U.S. markets open in 5 hours 53 minutes
  • S&P Futures

    3,224.25
    -7.00 (-0.22%)
     
  • Dow Futures

    26,633.00
    -52.00 (-0.19%)
     
  • Nasdaq Futures

    10,792.00
    -37.00 (-0.34%)
     
  • Russell 2000 Futures

    1,448.50
    +1.80 (+0.12%)
     
  • Crude Oil

    39.64
    -0.29 (-0.73%)
     
  • Gold

    1,859.80
    -8.60 (-0.46%)
     
  • Silver

    22.27
    -0.83 (-3.59%)
     
  • EUR/USD

    1.1662
    0.0000 (-0.00%)
     
  • 10-Yr Bond

    0.6760
    0.0000 (0.00%)
     
  • Vix

    29.36
    +2.50 (+9.31%)
     
  • GBP/USD

    1.2722
    -0.0004 (-0.03%)
     
  • USD/JPY

    105.2500
    -0.0820 (-0.08%)
     
  • BTC-USD

    10,319.71
    +70.24 (+0.69%)
     
  • CMC Crypto 200

    209.05
    -4.92 (-2.30%)
     
  • FTSE 100

    5,838.17
    -61.09 (-1.04%)
     
  • Nikkei 225

    23,087.82
    -258.67 (-1.11%)
     

Construction Partners, Inc. Announces Fiscal 2020 Second Quarter Results

Q2 Year-over-Year Revenue Up 2.7% and Gross Profit Up 5.9% Company Revises and Narrows FY 2020 Outlook

DOTHAN, Ala., May 08, 2020 (GLOBE NEWSWIRE) -- Construction Partners, Inc. (ROAD) (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 its second fiscal quarter ended March 31, 2020. Results for the quarter included revenues of $168.7 million, an increase of 2.7%, gross profit of $21.0 million, an increase of 5.9%, net income of $1.5 million, a decrease of 63.5%, and adjusted EBITDA(1) of $14.2 million, an increase of 2.0%, compared to the same quarter last year.

Charles E. Owens, the Company’s President and Chief Executive Officer, stated, “We are pleased with our second quarter results. Notwithstanding the positive start to the year, we are all responding and adjusting to the unprecedented global health and economic impacts from COVID-19. First and foremost, we are focused on the safety and welfare of our employees, our customers, and the general public.  In early March, we implemented additional safety protocols in response to the COVID-19 outbreak. As an essential business, we continued to work throughout the crisis, and we did not incur significant disruptions during the second quarter.”

Alan Palmer, the Company’s Executive Vice President and Chief Financial Officer, commented, “Our second quarter net income was adversely affected by a $1.4 million non-cash charge to interest expense related to interest swaps on our outstanding debt and a $0.8 million non-cash charge to other expense related to fuel swaps that we entered during the quarter to take advantage of historically low diesel fuel prices. We record these derivative instruments at their fair value and record changes in the fair value in current earnings.”

Project backlog at March 31, 2020 was $579.1 million, compared to $539.1 million at December 31, 2019 and $584.8 million at March 31, 2019. Palmer continued, “We maintain a construction backlog consisting primarily of recurring maintenance projects, and we continue to see opportunities to bid on these projects in our markets.”

Owens commented, “During the second quarter, we acquired two hot mix asphalt plants in the Florida panhandle.  The Pensacola plant represents our entry into a new market with the ability to pursue a variety of public, private and Department of Defense projects. This transaction favorably positions us in the Florida panhandle, which we believe is poised for growth in the coming years. Also, this acquisition is already fully integrated.

“Looking forward, while our operations in the second quarter were largely unaffected by COVID-19, visibility on longer-term public and private construction projects is less clear at this time.  Taking into account future economic uncertainties, coupled with our current project work and construction backlog as of March 31, 2020, we are adjusting and narrowing our full-year outlook for fiscal 2020.”

Revised Fiscal Year 2020 Outlook

The Company has revised its outlook for fiscal year 2020 with regard to revenue, net income and Adjusted EBITDA, as follows:

  • Revenue of $820 million to $830 million

  • Net income of $32 million to $34 million

  • Adjusted EBITDA (1) of $88 million to $91 million

Ned N. Fleming, III, the Company’s Executive Chairman, stated, “I’m extremely proud of our organization for always putting safety first. The entire team has exemplified this core value during the pandemic by quickly and effectively implementing new protocols to further the safety and welfare of our employees and the communities in which we work. We will continue to be prudent as we navigate forward through these dynamic economic times. However, we expect the demand for infrastructure projects throughout the country to persist, and we believe that we are well-positioned to continue executing on our proven strategy for long-term growth and value creation.”

Conference Call

The Company will conduct a conference call on Friday, May 8, 2020 at 9:00 a.m. Central Time to discuss financial and operating results for the quarter ended March 31, 2020. 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 15, 2020 by calling (201) 612-7415 and using passcode 13701537#. 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 35 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,

 

 2020

 

 

2019

 

 

 2020

 

 

2019

 

Revenues

$

168,679

 

 

$

164,304

 

 

$

343,993

 

 

$

318,631

 

Cost of revenues

147,708

 

 

144,503

 

 

299,265

 

 

277,702

 

Gross profit

20,971

 

 

19,801

 

 

44,728

 

 

40,929

 

General and administrative expenses

(16,821

)

 

(14,771

)

 

(33,934

)

 

(29,202

)

Settlement income

-

 

 

-

 

 

-

 

 

-

 

Gain on sale of equipment, net

435

 

 

693

 

 

744

 

 

1,027

 

Operating income

4,585

 

 

5,723

 

 

11,538

 

 

12,754

 

Interest expense, net

(1,834

)

 

(379

)

 

(2,115

)

 

(894

)

Other income (expense)

(753

)

 

123

 

 

(688

)

 

106

 

Income before provision for income taxes and earnings from investment in joint venture

1,998

 

 

5,467

 

 

8,735

 

 

11,966

 

Provision for income taxes

531

 

 

1,488

 

 

1,850

 

 

3,139

 

Earnings from investment in joint venture

70

 

 

233

 

 

113

 

 

539

 

Net income

$

1,537

 

 

$

4,212

 

 

$

6,998

 

 

$

9,366

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

0.03

 

 

$

0.08

 

 

$

0.14

 

 

$

0.18

 

Diluted

$

0.03

 

 

$

0.08

 

 

$

0.14

 

 

$

0.18

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

51,489,211

 

 

51,414,619

 

 

51,489,211

 

 

51,414,619

 

Diluted

51,619,403

 

 

51,414,619

 

 

51,612,340

 

 

51,414,619

 



CONSTRUCTION PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

 

 

March 31,

 

September 30,

 

 

 2020

 

2019

ASSETS

 

(unaudited)

 

 

Current assets:

 

 

 

 

Cash

 

$

53,794

 

 

$

80,619

 

Contracts receivable including retainage, net

 

122,897

 

 

139,882

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

16,101

 

 

12,030

 

Inventories

 

42,010

 

 

34,291

 

Prepaid expenses and other current assets

 

11,547

 

 

13,144

 

Total current assets

 

246,349

 

 

279,966

 

Property, plant and equipment, net

 

240,083

 

 

205,870

 

Operating lease right of use assets

 

8,569

 

 

-

 

Goodwill

 

46,348

 

 

38,546

 

Intangible assets, net

 

3,329

 

 

3,434

 

Investment in joint venture

 

109

 

 

496

 

Other assets

 

1,952

 

 

2,284

 

Deferred income taxes, net

 

1,173

 

 

1,173

 

Total assets

 

$

547,912

 

 

$

531,769

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

57,990

 

 

$

70,442

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

29,540

 

 

31,115

 

Current portion of operating lease liabilities

 

2,722

 

 

-

 

Current maturities of debt

 

8,457

 

 

7,538

 

Accrued expenses and other current liabilities

 

15,699

 

 

19,078

 

Total current liabilities

 

114,408

 

 

128,173

 

Long-term liabilities:

 

 

 

 

Long-term debt, net of current maturities

 

57,096

 

 

42,458

 

Operating lease liabilities, net of current portion

 

6,058

 

 

-

 

Deferred income taxes, net

 

11,480

 

 

11,480

 

Other long-term liabilities

 

7,759

 

 

6,108

 

Total long-term liabilities

 

82,393

 

 

60,046

 

 

 

 

 

 

Total liabilities

 

196,801

 

 

188,219

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, par value $0.001; 10,000,000 shares authorized at March 31, 2020 and September 30, 2019 and no shares issued and outstanding

 

-

 

 

-

 

Class A common stock, par value $0.001; 400,000,000 shares authorized, 32,705,418 shares issued and outstanding at March 31, 2020, and 32,597,736 shares issued and outstanding at September 30, 2019

 

33

 

 

33

 

Class B common stock, par value $0.001; 100,000,000 shares authorized, 21,999,279 shares issued and 19,076,327 outstanding at March 31, 2020, and 22,106,961 shares issued and 19,184,009 shares outstanding at September 30, 2019

 

22

 

 

22

 

Additional paid-in capital

 

244,237

 

 

243,452

 

Treasury stock, at cost, 2,922,952 shares of Class B common stock, par value $0.001

 

(15,603

)

 

(15,603

)

Retained earnings

 

122,422

 

 

115,646

 

Total stockholders’ equity

 

351,111

 

 

343,550

 

Total liabilities and stockholders’ equity

 

$

547,912

 

 

$

531,769

 



CONSTRUCTION PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

 

For the Six Months Ended March 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

6,998

 

 

$

9,366

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amortization of long-lived assets

19,031

 

 

14,639

 

Amortization of deferred debt issuance costs and debt discount

74

 

 

55

 

(Gain) loss on derivative instruments

2,263

 

 

331

 

Provision for bad debt

305

 

 

290

 

Gain on sale of equipment

(744

)

 

(1,027

)

Equity-based compensation expense

785

 

 

 

Earnings from investment in joint venture

(113

)

 

(539

)

  Other non-cash adjustments

(11

)

 

 

Changes in operating assets and liabilities, net of acquisition:

 

 

 

Contracts receivable including retainage, net

16,680

 

 

14,460

 

Costs and estimated earnings in excess of billings on uncompleted contracts

(4,071

)

 

(3,261

)

Inventories

(4,632

)

 

(7,965

)

Prepaid expenses and other current assets

1,597

 

 

(2,987

)

Other assets

332

 

 

3,865

 

Accounts payable

(12,452

)

 

(15,911

)

Billings in excess of costs and estimated earnings on uncompleted contracts

(1,575

)

 

(4,081

)

Accrued expenses and other current liabilities

(3,967

)

 

(1,972

)

Other long-term liabilities

(24

)

 

36

 

Net cash provided by operating activities, net of acquisition

20,476

 

 

5,299

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

(34,512

)

 

(19,802

)

Proceeds from sale of equipment

1,419

 

 

2,585

 

Business acquisitions, net of cash acquired

(30,191

)

 

(8,854

)

Acquisition of liquid asphalt terminal assets

 

 

(10,848

)

Distributions received from investment in joint venture

500

 

 

1,800

 

Net cash used in investing activities

(62,784

)

 

(35,119

)

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

(9,294

)

 

(7,406

)

Net cash provided by (used in) financing activities

15,483

 

 

(7,406

)

Net change in cash and cash equivalents

(26,825

)

 

(37,226

)

Cash and cash equivalents:

 

 

 

Beginning of period

80,619

 

 

99,137

 

End of period

$

53,794

 

 

$

61,911

 

 

 

 

 

Supplemental cash flow information:

 

 

 

Cash paid for interest

$

924

 

 

$

1,365

 

Cash paid for income taxes

$

3,400

 

 

$

1,532

 

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

$

1,140

 

 

$

 

Cash paid for operating lease liabilities

$

1,672

 

 

$

 

Non-cash items:

 

 

 

Property, plant and equipment financed with accounts payable

$

794

 

 

$

369

 

Amounts payable to Seller in business combination

$

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 and (v) certain management fees and expenses, and excludes income recognized in connection with a legal settlement between certain of the Company’s subsidiaries and a third party that did not directly relate to the Company’s business and that the Company does not expect to reoccur. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenues for each period. Adjusted EBITDA and Adjusted EBITDA Margin are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. Management uses Adjusted EBITDA and Adjusted EBITDA Margin as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

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 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 each of the periods presented:

Construction Partners, Inc.
Net Income to Adjusted EBITDA Reconciliation
Fiscal Quarters Ended March 31, 2020 and 2019
(unaudited, in thousands, except percentages)

 

 

 

 

For the Three Months Ended March 31,

 

 

2020

 

2019

Net income

 

$

1,537

 

 

$

4,212

 

Interest expense, net

 

1,834

 

 

379

 

Provision for income taxes

 

531

 

 

1,488

 

Depreciation, depletion and amortization of long-lived assets

 

9,593

 

 

7,501

 

Equity-based compensation expense

 

390

 

 

 

Management fees and expenses (1)

 

357

 

 

387

 

Adjusted EBITDA

 

$

14,242

 

 

$

13,967

 

Revenues

 

$

168,679

 

 

$

164,304

 

Adjusted EBITDA Margin

 

8.4

%

 

8.5

%

(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 2020 Updated Outlook
(unaudited, in thousands)

 

 

For the Fiscal Year Ending

 

 

September 30, 2020

 

 

Low

 

High

Net income

 

$

32,000

 

$

34,000

Interest expense, net

 

3,300

 

3,300

Provision for income taxes

 

10,700

 

11,400

Depreciation, depletion and amortization

 

39,000

 

39,300

Equity-based compensation expense

 

1,600

 

1,600

Management fees and expenses (2)

 

1,400

 

1,400

 Adjusted EBITDA

 

$

88,000

 

$

91,000

(1) Reflects fees and reimbursement of certain travel expenses under a management services agreement with an affiliate of SunTx Capital Partners, the Company’s controlling stockholder.