FY23 Revenue Up 20%, Net Income Up 129%,
Adjusted EBITDA Up 57%, Compared to FY22
Q4 Revenue up 21%, Net Income Up 136%,
Adjusted EBITDA Up 76% Compared to Q4 FY22
Company Reports Record Backlog of $1.60 Billion
DOTHAN,
Ala., Nov. 29, 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 and fiscal year ended September 30, 2023.
Fred J. (Jule) Smith, III, the
Company's President and Chief Executive Officer, said, "We are
pleased to report a record fourth quarter to complete a strong
fiscal year 2023, with significant period-over-period revenue and
profit growth for both the fourth quarter and the fiscal
year. The growth we are experiencing on both the top and
bottom lines continues to be supported by a healthy bidding
environment. The IIJA and state funding programs are
continuing to provide a generational investment in public
infrastructure, and a sustained strong commercial market throughout
our six southeastern states also contributed to a record high
project backlog of $1.6 billion at
fiscal year-end. During our fiscal year, the operating environment
began to normalize, resulting in a more stable cost environment
that we believe will continue into fiscal 2024. Across our
geographic footprint, we remain focused on executing on the
strategic priorities outlined in our ROAD-Map 2027 and building
shareholder value. Our team's hard work, dedication to detail
and focus on safety are critical to our success and to positioning
our organization for continued growth in fiscal 2024 and
beyond."
Fiscal 2023 revenues were $1.56
billion, an increase of 20% compared to $1.30 billion in fiscal 2022. Gross profit was
$196.4 million in fiscal 2023, an
increase of 41% compared to $139.3
million in fiscal 2022. Fourth quarter revenues were
$475.0 million, an increase of 21%
compared to $393.1 million in the
fourth last year. Gross profit for the fourth quarter was
$75.5 million, an increase of 52%
compared to $49.6 million in the
fourth quarter last year.
General and administrative expenses were $126.9 million for fiscal 2023, compared to
$107.6 million in fiscal 2022, and as
a percentage of total revenue, 8.1% and 8.3% respectively. Fourth
quarter general and administrative expenses were $33.0 million, compared to $31.0 million in the fourth quarter last year,
and as a percentage of total revenue, 6.9% and 7.9%
respectively.
Net income was $49.0 million for
fiscal 2023, an increase of 129% compared to net income of
$21.4 million in fiscal 2022.
Fourth quarter net income was $30.9
million, an increase of 136% compared to net income of
$13.1 million in the fourth quarter
last year.
Adjusted EBITDA(1) for fiscal 2023 was $174.1 million, an increase of 57% compared to
$111.2 million in fiscal 2022.
Adjusted EBITDA Margin(1) in fiscal 2023 was 11.1%,
compared to 8.5% in fiscal 2022. Fourth quarter Adjusted
EBITDA(1) was $69.5
million, an increase of 76% compared to $39.4 million in the fourth quarter last year.
Adjusted EBITDA Margin (1) in the fourth quarter was
14.6%, compared to 10.0% in the fourth quarter last year.
Project backlog was $1.60 billion
at September 30, 2023, compared to
$1.41 billion at September 30, 2022 and $1.59 billion at June 30,
2023.
Smith continued, "Capitalizing on the positive trends for strong
demand and more stable construction costs that persisted in the
second half of fiscal 2023, we expect further revenue growth and
margin expansion in fiscal 2024. Today we are maintaining our
fiscal year 2024 outlook that was introduced last month at our
Analyst Day event and reflects our confidence in executing the same
strategy we have had since CPI's inception to generate growth and
enhance shareholder value."
Fiscal Year 2024 Outlook
The Company's outlook for fiscal year 2024 with regard to
revenue, net income, Adjusted EBITDA and Adjusted EBITDA Margin is
as follows:
- Revenue in the range of $1.750
billion to $1.825 billion
- Net income in the range of $63
million to $70 million
- Adjusted EBITDA(1) in the range of $197 million to $219
million
- Adjusted EBITDA Margin(1) in the range of 11.3% to
12.0%
Ned N. Fleming, III, the
Company's Executive Chairman, stated, "Fiscal year 2023 marked
strong top-line growth and margin expansion consistent with CPI's
historical trends. Since our IPO five years ago, CPI has doubled in
size and outperformed all of the targets we set at that time.
Today, we are even better positioned than in the past to continue
executing on our proven growth strategy, and we are experiencing
the highest demand for infrastructure services across our
geographic footprint in the fast-growing Sunbelt than at any time
in our past. The Board and I are pleased with the strength of the
organization, the commitment of our team and the opportunities to
grow within our existing markets and expand into new markets. In a
highly fragmented industry with an extremely long runway for
continued growth, we believe CPI will continue to enhance value for
all of our stakeholders."
Conference Call
The Company will conduct a conference call today at 9:00 a.m. Central Time to discuss financial and
operating results for the quarter and fiscal year ended
September 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
December 6, 2023 by calling (201)
612-7415 and using passcode ID: 13741509#. 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
(in thousands,
except share and per share data)
|
|
|
|
For the Three Months
Ended
September 30,
|
|
For the Fiscal Year
Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
$
475,026
|
|
$
393,053
|
|
$
1,563,548
|
|
$
1,301,674
|
Cost of
revenues
|
|
399,489
|
|
343,462
|
|
1,367,163
|
|
1,162,372
|
Gross
profit
|
|
75,537
|
|
49,591
|
|
196,385
|
|
139,302
|
General and
administrative expenses
|
|
(33,002)
|
|
(31,032)
|
|
(126,947)
|
|
(107,562)
|
Gain on sale of
property, plant and equipment
|
|
2,223
|
|
1,885
|
|
7,048
|
|
3,673
|
Gain on facility
exchange
|
|
—
|
|
—
|
|
5,389
|
|
—
|
Operating
income
|
|
44,758
|
|
20,444
|
|
81,875
|
|
35,413
|
Interest expense,
net
|
|
(3,545)
|
|
(3,524)
|
|
(17,346)
|
|
(7,701)
|
Other income
|
|
(50)
|
|
263
|
|
875
|
|
600
|
Income before
provision for income taxes and
earnings from investment in joint venture
|
|
41,163
|
|
17,183
|
|
65,404
|
|
28,312
|
Provision for income
taxes
|
|
10,250
|
|
4,047
|
|
16,403
|
|
6,915
|
Earnings (loss) from
investment in joint venture
|
|
—
|
|
(21)
|
|
—
|
|
(21)
|
Net
income
|
|
$
30,913
|
|
$
13,115
|
|
$
49,001
|
|
$
21,376
|
Other comprehensive
income (loss), net of tax
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
on interest rate swap contract, net
|
|
1,922
|
|
9,337
|
|
1,297
|
|
18,091
|
Unrealized (loss) on
restricted investments, net
|
|
(211)
|
|
(172)
|
|
(223)
|
|
(448)
|
Other comprehensive
income (loss), net
|
|
1,711
|
|
9,165
|
|
1,074
|
|
17,643
|
Comprehensive
income
|
|
$
32,624
|
|
$
22,280
|
|
$
50,075
|
|
$
39,019
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.60
|
|
$
0.25
|
|
$
0.95
|
|
$
0.41
|
Diluted
|
|
$
0.59
|
|
$
0.25
|
|
$
0.94
|
|
$
0.41
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
51,828,257
|
|
51,807,734
|
|
51,827,001
|
|
51,773,559
|
Diluted
|
|
52,406,501
|
|
52,027,267
|
|
52,260,206
|
|
51,957,420
|
CONSTRUCTION
PARTNERS, INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands,
except share and per share data)
|
|
|
September
30,
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
48,243
|
|
$
35,531
|
Restricted
cash
|
837
|
|
28
|
Contracts receivable
including retainage, net
|
303,704
|
|
265,207
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
27,296
|
|
29,271
|
Inventories
|
84,038
|
|
74,195
|
Prepaid expenses and
other current assets
|
9,306
|
|
12,957
|
Total current
assets
|
473,424
|
|
417,189
|
|
|
|
|
Property, plant and
equipment, net
|
505,095
|
|
481,412
|
Operating lease
right-of-use assets
|
14,485
|
|
13,985
|
Goodwill
|
159,270
|
|
129,465
|
Intangible assets,
net
|
19,520
|
|
15,976
|
Investment in joint
venture
|
87
|
|
87
|
Restricted
investments
|
15,079
|
|
6,866
|
Other assets
|
32,705
|
|
30,541
|
Total assets
|
$ 1,219,665
|
|
$ 1,095,521
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
151,406
|
|
$
130,468
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
78,905
|
|
52,477
|
Current portion of
operating lease liabilities
|
2,338
|
|
2,209
|
Current maturities of
long-term debt
|
15,000
|
|
12,500
|
Accrued expenses and
other current liabilities
|
31,534
|
|
28,484
|
Total current
liabilities
|
279,183
|
|
226,138
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net of
current maturities and deferred debt issuance costs
|
360,740
|
|
363,066
|
Operating lease
liabilities, net of current portion
|
12,649
|
|
12,059
|
Deferred income taxes,
net
|
37,121
|
|
26,713
|
Other long-term
liabilities
|
13,398
|
|
11,666
|
Total long-term
liabilities
|
423,908
|
|
413,504
|
Total
liabilities
|
703,091
|
|
639,642
|
Commitments and
contingencies
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Preferred stock, par
value $0.001; 10,000,000 shares authorized at September 30, 2023
and
September 30, 2022 and no shares issued and
outstanding
|
—
|
|
—
|
Class A common stock,
par value $0.001; 400,000,000 shares authorized, 43,760,546
shares
issued and 43,727,680 shares outstanding at
September 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
September 30, 2023, and 14,275,867 shares
issued and 11,352,915 shares outstanding at
September 30, 2022
|
12
|
|
15
|
Additional paid-in
capital
|
267,330
|
|
256,571
|
Treasury stock, Class A
common stock, par value $0.001, at cost, 32,866 shares at
September 30, 2023, and 2,706 shares at
September 30, 2022
|
(178)
|
|
(39)
|
Treasury stock, Class B
common stock, par value $0.001, at cost, 2,922,952 shares at
September 30, 2023 and 2022
|
(15,603)
|
|
(15,603)
|
Accumulated other
comprehensive income, net
|
18,694
|
|
17,620
|
Retained
earnings
|
246,275
|
|
197,274
|
Total stockholders'
equity
|
516,574
|
|
455,879
|
Total liabilities and
stockholders' equity
|
$ 1,219,665
|
|
$ 1,095,521
|
|
|
|
|
CONSTRUCTION
PARTNERS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
For the Fiscal Year
Ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
49,001
|
|
$
21,376
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation, depletion, accretion and
amortization
|
79,100
|
|
65,730
|
Amortization of deferred debt issuance costs
|
299
|
|
216
|
Unrealized loss (gain) on derivative instruments
|
342
|
|
(382)
|
Provision (recovery) for bad debt
|
456
|
|
(947)
|
Gain on sale of property, plant and equipment
|
(7,048)
|
|
(3,673)
|
Gain on facility exchange
|
(5,389)
|
|
—
|
Realized losses on restricted investments
|
30
|
|
—
|
Equity-based compensation expense
|
10,759
|
|
8,000
|
Loss (earnings) from investment in joint venture
|
—
|
|
21
|
Distribution of earnings from investment in joint
venture
|
—
|
|
—
|
Deferred income taxes
|
11,165
|
|
5,966
|
Other non-cash adjustments
|
(263)
|
|
40
|
Changes in operating
assets and liabilities:
|
|
|
|
Contracts receivable including retainage
|
(25,961)
|
|
(97,075)
|
Costs and estimated earnings in excess of billings on
uncompleted contracts
|
2,573
|
|
(6,123)
|
Inventories
|
(7,320)
|
|
(17,513)
|
Prepaid expenses and other current assets
|
3,650
|
|
(4,912)
|
Other assets
|
(129)
|
|
(955)
|
Accounts payable
|
17,220
|
|
41,319
|
Billings in excess of costs and estimated earnings on
uncompleted contracts
|
24,099
|
|
15,635
|
Accrued expenses and other current liabilities
|
2,340
|
|
(11,559)
|
Other long-term liabilities
|
2,233
|
|
1,334
|
Net cash provided by
operating activities, net of acquisitions
|
157,157
|
|
16,498
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property, plant and equipment
|
(97,810)
|
|
(68,851)
|
Proceeds from sale of property, plant and
equipment
|
17,698
|
|
7,525
|
Proceeds from facility exchange
|
36,987
|
|
—
|
Business acquisitions, net of cash acquired
|
(91,787)
|
|
(128,568)
|
Proceeds from the sale of restricted investments
|
2,900
|
|
—
|
Purchases of restricted investments
|
(11,360)
|
|
(7,432)
|
Net cash used in
investing activities
|
(143,372)
|
|
(197,326)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance of long-term debt, net of debt
issuance costs
|
103,000
|
|
167,300
|
Principal payments of long-term debt
|
(103,125)
|
|
(8,125)
|
Purchase of treasury stock
|
(139)
|
|
(39)
|
Net cash (used in)
provided by financing activities
|
(264)
|
|
159,136
|
Net change in cash,
cash equivalents and restricted cash
|
13,521
|
|
(21,692)
|
|
|
|
|
Cash, cash
equivalents and restricted cash:
|
|
|
|
Beginning of year
|
35,559
|
|
57,251
|
End of year
|
$
49,080
|
|
$
35,559
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Cash paid for
interest
|
$
19,157
|
|
$
9,289
|
Cash paid for income
taxes
|
$
1,009
|
|
$
1,372
|
Cash paid for
operating lease liabilities
|
$
3,029
|
|
$
2,396
|
Non-cash
items:
|
|
|
|
Operating lease right-of-use assets obtained in exchange for
operating
lease liabilities
|
$
3,109
|
|
$
9,629
|
Property, plant and equipment financed with accounts
payable
|
$
2,459
|
|
$
2,587
|
Amounts payable to sellers in business
combinations
|
$
—
|
|
$
664
|
Non-compete agreements to seller in business
combination
|
$
—
|
|
$
—
|
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. Periods commencing subsequent to September 30, 2023 will not include an adjustment
for management fees and expenses, which have historically related
to the Company's management services agreement with an affiliate of
SunTx Capital Partners, the Company's controlling stockholder
("SunTx"). 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. 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 (in thousands, except
percentages):
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Fiscal Years Ended
September 30, 2023 and 2022
(in
thousands)
|
|
|
For the Fiscal Year
Ended
September 30,
|
|
2023
|
|
2022
|
Net income
|
$
49,001
|
|
$
21,376
|
Interest expense,
net
|
17,346
|
|
7,701
|
Provision for income
taxes
|
16,403
|
|
6,915
|
Depreciation,
depletion, accretion and amortization
|
79,100
|
|
65,730
|
Equity-based
compensation expense
|
10,759
|
|
8,000
|
Management fees and
expenses (1)
|
1,486
|
|
1,451
|
Adjusted
EBITDA
|
$
174,095
|
|
$
111,173
|
Revenues
|
$
1,563,548
|
|
$
1,301,674
|
Adjusted EBITDA
Margin
|
11.1 %
|
|
8.5 %
|
|
(1)
Reflects fees and reimbursement of certain out-of-pocket expenses
under a management services agreement with an affiliate of
SunTx.
|
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Three Months Ended
September 30, 2023 and 2022
(in
thousands)
|
|
|
For the Three Months
Ended
September 30,
|
|
2023
|
|
2022
|
Net income
|
$
30,913
|
|
$
13,115
|
Interest expense,
net
|
3,545
|
|
3,524
|
Provision for income
taxes
|
10,250
|
|
4,047
|
Depreciation,
depletion, accretion and amortization
|
21,331
|
|
15,439
|
Equity-based
compensation expense
|
2,850
|
|
2,906
|
Management fees and
expenses (1)
|
377
|
|
322
|
Adjusted
EBITDA
|
$
69,266
|
|
$
39,353
|
Revenues
|
$
475,026
|
|
$
393,053
|
Adjusted EBITDA
Margin
|
14.6 %
|
|
10.0 %
|
|
(1)
Reflects fees and reimbursement of certain out-of-pocket expenses
under a management services agreement with an affiliate of
SunTx.
|
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Fiscal Year 2024
Outlook
(unaudited, in
thousands)
|
|
|
For the Fiscal Year
Ending
September 30, 2024
|
|
Low
|
|
High
|
Net income
|
$
63,000
|
|
$
70,000
|
Interest expense,
net
|
18,000
|
|
20,500
|
Provision for income
taxes
|
21,200
|
|
23,600
|
Depreciation,
depletion, accretion and amortization
|
83,600
|
|
93,100
|
Equity-based
compensation expense
|
11,200
|
|
11,800
|
Adjusted
EBITDA
|
$ 197,000
|
|
$ 219,000
|
Revenues
|
$
1,750,000
|
|
$
1,825,000
|
Adjusted EBITDA
Margin
|
11.3 %
|
|
12.0 %
|
View original
content:https://www.prnewswire.com/news-releases/construction-partners-inc-announces-fiscal-2023-fourth-quarter-and-year-end-results-302000070.html
SOURCE Construction Partners, Inc.