Concrete Pumping Holdings, Inc. (BBCP) Q2 2019 Earnings Call Transcript

Concrete Pumping Holdings, Inc. (BBCP -2.70%)
Q2 2019 Earnings Call
May 17, 2019, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and thank you for participating in today's conference call to discuss Concrete Pumping Holdings' financial results for the second fiscal quarter ended April 30th, 2019. Joining us today are Concrete Pumping Holdings' CEO, Bruce Young; CFO, Iain Humphries; and the company's external director of investor relations, Jared Filippone. Before we go further, I would like to turn the call over to Mr. Filippone to read the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important questions regarding forward-looking statements.

Jared, please go ahead.

Jared Filippone -- External Director of Investor Relations

Thank you, Sherry. I would 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 actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Concrete Pumping Holdings, 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, which is a non-GAAP financial measure that adjusts reported figures for certain items. 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. Also, please note that on December 6th, 2018, we consummated the previously announced business combination, where we acquired the formally private company previously known as Concrete Pumping Holdings, Inc., and the former SPAC called Industrea Acquisition Corp, which transactions we collectively refer to as the business combination.

In connection with the closing of the business combination, the company changed its name to Concrete Pumping Holdings, Inc. Finally, the financial results described today, for dates and periods prior to the business combination, relates to operations of the formerly private company previously known as Concrete Pumping Holdings, Inc. For additional information, please see our Form 10-Q that we will file later today, which includes the historical Concrete Pumping Holdings, Inc. financial statements that we are discussing on this call as well as pro forma financial information for the company that reflects the business combinations.

I would like to remind everyone that this call will be available for replay starting at 1 p.m. Eastern Time today. 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 to Concrete Pumping Holdings website.

Now I would like to turn the call over to the CEO of Concrete Pumping Holdings, Bruce Young. Bruce?

Bruce Young -- Chief Executive Officer

Thank you, Jared, and good morning, everyone. I'm excited to be here today to discuss our extremely productive and eventful last few months. First, I will briefly cover our second fiscal quarter results and then provide an overview on our strategic -- several strategic transactions we have recently announced. Iain will then provide a more detailed review of our second-quarter financial results.

I will then finish the call by highlighting what our organization will be focused on for the remainder of 2019. Turning to our results, we generated strong top-line growth across all our segments in the second quarter as revenue increased 10% to $62 million, while adjusted EBITDA was up slightly to $17.9 million. Results were driven by broad end-market strength in the U.S., strong price and volume growth in the U.K., and an expanded footprint in Eco-Pan as we grew to 16 locations from 14 locations at the end of the last quarter. Revenue growth and adjusted EBITDA were impacted by by continued adverse weather in our West Coast region, which affected Brundage-Bone as well as Eco-Pan's high-volume, mature markets.

Additionally, the strengthening of the U.S. dollar negatively impacted translation of our reported U.K. results. As we discussed on our last call, we believe the majority of the delayed projects due to weather will commence throughout the remainder of fiscal 2019.

Lastly, our end markets largely remained strong in both the U.S. and U.K. As a reminder, our national presence allows us to optimize utilization by efficiently and cost-effectively moving our equipment between branches to match supply with demand. We are unique in our ability to do this as the majority of our peers have a smaller regional presence and fewer options to flex capacity.

I'd like to now turn to our several transactions we have recently announced. First, on April 15th and May 15th, we closed on acquisitions of Atlas Concrete Pumping and Capital Pumping, respectively. Atlas is a concrete pumping provider based out of Boise, Idaho and has a roughly 60:40 commercial to residential split in a fleet of nine pumps. The tuck-in acquisition of Atlas provides us expanded reach and a broader customer base within the Boise marketplace.

The Capital Pumping transaction brought us an extremely well respected and well run concrete pumping provider with a strong presence and a long-standing customer relationships in the attractive Texas marketplace. Capital Pumping has 140 pieces of equipment with a weighted average life of 2.9 years, the youngest fleet of scale in our industry. The younger fleet produces strong adjusted EBITDA margins as it requires less downtime for repairs and maintenance, which also benefits utilization rates. We are happy to bring these two great businesses into the Concrete Pumping Holdings' family and welcome all the new employees to the team.

Second, on April 29th, we completed the exchange offer for 62% of our outstanding warrants for 3.8 million shares of our common stock. The warrant exchange aids in simplifying our capital structure. We are comfortable with our remaining outstanding warrants and a strike price of $11.50. We are happy to generate $150 million in gross proceeds if the holders decide to exercise them in the future.

Lastly, in conjunction with the close of the Capital Pumping acquisition, we completed the follow-on public offering of 18.1 million shares of our common stock for net proceeds of $78.2 million, inclusive of the underwriters' option to purchase additional shares. These funds, along with $60 million of incremental term loans, were largely used to fund the acquisition of Capital Pumping as well as for normal working capital purposes. While the follow-on offering allowed us to significantly increase our public float, approximately 25% of the total amount raised was purchased by certain directors, management and other significant shareholders of the company. It is been a very successful and busy few months for our organization, and I'm proud of our entire team's continued dedication to drive the business forward and execute on our strategic initiatives during this time.

Not only did we generate strong revenue growth in the second quarter, but we also bolstered our presence in the important Texas region with the Capital Pumping acquisition, found a profitable tuck-in acquisition for our already strong Idaho operations with Atlas Concrete Pumping, successfully simplified our capital structure with our warrant exchange and increased the public float with the follow-on offering. Before getting to areas of focus for the remainder of fiscal 2019, I'd like to hand the call over to Iain so he can provide a more detailed overview on our second-quarter financial results. Iain?

Iain Humphries -- Chief Financial Officer

Thanks, Bruce, and good morning, everyone. Before getting into the details, I'd like to remind everyone that we refer to adjusted EBITDA, which is a non-GAAP financial measure, and a reconciliation from net income to adjusted EBITDA can be found in the press release we issued earlier today. Now moving into the second-quarter financial results, as Bruce mentioned, revenue increased 10% to $62 million, compared to $56.4 million in the same year-ago quarter. On a pro forma basis for acquisitions, which includes the results of recent acquisitions pre and post the transaction dates, revenue increased 3%.

The increase in reported revenue was largely driven by growth across all of our segments from higher levels of construction activity and the benefit from the acquisition of Richard O'Brien Companies in April 2018. This is partially offset by continued unfavorable weather conditions in our West Coast operations and the strengthening of the U.S. dollar, which has suppressed our growth in the reported U.K. results.

In the second fiscal quarter, our U.S. Concrete Pumping segment or Brundage-Bone increased revenue by 13% to $42.5 million, driven by improved levels of construction volume across the majority of our U.S. locations and the benefit of the acquisition of Richard O'Brien companies. This is partially offset by the adverse weather conditions, which impacted our customers in the West Coast operations.

The U.K. segment or Camfaud increased revenue by 5% in the second quarter to $12.7 million due to improved utilization rates and growth in both price and volume. There was a partial offset by the continued strengthening of the U.S. dollar, which has impacted the translation of our financial year reported results.

On a constant-currency basis, Camfaud's revenue in the second quarter increased 13% year over year. Our concrete waste management services segment or Eco-Pan increased revenue 2% to $6.8 million in the second quarter. We saw strong underlying trends across the business in the majority of our end markets. However, this was largely offset by continued harsh and wet weather conditions, mainly in our high-volume, mature markets.

Turning back to our consolidated results. Gross profit in the second quarter was $24.4 million, which is comparable to the same year-ago quarter, and gross margin was 39.3%, compared to 43.3% last year. The decrease in gross margin was primarily due to the step-up in depreciation related to the business combination and the O'Brien acquisition as depreciation expense related to our concrete pumping equipment is included within our cost of operations. General and administrative expenses were $21.9 million in the second quarter, compared to $12.4 million in the year-ago quarter.

As a percent of revenue, general and administrative expenses were 35.3%, compared to 22% last year. G&A increase was largely due to $5.1 million in higher amortization expense from the step-up in fair value of certain intangible assets related to the business combination and $2.3 million increase in public company-related expenses. Net loss attributable to common shareholders was $10.1 million or $0.35 per basic and diluted share, compared to net income attributable to common shareholders of $3.3 million or $0.39 per diluted share in the year-ago quarter. The decrease was primarily caused by increased depreciation and amortization expense and higher interest expense.

Finally, adjusted EBITDA in the second quarter increased slightly to $17.9 million, compared to $17.7 million in the same year-ago quarter. As Bruce mentioned, adjusted EBIDTA in the second quarter was impacted by continued adverse weather across our West Coast division that affected both Brundage-Bone and Eco-Pan's profitability. However, as we mentioned on the last call, we continue to expect delayed projects due to weather to resume in the second half of fiscal 2019. Turning to the balance sheet.

At April 30, 2019, we had $2.9 million in cash and $366.9 million of total debt compared to $8.6 million in cash and $237.1 million of total debt at October 31, 2018. The change in debt is attributed to the effect of the business combination. As a reminder, our business generates healthy free cash flow as we invoice our customers daily for the work that we perform, and we have minimal working capital requirements as we do not take ownership of the concrete that we place. This ability to generate strong free cash flow, along with a strong margins provided by the recent acquisition of the accretive Capital Pumping business, provides us comfort in our current debt levels and our ability to strategically delever the balance sheet over time.

Before turning the call back to Bruce, I'd like to mention that since closing the Capital Pumping acquisition on May 15th, we have been intently focused on efficiently integrating the two businesses. The initial integration is going great. And as we get deeper into combining the two businesses and quantifying the combined financial opportunity, we will provide updated financial guidance on the expected 2019 financial performance. There is no change in the expectations for our currently issued 2019 guidance related to the stand-alone CPH business before including the financial contribution from the Capital Pumping acquisition.

Looking ahead, now that we've successfully completed the acquisition of Capital Pumping and taken steps to simplify our capital structure, our company is in an excellent position to continue to leverage our scale, our geographical footprint to drive profitable growth and efficiently allocate capital to investments that will drive strong returns for our shareholders. With that, I will now turn the call back over to Bruce.

Bruce Young -- Chief Executive Officer

Thanks, Iain. On our fourth-quarter call back in January, I provided a detailed overview of our gross strategy and strategic initiatives. Due to several transformational transactions we have completed over the last few months, I would like to touch on a few key aspects of our growth strategy and what our organization will be focused on for the remainder of the fiscal year. First, our main focus is always on the continued organic growth and optimization of our business.

In the U.S., we remain in a position to drive market share gains through our extensive national footprint, which is now bolstered with the addition of Capital Pumping business. With the addition of Capital Pumping's fleet, we will focus on maximizing utilization rates across the combined fleet as we can efficiently and cost-effectively mobilize assets to match supply with demand. In terms of our U.K. operations, we have not seen any material impact due to Brexit concerns and see strong momentum across infrastructure spending with a high-speed rail and other government-funded projects.

Infrastructure represents about a third of our business in the U.K., and we are well positioned to continue to capture this profitable business as these large-scale and long-term projects commence. For Eco-Pan, we are continuing to strategically roll out the offering at a rate of about five to six locations per year, with two additional locations already added to this fiscal year to date. The overall market opportunity for Eco-Pan remains unchanged as we still have about 3% to 4% penetration of an estimated U.S. addressable market of $850 million.

Also, due to the Capital Pumping acquisition and with Eco-Pan's already strong presence in Texas, we have an immediate opportunity to offer the Eco-Pan service across Capital Pumping's customer base and have already begun the process. As mentioned previously, the Eco-Pan business in the U.K. will commence soon with the delivery of our first truck, and we are looking forward to tracking the developments of the rollout of this service. Second, our team is already hard at work on the integration of Capital Pumping's operation onto our platform, and we estimate that we will have the business completely integrated by the end of the summer.

This includes back-office functions, accounting system, sales and marketing, IT and branch consolidations, among others. Additionally, as we communicated in our messaging around the acquisition, we acquired Capital Pumping for 5.3 times adjusted EBITDA before synergies. We have identified $4.9 million of EBITDA synergies. On top of the EBITDA synergies and on a net present-value basis, we have identified $18.6 million of tax benefits, $9 million of capex synergies and $1.2 million of real estate synergies, all of which we expect to realize within 24 months after the close.

The $18.6 million net present value tax benefit is a result of how we structure our acquisitions as a synthetic asset purchase, which allows us to expense 100% of the cost of acquisitions for tax purposes. This further bolstered our NOL position to $34.6 million in deferred cash tax payments into the future. Lastly, our M&A pipeline still sits at about $100 million of incremental adjusted EBITDA. While our immediate focus is on the organic growth of our portfolio, the integration of Capital Pumping onto our platform and the natural deleveraging of our balance sheet, we will continue to foster relationships across the industry and actively manage our acquisition pipeline.

To put this opportunity into perspective, using trailing 12-month results as of March 31st, Capital Pumping generated $24.2 million of adjusted EBITDA, while the companies in our pipeline have an average adjusted EBITDA of about $5 million to $10 million. As we evaluate potential deals, we will do so with the intent to maintain a strong balance sheet with the optimal amount of leverage allowing us to remain nimble and flexible in any market environment. Before turning the call over for Q&A, I'd like to quickly thank the entire organization for their dedication to the growth and success of our business over the last several quarters. We have gone through a significant change by transitioning into a public company, making a large-scale acquisition and successfully completing several capital market transactions, and throughout this process, the organization has successfully executed on our strategic plan and provided excellent service to our customers.

Lastly, I am confident that the team we have in place, along with the profitable and accretive growth we can drive through our combined business with Capital Pumping, can produce long-term value for our shareholders. With that, I'd now like to turn the time back over the operator for Q&A. Sherry?

Questions & Answers:

Operator

[Operator instructions] Our first question is from Alex Rygiel with B. Riley FBR. Please proceed.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Thank you. Good morning, gentleman.

Bruce Young -- Chief Executive Officer

Hey, good morning.

Iain Humphries -- Chief Financial Officer

Good morning, Alex.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

First, congratulations on a pretty busy quarter there. You had a lot of transactions going on all at once. As you think about sort of the upcoming quarter, the third quarter, and as you think about sort of 2019, can you give us a sense as to maybe what some of your company goals or expectations are for revenue and EBITDA or the margin profile of the company?

Iain Humphries -- Chief Financial Officer

Yeah, Alex, I mean, we haven't changed our guidance for '19, so we expect the margin profile in our business to continue. I mean as you probably know, with the -- the first half of the year is more impacted by weather, so we expect to see higher uptime in our fleet as we move into the better months, which typically will improve the margin profile of our business. So as we get into those sort of more stable weather conditions, we expect to be seeing a higher-margin profile in our business through these summer months.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

It's very helpful. And more broadly speaking, can you comment on the status of where price versus volume stands, maybe what price was in the current quarter in both the U.S. and the U.K., and what your outlook is for price over the next 12 months?

Iain Humphries -- Chief Financial Officer

Yes. So -- I mean the pricing -- on the pumping side in the U.S. and the U.K., I mean, as you know, our price increase is typically through the first of the year. So we expect to see that price rise, which is around 3% in the U.S.

or 4% or 5% in the U.K. So those price increases have been affected. So that, in combination with the higher volume of H2, we will see that come through in H2, if anything, from a price perspective, and the adjustments have already been made as expected.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

And lastly, you had a little bit of whether sort of affect your fourth-quarter results and first-quarter results, and you had a number of projects that were expected to then move forward. Did all those projects move forward in a timely basis as you anticipated?

Bruce Young -- Chief Executive Officer

Yeah, Alex, this is Bruce. Yeah, so all the projects that we have that were delayed because of weather are currently on track and, in many cases, they're accelerating their schedule to get caught up.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Very helpful. Thank you.

Bruce Young -- Chief Executive Officer

Thanks, Alex.

Iain Humphries -- Chief Financial Officer

Thanks, Alex.

Operator

Our next question is from Andrew Wittmann with Robert W. Baird. Please proceed.

Andrew Wittmann -- Robert W. Baird and Company--Analyst

Great. Thanks. I was just wondering, guys, if you could just give a little bit of context here on the specific impact of the weather to the quarter. I guess when I look at it based on margin percentages from the respective segments, it looks like it hurt Brundage-Bone a little bit more than Eco-Pan.

But you tell me and any boundaries you can give us in terms the amount of EBITDA that you think may have been pushed into another quarter would be helpful.

Iain Humphries -- Chief Financial Officer

Yeah. Good morning, Andrew. So what we've seen in Q2 from a weather perspective, we estimate we've lost about 7,000 hours on the pumping side. And so if you use that as a sort of guide to what we would see be unrecovered, that's what we've seen came through.

And as we mentioned, it was largely on our West Coast region with a slight weather impact in the West Texas region. So it was 7,000 hours of what we would have expected to have seen come through that quarter. Now as Bruce mentioned, I mean, we can see our customers, if they can catch up on their side, then we can certainly support their appetite to accelerate the growth of their business.

Andrew Wittmann -- Robert W. Baird and Company--Analyst

Can you give us some context for that 7,000 hours? What's the total number of hours that you guys typically work in a quarter -- in the second quarter? I know that the 7,000 hours, that's a hard number for us to relate to.

Iain Humphries -- Chief Financial Officer

Yeah. I mean the 7,000 hours would equate to maybe $2.5 million of revenue, about $2.2 million of revenue. And typically, when you see the weather impact, I mean, maybe 40% of that would typically go to EBITDA.

Andrew Wittmann -- Robert W. Baird and Company--Analyst

OK. That's helpful. Thank you for that. I just noticed in the reconciliation for adjusted EBIDTA that there was an -- there's an other line item of $3.2 million.

Given that magnitude, I thought maybe it was worth getting a little bit more detail on it.

Iain Humphries -- Chief Financial Officer

Yes. So we have footnoted some of the detail, but it's really a makeup of a one-time non-recurring cost, anything for board of director cost or the public company start-up costs that we don't expect to recur as another adjustment. We don't have one-time cost events skewing the comparable.

Andrew Wittmann -- Robert W. Baird and Company--Analyst

Gotcha. And then I just had a couple of questions to make sure that our model is going to be good for the quarter and for the rest of the year. And if you could just help us with maybe, first, on the share count. I guess I just found here that you've got a share count in the presentation here.

It looks like you've got for EPS calculations, $62.26 million the right number here for the fourth quarter when you have the new shares fully in for the quarter. Is that the right number to use? Or is there some other number we should look at there?

Iain Humphries -- Chief Financial Officer

Yes. So what we've used for the EV calculation is the nearly $57 million, so the $56.981 million. Now what we have in the presentation is really to show the issued and outstanding common stock as $58.2 million, which is inclusive of the performance-based MIP as well. So what we look to do from an EV perspective is to include them, the fully diluted issued and outstanding, including the convertible preferred plus the time-based MIP.

So we thought we would include this so that people can make their determination for their modeling of the share count on a dilutive basis.

Andrew Wittmann -- Robert W. Baird and Company--Analyst

OK. Thanks. And then just can you give the revenue that was added through acquisition for the quarter so we get back into like an organic growth rate?

Iain Humphries -- Chief Financial Officer

Yes. I mean what we -- so it's really just O'Brien. As you know, we move our equipment around and from branches to branches. What you will see come out in the 10-Q later is really the comparable for the prior year.

On a pro forma, it was around $7 million.

Andrew Wittmann -- Robert W. Baird and Company--Analyst

Thank you.

Operator

And our next question will be from Tim Mulrooney with William Blair & Company. Please proceed.

Tim Mulrooney -- William Blair and Company -- Analyst

Yeah, good morning.

Iain Humphries -- Chief Financial Officer

Hey, good morning, Tim.

Bruce Young -- Chief Executive Officer

Hey, Tim.

Tim Mulrooney -- William Blair and Company -- Analyst

So if pricing was about 3% in the U.S. concrete business, that implies volumes were up about 10% in the U.S. concrete in the quarter. Is that the right way to think about it? And are you seeing any change in that trend now that you're halfway through the third quarter?

Iain Humphries -- Chief Financial Officer

Yeah. I mean that is the right way to think about between pricing and volume. And as you mentioned, I mean bringing in the U.K. as well, we've seen some improved volumes in the U.K.

as well. Now as we move into the third quarter and fourth quarter, with the improved stability of weather, we would expect to see those volumes increase in quarters 3 and 4.

Tim Mulrooney -- William Blair and Company -- Analyst

OK. That's helpful. Iain, Thank you. And on the EBITDA margin, like, I know you have higher D&A expense from the business combination.

But setting that aside, if I just look at EBITDA margin, adjusted EBITDA margin contracted about 260 basis points, I think. I know you had bad weather working against you in the quarter, but were there any factors contributing to that contraction?

Iain Humphries -- Chief Financial Officer

No. I mean it really just was due to the weather impact, and we will see -- I mean as we see that back to the stability in the weather, we will see that operating leverage kick in, in Q3 and Q4, which is typical in our business. I mean once we see the stability there, then we can leverage the scale of the business to drive improved margins. So -- and that's typically what we see, unless there is some, like, one-time weather events that we don't anticipate.

I mean we do see that come through in quarters 3 and 4 typically.

Tim Mulrooney -- William Blair and Company -- Analyst

Yeah. OK. So you wouldn't expect to see the same level of year-over-year contraction, so to speak, in the back half of the year outside of weather?

Iain Humphries -- Chief Financial Officer

No.

Tim Mulrooney -- William Blair and Company -- Analyst

Yeah. OK. That's really helpful. And lastly, just on capital allocation stuff, I mean, we're assuming that you guys step back from the M&A markets for a little while to focus on the capital integration and deleveraging.

Is that a fair assumption to make?

Bruce Young -- Chief Executive Officer

Yes. So we have several in our pipeline that we're keeping warm, but our focus now is on organic growth and integrating capital. And once we feel comfortable with that, we'll look to move on future acquisitions.

Tim Mulrooney -- William Blair and Company -- Analyst

Thanks, Bruce. Can you remind me what your target leverage ratio is maybe for the end of this year and then long term?

Iain Humphries -- Chief Financial Officer

By the end of this year, I mean, we would probably see it come down to around three and a half times. And as we've spoken before, we will remain opportunistic on our M&A, but not at the cost of strengthening the balance sheet. So as Bruce says, we'll make sure that the pace of those and even the size of those will contribute to delevering the balance sheet. In the long term, we've said that our goal is to get to maybe around two and a half times.

So we'll make sure that we balance that M&A appetite with continuing to strengthen the balance sheet.

Tim Mulrooney -- William Blair and Company -- Analyst

OK. Thank you.

Operator

[Operator instructions] Our next question is from Stanley Elliott with Stifel. Please proceed.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Hey. Thanks, guys. Good morning. Thanks for taking the question.

Hey, quick question just to make sure I heard correctly. You said five to six locations on the Eco-Pan business. Is that -- are those cold starts and then we think you can still infill other locations within some of your existing branches?

Bruce Young -- Chief Executive Officer

Yes. So these are -- one of the operations that we just started is extending our footprint in California into the Bay Area and the other start-ups are within Brundage-Bone operations to leverage the Brundage-Bone footprint.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

All right. And then you mentioned the weather piece impacting primarily the West and parts of West Texas. Obviously, there's been a fair amount of weather through the Midwest and other parts of kind of the footprint in the U.S. Is it fair to say that weather was really not impacting those other parts of the portfolio?

Bruce Young -- Chief Executive Officer

Well, I would say in addition to what we saw on the West Coast and West Texas, we did have some significant weather in Colorado as well that affected it some, maybe just not as much as what we saw on the West Coast.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

And of those 7,000 hours, was that all kind of relegated to a particular month? Maybe how was the cadence within that? Then I -- probably more importantly, I'd love to see how kind of volumes have trended kind of this point after the quarter just to kind of look at a normalization path.

Iain Humphries -- Chief Financial Officer

Yeah. I mean we've seen most of it come through in February and March and affected different locations at different times, but it was really in the first two months.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

And after the quarter, volumes have been -- how would you describe them?

Iain Humphries -- Chief Financial Officer

I mean after the quarter, the volumes have been, I mean, largely in line with where we expect them to be.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

And with -- kind of with the higher volumes, we'd expect kind of higher incrementals in the balance of the year. Is that a fair way to think about it?

Iain Humphries -- Chief Financial Officer

Yes. So when we look at the, like I said, the stabilization of the weather, that's when we start to see the operating leverage come through and that's when we would see the margin performance start to grow.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Great, guys. Thank you very much. Appreciate it.

Iain Humphries -- Chief Financial Officer

Thanks, Stanley.

Operator

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Young for closing remarks.

Bruce Young -- Chief Executive Officer

Thanks, Sherry. We'd like to thank everyone for listening and joining the call today, and we look forward to speaking with you shortly for our third-quarter results. Thank you.

Operator

[Operator signoff]

Duration: 33 minutes

Call participants:

Jared Filippone -- External Director of Investor Relations

Bruce Young -- Chief Executive Officer

Iain Humphries -- Chief Financial Officer

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Andrew Wittmann -- Robert W. Baird and Company--Analyst

Tim Mulrooney -- William Blair and Company -- Analyst

Stanley Elliott -- Stifel Financial Corp. -- Analyst

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