment was $12.2 million for the twelve-months ended October 31, 2020, down 22.1% from $15.7 million for the S/P
combined twelve-months ended October 31, 2019. The decrease was primarily attributable to the year-over-year decline in revenue due to the negative impact on
construction activity resulting from COVID-19 imposed operating conditions.
U.S. Concrete Waste Management Services
Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $17.7 million for the Successor year ended October 31, 2020, up 24.8% from
$14.2 million for the S/P combined twelve-months ended October 31, 2019. The increase was primarily attributable to the year-over-year change in revenue discussed
previously.
Corporate
There was limited movement in Adjusted EBITDA for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment
was primarily related to the allocation of overhead costs.
32
Table of Contents
Liquidity and Capital Resources
Overview
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, such as the acquisition of Capital. Our primary sources of liquidity are cash generated from operations, available cash and cash
equivalents and access to our revolving credit facility under our Asset-Based Lending Credit Agreement (the “ABL Credit Agreement”), which provides for aggregate
borrowings of up to $60.0 million, subject to a borrowing base limitation. As of October 31, 2020, we had $6.7 million of cash and cash equivalents and $52.6 million of
available borrowing capacity under the ABL Credit Agreement, providing total available liquidity of $59.3 million.
Capital Resources
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 Term Loan Agreement (defined below) and (4) short-term financing under our ABL Credit Agreement. We may from time
to time seek to retire or pay down borrowings on the outstanding balance of our ABL Credit Agreement or Term Loan Agreement using cash on hand. Such repayments, if
any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
After consideration of any potential impacts from COVID-19 on our operations, we believe our existing cash and cash equivalent balances, cash flow from
operations, and borrowing capacity under our ABL Credit Agreement 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. The incurrence of
debt financing would result in debt service obligations and the agreements in place governing such debt could provide for operating and financing covenants that could
restrict our operations.
Term Loan Agreement and ABL Credit Agreement
As part of the Business Combination, the Company entered into (i) a Term Loan Agreement, dated December 6, 2018, among the Company, certain subsidiaries of
the Company, Credit Suisse AG, Cayman Islands Branch as administrative agent and Credit Suisse Loan Funding LLC, Jefferies Finance LLC and Stifel Nicolaus &
Company Incorporated LLC as joint lead arrangers and joint bookrunners, and the other Lenders party thereto (as amended, the “Term Loan Agreement”) and (ii) a Credit
Agreement, dated December 6, 2018, 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 and the other parties thereto (“ABL Credit Agreement”). Summarized terms of those debt agreements are included below.
Term Loan Agreement
Summarized terms of the Term Loan Agreement are as follows:
●
●
●
Provides for an original aggregate principal amount of $357.0 million. This amount was increased in May 2019 by $60.0 million in connection with the
acquisition of Capital;
The initial term loans advanced will mature and be due and payable in full seven years after the issuance, with principal amortization payments in an
annual amount equal to 5.00% of the original principal amount;
Borrowings under the Term Loan Agreement, will bear interest at either (1) an adjusted LIBOR rate or (2) an alternate base rate, plus an applicable margin
of 6.00% or 5.00%, respectively;
●
The Term Loan Agreement is secured by (i) a first priority perfected lien on substantially all of the assets of the Company and certain of its subsidiaries
that are loan parties thereunder to the extent not constituting ABL Credit Agreement priority collateral and (ii) a second priority perfected lien on
substantially all ABL Credit Agreement priority collateral, in each case subject to customary exceptions and limitations;
●
The Term Loan Agreement includes certain non-financial covenants.
The outstanding balance under the Term Loan Agreement as of October 31, 2020 was $381.2 million and the Company was in compliance with all debt covenants.
The Company’s interest on borrowings under the Term Loan Agreement bear interest using the London Inter-bank Offered Rate (LIBOR) as the base rate plus an applicable
margin in line with the summarized terms of the Term Loan Agreement as described above.
Table of Contents
Asset Based Revolving Lending Credit Agreement
Summarized terms of the ABL Credit Agreement are as follows:
33
●
●
●
●
●
●
●
●
Borrowing availability in U.S. Dollars and GBP up to a maximum of $60.0 million;
Borrowing capacity available for standby letters of credit of up to $7.5 million and for swing loan borrowings of up to $7.5 million. Any issuance of
letters of credit or making of a swingline loan will reduce the amount available under the ABL Facility;
All loans advanced will mature and be due and payable in full five years after the issuance;
Amounts borrowed may be repaid at any time, subject to the terms and conditions of the agreement;
Interest on borrowings in U.S. Dollars and GBP under the ABL Credit Agreement, will bear interest at either (1) an adjusted LIBOR rate or (2) a base
rate, in each case plus an applicable margin currently set at 2.25% and 1.25%, respectively. The ABL Credit Agreement is subject to two step-downs of
0.25% and 0.50% based on excess availability levels;
U.S. ABL Credit Agreement obligations are secured by (i) a perfected first priority security interest in substantially all personal property of the Company
and certain of its subsidiaries that are loan parties thereunder consisting of all accounts receivable, inventory, cash, intercompany notes, books and
records, chattel paper, deposit, securities and operating accounts and all other working capital assets and all documents, instruments and general
intangibles related to the foregoing (the “U.S. ABL Priority Collateral”) and (ii) a perfected second priority security interest in substantially all Term Loan
Agreement priority collateral, in each case subject to customary exceptions and limitations;
U.K. ABL Credit Agreement obligations are secured by (i) a perfected first-priority security interest in (A) the U.S. ABL Priority Collateral, (B) all of the
stock (or other ownership interests) in, and held by, the U.K. borrower subsidiaries of the Company, and (C) all of the current and future assets and
property of the U.K. subsidiaries of the Company that are loan parties thereunder, including a first-ranking floating charge over all current and future
assets and property of each U.K. subsidiary of the Company that is a loan party thereunder; and (ii) a perfected, second-priority security interest in
substantially all Term Loan Agreement priority collateral, in each case subject to customary exceptions and limitations; and
The ABL Credit Agreement also includes (i) a springing financial covenant (fixed charge coverage ratio) based on excess availability levels that the
Company must comply with on a quarterly basis during required compliance periods and (ii) certain non-financial covenants.
The outstanding balance under the ABL Credit Agreement as of October 31, 2020 was $1.7 million and the Company was in compliance with all debt covenants
thereunder.
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 customers paying the Company as invoices are submitted daily for many of our services.
Successor
Net cash provided by (used in) 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 twelve-months ended October 31, 2020 was $79.0 million. The Company had a net loss of $61.0 million that
included significant non-cash charges, net totaling $133.6 million as follows: (1) Goodwill and intangibles impairment of $57.9 million, (2) depreciation of $28.3 million, (3)
amortization of intangible assets of $33.4 million, (4) amortization of deferred financing costs of $4.1 million (5) stock-based compensation expense of $11.5 million, and
(6) gain on sale of $1.5 million. In addition, we had cash inflows related to the following activity: (1) a decrease of $1.6 million in trade receivables, (2) a decrease of prepaid
expenses and other current assets of $1.7 million, and (3) an increase of $5.8 million in accrued payroll, accrued expenses and other current liabilities. These amounts were
partially offset by outflows related to the following activity: (1) a decrease of $1.0 million in income taxes payable, (2) a decrease of $0.8 million in accounts payable, and
(3) a $0.5 million payment of contingent consideration in connection with the acquisition of Camfaud in excess of amounts established in purchase accounting.
Table of Contents
34
We used $35.9 million to fund investing activities during the twelve-months ended October 31, 2020. The Company used $39.3 million for the purchase of
property, plant and equipment, which was partially offset by $3.5 million in proceeds from the sale of property, plant and equipment.
Net cash used in financing activities was $43.9 million for the twelve-months ended October 31, 2020. Financing activities during this period included $21.7
million in net payments under the Company’s ABL Credit Agreement, $20.9 in payments on the Company's Term Loan Agreement, and the payment of the contingent
consideration in connection with the acquisition of Camfaud of $1.2 million.
Net cash provided by operating activities during the period from December 6, 2018 through October 31, 2019 (the “Successor Period”) was $22.8 million. The
Company had a net loss of $9.9 million that included significant non-cash charges totaling $60.0 million as follows: (1) depreciation of $20.3 million, (2) amortization of
intangible assets of $32.4 million, (3) amortization of deferred financing costs of $3.7 million and (4) stock-based compensation expense of $3.6 million. These amounts
were partially offset by net cash outflows related to the following activity: (1) an increase of $5.9 million in trade receivables, (2) a $0.5 million increase in inventory, (3) a
$1.0 million increase in prepaid expenses and other current assets, (4) an increase of $2.4 million in our net deferred income taxes, (5) a decrease in income taxes payable of
$1.4 million, (6) a $7.3 million decrease in accounts payable, and (7) a decrease of $8.3 million in accrued payroll, accrued expenses and other current liabilities.
We used $374.9 million to fund investing activities during the Successor Period. The Company paid $449.2 million to fund the Business Combination, $129.2
million to fund the acquisition of Capital and $2.3 million to fund other business combinations. Additionally, $35.7 million was used to purchase machinery, equipment and
other vehicles to service our business. These cash outflows were partially offset by $238.5 million in cash withdrawn from Industrea trust account in addition to proceeds
from the sale of property, plant and equipment of $3.1 million.
Net cash used in financing activities was $361.6 million for the Successor Period. Financing activities during the Successor Period included cash inflows from
$402.1 million in net borrowings from our new Term Loan Agreement, $23.3 million in net borrowings under the Company’s new ABL Credit Agreement, $174.3 million
from the issuance of common shares, $1.4 million in proceeds from the exercise of stock options and an additional $25.0 million from the issuance of preferred stock. All of
these cash inflows were used to fund business combinations and other operational activity such as equipment purchases. These cash inflows were offset by payments for
redemptions of common stock totaling $231.4 million, $24.9 million for the payment of debt issuance costs (which are inclusive of any original issuance discounts) that
were associated with the Term Loan Agreement and new ABL Credit Agreement, and $8.1 million in payments for underwriting fees.
Predecessor
Net cash provided by operating activities during the period from November 1, 2018 through December 5, 2018 (the “Predecessor Period”) was $7.9 million. The
Company had a net loss of $22.6 million that included significant non-cash charges totaling $18.5 million as follows: (1) depreciation of $2.1 million, (2) prepayment
penalty on early extinguishment of debt of $13.0 million, and (3) write off deferred debt issuance costs of $3.4 million. The Company had cash outflows due to (1) an
increase of $0.3 million in inventory, (2) a $1.3 million increase in prepaid expenses and other current assets, (3) an increase of $4.4 million in our net deferred income
taxes, and (4) a $0.7 million decrease in accounts payable. The amounts were more than offset by cash inflows from an increase of $17.3 million in accrued payroll, accrued
expenses and other current liabilities.
We used $0.1 million to fund investing activities during the Predecessor Period. We used $0.5 million to fund purchases of machinery, equipment and other
vehicles to service our business. This was offset by $0.4 million in proceeds received from the sale of property, plant and equipment.
We used $15.4 million to fund financing activities during the Predecessor Period and this activity was driven by $15.4 million of net borrowings under the Revolver
to operate our business and fund acquisitions.
Table of Contents
Off-Balance Sheet Arrangements
35
We do not currently have any off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on our financial
condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. From time to time, we enter into non-cancellable operating leases
that are not reflected on our balance sheet. At October 31, 2020, we had $1.2 million of undrawn letters of credit outstanding.
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, other income, net, and other adjustments. We believe
these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends related to our
financial condition and results of operations, and provide a 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
prepared for management and our board of directors 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. 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 severance expenses, director fees, expenses related to being a
newly publicly-traded company and other non-recurring costs, which includes the $2.0 million charge recorded during fiscal 2020 related to a settlement with the Company's
prior shareholders.
(in thousands)
Consolidated
Net loss
Interest expense, net
Income tax benefit
Depreciation and amortization
EBITDA
Transaction expenses
Loss on debt extinguishment
Stock-based compensation
Other income, net
Goodwill and intangibles impairment
Other adjustments
Adjusted EBITDA
Table of Contents
(in thousands)
U.S. Concrete Pumping
Net loss
Interest expense, net
Income tax benefit
Depreciation and amortization
EBITDA
Transaction expenses
Loss on debt extinguishment
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
(60,990) $
34,408
(4,977)
61,655
30,096
-
-
11,455
(169)
57,944
7,975
107,301
$
(9,912) $
34,880
(3,303)
52,652
74,317
1,521
-
3,619
(47)
-
6,496
85,906 $
(22,575) $
1,644
(4,192)
2,713
(22,410)
14,167
16,395
-
(6)
-
1,442
9,588 $
(32,487)
36,524
(7,495)
55,365
51,907
15,688
16,395
3,619
(53)
-
7,938
95,494
$
$
36
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
$
(50,140) $
31,452
(5,955)
41,717
17,074
-
-
(11,031) $
32,173
(6,658)
32,245
46,729
1,521
-
(25,252) $
1,154
(2,102)
1,635
(24,565)
14,167
16,395
(36,283)
33,327
(8,760)
33,880
22,164
15,688
16,395
Stock-based compensation
Other income, net
Goodwill and intangibles impairment
Other adjustments
Adjusted EBITDA
(in thousands)
U.K. Operations
Net income (loss)
Interest expense, net
Income tax expense
Depreciation and amortization
EBITDA
Transaction expenses
Loss on debt extinguishment
Stock-based compensation
Other income, net
Goodwill and intangibles impairment
Other adjustments
Adjusted EBITDA
Table of Contents
(in thousands)
U.S. Concrete Waste Management Services
Net income (loss)
Interest expense, net
Income tax expense (benefit)
Depreciation and amortization
EBITDA
Transaction expenses
Loss on debt extinguishment
Stock-based compensation
Other income, net
Goodwill and intangibles impairment
Other adjustments
Adjusted EBITDA
(in thousands)
Corporate
Net income
Interest expense, net
Income tax expense (benefit)
Depreciation and amortization
EBITDA
Transaction expenses
Loss on debt extinguishment
Stock-based compensation
Other income, net
Goodwill and intangibles impairment
Other adjustments
Adjusted EBITDA
Jobs Act
$
$
$
37
$
$
$
$
3,619
(45)
-
4,245
56,069 $
-
(6)
-
761
6,752 $
3,619
(51)
-
5,006
62,821
11,455
(37)
43,500
2,894
74,886
$
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
(16,620) $
2,955
80
8,422
(5,163)
-
-
-
(132)
14,444
3,079
12,228 $
1,123 $
2,705
538
8,807
13,173
-
-
-
-
-
861
14,034 $
158 $
490
49
890
1,587
-
-
-
-
-
73
1,660 $
1,281
3,195
587
9,697
14,760
-
-
-
-
-
934
15,694
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
(1,520) $
2
2,485
10,871
11,838
-
-
-
(2)
-
1,342
13,178 $
2,009 $
-
(1,784)
163
388
-
-
-
-
-
611
999 $
489
2
701
11,034
12,226
-
-
-
(2)
-
1,953
14,177
4,404 $
-
593
10,687
15,684
-
-
-
-
-
2,002
17,686 $
Successor
Year Ended
October 31,
2020
December 6,
2018 through
October 31,
2019
Predecessor
November 1,
2018 through
December 5,
2018
S/P Combined
(non-GAAP)
Year Ended
October 31,
2019
1,366 $
1
305
829
2,501
-
-
-
-
-
-
2,501 $
1,516 $
-
332
729
2,577
-
-
-
-
-
48
2,625 $
510 $
-
(355)
25
180
-
-
-
-
-
(3)
177 $
2,026
-
(23)
754
2,757
-
-
-
-
-
45
2,802
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for
qualifying public companies. As we are an emerging growth company, we have qualified for and have previously elected to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-
emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of
public company effective dates. If we were to subsequently elect instead to comply with these public company effective dates, such election would be irrevocable pursuant to
Section 107 of the JOBS Act.
Table of Contents
38
Critical Accounting Policies and Estimates
In presenting our financial statements in conformity with U.S. GAAP, we are required to make estimates and assumptions that affect the amounts reported therein.
Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are
outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable
change to current conditions, it could result in a material impact to our consolidated and combined results of operations, financial position and liquidity. We believe that the
estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we
believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our business activities are in environments where
we are paid a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting
policies that are not particularly subjective, nor complex.
Listed below are those estimates that we believe are critical and require the use of complex judgment in their application.
Goodwill and Intangible Assets
In accordance with ASC Topic 350, Intangibles–Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment annually, generally as
of August 31st, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses a two-
step process to assess the realizability of goodwill. The first step is a qualitative assessment that analyzes current economic indicators associated with a particular reporting
unit. For example, the Company analyzes changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to
determine if there are indicators of a significant decline in the fair value of a particular reporting unit. If the qualitative assessment indicates a stable or improved fair value,
no further testing is required. If a qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the
Company will proceed to the quantitative second step where the fair value of a reporting unit is calculated based on weighted income and market-based approaches. If the
fair value of a reporting unit is lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating fair value
of individual reporting units and indefinite-lived intangible assets requires us to make assumptions and estimates regarding our future plans, as well as industry and
economic conditions including those relating to the duration and severity of COVID-19. These assumptions and estimates include projected revenue, trade name royalty
rates, discount rate, tax amortization benefit and other market factors outside of our control. The Company elects to perform a qualitative assessment for the other quarterly
reporting periods throughout the fiscal year.
During the second quarter of fiscal year 2020, the Company identified a triggering event from the recent decline in its stock price and deterioration in general
economic conditions resulting from the COVID-19 pandemic. As a result, the Company performed an interim step one goodwill impairment analysis in accordance with
ASU 2017-04, Intangibles — Goodwill and Other (ASC 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) and recorded a goodwill and intangibles
impairment charge of $57.9 million. No such impairment was required during the remainder of fiscal 2020.
When we perform any goodwill impairment test, the estimated fair value of our reporting units are determined using an income approach that utilizes a discounted
cash flow (“DCF”) model and a market approach that utilizes the guideline public company method (“GPC”), both of which are weighted for each reporting unit and are
discussed below in further detail. In accordance with ASC 820, we evaluated the methods for reasonableness and reliability and assigned weightings accordingly. A
mathematical weighting is not prescribed by ASC 820, rather it requires judgement. As such, each of the valuation methods were weighted by accounting for the relative
merits of each method and considered, among other things, the reliability of the valuation methods and the inputs used in the methods. In addition, in order to assess the
reasonableness of the fair value of our reporting units as calculated under both approaches, we also compare the Company’s total fair value to its market capitalization and
calculate an implied control premium (the excess sum of the reporting unit’s fair value over its market capitalization). We evaluate the implied control premium by
comparing it to control premiums of recent comparable market transactions, as applicable.
Table of Contents
39
Under the income approach, the DCF model is based on expected future after-tax operating cash flows of the reporting unit, discounted to a present value using a
risk-adjusted discount rate. Estimates of future cash flows require management to make significant assumptions concerning (i) future operating performance, including future
sales, long-term growth rates, operating margins, variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, (ii) the
probability of regulatory approvals, and (iii) future economic conditions, including the extent and duration of the COVID-19 pandemic, all of which may differ from actual
future cash flows. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.
The discount rate, which is intended to reflect the risks inherent in future cash flow projections, used in the DCF model, is based on estimates of the weighted average cost of
capital (“WACC”) of market participants relative to our reporting unit. Financial and credit market volatility can directly impact certain inputs and assumptions used to
develop the WACC. Any changes in these assumptions may affect our fair value estimate and the result of an impairment test. The discount rates and other inputs and
assumptions are consistent with those that a market participant would use.
The GPC method provides an estimate of value using multiples derived from the stock prices of publicly traded companies. This method requires a selection of
comparable publicly-traded companies on major exchanges and involves a certain degree of judgment, as no two companies are entirely alike. These companies should be
engaged in the same or a similar line of business as the reporting units be evaluated. Once comparable companies are selected, the application of the GPC method includes
(i) analysis of the guideline public companies' financial and operating performance, growth, intangible asset's value, size, leverage, and risk relative to the respective
reporting unit, (ii) calculation of valuation multiples for the selected guideline companies, and (iii) application of the valuation multiples to each reporting unit's selected
operating metrics to arrive at an indication of value. Market multiples for the selected guideline public companies are developed by dividing the business enterprise value of
each guideline public company by a measure of its financial performance (e.g., earnings). The business enterprise value is calculated taking the market value of equity (share
price times fully-diluted shares outstanding) plus total interest bearing debt net of cash, preferred stock and minority interest. The market value of equity is based upon the
stock price of equity as of the valuation date, and the debt figures are taken from the most recently available financial statements as of the valuation date. In selecting
appropriate multiples to apply to each reporting unit, we perform a comparative analysis between the reporting units and the guideline public companies. In making a
selection, we consider the revenue growth, profitability and the size of the reporting unit compared to the guideline public companies, and the overall EBITDA multiples
implied from the transaction price. In addition, we consider a control premium for purposes of estimating the fair value of our reporting units as we believe that a market
participant buyer would be required to pay a premium for control of our business. The control premium utilized is based on control premiums observed in recent comparable
market transactions.
The impairment charges were primarily due to COVID-19, which negatively impacted our market capitalization, drove an increase in the discount rate that is
utilized in our DCF models, and negatively impacted near-term cash flow expectations.
Income Taxes
We are subject to income taxes in the U.S., U.K. and other jurisdictions. Significant judgment is required in determining our provision for income tax, including
evaluating uncertainties in the application of accounting principles and complex tax laws.
Income taxes include federal, state and foreign taxes currently payable and deferred taxes arising from temporary differences between income for financial
reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the differences between the financial statement balances and the tax bases of
assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the year that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to
amounts expected to be realized.
Table of Contents
Stock-Based Compensation.
40
ASC Topic 718, Compensation—Stock Compensation (“ASC 718”) requires that share-based compensation expense be measured and recognized at an amount
equal to the fair value of share-based payments granted under compensation arrangements. The fair value of each restricted stock award or stock option awards (with an
exercise price of $0.01) that only contains a time-based vesting condition is equal to the market value of our common stock on the date of grant. A substantial portion of the
Company's stock awards contain a market condition. For those awards, we estimate the fair value using a Monte Carlo simulation model whereby the fair value of the awards
is fixed at grant date and amortized over the longer of the remaining performance or service period. The Monte Carlo Simulation valuation model incorporates the following
assumptions: expected stock price volatility, the expected life of the awards, a risk-free interest rate and expected dividend yield. Significant judgment is required in
determining the expected volatility of our common stock. Due to the limited history of trading of the Company’s common stock, the Company determined expected
volatility based on a peer group of publicly traded companies.
The Company accounts for forfeitures as they occur.
Recently Issued Accounting Standards
For a detailed description of recently adopted and new accounting pronouncements refer to Note 2 to the Company’s audited financial statements included
elsewhere in this Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, pursuant to Item 305(e) of Regulation S-K, we are not required to
provide the information required by this Item.
41
TABLE OF CONTENTS
42
Page
43
44
45
46
47
48
51
Table of Contents
Item 8. Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Stockholders Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Concrete Pumping Holdings, Inc.
Thornton, Colorado
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Concrete Pumping Holdings, Inc. (the “Company”) as of October 31, 2020 (Successor) and 2019
(Successor), the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for the year ended October 31,
2020 (Successor), for the period from December 6, 2018 through October 31, 2019 (Successor) and for the period from November 1, 2018 through December 5, 2018
(Predecessor), and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of October 31, 2020 (Successor) and 2019 (Successor), and the results of its operations and its cash flows for the year ended October
31, 2020 (Successor), for the period from December 6, 2018 to October 31, 2019 (Successor) and for the period from November 1, 2018 to December 5, 2018 (Predecessor),
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company was not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BDO USA, LLP
We have served as the Company's auditor since 2018.
Dallas, Texas
January 12, 2021
Table of Contents
43
Concrete Pumping Holdings, Inc.
Consolidated Balance Sheets
(in thousands except per share amounts)
ASSETS
October 31,
2020
October 31,
2019
Current assets:
Cash and cash equivalents
Trade receivables, net
Inventory
Income taxes receivable
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Intangible assets, net
Goodwill
Other non-current assets
Deferred financing costs, net
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan
Term loans, current portion
Current portion of capital lease obligations
Accounts payable
Accrued payroll and payroll expenses
Accrued expenses and other current liabilities
Income taxes payable
Deferred consideration
Total current liabilities
Long term debt, net of discount for deferred financing costs
Capital lease obligations, less current portion
Deferred income taxes
Total liabilities
$
$
$
6,736 $
44,343
4,630
1,602
2,694
60,005
304,254
183,839
223,154
1,753
753
773,758 $
1,741 $
20,888
97
6,587
13,065
18,879
1,055
-
62,312
343,906
380
68,019
474,617
7,473
45,957
5,254
697
3,378
62,759
307,415
222,293
276,088
1,813
997
871,365
23,555
20,888
91
7,408
9,177
28,106
1,153
1,708
92,086
360,938
477
69,049
522,550
Zero-dividend convertible perpetual preferred stock, $0.0001 par value, 2,450,980 shares issued and outstanding as of
October 31, 2020 and October 31, 2019
Stockholders' equity
Common stock, $0.0001 par value, 500,000,000 shares authorized, 56,463,992 and 58,253,220 issued and outstanding
as of October 31, 2020 and October 31, 2019, respectively
Additional paid-in capital
Treasury stock
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders' equity
Total liabilities and stockholders' equity
25,000
25,000
6
361,943
(131)
(606)
(87,071)
274,141
$
773,758 $
6
350,489
-
(599)
(26,081)
323,815
871,365
Table of Contents
See accompanying notes to consolidated financial statements.
44
Concrete Pumping Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December
5, 2018
Revenue
Cost of operations
Gross profit
General and administrative expenses
Goodwill and intangibles impairment
Transaction costs
Income (loss) from operations
Other income (expense):
Interest expense, net
Loss on extinguishment of debt
Other income, net
Total other expense
Loss before income taxes
Income tax benefit
Net loss
Less accretion of liquidation preference on preferred stock
Loss available to common shareholders
Weighted average common shares outstanding
Basic
Diluted
Net loss per common share
Basic
Diluted
Table of Contents
(in thousands)
Net loss
Other comprehensive loss:
Foreign currency translation adjustment
Total comprehensive loss
Table of Contents
(in thousands)
Balance at October 31, 2018
Net loss
Stock-based compensation
Foreign currency translation adjustment
Balance at December 5, 2018
$
304,301 $
258,565 $
166,998
137,303
111,087
57,944
-
(31,728)
(34,408)
-
169
(34,239)
143,512
115,053
91,914
-
1,521
21,618
(34,880)
-
47
(34,833)
(65,967)
(13,215)
(4,977)
(60,990)
(1,930)
(3,303)
(9,912)
(1,623)
$
(62,920) $
(11,535) $
24,396
14,027
10,369
4,936
-
14,167
(8,734)
(1,644)
(16,395)
6
(18,033)
(26,767)
(4,192)
(22,575)
(126)
(22,701)
52,752,884
52,752,884
41,445,508
41,445,508
7,576,289
7,576,289
$
$
(1.19) $
(1.19) $
(0.28) $
(0.28) $
(3.00)
(3.00)
See accompanying notes to consolidated financial statements.
45
Concrete Pumping Holdings, Inc.
Consolidated Statements of Comprehensive Loss
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December
5, 2018
$
(60,990) $
(9,912) $
(22,575)
(7)
(599)
$
(60,997) $
(10,511) $
(674)
(23,249)
See accompanying notes to consolidated financial statements.
46
Concrete Pumping Holdings, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(PREDECESSOR)
October 31, 2018 through December 5, 2018
Additional
Paid-In Capital
Accumulated
Other
Comprehensive
Income (loss)
Retained
Earnings
(Accumulated
Deficit)
8 $
-
-
-
8 $
18,724 $
-
27
-
18,751 $
584 $
-
-
(674)
(90) $
26,704 $
(22,575)
-
-
4,129 $
Total
46,020
(22,575)
27
(674)
22,798
Common Stock
$
$
(in thousands)
Balance at December 6, 2018
$
Redemption of Class A common stock
Issuance of Class A common stock
Rollover of Class A common stock as a result
of the Business Combination
Conversion of Class B common stock
Net loss
Foreign currency translation adjustment
Shares issued to acquire business
Stock-based compensation expense
Shares issued upon exercise of stock options
and warrants
Shares issued upon awards of restricted stock
Issuance of shares in exchange for warrants
Shares issued upon public offering Class A
common stock
Balance at October 31, 2019
Stock-based compensation expense
Shares issued upon exercise of stock options,
net of shares used for tax withholding
Net loss
Foreign currency translation adjustment
Balance at October 31, 2020
$
$
Table of Contents
(SUCCESSOR)
December 6, 2018 through October 31, 2020
Common Stock
Additional
Paid-In
Treasury
Stock
Accumulated
Other
Comprehensive
Class A
Class B
Capital
Income (loss)
Accumulated
Deficit
Total
- $
-
-
-
-
-
(599)
-
-
-
-
-
-
(599) $
-
-
-
(7)
(606) $
(7,434) $
(3,577)
-
-
-
(9,912)
-
- $
-
-
-
(5,158)
- $
(26,081) $
-
-
(60,990)
-
(87,071) $
5,000
(16,010)
96,901
164,909
-
(9,912)
(599)
1,150
3,619
1,370
-
-
77,387
323,815
11,454
(131)
(60,990)
(7)
274,141
- $
-
1
1
1
-
-
-
-
-
1
-
2
6 $
-
-
-
-
6 $
1 $
-
-
-
(1)
-
-
-
-
-
-
-
-
- $
-
-
-
-
- $
12,433 $
(12,433)
96,900
164,908
-
-
-
1,150
3,619
1,370
(1)
5,158
77,385
350,489 $
11,454
-
-
-
361,943 $
- $
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
(131)
-
-
(131) $
See accompanying notes to consolidated financial statements.
47
Concrete Pumping Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill and intangibles impairment
Depreciation
Deferred income taxes
Amortization of deferred financing costs
Write off deferred debt issuance costs
Amortization of debt premium
Amortization of intangible assets
Stock-based compensation expense
Prepayment penalty on early extinguishment of debt
Net gain on the sale of property, plant and equipment
(Payment) / accretion of contingent consideration in excess of amounts established in
purchase accounting
Net changes in operating assets and liabilities (net of acquisitions):
Trade receivables, net
Inventory
Prepaid expenses and other current assets
Income taxes payable, net
Accounts payable
Accrued payroll, accrued expenses and other current liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Cash withdrawn from Industrea Trust Account
Acquisition of net assets, net of cash acquired - CPH acquisition
Acquisition of net assets, net of cash acquired - Capital acquisition
Acquisition of net assets, net of cash acquired - Other Business Combinations
Net cash used in investing activities
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December
5, 2018
$
(60,990) $
(9,912) $
(22,575)
57,944
28,264
(1,029)
4,100
-
-
33,392
11,454
-
(1,508)
(526)
1,597
624
1,651
(998)
(796)
5,791
78,970
(39,339)
3,486
-
-
-
-
(35,853)
-
20,279
(2,446)
3,664
-
-
32,366
3,619
-
(611)
207
(5,861)
(466)
(1,001)
(1,428)
(7,303)
(8,330)
22,777
(35,736)
3,073
238,474
(449,434)
(129,218)
(2,257)
(375,100)
-
2,060
(4,355)
152
3,390
(11)
653
27
13,004
(166)
-
485
(294)
(1,283)
203
(654)
17,280
7,916
(503)
364
-
-
-
(139)
Table of Contents
See accompanying notes to consolidated financial statements.
48
Concrete Pumping Holdings, Inc.
Consolidated Statements of Cash Flows (Continued)
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December
5, 2018
-
(20,888)
285,861
(307,518)
-
-
(91)
(131)
-
-
-
-
(1,161)
-
(43,928)
74
(737)
7,473
6,736 $
417,000
(14,906)
222,213
(198,863)
(231,415)
(24,929)
(78)
-
25,000
(8,050)
96,900
77,387
-
1,370
361,629
(1,837)
7,469
4
7,473 $
-
-
4,693
(20,056)
-
-
(7)
-
-
-
-
-
-
-
(15,370)
(70)
(7,663)
8,621
958
$
(in thousands)
Cash flows from financing activities:
Proceeds on long term debt
Payments on long term debt
Proceeds on revolving loan
Payments on revolving loan
Payment of debt issuance costs
Redemption of common shares
Payments on capital lease obligations
Purchase of treasury stock
Issuance of preferred shares
Payment of underwriting fees
Issuance of common shares - Dec 2018
Issuance of common shares - May 2019
Payment of contingent consideration established in purchase accounting
Proceeds on exercise of rollover incentive options
Net cash provided by (used in) financing activities
Effect of foreign currency exchange rate on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents:
Beginning of period
End of period
Table of Contents
See accompanying notes to consolidated financial statements.
49
Concrete Pumping Holdings, Inc.
Consolidated Statements of Cash Flows (Continued)
(in thousands)
Supplemental cash flow information:
Cash paid for interest
Cash paid for income taxes, net of refunds
Non-cash investing and financing activities:
Fair value of rollover equity for Business Combination
Equipment purchases included in accrued expenses and accounts payable
Shares issued to acquire a business
Holdbacks related to the acquisition of a business
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
$
$
$
$
33,100 $
3,352 $
29,472 $
1,984 $
- $
4,149 $
- $
- $
164,909 $
16,417 $
1,150 $
181 $
201
-
-
-
-
-
See accompanying notes to consolidated financial statements.
50
Table of Contents
Note 1. Organization and Description of Business
Organization
Concrete Pumping Holdings, Inc. (the “Company” or “Successor”) is a Delaware corporation headquartered in Denver, Colorado. The Consolidated Financial
Statements include the accounts of Concrete Pumping Holdings, Inc. and its wholly owned subsidiaries including Brundage-Bone Concrete Pumping, Inc. (“Brundage-
Bone”), Capital Pumping (“Capital”), Camfaud Group Limited (“Camfaud”), and Eco-Pan, Inc. (“Eco-Pan”).
O n December 6, 2018 (the "Closing Date"), the Company, formerly known as Concrete Pumping Holdings Acquisition Corp., consummated a business
combination transaction (the “Business Combination”) pursuant to which it acquired (i) the private operating company formerly called Concrete Pumping Holdings, Inc.
(“CPH”) and (ii) the former special purpose acquisition company called Industrea Acquisition Corp (“Industrea”). In connection with the closing of the Business
Combination, the Company changed its name to Concrete Pumping Holdings, Inc. The financial results described herein for the dates and periods prior to the Business
Combination relate to the operations of CPH prior to the consummation of the Business Combination. See Note 4 – Business Combinations for further discussion.
Nature of business
Brundage-Bone and Capital are concrete pumping service providers in the United States ("U.S.") and Camfaud is a concrete pumping service provider in the United
Kingdom (“U.K.”). Their core business is the provision of concrete pumping services to general contractors and concrete finishing companies in the commercial,
infrastructure and residential sectors. Most often equipment returns to a “home base” nightly and neither company contracts to purchase, mix, or deliver concrete. Brundage-
Bone and Capital collectively have approximately 90 branch locations across 22 states, with its corporate headquarters in Thornton (near Denver), Colorado. Camfaud has
30 branch locations throughout the U.K., with its corporate headquarters in Epping (near London), England.
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 16 operating locations across the U.S. with its corporate headquarters in
Thornton, Colorado.
Seasonality
The Company’s sales are historically seasonal, with lower revenue in the first quarter and higher revenue in the fourth quarter of each year. Such seasonality also
causes the Company’s working capital cash flow requirements to vary from quarter to quarter and primarily depends on the variability of weather patterns with the Company
generally having lower sales volume during the winter and spring months.
Impacts of COVID-19
I n March 2020, the World Health Organization declared the outbreak of COVID-19 to be a global pandemic and recommended containment and mitigation
measures worldwide. The COVID-19 pandemic has rapidly changed market and economic conditions globally and may continue to create significant uncertainty in the
macroeconomic environment. Such macroeconomic volatility, in addition to other unforeseen effects of this pandemic, has impacted our business, results of operations and
overall financial performance. The Company has made adjustments to its operations and executed certain cost reduction initiatives as a result of the COVID-19 pandemic.
In the final month of the second quarter of fiscal 2020, our operations in the Seattle and U.K. markets were negatively impacted due to COVID-19-imposed
construction site shutdowns. These restrictions were, for the most part, lifted during the third quarter ended July 31, 2020. As a result of the pandemic, the Company has
implemented certain short-term cost reductions, including headcount reductions, modified work schedules reducing hours where needed, and furloughs in limited locations.
The Company had previously suspended any remaining uncommitted 2020 capital expenditure investments, but that was lifted as its overall liquidity and operations have
improved. While the Company believes these disruptions will be temporary, it is difficult to predict how long they will last and the impact they will have on the Company in
future periods.
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In addition, the COVID-19 pandemic drove a sustained decline in the Company's stock price and a deterioration in general economic conditions in the fiscal 2020
second quarter, which qualified as a triggering event necessitating the evaluation of its goodwill and long-lived assets for indicators of impairment. As a result of the
evaluation, the Company conducted a quantitative interim impairment test as of April 30, 2020. There were no triggering events during the remainder of fiscal 2020. Refer to
Notes 2 and 8 for further discussion. The Company will continue to evaluate its goodwill and intangible assets in future quarters. Additional impairments may be recorded in
the future based on events and circumstances, including those related to COVID-19 discussed above.
Despite recent news regarding vaccines, both the outbreak and the containment and mitigation measures have had and are likely to continue to have a serious
adverse impact on the global economy, the severity and duration of which are uncertain. It is likely that government stabilization efforts will only partially mitigate the
consequences to the economy. The extent to which the COVID- 19 pandemic will impact the Company’s business, financial condition, and results of operations in the future
is highly uncertain and will be affected by a number of factors. These include the duration and extent of the pandemic; the duration and extent of imposed or recommended
containment and mitigation measures; the extent, duration, and effective execution of government stabilization and recovery efforts, including those from the successful
distribution of an effective vaccine; the impact of the pandemic on economic activity, including on construction projects and the Company’s customers’ demand for its
services; the Company’s ability to effectively operate, including as a result of travel restrictions and mandatory business and facility closures; the ability of the Company’s
customers to pay for services rendered; any further closures of the Company’s and the Company’s customers’ offices and facilities; and any additional project delays or
shutdowns. Customers may also slow down decision-making, delay planned work or seek to terminate existing agreements. Any of these events may have a material adverse
effect on the Company’s business, financial condition, and/or results of operations, including further impairment to our goodwill and intangible assets. The Company will
continue to evaluate the effect of COVID-19 on its business.
Note 2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of
America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The enclosed statements reflect all normal and recurring adjustments
which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company at October 31, 2020 and for
all periods presented. All intercompany balances and transactions have been eliminated in consolidation.
As a result of the Business Combination, the Company is the acquirer for accounting purposes and CPH is the acquiree and accounting predecessor. The Company’s
financial statement presentation distinguishes the Company’s financial performance into two distinct periods, the period up to the Closing Date (labeled “Predecessor”) and
the period including and after that date (labeled “Successor”).
The Business Combination was accounted for using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting
that is based on the fair value of the net assets acquired.
Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. See
Note 4 – Business Combinations for a discussion of the estimated fair values of assets and liabilities recorded in connection with the Company’s acquisition of CPH.
As a result of the application of the acquisition method of accounting as of the Closing Date of the Business Combination, the accompanying Consolidated
Financial Statements include a black line division which indicates that the Predecessor and Successor reporting entities shown are presented on a different basis and are
therefore, not comparable.
The historical financial information of Industrea prior to the Business Combination (a special purpose acquisition company, or “SPAC”) has not been reflected in
the Predecessor financial statements as these historical amounts have been determined to be not useful information to a user of the financial statements. SPACs deposit the
proceeds from their initial public offerings into a segregated trust account until a business combination occurs, where such funds are then used to pay consideration for the
acquiree and/or to pay stockholders who elect to redeem their shares of common stock in connection with the business combination. The operations of a SPAC, until the
closing of a business combination, other than income from the trust account investments and transaction expenses, are nominal. Accordingly, no other activity in the
Company was reported for periods prior to December 6, 2018 besides CPH’s operations as Predecessor.
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Principles of consolidation
The Successor Consolidated Financial Statements include all amounts of the Company and its subsidiaries. The Predecessor Consolidated Financial Statements
include all amounts of CPH and its subsidiaries. All intercompany balances and transactions have been eliminated.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Significant estimates include accrued sales and use taxes, the liability for incurred but unreported claims under various partially self-insured polices, allowance for
doubtful accounts, goodwill impairment analysis, valuation of share-based compensation and accounting for business combinations. Actual results may differ from those
estimates, and such differences may be material to the Company’s consolidated financial statements.
Trade receivables
Trade receivables are carried at the original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts.
Generally, the Company does not require collateral for their accounts receivable; however, the Company may file statutory liens or take other appropriate legal action when
necessary on construction projects in which collection problems arise. A trade receivable is typically considered to be past due if any portion of the receivable balance is
outstanding for more than 30 days. The Company does not charge interest on past-due trade receivables.
Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.
The allowance for doubtful accounts was $0.6 million and $0.6 million as of October 31, 2020 and 2019, respectively. Trade receivables are written off when deemed
uncollectible. Recoveries of trade receivables previously written off are recorded when received.
Inventory
Inventory consists primarily of replacement parts for concrete pumping equipment. Inventories are stated at the lower of cost (first-in, first-out method) or net
realizable value. The Company evaluates inventory and records an allowance for obsolete and slow- moving inventory to account for cost adjustments to market. Based on
management’s analysis, no allowance for obsolete and slow-moving inventory was required as of October 31, 2020 and 2019.
Fair Value Measurements
The FASB’s standard on fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that
is significant to the fair value measurement. This standard establishes three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities.
Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities
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Deferred financing costs
Deferred financing costs representing third-party, non-lender debt issuance costs are deferred and amortized using the effective interest rate method over the term of
the related long-term-debt agreement, and the straight-line method for the revolving credit agreement.
Debt issuance costs, including any original issue discounts, related to term loans are reflected as a direct deduction from the carrying amount of the long-term debt
liability that is included in long term debt, net of discount for deferred financing costs in the accompanying consolidated balance sheet. Debt issuance costs related to
revolving credit facilities are capitalized and reflected in deferred financing in the accompanying consolidated balance sheet.
Goodwill
In accordance with ASC Topic 350, Intangibles–Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment annually or more
frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses a two-step process to assess the
realizability of goodwill. The first step is a qualitative assessment that analyzes current economic indicators associated with a particular reporting unit. For example, the
Company analyzes changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there are
indicators of a significant decline in the fair value of a particular reporting unit. If the qualitative assessment indicates a stable or improved fair value, no further testing is
required. If a qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed to the
quantitative second step where the fair value of a reporting unit is calculated based on weighted income and market-based approaches. If the fair value of a reporting unit is
lower than its carrying value, an impairment to goodwill is recorded, not to exceed the carrying amount of goodwill in the reporting unit.
During the second quarter of fiscal year 2020, the Company identified a triggering event from the recent decline in its stock price resulting from the COVID-19
pandemic (“COVID-19”). As a result, the Company performed an interim step one goodwill impairment analysis in accordance with ASU 2017-04, Intangibles — Goodwill
and Other (ASC 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). Refer to Note 8 for further discussion.
Property, plant and equipment
Property, plant and equipment are recorded at cost. Expenditures for additions and betterments are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred; however, maintenance and repairs that improve or extend the life of existing assets are capitalized. The carrying amount of assets disposed
of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains or losses from property and equipment disposals are recognized
in the year of disposal. Property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:
Buildings and improvements
Capital lease assets—buildings
Furniture and office equipment
Machinery and equipment
Transportation equipment
In Years
15 to 40
40
2 to 7
3 to 25
3 to 7
Capital lease assets are being amortized over the estimated useful life of the asset (see Note 13).
Intangible Assets
Intangible assets are recorded at cost or their estimated fair value (when acquired through a business combination) less accumulated amortization (if finite-lived).
Intangible assets with finite lives, except for customer relationships, are amortized on a straight-line basis over their estimated useful lives. Customer relationships
are amortized on an accelerated basis over their estimated useful lives. Intangible assets with indefinite lives are not amortized but are subject to annual reviews for
impairment. As noted above, the Company identified a triggering event during the second quarter of fiscal 2020 from the recent decline in its stock price and elected to
perform an interim impairment test on its indefinite-lived trade names. Refer to Note 8 for further discussion.
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Impairment of long-lived assets
ASC 360, Property, Plant and Equipment (ASC 360) requires other long-lived assets to be evaluated for impairment when indicators of impairment are present. If
indicators are present, assets are grouped to the lowest level for which identifiable cash flows are largely independent of other asset groups and cash flows are estimated for
each asset group over the remaining estimated life of each asset group. If the undiscounted cash flows estimated to be generated by those assets are less than the asset’s
carrying amount, impairment is recognized in the amount of the excess of the carrying value over the fair value. No indicators of impairment were identified as of October
31, 2020.
Revenue recognition
The Company generates revenues primarily from concrete pumping services in both the U.S. and U.K. Additionally, revenues are generated from the Company’s
waste management business which consists of service fees charged to customers for the delivery of our pans and containers and the disposal of the concrete waste material.
The Company recognizes revenue from these businesses when all of the following criteria are met: (a) persuasive evidence of an arrangement exists, (b) the service
has been performed or delivery has occurred, (c) the price is fixed or determinable, and (d) collectability is reasonably assured. The Company’s delivery terms for
replacement part sales are FOB shipping point.
The Company imposes and collects sales taxes concurrent with our revenue-producing transactions with customers and remits those taxes to the various
governmental authorities as prescribed by the taxing jurisdictions in which we operate. We present such taxes in our consolidated statements of income on a net basis.
Stock-based compensation
The Company follows ASC 718, Compensation—Stock Compensation (ASC 718), which requires the measurement and recognition of compensation expense,
based on estimated fair values, for all share-based awards made to employees and directors. The Company expenses the grant date fair value of the award in the consolidated
statements of income over the requisite service periods on a straight-line basis. The Company accounts for forfeitures as they occur in accordance with the adoption of ASU
No. 2016-09, Compensation—Stock Compensation (ASC 718): Improvements to Employee Share-Based Payment Accounting.
Income taxes
The Company complies with ASC 740, Income Taxes, which requires an asset and liability approach to financial reporting for income taxes.
The Company computes deferred income tax assets and liabilities annually for differences between the financial statements and tax basis of assets and liabilities
that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback opportunities, and tax planning strategies in making the assessment.
Income tax expense includes both the current income taxes payable or refundable and the change during the period in the deferred tax assets and liabilities. The tax benefit
from an uncertain tax position is only recognized in the consolidated balance sheet if the tax position is more likely than not to be sustained upon an examination.
Camfaud files income tax returns in the U.K. Camfaud’s national statutes are generally open for one year following the statutory filing period.
Foreign currency translation
The functional currency of Camfaud is the Pound Sterling (GBP). The assets and liabilities of the Company's foreign subsidiaries are translated into U.S. Dollars
using the period end exchange rates for the periods presented, and the consolidated statements of operations are translated at the average exchange rate for the periods
presented. The resulting translation adjustments are recorded as a component of comprehensive income on the consolidated statements of comprehensive income and
accumulated in other comprehensive income. The functional currency of our other subsidiaries is the United States Dollar.
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Earnings per share
The Company calculates earnings per share in accordance with ASC 260, Earnings per Share. The two-class method of computing earnings per share is required
for entities that have participating securities. The two-class method is an earnings allocation formula that determines earnings per share for participating securities according
to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company has two classes of stock: (1) Common Stock and (2) Participating
Preferred Stock (“Preferred Stock”).
Basic earnings (loss) per common share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of shares
of Common Stock outstanding each period. Diluted earnings (loss) per common share is based on the weighted average number of shares outstanding during the period plus
the common stock equivalents which would arise from the exercise of stock options outstanding using the treasury stock method and the average market price per share
during the period. Common stock equivalents are not included in the diluted earnings (loss) per share calculation when their effect is antidilutive.
An anti-dilutive impact is an increase in earnings per share or a reduction in net loss per share resulting from the conversion, exercise, or contingent issuance of
certain securities.
Business combinations
The Company applies the principles provided in ASC 805, Business Combinations, when a business is acquired. Tangible and intangible assets acquired and
liabilities assumed are recorded at fair value and goodwill is recognized for any differences between the fair value of consideration transferred and the fair value of net assets
acquired. Transaction costs for business combinations are expensed as incurred in accordance with ASC 805.
Concentrations
As of October 31, 2020 there were three significant vendors that the Company relied upon to purchase concrete pumping boom equipment. However, should the
need arise, there are alternate vendors who can provide concrete pumping boom equipment.
Cash balances held at financial institutions may, at times, be in excess of federally insured limits. The Company places its temporary cash balances in high-credit
quality financial institutions.
The Company’s customer base is dispersed across the U.S. and U.K. The Company performs ongoing evaluations of its customers’ financial condition and requires
no collateral to support credit sales. During the Predecessor and Successor periods described above, no customer represented 10 percent or more of sales or trade receivables.
Note 3. New Accounting Pronouncements
The Company has opted to take advantage of the extended transition period available to emerging growth companies pursuant to the Jumpstart Our Business
Startups Act of 2012 (the “JOBS Act”) for new accounting standards.
Newly adopted accounting pronouncements
I n January 2017, the FASB issued ASU No. 2017-01, Business Combinations (ASC 805): Clarifying the Definition of a Business (“ASU 2017-01”), which
provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 requires
entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further
evaluated against the framework. The new standard will be applied prospectively to any transactions occurring within the period of adoption and is effective for entities other
than public business entities for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company
adopted this ASU in the first quarter of 2020. As there have been no new business combinations, this ASU has not had an effect on the Company’s consolidated financial
statements. The Company will apply this ASU as new business combinations occur.
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In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU
2016-15”) related to how certain cash receipts and payments are presented and classified in the statement of cash flows. These cash flow issues include debt prepayment or
extinguishment costs, settlement of zero-coupon debt, contingent consideration payments made after a business combination, proceeds from the settlement of insurance
claims, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows. ASU 2016-15 is
effective for emerging growth companies in annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods
beginning after December 15, 2019. The Company early adopted this ASU in the first quarter of 2020 on a retrospective basis and the adoption did not have a material
impact on the consolidated financial statements.
Recently issued accounting pronouncements not yet effective
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606) (“ASU 2014-09”), which is a comprehensive new revenue
recognition model.
Under ASU 2014-09 and the related clarifying ASUs, a company will recognize revenue when it transfers promised goods or services to customers in an amount
that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. Following the issuance of ASU 2020-05 that deferred
the effective date for certain companies, ASU 2014-09 is effective for emerging growth companies that have elected to use private company adoption dates in annual
reporting periods beginning after December 15, 2019 and interim reporting periods within annual reporting periods beginning after December 15, 2020 and is to be adopted
using either a full retrospective or modified retrospective transition method. The Company expects to adopt the guidance under the modified retrospective approach during
the fourth quarter of the fiscal year ending October 31, 2021. The Company is currently evaluating the impact of the adoption of the new standard but does not expect a
significant impact on the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which is codified in ASC 842, Leases (“ASC 842”) and supersedes current lease
guidance in ASC 840, Leases. ASC 842 requires a lessee to recognize a right-of-use asset and a corresponding lease liability for substantially all leases. The lease liability
will be equal to the present value of the remaining lease payments while the right-of-use asset will be similarly calculated and then adjusted for initial direct costs. In
addition, ASC 842 expands the disclosure requirements to increase the transparency and comparability of the amount, timing and uncertainty of cash flows arising from
leases. In July 2018, the FASB issued ASU 2018-11, Leases ASC 842: Targeted Improvements, which allows entities to initially apply the new leases standard at the
adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
The new standard is effective for emerging growth companies that have elected to use private company adoption dates for fiscal years beginning after December
15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company plans to adopt the new standard effective for the year ending October
31, 2022. The Company is currently evaluating the impact of the pending adoption of the new standard on the consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), This ASU, along with subsequently issued related ASUs,
requires financial assets (or groups of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, among other provisions.
This ASU is effective for emerging growth companies that have elected to use private company adoption dates with annual and interim periods beginning after December
15, 2022, with early adoption permitted. The Company plans to adopt the new standard effective for the year ending October 31, 2022. The amendments of this ASU should
be applied on a modified retrospective basis to all periods presented. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated
financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
(“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate
reform on financial reporting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”). Specifically, to the
extent the Company's debt agreements are modified to replace LIBOR with another interest rate index, ASU 2020-04 will permit the Company to account for the
modification as a continuation of the existing contract without additional analysis. Companies may generally elect to apply the guidance for periods that include March 12,
2020 through December 31, 2022. The Company is evaluating the anticipated impact of this standard on its condensed consolidated financial statements as well as timing of
adoption.
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Note 4. Business Combinations
May 2019 Acquisition of Capital Pumping
On May 15, 2019, the Company acquired Capital Pumping, LP and its affiliates (“Capital”), a concrete pumping provider based in Texas for a purchase price of
$129.2 million, which was paid using proceeds from the Company’s public offering of common stock and additional borrowings on its term loan facility. This acquisition
qualified as a business combination under ASC 805. Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with
any excess recognized as goodwill. Goodwill recorded from the transaction represents expected synergies from combining operations and the assembled workforce.
The following table represents the final allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values with
any measurement-period adjustments included:
Consideration paid:
Net assets acquired:
Current assets
Intangible assets
Property and equipment
Liabilities assumed
Total net assets acquired
Goodwill
$
$
$
129,218
748
45,500
56,467
(63)
102,652
26,566
Identifiable intangible assets acquired consist of customer relationships of $40.0 million and a trade name valued at $5.5 million. The customer relationships were
valued using the multi-period excess earnings method. The Company determined the useful life of the customer relationships to be 15 years. The trade name was valued
using the relief-from-royalty method and the Company determined the trade name associated with Capital to be indefinite.
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December 2018 Acquisition of CPH
On December 6, 2018, the Company consummated the Business Combination. This acquisition qualified as a business combination under ASC 805. Accordingly,
the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill. Goodwill recorded from the
transaction represents the value provided by the Company’s leading market share in a highly-fragmented industry.
The following table represents the final allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values with
any measurement-period adjustments included (see paragraph below for any measurement-period adjustments included):
Consideration paid:
Cash
Fair value of rollover equity
Net working capital adjustment
Total consideration paid
Net assets acquired:
Current assets
Intangible assets
Property and equipment
Liabilities assumed
Total net assets acquired
Goodwill
$
$
$
$
445,386
164,908
4,050
614,344
49,112
208,063
219,467
(110,245)
366,397
247,947
Note: Cash in table above is net of $1.0 million in cash acquired
Identifiable intangible assets acquired consist of customer relationships of $152.7 million and trade names of $55.4 million. The customer relationships were valued
using the multi-period excess earnings method. The Company determined the useful life of the customer relationships to be 15 years. The trade names were valued using the
relief-from-royalty method. The Company determined the useful life of the trade name associated with Camfaud to be 10 years. The Company determined the trade names
associated with Brundage-Bone and Eco-Pan to be indefinite.
During the Successor period from December 6, 2018 through October 31, 2019, the Company recorded an out of period adjustment related to the reduction of sales
tax accrual of $3.4 million that resulted in changes to goodwill and liabilities assumed in the transaction. The impact of the adjustment was not considered material to the
Company's previously issued financial statements.
CPH incurred transaction costs of $14.2 million and debt extinguishment costs of $16.4 million independently prior to the Business Combination.
Additional costs consisting of stock option and other compensation related expenses were recorded in connection with the Business Combination. These costs were
solely contingent upon the completion of the business combination and did not include any future service requirements. As such, these costs will be presented “on the line”
and are not reflected in either Predecessor or Successor financial statements. “On the line” describes those expenses triggered by the consummation of a business
combination that were incurred by the acquiree, i.e. CPH, that are not recognized in the Statement of Operations of either the Predecessor or Successor as they are not
directly attributable to either period but instead were contingent on the Business Combination.
In conjunction with the Business Combination, there were $15.6 million of transaction bonuses and, as a result of a change in control provision for stock-based
awards, certain unvested stock-based awards immediately vested, resulting in the recognition of compensation expense of approximately $0.6 million. These expenses were
not reflected in either the Predecessor or Successor consolidated statement of operations and comprehensive loss periods.
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Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the CPH and Capital
business combinations discussed above as if they had occurred on November 1, 2018. The unaudited pro forma financial information is presented for illustrative purposes
only and is not necessarily indicative of the results of operations that would have been realized if the CPH and Capital business combinations had been completed on
November 1, 2018, nor does it purport to project the results of operations of the combined company in future periods. The unaudited pro forma financial information does
not give effect to any anticipated integration costs related to the acquired company.
The unaudited pro forma financial information is as follows:
(in thousands)
Revenue
Pro forma revenue adjustments by Business Combination
Capital
CPH
Total pro forma revenue
(in thousands)
Net loss
Pro forma net income (loss) adjustments by Business Combination
Capital
CPH
Total pro forma net loss
60
Year Ended October
31, 2020
Year Ended October
31, 2019
$
$
304,301 $
-
-
304,301 $
24,396
26,829
258,565
309,790
Year Ended October
31, 2020
Year Ended October
31, 2019
$
$
(60,990) $
-
-
(60,990) $
(22,575)
2,868
(9,912)
(29,619)
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Note 5. Fair Value Measurement
The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable and current accrued liabilities approximate their fair
value as recorded due to the short-term maturity of these instruments, which approximates fair value. The Company’s outstanding obligations on its ABL credit facility are
deemed to be at fair value as the interest rates on these debt obligations are variable and consistent with prevailing rates. The Company believes the carrying values of its
capital lease obligations represent fair value.
The Company's long-term debt instruments are recorded at their carrying values in the consolidated balance sheet, which may differ from their respective fair
values. The fair values of the long-term debt instruments are derived from Level 2 inputs. The fair value amount of the Long-term debt instruments at October 31, 2020 and
2019 is presented in the table below based on the prevailing interest rates and trading activity of the Notes.
(in thousands)
Term loans
Capital lease obligations
October 31,
2020
October 31,
2019
Carrying Value
381,205
$
477
$
Fair Value
Carrying Value
Fair Value
365,003 $
477
402,094 $
568
394,052
568
In connection with the acquisition of Camfaud in November 2016, former Camfaud shareholders were eligible to receive earnout payments (“deferred
consideration”) of up to $3.1 million if certain Earnings before interest, taxes, depreciation, and amortization ("EBITDA") targets were met. In accordance with ASC 805,
the Company reviewed the deferred consideration on a quarterly basis in order to determine its fair value. Changes in the fair value of the liability are recorded within
general and administrative expenses in the consolidated statement of income in the period in which the change was made. The Company estimated the fair value of the
deferred consideration based on its probability assessment of Camfaud’s EBITDA achievements during the 3 year earnout period. In developing these estimates, the
Company considered its revenue and EBITDA projections, its historical results, and general macro-economic environment and industry trends. This fair value measurement
was based on significant revenue and EBITDA inputs not observed in the market, which represents a Level 3 measurement. The fair value of the deferred consideration was
$1.7 million at October 31, 2019, which also represented the date at which the 3-year earnout period ended. The deferred consideration was fully paid out during the fiscal
2020 first quarter. In accordance with US GAAP, the related cash outflows are reflected in the statement of cash flows with $1.2 million being included in financing
activities, reflecting the payment of contingent consideration that was originally established in purchase accounting, and the remaining $0.5 million being included in
operating activities, reflecting the payment amount that is in excess of the contingent consideration that was originally established in purchase accounting.
The Company's non-financial assets, which primarily consist of property and equipment, goodwill and other intangible assets, are not required to be carried at fair
value on a recurring basis and are reported at carrying value. However, on a periodic basis or whenever events or changes in circumstances indicate that their carrying value
may not be fully recoverable (and at least annually for goodwill and indefinite lived intangibles), non-financial instruments are assessed for impairment and, if applicable,
written down to and recorded at fair value.
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Table of Contents
Note 6. Prepaid Expenses and Other Current Assets
The significant components of prepaid expenses and other current assets at October 31, 2020 and 2019 are comprised of the following:
(in thousands)
Prepaid insurance
Prepaid licenses and deposits
Prepaid rent
Other prepaids
Total prepaid expenses and other current assets
Note 7. Property, Plant and Equipment
October 31,
2020
October 31,
2019
$
$
1,399 $
429
149
717
2,694 $
1,416
528
485
949
3,378
The significant components of property, plant and equipment at October 31, 2020 and 2019 are comprised of the following:
(in thousands)
Land, building and improvements
Capital leases—land and buildings
Machinery and equipment
Transportation equipment
Furniture and office equipment
Property, plant and equipment, gross
Less accumulated depreciation
Property, plant and equipment, net
October 31,
2020
October 31,
2019
$
$
26,728 $
828
318,029
2,338
1,230
349,153
(44,899)
304,254 $
26,085
828
295,741
2,223
1,209
326,086
(18,671)
307,415
Depreciation expense for the Successor year ended October 31, 2020 was $28.3 million. Depreciation expense for the Successor period from December 6, 2018 to
October 31, 2019 was $20.3 million. Depreciation expense for the Predecessor from November 1, 2018 to December 5, 2018 was $2.1 million. Depreciation expense related
to revenue producing machinery and equipment is recorded in cost of operations and an immaterial amount of depreciation expense related to the Company's capital leases
and furniture and fixtures is included in general and administrative expenses.
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Note 8. Goodwill and Intangible Assets
The Company recognized goodwill and certain intangible assets in connection with business combinations (see Note 4 - Business Combinations).
During the second quarter of fiscal 2020, the Company identified a triggering event resulting from a sustained decline in its stock price and deterioration in general
economic conditions resulting from COVID-19. As a result, the Company, with the assistance of a third party valuation specialist, performed an interim impairment test on
its indefinite-lived trade name intangible assets and goodwill as of April 30, 2020.
The valuation methodology used to value the trade-names was based on the relief-from-royalty method which is an income based measure that derives the value
from total revenue growth projected and what percentage is attributable to the trade name. As a result of the analysis, the Company identified that the fair value of its
Brundage-Bone Concrete Pumping trade name was approximately 11.8% below its carrying value and as such, recorded a non-cash impairment charge of $5.0 million in
intangibles impairment in its consolidated statements of operations for the year ended October 31, 2020. The impaired trade name has a remaining value of $37.3 million as
o f October 31, 2020. In addition, the Company concluded that the fair values of its Eco-Pan and Capital Pumping trade names exceeded their carrying values by
approximately 7.8% and 109.1%, respectively, and their remaining values are $7.7 million and $5.5 million as of October 31, 2020, respectively.
The goodwill impairment test was performed on the Company’s U.S. Concrete Pumping, U.S. Concrete Waste Management Services, and U.K. Operations
reporting units. The valuation methodologies used to value the reporting units included the discounted cash flow method (income approach) and the guideline public
company method (market approach). As a result of the goodwill impairment analysis, the Company identified that the fair values of its U.S. Concrete Pumping and U.K.
Operations reporting units were approximately 6.9% and 14.8% below their carrying values, respectively. As such, the Company recorded non-cash impairment charges of
$38.5 million and $14.4 million to its U.S. Concrete Pumping and U.K. Operations reporting units, respectively, in goodwill impairment in its consolidated statements of
operations for the year ended October 31, 2020. In addition, the Company concluded that the fair value of its U.S. Concrete Waste Management Services reporting unit
exceeded its carrying value by approximately 4.5% and, as such, no impairment charge was recorded.
The factors leading to the impairment of the Company's goodwill and intangibles were primarily due to (1) lower anticipated future net revenues and earnings in its
estimate of future cash flows resulting from COVID-19 and (2) a higher discount rate applied to future cash flows as a result of uncertainties of the overall economic impact
from COVID-19. There is inherent uncertainty associated with key assumptions used by the Company in its impairment analyses including the duration of the economic
downturn associated with COVID-19 and the recovery period.
A qualitative impairment assessment was done on the annual assessment date and no impairment was identified for the remainder of fiscal 2020. The Company will
continue to evaluate its goodwill and intangible assets in future quarters. Additional impairments may be recorded based on events and circumstances, including those related
to COVID-19 discussed in Note 1.
The following table summarizes the composition of intangible assets at October 31, 2020 and at October 31, 2019:
October 31,
2020
October 31,
2019
Gross
Carrying
Impairments Amortization Adjustment Amount
Gross
Accumulated Translation Carrying Carrying Accumulated Translation Carrying
Value
Amortization Adjustment
Amount
Net
Net
Value
Foreign
Currency
Foreign
Currency
$
(in thousands)
Customer
relationship
Trade name
Trade name
(indefinite life)
Noncompete
agreements
Total
intangibles
$
193,585 $
5,432
- $
-
(64,676) $
(1,020)
(106) $
(14)
128,803 $
4,398
193,594 $
5,434
(31,861) $
(483)
(62) $
(7)
161,671
4,944
55,500
(5,000)
-
200
-
(62)
-
-
50,500
55,500
-
138
200
(22)
-
-
55,500
178
254,717 $
(5,000) $
(65,758) $
(120) $
183,839 $
254,728 $
(32,366) $
(69) $
222,293
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Amortization expense for the Successor year ended October 31, 2020 was $33.4 million. Amortization expense for the Successor period from December 6, 2018 to
October 31, 2019 was $32.4 million. Amortization expense for the Predecessor from November 1, 2018 to December 5, 2018 was $0.7 million. The estimated aggregate
amortization expense for intangible assets over the next five fiscal years ending October 31 and thereafter is as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total
$
$
26,852
21,606
17,173
13,792
11,159
42,758
133,340
The changes in the carrying value of goodwill by reportable segment for the twelve months ended October 31, 2020 are as follows:
(in thousands)
Balance at October 31, 2018 (Predecessor)
Foreign currency translation
Balance at December 5, 2018 (Predecessor)
Balance at December 6, 2018 (Successor)
Acquired goodwill
Foreign currency translation
Balance at October 31, 2019 (Successor)
Measurement-period adjustments
Impairments
Foreign currency translation
Balance at October 31, 2020 (Successor)
U.S. Concrete
Pumping
U.K.
Operations
U.S. Concrete
Waste
Management
Services
Corporate
Total
$
$
$
$
$
49,374 $
-
49,374 $
- $
185,782
-
185,782 $
200
(38,500)
-
147,482 $
64
18,368 $
(12)
18,356 $
- $
40,554
619
41,173 $
-
(14,444)
(190)
26,539 $
6,914 $
-
6,914 $
- $
49,133
-
49,133 $
-
-
-
49,133 $
- $
-
- $
- $
-
-
- $
-
-
-
- $
74,656
(12)
74,644
-
275,469
619
276,088
200
(52,944)
(190)
223,154
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Note 9. Long-Term Debt and Revolving Lines of Credit
Successor
As part of the Business Combination, the Predecessor’s Revolver, U.K. Revolver, Senior secured notes, and Seller notes (see Predecessor section below for a
discussion of these agreements) were all extinguished and the Company entered into (i) a term loan agreement, dated December 6, 2018, among the Company, certain
subsidiaries of the Company, Credit Suisse AG, Cayman Islands Branch as administrative agent and Credit Suisse Loan Funding LLC, Jefferies Finance LLC and Stifel
Nicolaus & Company Incorporated LLC as joint lead arrangers and joint bookrunners, and the other Lenders party thereto and (the “Term Loan Agreement”) (ii) a Credit
Agreement, dated December 6, 2018, 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, and the other parties thereto (“ABL Credit Agreement”). In addition, in order to finance the acquisition of Capital, the
Company added $60.0 million of incremental term loans under the Term Loan Agreement in May 2019. Summarized terms of these facilities are included below.
Term Loan Agreement
Summarized terms of the Term Loan Agreement are as follows:
●
●
●
●
●
Provides for an original aggregate principal amount of $357.0 million. This amount was increased in May 2019 by $60.0 million in connection with the
acquisition of Capital;
The initial term loans advanced will mature and be due and payable in full seven years after the Closing Date, with principal amortization payments in an
annual amount equal to 5.00% of the original principal amount;
Borrowings under the Term Loan Agreement, will bear interest at either (1) an adjusted LIBOR rate or (2) an alternate base rate, plus an applicable
margin of 6.00% or 5.00%, respectively;
The Term Loan Agreement is secured by (i) a first priority perfected lien in substantially all of the assets of the Company and certain of its subsidiaries
that are loan parties thereunder to the extent not constituting ABL Credit Agreement priority collateral and (ii) a second priority perfected lien on
substantially all ABL Credit Agreement priority collateral, in each case subject to customary exceptions and limitations;
The Term Loan Agreement includes certain non-financial covenants.
The outstanding balance under the Term Loan Agreement as of October 31, 2020 was $381.2 million and as of that date, the Company was in compliance with all
debt covenants. The Company’s interest on borrowings under the Term Loan Agreement bear interest using the London Inter-bank Offered Rate (LIBOR) as the base rate
plus an applicable margin in line with the summarized terms of the Term Loan Agreement as described above.
Future maturities of the term loans for fiscal years ending October 31 and thereafter is as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total
$
$
20,888
20,888
20,888
20,888
20,888
276,765
381,205
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ABL Credit Agreement
Summarized terms of the ABL Credit Agreement are as follows:
●
●
●
●
●
●
●
●
Borrowing availability in U.S. Dollars and GBP up to a maximum of $60.0 million;
Borrowing capacity available for standby letters of credit of up to $7.5 million and for swing loan borrowings of up to $7.5 million. Any issuance of letters
of credit or making of a swingline loan will reduce the amount available under the ABL Facility;
All loans advanced will mature and be due and payable in full five years after the Closing Date;
Amounts borrowed may be repaid at any time, subject to the terms and conditions of the agreement;
Borrowings in U.S. Dollars and GBP under the ABL Credit Agreement bear interest at either (1) an adjusted LIBOR rate or (2) a base rate, in each case
plus an applicable margin currently set at 2.25% and 1.25%, respectively. The ABLE Credit Agreement is subject to two step-downs of 0.25% and 0.50%
based on excess availability levels;
U.S. ABL Credit Agreement obligations are secured by (i) a perfected first priority security interest in substantially all personal property of the Company
and certain of its subsidiaries that are loan parties thereunder consisting of all accounts receivable, inventory, cash, intercompany notes, books and records,
chattel paper, deposit, securities and operating accounts and all other working capital assets and all documents, instruments and general intangibles related
to the foregoing (the “U.S. ABL Priority Collateral”) and (ii) a perfected second priority security interest in substantially all Term Loan Agreement priority
collateral, in each case subject to customary exceptions and limitations;
U.K. ABL Credit Agreement obligations are secured by (i) a perfected first-priority security interest in (A) the U.S. ABL Priority Collateral, (B) all of the
stock (or other ownership interests) in, and held by, the U.K. borrower subsidiaries of the Company, and (C) all of the current and future assets and
property of the U.K. subsidiaries of the Company that are loan parties thereunder, including a first-ranking floating charge over all current and future assets
and property of each U.K. subsidiary of the Company that is a loan party thereunder; and (ii) a perfected, second-priority security interest in substantially
all Term Loan Agreement priority collateral, in each case subject to customary exceptions and limitations; and
The ABL Credit Agreement also includes (i) a springing financial covenant (fixed charges coverage ratio) based on excess availability levels that the
Company must comply with on a quarterly basis during required compliance periods and (ii) certain non-financial covenants.
The outstanding balance under the ABL Credit Agreement as of October 31, 2020 was $1.7 million and as of that date, the Company was in compliance with all
debt covenants.
In connection with the Business Combination, the Company repaid its existing credit facilities and the Seller Notes discussed below in full and replaced them with
the Term Loan Agreement and the ABL Credit Agreement discussed previously. The Company also incurred an aggregate of $16.4 million of costs related to the
extinguishment of its existing debts, including the write-off of unamortized borrowing costs and an early extinguishment fee paid to its lenders. The amount has been
reflected as debt extinguishment costs in the Predecessor’s consolidated statement of income for the period ended December 5, 2018.
Predecessor
Revolving line of credit
The Predecessor had a revolving loan agreement (the "Revolver"). Summarized terms of the Revolver were as follows:
● Maximum borrowing capacity of $65.0 million with a maturity date of September 8, 2022;
●
Borrowings bear interest at the LIBOR rate plus an applicable margin that resets quarterly and is (a) 2.00%, (b) 2.25% or (c) 2.50% if the quarterly
average excess availability is (a) at least 66.67%, (b) less than 66.67% and at least 33.33% and (c) less than 33.33%, respectively;
Interest is due monthly and the outstanding principal balance was due upon maturity;
On October 2, 2017, $35.0 million of the Revolver balance was transferred to a 3-month line of credit with a separate LIBOR interest rate; and
Required Predecessor to maintain a maximum ratio of total fixed charges.
●
●
●
66
Table of Contents
U.K. Revolver
The Predecessor had a revolving loan agreement (the “U.K. Revolver”) associated with the acquisition of Camfaud in November 2016. The U.K. Revolver had a
maximum borrowing capacity of approximately $28.0 million and bore interest at LIBOR plus 2.00%. The U.K. Revolver required the Predecessor maintain a maximum
ratio of total fixed charges.
Senior secured notes
In August 2014, the Predecessor issued $140.0 million in senior secured notes through a high-yield bond offering under SEC Rule 144A (“Senior Notes”). In
November 2016, the Predecessor issued additional senior secured notes of $40.0 million as an incremental borrowing with the same terms and form as the original Senior
Notes.
Summarized terms of the Senior Notes were as follows:
● Maturity date on September 1, 2021. Principal due upon maturity.
●
●
Interest rate of 10.375% per annum, payments due every March 1 and September 1 commencing March 1, 2015
The Senior Notes were secured by substantially all of the assets of the Company and contain various non-financial covenants.
Seller notes
In connection with the acquisitions of the Camfaud and Reilly in November 2016 and July 2017, respectively, the Predecessor entered into separate loan agreements
with the former owners of the Camfaud and Reilly for $6.2 million and $1.9 million, respectively (collectively, the “Seller Notes”). The Seller Note with respect to Camfaud
bore interest at 5.0% per annum and all principal plus accrued interest was due upon the earlier of; (1) 6 months after the U.K. Revolver is repaid in full, (2) 42 months after
the acquisition date ( May 2020) or (3) the date on which the Predecessor suffers an insolvency event. The Seller Note with respect to Reilly bore interest at 5.0% per annum
and all principal plus accrued interest are due three years after the acquisition date ( July 2020). The Seller Notes were unsecured.
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Table of Contents
The table below is a summary of the composition of the Company’s long-term debt balances at October 31, 2020 and 2019.
(in thousands)
Short term portion of term loan
Long term portion of term loan
Total term loan
Less unamortized deferred financing costs
Total debt
Note 10. Accrued Payroll and Payroll Expenses
The following table summarizes accrued payroll and expenses at October 31, 2020 and 2019:
(in thousands)
Accrued vacation
Accrued payroll
Accrued bonus
Other accrued
Total accrued payroll and payroll expenses
Note 11. Accrued Expenses and Other Current Liabilities
The following table summarizes accrued expenses and other current liabilities at October 31, 2020 and 2019:
(in thousands)
Accrued insurance
Accrued interest
Accrued equipment purchases
Accrued sales and use tax
Accrued property taxes
Accrued professional fees
Accrued due to related party (refer to Note 12)
Other
Total accrued expenses and other liabilities
68
October 31,
2020
October 31,
2019
20,888 $
360,317
381,205
(16,411)
364,794 $
20,888
381,206
402,094
(20,268)
381,826
October 31,
2020
October 31,
2019
1,667 $
1,507
4,752
5,139
13,065 $
1,433
3,205
3,177
1,362
9,177
October 31,
2020
October 31,
2019
7,806 $
146
4,149
311
882
1,213
1,765
2,607
18,879 $
6,105
3,049
15,343
311
915
1,729
-
654
28,106
$
$
$
$
$
$
Table of Contents
Note 12. Income Taxes
The sources of income before income taxes for the fiscal year ended October 31, 2020, the Successor period from December 6, 2018 through October 31, 2019, and
the predecessor period from November 1, 2018 through December 5, 2018 are as follows:
(in thousands)
United States
Foreign
Total
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
(49,427) $
(16,540)
(65,967) $
(14,875) $
1,660
(13,215) $
(26,975)
207
(26,768)
The components of the provision for income taxes for the fiscal year ended October 31, 2020, the Successor period from December 6, 2018 through October 31,
2019, and the predecessor period from November 1, 2018 through December 5, 2018 are as follows:
(in thousands)
Current tax provision (benefit):
Federal
Foreign
State and local
Total current tax provision (benefit)
Deferred tax provision (benefit):
Federal
Foreign
State and local
Total deferred tax benefit
Net benefit for income taxes
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
$
(4,299) $
(9)
361
(3,947)
759 $
126
(1,914)
(1,029)
(4,977) $
- $
1,108
409
1,517
(3,317) $
(571)
(932)
(4,820)
(3,303) $
-
134
31
165
(3,474)
(86)
(797)
(4,357)
(4,192)
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Table of Contents
For the fiscal year ended October 31, 2020, the Successor period from December 6, 2018 through October 31, 2019, and the Predecessor period from November 1,
2018 through December 5, 2018, the income tax provision differs from the expected tax provision computed by applying the U.S. federal statutory rate to income before
taxes as a result of the following:
(in thousands)
Income tax benefit per federal statutory rate of 21% for each period
State income taxes, net of federal deduction
Foreign rate differential
Meals and entertainment
Transaction costs
Change in deferred tax rate
Stock-based compensation
Equity contribution
Nontaxable interest income net of foreign income inclusions
Deferred tax on undistributed foreign earnings
Impact of tax reform in the U.K. (see discussion below)
Deferred finance costs
Goodwill impairment
Impact of US tax reform from CARES Act
Settlement with related party
Other
Income tax benefit
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
70
(13,912) $
(150)
108
127
-
(1,654)
105
-
717
(255)
859
-
9,812
(1,381)
420
227
(4,977) $
(2,777) $
(468)
(48)
187
18
(95)
-
127
(257)
236
-
-
-
-
-
(226)
(3,303) $
(5,622)
(635)
(6)
24
1,414
30
6
-
(62)
68
-
586
-
-
-
5
(4,192)
Table of Contents
The tax effects of the temporary differences giving rise to the Company’s net deferred tax liabilities for fiscal years ending October 31, 2020 and October 31, 2019
are summarized as follows:
(in thousands)
Deferred tax assets:
Accrued insurance reserve
Accrued sales and use tax
Accrued bonuses and vacation
Accrued payroll tax
Foreign tax credit carryforward
State tax credit carryforward
Interest expense carryforward
Stock-based compensation
Prepaid expenses
Other
Net operating loss carryforward
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Intangible assets
Property and equipment
Prepaid expenses
Unremitted foreign earnings
Total net deferred tax liabilities
Net deferred tax liabilities
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
$
$
$
1,637 $
75
1,521
676
80
70
4,089
3,127
-
335
10,308
21,918 $
(63)
21,855 $
(27,504)
(61,761)
(128)
(481)
(89,874)
71
$
(68,019) $
1,334
77
353
-
80
-
9,181
893
4
435
17,385
29,742
(63)
29,679
(36,593)
(61,608)
-
(527)
(98,728)
(69,049)
Table of Contents
As of October 31, 2020, the Company has the following tax carryforwards:
(in millions)
Federal net operating loss carryforwards
State net operating loss carryforwards
Foreign tax carryforwards
State credit carryforwards
Interest expense carryforwards
Total tax carryforwards
Balance as of October 31,
2020
$
$
42.6
30.4
0.1
0.1
15.8
89.0
Year that
Carryforwards Begin to
Expire
N/A – Carried forward
indefinitely
2023
2026
2023
N/A – Carried forward
indefinitely
The Company has provided U.S. deferred taxes on cumulative earnings of all of its non-U.S. affiliates.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback opportunities, and tax
planning strategies in making the assessment. The Company believes it is more likely than not that it will realize the benefits of these deductible differences, net of the
valuation allowance provided. The valuation allowance provided by the Company relates to foreign tax credit carryforwards.
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Table of Contents
The following table summarizes the changes in the Company's unrecognized tax benefits during the year ended October 31, 2020 and 2019, and the Predecessor
period ended December 5, 2018. The Company expects no material changes to unrecognized tax positions within the next twelve months. If recognized, none of these
benefits would favorably impact the Company's income tax expense, before consideration of any related valuation allowance:
Successor
Predecessor
(in thousands)
Balance, beginning of year
Increase in current year position
Increase in prior year position
Decrease in prior year position
Lapse in statute of limitations
Balance, end of year
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
$
$
1,726 $
-
-
(154)
-
1,572 $
November 1, 2018
through December 5, 2018
-
-
-
-
-
-
- $
1,726
-
-
-
1,726 $
As of October 31, 2020 and 2019, and December 5, 2018, the company has recognized no interest or penalties.
O n March 17, 2020, the House of Commons in the U.K. passed a Budget Resolution under the Provisional Collection of Taxes Act of 1968 (the "Budget
Resolution"). The Budget Resolution substantively enacted an increase in the U.K. corporate tax rate for tax periods after March 31, 2020 from 17% to 19%. As a result of
the Budget Resolution, the Company recorded tax expense of $0.9 million related to the remeasurement of deferred tax assets and liabilities to reflect the increase in the
U.K. corporate tax rate.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security "CARES" Act into law. The CARES Act included several
significant business tax provisions that, among other things, eliminated the taxable income limit for certain net operating losses ("NOL") and allowed businesses to carry
back NOL's arising in 2018, 2019 and 2020 to the five prior years, accelerated refunds of previously generated corporate alternative minimum tax credits, generally loosened
the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax
provisions.
During fiscal years 2016 and 2017, the Company paid federal income taxes totaling $4.3 million (at a federal income tax rate of 34%). As the Company generated
NOL carryforwards during fiscal 2018 and 2019, the CARES Act allowed the Company to carry back those NOL's to the fiscal 2016 and 2017 tax returns. During fiscal
2020, the Company carried back all NOL's that were generated in fiscal year 2018 to the 2016 and part of the 2017 tax returns and also carried back a portion of the NOL's
accumulated during fiscal 2019 to the remaining income from the 2017 tax return. These carrybacks resulted in a revaluation of the NOL carryforwards from the 21%
federal rate in effect prior to the CARES Act to 34%, which was the federal income tax rate for 2016 and 2017. On March 31, 2020, the Company received a demand letter
alleging that the Company is required to remit to the Predecessor's shareholders certain tax refunds from carrying back certain NOL's made available as a result of the
passage of the CARES Act. In October 2020, the Company reached a settlement with the Predecessor’s shareholders, resulting in the Company agreeing to pay $2.0 million
of the $4.3 million in refunds to the Predecessor’s shareholders. This $2.0 million charge was recorded in general and administrative expenses in the accompanying
consolidated statements of operations. Following the $1.4 million revaluation in the carrying value of the NOL's as a result of the carryback benefit at a higher tax rate, the
net financial impact to the Company is a $0.6 million loss. The corresponding due to related party is included in accrued expenses and other current liabilities in the
accompanying consolidated balance sheets. This is expected to be settled as the income tax refunds from the IRS are received.
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Note 13. Commitments and Contingencies
Operating Leases
The Company leases facilities, equipment and vehicles under non-cancelable operating leases with various expiration dates through April 2029. Monthly lease
payments range from $100 to $19,564. Total rental expense for the Successor year ended October 31, 2020 was $6.6 million. Total rental expense for Successor period from
December 6, 2018 through October 31, 2019 and the Predecessor period from November 1, 2018 through December 5, 2018 was $4.4 million and $0.7 million, respectively,
which also includes the Company’s month-to-month leases.
The following is a summary of future minimum lease payments for the years ended October 31:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total
Capital Leases
Future Payments
2,139
1,868
1,370
743
265
835
7,220
$
$
The Company has a limited number of capital leases related to land and buildings. The capital lease obligation recorded as of October 31, 2020 was $0.5 million
while the net book value of the leased assets as of October 31, 2019 was $0.6 million.
The following is a summary of future minimum lease payments together with the present value of those payments for the years ended October 31:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less the amount representing interest
Present value of minimum lease payments
Insurance
Future Payments
107
115
118
120
61
-
521
(43)
478
$
$
As of October 31, 2020, and October 31, 2019, the Company was partially insured for automobile, general and worker's compensation liability with the following
deductibles (per occurrence):
General liability
General liability (in the case of accident and driver has completed NationsBuilders Insurance Services driver training)
Automobile
Workers' compensation
Deductible
250,000
125,000
100,000
250,000
$
$
$
$
The Company has accrued $5.4 million and $5.0 million, as of October 31, 2020 and October 31, 2019, respectively, for claims incurred but not reported and
estimated losses reported, which is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
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The Company offers employee health benefits via a partially self-insured medical benefit plan. Participant claims exceeding certain limits are covered by a stop-
loss insurance policy. As of October 31, 2020 and October 31, 2019, the Company had accrued $2.4 million and $1.1 million, respectively, for health claims incurred but
not reported based on historical claims amounts and average lag time. These accruals are included in accrued expenses and other current liabilities in the accompanying
consolidated balance sheets. The Company contracts with a third-party administrator to process claims, remit benefits, etc. The third party administrator requires the
Company to maintain a bank account to facilitate the administration of claims. The account balance was $0.3 million, as of October 31, 2020 and October 31, 2019,
respectively, and is included in cash and cash equivalents in the accompanying consolidated balance sheets.
Litigation
The Company is currently involved in certain legal proceedings and other disputes with third parties that have arisen in the ordinary course of business.
Management believes that the outcomes of these matters will not have a material impact on the Company’s financial statements and does not believe that any amounts need
to be recorded for contingent liabilities in the Company’s consolidated balance sheet.
Letters of credit
The ABL Credit Agreement provides for up to $7.5 million of standby letters of credit. As of October 31, 2020, total outstanding letters of credit totaled
$1.2 million, the vast majority of which had been committed to the Company’s general liability insurance provider.
Note 14. Stockholders’ Equity
In conjunction with the Business Combination, all common and preferred shares that were in existence for the Predecessor were settled and no longer outstanding
subsequent to December 5, 2018. On December 6, 2018, in connection with the closing of the Business Combination, we redeemed a total of 22,337,322 shares of our Class
A common stock pursuant to the terms of our certificate of incorporation, resulting in a total cash payment from the Company’s trust account to redeeming stockholders of
$231.4 million.
The Company’s amended and restated certificate of incorporation authorizes the issuance of 500,000,000 shares of common stock, par value $0.0001, and
10,000,000 shares of preferred stock, par value $0.0001. Immediately following the Business Combination, there were:
●
●
●
28,847,707 shares of common stock issued and outstanding;
34,100,000 warrants outstanding, each exercisable for one share of common stock at an exercise price of $11.50 per share; and
2,450,980 shares of zero-dividend convertible perpetual preferred stock (“Series A Preferred Stock”) outstanding, as further discussed below
On May 14, 2019, in order to finance a portion of the purchase price for the acquisition of Capital, the Company completed a public offering of 18,098,166 of its
common stock at a price of $4.50 per share, receiving net proceeds of approximately $77.4 million, after deducting underwriting discounts, commissions, and other offering
expenses. In connection with the offering, certain of the Company’s directors, officers and significant stockholders, and certain other related investors purchased an
aggregate of 3,980,166 shares of its common stock from the underwriters at the public offering price of $4.50, representing approximately 25% of the total shares issued
(without giving effect to the underwriters’ option to purchase additional shares).
As discussed below, on April 29, 2019, 2,101,213 shares of common stock were issued in exchange for the Company's public warrants and 1,707,175 shares of
common stock were issued in exchange for the Company's private warrants. After the completion of the warrant exchange and as of October 31, 2020, there were 13,017,777
public warrants and no private warrants outstanding.
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The Company’s Series A Preferred Stock does not pay dividends and is convertible (effective June 6, 2019) into shares of the Company’s common stock at a 1:1
ratio (subject to customary adjustments). The Company has the right to elect to redeem all or a portion of the Series A Preferred Stock at its election after December 6, 2022
for cash at a redemption price equal to the amount of the principal investment plus an additional cumulative amount that will accrue at an annual rate of 7.0% thereon. In
addition, if the volume weighted average price of shares of the Company’s common stock equals or exceeds $13.00 for 30 consecutive days, then the Company will have the
right to require the holder of the Series A Preferred Stock to convert its Series A Preferred Stock into Company common stock, at a ratio of 1:1 (subject to customary
adjustments).
Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. The preferred stock contains a redemption
feature contingent upon a change in control which is not solely within the control of the Company, and as such, the preferred stock is presented outside of permanent equity.
Warrant Exchange
On April 1, 2019, the Company commenced an offer to each holder of its publicly traded warrants (the “public warrants”) and private placement warrants that were
issued in connection with Industrea’s initial public offering on April 17, 2017 (the “private warrants”) to receive 0.2105 shares of common stock in exchange for each
outstanding public warrant tendered and 0.1538 shares of common stock in exchange for each private warrant tendered pursuant to the offer (the “Offer” or “Warrant
Exchange”).
On April 26, 2019, a total of 9,982,123 public warrants and 11,100,000 private warrants were tendered for exchange pursuant to the Offer. On April 29, 2019,
2,101,213 shares of common stock were issued in exchange for the tendered public warrants and 1,707,175 shares of common stock were issued in exchange for the tendered
private warrants. A negligible amount of cash was paid for fractional shares. As no agreement was modified as a result of the exchange, we concluded that the exchange of
Company common stock for the warrants was analogous to a share repurchase. The Company recorded a loss on repurchase of the warrants of $5.2 million in the 2019
second quarter, all of which was included as an adjustment to retained earnings. The $5.2 million loss reflects the par value of the warrants in APIC of $21.1 million less the
fair value of the common stock that was issued in exchange for the warrants of $26.3 million. As of October 31, 2020, 13,017,777 public warrants and no private warrants
were outstanding.
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Note 15. Stock-Based Compensation
Successor
The Company rolled forward certain vested options from the Predecessor (see discussion below) to 2,783,479 equivalent vested options in the Successor. No
incremental compensation costs were recognized on conversion as the fair value of the options issued were equivalent to the fair value of the vested options of the
Predecessor. Exercise prices for those options range from $0.87 to $6.09.
During 2019, pursuant to the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, the Company granted stock-based awards to certain employees in the
U.S. and U.K. All awards in the U.S. are restricted stock awards while awards granted to employees in the U.K. are stock options with exercise prices of $ 0.01. Regardless
of where the awards were granted, the awards vested pursuant to one of the following four conditions:
(1) Time-based only – Awards vest in equal installments over a five-year period.
(2)
$13 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $13.00 for 30
consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period.
$16 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $16.00 for 30
consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period.
$19 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $19.00 for 30
consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period.
(3)
(4)
On October 29, 2020 almost all of the then-outstanding stock awards were modified as follows:
(1)
113 awards for 113 employees accepted a modification to their restricted stock awards (if U.S. employees) or stock options (if U.K. employees) with market-
based vesting conditions as follows:
o
o
The price vesting targets of $13.00 per share, $16.00 per share or $19.00 per share were reduced to $6.00 per share, $8.00 per share or $10.00 per
share, respectively
The market-based awards were exchanged on a 2-for-1 exchange ratio. In total 3,816,450 market-based awards were exchanged for 1,908,165
market-based awards
(2)
18 awards for 18 employees had their restricted stock awards (if U.S. employees) or stock options (if U.K. employees) with market-based vesting conditions
(the same $13/$16/$19 price targets outlined above) modified as follows:
o
o
Each individual's total award was split into the following: (a) 46% of time vesting shares that vested on December 6, 2020, (b ) 15% of time
vesting shares which will vest ratably 1/3 each year on December 6, 2021, 2022 and 2023, and (c) the remaining 39% will initially vest based on
reduced price vesting targets of $6.00 per share, $8.00 per share or $10.00 per share. Once the first vesting condition is achieved, the stock award
will then vest 1/3 annually over a three-year period.
In the aggregate, 1,381,426 stock awards were modified as follows:
(a)
(b)
(c)
635,455 shares vested on December 6, 2020,
207,215 shares will vest ratably 1/3 each year on December 6, 2021, 2022 and 2023, and
538,756 shares will vest based on reduced price vesting targets of $6.00 per share, $8.00 per share or $10.00 per share
As a result of the modifications, and in accordance with ASC 718, the Company updated the fair value of each modified award to be equal to the following:
●
●
Unrecognized stock-based compensation expense as of October 29, 2020 immediately before the modification plus
The greater of $0 or the difference between fair value of new award immediately after modification less the fair value of old award immediately
before modification
The fair values for the above awards were calculated using a Monte Carlo simulation model and the updated fair value of the stock award is expensed over the
new service period for the new award. As a result of the modifications, the Company recorded $5.9 million of compensation expense on day 1 of the modification as the
requisite service period is zero. Outside of the unrecognized compensation expense for all other awards, no incremental costs are expected to be incurred in the future.
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Included in the table below is a summary of the awards outstanding at October 31, 2020, following the modification, including the location, type of award, shares
outstanding, unrecognized compensation expense, and the date that expense will be recognized through. In addition, while the table below provides a date through which
expense will be recognized on a straight-line basis, if at such time the market-based stock awards vest earlier than the Monte Carlo simulation derived service period,
expense recognition will be accelerated.
(in thousands, except shares outstanding and fair value amounts)
Type of Award
Shares Outstanding
at October 31, 2020
Fair Value
Unrecognized
Compensation
Expense at October
31, 2020
Location
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
Total
Time Based Only
Time Based Only
$6 Market/Time- Based
$8 Market/Time- Based
$10 Market/Time- Based
$6 Market/Time- Based
$8 Market/Time- Based
$10 Market/Time- Based
$13 Market/Time- Based
$16 Market/Time- Based
$19 Market/Time- Based
Time Based Only
Time Based Only
$6 Market/Time- Based
$8 Market/Time- Based
$10 Market/Time- Based
$6 Market/Time- Based
$8 Market/Time- Based
$10 Market/Time- Based
895,902 $
707,133 $
558,956 $
558,956 $
558,969 $
150,697 $
150,697 $
150,706 $
1,925 $
1,925 $
1,925 $
123,350 $
135,537 $
77,091 $
77,091 $
77,102 $
28,885 $
28,885 $
28,886 $
4,314,618
78
6.67 $
5.18
3.86
3.46
3.15
6.19
5.47
4.83
3.86
3.46
3.15
6.66
5.17
3.85
3.45
3.14
6.18
5.46
4.82
$
Date Expense will
be Recognized
Through (Straight-
Line Basis)
12/6/2023
10/29/2020
1/22/2025
5/1/2025
7/9/2025
10/29/2020
10/29/2020
10/29/2020
5/4/2024
8/27/2024
11/19/2024
12/6/2023
10/29/2020
1/22/2025
5/1/2025
7/9/2025
10/29/2020
10/29/2020
10/29/2020
4,633
-
3,455
3,054
2,697
-
-
-
9
7
6
637
-
476
420
371
-
-
-
15,765
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Stock Options
The following tables summarize stock option activity for the year ended October 31, 2020:
Outstanding stock options, October 31, 2019
Granted
Forfeited
Exercised
Expired
Modified
Outstanding stock options, October 31, 2020
Options
Weighted average
exercise price
2,069,398 $
7,250 $
(25,888) $
(27,660) $
(500) $
(231,284) $
1,791,316 $
1.33
0.01
0.01
0.01
0.01
0.01
1.54
The total intrinsic value of stock options exercised for the Successor year ended October 31, 2020 was $0.1 million.
The following table summarizes information about stock options outstanding at October 31, 2020:
Exercise price
$0.01
$0.87
$6.09
Total
Number of
options
580,861 $
886,382 $
324,073 $
1,791,316 $
Options Outstanding
Weighted
average
exercise
price
Weighted
average
remaining
contractual
life (yrs)
Aggregate
Intrinsic
Value
Number of
options
Options Exercisable
Weighted
average
exercise
price
Weighted
average
remaining
contractual
life (yrs)
Aggregate
Intrinsic
Value
0.01
0.87
6.09
1.54
8.4 $
4.3
5.4
- $
1,870
2,092
-
3,962
4,034 $
886,382 $
324,073 $
1,214,489 $
0.01
0.87
6.09
2.26
8.4 $
4.3
5.4
4.6 $
13
2,092
-
2,105
As of October 31, 2020, there was $1.9 million of total unrecognized compensation cost related to stock options that is expected to be recognized as an expense by
the Company in the future.
The Company recognized $0.0 million in tax benefits related to exercised stock options for the Successor year ended October 31, 2020.
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Restricted Stock Awards
The following table is a summary of Restricted Stock Awards activity for year ended October 31, 2020:
Units
Unvested as of December 6, 2018
Granted
Vested
Forfeited
Unvested as of October 31, 2019
Granted
Vested
Forfeited
Modified
Unvested as of October 31, 2020
Weighted average
grant-date fair value
-
4.42
-
4.58
4.44
-
6.61
4.49
3.89
5.39
- $
5,885,809 $
- $
(130,350) $
5,755,459 $
- $
(229,011) $
(111,656) $
(1,677,001) $
3,737,791 $
As of October 31, 2020, there was $13.5 million of unrecognized compensation expense related to non-vested restricted stock awards that is expected to be
recognized as an expense by the Company in the future.
Predecessor
The Predecessor accounted for share-based awards in accordance with ASC Topic 718 Compensation–Stock Compensation (“ASC 718”), which requires the fair
value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at fair value on the date of
grant. As a result of the Business Combination, the acceleration clause within the original award agreements was triggered and all unvested awards immediately vested,
resulting in an amount of $0.6 million of stock-based compensation expense presented “on the line” (see Note 4 - Business Combinations). Stock-based compensation for
the Predecessor period from November 1, 2018 to December 5, 2018 totaled $0.1 million and has been included in general and administrative expenses on the accompanying
consolidated statement of income.
Note 16. Earnings Per Share
The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share. For purposes of calculating earnings (loss) per share (“EPS”), a
company that has participating security holders (for example, holders of unvested restricted stock that have non-forfeitable dividend rights and the Company’s Series A
Preferred Stock) is required to utilize the two-class method for calculating EPS unless the treasury stock method results in lower EPS. The two-class method is an allocation
of earnings/(loss) between the holders of common stock and a company’s participating security holders. Under the two-class method, earnings/(loss) for the reporting period
is calculated by taking the net income (loss) for the period, less both the dividends declared in the period on participating securities (whether or not paid) and the dividends
accumulated for the period on cumulative preferred stock (whether or not earned) for the period. Our common shares outstanding are comprised of shareholder owned
common stock and shares of unvested restricted stock held by participating security holders. Basic EPS is calculated by dividing income or loss attributable to common
stockholders by the weighted average number of shares of common stock outstanding, excluding participating shares. To calculate diluted EPS, basic EPS is further
adjusted to include the effect of potentially dilutive stock options outstanding and Series A Preferred Stock outstanding as of the beginning of the period.
At October 31, 2020 (Successor), the Company had outstanding (1) 13,017,777 million warrants to purchase shares of common stock at an exercise price of
$11.50, (2) 5.6 million outstanding unvested restricted stock awards, (3) 1.2 million outstanding vested incentive stock options, (4) 0.6 million outstanding unvested non-
qualified stock options, and (5) 2.5 million shares of Series A Preferred Stock, all of which could potentially be dilutive. For all periods presented, the weighted-average
dilutive impact, if any, of these shares was excluded from the calculation of diluted earnings (loss) per common share because their inclusion would have been anti-dilutive.
As a result, dilutive earnings (loss) per share is equal to basic earnings (loss) per share.
Successor
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The table below shows our basic and diluted EPS calculations for the fiscal year ended October 31, 2020 and the Successor period from December 6, 2018 through
October 31, 2019:
(in thousands, except share and per share amounts)
Net loss attributable to Concrete Pumping Holdings, Inc.
Less: Preferred stock - cumulative dividends
Less: Undistributed earnings allocated to participating securities
Net loss attributable to common stockholders (numerator for basic earnings per share)
Add back: Preferred stock - cumulative dividends
Add back: Undistributed earning allocated to participating securities
Less: Undistributed earnings reallocated to participating securities
Numerator for diluted loss per share
Weighted average shares (denominator):
Weighted average shares - basic
Weighted average shares - diluted
Basic loss per share
Diluted loss per share
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
$
$
$
$
$
(60,990) $
(1,930)
-
(62,920) $
-
-
-
(62,920) $
(9,912)
(1,623)
-
(11,535)
-
-
-
(11,535)
52,752,884
52,752,884
41,445,508
41,445,508
(1.19) $
(1.19) $
(0.28)
(0.28)
Predecessor
Under the terms and conditions of the Company’s Participating Preferred Stock Agreement, the holders of the preferred stock had the right to receive dividends or
dividend equivalents should the Company declare dividends on its common stock on a one-for-one per-share basis. Under the two-class method, undistributed earnings were
calculated by the earnings for the period less the cumulative preferred stock dividends earned for the period. The undistributed earnings were then allocated on a pro-rata
basis to the common and preferred stockholders on a one-for-one per-share basis. The weighted-average number of common and preferred shares outstanding during the
period was then used to calculate basic EPS for each class of shares. As a result, the undistributed earnings available to common shareholders was calculated by earnings
(loss) for the period less the cumulative preferred stock dividends earned for the period less undistributed earnings allocated to the holders of the preferred stock.
In periods in which the Company had a net loss or undistributed net loss, basic loss per share was calculated by dividing the loss attributable to common
stockholders by the weighted-average number of common shares outstanding during the period. The two-class method was not used, because the holders of the preferred
stock did not participate in losses.
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The table below shows our basic and diluted EPS calculations for the Predecessor period from November 1, 2018 through December 5, 2018:
(in thousands, except share and per share amounts)
Net loss (numerator):
Net loss income attributable to Concrete Pumping Holdings, Inc.
Less: Accretion of liquidation preference on preferred stock
Less: Undistributed earnings allocated to preferred shares
Net (loss) available to common shareholders
Weighted average shares (denominator):
Weighted average shares - basic
Weighted average shares - diluted
Antidilutive stock options
Basic loss per share
Diluted loss per share
Note 17. Employee Benefits Plan
Retirement plans
Predecessor
November 1, 2018
through December 5,
2018
$
$
$
$
(22,575)
(126)
-
(22,701)
7,576,289
7,576,289
932,746
(3.00)
(3.00)
The Company offers a 401(k) plan, which covers substantially all employees in the U.S., with the exception of certain union employees. Participating employees
may elect to contribute, on a tax-deferred basis, a portion of their compensation, in accordance with Section 401(k) of the Internal Revenue Code. The Company generally
provides some form of a matching contribution for most employees in the U.S. Retirement plan contributions for the Successor year ended October 31, 2020 and Successor
period from December 6, 2018 through October 31, 2019 were $1.0 million, $0.8 million, respectively. For the Predecessor period from November 1, 2018 through
December 5, 2018 retirement plan contributions were $0.1 million.
Camfaud operates a Small Self-Administered Scheme (SSAS), which is the equivalent of a U.S. defined contribution pension plan. The assets of the plan are held
separately from those of Camfaud in an independently administered fund. Contributions by Camfaud to the SSAS amounted to $0.3 million and $0.2 million for the
Successor year ended October 31, 2020 and the Successor period from December 6, 2018 through October 31, 2019, respectively. For the Predecessor period from
November 1, 2018 through December 5, 2018 contributions amounted to $0.1 million.
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Multiemployer plans
Our U.S. Concrete Pumping segment contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements
(CBAs) that cover its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following
aspects: (a) Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (b) If a
participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) If we choose to
stop participating in some of its multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a
withdrawal liability. We have no intention of stopping our participation in any multiemployer plan.
The following is a summary of our contributions to each multiemployer pension plan for the years ended October 31, 2020 and 2019:
(in thousands)
California
Oregon
Washington
Total contributions
Successor
Year Ended October
31, 2020
Successor and
Predecessor
Year Ended October
31, 2019
$
$
685 $
301
273
1,259 $
581
288
242
1,111
No plan was determined to be individually significant. There have been no significant changes that affect the comparability of the contributions. The Company
reviews the funded status of each multiemployer defined benefit pension plan at each reporting period to monitor the certified zone status for each of the multiemployer
defined benefit pension plans. The zone status for the multiemployer defined benefit pension plan for Oregon was Green (greater than 80 percent funded) and for California
and Washington, it was Yellow (less than 80 percent funded but greater than 65 percent funded). The funding status for the Oregon and Washington multiemployer defined
benefit pension plans is at January 1, 2019 and for the California multiemployer defined benefit pension plan is at July 1, 2019.
Government regulations impose certain requirements relative to multiemployer plans. In the event of plan termination or employer withdrawal, an employer may be
liable for a portion of the plan’s unfunded vested benefits. We have not received information from the plans’ administrators to determine its share of unfunded vested
benefits. We do not anticipate withdrawal from the plans, nor are we aware of any expected plan terminations.
If the construction industry exception applies, then it would delay the imposition of a withdrawal liability. The “construction industry” exception generally delays
the imposition of withdrawal liability in connection with an employer’s withdrawal from a “construction industry” multiemployer plan unless and until that employer
resumes covered operations in the relevant geographic region without a corresponding resumption of contributions to the multiemployer plan. The Company has no intention
of withdrawing, in either a complete or partial withdrawal, from any of the multiemployer plans to which the Company currently contributes; however, it has been assessed a
withdrawal liability in the past.
83
Table of Contents
Note 18. Segment Reporting
The Company conducts business through the following reportable segments based on geography and the nature of services sold:
●
●
●
●
U.S. Concrete Pumping – Consists of concrete pumping services sold to customers in the U.S. Business in this segment is primarily performed under the
Brundage-Bone and Capital Pumping trade names.
U.K. Operations – Consists of concrete pumping services and leasing of concrete pumping equipment to customers in the U.K. Business in this segment is
primarily performed under the Camfaud Concrete Pumps and Premier Concrete Pumping trade names. In addition to concrete pumping, we recently
started operations of waste management services in the U.K. under the Eco-Pan trade name and the results of this business are included in this segment.
This represents the Company’s foreign operations.
U.S. Concrete Waste Management Services – Consists of pans and containers rented to customers in the U.S. and the disposal of the concrete waste
material services sold to customers in the U.S. Business in this segment is performed under the Eco-Pan trade name.
Corporate - Is primarily related to the intercompany leasing of real estate to certain of the U.S Concrete Pumping branches.
Any differences between segment reporting and consolidated results are reflected in Intersegment below.
The accounting policies of the reportable segments are the same as those described in Note 2. The Company’s Chief Operating Decision Maker (“CODM”)
evaluates the performance of each segment based on revenue, and measures segment performance based upon EBITDA (earnings before interest, taxes, depreciation and
amortization). Non-allocated interest expense and various other administrative costs are reflected in Corporate. Corporate assets primarily include cash and cash equivalents,
prepaid expenses and other current assets, and real property. The following provides operating information about the Company’s reportable segments for the periods
presented:
(in thousands)
Revenue
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Intersegment
Income (loss) before income taxes
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
$
$
229,740 $
39,145
35,890
2,500
(2,974)
304,301 $
(56,095) $
(16,540)
4,997
1,671
(65,967) $
187,031 $
44,021
27,779
2,258
(2,524)
258,565 $
(17,689) $
1,661
965
1,848
(13,215) $
16,659
5,143
2,628
242
(276)
24,396
(27,354)
207
225
155
(26,767)
84
Table of Contents
(in thousands)
EBITDA
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Consolidated EBITDA reconciliation
Net loss
Interest expense, net
Income tax benefit
Depreciation and amortization
EBITDA
Successor
Year Ended October 31,
2020
December 6, 2018
through October 31, 2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
$
$
17,074 1 $
(5,163) 1
15,684
2,501
30,096 $
(60,990) $
34,408
(4,977)
61,655
30,096 $
46,729 $
13,173
11,838
2,577
74,317 $
(9,912) $
34,880
(3,303)
52,652
74,317 $
(24,565)
1,587
388
180
(22,410)
(22,575)
1,644
(4,192)
2,713
(22,410)
1 The U.S. Concrete Pumping segment’s EBITDA for the year ended October 31, 2020 includes the impact of $43.5 million in goodwill and intangibles impairment while
the U.K. Concrete Pumping segment’s EBITDA for the year ended October 31, 2020 includes the impact of $14.4 million in goodwill and intangibles impairment.
(in thousands)
Depreciation and amortization
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Interest expense, net
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Transaction costs including transaction-related debt extinguishment
U.S. Concrete Pumping
Corporate
85
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
$
$
$
$
41,717 $
8,422
10,687
829
61,655 $
(31,452) $
(2,955)
-
(1)
(34,408) $
- $
-
- $
32,245 $
8,807
10,871
729
52,652 $
(32,173) $
(2,705)
(2)
-
(34,880) $
1,521 $
-
1,521 $
1,635
890
163
25
2,713
(1,154)
(490)
-
-
(1,644)
-
30,562
30,562
Table of Contents
Total assets by segment for the periods presented are as follows:
(in thousands)
Total Assets
U.S. Concrete Pumping
U.K. Operations
U.S. Concrete Waste Management Services
Corporate
Intersegment
October 31,
2020
October 31,
2019
$
$
570,536 $
109,726
140,209
25,517
(72,230)
773,758 $
637,384
138,435
137,646
24,223
(66,323)
871,365
The U.S. and U.K. were the only regions that accounted for more than 10% of the Company’s revenue for the periods presented. There was no single customer that
accounted for more than 10% of revenue for the periods presented. Revenue for the periods presented and long lived assets as of October 31, 2020 and 2019 are as follows:
(in thousands)
Revenues
U.S.
U.K.
(in thousands)
Long Lived Assets
U.S.
U.K.
Successor
Year Ended October
31, 2020
December 6, 2018
through October 31,
2019
Predecessor
November 1, 2018
through December 5,
2018
$
$
265,156 $
39,145
304,301 $
214,544 $
44,021
258,565 $
19,253
5,143
24,396
October 31,
2020
October 31,
2019
$
$
260,693 $
43,561
304,254 $
263,363
44,052
307,415
86
Table of Contents
Note 19. Related-Party Transactions
As discussed in Note 12, in October 2020, the Company reached a settlement with the Predecessor’s shareholders, resulting in the Company recording a $2.0
million charge related to the settlement agreement reached between the Company and the Predecessor shareholders that is included in general and administrative expenses in
the accompanying consolidated statements of operations. The corresponding due to related party is included in accrued expenses and other current liabilities in the
accompanying consolidated balance sheets and is expected to be settled as the income tax refunds from the IRS are received.
Successor
The Predecessor had a Management Services Agreement, as amended from time to time, with PGP Advisors, LLC (“PGP”), the Predecessor’s largest shareholder,
to provide advisory, consulting and other professional services. Under the terms of the agreement the annual fee for these services was $4.0 million from September of 2017
through August of 2019, and $2.0 million annually thereafter. For the period from November 1, 2018 through December 5, 2018, the Predecessor incurred no fees related to
this agreement and other agreed upon expenses. These expenses were included in general and administrative expenses on the accompanying consolidated statements of
operations. In conjunction with the Business Combination, this agreement was terminated.
Predecessor
87
Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report, we conducted an evaluation, under the supervision and with the participation of management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that,
as of October 31, 2020, the disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of October 31, 2020, utilizing the criteria in the
Committee of Sponsoring Organizations of the Treadway Commission’s Internal Control-Integrated Framework (2013). Based on its assessment, our management
concluded that all previously reported material weaknesses have been remediated and the Company’s internal control over financial reporting was effective as of October
31, 2020.
Attestation Report of the Independent Registered Public Accounting Firm
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on our internal control over financial
reporting because Section 103 of the JOBS Act provides that an emerging growth company is not required to provide an auditor’s report on internal control over financial
reporting for as long as we qualify as an emerging growth company.
Table of Contents
Remediation of Prior Material Weakness
88
Management identified and disclosed a material weakness in internal control in the Company’s fiscal 2020 second quarter Form 10-Q. Specifically, during
completion of the Company’s goodwill and intangibles impairment analysis as of April 30, 2020, the Management review control related to certain inputs into the valuation
analysis did not operate effectively, resulting in a material reduction to the goodwill impairment originally recorded. The error was identified and corrected prior to release of
the Company’s fiscal 2020 second quarter Form 10-Q.
As of October 31, 2020, management concluded that the above material weakness in our internal controls over financial reporting related to our goodwill and
intangibles impairment analysis as of April 30, 2020, was fully remediated as controls were put in place and evidenced to ensure that review of inputs included in valuation
analyses provided to valuation specialists is reviewed for accuracy and completeness.
Changes in Internal Control Over Financial Reporting
Other than changes described under Remediation of Prior Material Weaknesses above, there was no change in our internal control over financial reporting
identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended October 31,
2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Table of Contents
89
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information not disclosed below that is required with respect to directors, executive officers, filings under Section 16(a) of the Securities and Exchange Act of
1934, as amended (the “Exchange Act”) and corporate governance is incorporated herein by reference, when filed, from our proxy statement (the “Proxy Statement”) for the
Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act no later than 120 days after
the end of the fiscal year ended October 31, 2019.
We have adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to our directors, officers and employees. We have posted our Code of
Ethics on our website (https://ir.concretepumpingholdings.com/governance-docs) and will post on such website any amendments to, or waivers from, a provision of its Code
of Ethics applying to an executive officer or director when required by applicable SEC and Nasdaq rules and regulations.
Item 11. Executive Compensation
Information required to be set forth hereunder has been omitted and will be incorporated by reference, when filed, from our Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information required to be set forth hereunder has been omitted and will be incorporated by reference, when filed, from our Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required to be set forth hereunder has been omitted and will be incorporated by reference, when filed, from our Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information required to be set forth hereunder has been omitted and will be incorporated by reference, when filed, from our Proxy Statement.
Table of Contents
Item 15. Exhibits, Financial Statement Schedules
(1) Financial Statements and Schedules
90
PART IV
The audited consolidated financial statements of Concrete Pumping Holdings, Inc. and its subsidiaries, as required to be filed, are included under Item 8 of this
Annual Report. Other schedules have been omitted as they are not applicable or the required information is set forth in the consolidated financial statements or notes
thereto.
(2) Exhibits
Exhibit
No.
2.1
2.2
2.3
2.4
2.5
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
10.1
10.2
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
Description
Agreement and Plan of Merger, dated as of September 7, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition
Corp.), Industrea Acquisition Corp., Concrete Pumping Intermediate Acquisition Corp., Concrete Pumping Merger Sub Inc., Industrea Acquisition Merger Sub
Inc., Concrete Pumping Holdings, Inc. and PGP Investors, LLC, as the Holder Representative (incorporated by reference to Exhibit 2.1 to the Current Report
on Form 8-K (File No. 001-38166) filed by Industrea Acquisition Corp. on September 7, 2018).
Amendment No. 1 to Agreement and Plan of Merger, dated as of October 30, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping
Holdings Acquisition Corp.), Industrea Acquisition Corp., Concrete Pumping Intermediate Acquisition Corp., Concrete Pumping Merger Sub Inc., Industrea
Acquisition Merger Sub Inc., Concrete Pumping Holdings, Inc., and PGP Investors, LLC, as the Holder Representative (incorporated by reference to Exhibit
2.2 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on December 10, 2018).
Amendment No. 2 to Agreement and Plan of Merger, dated as of November 16, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete
Pumping Holdings Acquisition Corp.), Industrea Acquisition Corp., Concrete Pumping Intermediate Acquisition Corp., Concrete Pumping Merger Sub Inc.,
Industrea Acquisition Merger Sub Inc., Concrete Pumping Holdings, Inc., and PGP Investors, LLC, as the Holder Representative (incorporated by reference to
Exhibit 2.3 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on December 10, 2018).
Interest Purchase Agreement, dated as of March 18, 2019, by and between the Company, Brundage-Bone Concrete Pumping, Inc., CPH Acquisition, LLC,
ASC Equipment, LP, Capital Pumping, LP, MC Services, LLC, Capital Rentals, LLC, Central Texas Concrete Services, LLC, A. Keith Crawford and Melinda
Crawford (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on
March 18, 2019).
First Amendment to Interest Purchase Agreement, dated as of May 14, 2019, by and between Concrete Pumping Holdings, Inc., Brundage-Bone Concrete
Pumping, Inc., CPH Acquisition, LLC, ASC Equipment, LP, Capital Pumping, LP, MC Services, LLC, Capital Rentals, LLC, Central Texas Concrete
Services, LLC, A. Keith Crawford and Melinda Crawford (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K (File No. 001-38166)
filed by Concrete Pumping Holdings, Inc. on May 15, 2019).
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-38166) filed by
Concrete Pumping Holdings, Inc. on December 10, 2018).
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping
Holdings, Inc. on December 10, 2018).
Certificate of Designations (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping
Holdings, Inc. on December 10, 2018).
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete
Pumping Holdings, Inc. on December 10, 2018).
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping
Holdings, Inc. on December 10, 2018).
Warrant Agreement, dated July 26, 2017, between Industrea Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent
(incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-38166) filed by Industrea Acquisition Corp. on August 1, 2017).
Assignment and Assumption Agreement, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition Corp.), Industrea
Acquisition Corp. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K (File No.
001-38166) filed by Concrete Pumping Holdings, Inc. on December 10, 2018).
91
Description of Capital Stock. (incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K (File No. 001-38166), filed Concrete Pumping
Holdings, Inc, on January 14, 2020)
Non-Management Rollover Agreement, dated September 7, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings
Acquisition Corp.), Industrea Acquisition Corp. and the Rollover Holders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K (File No. 001-38166), filed by Industrea Acquisition Corp. on September 7, 2018).
Management Rollover Agreement, dated September 7, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition
Corp.), Industrea Acquisition Corp. and the Rollover Holders party thereto (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File
No. 001-38166), filed by Industrea Acquisition Corp. on September 7, 2018).
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
U.K. Share Purchase Agreement, dated September 7, 2018, by and among Lux Concrete Holdings II S.á r.l., Concrete Pumping Holdings, Inc. (f/k/a Concrete
Pumping Holdings Acquisition Corp.) and the Vendors party thereto (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No.
001-38166), filed by Industrea Acquisition Corp. on September 7, 2018).
Argand Subscription Agreement, dated September 7, 2018, by and among Industrea Acquisition Corp., Concrete Pumping Holdings, Inc. (f/k/a Concrete
Pumping Holdings Acquisition Corp.) and Argand Partners Fund, LP (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No.
001-38166), filed by Industrea Acquisition Corp. on September 7, 2018).
Form of Common Stock Subscription Agreement (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K (File No. 001-38166), filed by
Industrea Acquisition Corp. on September 7, 2018).
Preferred Stock Subscription Agreement, dated September 7, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings
Acquisition Corp.), Industrea Acquisition Corp. and Nuveen Alternatives Advisors, LLC (incorporated by reference to Exhibit 10.6 to the Current Report on
Form 8-K (File No. 001-38166), filed by Industrea Acquisition Corp. on September 7, 2018).
Expense Reimbursement Letter, dated September 7, 2018, by and among Argand Partners Fund, LP, CFLL Sponsor Holdings, LLC (f/k/a Industrea Alexandria
LLC), Industrea Acquisition Corp., Concrete Pumping Holdings, Inc. and BBCP Investors, LLC (incorporated by reference to Exhibit 10.9 to the Current
Report on Form 8-K (File No. 001-38166), filed by Industrea Acquisition Corp. on September 7, 2018).
Term Loan Agreement, dated as of December 6, 2018, among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition Corp.),
Concrete Pumping Intermediate Acquisition Corp., Brundage-Bone Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Merger Sub, Inc.), as borrower,
the financial institutions party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, and Credit Suisse Loan Funding LLC, Jefferies
Finance LLC and Stifel Nicolaus & Company Incorporated LLC, as joint lead arrangers and joint bookrunners (incorporated by reference to Exhibit 10.29 to
the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on December 10, 2018).
Amended and Restated Amendment No. 1 to Term Loan, dated as of May 10, 2019, by and between Concrete Pumping Holdings, Inc., Concrete Pumping
Intermediate Acquisition Corp., Brundage-Bone Concrete Pumping Holdings Inc., Credit Suisse AG, Cayman Islands Branch, and each lender party thereto
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on May 15,
2019).
Credit Agreement, dated as of December 6, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition Corp.),
Wells Fargo Bank, National Association, as agent, sole lead arranger and sole bookrunner, the lenders party thereto, Wells Fargo Capital Finance (U.K.)
Limited, as U.K. security agent, Concrete Pumping Intermediate Acquisition Corp., Brundage-Bone Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping
Merger Sub, Inc.), Brundage-Bone Concrete Pumping, Inc. and Eco-Pan, Inc., as U.S. Borrowers, and Camfaud Concrete Pumps Limited and Premier Concrete
Pumping Limited, as the U.K. borrowers (incorporated by reference to Exhibit 10.30 to the Current Report on Form 8-K (File No. 001-38166) filed by
Concrete Pumping Holdings, Inc. on December 10, 2018).
U.S. Guaranty and Security Agreement, dated as of December 6, 2018, by each to the U.S. ABL Borrowers and U.S. ABL Guarantors in favor of Wells Fargo
Bank, National Association, as agent (incorporated by reference to Exhibit 10.31 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete
Pumping Holdings, Inc. on December 10, 2018).
Guarantee and Debenture, dated as of December 6, 2018, by each to the U.K. ABL Borrowers and U.K. ABL Guarantors in favor of Wells Fargo Capital
Finance (U.K.) Limited, as U.K. security agent (incorporated by reference to Exhibit 10.32 to the Current Report on Form 8-K (File No. 001-38166) filed by
Concrete Pumping Holdings, Inc. on December 10, 2018).
Pledge and Security Agreement, dated as of December 6, 2018, by Concrete Merger Sub Inc., as term loan borrower, and the guarantors in respect to the
obligations under Term Loan Agreement, dated as of December 6, 2018, party thereto in favor of Credit Suisse AG, Cayman Islands Branch, as administrative
agent (incorporated by reference to Exhibit 10.33 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on
December 10, 2018).
92
10.14
10.15
10.16
10.17
10.18
10.19*
10.20*
10.21*
10.22
10.23
10.24
16.1
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
Guaranty Agreement, dated as of December 6, 2018, by the guarantors in respect to the obligations under Term Loan Agreement, dated as of December 6,
2018, party thereto in favor of Credit Suisse AG, Cayman Islands Branch as administrative agent (incorporated by reference to Exhibit 10.34 to the Current
Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on December 10, 2018).
Stockholders Agreement, dated December 6, 2018, by and among Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition Corp.) and
the Investors party thereto (incorporated by reference to Exhibit 10.35 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete Pumping
Holdings, Inc. on December 10, 2018).
First Amendment to Stockholders Agreement, dated April 1, 2019, among Concrete Pumping Holdings, Inc. and the signatories thereto (incorporated by
reference to Exhibit 10.23 to the Registration Statement on Form S-1 (File No. 333-230673) filed by Concrete Pumping Holdings, Inc. on April 1, 2019).
Letter Agreement, dated as of December 6, 2018, by and between Concrete Pumping Holdings, Inc. (f/k/a Concrete Pumping Holdings Acquisition Corp.) and
Nuveen Alternative Advisors, LLC, on behalf of one or more funds and accounts (incorporated by reference to Exhibit 10.36 to the Current Report on Form 8-
K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on December 10, 2018).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.37 to the Current Report on Form 8-K (File No. 001-38166) filed by Concrete
Pumping Holdings, Inc. on December 10, 2018).
Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, as amended October 29, 2020 (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K (File No. 001-38166) filed by Concrete Pumping Holdings, Inc. on November 2, 2020).
Employment Agreement by and between Brundage-Bone Concrete Pumping, Inc. and Bruce Young, dated July 11, 2014 (incorporated by reference to Exhibit
10.4 to the Registration Statement on Form S-4 (File No. 333-227259) filed by Concrete Pumping Holdings, Inc. on October 22, 2018).
Employment Agreement by and between Brundage-Bone Concrete Pumping, Inc. and Iain Humphries, dated August 4, 2017 (incorporated by reference to
Exhibit 10.6 to the Registration Statement on Form S-4 (File No. 333-227259) filed by Concrete Pumping Holdings, Inc. on October 22, 2018).
Settlement Agreement and Release, dated as of October 30, 2020, by and between (i) Concrete Pumping Holdings, Inc. and Brundage-Bone Concrete Pumping
Holdings, and (ii) PGP Investors, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 8-K (File No. 001-38166), filed by Concrete
Pumping Holdings, Inc. on October 30, 2020).
Form of first amended stock award agreement for executives
Form of second amended stock award agreement for executives
Letter from WithumSmith+Brown, PC to the SEC, dated March 1, 2019. (incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K (File
No. 001-38166) filed by Concrete Pumping Holdings, Inc. on March 4, 2019).
Subsidiaries of Concrete Pumping Holdings, Inc.
Consent of BDO USA, LLP.
Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule15d-14(a).
Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule15d-14(a).
Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule15d-14(b) and 18 U.S.C. Section 1350.
Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule15d-14(b) and 18 U.S.C. Section 1350.
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
Item 16. Form 10-K Summary
None.
Table of Contents
93
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CONCRETE PUMPING HOLDINGS, INC.
By:
/s/ Iain Humphries
Name: Iain Humphries
Title: Chief Financial Officer and Secretary
Dated: January 12, 2021
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bruce Young and Iain Humphries, and each
of them, his or her true and lawful attorneys-in-fact and agents, with full power to act separately and full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and
all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-facts and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as they or he or she
might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or his or their substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
This Power of Attorney shall not revoke any powers of attorney previously executed by the undersigned. This Power of Attorney shall not be revoked by any
subsequent power of attorney that the undersigned may execute, unless such subsequent power of attorney specifically provides that it revokes this Power of Attorney by
referring to the date of the undersigned’s execution of this Power of Attorney. For the avoidance of doubt, whenever two or more powers of attorney granting the powers
specified herein are valid, the agents appointed on each shall act separately unless otherwise specified.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Concrete Pumping
Holdings, Inc. and in the capacities indicated, on January 12, 2021.
/s/ Bruce Young
Bruce Young
/s/ Iain Humphries
Iain Humphries
/s/ David A.B. Brown
David A.B. Brown
/s/ Tariq Osman
Tariq Osman
/s/ Raymond Cheesman
Raymond Cheesman
/s/ Heather L. Faust
Heather L. Faust
Table of Contents
/s/ David G. Hall
David G. Hall
/s/ Brian Hodges
Brian Hodges
/s/ Matthew Homme
Matthew Homme
/s/ Howard D. Morgan
Howard D. Morgan
/s/ John Piecuch
John Piecuch
/s/ M. Brent Stevens
M. Brent Stevens
Chief Executive Officer and Director
(principal executive officer)
Chief Financial Officer and Director
(principal financial and accounting officer)
January 12, 2021
January 12, 2021
Chairman of the Board
January 12, 2021
Vice Chairman of the Board
January 12, 2021
Director
Director
Director
Director
Director
Director
Director
Director
94
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January 12, 2021
January 12, 2021
January 12, 2021
January 12, 2021
January 12, 2021
January 12, 2021
January 12, 2021
January 12, 2021
Exhibit 10.23
Concrete Pumping Holdings, Inc.
Restricted Share Award Notice (“Award Notice”)
(2018 Omnibus incentive plan)
Concrete Pumping Holdings, Inc. (the “Company”), pursuant to Section 9 of the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, as amended from time-to-
time (the “Plan,” a copy of which has been provided to you), hereby awards to Participant (or “You”) that number of shares (“Restricted Shares”) of the Company’s
Common Stock (“Common Stock”) set forth below (the “Award”). The Award is evidenced by a Restricted Share Award Agreement (a copy of which is attached as
Attachment A hereto, the “Award Agreement”). The Award is subject to all of the terms and conditions as set forth herein and in the Award Agreement and the Plan, each of
which is incorporated herein and made a part hereof in its entirety. Capitalized terms used in this Award Notice and not defined have the meanings given to them in the Plan
and the Award Agreement.
Pursuant to the terms and conditions of the Offer to Exchange Certain Outstanding Restricted Share Awards for New Restricted Share Awards dated October 1, 2020 (as it
may have been amended and supplemented from time to time) (the “Offer to Exchange”), You tendered for exchange and the Company accepted for exchange the award
(the “Original Award”) of _____ restricted shares of Common Stock granted pursuant to that certain Restricted Share Award Notice, dated as of April 10, 2019 (the
“Original Award Notice”), and that certain Restricted Share Award Agreement, dated as of the same date (the “Original Award Agreement”). You acknowledge that, as of
the Grant Date, the Original Award is cancelled, You have no right, title or interest to the Original Award, and the Original Award Notice and Original Award Agreement
shall be void and of no further effect.
Participant: ________________
Grant Date: October 29, 2020
Number of Restricted Shares
Subject to the Award:
_____ Restricted Shares, consisting of:
_____ of Time Vesting Shares (as defined in your Award Agreement), reflecting __________ shares from Original
Award less _____Vested Shares on Grant Date; and
_____ Performance Vesting Shares (as defined in your Award Agreement).
Payment for Restricted Shares:
Services rendered and to be rendered by You to the Company and its Subsidiaries and Affiliates.
Change in Control:
See your Award Agreement regarding the consequences with respect to your Restricted Shares in the event of a
Change in Control of the Company.
Plan Administrator:
The Compensation Committee of the Board of Directors
Restricted Shares Agent:
Chief Financial Officer of the Company (subject to change or replacement as set forth in your Award Agreement).
Transfer Agent:
Continental Stock Transfer and Trust Company (subject to change or replacement as set forth in your Award
Agreement).
Vesting Schedule:
See your Award Agreement for the Vesting Schedule applicable to your Restricted Shares.
Transfer Restrictions:
See your Award Agreement for the Transfer Restrictions applicable to your Restricted Shares.
Forfeiture of Unvested Shares:
See your Award Agreement for the forfeiture provisions applicable to your Restricted Shares.
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Additional Terms/Acknowledgements
You hereby acknowledge, by your signature hereto and to the Award Agreement, that (a) You have received and reviewed copies of this Award Notice, your Award
Agreement and the Plan, (b) You have had an opportunity to obtain the advice of counsel prior to executing this Award Notice and your Award Agreement and (c) as of the
Grant Date, this Award Notice, your Award Agreement and the Plan (i) set forth the entire understanding between You and the Company regarding the acquisition of the
Restricted Shares pursuant to your Award Agreement and this Award Notice and (ii) supersede all prior oral and supersede and replace, in their entirety, any and all written
agreements (including, but not limited to, your Original Award Notice and your Original Award Agreement) regarding the subject matter hereof. Concurrently with the
execution of this Award Notice, You agree to (a) sign and deliver to the Company your Award Agreement in the form attached to this Award Notice as Attachment A and
(b) accept as binding, conclusive and final all decisions or interpretations of the Plan Administrator regarding any questions arising under the Plan, your Award Notice and
your Award Agreement.
[Signature page(s) to follow.]
2
Signature Page to the Restricted Share Award Notice (Grant Date: October 29, 2020), by and among the signatories identified Below.
Concrete Pumping Holdings, Inc.
By: ____________________________________
Name (Print): Bruce Young
Title: Chief Executive Officer
Date: October 29, 2020
Participant
By: ____________________________________
Name (Print): ____________________________
Date:
Restricted Shares Agent
By:____________________________________
Name (Print): Iain Humphries
Title: Chief Financial Officer
Date: October 29, 2020
Attachment A - Restricted Share Award Agreement
1
Attachment A
Restricted Share Award Agreement
2
Concrete Pumping Holdings, Inc.
Restricted Share Award Agreement
this restricted share award agreement (this “Agreement”) is made as of this 29th day of October, 2020 (the “Grant Date”), by and among Concrete Pumping
Holdings, Inc., a Delaware corporation (the “Company”), _____ (“Participant” or “You”) and Iain Humphries (the initial “Restricted Shares Agent”). Capitalized terms
used herein and not otherwise defined have the meanings given to them in the Award Notice (as defined below) and the Plan (as defined below).
whereas, the Company has adopted, and the shareholders of the Company have adopted and approved, the Concrete Pumping Holdings, Inc. 2018 Omnibus
Incentive Plan, as amended from time to time (the “Plan”); and
whereas, the purposes of the Plan are to: (a) encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent
with the Company’s objectives; (b) give Participants an incentive for excellence in individual performance; (c) promote teamwork among Participants; and (d) give the
Company a significant advantage in attracting and retaining key Employees, Directors and Consultants; and
whereas, in order to accomplish the purposes of the Plan, the Plan provides that the Company may award, among other forms of incentive compensation,
Restricted Shares to Participants pursuant to the Plan; and
whereas, this Award was granted on the Grant Date in exchange for the Original Award and as of the Grant Date, the Original Award is cancelled, You have no
right, title or interest to the Original Award, and the Original Award Notice and Original Award Agreement shall be void and of no further effect in accordance with the
Offer to Exchange.
now, therefore, it is agreed among the parties as follows:
1 . award of restricted shares. Pursuant to the Restricted Share Award Notice (“Award Notice”) and this Agreement (collectively, the “ Award Documents”),
the Company hereby awards and issues to You as of the Grant Date the aggregate number of shares of Common Stock (your “Restricted Shares”) specified in your Award
Notice pursuant to Section 9 of the Plan (collectively, the “Award”) for the consideration set forth in your Award Notice. Your Award is subject to all of the terms and
conditions set forth in your Award Notice, this Agreement and the Plan.
2. issuance of shares. On the Grant Date, the Company will direct the Transfer Agent to issue the Restricted Shares to You in uncertificated, restricted book-
entry form. The Transfer Agent shall provide You a customary statement reflecting the issuance of the Restricted Shares.
3. consideration. Unless otherwise required by law, the Restricted Shares awarded to You under your Award Documents shall be deemed paid in exchange for
the services rendered and to be rendered by You to and for the benefit of the Company and/or its Subsidiaries and Affiliates.
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4. vesting.
(a) Subject to the limitations and exceptions contained in your Award Documents and the Plan, or in any other written agreement between the Company, any
Subsidiary or any Affiliate and you, your Award will vest as follows:
(i) Your _____ Time Vesting Shares shall vest in four installments as follows: (A) twenty-five percent (25%) of your Time Vesting Shares will vest on
December 6, 2020, provided that You are employed by the Company or one or more of its Affiliates on such date; (B) another twenty-five percent (25%) of your Time
Vesting Shares will vest on December 6, 2021, provided that You are employed by the Company or one or more of its Affiliates on such date; (C) another twenty-five
percent (25%) of your Time Vesting Shares will vest on December 6, 2022, provided that You are employed by the Company or one or more of its Affiliates on such date;
and (D) the final twenty-five percent (25%) of your Time Vesting Shares will vest on December 6, 2023, provided that You are employed by the Company or one or more of
its Affiliates on such date.
(ii) _____ of your Restricted Shares (“Performance Vesting Shares”) shall vest in three tranches (designated “Tranche 1 Performance Shares,”
“Tranche 2 Performance Shares” and “Tranche 3 Performance Shares”) as follows:
(A) subject to clause (iii) below, your Tranche 1 Performance Shares shall vest in three equal tranches of _____ Performance Vesting Shares on the
first, second and third anniversaries of the 30th consecutive business day on which the Fair Market Value of the Common Stock equals or exceeds $6.00 per share (“Tranche
1 Price Target”);
(B) subject to clause (iii) below, your Tranche 2 Performance Shares shall vest in equal tranches of _____ Performance Vesting Shares on the first,
second and third anniversaries of the 30th consecutive business day on which the Fair Market Value of the Common Stock equals or exceeds $8.00 per share (“Tranche 2
Price Target”); and
(C) subject to clause (iii) below, your Tranche 3 Performance Shares shall vest in equal tranches of _____ Performance Vesting Shares on the first,
second and third anniversaries of the 30th consecutive business day on which the Fair Market Value of the Common Stock equals or exceeds $10.00 per share (“Tranche 3
Price Target” and, together with the Tranche 1 Price Target and Tranche 2 Price Target, the “Performance Price Targets”).
(iii) Notwithstanding anything herein or elsewhere to the contrary, there shall be no further vesting after December 6, 2023 with respect to any
Performance Vesting Shares that have not achieved the Performance Price Target on or before 6:00 pm (ET) on December 6, 2023.
(b) Restricted Shares acquired by You that have vested in accordance with this Agreement are “Vested Shares.” Restricted Shares acquired by You pursuant to
this Agreement that are not Vested Shares are “Unvested Shares.”
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5. forfeiture and clawback of restricted shares under certain circumstances.
(a) Notwithstanding anything herein to the contrary, all vesting of your Unvested Shares shall cease upon your Termination of Service due to (i) a for Cause
termination by the Company of your employment or other service relationship with the Company or an Affiliate or (ii) a voluntary termination by You of your employment
or other service relationship with the Company or an Affiliate.
(b) Notwithstanding anything herein to the contrary, all vesting of your Unvested Shares shall cease upon your Termination of Service for any reason other than a
reason described in Section 5(a)(i) or (ii); provided, however, that, subject to clause (d)(ii) below, in the case of your Performance Vesting Shares, vesting shall continue
following your Termination of Service for any reason other than a reason described in Section 5(a)(i) or (ii) with respect to Performance Vesting Shares to which the
Performance Price Targets are achieved prior to such Termination of Service.
(c) For this purpose, a “Termination of Service” shall mean the termination of your employment or other service relationship with the Company or an Affiliate
for any reason, voluntarily or involuntarily, with or without Cause, including by reason of your death or Disability; provided, however, that a Termination of Service shall not
be deemed to occur if (i) (a) You are simultaneously re-employed or your employment continues by the Company or any Affiliate, or (b) in the discretion of the Plan
Administrator, there is a simultaneous establishment of a consulting relationship between You and the Company or any Affiliate, or (ii) in the discretion of the Plan
Administrator, your service is interrupted for any approved leaves of absence for illness, temporary disability, military or governmental service, or other reasons. The Plan
Administrator, in its discretion, shall determine the effect of all matters and questions relating to whether a Termination of Service has occurred, including whether a
particular leave of absence constitutes a Termination of Service.
(d) Notwithstanding anything herein to the contrary, unless the Committee, in its sole and absolute discretion, determines otherwise and so advises You in
writing, You shall automatically forfeit back to Company, for no consideration and without any further action on your or the Company’s part, (i) all Time Vesting Shares
that are Unvested Shares upon the effective date of your Termination of Service and (ii) all Performance Vesting Shares as to which the Performance Price Targets have not
been met on or before the first to occur of your Termination of Service or 6:00 pm (ET) on December 6, 2023. Any Restricted Shares that cannot Vest shall be forfeited back
to the Company.
(e) Notwithstanding anything herein to the contrary and not in limitation of any other rights or remedies at law or equity available to the Company and its
Affiliates, in the event of (i) your Termination of Service for Cause, or (ii) your material breach of any written non-competition, non-solicitation, non-disparagement, and/or
intellectual property rights assignment obligations with the Company or an Affiliate to which You are subject, the Company shall be entitled to recover from You any
Restricted Shares acquired upon vesting thereof within the three (3) years prior to the Termination of Service for Cause or such material breach, as applicable (the
“Recoverable Shares”), and, if You have previously sold any such Recoverable Shares, the Company shall also have the right to recover from You the “after-tax economic
value” of the Recoverable Shares, in each case, except to the extent prohibited by applicable law. The recoupment right set forth in this Section 5(e) may, in the Committee’s
sole discretion, be carried out either by (x) seeking directly to recover the Recoverable Shares and/or “after tax economic value” at issue or (y) without your consent, and
except to the extent prohibited by applicable law, offsetting any other compensation payable to You by the Company or an Affiliate thereof by the amount owed by You
hereunder. The term “after-tax economic value” means the gross proceeds received by You from the sale, transfer, exchange, assignment, pledge or other disposition (each a
“Disposition”) of your Recoverable Shares net of federal, state and local income taxes (“Taxes”) actually paid by You, and/or owed but unpaid by You as of the date of any
determination hereunder, with respect to each Disposition of such Recoverable Shares. At the Company’s request, You shall certify in writing to the Company your Taxes
paid or payable with respect to any Disposition of Recoverable Shares. If You fail to timely provide such certification, the “after-tax economic value” means the gross
proceeds received by You from the sale, transfer, exchange, assignment, pledge or other disposition (each a “ Disposition”) of your Recoverable Shares, without any
reduction for Taxes.
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6. transfer restrictions.
(a) Notwithstanding anything herein to the contrary, unless the Plan Administrator determines otherwise, your Restricted Shares shall become transferable for the
first time immediately following the date on which such Restricted Shares become Vested Shares.
(b) In addition to any other limitation on transfer created by applicable securities laws, You shall not sell, assign, hypothecate, donate, encumber, or otherwise
dispose of any interest in the Restricted Shares while such Restricted Shares are Unvested Shares (or continue to be held in the Restricted Shares Agent’s custody, in the case
of certificated Restricted Shares); provided, however, that an interest in such Restricted Shares may be transferred by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Internal Revenue Code of 1986, as amended (the “Code”), or Title I of the Employee Retirement Income
Security Act of 1974, as amended. Any interest in any Restricted Shares that are not held in the Company’s custody by the Restricted Shares Agent shall not be sold,
assigned, hypothecated, donated, encumbered, or otherwise disposed of except in compliance with the provisions herein, applicable securities laws, the Company’s
Certificate of Incorporation and the Company’s Bylaws. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company,
You may designate a third party who, in the event of your death, shall thereafter be entitled to receive any distribution of Restricted Shares pursuant to this Agreement.
(c) Notwithstanding anything herein to the contrary, your Restricted Shares shall not be sold, assigned, hypothecated, donated, encumbered, or otherwise
disposed of except in compliance with the provisions herein, applicable securities laws, the Company’s Certificate of Incorporation and the Company’s Bylaws. The
Company shall not be required (and the Transfer Agent shall not be required) (i) to transfer on its books (including electronic records) all or any of your Restricted Shares
that are transferred in violation of any of the provisions set forth in this Agreement or (ii) to treat as owner of such Restricted Shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such Restricted Shares shall have been so transferred.
(d) You acknowledge and agree that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer”
instructions to the Transfer Agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(e) You acknowledge and agree that any or all of your Restricted Shares (whether before or after any vesting conditions have been satisfied) may be issued in
uncertificated form pursuant to the customary arrangements for issuing shares in such form, including, but not limited to, book entry form directly registered with the
Transfer Agent or in such other form as the Company may determine, in its sole and absolute discretion.
6
7. capitalization changes. The number of Restricted Shares subject to your Award shall be adjusted from time to time for changes in capitalization pursuant to
Section 5 of the Plan.
8. certain corporate transactions. Notwithstanding any provision to the contrary, but subject to the proviso in this sentence, your Unvested Shares shall vest
on an accelerated basis upon a Change in Control described in clauses (i), (iii) and (iv) of the definition of Change in Control in Section 2 (Definitions) of the Plan (each a
“Sale Transaction”) if and to the extent that such Sale Transaction would result in (a) the forfeiture of such Unvested Shares, (b) a material adverse change, without your
prior written consent, to your rights with respect to your Unvested Shares and/or your Award Documents and (c) a Termination of Service in connection with such Sale
Transaction and/or the surviving entity does not either assume your Restricted Shares or replace them with securities of the surviving entity on terms substantially the same
as the terms of your Award Documents; provided however, that, in the case of Performance Vesting Shares, upon a Sale Transaction, (y) only your Unvested Performance
Vesting Shares as to which the “Change in Control Price” with respect to such Sale Transaction equals or exceeds the Performance Price Target shall vest on an accelerated
basis upon the closing of such Sale Transaction and (z) You shall forfeit upon the closing of such Sale Transaction, without any further action on your or the Company’s
part, your Unvested Performance Vesting Shares as to which the “Change in Control Price” with respect to such Sale Transaction is less than any Price Performance Targets
for your remaining Unvested Performance Vesting Shares. Furthermore, the Company reserves the right, in its sole and absolute direction, and You acknowledge the
Company’s right, to exercise any of the rights afforded to the Company with respect to the Restricted Shares in connection with any Change in Control as set forth in Section
12 of the Plan.
9. securities law compliance. You may not be issued any Restricted Shares under your Award unless such Restricted Shares are either (a) then registered
under the Securities Act of 1933, as amended (the “Securities Act”), or (b) the Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act. Your Award must also comply with other applicable laws and regulations governing your Award, and You shall not receive such
Restricted Shares if the Company determines that such receipt would not be in material compliance with such laws and regulations.
10. restricted shares evidenced by stock certificates. If your Restricted Shares are evidenced by stock certificates, You agree to the following joint
instructions, and You and the Company hereby authorize and direct the Restricted Shares Agent or the Restricted Shares Agent’s designee to hold the documents delivered
to the Restricted Shares Agent pursuant to the terms of your Award Documents, in accordance with the following joint instructions:
(a) Unvested Shares that become Vested Shares shall be delivered to You (or registered in your name by the Transfer Agent in the case of Restricted Shares that
are not certificated) upon your request given in the manner provided in Section 20 for providing notice.
(b) At any closing involving the transfer or delivery of some or all of your Restricted Shares back to the Company pursuant hereto, the Restricted Shares Agent is
directed (i) to date any stock assignments necessary for the transfer in question, (ii) to fill in the number of such Restricted Shares being transferred, and (iii) to deliver the
same, together with the certificate, if any, evidencing the Restricted Shares to be transferred, to You or the Company, as applicable.
(c) You irrevocably authorize the Company to deposit with the Restricted Shares Agent the stock certificates, if any, evidencing Unvested Shares to be held by
the Restricted Shares Agent and any additions and substitutions to such Unvested Shares as specified in this Agreement. You do hereby irrevocably constitute and appoint
the Restricted Shares Agent as your attorney-in-fact and Restricted Shares Agent for the term of this arrangement to execute with respect to such securities and other property
all documents of assignment and/or transfer and all stock certificates necessary or appropriate to make all securities negotiable and complete any transaction herein
contemplated.
7
(d) This Section 10 and the joint instructions shall terminate upon the vesting in full of your Restricted Shares or the forfeiture of all or a portion of your
remaining Restricted Shares, whichever occurs first, and the completion of the tasks contemplated by these joint instructions.
11. restricted shares not evidenced by stock certificates. If your Restricted Shares are not evidenced by stock certificates but, instead, are held in book entry
form by the Transfer Agent, You agree to the following joint instructions:
(a) You and the Company hereby authorize and direct the Restricted Shares Agent or the Restricted Shares Agent’s designee to instruct the Transfer Agent to (i)
issue on the Transfer Agent’s book and records your Restricted Shares and (ii) indicate in its records that You are the record or beneficial owner of such Restricted Shares.
(b) You and the Company hereby authorize and direct the Restricted Shares Agent or the Restricted Shares Agent’s designee to instruct the Transfer Agent to (i)
transfer on the Transfer Agent’s book and records back to the Company the Restricted Shares, if any, that You forfeit pursuant to Sections 4 or 5 and (ii) indicate in its
records that You are no longer the record or beneficial owner of such Restricted Shares, if any, that You forfeit back to the Company pursuant to Sections 4 or 5.
(c) This Section 11 and the joint instructions shall terminate upon the completion of the tasks contemplated by these joint instructions.
12. general duties of and other matters related to the restricted shares agent.
(a) If, at the time of termination of Section 10 or Section 11 and the joint instructions set forth therein, the Restricted Shares Agent has in its possession any
documents, securities or other property belonging to You, the Restricted Shares Agent shall deliver all of the same to You and shall be discharged of all further obligations
hereunder.
(b) The Restricted Shares Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by the Restricted Shares Agent to be genuine and to have been signed or presented by the proper
party or parties or their assignees. The Restricted Shares Agent shall not be personally liable for any act the Restricted Shares Agent may do or omit to do hereunder as
attorney-in-fact for You and the Company hereunder while acting in good faith and any act done or omitted by the Restricted Shares Agent pursuant to the advice of the
Restricted Shares Agent’s own legal counsel or the Company’s General Counsel or the Company’s outside legal counsel shall be conclusive incontrovertible evidence of
such good faith.
(c) The Restricted Shares Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and is hereby expressly authorized to comply with and obey orders, judgments, or decrees of any court. In
case the Restricted Shares Agent obeys or complies with any such order, judgment, or decree of any court, the Restricted Shares Agent shall not be liable to any of the
parties hereto or to any other person, firm, or corporation by reason of such compliance, notwithstanding any such order, judgment, or decree being subsequently reversed,
modified, annulled, set aside, vacated, or found to have been entered without jurisdiction.
8
(d) The Restricted Shares Agent shall not be liable in any respect on account of the identity, authority, or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers deposited or called for hereunder.
(e) The Restricted Shares Agent’s responsibilities hereunder shall terminate if the Restricted Shares Agent shall cease to be the Restricted Shares Agent of the
Company for any reason or no reason or if the Company elects to replace the Restricted Shares Agent as the Restricted Shares Agent for any reason or no reason by written
notice to each party. In the event of any such termination, the Company may appoint any officer or assistant officer of the Company or other person who in the future
assumes the position of Restricted Shares Agent for the Company as successor Restricted Shares Agent and You hereby confirm the appointment of such successor or
successors as your attorney-in-fact and Restricted Shares Agent to the full extent of such successor Secretary’s appointment.
(f) If the Restricted Shares Agent reasonably requires other or further instruments in connection with these joint instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
(g) It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the Restricted Shares, the
Restricted Shares Agent is authorized and directed to retain in its possession without liability to anyone all or any part of said securities until such dispute shall have been
settled either by mutual written agreement of the parties concerned or by a final order, decree, or judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Restricted Shares Agent shall be under no duty whatsoever to institute or defend any such proceedings.
(h) By signing this Agreement below, Restricted Shares Agent becomes a party hereto only for the purpose of performing the duties, responsibilities and
obligations, and exercising the rights, benefits and privileges set forth in this Section 12. The Restricted Shares Agent is not, and does not, become a party to any other rights
and obligations of this Agreement apart from those in this Section 12.
(i) The Restricted Shares Agent shall be entitled to employ such legal counsel (including, but not limited to the General Counsel of the Company and/or the
Company’s outside legal counsel) and other experts as the Restricted Shares Agent may deem necessary properly to advise Restricted Shares Agent in connection with
Restricted Shares Agent’s obligations hereunder. The Restricted Shares Agent may rely upon the advice of such counsel, and may pay such counsel reasonable compensation
therefor. The Company shall be responsible for all fees generated by such legal counsel in connection with Restricted Shares Agent’s obligations hereunder.
(j) The joint instructions set forth in Sections 10 and 11 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns. It is understood and agreed that references to “Restricted Shares Agent” herein refer to the original Restricted Shares Agent and to any and all successor
Restricted Shares Agents. It is understood and agreed that the Company may at any time or from time to time assign its rights under the Agreement and the joint instructions
in whole or in part.
13. Irrevocable Power of Attorney. You constitute and appoint the Restricted Shares Agent as your attorney-in-fact to transfer/terminate Restricted Shares, if
any, that You forfeit pursuant to Sections 4 or 5, on the books of the Company (including electronic records of the Transfer Agent) with full power of substitution in the
premises, and to execute with respect to such securities and other property all documents of assignment and/or transfer, all stock certificates necessary or appropriate (and all
matters with the Transfer Agent in the case of uncertificated securities) to make all securities negotiable and complete any transaction herein contemplated. This is a special
power of attorney coupled with an interest (specifically, the Company’s underlying security interest in retaining the Restricted Shares in the event that You forfeit such
Restricted Shares pursuant to Sections 4 or 5), and is irrevocable and shall survive your death or legal incapacity. This power of attorney is limited to the matters specified
in this Agreement.
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14. Rights as Stockholder. Subject to the provisions of this Award Agreement, You shall have the right to exercise all rights and privileges of a stockholder of
the Company with respect to the Vested Shares and the Unvested Shares deposited in the Restricted Shares Agent’s Custody or held in electronic form by the Transfer
Agent. You shall be deemed to be the holder of all of your Restricted Shares for purposes of receiving any dividends that may be paid with respect to such Restricted Shares
and for purposes of exercising any voting rights relating to such Restricted Shares, including your Unvested Shares.
15. Restrictive Legends.
(a) All stock certificates representing the Restricted Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of
uncertificated Restricted Shares language comparable to the following) a legend in substantially the following forms (in addition to any other legend which may be required
by other agreements between the parties hereto):
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VESTING RESTRICTIONS, FORFEITURE PROVISIONS,
TRANSFER RESTRICTIONS, AND OTHER RESTRICTIONS SET FORTH IN THE 2018 OMNIBUS INCENTIVE PLAN OF CONCRETE PUMPING
HOLDINGS, INC. (THE “COMPANY”), A RESTRICTED SHARE AWARD NOTICE AND RESTRICTED SHARE AWARD AGREEMENT BY AND
AMONG THE COMPANY, THE RESTRICTED SHARES AGENT AND THE REGISTERED HOLDER OR SUCH HOLDER’S PREDECESSOR IN
INTEREST, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER OR ATTEMPTED
TRANSFER OF ANY SHARES REPRESENTED BY THIS STOCK CERTIFICATE IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN
CONSENT OF THE COMPANY.”
(b) All of your Restricted Shares are, on the date hereof, are subject to and covered by an effective registration statement on Form S-8 filed with the Securities
and Exchange Commission on April 5, 2019, Registration No. 333-230753. If at any time all or any portion of your Restricted Shares are not subject to and covered by an
effective registration statement on Form S-8 (or any other applicable registration statement) under the Securities Act of 1933, as amended, then stock certificates representing
the Restricted Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of uncertificated Restricted Shares language comparable to
the following) a legend in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto):
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”
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(c) All stock certificates representing the Restricted Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of
uncertificated Restricted Shares, shall include) any legend required by appropriate blue sky officials.
(d) All stock certificates representing the Restricted Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of
uncertificated Restricted Shares, shall include) any legend the Company determines, acting in its sole discretion, is necessary or required to enforce the provisions of
Sections 4 or 5.
16. Market Stand-Off Agreement. You agree that the Company (or a representative of the underwriter(s)) may, in connection with the underwritten
registration of the offering of any securities of the Company under the Securities Act, require that You not sell, dispose of, transfer, make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Restricted Shares or other securities of the Company held by
You, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the
Company filed under the Securities Act. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to your Restricted Shares until the end of such period. The underwriters of the Company’s stock are intended third party
beneficiaries of this Section 16 and shall have the right, power and authority to enforce the provision hereof as though they were a party hereto.
17. Award not a Service Contract. Your Award Documents and other documents referenced herein are not, individually or together in any combination, an
employment or service contract, and nothing in any of the aforementioned documents shall be deemed to create in any way whatsoever any obligation on your part to
continue in the service of the Company or any Affiliate, or on the part of the Company or any Affiliate to continue such service. In addition, nothing in your Award shall
obligate the Company or any Affiliate, their respective stockholders, boards of directors, or employees to continue any relationship that You might have as an Employee,
Consultant or Director of the Company or any Affiliate or Subsidiary. Unless You have a fully-executed, written employment agreement with the Company, You are an
employee at-will for all purposes.
18. Withholding Obligations. You hereby authorize withholding from any amounts payable to you, or otherwise agree to make adequate provision in cash for,
any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate or Subsidiary, if any, which arise in connection
with your Award. In the Company’s sole discretion, the Company may elect, and You hereby authorize the Company, to withhold Vested Shares in such amounts as the
Company determines are necessary to satisfy your obligation pursuant to the preceding sentence. Unless the tax withholding obligations of the Company and/or any Affiliate
are satisfied, the Company shall have no obligation to deliver to You any Restricted Shares. In the event You fail to make adequate provision in cash for, any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate or Subsidiary, if any, which arise in connection with your Award,
the Company reserves all rights and remedies available at law and in equity in order to enforce your obligation to make such provision to the satisfaction of the Company,
and to collect from You, all such withholding obligations, which are your full, unqualified, recourse obligations.
11
19. Tax Consequences. You agree to review with your own tax advisors the federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement and Award Notice. You shall rely solely on such advisors and not on any statements or representations of the Company or its
Restricted Shares Agent with respect to the federal, state, local and foreign tax consequence of any matters relating, in any way or manner, to your Restricted Shares. You
understand that You (and not the Company or any of its Affiliates) shall be responsible for your own tax liability that may arise as a result of any and all matters relating, in
any way or manner, to your Restricted Shares. You understand that Section 83 of the Code taxes as ordinary income to You the fair market value of the Restricted Shares as
of the date any restrictions on the Restricted Shares lapse (that is, as of the date on which part or all of the Restricted Shares become Vested Shares). In this context,
“restriction” includes, among other provisions hereof, forfeiture of Restricted Shares set forth in Section 5 and transfer restrictions set forth in Section 6.
20. Notices. Any notice or request required or permitted hereunder shall be given in writing to each of the other parties hereto and shall be deemed effectively
given on the earlier of (i) the date of personal delivery, including delivery by express courier, or (ii) the date that is five (5) days after deposit in the United States Post Office
(whether or not actually received by the addressee), by registered or certified mail with postage and fees prepaid, addressed at the following addresses, or at such other
address(es) as a party may designate by ten (10) days’ advance written notice to each of the other parties hereto:
Company:
Participant:
Restricted Shares Agent:
Concrete Pumping Holdings, Inc.
Attn: Chief Financial Officer
500 E. 84th Ave. Suite A-5
Thornton, Colorado 80229
Your address as on file with the Company
at the time notice is given
c/o Concrete Pumping Holdings, Inc.
Attn: Chief Financial Officer
500 E. 84th Ave. Suite A-5
Thornton, Colorado 80229
2 1 . Headings. The headings of the Sections in this Award Agreement are inserted for convenience only and shall not be deemed to constitute a part of this
Agreement or to affect the meaning of this Award Agreement.
22. Miscellaneous.
a. The rights and obligations of the Company under your Award Documents shall, in accordance with the Plan, be transferable by the Company to any one or
more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s successors and assigns.
b. You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the
purposes or intent of your Award Documents.
c. You acknowledge and agree that You have reviewed your Award Documents, have had an opportunity to obtain the advice of counsel prior to accepting,
executing and delivering to the Company the aforementioned documents and fully understand all of the provisions and legal consequences of accepting, executing and
delivering to the Company the aforementioned documents.
d. Your Award Documents shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
e. All obligations of the Company under the Plan and your Award Documents shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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2 3 . Governing Plan Document. Your Award Documents are subject to all the provisions of the Plan, the provisions of which are hereby made a part of your
Award Documents, and are further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your Award Documents, on the one hand, and those of the Plan, on the other hand, the provisions of the Plan
shall control.
2 4 . Effect on Other Employee Benefit Plans. The value of the Restricted Shares subject to your Award Documents shall not be included as compensation,
earnings, salaries, or other similar terms used when calculating benefits under any employee benefit plan (other than the Plan) sponsored by the Company or any Affiliate
except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of the
Company or any Affiliate.
25. Choice of Law. The interpretation, performance and enforcement of your Award Documents shall be governed by the law of the State of Delaware without
regard to such state’s conflicts of laws rules.
26. Severability. If all or any part of your Award Documents is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any portion of your Award Documents not declared to be unlawful or invalid. Any Section of your Award Documents (or part of such a
Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid.
27. Parachute Payments.
(a) If any payment or benefit You would receive pursuant to a Change in Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute
payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the
Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the
highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment
may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount,
reduction shall occur in the following order unless You elect in writing a different order (provided, however, that such election shall be subject to Company approval if
made on or after the date on which the event that triggers the Payment occurs): reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of
employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order
of the date of grant of your Restricted Shares hereunder unless You elect in writing a different order for cancellation.
(b) The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group affecting the Change in
Control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made hereunder.
(c) The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the
Company and You within fifteen (15) calendar days after the date on which your right to a Payment is triggered (if requested at that time by the Company or You) or such
other time as requested by the Company or You. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, it shall furnish the Company and
You with an opinion reasonably acceptable to You that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon the Company and You.
[Signature page(s) to follow.]
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Signature Page to the Restricted Share Award Agreement (Grant Date: October 29, 2020), by and among the signatories identified.
Concrete Pumping Holdings, Inc.
Participant
By:
Name (Print): ____________________________________
Date:
By:
Name (Print): Bruce Young
Title: Chief Executive Officer
Date: October 29, 2020
Restricted Shares Agent
By:
Name (Print): Iain Humphries
Title: Chief Financial Officer
Date: October 29, 2020
Concrete Pumping Holdings, Inc.
Amended and restated Restricted Share Award Notice ("A&R Award Notice")
(2018 Omnibus incentive plan)
Exhibit 10.24
Concrete Pumping Holdings, Inc. (the "Company"), pursuant to Section 9 of the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, as amended from time-to-
time (the "Plan," a copy of which has been provided to you), awarded (your "Original Award") to you ("You") ____________ shares ("Original Award Share(s)") of the
Company’s Common Stock ("Common Stock") on April 10, 2019 (the "Original Award Date"), pursuant to that certain Restricted Share Award Notice, dated as of the
same date (the "Original Award Notice"), and that certain Restricted Share Award Agreement, dated as of the same date (the "Original Award Agreement").
From and after the A&R Effective Date (as defined below), the Company amends and restates, with your consent, as evidenced by your signatures hereto and to Attachment
A hereto, (1) your Original Award Notice (as amended and restated hereby, your "A&R Award Notice") and (2) your Original Award Agreement (as amended and restated
hereby, your "A&R Award Agreement," a copy of which is attached as Attachment A hereto). This A&R Award Notice is subject to all of the terms and conditions set forth
herein and in your A&R Award Agreement and the Plan, the latter two of which incorporated herein and made a part hereof. Capitalized terms used in this A&R Award
Notice and not defined have the meanings given to them in the Plan and your A&R Award Agreement.
From and after the A&R Effective Date, this A&R Award Notice and your A&R Award Agreement (together with the exhibits and attachments to this A&R
Award Notice and your A&R Award Agreement, your "A&R Award Documents") supersede and replace, in their entirety, your Original Award Notice and
Original Award Agreement (together with the exhibits and attachments to your A&R Award Notice and your A&R Award Agreement, your "Original Award
Documents"), which, as of the A&R Effective Date, shall cease to have any further force or effect.
Participant:
Original Award Date
(which remains the same as
in your Original Award Notice):
A&R Effective Date:
Total Number of Original
Award Shares:
April 10, 2019.
October 29, 2020 ("A&R Effective Date").
____________, all of which constituted Performance Vesting Shares (as defined in your
Original Award Documents).
Vested Original Award Share(s) as of the A&R
Effective Date:
None.
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A&R Award Shares (all unvested) as of
the A&R Effective Date:
The total number of your A&R Award Shares is the same as the total number of your
Original Award Shares - _____________. Your A&R Award Shares shall consist of:
Original Warrants:
_________________ Time Vesting Shares (as defined in your A&R Award Agreement);
and
________________ Performance Vesting Shares (as defined in your A&R Award
Agreement).
A total of 34,100,000 public warrants and private placement warrants outstanding as of April
1, 2019, 21,083,563 of which were exchanged on April 29, 2019 for 3,808,720 shares of
Common Stock ("April 2019 Warrant Exchange Shares").
Remaining Original Warrants:
13,017,777 remain outstanding as of the A&R Effective Date ("Remaining Original
Warrants").
Warrant Acceleration
Percentage:
Payment for A&R Award
Shares:
Change in Control:
Plan Administrator:
Restricted Shares Agent:
Transfer Agent:
Vesting Schedule:
Transfer Restrictions:
__.___%. ("Warrant Acceleration Percentage").
Services rendered and to be rendered by You to the Company and its Subsidiaries and
Affiliates.
See your A&R Award Agreement regarding the consequences with respect to your A&R
Award Shares in the event of a Change in Control of the Company.
The Compensation Committee of the Board of Directors.
Chief Financial Officer of the Company (subject to change or replacement as set forth in
your A&R Award Agreement).
Continental Stock Transfer and Trust Company (subject to change or replacement as set
forth in your A&R Award Agreement).
See your A&R Award Agreement for the amended and restated Vesting Schedule applicable
to your A&R Award Shares.
See your A&R Award Agreement for the transfer restrictions applicable to your A&R
Award Shares.
Forfeiture of unvested A&R
Shares:
See your A&R Award Agreement for the forfeiture provisions applicable to your A&R
Award Shares.
2
Additional Terms/Acknowledgements
You hereby acknowledge, by your signatures to your A&R Award Documents, that (a) You have received and have reviewed copies of your A&R Award Documents and
the Plan, (b) You have had an opportunity to obtain the advice of counsel prior to executing your A&R Award Documents and (c) as of the A&R Effective Date, your A&R
Award Documents and the Plan (i) set forth the entire understanding between You and the Company regarding the acquisition of your A&R Award Shares pursuant to your
A&R Award Documents and (ii) supersede all prior oral and supersede and replace, in their entirety, any and all written agreements (including, but not limited to, your
Original Award Documents) regarding the subject matter hereof.
Concurrently with the execution of this A&R Award Notice, You agree to (a) sign and deliver to the Company your A&R Award Agreement in the form attached hereto as
Attachment A and your Stock Assignment Separate from Certificate which is attached as Exhibit B to your A&R Award Agreement and (b) accept as binding, conclusive
and final all decisions or interpretations of the Plan Administrator regarding any questions arising under the Plan and your A&R Award Documents.
As of the A&R Effective Date, none of your A&R Award Shares are vested. From and after the A&R Effective Date, all of your A&R Award Shares shall remain eligible to
vest hereunder if all conditions to vesting in your A&R Award Agreement are satisfied.
[Signature page(s) to follow.]
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Signature Page to the Amended and Restated Restricted Share Award Notice (A&R Effective Date: October 29, 2020), by and among the signatories identified
Below.
Participant
Name (Print): ___________________________
Date:
Concrete Pumping Holdings, Inc.
By:
Name (Print): ____________________________
Title:___________________________________
Date: ___________ __, 2020
Restricted Shares Agent
By:____________________________________
Name (Print): Iain Humphries
Title: Chief Financial Officer
Date: _____________ __, 2020
Attachment A - Amended And Restated Restricted Share Award Agreement
Attachment A
Amended and Restated Restricted Share Award Agreement
See attached
Concrete Pumping Holdings, Inc.
Amended and Restated Restricted Share Award Agreement
This Amended and Restated Restricted Share Award Agreement (this "A&R Agreement") is made as of this 29th day of October, 2020 (the "A&R Effective
Date"), by and among Concrete Pumping Holdings, Inc., a Delaware corporation (the "Company"), _____________ ("Participant" or "You") and Iain Humphries (the initial
"Restricted Shares Agent"). Capitalized terms used herein and not otherwise defined have the meanings given to them in your A&R Award Notice (as defined below) and
the Plan (as defined below).
Whereas, the Company has adopted, and the shareholders of the Company have adopted and approved, the Concrete Pumping Holdings, Inc. 2018 Omnibus
Incentive Plan, as amended from time to time (the "Plan"); and
Whereas, the purposes of the Plan are to: (a) encourage the profitability and growth of the Company through short-term and long-term incentives that are
consistent with the Company’s objectives; (b) give Participants an incentive for excellence in individual performance; (c) promote teamwork among Participants; and (d)
give the Company a significant advantage in attracting and retaining key Employees, Directors and Consultants; and
Whereas, in order to accomplish the purposes of the Plan, the Plan provides that the Company may award, among other forms of incentive compensation,
Restricted Shares to Participants pursuant to the Plan; and
Whereas, You and the Company are parties to that certain Restricted Share Award Notice, dated as of April 10, 2019 (your "Original Award Notice" and
"Original Award Date," respectively) and that certain Restricted Share Award Agreement, dated as of the same date (your "Original Award Agreement" and, together with
your Original Award Notice and the exhibits and attachments to your Original Award Notice and your Original Award Agreement, your " Original Award Documents"),
pursuant to which the Company awarded You your Original Award Shares (sometimes referred to herein as your " Original Award") on the terms and subject to the
conditions set forth therein; and
Whereas, You and the Company have agreed, effective as of the A&R Effective Date, to amend and restate, in their entirety, your Original Award Documents, on
the terms and subject to the conditions set forth in your Amended and Restated Restricted Share Award Notice, dated as of the A&R Effective Date (your " A&R Award
Notice"), this A&R Award Agreement (together with your A&R Award Notice and the exhibits and attachments to your A&R Award Notice and this A&R Award
Agreement, your "A&R Award Documents") and the Plan; and
Whereas, You and the Company hereby acknowledge and agree that, from and after the A&R Effective Date, your A&R Award Documents supersede and replace,
in their entirety, your Original Award Documents, which, as of the A&R Effective Date, shall cease to have any further force or effect.
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Now, Therefore, It Is Agreed among the parties as follows:
1. Reconstitution of your Original Award into Time Vesting Shares and Performance Vesting Shares; A&R Effective Date.
(a) Your Original Award consisted solely and entirely of Performance Vesting Shares (as defined therein). From and after the A&R Effective Date, your Original
Award shall be divided, reconstituted, restated, converted and changed into two types of A&R Award Shares - Time Vesting Shares (as defined in Section 4 below) and
Performance Vesting Shares (as defined in Section 4 below) (collectively, your " A&R Award" and the shares of Common Stock of the Company ("Common Stock")
issuable upon acceptance of your A&R Award are referred to as your "A&R Award Shares"). Your A&R Award is subject to all of the terms and conditions set forth in your
A&R Award Documents and the Plan.
(b) The date of this A&R Award Agreement is the A&R Effective Date. Your A&R Award Documents, however, will not become effective until You deliver
your A&R Award Documents, executed by You in the manner required by the Company (along with such additional documents as the Company may then require) to the
Restricted Shares Agent, or to such other person as the Company may designate in writing delivered to You (or at such other time and place as You and the Company may
mutually agree upon in writing).
2.
Original Award Date; Your Restricted Book-Entry Transaction Advice.
(a) You acquired, and the Company issued to You, all of your Original Award Shares on the Original Award Date.
(b) The Company hereby acknowledges and agrees that, on or about the Original Award Date, You delivered to the Company, and the Company accepted,
executed and subsequently delivered to You, fully executed copies of your Original Award Documents along with such additional documents as the Company then required
(including but not limited to, your stock assignment, the form of which was attached as Attachment A to your Original Award Agreement).
(c) You hereby acknowledge that Continental Stock Transfer & Trust, the Company’s stock transfer agent ("Stock Transfer Agent"), issued to You, and you
received from the Stock Transfer Agent, a Restricted Book-Entry Transaction Advice for all of your Original Award Shares. All of your Original Award Shares were upon
issuance (A) unvested A&R Shares (as defined in your Original Award Agreement) and (B) subject to the transfer restrictions set forth in the legends on the backside of your
Restricted Book-Entry Transaction Advice. You hereby consent to the Company instructing the Stock Transfer Agent to cancel your existing Restricted Book-Entry
Transaction Advice and issue a replacement Restricted Book-Entry Transaction Advice that accurately reflects the changes to your Original Award as set forth herein.
3. Consideration. Unless otherwise required by law, your A&R Award Shares shall be deemed paid in exchange for the services rendered and to be rendered by
You to and for the benefit of the Company and/or its Subsidiaries and Affiliates.
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4. Vesting.
(a) Subject to the limitations and exceptions contained in your A&R Award Documents and the Plan, or in any other written agreement between the Company,
any Subsidiary or any Affiliate and you, your A&R Award Shares will vest as follows:
(i) Twenty-five percent (25.0%) of your total A&R Award Shares (the "Time Vesting Shares") shall vest in four installments, totaling _________ Time
Vesting Shares, as follows: (A) forty percent (40%) of your Time Vesting Shares shall vest on December 6, 2020, provided that You are employed by the Company
or one or more of its Affiliates on such date; (B) another twenty percent (20%) of your Time Vesting Shares shall vest on December 6, 2021, provided that You are
employed by the Company or one or more of its Affiliates on such date; (C) another twenty percent (20%) of your Time Vesting Shares shall vest on December 6,
2022, provided that You are employed by the Company or one or more of its Affiliates on such date; and (D) the last twenty percent (20%) of your Time Vesting
Shares shall vest on December 6, 2023, provided that You are employed by the Company or one or more of its Affiliates on such date.
(ii) The remaining seventy-five percent (75.0%) of your total A&R Award Shares (your "Performance Vesting Shares") shall vest in four installments,
totaling ________ Performance Vesting Shares, as follows:.
(A) ____________ Performance Vesting Shares shall vest on December 6, 2020. These Performance Vesting Shares represent an acceleration of the
vesting of that number of your Performance Vesting Shares equal to (a) thirteen percent (13.0%) of the total number of April 2019 Warrant Exchange Shares
(stated as a number of shares of Common Stock) multiplied by your Warrant Acceleration Percentage.
(B) Subject to clauses (iii) and (iv) below, another ___________ Performance Vesting Shares shall vest in three equal tranches on the first, second
and third anniversaries of the 30th consecutive business day on which the Fair Market Value of the Common Stock equals or exceeds $6.00 per share ("$6.00
Price Target").
(C) Subject to clauses (iii) and (iv) below, another __________ Performance Vesting Shares shall vest in three equal tranches on the first, second and
third anniversaries of the 30th consecutive business day on which the Fair Market Value of the Common Stock equals or exceeds $8.00 per share ("$8.00 Price
Target")..
(D) Subject to clauses (iii) and (iv) below, the final ___________ Performance Vesting Shares shall vest in three equal tranches on the first, second
and third anniversaries of the 30th consecutive business day on which the Fair Market Value of the Common Stock equals or exceeds $10.00 per share ("10.00
Price Target").
(E) The $6.00 Price Target, the $8.00 Price Target and the $10.00 Price Target are collectively referred to herein as the "Performance Price
Targets".
(iii) Notwithstanding anything in your A&R Award Documents to the contrary, all or a portion, as the case may be, of your unvested Performance Vesting
Shares described in Section 4(a)(ii)(B), (C) and (D) on each Future Warrant Exchange Closing Date (as defined below) shall vest, to the extent set forth in this
Section 4(a)(iii), on an accelerated basis on each date (each a "Future Warrant Exchange Closing Date") on which the Remaining Original Warrants are converted
into, exercised for or otherwise exchanged (each a "Future Warrant Exchange"), in whole or part, for shares of Common Stock ("Future Warrant Exchange
Shares"). The number of your unvested Performance Vesting Shares described in Section 4(a)(ii)(B), (C) and (D) that shall vest in connection with each Future
Warrant Exchange (your "Accelerated Vested Performance Shares") shall be equal to (a) thirteen percent (13.0%) of the total number of Future Warrant Exchange
Shares issued in connection with such Future Warrant Exchange (stated as a number of shares of Common Stock) multiplied by (b) your Warrant Acceleration
Percentage. Your Accelerated Performance Vesting Shares that vest in connection with each Future Warrant Exchange shall proportionately reduce the number of
your outstanding unvested Performance Vesting Shares in each of Sections 4(a)(ii) (B), (C) and (D), determined immediately following the vesting of such
Accelerated Performance Vesting Shares. For illustration purposes only, if a Future Warrant Exchange occurs before the Common Stock achieves the $6.00 Price
Target, one-third of your Accelerated Performance Vesting Shares that vest as of such Future Warrant Exchange Closing Date shall reduce (but not below zero) the
number of your then remaining unvested Performance Vesting Shares in Sections 4(a)(ii)(B), (C) and (D); however, if such Future Warrant Exchange occurs after the
Common Stock achieves the $6.00 Price Target but before it achieves the $8.00 Price Target, one-half of your Accelerated Performance Vesting Shares that vest as of
such Future Warrant Exchange Closing Date shall reduce (but not below zero) the number of your then remaining unvested Performance Vesting Shares in Sections
4(a)(ii)(C) and (D). No fractional Accelerated Vested Performance Shares shall be issued, and all such Accelerated Vested Performance Shares shall be round to the
nearest whole share.
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(iv) Notwithstanding anything herein or elsewhere to the contrary, there shall be no further vesting after December 6, 2023, with respect to any
Performance Vesting Shares that have not achieved the Performance Price Target on or before 6:00 pm (ET) on December 6, 2023. The aggregate number of
Performance Vesting Shares that are eligible to vest pursuant to Section 4(a)(iii) and Section 4(a)(iv) shall not exceed the total number of your Performance Vesting
Shares.
5. Forfeiture and Clawback of A&R Award Shares Under Certain Circumstances
(a) Notwithstanding anything herein to the contrary, unless the Plan Administrator determines otherwise, all vesting of your unvested A&R Award Shares shall
cease upon (i) your Termination of Service due to a for Cause termination by the Company of your employment or other service relationship with the Company or an
Affiliate or (ii) a voluntary termination by You of your employment or other service relationship with the Company or an Affiliate that is related to the occurrence of a
Cause event (each event described in clauses (i) and (ii) is referred to herein as a "Cause Event").
(b) Notwithstanding anything herein to the contrary, subject to clause (d)(ii) below, vesting of your Performance Vesting Shares shall continue following your
Termination of Service for any reason other than a Cause Event with respect to such Performance Vesting Shares as to which the Performance Price Targets are achieved
prior to such Termination of Service.
(c) For this purpose, a "Termination of Service" shall mean the termination of your employment or other service relationship with the Company or an Affiliate
for any reason, voluntarily or involuntarily, with or without the occurrence of a Cause Event, including by reason of your death or Disability; provided, however, that a
Termination of Service shall not be deemed to occur if (a) (a) You are simultaneously re-employed or your employment continues by the Company or any Affiliate or (b) in
the discretion of the Plan Administrator, (i) there is a simultaneous establishment of a consulting relationship between You and the Company or any Affiliate or (ii) or, your
service is interrupted for any approved leaves of absence for illness, temporary disability, military or governmental service, or other reasons. The Plan Administrator, in its
discretion, shall determine the effect of all matters and questions relating to whether a Termination of Service has occurred, including whether a particular leave of absence
constitutes a Termination of Service.
(d) Notwithstanding anything herein to the contrary, unless the Plan Administrator, in its sole and absolute discretion, determines otherwise and so advises You
in writing, You shall automatically forfeit back to Company, for no consideration and without any further action on your or the Company’s part, (i) all unvested Time
Vesting Shares upon the earlier of the effective date of your Termination of Service due to the occurrence of a Cause Event and 6:00 pm (ET) on December 6, 2023, and (ii)
all unvested Performance Vesting Shares upon the earlier of the effective date of your Termination of Service due to the occurrence of a Cause Event or (B) with respect to
which the Performance Price Targets have not been met on or before 6:00 pm (ET) on December 6, 2023. A&R Award Shares that cannot vest shall be forfeited back to the
Company.
(e) Notwithstanding anything herein to the contrary and not in limitation of any other rights or remedies at law or equity available to the Company and its
Affiliates, in the event of (i) your Termination of Service in connection with or related to a Cause Event or (ii) your material breach of any written non-competition, non-
solicitation, non-disparagement, and/or intellectual property rights assignment obligations with the Company or an Affiliate to which You are subject, the Company shall be
entitled to recover from You any (i) A&R Award Shares that are vested but not disposed of unvested A&R Award Shares or (ii) any unvested A&R Award Shares within the
three (3) years prior to the Termination of Service in connection with or related to such Cause Event or such material breach, as applicable (the "Recoverable Shares"), and,
if You have previously sold any such Recoverable Shares, the Company shall also have the right to recover from You the "after-tax economic value" of the Recoverable
Shares, in each case, except to the extent prohibited by applicable law. The recoupment right set forth in this Section 5(e) may, in the Plan Administrator's sole discretion, be
carried out either by (x) seeking directly to recover the Recoverable Shares and/or "after tax economic value" at issue or (y) without your consent, and except to the extent
prohibited by applicable law, offsetting any other compensation payable to You by the Company or an Affiliate thereof by the amount owed by You hereunder. The term
"after-tax economic value" means the gross proceeds received by You from the sale, transfer, exchange, assignment, pledge or other disposition (each a "Disposition") of
your Recoverable Shares net of federal, state and local income taxes ("Taxes") actually paid by You, and/or owed but unpaid by You as of the date of any determination
hereunder, with respect to each Disposition of such Recoverable Shares. At the Company’s request, You shall certify in writing to the Company your Taxes paid or payable
with respect to any Disposition of Recoverable Shares. If You fail to timely provide such certification, the "after-tax economic value" means the gross proceeds received by
You from the Disposition of your Recoverable Shares, without any reduction for Taxes.
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6. Transfer Restrictions.
(a) Notwithstanding anything herein to the contrary, unless the Plan Administrator determines otherwise, your A&R Award Shares shall become transferable for
the first time immediately following the date on which such A&R Award Shares vest.
(b) In addition to any other limitation on transfer created by applicable securities laws, You shall not sell, assign, hypothecate, donate, encumber, or otherwise
dispose of any interest in your A&R Award Shares while such A&R Award Shares are unvested (or continue to be held in the Restricted Shares Agent’s custody, in the case
of certificated A&R Award Shares); provided, however, that an interest in such A&R Award Shares may be transferred by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Internal Revenue Code of 1986, as amended (the "Code"), or Title I of the Employee Retirement Income
Security Act of 1974, as amended. Any interest in any A&R Award Shares that are not held in the Company’s custody by the Restricted Shares Agent shall not be sold,
assigned, hypothecated, donated, encumbered, or otherwise disposed of except in compliance with the provisions herein, applicable securities laws, the Company’s
Certificate of Incorporation and the Company’s Bylaws. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company,
You may designate a third party who, in the event of your death, shall thereafter be entitled to receive any distribution of A&R Award Shares pursuant to this A&R Award
Agreement.
(c) Notwithstanding anything herein to the contrary, your A&R Award Shares shall not be sold, assigned, hypothecated, donated, encumbered, or otherwise
disposed of except in compliance with the provisions herein, applicable securities laws, the Company’s Certificate of Incorporation and the Company’s Bylaws. The
Company shall not be required (and the Transfer Agent shall not be required) (i) to transfer on its books (including electronic records) all or any of your A&R Award Shares
that are transferred in violation of any of the provisions set forth in this Agreement or (ii) to treat as owner of such A&R Award Shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom your A&R Award Shares shall have been so transferred.
(d) You acknowledge and agree that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer"
instructions to the Transfer Agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(e) You acknowledge and agree that any or all of your A&R Award Shares (whether before or after any vesting conditions have been satisfied) may be issued in
uncertificated form pursuant to the customary arrangements for issuing shares in such form, including, but not limited to, book entry form directly registered with the
Transfer Agent or in such other form as the Company may determine, in its sole and absolute discretion.
7 . Capitalization Changes. The number of A&R Award Shares subject to your A&R Award shall be adjusted from time to time for changes in capitalization
pursuant to Section 5 of the Plan.
8. Certain Corporate Transactions. Notwithstanding any provision to the contrary, but subject to the proviso in this sentence, your unvested A&R Shares shall
vest on an accelerated basis upon a Change in Control described in clauses (i), (iii) and (iv) of the definition of Change in Control in Section 2 (Definitions) of the Plan (each
a "Sale Transaction") if and only to the extent that such Sale Transaction would result in (a) the forfeiture of such unvested A&R Shares, (b) a material adverse change,
without your prior written consent, to your rights with respect to your unvested A&R Shares and/or your A&R Award Documents and (c) a Termination of Service in
connection with such Sale Transaction and/or the surviving entity does not either assume your A&R Award Shares or replace them with securities of the surviving entity on
terms substantially the same as the terms of your A&R Award Documents; provided however, that, in the case of Performance Vesting Shares, upon a Sale Transaction, (y)
only your unvested Performance Vesting Shares as to which the "Change in Control Price" with respect to such Sale Transaction equals or exceeds the Performance Price
Target shall vest on an accelerated basis upon the closing of such Sale Transaction and (z) unless the Plan Administrator determines otherwise, You shall forfeit upon the
closing of such Sale Transaction, without any further action on your or the Company’s part, your unvested Performance Vesting Shares as to which the "Change in Control
Price" with respect to such Sale Transaction is less than any Price Performance Targets for your remaining unvested Performance Vesting Shares. Furthermore, the
Company reserves the right, in its sole and absolute direction, and You acknowledge the Company’s right, to exercise any of the rights afforded to the Company with respect
to your A&R Award Shares in connection with any Change in Control as set forth in the Plan.
9 . Securities Law Compliance. You may not be issued any A&R Award Shares unless such A&R Award Shares are either (a) then registered under the
Securities Act of 1933, as amended (the "Securities Act"), or (b) the Company has determined that such issuance would be exempt from the registration requirements of the
Securities Act. The issuance of your A&R Shares must also comply with other applicable laws and regulations governing your A&R Award, and You shall not receive such
A&R Award Shares if the Company determines that such receipt would not be in material compliance with such laws and regulations.
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1 0 . A&R Award Shares Evidenced by Stock Certificates. If your A&R Award Shares are evidenced by stock certificates, You agree to the following joint
instructions (and, in connection with and at the same time You deliver your A&R Award Documents, You agree to execute in blank and deliver to the Company the Stock
Assignment Separate From Certificate attached as Exhibit A hereto), and You and the Company hereby authorize and direct the Restricted Shares Agent or the Restricted
Shares Agent’s designee to hold the documents delivered to the Restricted Shares Agent pursuant to the terms of your A&R Award Documents, in accordance with the
following joint instructions:
(a) Vested A&R Award Shares shall be delivered to You (or registered in your name by the Transfer Agent in the case of your A&R Award Shares that are not
certificated) upon your request given in the manner provided in Section 20 for providing notice.
(b) At any closing involving the transfer or delivery of some or all of your A&R Award Shares back to the Company pursuant hereto, the Restricted Shares
Agent is directed (i) to date any stock assignments necessary for the transfer in question, (ii) to fill in the number of such A&R Award Shares being transferred, and (iii) to
deliver the same, together with the certificate, if any, evidencing the A&R Award Shares to be transferred, to You or the Company, as applicable.
(c) You irrevocably authorize the Company to deposit with the Restricted Shares Agent the stock certificates, if any, evidencing unvested A&R Shares to be held
by the Restricted Shares Agent and any additions and substitutions to such unvested A&R Shares as specified in this A&R Award Agreement. You do hereby irrevocably
constitute and appoint the Restricted Shares Agent as your attorney-in-fact and Restricted Shares Agent for the term of this arrangement to execute with respect to such
securities and other property all documents of assignment and/or transfer and all stock certificates necessary or appropriate to make all securities negotiable and complete
any transaction herein contemplated.
(d) This Section 10 and the joint instructions shall terminate upon the vesting in full of your Restricted Shares or the forfeiture of all or a portion of your
remaining A&R Award Shares, whichever occurs first, and the completion of the tasks contemplated by these joint instructions.
11. A&R Award Shares Not Evidenced by Stock Certificates. If your A&R Award Shares are not evidenced by stock certificates but, instead, are held in book
entry form by the Transfer Agent, You agree to the following joint instructions (and, in connection with and at the same time You deliver your A&R Award Documents,
You agree to execute in blank and deliver to the Company the Stock Assignment Separate From Certificate attached as Exhibit A hereto):
(a) You and the Company hereby authorize and direct the Restricted Shares Agent or the Restricted Shares Agent’s designee to instruct the Transfer Agent to (i)
issue on the Transfer Agent’s book and records your A&R Award Shares and (ii) indicate in its records that You are the record or beneficial owner of such A&R Award
Shares.
(b) You and the Company hereby authorize and direct the Restricted Shares Agent or the Restricted Shares Agent’s designee to instruct the Transfer Agent to (i)
transfer on the Transfer Agent’s book and records back to the Company the A&R Award Shares, if any, that You forfeit pursuant to Sections 4 or 5 and (ii) indicate in its
records that You are no longer the record or beneficial owner of such A&R Award Shares, if any, that You forfeit back to the Company pursuant to Sections 4 or 5.
(c) This Section 11 and the joint instructions shall terminate upon the completion of the tasks contemplated by these joint instructions.
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12. General Duties of And Other Matters related to The Restricted Shares Agent.
(a) If, at the time of termination of Section 10 or Section 11 and the joint instructions set forth therein, the Restricted Shares Agent has in its possession any
A&R Award Shares or other property belonging to You, the Restricted Shares Agent shall deliver all of the same to You and shall be discharged of all further obligations
hereunder.
(b) The Restricted Shares Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by the Restricted Shares Agent to be genuine and to have been signed or presented by the proper
party or parties or their assignees. The Restricted Shares Agent shall not be personally liable for any act the Restricted Shares Agent may do or omit to do hereunder as
attorney-in-fact for You and the Company hereunder while acting in good faith and any act done or omitted by the Restricted Shares Agent pursuant to the advice of the
Restricted Shares Agent’s own legal counsel or the Company’s General Counsel or the Company’s outside legal counsel shall be conclusive incontrovertible evidence of
such good faith.
(c) The Restricted Shares Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and is hereby expressly authorized to comply with and obey orders, judgments, or decrees of any court. In
case the Restricted Shares Agent obeys or complies with any such order, judgment, or decree of any court, the Restricted Shares Agent shall not be liable to any of the
parties hereto or to any other person, firm, or corporation by reason of such compliance, notwithstanding any such order, judgment, or decree being subsequently reversed,
modified, annulled, set aside, vacated, or found to have been entered without jurisdiction.
(d) The Restricted Shares Agent shall not be liable in any respect on account of the identity, authority, or rights of the parties executing or delivering or
purporting to execute or deliver this A&R Award Agreement or any documents or papers deposited or called for hereunder.
(e) The Restricted Shares Agent’s responsibilities hereunder shall terminate if the Restricted Shares Agent shall cease to be the Restricted Shares Agent of the
Company for any reason or no reason or if the Company elects to replace the Restricted Shares Agent as the Restricted Shares Agent for any reason or no reason by written
notice to each party. In the event of any such termination, the Company may appoint any officer or assistant officer of the Company or other person who in the future
assumes the position of Restricted Shares Agent for the Company as successor Restricted Shares Agent and You hereby confirm the appointment of such successor or
successors as your attorney-in-fact and Restricted Shares Agent to the full extent of such successor Secretary’s appointment.
(f) If the Restricted Shares Agent reasonably requires other or further instruments in connection with these joint instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
(g) It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the A&R Award Shares, the
Restricted Shares Agent is authorized and directed to retain in its possession without liability to anyone all or any part of said securities until such dispute shall have been
settled either by mutual written agreement of the parties concerned or by a final order, decree, or judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Restricted Shares Agent shall be under no duty whatsoever to institute or defend any such proceedings.
7
(h) By signing this Agreement below, Restricted Shares Agent becomes a party hereto only for the purpose of performing the duties, responsibilities and
obligations and exercising the rights, benefits and privileges set forth herein.
(i) The Restricted Shares Agent shall be entitled to employ such legal counsel (including, but not limited to the General Counsel of the Company and/or the
Company’s outside legal counsel) and other experts as the Restricted Shares Agent may deem necessary properly to advise Restricted Shares Agent in connection with
Restricted Shares Agent’s obligations hereunder. The Restricted Shares Agent may rely upon the advice of such counsel, and may pay such counsel reasonable compensation
therefor. The Company shall be responsible for all fees generated by such legal counsel in connection with Restricted Shares Agent’s obligations hereunder.
(j) The joint instructions set forth in Sections 10 and 11 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns. It is understood and agreed that references to "Restricted Shares Agent" herein refer to the original Restricted Shares Agent and to any and all successor
Restricted Shares Agent. It is understood and agreed that the Company may at any time or from time to time assign its rights under the Agreement and the joint instructions
in whole or in part.
13. Irrevocable Power of Attorney. You constitute and appoint the Restricted Shares Agent as your attorney-in-fact to transfer/terminate A&R Award Shares, if
any, that You forfeit pursuant to Sections 4 or 5, on the books of the Company (including electronic records of the Transfer Agent) with full power of substitution in the
premises, and to execute with respect to such securities and other property all documents of assignment and/or transfer, all stock certificates necessary or appropriate (and all
matters with the Transfer Agent in the case of uncertificated securities) to make all securities negotiable and complete any transaction herein contemplated. This is a special
power of attorney coupled with an interest (specifically, the Company’s underlying security interest in retaining and terminating the A&R Award Shares in the event that
You forfeit such A&R Award Shares pursuant to Section 4 or 5, and is irrevocable and shall survive your death or legal incapacity. This power of attorney is limited to the
matters specified in this Agreement.
1 4 . Rights as Stockholder. Subject to the provisions of this A&R Award Agreement, You shall have the right to exercise all rights and privileges of a
stockholder of the Company with respect to the vested A&R Shares and the unvested A&R Shares deposited in the Restricted Shares Agent’s Custody or held in electronic
form by the Transfer Agent. You shall be deemed to be the holder of all of your A&R Award Shares for purposes of receiving any dividends that may be paid with respect to
such A&R Award Shares and for purposes of exercising any voting rights relating to such A&R Award Shares, including your unvested A&R Shares.
15. Restrictive Legends.
(a) All stock certificates representing the A&R Award Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of
uncertificated A&R Award Shares language comparable to the following) a legend in substantially the following forms (in addition to any other legend which may be
required by other agreements between the parties hereto):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VESTING RESTRICTIONS, FORFEITURE PROVISIONS,
TRANSFER RESTRICTIONS, AND OTHER RESTRICTIONS SET FORTH IN THE 2018 OMNIBUS INCENTIVE PLAN OF CONCRETE PUMPING
HOLDINGS, INC. (THE "COMPANY"), A RESTRICTED SHARE AWARD NOTICE (AS AMENDED OR MODIFIED FROM TIME TO TIME) AND
RESTRICTED SHARE AWARD AGREEMENT (AS AMENDED OR MODIFIED FROM TIME TO TIME) BY AND AMONG THE COMPANY, THE
RESTRICTED SHARES AGENT AND THE REGISTERED HOLDER OR SUCH HOLDER’S PREDECESSOR IN INTEREST, COPIES OF WHICH
ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES
REPRESENTED BY THIS STOCK CERTIFICATE IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY."
8
(b) All of your A&R Award Shares are, on the date hereof, are subject to and covered by an effective registration statement on Form S-8 filed with the Securities
and Exchange Commission on April 5, 2019, Registration No. 333-230753. If at any time all or any portion of your A&R Award Shares are not subject to and covered by an
effective registration statement on Form S-8 (or any other applicable registration statement) under the Securities Act of 1933, as amended, then stock certificates representing
the A&R Award Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of uncertificated A&R Award Shares language comparable
to the following) a legend in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) All stock certificates representing your A&R Award Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of
uncertificated your A&R Award Shares, shall include) any legend required by appropriate blue sky officials.
(d) All stock certificates representing your A&R Award Shares shall have endorsed thereon (and the electronic records of the Transfer Agent, in the case of
uncertificated A&R Award Shares, shall include) any legend the Company determines, acting in its sole discretion, is necessary or required to enforce the provisions of
Sections 4 or 5.
16. Market Stand-Off Agreement. You agree that the Company (or a representative of the underwriter(s)) may, in connection with the underwritten registration
of the offering of any securities of the Company under the Securities Act, require that You not sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any A&R Award Shares or other securities of the Company held by
You, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the
Company filed under the Securities Act. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your A&R Award Shares until the end of such period. The underwriters of the Company’s stock are intended third party
beneficiaries of this Section 16 and shall have the right, power and authority to enforce the provision hereof as though they were a party hereto.
17. Award not a Service Contract. Your A&R Award Documents and other documents referenced herein are not, individually or together in any combination,
an employment or service contract, and nothing in any of the aforementioned documents shall be deemed to create in any way whatsoever any obligation on your part to
continue in the service of the Company or any Affiliate, or on the part of the Company or any Affiliate to continue such service. In addition, nothing in your A&R Award
Documents shall obligate the Company or any Affiliate, their respective stockholders, boards of directors, or employees to continue any relationship that You might have as
an Employee, Consultant or Director of the Company or any Affiliate or Subsidiary. Unless You have a fully-executed, written employment agreement with the Company,
You are an employee at-will for all purposes.
18. Withholding Obligations. You hereby authorize withholding from any amounts payable to you, or otherwise agree to make adequate provision in cash for,
any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate or Subsidiary, if any, which arise in connection
with your A&R Award. In the Company’s sole discretion, the Company may elect, and You hereby authorize the Company, to withhold vested A&R Award Shares in such
amounts as the Company determines are necessary to satisfy your obligation pursuant to the preceding sentence. Unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied, the Company shall have no obligation to deliver to You any A&R Award Shares. In the event You fail to make adequate provision in cash
for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate or Subsidiary, if any, which arise in
connection with your Award, the Company reserves all rights and remedies available at law and in equity in order to enforce your obligation to make such provision to the
satisfaction of the Company, and to collect from You, all such withholding obligations, which are your full, unqualified, recourse obligations.
9
1 9 . Tax Consequences. You agree to review with your own tax advisors the federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement and A&R Award Notice. You shall rely solely on such advisors and not on any statements or representations of the
Company or its Restricted Shares Agent with respect to the federal, state, local and foreign tax consequence of any matters relating, in any way or manner, to your
A&R Award Shares and A&R Award Documents . You understand that You (and not the Company or any of its Affiliates) shall be responsible for your own tax liability
that may arise as a result of any and all matters relating, in any way or manner, to your A&R Award Shares. Nothing contained in your A&R Award Documents constitutes
tax advice of any nature, type or kind concerning the subject matter of your A&R Award.
2 0 . Notices. Any notice or request required or permitted hereunder shall be given in writing to each of the other parties hereto and shall be deemed effectively
given on the earlier of (a) the date of personal delivery, including delivery by express courier, or (b) the date that is five (5) days after deposit in the United States Post Office
(whether or not actually received by the addressee), by registered or certified mail with postage and fees prepaid, addressed at the following addresses, or at such other
address(es) as a party may designate by ten (10) days’ advance written notice to each of the other parties hereto:
Company:
Concrete Pumping Holdings, Inc.
Attn: Chief Financial Officer
500 E. 84th Ave. Suite A-5
Thornton, Colorado 80229
Participant:
Your address as on file with the Company
at the time notice is given
Restricted Shares Agent:
c/o Concrete Pumping Holdings, Inc.
Attn: Chief Financial Officer
500 E. 84th Ave. Suite A-5
Thornton, Colorado 80229
21. Headings. The headings of the Sections in this A&R Award Agreement are inserted for convenience only and shall not be deemed to constitute a part of this
A&R Agreement or to affect the meaning of this A&R Award Agreement.
22. Miscellaneous.
(a) The rights and obligations of the Company under your A&R Award Documents shall, in accordance with the Plan, be transferable by the Company to any
one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s successors and assigns.
(b) You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the
purposes or intent of your A&R Award Documents.
(c) You acknowledge and agree that You have reviewed your A&R Award Documents, have had an opportunity to obtain the advice of counsel (including tax
counsel) prior to accepting, executing and delivering to the Company the aforementioned documents and fully understand all of the provisions and legal consequences of
accepting, executing and delivering to the Company the aforementioned documents.
(d) Your A&R Award Documents shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
(e) All obligations of the Company under the Plan and your A&R Award Documents shall be binding on any successor to the Company, whether the existence of
such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
23. Governing Plan Document. Your A&R Award Documents are subject to all the provisions of the Plan, which are hereby made a part of your A&R Award
Documents, and are further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan.
In the event of any conflict between the provisions of your A&R Award Documents, on the one hand, and those of the Plan, on the other hand, the provisions of the Plan
shall control.
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24. Effect on Other Employee Benefit Plans. The value of the A&R Award Shares shall not be included as compensation, earnings, salaries, or other similar
terms used when calculating benefits under any employee benefit plan (other than the Plan) sponsored by the Company or any Affiliate except as such plan otherwise
expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of the Company or any Affiliate.
2 5 . Choice of Law. The interpretation, performance and enforcement of your A&R Award Documents shall be governed by the law of the State of Delaware
without regard to such state’s conflicts of laws rules.
2 6 . Severability. If all or any part of your A&R Award Documents is declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of your A&R Award Documents not declared to be unlawful or invalid. Any Section of your A&R Award
Documents (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and valid.
27. Parachute Payments.
(a) If any payment or benefit You would receive pursuant to a Change in Control from the Company or otherwise ("Payment") would (i) constitute a "parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then such Payment shall be reduced to the Reduced Amount. The "Reduced Amount" shall be either (x) the largest
portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment,
whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in your receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. If a reduction in payments or benefits constituting "parachute payments" is necessary so that the Payment equals the Reduced Amount, reduction
shall occur in the following order unless You elect in writing a different order (provided, however, that such election shall be subject to Company approval if made on or
after the date on which the event that triggers the Payment occurs): reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee
benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the
date of grant of your A&R Award Shares hereunder unless You elect in writing a different order for cancellation.
(b) The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group affecting the Change in
Control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made hereunder.
(c) The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the
Company and You within fifteen (15) calendar days after the date on which your right to a Payment is triggered (if requested at that time by the Company or You) or such
other time as requested by the Company or You. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, it shall furnish the Company and
You with an opinion reasonably acceptable to You that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon the Company and You.
[Signature page(s) to follow.]
11
Signature Page to the Amended and Restated Restricted Share Award Agreement (A&R Effective Date: October 29, 2020), by and among the signatories
identified.
Concrete Pumping Holdings, Inc.
By:
Name (Print): ____________________________
Title:___________________________________
Date: ___________ __, 2020
Restricted Shares Agent
By:____________________________________
Name (Print): Iain Humphries
Title: Chief Financial Officer
Date: _____________ __, 2020
Participant
Name (Print): ___________________________
Date:
EXHIBIT A
Stock Assignment separate from Certificate
For Value Received, ______________ hereby sells, assigns, conveys and transfers unto Concrete Pumping Holdings, Inc., a Delaware corporation (the
"Company"), pursuant to Sections 4 and 5 of the Amended and Restated Restricted Share Award Agreement, A&R Effective Date: October 29, 2020, by and between the
Restricted Shares Agent (as defined in the A&R Award Agreement), the undersigned and the Company (the " A&R Award Agreement") ______ restricted shares of
Common Stock of the Company ("A&R Award Shares") standing in the undersigned’s name on the books of the Company and does hereby irrevocably constitute and
appoint both the Restricted Shares Agent and the Company’s attorney, or either of them, to transfer such A&R Award Shares on the books of the Company with full power
of substitution in the premises. This Stock Assignment may be used only in accordance with and subject to the terms and conditions of the A&R Award Documents (as
defined in the A&R Award Agreement) in connection with the undersigned's forfeiture of A&R Award Shares pursuant to the undersigned's A&R Award Documents.
Capitalized terms used herein and not otherwise defined have the meanings given to them in the A&R Award Documents.
(Signature)
(Print Name)
Instruction: Please do not fill in any blanks other than the signature line. The purpose of this Stock Assignment is to enable the Company to terminate A&R Award Shares
you have forfeited under your A&R Award Documents without requiring additional signatures.
Subsidiaries of Concrete Pumping Holdings, Inc.
Exhibit 21.1
Entity
Concrete Pumping Intermediate Acquisition Corp.
Industrea Acquisition Corp.
CPH Acquisition I, Inc.
Brundage-Bone Concrete Pumping Holdings, Inc.
Concrete Pumping Intermediate Holdings, LLC
Concrete Pumping Property Holdings, LLC
Brundage-Bone Concrete Pumping, Inc.
Eco-Pan, Inc.
Greystone Pumping Holdings SRL
Lux Concrete Holdings I S.à r.l.
Lux Concrete Holdings II S.à r.l.
Camfaud Group Limited
Camfaud Concrete Pumps Limited
South Cost Concrete Pumping Limited
Premier Concrete Pumping Limited
Reilly Concrete Pumping Limited
CPH Acquisition LLC
Capital Pumping, LP
ASC Equipment, LP
Jurisdiction
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Colorado
Colorado
Barbados
Luxembourg
Luxembourg
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Delaware
Texas
Texas
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
Concrete Pumping Holdings, Inc.
Thornton, Colorado
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-229402 and 333-230105) and Form S-8 (No. 333-230753) of
Concrete Pumping Holdings, Inc. of our report dated January 12, 2021, relating to the consolidated financial statements, which appears in this Annual Report on Form 10-
K.
/s/ BDO USA, LLP
Dallas, Texas
January 12, 2021
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bruce Young, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the year ended October 31, 2020 of Concrete Pumping Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
Date: January 12, 2021
/s/ Bruce Young
Bruce Young, Chief Executive Officer and Director
(principal executive officer)
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Iain Humphries, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the year ended October 31, 2020 of Concrete Pumping Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
Date: January 12, 2021
/s/ Iain Humphries
Iain Humphries, Chief Financial Officer and
Director
(principal financial and accounting officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Concrete Pumping Holdings, Inc. (the "Company") hereby
certifies that to my knowledge, the Annual Report on Form 10-K of the Company for the year ended October 31, 2020 (the “Report”) accompanying this certification, fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: January 12, 2021
/s/ Bruce Young
Bruce Young, Chief Executive Officer and Director
(principal executive officer)
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of Concrete Pumping Holdings, Inc. (the "Company") hereby
certifies that to my knowledge, the Annual Report on Form 10-K of the Company for the year ended October 31, 2020 (the “Report”) accompanying this certification, fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: January 12, 2021
/s/ Iain Humphries
Iain Humphries, Chief Financial Officer and
Director
(principal financial and accounting officer)