Construction Partners, Inc. Announces Fiscal 2024 Third Quarter Results
Revenue Up 22.7% Compared to Q3 FY23
Net Income Up 42.4% Compared to Q3 FY23
Adjusted EBITDA Up 30.5% Compared to Q3 FY23
Record Backlog of
Company Raises FY24 Outlook
Revenues were
Gross profit was
General and administrative expenses were
Net income was
Adjusted EBITDA(1) was
Project backlog was
Smith added, "As we enter the final quarter of our fiscal year, our team is dedicated to safely and efficiently building projects throughout our six southeastern states, while also integrating our three recent acquisitions. At CPI, we are also focused on organic growth, as evidenced by our 13% organic growth for the quarter. We continue to pursue the path to our ROAD-Map 2027 goals and create value for shareholders through improving returns on capital."
Fiscal Year 2024 Outlook
The Company is increasing guidance for fiscal 2024 with regard to revenue, net income, Adjusted EBITDA and Adjusted EBITDA Margin, as follows:
- Revenue in the range of
$1.835 billion to$1.860 billion - Net income in the range of
$73.5 million to$76.5 million - Adjusted EBITDA(1) in the range of
$219 million to$228 million - Adjusted EBITDA Margin(1) in the range of 11.9% to 12.3%
Conference Call
The Company will conduct a conference call today at
About
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:
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 -
Consolidated Statements of Comprehensive Income (unaudited, in thousands, except share and per share data) |
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For the Three Months |
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For the Nine Months |
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|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenues |
|
$ 517,794 |
|
$ 421,893 |
|
$ 1,285,726 |
|
$ 1,088,522 |
Cost of revenues |
|
434,302 |
|
357,821 |
|
1,111,553 |
|
967,674 |
Gross profit |
|
83,492 |
|
64,072 |
|
174,173 |
|
120,848 |
General and administrative expenses |
|
(38,928) |
|
(32,231) |
|
(111,661) |
|
(93,945) |
Gain on sale of property, plant and equipment, net |
|
1,093 |
|
1,499 |
|
2,960 |
|
4,825 |
Gain on facility exchange |
|
— |
|
— |
|
— |
|
5,389 |
Operating income |
|
45,657 |
|
33,340 |
|
65,472 |
|
37,117 |
Interest expense, net |
|
(4,673) |
|
(5,039) |
|
(12,987) |
|
(13,801) |
Other income |
|
32 |
|
493 |
|
47 |
|
925 |
Income before provision for income taxes |
|
41,016 |
|
28,794 |
|
52,532 |
|
24,241 |
Provision for income taxes |
|
10,108 |
|
7,117 |
|
12,905 |
|
6,153 |
Net income |
|
30,908 |
|
21,677 |
|
39,627 |
|
18,088 |
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
Unrealized gain (loss) on interest rate swap contract, net |
|
(540) |
|
4,127 |
|
(5,167) |
|
(625) |
Unrealized gain (loss) on restricted investments, net |
|
(34) |
|
(129) |
|
279 |
|
(12) |
Other comprehensive income (loss) |
|
(574) |
|
3,998 |
|
(4,888) |
|
(637) |
Comprehensive income |
|
$ 30,334 |
|
$ 25,675 |
|
$ 34,739 |
|
$ 17,451 |
|
|
|
|
|
|
|
|
|
Net income per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ 0.60 |
|
$ 0.42 |
|
$ 0.76 |
|
$ 0.35 |
Diluted |
|
$ 0.59 |
|
$ 0.41 |
|
$ 0.75 |
|
$ 0.35 |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
51,913,124 |
|
51,827,448 |
|
51,914,508 |
|
51,826,578 |
Diluted |
|
52,654,882 |
|
52,293,846 |
|
52,572,429 |
|
52,114,438 |
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|
|
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Consolidated Balance Sheets (in thousands, except share and per share data) |
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|
2024 |
|
2023 |
ASSETS |
(unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 56,327 |
|
$ 48,243 |
Restricted cash |
2,116 |
|
837 |
Contracts receivable including retainage, net |
340,684 |
|
303,704 |
Costs and estimated earnings in excess of billings on uncompleted contracts |
32,550 |
|
27,296 |
Inventories |
104,554 |
|
84,038 |
Prepaid expenses and other current assets |
17,955 |
|
9,306 |
Total current assets |
554,186 |
|
473,424 |
Property, plant and equipment, net |
579,106 |
|
505,095 |
Operating lease right-of-use assets |
33,329 |
|
14,485 |
|
200,333 |
|
159,270 |
Intangible assets, net |
20,879 |
|
19,520 |
Investment in joint venture |
84 |
|
87 |
Restricted investments |
17,016 |
|
15,079 |
Other assets |
27,163 |
|
32,705 |
Total assets |
$ 1,432,096 |
|
$ 1,219,665 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 158,617 |
|
$ 151,406 |
Billings in excess of costs and estimated earnings on uncompleted contracts |
113,195 |
|
78,905 |
Current portion of operating lease liabilities |
7,324 |
|
2,338 |
Current maturities of long-term debt |
23,906 |
|
15,000 |
Accrued expenses and other current liabilities |
42,975 |
|
31,534 |
Total current liabilities |
346,017 |
|
279,183 |
Long-term liabilities: |
|
|
|
Long-term debt, net of current maturities and deferred debt issuance costs |
453,942 |
|
360,740 |
Operating lease liabilities, net of current portion |
26,762 |
|
12,649 |
Deferred income taxes, net |
34,895 |
|
37,121 |
Other long-term liabilities |
17,539 |
|
13,398 |
Total long-term liabilities |
533,138 |
|
423,908 |
Total liabilities |
879,155 |
|
703,091 |
Stockholders' equity: |
|
|
|
Preferred stock, par value |
— |
|
— |
Class A common stock, par value |
44 |
|
44 |
Class B common stock, par value |
12 |
|
12 |
Additional paid-in capital |
275,562 |
|
267,330 |
|
(6,783) |
|
(178) |
|
(15,603) |
|
(15,603) |
Accumulated other comprehensive income, net |
13,807 |
|
18,694 |
Retained earnings |
285,902 |
|
246,275 |
Total stockholders' equity |
552,941 |
|
516,574 |
Total liabilities and stockholders' equity |
$ 1,432,096 |
|
$ 1,219,665 |
|
|
|
|
Consolidated Statements of Cash Flows (unaudited, in thousands) |
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For the Nine Months Ended |
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|
2024 |
|
2023 |
Cash flows from operating activities: |
|
|
|
Net income |
$ 39,627 |
|
$ 18,088 |
Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by |
|
|
|
Depreciation, depletion, accretion and amortization |
67,468 |
|
57,769 |
Amortization of deferred debt issuance costs |
223 |
|
225 |
Unrealized loss on derivative instruments |
184 |
|
1,408 |
Provision for bad debt |
370 |
|
450 |
Gain on sale of property, plant and equipment |
(2,960) |
|
(4,825) |
Gain on facility exchange |
— |
|
(5,389) |
Realized loss on sales, calls and maturities of restricted investments |
53 |
|
10 |
Share-based compensation expense |
10,206 |
|
7,909 |
Loss from investment in joint venture |
3 |
|
— |
Deferred income tax benefit |
(194) |
|
(145) |
Other non-cash adjustments |
(179) |
|
(117) |
Changes in operating assets and liabilities, net of business acquisitions: |
|
|
|
Contracts receivable including retainage |
(11,310) |
|
22,777 |
Costs and estimated earnings in excess of billings on uncompleted contracts |
(4,273) |
|
(3,580) |
Inventories |
(16,959) |
|
(11,999) |
Prepaid expenses and other current assets |
(1,194) |
|
3,214 |
Other assets |
(915) |
|
(283) |
Accounts payable |
635 |
|
(7,441) |
Billings in excess of costs and estimated earnings on uncompleted contracts |
27,042 |
|
14,159 |
Accrued expenses and other current liabilities |
5,370 |
|
(1,741) |
Other long-term liabilities |
(16) |
|
4,053 |
Net cash provided by operating activities, net of business acquisitions |
113,181 |
|
94,542 |
Cash flows from investing activities: |
|
|
|
Purchases of property, plant and equipment |
(70,410) |
|
(79,046) |
Proceeds from sale of property, plant and equipment |
8,047 |
|
12,640 |
Proceeds from facility exchange |
— |
|
36,987 |
Proceeds from sales, calls and maturities of restricted investments |
2,860 |
|
1,403 |
Business acquisitions, net of cash acquired |
(135,219) |
|
(82,740) |
Purchase of restricted investments |
(4,376) |
|
(7,882) |
Net cash used in investing activities |
(199,098) |
|
(118,638) |
Cash flows from financing activities: |
|
|
|
Proceeds from issuance of long-term debt, net of debt issuance costs |
149,385 |
|
53,000 |
Repayments of long-term debt |
(47,500) |
|
(9,375) |
Purchase of treasury stock |
(6,605) |
|
(139) |
Net cash provided by financing activities |
95,280 |
|
43,486 |
Net change in cash, cash equivalents and restricted cash |
9,363 |
|
19,390 |
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 |
$ 58,443 |
|
$ 54,949 |
|
|
|
|
Supplemental cash flow information: |
|
|
|
Cash paid for interest |
$ 15,201 |
|
$ 14,319 |
Cash paid for income taxes |
$ 4,285 |
|
$ 1,021 |
Cash paid for operating lease liabilities |
$ 4,306 |
|
$ 1,802 |
Non-cash items: |
|
|
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities |
$ 22,986 |
|
$ 5,417 |
Property, plant and equipment financed with accounts payable |
$ 2,490 |
|
$ 2,078 |
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) share-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 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 Adjusted EBITDA and Adjusted EBITDA Margin 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 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:
Net Income to Adjusted EBITDA Reconciliation
Fiscal Quarters Ended (unaudited, in thousands) |
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For the Three Months |
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|
2024 |
|
2023 (1) |
Net income |
$ 30,908 |
|
$ 21,677 |
Interest expense, net |
4,673 |
|
5,039 |
Provision for income taxes |
10,108 |
|
7,117 |
Depreciation, depletion, accretion and amortization |
23,507 |
|
19,536 |
Share-based compensation expense |
4,039 |
|
2,737 |
Adjusted EBITDA |
$ 73,235 |
|
$ 56,106 |
Revenues |
$ 517,794 |
|
$ 421,893 |
Adjusted EBITDA Margin |
14.1 % |
|
13.3 % |
|
|
(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 |
Net Income to Adjusted EBITDA Reconciliation Fiscal Year 2024 Updated Outlook (unaudited, in thousands, except percentages) |
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For the Fiscal Year Ending |
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|
Low |
|
High |
Net income |
$ 73,500 |
|
$ 76,500 |
Interest expense, net |
17,500 |
|
19,500 |
Provision for income taxes |
24,000 |
|
25,000 |
Depreciation, depletion, accretion and amortization |
90,000 |
|
92,000 |
Share-based compensation expense |
14,000 |
|
15,000 |
Adjusted EBITDA |
$ 219,000 |
|
$ 228,000 |
Revenues |
$ 1,835,000 |
|
$ 1,860,000 |
Adjusted EBITDA Margin |
11.9 % |
|
12.3 % |
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