Concrete Pumping Holdings (NASDAQ:BBCP) Q3 2020 Earnings Call

0:00 Good afternoon, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings financial results for the third quarter fiscal quarter and into July 31st, 2020. Joining us today are Concrete Pumping Holdings CEO, Bruce Young, CFO, Iain Humphries, and the company's external director of investor relations, Cody Slaw. Before we go ahead, I'd like to turn the floor over to Mr. Slaw to read the company's Safe Harbor Statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

0:40 Thanks, Kevin. I'd like to remind everyone that in the course of this call to give you a better understanding of our operations, we will be making certain forward-looking statements. These statements are subject to numerous risks and uncertainties that could cause the actual result to differ materially from such statements. For information concerning these risks and uncertainties, see Concrete Pumping Holding, Inc.'s publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, we will also discuss adjusted EBITDA and net debt, which are non-GAAP financial measures. Adjusted EBITDA adjusts reported EBITDA for certain items.

1:26 We believe the presentation of this non-GAAP financial measure is useful because it provides investors and industry analysts the same information that we use internally for purposes of assessing our core operating performance. Net debt reflects all principal amounts outstanding under debt agreements plus cash. Cash is subtracted from the GAAP measure because it could be used to reduce the company's debt obligations. We believe this non-GAAP measure provides useful information to management and investors in order to monitor the company's leverage and evaluate the company's consolidated balance sheet. For a reconciliation of both of these measures to their most directly comparable GAAP financial measure, please refer the press release issued today or the investor presentation posted on the company's website.

2:12 I'd like to remind everyone that this call will be available for replay later this evening. A webcast replay will also be available via the link provided in today's press release, as well as on the company's website. Additionally, we have posted an updated investor presentation on the same website. Now I'd like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

2:37 Thank you, Cody, and good afternoon, everyone. As our third quarter results demonstrate, we continue to navigate COVID-19 from a position of strength, which is a testament to our great employees. the resiliency of our business model and our highly variable cost structure. Our team continues to show exceptional leadership, resourcefulness, and collaboration as we address this unprecedented event. I remain incredibly proud of our employee morale throughout the organization as our team seamlessly adapts to new health protocols and remains focused on serving our many stakeholders. Our employees continue to demonstrate a high degree of engagement in the work and empathy for our clients during these uncertain times. Their proactive safety measures I laid out during our last earnings call are still in place and have served us well as we've continued to experience minimal disruption in our operations.

3:27 Diving into our Q3 performance, revenue and EBITDA were essentially flat despite COVID-19 related shutdowns in the UK and softness in a few of our markets. Our concrete waste management services business performed particularly well, growing by double digits. Again, I am incredibly proud of our entire team given that they were able to maintain consistent year-over-year operating performance despite a substantially more challenging macro environment in 2020. Let me summarize the components of our revenue performance a bit further. Our U.S. pumping business remained fairly resilient in the third quarter. Markets like Seattle, which experienced a significant drop in revenue during our second quarter but recovered quickly, continued to run a pre-COVID and others.

4:15 We experienced growing demand across our residential market and expect that to continue to strengthen in the near term as evidenced by strong housing starts data in the majority of our geographic markets. Our Ecopan business, which we define as U.S. Concrete Waste Management Services in our filings, was a real standout of the quarter, growing organically Revenue by 18% and Adjusted EBITDA by 34%. In addition to steady organic growth and improved operational effectiveness that continues to drive this business during the quarter, we launched roll-off services in several locations. The services compromised a larger container than our legacy offering and is moved with a roll-off or hook-lift truck. is intended to service larger volume pickups where ample space is available compared to the compact nature of our standard Ecopan offering.

5:10 While this isn't the rapacity play of traditional Ecopan, it allows us to increase our revenue penetration with a complementary concrete waste removal solution that remains superior to other historical alternatives the contractor had at their disposal prior to Ecopan. We're obviously pleased with Ecopan's performance during the quarter, and we are confident market tailwinds will remain. In fact, during the quarter, we invested in additional CapEx to have the equipment necessary to fill strong demand. Iain will walk through CapEx in his section, and we are pleased we have the equipment to go to attack this exciting market. The offset to this revenue performance was continued softness in our UK market as a result of continued lingering effect of COVID-19, which drove substantial curtailment of business operations during April and into May. We noted last quarter's call that the UK was performing at roughly 60% of the revenue capacity that we would normally expect.

6:10 That has improved to roughly 80% in the third quarter, so a nice sequential improvement, but still room for further recovery. We aren't expecting any structural demand constraints that concern us long-term. We believe it's simply a market that is slower to recover from COVID-19 when compared to what we're experiencing in the U.S. We have begun a modest amount of work on the HS2 project, but not enough to change the revenue dynamics near-term. Of course, it still represents an enormous opportunity for our business, and we are well-positioned to capitalize when work begins in earnest, which we anticipate to occur in the first half of fiscal year 2021. In addition, in our U.S. pumping business, there are a few markets that experience project delays due to COVID-19-related reasons. We are confident most of these projects will come back and include things in retail and hospitality space.

7:03 The diversity of our revenue often shows the most value in times of uncertainty, and we are currently seeing that today. As I mentioned, Ecopan continues to gain momentum. Our infrastructure business, which we define as anything publicly funded, remains resilient, and our residential business is strengthening. Putting this together, we believe flat revenue growth was a good outcome in a challenging market. I'm also pleased to report that we were able to show the value of our roughly 70% variable cost structure. This showed most prominently in our ability to maintain a 39% adjusted EBITDA margin, As Iain will highlight, this was also aided by proactive measures we took across the organization to rationalize variable expenses.

7:48 All of this was accomplished by continuing to strengthen our balance sheet. With our continued commitment to strengthen our balance sheet, we reduced net debt by $17.5 million during the third quarter and have access to $43.5 million of total liquidity as of July 31st. Our healthy operating cash flow and no near-term debt maturities has us continuing to feel comfortable with our liquidity during these uncertain times. Now I'd like to hand the call over to Iain so he can provide a detailed overview on our third quarter financial results. I'll then return to provide some color on our market expectations for the remainder of the year. Iain?

8:25 Thanks, Bruce, and good afternoon, everyone. Moving into our third quarter 2020 results, We generated Q3 revenue of $77.1 million compared to $78.7 million in the same year-ago quarter. The slight decline was largely due to lower revenue in our UK segment as a result of the continued market softness from COVID-19. This was offset by the strength of our 18% organic growth in Ecopan and resiliency in our US concrete pumping operations. In the third fiscal quarter, revenue in our US concrete pumping segment Mostly operating under the Brundage Bone brand, increased slightly to $58.6 million for $58.4 million in the same year-ago quarter.

9:11 On an organic basis, which removes the result from capital in both periods, revenue in Q3 was consistent year-over-year. Q3 2020 revenue in our UK operations, operating largely under the Camford brand, was $9.2 million compared to $12.5 million in the same year-ago quarter. Construction volume reductions due to a slower recovery from COVID-19 was the driver of the decline. As Bruce mentioned, the UK is currently running at approximately 80% of our pre-COVID revenue run rate. As we anticipate a tempered return to full revenue capacity in the UK region, we believe we have ample runway for long-term market share expansion, including the multi-decade high-speed rail project HS2.

9:58 Revenue in our U.S. concrete waste management services segment, operating under the Ecopan brand, increased 18% and $9.4 million in the third quarter. This was driven by robust organic growth in the majority of our markets and high utilization of our assets. We also experienced strong growth in our next-tier markets as we continued integrating the Ecopan service into our concrete pumping footprint. At the end of Q3 2020, PANs in the field, which is a leading indicator for future pickups, were 11% higher when compared to the same year-ago quarter. As Bruce referenced, our EcoPAN operations benefited from the continued investment and growth in roll-off services in several locations, which allows us to service larger volumes than our established small and large PAN services.

10:50 Turning back to our consolidated results, Cross-profit in the third quarter was $37.8 million compared to $39 million in the same year-ago quarter, and gross margin declined 60 basis points to 49%, as improved revenue pricing, more favorable fuel costs, and continued improvement in our supply chain procurement costs did not fully offset the slight decline in revenue. General and administrative expenses in Q3 were $27 million, and David O'Hare. The 4% cost reduction was largely due to lower amortization of intangible asset expense and reduced variable G&A expenses such as travel costs. Net income available to common shareholders in the third quarter of fiscal year 2020 was $2.5 million or $0.04 per diluted share compared to $2.3 million or $0.05 per diluted share in the third quarter and the team.

11:52 Finally, adjusted EBITDA in the third quarter was $30 million compared to $30.6 million in the same year-ago quarter. Adjusted EBITDA margin remained consistently strong at 39%. In our U.S. concrete waste management business, adjusted EBITDA improved 34% to $4.8 million on the back of 18% organic revenue growth. In our U.S. concrete pumping business, adjusted EBITDA was marginally down 4% to $21.2 million on slight revenue growth. And in our UK business, adjusted EBITDA declined by $0.9 million against approximately $3 million drop in revenue. Despite the lower trends, we are proud of the cost containment and margin control coming out of the UK during a slower demand environment.

12:42 The healthy and consistent consolidated adjusted EBITDA margin In Q3, an EBITDA margin improvement year-to-date demonstrates the ability of our team to move proactively and with agility to successfully navigate through challenging times. Turning to the balance sheet, we continue to prioritize our liquidity and cash preservation. Compared to Q2 2020, net debt in the third fiscal quarter was reduced by approximately $17.5 million to $395.3 million. This was comprised of $399.4 million in debt principal and $4.1 million in cash. We have no near-term debt maturities, and as a reminder, our five-year ABL revolver is in place until December 2023, and our seven-year term loan facility matures in December 2025.

13:40 These debt instruments are also covenant-like. We have no financial covenants on the term loan, and our ABL has a springy one-to-one fixed charge ratio based on total excess availability and based on our improving liquidity position, we believe we have significant headroom. Cash preservation initiatives implemented since the onset of the coronavirus have helped us build approximately $43.5 million of total available liquidity as of July 31, 2020, which includes cash on the balance sheet, and availability from the ABL Revolver. As a reminder, our business generates healthy operating fee cash flows as we invoice our customers daily for the work we perform.

14:25 And we have minimal working capital requirements as we do not take ownership of the concrete we place. We believe our ability to generate strong operating fee cash flows along with our strong margins provides us with the ability to delever and strengthen our balance sheet over time, even in the current environment. We suspended uncommitted 2020 CapEx investment for a brief period during the height of the COVID-19 pandemic. However, as Bruce mentioned, the continued growth momentum in our EcoPlan business supported strategic CapEx investments to fulfill demand. With the continued strong performance of U.S. concrete pumping, we also took the opportunity to selectively improve the age of our concrete pumping fleet. We will continue to apply prudent capital deployment and remain opportunistic with our CapEx investments in our fourth quarter.

15:18 With our cash and liquidity focus, we are pleased that we've been able to reduce our net debt position by approximately $38 billion over the past two quarters while being able to strategically invest in equipment to position our operations for growth. The resiliency of our business, the highly available component of our costs, and our revenue diversity are also strong components of these results. We continue to believe we are well positioned to navigate the evolving impacts of the COVID-19 environment and we are fully prepared to leverage an economic recovery. However, given the lingering uncertainty about the duration and timing of the economic recovery associated with the COVID-19 pandemic, we are not currently prepared to provide guidance for the last quarter of 2020.

16:08 The combination of our healthy operating cash flow, highly variable cost structure, and ample liquidity with no near-term debt maturities puts us in a position of strength as we manage the business through the pandemic while opportunistically investing for growth. With that, I will now turn the call back over to Bruce.

16:26 Thanks, Ian. I now want to make some broad statements about how we view the remainder of our fiscal year playing out and how CPH will leverage its strength to succeed moving forward. We remain cautiously optimistic about the demand environment for the remainder of our fiscal year. Our diversified revenue and customer base create opportunities for growth, particularly in areas where we're currently experiencing incremental market share gains like Ecopan and residential construction. We look forward to our continued execution in these markets while appropriately balancing debt pay down and investment opportunities to support the long-term growth of the business. While some projects are experiencing delays, for the most part our projects are expected to move forward and the bidding environment is still relatively healthy.

17:13 However, we are taking a cautious approach to our growth expectations while still remaining optimistic. We still expect to report year-over-year revenue growth in our U.S. concrete pumping, but at a lower rate than originally contemplated in our full-year revenue outlook earlier this year. However, given the strength in Ecopan, we now expect our waste management services segment to actually grow faster than the 11% to 17% top line rate contemplated in our original outlook. For perspective, the segment is up 21% year-to-date. In our U.K. market, the pace of recovery has turned out to be slower than the U.S. As such, we now expect this market to continue to recover into our fiscal year 2021. While it's difficult to know when normalized business returns throughout the world, we remain confident that our company is well positioned for the recovery.

18:02 We have strengthened proactive measures to enforce our variable expense structure and remain focused on managing cash flow. Our highly variable cost structure makes us well positioned to accelerate growth and drive profit when conditions stabilize. We also have a solid balance sheet and improved liquidity, no near-term debt maturities, and covenant-like debt facilities. Our healthy operating cash flow characteristics position us well to safeguard liquidity and to service our debt obligations. We have an unrivaled geographic footprint in the U.S. and the U.K., as well as highly diversified and market exposure. In closing, we wish you, your colleagues, and everyone's family the very best during these trying times. We are living through complex and dynamic times, and our entire team is highly committed to maximizing shareholder value.

18:51 Supporting our talented employees and our partners in the coming months ahead. With that, I'd now like to turn the call back over to Kevin for Q&A. Thank you. And I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions. Our first question today is coming from Sam Cussworm from William Blair. Your line is now live.

19:34 Hey, Bruce. Hey, Iain. Hope you both are doing well. Hi, Sam. So can you guys update us on how the current backlog looks relative to pre-COVID levels and if it is pretty stable at this point or if it's trying to tie in with the quarter for grass?

19:51 Yeah, so what we're seeing, Sam, is things are very stable, not really growing, fairly consistent. The bidding activity is similar to what we had seen a year ago. And so that's where our outlook for, you know, the remainder of the year is to remain flat, and then we'll continue to watch it as we go into next year.

20:13 Gotcha. Thanks. And then maybe pivoting to Ecopan, Sam. You mentioned the new roll-off options within the Ecopan business. Can you expand on the market opportunity for this larger bucket and the margin profile it has compared to the business's original offering?

20:28 Yeah, you might have seen in our investor presentation that if every concrete placement had a concrete washout system, it's about an $850 million market. Now, our Ecopan offering that we have in most of our locations is a smaller container that fits in very tight, congested areas on shop sites. Thank you very much. and Iain Humphries, and Iain Humphries, and Iain Humphries.

21:49 and we've spent the last year refining and building up those locations and that's where you've seen our margin improvement as we've created that density in those areas. We still believe there's a lot of room in those current markets and we are contemplating other new markets but we're not ready to release those areas yet.

22:06 Okay, perfect. Thanks, guys.

22:08 Thank you. Thank you. Our next question is coming from Andrew Whitman from Robert W. Baird. Your line is now live.

22:16 Great, thanks. Wanting to just dig in a little bit to the end markets, particularly in the U.S. Sounds like there's a little bit of a dynamic happening here that's pretty well known to the investment community about presidential markets being very strong and commercial. I think there's some concerns in the investment community about the strength of the commercial market. So, Bruce, I guess the question is this. Is the growth rate that you're seeing for your residential business, which is about half the size of your commercial business, sufficient to offset any declines that could occur or maybe are occurring from the delays that you're seeing today in those hospitality and retail markets? In other words, do you think the growth rate in residential could be 2x that of commercial?

23:05 I do think there's going to be... Andy, I do believe that next year there will be more opportunity in residential. Currently, what we're seeing is our residential, as a percentage of revenue, hasn't really grown that much quarter over quarter of what we had been experiencing. Our commercial markets are still quite strong. Infrastructure still seems strong. We think there is some opportunity to increase our revenues with the residential as our markets became much hotter in most of our locations, and we're certainly targeting that. But the real question I think that we're following most closely is where the commercial market goes, and currently it's been fairly stable for us.

23:47 Got it. And then I guess I wanted to dig in next a little bit onto the U.K. business. I heard your comment about it just seems like it's a little bit slower recovery from the COVID impact there than it has been in the U.S. I was just wondering if you could put a little bit more meat on that bone and talk about the dynamics that you're seeing in the marketplace that gives you the confidence to say that. In other words, is there maybe longer-term economic damage from the COVID impact, or is it just really purely a reopening timing where things are reopening slower? I'd try to understand your thoughts behind that would be helpful, I think.

24:26 So currently we're seeing things reopening slower. Scotland Wells have been slower to reopen, and the City of London itself has been a little slower to reopen. So the market seems fairly strong for next year. We've talked about HS2 and the impact that that will have. Hinkley Point has still been a very good project for us there. I think once London and Scotland Wells get opened up to their full capacity, I think our revenue should get back to what our normal expectations would be.

24:57 Okay, that's helpful. Sorry, I've got one more kind of big picture question than a technical one. Just on the infrastructure side of the business, there's been a lot in the popular press about state and local budgets. You mentioned the infrastructure segment. For you guys, is anything that's publicly funded? I was wondering what you're hearing from your customers and what your customers are hearing from their budgetary folks as to what the impact is are today or could be in the future from the potential decline in tax receipts and if there's any impact on your business that you're seeing today or likely to see in the next few months.

25:39 Again, our infrastructure revenue as a percentage of the total is still fairly consistent with what we would have expected. We're bidding a lot of infrastructure work in certain areas. We're following them just State-by-state, just as you are, thinking about a federal-supported fund that would come in, a bill that would fund that package into the future. Clearly, we're following that as closely as we can in every city and every state. While it's not a really big part of our business, it could be impactful in the states that are better funded with receipts.

26:20 This is all helpful. I don't want to forget about Ian, so the last one is for you. I noticed in the EBITDA reconciliation bridge, there is a $3.1 million of other adjustments. Given that there are other, I thought it would be worth giving you an opportunity to comment on what those were. Thanks.

26:37 Yeah, I mean, the way that we look at the other adjustments on either EBITDA, really anything that's non-recurring or non-operational. So, Those are consistent with other adjustments in prior periods, but it's largely around any sort of restructured or non-operational costs that are coming through the business.

26:59 Thanks. Thanks. Our next question today is coming from Brent Bowman from the Davidson. Your line is now live.

27:09 Hey, great. Good afternoon. Hey, Iain, could you comment on the net capex expectations for this year? I think originally it was $35 to $38 million, and then I think you thought that you might fall somewhere below that. So I just wanted to see where you thought that would stand at this point.

27:29 Yeah, so, I mean, obviously through the current year, I mean, obviously, as you know, we look at the free cash flow of the business, and given the – The nice surprise of strong momentum, and that's where we're looking at how we look at the capital allocation. So through the year today, it's around $30 million. We haven't provided guidance for the fourth quarter, but as we said in our prepared remarks, as long as there's a strategic opportunity for us to invest in the growth of the business, then we'll continue to look at those. But it really takes some comfort, first of all, about whether those investment levels support our expectations around free cash flow.

28:10 Okay, and then as a follow-up to that and with, I guess, these larger buckets in Ecopan, could you comment on the need to continue this pace of CapEx within that business in order to sustain this growth you've seen in that segment?

28:29 Yeah, I mean, again, I mean, given that it's the highest margin, highest growth part of our business, again, as long as the returns on investment Thank you very much. and Criteria to continue that strategic path for the business.

29:14 Okay, I appreciate that. Bruce, I'm wondering if you could elaborate on the market share gain opportunities. You mentioned that you're seeing in the residential construction business. What exactly are you seeing

29:27 there? Yeah, so we provide a very good concrete pumping service and we think it's second to no one else. And so As we slow down in certain markets, it's up to us to go and improve our value to other end markets. And it comes down to being available when they need us, being reliable so that when they have concrete there, that they know that it's going to go into the forms and they won't have issues with the equipment. And if they do, we have the backup, having the specialty sizes of equipment that sometimes become advantageous to them in unusual circumstances. And and so as we have that capacity, we'll drive that message hard with residential customers and even try to gain share in the commercial market.

30:15 Bruce, is that across the country where you operate or is it specific areas you're really targeting?

30:21 That's across the country. In every one of our locations, we have targeted end markets and targeted customers and we work on those things weekly. This isn't a new thing. Now, when markets slow down, we accelerate that, and that's really where we're at right now with the uncertainty of where next year's markets will be.

30:42 Okay. Great. Thank you. Thank you. Our next question today is coming from Stephen Fisher from UBS. Your line is now live.

30:53 Thanks. Good afternoon, guys. So I know there's enough uncertainty to prevent you from giving guidance, but can you just maybe give us a sense of the visibility that you do have in your various businesses at this point relative to the visibility you would typically have at this point? I don't know if that's sort of expressed in months of opportunities or backlog or work, but I'm just kind of curious – How you feel your visibility is today versus typically at this point, and kind of where those core uncertainties really lie. Because it sounds like a number of your businesses still sound like you feel pretty confident about them.

31:39 We do. We feel like the remainder of this year will go strong and into next year. We are watching to see which projects get funded. of the projects we're bidding right now, whether it's a federally or state-funded job or whether it's a privately-funded job. We do have some concerns there, but our activity levels still seem relatively stable.

32:03 Okay. And I guess within your flattish revenues, you know, it's called in the U.S. concrete pumping, how would you characterize, for the quarter, What was volume versus price if I missed it?

32:27 We didn't give numbers on volume versus price. Our rates have increased nicely during this quarter. You know, the markets were softer. Some of the revenue that we created was because we've got better rates on a lot of our projects, especially those that required specialty equipment. But we continue to, you know, to drive price and value. That's really what our customers are looking for from us.

32:57 Okay. Any way to bracket what that pricing was? Kind of like low single digits? Is that kind of what we should assume?

33:05 Yeah, Stephen, I mean, that's typically what we see on the pricing is low signal digits year over year, and then almost an equal amount on volume as well, but obviously we haven't broken that out for the current quarter. But yeah, low signal digits on prices is fair for where we are.

33:21 Okay, and then just lastly, can you just clarify what's implied by your comments for Iain Humphries, David Anthony Faud

33:57 and Q4 are considered relatively compatible. Now, looking at what we mentioned on the flatness was actually year over year for the third quarter. But looking forward to the fourth, I mean, if you look at the seasonality of our business, typically Q4, if you're looking for a guide, is relatively similar to Q3.

34:17 Okay, got it. Thanks very much. Thank you. Thanks. Our next question today is coming from Alex. Rival from D. Reilly FDR. Your line is now live.

34:31 Thank you. Lots of questions here so far, Picken. But can you comment on how the competitive environment has changed at all following COVID?

34:42 Alex, it's a little bit market by market. Some markets really haven't changed that much with COVID. Others have. And so we look at the different geographies and the different end markets, and it's a little bit all over the board.

35:00 And then as we think about Ecopan, how should we think about the growth rate in 2021? The growth rate in 2020 is moving along very, very well. How should we think about modeling that for 2021?

35:12 We really aren't given any guidance right now for 2021, although we're very bullish on the opportunity.

35:23 And as you look at the M&A environment coming out of COVID-19, How has that changed, or how has your view on M&A activity and token acquisitions on your term changed?

35:39 Going into COVID, we had a large backlog of opportunity for acquisitions. It hasn't really changed through COVID. Now, as you know, we've been focused on delevering, improving the balance sheet, which we've done a fairly good job of this year. and we'll continue to do. We will start looking at acquisitions more seriously and grading them on where the best opportunities are.

36:07 Great. Thank you very much. Thank you. Thanks, Alex. Thanks. Our next question is coming from Stanley Elliott from Steve Poole. Your line is now live.

36:16 Hey, thanks, guys. Good afternoon. Thanks for taking the questions. Bruce, in terms of M&A, what sort of leverage do you want to get to? Do you have a bogey in mind before you start to look at M&A, or is it just going to be more opportunistic on a go-forward basis?

36:33 We've certainly worked hard to get our leverage down to around three and a half times. We'd like to get it a little bit below that. But there are some opportunities out there that actually could help us delever the business at the same time, and so we're looking at those types of opportunities as well.

36:52 Did you talk about or did you all see any disruptions from weather either during the quarter or kind of in the month of August that would have impacted some of the U.S. numbers?

37:06 We have seen some weather and will continue to see weather with the geographic footprint we have in the U.S. and the U.K. We're going to have weather somewhere all the time. as a regional player.

37:30 You all mentioned some uncertainties on the marketplace. Iain, could you remind us when you need to commit your CapEx for next year? I guess this year. It seems like forever ago. This year, you had already committed a lot in terms of CapEx, and then we had the dramatic shutdown, and you had already committed to that. What sort of flexibility do you all have in terms of spend for next year first? And then I'll have to follow up.

38:02 Yeah, so what I would say on our equipment orders is, I mean, typically we are thinking about what the needs are today, but it's probably worthwhile that we define the commitment piece where, I mean, up until the point when any equipment is actually delivered, we have the ability to work with the manufacturers because of our scale to make sure that we can achieve The Desired Outcome, Where Need Be, and naturally the avenue we explored this year. So I would say that we would have some flexibility around the commitment part, but in terms of when we think about what we might need, it's right about now is when we tend to start thinking about what our equipment needs as we go forward.

38:42 And do we think about the capital spend for the ecopan business and the roll-off trucks? Do we think of that as you pulling ahead CapEx or is this incremental CapEx because this is a new opportunity for you? Just trying to balance that and free cash flow expectations.

39:00 Yeah, I mean, the spend on Ecopan, I mean, is all growth. I mean, it's the growth part of our business. We're not really in a replacement cycle yet in terms of the life cycle of that business. So it would all be growth CapEx for that business as it sort of moves forward.

39:16 Perfect. And then lastly, have you noticed any changes in your receivables? You know, anything, just curious, kind of the financial health of some of your contractor base, how those guys are holding up?

39:28 No, we have not. I mean, the team have collectively done an exceptional job on accounts receivable and really staying in front of it. We've got quite sophisticated signals in our business and it's something that we stay very close to. So even through our cash and liquidity focus, that's something that got I would say heightened attention, but I would say it's performed very well through this period and even better than prior to COVID.

39:54 Great. Thanks, guys. Appreciate it.

39:56 Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.

40:07 Thank you, Kevin. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you again when we report our fourth quarter and full year fiscal 2020 results in January. Thank you. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation.