Q2 Revenue Up 14% Compared to Q2 FY23
Q2 Adjusted EBITDA Up 45% Compared to Q2
FY23
Record Backlog of $1.79
Billion
Company Raises FY24 Outlook
DOTHAN,
Ala., May 10, 2024 /PRNewswire/
-- Construction Partners, Inc. (NASDAQ: ROAD) ("CPI" or the
"Company"), a vertically integrated civil infrastructure company
specializing in the construction and maintenance of roadways across
six southeastern states, today reported financial and operating
results for its fiscal second quarter ended March 31, 2024.
Fred J. (Jule) Smith, III, the
Company's President and Chief Executive Officer, said, "We are
pleased to report a strong second quarter in the slowest winter
quarter of our seasonal business, achieving year-over-year growth
in revenue, gross profit and gross profit margin, Adjusted EBITDA
and Adjusted EBITDA margin. In addition, we grew our project
backlog to $1.79 billion as of
March 31, 2024. Our continued revenue
and backlog growth reflects the strong ongoing demand and funding
environment for both public and private infrastructure projects
across our geographic footprint. Because of our confidence in these
sustained industry trends, strong operational performance across
our 70 markets in the Southeast, and continued infrastructure
tailwinds, we are raising our outlook for fiscal 2024."
Revenues were $371.4 million in
the second quarter of fiscal 2024, an increase of 14% compared to
$324.8 million in the same quarter
last year. The increase included $25.1
million of revenues attributable to acquisitions completed
during or subsequent to the three months ended March 31, 2023 and an increase of approximately
$21.4 million of revenues in the
Company's existing markets from contract work and sales of HMA and
aggregates to third parties. The mix of total revenue growth for
the quarter was approximately 6.6% organic revenue and
approximately 7.7% from these recent acquisitions.
Gross profit was $38.8 million in
the second quarter of fiscal 2024, an increase of 48% compared to
$26.3 million in the same quarter
last year. Gross profit as a percentage of total revenue was
10.4% and 8.1% for the quarters ended March
31, 2024 and 2023, respectively, an increase of 220 basis
points year over year.
General and administrative expenses were $36.7 million in the second quarter of fiscal
2024, compared to $32.0 million in
the same quarter last year, and as a percentage of total revenue,
were 9.9% in each quarter.
Net loss was $1.1 million in the
second quarter of fiscal 2024, compared to net loss of $5.5 million in the same quarter last year.
Adjusted EBITDA(1) in the second quarter of fiscal
2024 was $29.5 million, an increase
of 45% compared to $20.4 million in
the same quarter last year.
Project backlog was $1.79 billion
at March 31, 2024, compared to
$1.52 billion at March 31, 2023 and $1.62
billion at December 31,
2023.
Smith added, "Across our six southeastern states, which
represent many of the fastest-growing markets in the country, the
project bidding and pricing environment remains positive. We remain
focused on organic growth and gaining market share, which, in
conjunction with our acquisition activity, grow our top line and
expand our margins. Our team's hard work, operational efficiency,
dedication to detail and focus on safety continue to support our
strategy, and we progress toward our ROAD-Map 2027 goals and create
value for our shareholders through improving returns on
capital."
Fiscal Year 2024 Outlook
The Company is raising its outlook ranges for fiscal year 2024
with regard to revenue, net income, Adjusted EBITDA and Adjusted
EBITDA Margin, as follows:
- Revenue in the range of $1.81
billion to $1.85 billion
- Net income in the range of $71
million to $75 million
- Adjusted EBITDA(1) in the range of $211 million to $225
million
- Adjusted EBITDA Margin(1) in the range of 11.7% to
12.2%
Ned N. Fleming, III, the
Company's Executive Chairman, stated, "Construction Partners
continues to benefit from strong public and private project demand.
This demand is supported by elevated funding for public projects at
the federal, state and local levels, in addition to a steady
commercial project environment led by the continued migration to
the southeastern United States.
The overall backdrop of our strategy also remains constant in
support of the nation's need to invest in deferred infrastructure
maintenance and additional capacity. CPI is well positioned for
growth as we steadily execute on our strategy and perform this
work. The Board and I are pleased with the strength of the
organization, its leadership and the commitment of our team to
continue to grow the Company and enhance value for all of our
stakeholders."
Conference Call
The Company will conduct a conference call today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss financial and
operating results for the fiscal quarter ended March 31, 2024. To access the call live by phone,
dial (412) 902-0003 and ask for the Construction Partners call at
least 10 minutes prior to the start time. A telephonic replay
will be available through May 17,
2024 by calling (201) 612-7415 and using passcode ID:
13743799#. A webcast of the call will also be available live and
for later replay on the Company's Investor Relations website at
www.constructionpartners.net.
About Construction Partners, Inc.
Construction Partners, Inc. is a vertically integrated civil
infrastructure company operating across six southeastern states.
Supported by its hot-mix asphalt plants, aggregate facilities and
liquid asphalt terminals, the company focuses on the construction,
repair and maintenance of surface infrastructure. Publicly funded
projects make up the majority of its business and include local and
state roadways, interstate highways, airport runways and bridges.
The company also performs private sector projects that include
paving and sitework for office and industrial parks, shopping
centers, local businesses and residential developments. To learn
more, visit www.constructionpartners.net.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained herein that are not statements of
historical or current fact constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of
1934. These statements may be identified by the use of words such
as "may," "will," "expect," "should," "anticipate," "intend,"
"project," "outlook," "believe" and "plan." The forward-looking
statements contained in this press release include, without
limitation, statements related to financial projections, future
events, business strategy, future performance, future operations,
backlog, financial position, estimated revenues and losses,
projected costs, prospects, plans and objectives of management.
These and other forward-looking statements are based on
management's current views and assumptions and involve risks and
uncertainties that could significantly affect expected results.
Important factors could cause actual results to differ materially
from those expressed in the forward-looking statements, including,
among others: our ability to successfully manage and integrate
acquisitions; failure to realize the expected economic benefits of
acquisitions, including future levels of revenues being lower than
expected and costs being higher than expected; failure or inability
to implement growth strategies in a timely manner; declines in
public infrastructure construction and reductions in government
funding, including the funding by transportation authorities and
other state and local agencies; risks related to our operating
strategy; competition for projects in our local markets; risks
associated with our capital-intensive business; government
requirements and initiatives, including those related to funding
for public or infrastructure construction, land usage and
environmental, health and safety matters; unfavorable economic
conditions and restrictive financing markets; our ability to obtain
sufficient bonding capacity to undertake certain projects; our
ability to accurately estimate the overall risks, requirements or
costs when we bid on or negotiate contracts that are ultimately
awarded to us; the cancellation of a significant number of
contracts or our disqualification from bidding for new contracts;
risks related to adverse weather conditions; our substantial
indebtedness and the restrictions imposed on us by the terms
thereof; our ability to maintain favorable relationships with third
parties that supply us with equipment and essential supplies; our
ability to retain key personnel and maintain satisfactory labor
relations; property damage, results of litigation and other claims
and insurance coverage issues; risks related to our information
technology systems and infrastructure; our ability to maintain
effective internal control over financial reporting; and the risks,
uncertainties and factors set forth under "Risk Factors" in the
Company's most recent Annual Report on Form 10-K and its
subsequently filed Quarterly Reports on Form 10-Q.
Forward-looking statements speak only as of the date they are
made. The Company assumes no obligation to update
forward-looking statements to reflect actual results, subsequent
events, or circumstances or other changes affecting such statements
except to the extent required by applicable law.
Contacts:
Rick Black / Ken Dennard
Dennard Lascar Investor
Relations
ROAD@DennardLascar.com
(713) 529-6600
(1) Adjusted EBITDA and Adjusted EBITDA Margin
are financial measures not presented in accordance with generally
accepted accounting principles ("GAAP"). Please see "Reconciliation
of Non-GAAP Financial Measures" at the end of this press
release.
- Financial Statements Follow -
|
Construction
Partners, Inc.
Consolidated
Statements of Comprehensive Income (Loss)
(unaudited, in
thousands, except share and per share data)
|
|
|
|
For the Three
Months
Ended March 31,
|
|
For the Six
Months
Ended March 31,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenues
|
|
$
371,427
|
|
$
324,850
|
|
$
767,932
|
|
$
666,629
|
|
Cost of
revenues
|
|
332,626
|
|
298,570
|
|
677,251
|
|
609,853
|
|
Gross
profit
|
|
38,801
|
|
26,280
|
|
90,681
|
|
56,776
|
|
General and
administrative expenses
|
|
(36,752)
|
|
(31,989)
|
|
(72,733)
|
|
(61,714)
|
|
Gain on sale of
property, plant and equipment, net
|
|
1,031
|
|
3,158
|
|
1,867
|
|
3,326
|
|
Gain on facility
exchange
|
|
—
|
|
—
|
|
—
|
|
5,389
|
|
Operating income
(loss)
|
|
3,080
|
|
(2,551)
|
|
19,815
|
|
3,777
|
|
Interest expense,
net
|
|
(4,568)
|
|
(4,802)
|
|
(8,314)
|
|
(8,762)
|
|
Other income
|
|
43
|
|
398
|
|
15
|
|
432
|
|
Income (loss)
before provision for income taxes
|
|
(1,445)
|
|
(6,955)
|
|
11,516
|
|
(4,553)
|
|
Provision for income
taxes
|
|
(321)
|
|
(1,474)
|
|
2,797
|
|
(964)
|
|
Net income
(loss)
|
|
(1,124)
|
|
(5,481)
|
|
8,719
|
|
(3,589)
|
|
Other comprehensive
income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
on interest rate swap contract, net
|
|
2,478
|
|
(3,460)
|
|
(4,627)
|
|
(4,752)
|
|
Unrealized gain (loss)
on restricted investments, net
|
|
(87)
|
|
81
|
|
313
|
|
117
|
|
Other comprehensive
income (loss)
|
|
2,392
|
|
(3,379)
|
|
(4,313)
|
|
(4,635)
|
|
Comprehensive
income (loss)
|
|
$
1,268
|
|
$
(8,860)
|
|
$
4,406
|
|
$ (8,224)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.02)
|
|
$
(0.11)
|
|
$
0.17
|
|
$
(0.07)
|
|
Diluted
|
|
$
(0.02)
|
|
$
(0.11)
|
|
$
0.17
|
|
$
(0.07)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
51,938,216
|
|
51,827,365
|
|
51,915,069
|
|
51,826,143
|
|
Diluted
|
|
51,938,216
|
|
51,827,365
|
|
52,523,100
|
|
51,826,143
|
|
|
|
|
|
|
|
|
|
|
Construction
Partners, Inc.
Consolidated Balance
Sheets
(in thousands,
except share and per share data)
|
|
|
March
31,
|
|
September
30,
|
|
2024
|
|
2023
|
|
ASSETS
|
(unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
47,957
|
|
$
48,243
|
|
Restricted
cash
|
2,479
|
|
837
|
|
Contracts receivable
including retainage, net
|
275,570
|
|
303,704
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
36,120
|
|
27,296
|
|
Inventories
|
102,750
|
|
84,038
|
|
Prepaid expenses and
other current assets
|
10,586
|
|
9,306
|
|
Total current
assets
|
475,462
|
|
473,424
|
|
Property, plant and
equipment, net
|
565,351
|
|
505,095
|
|
Operating lease
right-of-use assets
|
26,721
|
|
14,485
|
|
Goodwill
|
181,467
|
|
159,270
|
|
Intangible assets,
net
|
21,451
|
|
19,520
|
|
Investment in joint
venture
|
84
|
|
87
|
|
Restricted
investments
|
15,452
|
|
15,079
|
|
Other assets
|
27,412
|
|
32,705
|
|
Total assets
|
$
1,313,400
|
|
$
1,219,665
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
141,522
|
|
$
151,406
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
103,453
|
|
78,905
|
|
Current
portion of operating lease liabilities
|
5,564
|
|
2,338
|
|
Current maturities of
long-term debt
|
15,000
|
|
15,000
|
|
Accrued expenses and
other current liabilities
|
24,608
|
|
31,534
|
|
Total current
liabilities
|
290,147
|
|
279,183
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, net of
current maturities and deferred debt issuance costs
|
423,388
|
|
360,740
|
|
Operating
lease liabilities, net of current portion
|
21,717
|
|
12,649
|
|
Deferred income taxes,
net
|
35,438
|
|
37,121
|
|
Other long-term
liabilities
|
17,727
|
|
13,398
|
|
Total long-term
liabilities
|
498,270
|
|
423,908
|
|
Total
liabilities
|
788,417
|
|
703,091
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, par
value $0.001; 10,000,000 shares authorized and no shares issued
and
outstanding at March
31, 2024 and September 30, 2023
|
—
|
|
—
|
|
Class A common stock,
par value $0.001; 400,000,000 shares authorized, 43,896,017
shares
issued and 43,828,855
shares outstanding at March 31, 2024 and 43,760,546 shares
issued
and 43,727,680 shares
outstanding at September 30, 2023
|
44
|
|
44
|
|
Class B common stock,
par value $0.001; 100,000,000 shares authorized, 11,921,463
shares
issued and 8,998,511
shares outstanding at March 31, 2024 and September 30,
2023
|
12
|
|
12
|
|
Additional paid-in
capital
|
272,669
|
|
267,330
|
|
Treasury stock, Class A
common stock, par value $0.001, at cost, 67,162 shares at March
31,
2024 and 32,866 shares
at September 30, 2023
|
(1,514)
|
|
(178)
|
|
Treasury stock, Class B
common stock, par value $0.001, at cost, 2,922,952 shares at March
31,
2024 and September 30,
2023
|
(15,603)
|
|
(15,603)
|
|
Accumulated other
comprehensive income, net
|
14,381
|
|
18,694
|
|
Retained
earnings
|
254,994
|
|
246,275
|
|
Total stockholders'
equity
|
524,983
|
|
516,574
|
|
Total liabilities and
stockholders' equity
|
$
1,313,400
|
|
$
1,219,665
|
|
|
|
|
|
Construction
Partners, Inc.
Consolidated
Statements of Cash Flows
(unaudited, in
thousands)
|
|
|
For the Six Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
(loss)
|
$
8,719
|
|
$
(3,589)
|
|
Adjustments to
reconcile net loss to net cash, cash equivalents and restricted
cash provided by operating activities:
|
|
|
|
|
Depreciation,
depletion, accretion and amortization
|
43,961
|
|
38,233
|
|
Amortization of
deferred debt issuance costs
|
148
|
|
151
|
|
Unrealized loss
on derivative instruments
|
194
|
|
2,286
|
|
Provision for
bad debt
|
335
|
|
70
|
|
Gain on sale of
property, plant and equipment
|
(1,867)
|
|
(3,326)
|
|
Gain on
facility exchange
|
—
|
|
(5,389)
|
|
Realized loss
on sales, calls and maturities of restricted investments
|
49
|
|
4
|
|
Share-based
compensation expense
|
6,221
|
|
5,172
|
|
Loss from
investment in joint venture
|
3
|
|
—
|
|
Deferred income
tax benefit
|
(306)
|
|
(224)
|
|
Other non-cash
adjustments
|
(224)
|
|
(69)
|
|
Changes in operating
assets and liabilities, net of business acquisitions:
|
|
|
|
|
Contracts
receivable including retainage, net
|
43,443
|
|
34,092
|
|
Costs and
estimated earnings in excess of billings on uncompleted
contracts
|
(7,799)
|
|
743
|
|
Inventories
|
(15,968)
|
|
(10,152)
|
|
Prepaid
expenses and other current assets
|
2,165
|
|
(3,246)
|
|
Other
assets
|
(585)
|
|
(206)
|
|
Accounts
payable
|
(12,536)
|
|
(12,764)
|
|
Billings in
excess of costs and estimated earnings on uncompleted
contracts
|
22,412
|
|
7,415
|
|
Accrued
expenses and other current liabilities
|
(11,976)
|
|
(6,289)
|
|
Other long-term
liabilities
|
2,161
|
|
2,784
|
|
Net cash provided by
operating activities, net of business acquisitions
|
78,550
|
|
45,696
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of property,
plant and equipment
|
(55,518)
|
|
(60,399)
|
|
Proceeds from sale of
property, plant and equipment
|
4,962
|
|
8,301
|
|
Proceeds from facility
exchange
|
—
|
|
36,987
|
|
Proceeds from sales,
calls and maturities of restricted investments
|
1,918
|
|
866
|
|
Business acquisitions,
net of cash acquired
|
(87,850)
|
|
(77,842)
|
|
Purchase of restricted
investments
|
(1,870)
|
|
(5,148)
|
|
Net cash used in
investing activities
|
(138,358)
|
|
(97,235)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
revolving credit facility
|
90,000
|
|
38,000
|
|
Proceeds from issuance
of long-term debt, net of debt issuance costs
|
—
|
|
15,000
|
|
Repayments of
long-term debt
|
(27,500)
|
|
(6,250)
|
|
Purchase of treasury
stock
|
(1,336)
|
|
(139)
|
|
Net cash provided by
financing activities
|
61,164
|
|
46,611
|
|
Net change in cash,
cash equivalents and restricted cash
|
1,356
|
|
(4,928)
|
|
Cash, cash
equivalents and restricted cash:
|
|
|
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
49,080
|
|
35,559
|
|
Cash, cash equivalents
and restricted cash, end of period
|
$
50,436
|
|
$
30,631
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest
|
$
9,569
|
|
$
9,047
|
|
Cash paid for income
taxes
|
$
3,155
|
|
$
626
|
|
Cash paid for
operating lease liabilities
|
$
1,435
|
|
$
1,204
|
|
Non-cash
items:
|
|
|
|
|
Operating lease
right-of-use assets obtained in exchange for operating lease
liabilities
|
$
9,999
|
|
$
4,062
|
|
Property, plant and
equipment financed with accounts payable
|
$
2,554
|
|
$
3,448
|
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA represents net income before, as applicable from
time to time, (i) interest expense, net, (ii) provision (benefit)
for income taxes, (iii) depreciation, depletion, accretion and
amortization, (iv) equity-based compensation expense, and (v) loss
on the extinguishment of debt. Adjusted EBITDA Margin
represents Adjusted EBITDA as a percentage of revenues for each
period. These metrics are supplemental measures of the Company's
operating performance that are neither required by, nor presented
in accordance with, GAAP. These measures have limitations as
analytical tools and should not be considered in isolation or as an
alternative to net income or any other performance measure derived
in accordance with GAAP as an indicator of the Company's operating
performance. The Company presents Adjusted EBITDA and Adjusted
EBITDA Margin because management uses these measures as key
performance indicators, and the Company believes that securities
analysts, investors and others use these measures to evaluate
companies in the Company's industry. The Company's calculation of
Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to
similarly named measures reported by other companies. Potential
differences may include differences in capital structures, tax
positions and the age and book depreciation of intangible and
tangible assets.
The following table presents a reconciliation of net income, the
most directly comparable measure calculated in accordance with
GAAP, to Adjusted EBITDA and the calculation of Adjusted EBITDA
Margin for the periods presented:
|
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Fiscal Quarters
Ended March 31, 2024 and 2023
(unaudited, in
thousands)
|
|
|
For the Three
Months
Ended March 31,
|
|
2024
|
|
2023 (1)
|
|
Net income
(loss)
|
$
(1,124)
|
|
$
(5,481)
|
|
Interest expense,
net
|
4,568
|
|
4,802
|
|
Provision for income
taxes
|
(321)
|
|
(1,474)
|
|
Depreciation,
depletion, accretion and amortization
|
22,840
|
|
19,858
|
|
Share-based
compensation expense
|
3,553
|
|
2,692
|
|
Adjusted
EBITDA
|
$
29,516
|
|
$
20,397
|
|
Revenues
|
$ 371,427
|
|
$ 324,850
|
|
Adjusted EBITDA
Margin
|
7.9 %
|
|
6.3 %
|
|
|
|
(1)
|
The Company has
historically included within the definition of Adjusted EBITDA an
adjustment for management fees and expenses related to the
Company's management services agreement with an affiliate of SunTx
Capital Partners, a member of the Company's control group.
Effective October 1, 2023, the term of the management services
agreement was extended to October 1, 2028. As a result of the term
extension, the Company no longer views the management fees and
expenses paid under the management services agreement as a
non-recurring expense. Accordingly, periods commencing subsequent
to September 30, 2023 do not include an adjustment for management
fees and expenses, and the Company has recast comparative Adjusted
EBITDA and Adjusted EBITDA Margin for the three months ended March
31, 2023 to conform to the current definition.
|
|
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Fiscal Year 2024
Updated Outlook
(unaudited, in
thousands, except percentages)
|
|
|
For the Fiscal Year
Ending
September 30, 2024
|
|
Low
|
|
High
|
|
Net income
|
$
71,000
|
|
$
75,000
|
|
Interest expense,
net
|
19,000
|
|
20,000
|
|
Provision for income
taxes
|
23,793
|
|
25,134
|
|
Depreciation,
depletion, accretion and amortization
|
84,507
|
|
91,766
|
|
Share-based
compensation expense
|
12,700
|
|
13,100
|
|
Adjusted
EBITDA
|
$ 211,000
|
|
$ 225,000
|
|
Revenues
|
$
1,810,000
|
|
$
1,850,000
|
|
Adjusted EBITDA
Margin
|
11.7 %
|
|
12.2 %
|
View original
content:https://www.prnewswire.com/news-releases/construction-partners-inc-announces-fiscal-2024-second-quarter-results-302141784.html
SOURCE Construction Partners, Inc.