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) |
|
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|
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|
|
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) |
|
|
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|
|
|
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|
|
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 |
|
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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 |
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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 % |
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SOURCE Construction Partners, Inc.
