Revenue Up 45%, Net Income Up 30%, Adjusted EBITDA Up 30%,
Compared to FYQ3 Last Year
Company Reports Record Backlog of $1.33 Billion
DOTHAN,
Ala., Aug. 5, 2022 /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 June 30,
2022.
Fred J. (Jule) Smith, III, the
Company's President and Chief Executive Officer, said, "We are
pleased with our 3rd quarter results, achieving record
revenue and Adjusted EBITDA driven by the continued strong demand
for infrastructure services throughout our end markets in both the
private and public sectors. Our mix of growth for the quarter
consisted of approximately 25 percent organic revenue and
approximately 20 percent from recent acquisitions. Revenue
was driven by a high volume of project work coupled with favorable
weather across our region, as well as our bids reflecting higher
project prices due to inflation. We continue to win new project
work across our five-state footprint in the southeastern U.S., and
we ended the quarter with a new record for project backlog of
$1.33 billion. In addition, similar
to last quarter, our backlog margins continue to grow, and we
anticipate that this healthy backlog margin growth will mean higher
future profit margins as backlog is converted. Based on the strong
revenue performance in the third quarter and record high backlog,
we are raising our FY2022 outlook for revenue."
Revenues for the third fiscal quarter of 2022 were $380.3 million, an increase of 45% compared to
the third fiscal quarter of last year. Gross profit was
$44.3 million in the third fiscal
quarter of 2022, compared to $36.6
million in the third fiscal quarter of last year.
General and administrative expenses were $26.6 million for the third fiscal quarter of
2022, compared to $23.2 million in
the third fiscal quarter of last year. General and administrative
expenses as a percentage of total revenue in the third quarter of
2022 were 7.0%, compared to 8.9% in the third quarter of last
year.
Net income was $12.2 million for
the third fiscal quarter of 2022, an increase of 30% compared to
net income of $9.3 million in the
third fiscal quarter of last year.
Adjusted EBITDA(1) for the third fiscal quarter of
2022 was $37.6 million, an increase
of 30% compared to $29.0 million for
the third fiscal quarter of last year.
Project backlog was $1.33 billion
at June 30, 2022, compared to
$822.9 million at June 30, 2021 and $1.28
billion at March 31, 2022.
Smith continued, "I am proud of our team's continued commitment
and hard work to push through today's challenging environment,
particularly as we have implemented new actions over the past
several months in response to the rapid rise of inflation, supply
chain constraints and tight labor market dynamics. While these
conditions persist, the resilience of our employees and our
strategic business model, with shorter duration projects generating
higher turnover in backlog as we work to pass through increasing
costs on new project work, is gaining momentum and increasing our
profitability and margins in the second half of FY2022.
"It is also important to recognize the more than 3,800 CPI
employees, which includes 200 new employees that we welcomed to the
company earlier this week through our acquisition of Southern
Asphalt, Inc., in South Carolina.
We are thankful for our employees' continued commitment to safety
at the jobsite and operational excellence in pursuit of our
strategic goals, despite the ongoing supply and labor challenges of
the U.S. economy," added Smith.
Fiscal Year 2022 Outlook
The Company has updated its full-year 2022 guidance to reflect
the strong project demand environment and the continued inflation
and elevated energy costs that it believes will persist during the
fiscal year. The Company's outlook for fiscal year 2022 with regard
to revenue, net income and Adjusted EBITDA is as follows:
- Revenue in the range of $1.25
billion to $1.28 billion
- Net income in the range of $17.5
million to $23.2 million
- Adjusted EBITDA(1) in the range of $108 million to $117
million
(1)
|
Adjusted EBITDA is a
financial measure 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.
|
Ned N. Fleming, III, the
Company's Executive Chairman, stated, "The CPI business model is
extremely resilient, and has been since the Company's inception.
The focus of our strategy for more than 20 years has been to pursue
recurring infrastructure repair and maintenance projects,
generating sustainable and profitable growth. The model is proving
out this dynamic in today's challenging economic environment. Even
with the rapid and steep rise in costs and continuing supply chain
disruptions, we are working to pass on costs judiciously and are
now converting higher-margin backlog. Moving forward, we intend to
expand margins due to the strong demand for projects, a growing
project backlog, and the continuing benefit of being a consolidator
in a highly fragmented industry."
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 June
30, 2022. 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 12, 2022 by
calling (201) 612-7415 and using passcode 13730485#. 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 59 hot-mix asphalt plants, 14 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 Comprehensive
Income (unaudited, in thousands, except share and per
share data)
|
|
|
|
For the Three
Months
Ended June 30,
|
|
For the Nine
Months
Ended June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues
|
|
$
380,272
|
|
$
261,656
|
|
$
908,621
|
|
$
631,697
|
Cost of
revenues
|
|
336,022
|
|
225,039
|
|
818,910
|
|
546,414
|
Gross
profit
|
|
44,250
|
|
36,617
|
|
89,711
|
|
85,283
|
General and
administrative expenses
|
|
(26,584)
|
|
(23,195)
|
|
(76,530)
|
|
(67,754)
|
Gain on sale of
equipment, net
|
|
333
|
|
835
|
|
1,788
|
|
1,177
|
Operating
income
|
|
17,999
|
|
14,257
|
|
14,969
|
|
18,706
|
Interest expense,
net
|
|
(2,054)
|
|
(568)
|
|
(4,177)
|
|
(1,334)
|
Other income
|
|
178
|
|
252
|
|
337
|
|
661
|
Income before
provision for income taxes and earnings from investment in joint
venture
|
|
16,123
|
|
13,941
|
|
11,129
|
|
18,033
|
Provision for income
taxes
|
|
3,955
|
|
4,600
|
|
2,868
|
|
5,767
|
Earnings from
investment in joint venture
|
|
—
|
|
(1)
|
|
—
|
|
10
|
Net
income
|
|
12,168
|
|
9,340
|
|
8,261
|
|
12,276
|
Other comprehensive
income, net of tax
|
|
|
|
|
|
|
|
|
Unrealized gain on
interest rate swap contract, net
|
|
1,729
|
|
—
|
|
8,754
|
|
—
|
Unrealized loss on
restricted investments, net
|
|
(154)
|
|
—
|
|
(276)
|
|
—
|
Other comprehensive
income
|
|
1,575
|
|
—
|
|
8,478
|
|
—
|
Comprehensive
income
|
|
$ 13,743
|
|
$
9,340
|
|
$ 16,739
|
|
$ 12,276
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.23
|
|
$
0.18
|
|
$
0.16
|
|
$
0.24
|
Diluted
|
|
$
0.23
|
|
$
0.18
|
|
$
0.16
|
|
$
0.24
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
51,793,245
|
|
51,686,735
|
|
51,760,384
|
|
51,620,143
|
Diluted
|
|
51,888,511
|
|
51,864,403
|
|
51,928,427
|
|
51,726,994
|
Construction
Partners, Inc. Consolidated Balance Sheets (in
thousands, except share and per share data)
|
|
|
June
30,
|
|
September
30,
|
|
2022
|
|
2021
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
26,079
|
|
$
57,251
|
Restricted
cash
|
105
|
|
—
|
Contracts receivable
including retainage, net
|
239,990
|
|
158,170
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
32,635
|
|
23,023
|
Inventories
|
77,383
|
|
53,792
|
Prepaid expenses and
other current assets
|
12,948
|
|
7,790
|
Total current
assets
|
389,140
|
|
300,026
|
Property, plant and
equipment, net
|
453,973
|
|
404,832
|
Operating lease
right-of-use assets
|
11,165
|
|
6,535
|
Goodwill
|
124,987
|
|
85,422
|
Intangible assets,
net
|
12,613
|
|
4,163
|
Investment in joint
venture
|
108
|
|
108
|
Restricted
investments
|
7,312
|
|
—
|
Other assets
|
21,041
|
|
5,534
|
Total assets
|
$
1,020,339
|
|
$
806,620
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
119,774
|
|
$
86,390
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
47,516
|
|
33,719
|
Current
portion of operating lease liabilities
|
2,087
|
|
1,395
|
Current maturities of
long-term debt
|
12,500
|
|
10,000
|
Accrued expenses and
other current liabilities
|
22,256
|
|
26,459
|
Total current
liabilities
|
204,133
|
|
157,963
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net of
current maturities and deferred debt issuance costs
|
341,173
|
|
206,175
|
Operating
lease liabilities, net of current portion
|
9,337
|
|
5,302
|
Deferred income taxes,
net
|
20,140
|
|
17,362
|
Other long-term
liabilities
|
14,863
|
|
10,919
|
Total long-term
liabilities
|
385,513
|
|
239,758
|
Total
liabilities
|
589,646
|
|
397,721
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock, par
value $0.001; 10,000,000 shares authorized and no shares issued
and
outstanding at June 30, 2022 and September 30, 2021
|
—
|
|
—
|
Class A common stock,
par value $0.001; 400,000,000 shares authorized, 41,195,730
issued
and 41,193,887 outstanding at June 30, 2022, and 36,600,639 issued
and outstanding at
September 30, 2021
|
41
|
|
37
|
Class B common stock,
par value $0.001; 100,000,000 shares authorized, 14,275,867
issued
and 11,352,915 outstanding at June 30, 2022 and 18,614,791 issued
and 15,691,839 outstanding at
September 30, 2021
|
15
|
|
19
|
Additional paid-in
capital
|
253,665
|
|
248,571
|
Treasury stock, at
cost, 1,183 shares of Class A common stock, par value
$0.001
|
(39)
|
|
—
|
Treasury stock, at
cost, 2,922,952 shares of Class B common stock, par value
$0.001
|
(15,603)
|
|
(15,603)
|
Accumulated other
comprehensive income (loss), net
|
8,455
|
|
(23)
|
Retained
earnings
|
184,159
|
|
175,898
|
Total stockholders'
equity
|
430,693
|
|
408,899
|
Total liabilities and
stockholders' equity
|
$
1,020,339
|
|
$
806,620
|
Construction
Partners, Inc. Consolidated Statements of Cash
Flows (unaudited, in thousands)
|
|
|
For the Nine Months
Ended June 30,
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
8,261
|
|
$
12,276
|
Adjustments to
reconcile net income to net cash, cash equivalents and restricted
cash
(used by) provided by operating activities:
|
|
|
|
Depreciation,
depletion, accretion and amortization of long-lived
assets
|
50,291
|
|
36,011
|
Amortization of
deferred debt issuance costs and debt discount
|
198
|
|
190
|
Unrealized gain on
derivative instruments
|
(2,589)
|
|
(3,141)
|
Provision for bad
debt
|
(1,077)
|
|
440
|
Gain on sale of
equipment, net
|
(1,788)
|
|
(1,177)
|
Equity-based
compensation expense
|
5,094
|
|
2,202
|
Earnings from
investment in joint venture
|
—
|
|
(10)
|
Distribution of
earnings from investment in joint venture
|
—
|
|
100
|
Deferred income tax
benefit
|
(193)
|
|
—
|
Other non-cash
adjustments
|
97
|
|
(57)
|
Changes in operating
assets and liabilities, net of acquisition:
|
|
|
|
Contracts receivable
including retainage, net
|
(71,865)
|
|
(32,975)
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
(9,487)
|
|
(7,897)
|
Inventories
|
(21,726)
|
|
(8,061)
|
Prepaid expenses and
other current assets
|
(2,327)
|
|
(1,723)
|
Other
assets
|
(2,893)
|
|
(4,123)
|
Accounts
payable
|
30,025
|
|
16,789
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
13,379
|
|
(2,149)
|
Accrued expenses and
other current liabilities
|
(6,946)
|
|
2,970
|
Other long-term
liabilities
|
3,825
|
|
(331)
|
Net cash (used by)
provided by operating activities, net of acquisitions
|
(9,721)
|
|
9,334
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property,
plant and equipment
|
(52,236)
|
|
(39,588)
|
Proceeds from sale of
equipment
|
4,184
|
|
2,361
|
Business acquisitions,
net of cash acquired
|
(102,893)
|
|
(92,303)
|
Purchase of restricted
investments
|
(7,662)
|
|
—
|
Net cash used in
investing activities
|
(158,607)
|
|
(129,530)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of long-term debt, net of debt issuance costs and
discount
|
142,300
|
|
199,198
|
Principal payments on
long-term debt
|
(5,000)
|
|
(92,850)
|
Purchase of treasury
stock
|
(39)
|
|
—
|
Net cash provided by
financing activities
|
137,261
|
|
106,348
|
Net change in cash and
cash equivalents
|
(31,067)
|
|
(13,848)
|
Cash, cash
equivalents and restricted cash:
|
|
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
57,251
|
|
148,316
|
Cash, cash equivalents
and restricted cash, end of period
|
$
26,184
|
|
$
134,468
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Cash paid for
interest
|
$
5,727
|
|
$
1,950
|
Cash paid for income
taxes
|
$
1,372
|
|
$
3,568
|
Operating lease
right-of-use assets obtained in exchange for operating lease
liabilities
|
$
6,209
|
|
$
1,089
|
Cash paid for
operating lease liabilities
|
$
1,783
|
|
$
1,795
|
Non-cash
items:
|
|
|
|
Property, plant and
equipment included with accounts payable at period end
|
$
1,236
|
|
$
778
|
Non-compete agreements
to seller in business combination
|
$
—
|
|
$
1,700
|
Amounts payable to
seller in business combination
|
$
600
|
|
$
1,296
|
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, (vi) certain management fees and
expenses and (vii) nonrecurring legal settlement costs and
associated legal expenses unrelated to the Company's core
operations. Adjusted EBITDA is a supplemental measure of our
operating performance that is neither required by, nor presented in
accordance with, GAAP. This measure has limitations as an
analytical tool 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 Adjusted EBITDA because management uses
this measure as a key performance indicator, and we believe that
securities analysts, investors and others use this measure to
evaluate companies in our industry. Our calculation of Adjusted
EBITDA 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 for the periods presented:
Construction
Partners, Inc. Net Income to Adjusted
EBITDA Reconciliation Fiscal Quarters Ended
June 30, 2022 and 2021 (unaudited, in
thousands)
|
|
|
For the Three Months
Ended
June 30,
|
|
2022
|
|
2021
|
Net income
|
$
12,168
|
|
$
9,340
|
Interest expense,
net
|
2,054
|
|
568
|
Provision for income
taxes
|
3,955
|
|
4,600
|
Depreciation,
depletion, accretion and amortization
|
17,244
|
|
12,626
|
Equity-based
compensation expense
|
1,848
|
|
1,347
|
Management fees and
expenses (1)
|
370
|
|
412
|
Settlement of legal
claim and associated legal expenses (2)
|
—
|
|
134
|
Adjusted
EBITDA
|
$
37,639
|
|
$
29,027
|
|
|
|
|
|
|
(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 legal expenses
associated with a settlement agreement entered into in April 2021
unrelated to the Company's core operations.
|
Construction
Partners, Inc. Net Income to Adjusted EBITDA
Reconciliation Fiscal Year 2022 Updated
Outlook (unaudited, in thousands)
|
|
For the Fiscal Year
Ending
September 30, 2022
|
|
Low
|
|
High
|
Net income
|
$
17,500
|
|
$
23,200
|
Interest expense,
net
|
7,400
|
|
7,800
|
Provision for income
taxes
|
6,100
|
|
7,900
|
Depreciation,
depletion, accretion and amortization
|
68,400
|
|
69,500
|
Equity-based
compensation expense
|
7,000
|
|
7,000
|
Management fees and
expenses (1)
|
1,600
|
|
1,600
|
Settlement of legal
claim and associated legal expenses (2)
|
—
|
|
—
|
Adjusted
EBITDA
|
$
108,000
|
|
$
117,000
|
|
|
|
|
|
|
(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.
|
(2)
|
Reflects legal expenses
associated with a settlement agreement entered into in April 2021
unrelated to the Company's core operations.
|
View original
content:https://www.prnewswire.com/news-releases/construction-partners-inc-announces-fiscal-2022-third-quarter-results-301600623.html
SOURCE Construction Partners, Inc.