Why Concrete Pumping Holdings Rocketed Over 30% Today On a Brutal Day For The Markets
Key Points
Concrete Pumping delivered a second quarter beat on revenue and margin expansion.
Results bettered expectations on the back of the company's data center and chip fab construction business.
These high-growth segments now make up over 10% of revenue, double that of last year.
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Concrete Pumping Holdings (NASDAQ: BBCP) rocketed 31.5% on Friday as of 2:00 p.m. EDT, despite most stocks getting absolutely hammered today, based on inflation and interest rate fears.
This small-cap construction stock reported its fiscal second-quarter earnings last night. Concrete Pumping does just what its name implies: pump concrete for construction projects. In addition to its core construction business, Concrete Pumping offers a waste management service tied to its construction projects and has a smaller operation in the United Kingdom.
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While overall construction remains somewhat subdued, the booming AI data center and chip fabrication plant segments of the market were enough to propel Concrete Pumping to mid-teens growth, ahead of expectations. At the same time, management also revealed that this AI-related segment now accounts for a larger share of the business.
A solid quarter all around
In the second quarter, Concrete Pumping Holdings grew revenue 14% to $106.8 million, beating analyst expectations by $10.8 million. Concrete Pumping also expanded its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margins, with adjusted EBITDA rising 17.4% to $26.4 million.
In addition to the quarterly beat, management raised full-year revenue guidance to between $410.0 million and $425.0 million, up from $390.0 million to $410.0 million, and for adjusted EBITDA to reach between $98.0 million and $105.0 million, up from a prior guidance range of $90.0 million to $100.0 million. Free cash flow is now projected at $45 million for the year, up from $40 million previously.
Management noted that while it expects only muted activity to continue in the residential and light commercial segments, the data center segment should pick up the slack. Management disclosed that, across data centers and semiconductor fabrication projects, these segments accounted for between 10% and 12% of revenue today, up from just 4% to 5% in the year-ago quarter.
With these high-growth segments making up an ever-larger share of the company's financials, they stand to underpin growth and de-risk future results.
Image source: Getty Images.
Concrete Pumping could be an under-the-radar AI winner
After today's big jump, Concrete's market cap has reached about $525 million, with an enterprise value just over $900 million. Thus, the stock trades for roughly 11.7 times this year's free cash flow estimates, and around nine times this year's EBITDA estimates relative to enterprise value.
While not expensive, that's not incredibly cheap for a cyclical business. However, if the data center and chip fab build-out continues for a few years, it could give the company breathing room until the dormant housing market recovers from its downturn.
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Billy Duberstein and/or his clients no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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