DOTHAN, Ala., May 7, 2021 /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 five
southeastern states, today reported financial and operating results
for the fiscal quarter ended March 31,
2021.
Fred J. (Jule) Smith, III, the
Company's President and Chief Executive Officer, said, "In the
second fiscal quarter, revenue grew 6.2% compared to the second
fiscal quarter last year. While adverse weather caused significant
project delays in the second quarter, we plan to make up that
volume in the second half of our fiscal year. As we have stated
before, historically we have generated approximately 40% of our
annual revenue in the first half of the fiscal year and
approximately 60% in the second half. Halfway through fiscal 2021,
we are roughly in line with our historical pattern, even with the
weather delays.
"More importantly, we are very pleased with our record high
project backlog of $773.3 million at
the end of the quarter. As we move into the seasonally stronger
second half of our fiscal year, we continue to see strength in
infrastructure funding programs and project lettings across our
markets. In light of these positive conditions, we are maintaining
our outlook for fiscal 2021."
Revenues for the second fiscal quarter of 2021 were $179.1 million, an increase of 6.2% compared to
the second quarter of last year. Gross profit was $18.1 million in the second fiscal quarter of
2021, a decrease of 10.4% compared to the second fiscal quarter of
last year.
General and administrative expenses were $24.5 million (consisting of a nonrecurring
$3.2 million legal settlement
unrelated to the Company's core operations, associated legal
expenses of $0.7 million, and
$20.6 million of other general and
administrative expenses), compared to general and administrative
expenses of $16.8 million in the
second fiscal quarter of 2020 and $20.1
million in the first fiscal quarter of 2021. The settlement
and associated legal expenses during the quarter related to claims
arising out of a former stockholder's sale of shares of the
Company's common stock in a private transaction prior to the
Company's initial public offering. In addition to the legal and
settlement expenses, the sequential increase in general and
administrative expenses was primarily due to payroll increases
related to acquisitions completed during the first fiscal quarter
of 2021, new corporate positions and compensation initiatives.
On a GAAP basis, the Company had a net loss of $4.9 million in the second fiscal quarter,
compared to net income of $1.5
million in the second fiscal quarter of 2020. On a
non-GAAP basis, adjusted net loss(1) was $2.0 million in the second fiscal quarter of
2021, compared to adjusted net income of $1.6 million in the second fiscal quarter of
2020.
Adjusted EBITDA(1) for the second fiscal quarter of
2021, which includes the nonrecurring legal and settlement expenses
described above, was $11.0 million,
compared to $14.3 million for the
second fiscal quarter of last year.
Project backlog at March 31, 2021
was $773.3 million, compared to
$665.6 at December 31, 2020 and $579.1 million at March
31, 2020.
Smith continued, "We extended our commitment to investing in our
people during the quarter as we continue to prepare for future
acquisition growth. The most critical component of our success has
been, and will continue to be, our people. Acquiring, integrating
and enhancing new construction operations, facilities and employees
in new markets is essential to our growth strategy. In the past six
months, we have added 13 hot-mix asphalt plants and more than 300
employees through acquisitions. Acquired operations frequently
create near-term margin headwinds as legacy backlog projects are
completed at lower margins. However, historically, within twelve to
eighteen months post-acquisition, we have been able to raise
project margins and expand market share. As a consolidator in our
space, we continue to see tremendous growth opportunities."
Ned N. Fleming, III, the
Company's Executive Chairman, stated, "CPI is well positioned for
growth in a highly fragmented market with strong industry demand
and growing infrastructure funding. Through our proven strategy, we
expect to improve our relative market share in the rapidly growing
southeastern United States. Today,
we see more acquisition opportunities than at any point in the
past. Our long-term strategy, we believe, will provide value to all
of our stakeholders."
(1) Adjusted net income (loss) and
Adjusted EBITDA 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.
|
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 ended March 31, 2021. 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 14,
2021 by calling (201) 612-7415 and using passcode 13717830#.
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 five southeastern states,
with 48 hot-mix asphalt plants, nine aggregate facilities and one
liquid asphalt terminal. Publicly funded projects make up the
majority of its business and include local and state roadways,
interstate highways, airport runways and bridges. The majority of
the Company's public projects are maintenance-related. Private
sector projects 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; risks from the
COVID-19 pandemic, 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
- Financial Statements Follow
–
Construction
Partners, Inc.
Consolidated
Statements of Income
(unaudited, in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
For the Three
Months Ended
March 31,
|
|
For the Six Months
Ended
March 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues
|
|
$
|
179,112
|
|
|
$
|
168,679
|
|
|
$
|
370,041
|
|
|
$
|
343,993
|
|
Cost of
revenues
|
|
161,040
|
|
|
148,505
|
|
|
321,375
|
|
|
300,062
|
|
Gross
profit
|
|
18,072
|
|
|
20,174
|
|
|
48,666
|
|
|
43,931
|
|
General and
administrative expenses
|
|
(24,475)
|
|
|
(16,821)
|
|
|
(44,559)
|
|
|
(33,934)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
equipment, net
|
|
9
|
|
|
435
|
|
|
342
|
|
|
744
|
|
Operating
income
|
|
(6,394)
|
|
|
3,788
|
|
|
4,449
|
|
|
10,741
|
|
Interest expense,
net
|
|
(298)
|
|
|
(1,834)
|
|
|
(766)
|
|
|
(2,115)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
244
|
|
|
44
|
|
|
409
|
|
|
109
|
|
Income (loss)
before provision for income taxes and earnings from investment in
joint venture
|
|
(6,448)
|
|
|
1,998
|
|
|
4,092
|
|
|
8,735
|
|
Provision for income
taxes
|
|
1,513
|
|
|
(531)
|
|
|
(1,167)
|
|
|
(1,850)
|
|
Earnings from
investment in joint venture
|
|
—
|
|
|
70
|
|
|
11
|
|
|
113
|
|
Net income
(loss)
|
|
$
|
(4,935)
|
|
|
$
|
1,537
|
|
|
$
|
2,936
|
|
|
$
|
6,998
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.10)
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.10)
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
51,686,652
|
|
|
51,489,211
|
|
|
51,586,846
|
|
|
51,489,211
|
|
Diluted
|
|
51,686,652
|
|
|
51,619,403
|
|
|
51,673,582
|
|
|
51,612,340
|
|
Construction
Partners, Inc.
Consolidated
Balance Sheets
(in thousands,
except share data)
|
|
|
March
31,
|
|
September
30,
|
|
2021
|
|
2020
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
33,749
|
|
|
$
|
148,316
|
|
Contracts receivable
including retainage, net
|
125,146
|
|
|
131,770
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
17,675
|
|
|
7,873
|
|
Inventories
|
46,129
|
|
|
38,561
|
|
Prepaid expenses and
other current assets
|
10,047
|
|
|
5,041
|
|
Total current
assets
|
232,746
|
|
|
331,561
|
|
|
|
|
|
Property, plant and
equipment, net
|
289,893
|
|
|
237,230
|
|
Operating lease
right-of-use assets
|
6,778
|
|
|
7,383
|
|
Goodwill
|
77,442
|
|
|
46,348
|
|
Intangible assets,
net
|
4,753
|
|
|
3,224
|
|
Investment in joint
venture
|
109
|
|
|
198
|
|
Other
assets
|
3,651
|
|
|
1,784
|
|
Deferred income
taxes, net
|
386
|
|
|
386
|
|
Total
assets
|
$
|
615,758
|
|
|
$
|
628,114
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
62,518
|
|
|
$
|
64,732
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
26,443
|
|
|
33,704
|
|
Current portion of operating lease
liabilities
|
1,663
|
|
|
2,046
|
|
Current maturities of
debt
|
13,000
|
|
|
13,000
|
|
Accrued expenses and
other current liabilities
|
22,706
|
|
|
22,347
|
|
Total current
liabilities
|
126,330
|
|
|
135,829
|
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net
of current maturities
|
72,680
|
|
|
79,053
|
|
Operating lease liabilities, net of
current portion
|
5,308
|
|
|
5,554
|
|
Deferred income
taxes, net
|
14,003
|
|
|
14,003
|
|
Other long-term
liabilities
|
8,451
|
|
|
8,480
|
|
Total long-term
liabilities
|
100,442
|
|
|
107,090
|
|
Total
liabilities
|
226,772
|
|
|
242,919
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock, par
value $0.001; 10,000,000 shares authorized at March 31, 2021 and
September 30, 2020 and no shares issued and outstanding
|
—
|
|
|
—
|
|
Class A common stock,
par value $0.001; 400,000,000 shares authorized, 35,719,569 shares
issued and outstanding at March 31, 2021, and 33,875,884 shares
issued and outstanding at September 30, 2020
|
35
|
|
|
34
|
|
Class B common stock,
par value $0.001; 100,000,000 shares authorized, 19,495,861 shares
issued and 16,572,909 outstanding at March 31, 2021 and 20,828,813
shares issued and 17,905,861 outstanding at September 30,
2020
|
20
|
|
|
21
|
|
Additional paid-in
capital
|
245,877
|
|
|
245,022
|
|
Treasury stock, at
cost, 2,922,952 shares of Class B common stock, par value
$0.001
|
(15,603)
|
|
|
(15,603)
|
|
Retained
earnings
|
158,657
|
|
|
155,721
|
|
Total stockholders'
equity
|
388,986
|
|
|
385,195
|
|
Total liabilities and
stockholders' equity
|
$
|
615,758
|
|
|
$
|
628,114
|
|
Construction
Partners, Inc.
Consolidated
Statements of Cash Flows
(unaudited, in
thousands)
|
|
|
For the Six Months
Ended March 31,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
2,936
|
|
|
$
|
6,998
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation,
depletion and amortization of long-lived assets
|
23,385
|
|
|
19,031
|
|
Amortization of
deferred debt issuance costs and debt discount
|
127
|
|
|
74
|
|
Unrealized (gain)
loss on derivative instruments
|
(2,377)
|
|
|
2,263
|
|
Provision for bad
debt
|
361
|
|
|
305
|
|
Gain on sale of
equipment, net
|
(342)
|
|
|
(744)
|
|
Equity-based
compensation expense
|
855
|
|
|
785
|
|
Earnings from
investment in joint venture
|
(11)
|
|
|
(113)
|
|
Distribution of
earnings from investment in joint venture
|
100
|
|
|
139
|
|
Other non-cash
adjustments
|
(24)
|
|
|
(11)
|
|
Changes in operating
assets and liabilities, net of acquisition:
|
|
|
|
Contracts receivable
including retainage, net
|
6,263
|
|
|
16,680
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
(9,802)
|
|
|
(4,071)
|
|
Inventories
|
(3,482)
|
|
|
(4,632)
|
|
Prepaid expenses and
other current assets
|
(4,343)
|
|
|
1,597
|
|
Other
assets
|
(1,275)
|
|
|
332
|
|
Accounts
payable
|
(2,464)
|
|
|
(12,452)
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
(7,261)
|
|
|
(1,575)
|
|
Accrued expenses and
other current liabilities
|
(8)
|
|
|
(3,967)
|
|
Other long-term
liabilities
|
(240)
|
|
|
(24)
|
|
Net cash provided by
operating activities, net of acquisitions
|
2,398
|
|
|
20,615
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
property, plant and equipment
|
(26,898)
|
|
|
(34,512)
|
|
Proceeds from sale of
equipment
|
927
|
|
|
1,419
|
|
Business
acquisitions, net of cash acquired
|
(84,494)
|
|
|
(30,191)
|
|
Return of investment
in joint venture
|
—
|
|
|
361
|
|
Net cash used in
investing activities
|
(110,465)
|
|
|
(62,923)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
issuance of long-term debt, net of debt issuance costs and
discount
|
—
|
|
|
24,777
|
|
Repayments of
long-term debt
|
(6,500)
|
|
|
(9,294)
|
|
Net cash (used in)
provided by financing activities
|
(6,500)
|
|
|
15,483
|
|
Net change in cash
and cash equivalents
|
(114,567)
|
|
|
(26,825)
|
|
Cash and cash
equivalents:
|
|
|
|
Beginning of
period
|
148,316
|
|
|
80,619
|
|
End of
period
|
$
|
33,749
|
|
|
$
|
53,794
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Cash paid for
interest
|
$
|
1,303
|
|
|
$
|
924
|
|
Cash paid for income
taxes
|
$
|
3,318
|
|
|
$
|
3,400
|
|
Operating lease
right-of-use assets obtained in exchange for operating lease
liabilities
|
$
|
615
|
|
|
$
|
1,140
|
|
Cash paid for
operating lease liabilities
|
$
|
1,234
|
|
|
$
|
1,672
|
|
Non-cash
items:
|
|
|
|
Property, plant and
equipment included with accounts payable at period end
|
$
|
1,663
|
|
|
$
|
794
|
|
Non-compete
agreements to seller in business combination
|
$
|
1,700
|
|
|
$
|
—
|
|
Amounts payable to
seller in business combination
|
$
|
250
|
|
|
$
|
2,642
|
|
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 and amortization of
long-lived assets, (iv) equity-based compensation expense, (v) loss
on the extinguishment of debt, (vi) certain management fees and
expenses and (vii) nonrecurring legal settlement costs and
associated legal expenses unrelated to the Company's core
operations. Adjusted net income (loss) represents net income (loss)
before nonrecurring legal settlement costs and associated legal
expenses unrelated to the Company's core operations, net of tax
impact. 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 (loss) or any other performance measure
derived in accordance with GAAP as an indicator of our operating
performance. We present Adjusted EBITDA and Adjusted net income
(loss) 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 measures 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
(loss), the most directly comparable measure calculated in
accordance with GAAP, to Adjusted EBITDA for the periods
presented:
Construction
Partners, Inc.
Net Income to
Adjusted EBITDA Reconciliation
Fiscal Quarters
Ended March 31, 2021 and 2020
(unaudited, in
thousands)
|
|
|
|
For the Three
Months Ended
March 31,
|
|
|
2021
|
|
2020
|
Net income
(loss)
|
|
$
|
(4,935)
|
|
|
$
|
1,537
|
|
Interest expense,
net
|
|
298
|
|
|
1,834
|
|
Provision for income
taxes
|
|
(1,513)
|
|
|
531
|
|
Depreciation,
depletion and amortization of long-lived assets
|
|
12,291
|
|
|
9,593
|
|
Equity-based
compensation expense
|
|
460
|
|
|
390
|
|
Management fees and
expenses (1)
|
|
521
|
|
|
357
|
|
Settlement of legal
claim and associated legal expenses (2)
|
|
3,876
|
|
|
97
|
|
Adjusted
EBITDA
|
|
$
|
10,998
|
|
|
$
|
14,339
|
|
|
|
(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.
|
(2)
|
Reflects a $3.9
million legal settlement unrelated to the Company's core operations
and associated legal expenses.
|
The following table presents a reconciliation of net income
(loss), the most directly comparable measure calculated in
accordance with GAAP, to adjusted net income (loss) for the periods
presented:
Construction
Partners, Inc.
Net Income to
Adjusted Net Income (Loss) Reconciliation
Fiscal Quarters
Ended March 31, 2021 and 2020
(unaudited, in
thousands)
|
|
|
|
For the Three
Months Ended
March 31,
|
|
|
2021
|
|
2020
|
Net income
(loss)
|
|
$
|
(4,935)
|
|
|
$
|
1,537
|
|
Settlement of legal
claim (1)
|
|
3,200
|
|
|
—
|
|
Legal fees associated
with settlement of legal claim
|
|
676
|
|
|
97
|
|
Tax impact due to
above reconciling items
|
|
(977)
|
|
|
(24)
|
|
Adjusted net income
(loss)
|
|
$
|
(2,036)
|
|
|
$
|
1,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects a $3.2
million legal settlement unrelated to the Company's core
operations.
|
View original
content:http://www.prnewswire.com/news-releases/construction-partners-inc-announces-fiscal-2021-second-quarter-results-301286348.html
SOURCE Construction Partners, Inc.