Record Quarterly Revenue Up 11%, Net Income Up
78%, & Adjusted EBITDA Up 50% Compared to Q3
FY2022
Company Updates FY2023 Outlook - Narrows
Revenue Range and Raises Net Income & Adjusted EBITDA
Ranges
Record Backlog of $1.59
Billion
DOTHAN,
Ala., Aug. 2, 2023 /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 the fiscal quarter ended June 30,
2023.
Fred J. (Jule) Smith, III, the
Company's President and Chief Executive Officer, said, "We are
pleased with our third quarter results, representing the single
highest revenue quarter in the Company's history, despite a
wetter-than-normal April and June. In addition, project backlog
increased to $1.59 billion, a new
record for CPI, and is reflective of continued strong demand
momentum. Our team achieved margins 350 basis points higher than a
year ago that led to significantly stronger net income, cash flow,
and Adjusted EBITDA. Overall, our business is now experiencing
operational performance typical for CPI, as we pursue healthy
sources of recurring revenue and operate in a more stable cost
environment. All of these factors continue to support our bullish
outlook for near- and long-term profitable growth."
Revenues were $421.9 million in
the third quarter of fiscal 2023, an increase of 11% compared to
$380.3 million in the same quarter
last year. Excluding the impact of approximately $10 million of additional revenue from higher
state liquid asphalt price index reimbursements in the third
quarter last year resulting from a large increase in asphalt prices
during that quarter(1), revenue growth was 14% for the
third quarter of fiscal 2023.
Gross profit was $64.1 million in
the third quarter of fiscal 2023, an increase of 45% compared to
$44.3 million in the same quarter
last year.
General and administrative expenses were $32.2 million in the third quarter of fiscal
2023, compared to $26.6 million in
the same quarter last year.
Net income was $21.7 million in
the third quarter of fiscal 2023, an increase of 78% compared to
$12.2 million in the same quarter
last year.
Net cash provided by operating activities in the third quarter
was $48.9 million, compared to
$13.0 million of net cash used in
operating activities in the same quarter last year.
Adjusted EBITDA(1) in the third quarter of fiscal
2023 was $56.4 million, an increase
of 50% compared to $37.6 million in
the same quarter last year. Adjusted EBITDA margin(1)
for the third quarter of fiscal 2023 was 13.4%, compared to 9.9% in
the same quarter last year.
Project backlog was $1.59 billion
at June 30, 2023, compared to
$1.33 billion at June 30, 2022 and $1.52
billion at March 31, 2023.
Smith continued, "The Infrastructure Investment and Jobs Act
(IIJA) is fully implemented and is driving investment in all six of
our states' roads, bridges, and airports, while the continued
migration to the Southeast supports a vibrant commercial economy in
our markets. CPI is well-positioned to meet this demand with our
more than 4,000 talented and dedicated employees. Based on our
increased profitability in the quarter and accounting for a
wetter-than-normal April and June, we are narrowing our revenue
range and raising our net income and Adjusted EBITDA ranges for our
FY2023 Outlook."
Fiscal Year 2023 Outlook
The Company's outlook for fiscal year 2023 with regard to
revenue, net income and Adjusted EBITDA is as follows:
- Revenue in the range of $1.535
billion to $1.555 billion
- Net income in the range of $41
million to $46 million
- Adjusted EBITDA(1) in the range of $161 million to $169
million
Ned N. Fleming, III, the
Company's Executive Chairman, stated, "The CPI business model is
demonstrating its efficiency as we return to historical norms in
terms of passing through costs and converting backlog reflective of
the changing macro-environment compared to our prior fiscal year.
We founded the company on a strategy of pursuing recurring
infrastructure repair and maintenance projects, generating
sustainable and profitable growth, and that strategy is as vibrant
now as at any point in our history. Generating record quarterly
revenue and another record backlog while achieving an Adjusted
EBITDA margin of 13.4% in the quarter compared to 9.9% in the same
quarter last year demonstrates the strength of the CPI business
model. Our team continues to do an outstanding job managing
the business and executing on our proven strategy."
Conference Call
The Company will conduct a conference call on August 2, 2023 at 9:00
a.m. Central Time to discuss financial and operating results
for the quarter ended June 30, 2023.
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
August 9, 2023 by calling (201)
612-7415 and using passcode ID: 13735456#. 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 terminal, 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, Adjusted EBITDA margin and
revenues adjusted for liquid asphalt index reimbursements 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 Income
(unaudited, in
thousands, except share and per share data)
|
|
|
|
For the Three
Months
Ended June 30,
|
|
For the Nine
Months
Ended June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
$
421,893
|
|
$
380,272
|
|
$
1,088,522
|
|
$
908,621
|
Cost of
revenues
|
|
357,821
|
|
336,022
|
|
967,674
|
|
818,910
|
Gross
profit
|
|
64,072
|
|
44,250
|
|
120,848
|
|
89,711
|
General and
administrative expenses
|
|
(32,231)
|
|
(26,584)
|
|
(93,945)
|
|
(76,530)
|
Gain on sale of
property, plant and equipment
|
|
1,499
|
|
333
|
|
4,825
|
|
1,788
|
Gain on facility
exchange
|
|
—
|
|
—
|
|
5,389
|
|
—
|
Operating
income
|
|
33,340
|
|
17,999
|
|
37,117
|
|
14,969
|
Interest expense,
net
|
|
(5,039)
|
|
(2,054)
|
|
(13,801)
|
|
(4,177)
|
Other income
|
|
493
|
|
178
|
|
925
|
|
337
|
Income before
provision for income taxes
|
|
28,794
|
|
16,123
|
|
24,241
|
|
11,129
|
Provision for income
taxes
|
|
7,117
|
|
3,955
|
|
6,153
|
|
2,868
|
Net
income
|
|
21,677
|
|
12,168
|
|
18,088
|
|
8,261
|
Other comprehensive
income (loss), net of tax
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
on interest rate swap contract, net
|
|
4,127
|
|
1,729
|
|
(625)
|
|
8,754
|
Unrealized loss on
restricted investments, net
|
|
(129)
|
|
(154)
|
|
(12)
|
|
(276)
|
Other comprehensive
income (loss)
|
|
3,998
|
|
1,575
|
|
(637)
|
|
8,478
|
Comprehensive
income
|
|
$ 25,675
|
|
$ 13,743
|
|
$ 17,451
|
|
$ 16,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.42
|
|
$
0.23
|
|
$
0.35
|
|
$
0.16
|
Diluted
|
|
$
0.41
|
|
$
0.23
|
|
$
0.35
|
|
$
0.16
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
51,827,448
|
|
51,793,245
|
|
51,826,578
|
|
51,760,384
|
Diluted
|
|
52,293,846
|
|
51,888,511
|
|
52,114,438
|
|
51,928,427
|
|
|
|
|
|
|
|
|
|
Construction
Partners, Inc.
Consolidated Balance
Sheets
(in thousands,
except share and per share data)
|
|
|
June
30,
|
|
September
30,
|
|
2023
|
|
2022
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
54,878
|
|
$
35,531
|
Restricted
cash
|
71
|
|
28
|
Contracts receivable
including retainage, net
|
254,972
|
|
265,207
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
33,449
|
|
29,271
|
Inventories
|
88,233
|
|
74,195
|
Prepaid expenses and
other current assets
|
9,694
|
|
12,957
|
Total current
assets
|
441,297
|
|
417,189
|
Property, plant and
equipment, net
|
502,732
|
|
481,412
|
Operating lease
right-of-use assets
|
17,484
|
|
13,985
|
Goodwill
|
157,289
|
|
129,465
|
Intangible assets,
net
|
21,169
|
|
15,976
|
Investment in joint
venture
|
87
|
|
87
|
Restricted
investments
|
13,353
|
|
6,866
|
Other assets
|
30,428
|
|
30,541
|
Total assets
|
$
1,183,839
|
|
$
1,095,521
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
126,745
|
|
$
130,468
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
68,748
|
|
52,477
|
Current
portion of operating lease liabilities
|
2,385
|
|
2,209
|
Current maturities of
long-term debt
|
14,000
|
|
12,500
|
Accrued expenses and
other current liabilities
|
28,935
|
|
28,484
|
Total current
liabilities
|
240,813
|
|
226,138
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net of
current maturities and deferred debt issuance costs
|
405,416
|
|
363,066
|
Operating
lease liabilities, net of current portion
|
15,607
|
|
12,059
|
Deferred income taxes,
net
|
25,700
|
|
26,713
|
Other long-term
liabilities
|
15,203
|
|
11,666
|
Total long-term
liabilities
|
461,926
|
|
413,504
|
Total
liabilities
|
702,739
|
|
639,642
|
Stockholders'
equity:
|
|
|
|
Preferred stock, par
value $0.001; 10,000,000 shares authorized and no shares issued
and
outstanding at June 30, 2023 and September 30, 2022
|
—
|
|
—
|
Class A common stock,
par value $0.001; 400,000,000 shares authorized, 43,760,546
shares
issued and 43,728,310 shares outstanding at June 30, 2023 and
41,195,730 shares issued
and 41,193,024 shares outstanding at September 30,
2022
|
44
|
|
41
|
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 June 30, 2023 and
14,275,867 shares issued
and 11,352,915 shares outstanding at September 30, 2022
|
12
|
|
15
|
Additional paid-in
capital
|
264,480
|
|
256,571
|
Treasury stock, at
cost, 32,236 shares of Class A common stock at June 30, 2023 and
2,706
shares at September 30, 2022, par value $0.001
|
(178)
|
|
(39)
|
Treasury stock, at
cost, 2,922,952 shares of Class B common stock at June 30, 2023
and
September 30, 2022, par value $0.001
|
(15,603)
|
|
(15,603)
|
Accumulated other
comprehensive income, net
|
16,983
|
|
17,620
|
Retained
earnings
|
215,362
|
|
197,274
|
Total stockholders'
equity
|
481,100
|
|
455,879
|
Total liabilities and
stockholders' equity
|
$
1,183,839
|
|
$
1,095,521
|
|
|
|
|
Construction
Partners, Inc.
Consolidated
Statements of Cash Flows
(unaudited, in
thousands)
|
|
|
For the Nine Months
Ended
June 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
18,088
|
|
$
8,261
|
Adjustments to
reconcile net income to net cash, cash equivalents and restricted
cash
provided by (used in) operating activities:
|
|
|
|
Depreciation,
depletion, accretion and amortization of long-lived
assets
|
57,769
|
|
50,291
|
Amortization of
deferred debt issuance costs and debt discount
|
225
|
|
198
|
Unrealized loss (gain)
on derivative instruments
|
1,408
|
|
(2,589)
|
Provision for bad
debt
|
450
|
|
(1,077)
|
Gain on sale of
property, plant and equipment
|
(4,825)
|
|
(1,788)
|
Gain on facility
exchange
|
(5,389)
|
|
—
|
Realized losses on
restricted investments
|
10
|
|
—
|
Equity-based
compensation expense
|
7,909
|
|
5,094
|
Deferred income tax
benefit
|
(145)
|
|
(193)
|
Other non-cash
adjustments
|
(117)
|
|
97
|
Changes in operating
assets and liabilities, net of acquisition:
|
|
|
|
Contracts receivable
including retainage
|
22,777
|
|
(71,865)
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
(3,580)
|
|
(9,487)
|
Inventories
|
(11,999)
|
|
(21,726)
|
Prepaid expenses and
other current assets
|
3,214
|
|
(2,327)
|
Other
assets
|
(283)
|
|
(2,893)
|
Accounts
payable
|
(7,441)
|
|
30,025
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
14,159
|
|
13,379
|
Accrued expenses and
other current liabilities
|
(1,741)
|
|
(6,946)
|
Other long-term
liabilities
|
4,053
|
|
3,825
|
Net cash provided by
(used in) operating activities, net of acquisitions
|
94,542
|
|
(9,721)
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property,
plant and equipment
|
(79,046)
|
|
(52,236)
|
Proceeds from sale of
property, plant and equipment
|
12,640
|
|
4,184
|
Proceeds from facility
exchange
|
36,987
|
|
—
|
Proceeds from
restricted investments
|
1,403
|
|
—
|
Business acquisitions,
net of cash acquired
|
(82,740)
|
|
(102,893)
|
Purchase of restricted
investments
|
(7,882)
|
|
(7,662)
|
Net cash used in
investing activities
|
(118,638)
|
|
(158,607)
|
Cash flows from
financing activities:
|
|
|
|
Net proceeds from
revolving credit facility
|
38,000
|
|
142,300
|
Proceeds from issuance
of long-term debt, net of debt issuance costs and
discount
|
15,000
|
|
—
|
Repayments of
long-term debt
|
(9,375)
|
|
(5,000)
|
Purchase of treasury
stock
|
(139)
|
|
(39)
|
Net cash provided by
financing activities
|
43,486
|
|
137,261
|
Net change in cash,
cash equivalents and restricted cash
|
19,390
|
|
(31,067)
|
Cash, cash
equivalents and restricted cash:
|
|
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
35,559
|
|
57,251
|
Cash, cash equivalents
and restricted cash, end of period
|
$
54,949
|
|
$
26,184
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Cash paid for
interest
|
$
14,319
|
|
$
5,727
|
Cash paid for income
taxes
|
$
1,021
|
|
$
1,372
|
Operating lease
right-of-use assets obtained in exchange for operating lease
liabilities
|
$
5,417
|
|
$
6,209
|
Cash paid for
operating lease liabilities
|
$
1,802
|
|
$
1,783
|
Non-cash
items:
|
|
|
|
Property, plant and
equipment included with accounts payable at period end
|
$
2,078
|
|
$
1,236
|
Amounts payable to
seller in business combination
|
$
—
|
|
$
600
|
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, (v) loss on
the extinguishment of debt and (vi) certain management fees and
expenses. Adjusted EBITDA Margin represents Adjusted EBITDA as a
percentage of revenues for each period. Revenues adjusted for
liquid asphalt index reimbursements represent revenues net of
payments received as reimbursement for increases in the index price
of liquid asphalt during the period. These metrics are supplemental
measures of our 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 our operating performance. We present these metrics because
management uses these measures as key performance indicators, and
we believe that securities analysts, investors and others use these
measures to evaluate companies in our industry. Our calculation of
these metrics 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 tables present 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 June 30, 2023 and 2022
(unaudited, in
thousands, except percentages)
|
|
|
For the Three Months
Ended
June 30,
|
|
2023
|
|
2022
|
Net income
|
$
21,677
|
|
$
12,168
|
Interest expense,
net
|
5,039
|
|
2,054
|
Provision for income
taxes
|
7,117
|
|
3,955
|
Depreciation,
depletion, accretion and amortization
|
19,536
|
|
17,244
|
Equity-based
compensation expense
|
2,737
|
|
1,848
|
Management fees and
expenses (1)
|
383
|
|
370
|
Adjusted
EBITDA
|
$
56,489
|
|
$
37,639
|
Revenues
|
$
421,893
|
|
$
380,272
|
Adjusted EBITDA
Margin
|
13.4 %
|
|
9.9 %
|
|
|
(1)
|
Reflects fees and
reimbursement of certain out-of-pocket expenses under a management
services agreement with an affiliate of SunTx Capital Partners, the
Company's controlling stockholder.
|
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Fiscal Year 2023
Updated Outlook
(unaudited, in
thousands)
|
|
|
For the Fiscal Year
Ending
September 30, 2023
|
|
Low
|
|
High
|
Net income
|
$
41,000
|
|
$
46,000
|
Interest expense,
net
|
18,000
|
|
18,400
|
Provision for income
taxes
|
13,800
|
|
15,500
|
Depreciation,
depletion, accretion and amortization
|
76,700
|
|
77,000
|
Equity-based
compensation expense
|
9,800
|
|
10,400
|
Management fees and
expenses (1)
|
1,700
|
|
1,700
|
Adjusted
EBITDA
|
$
161,000
|
|
$
169,000
|
|
|
|
|
|
|
(1)
|
Reflects fees and
reimbursement of certain out-of-pocket expenses under a management
services agreement with an affiliate of SunTx Capital Partners, the
Company's controlling stockholder.
|
The following table presents a reconciliation of revenues, the
most directly comparable measure calculated in accordance with
GAAP, to revenues adjusted for liquid asphalt index reimbursements
for the periods presented:
Construction
Partners, Inc.
Revenues Adjusted
for Liquid Asphalt Index Reimbursements
Fiscal Quarters
Ended June 30, 2023 and 2022
(unaudited, in
thousands)
|
|
|
For the Three Months
Ended
June 30,
|
|
2023
|
|
2022
|
Revenues
|
$
421,893
|
|
$
380,272
|
Impact of liquid
asphalt index reimbursements
|
(1,599)
|
|
(10,013)
|
Revenues adjusted for
liquid asphalt index reimbursements
|
$
420,294
|
|
$
370,259
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/construction-partners-inc-announces-fiscal-2023-third-quarter-results-301891018.html
SOURCE Construction Partners, Inc.