U.S. Markets open in 3 hrs 1 min

Edited Transcript of ROAD.OQ earnings conference call or presentation 9-Aug-19 3:00pm GMT

Q3 2019 Construction Partners Inc Earnings Call

Aug 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Construction Partners Inc earnings conference call or presentation Friday, August 9, 2019 at 3:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Charles E. Owens

Construction Partners, Inc. - President, CEO & Director

* Ned Nelson Fleming

Construction Partners, Inc. - Executive Chairman of the Board

* R. Alan Palmer

Construction Partners, Inc. - Executive VP & CFO

================================================================================

Conference Call Participants

================================================================================

* Andrew John Wittmann

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Brent Edward Thielman

D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst

* Joshua Kenneth Wilson

Raymond James & Associates, Inc., Research Division - Senior Research Associate

* Trey Grooms

Stephens Inc., Research Division - MD

* Rick Black

Dennard Lascar Associates, LLC - EVP

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Greetings, and welcome to the Construction Partners Third Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, with Investor Relations. Thank you, sir. You may begin.

--------------------------------------------------------------------------------

Rick Black, Dennard Lascar Associates, LLC - EVP [2]

--------------------------------------------------------------------------------

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners' conference call to review fiscal 2019 third quarter results. This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section of constructionpartners.net. Information recorded on this call speaks only as of today, August 9, 2019. So please be advised that any time-sensitive information may no longer be accurate as of the date of any replay. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of the company's call that by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to the company's earnings press release for a disclosure on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted EBITDA. Reconciliations to the nearest GAAP measures can be found at the end of our press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And now I would like to turn the call over to Construction Partners' President and CEO, Mr. Charles Owens. Charles?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Rick, and good morning, everyone. With me on the call today are Ned Fleming, our Executive Chairman; and Alan Palmer, our Chief Financial Officer. In my opening remarks, I will provide comments about our fiscal 2019 third quarter and give an update on our business. I will then turn the call over to Ned for a few additional comments. Finally, Alan will review our financial results before we take your questions. We are pleased with our performance during the third fiscal quarter. This reporting period marks our sixth consecutive quarter of revenue growth since our IPO last year. This success has been attributable to solid and consistent execution of our business model and growth strategy. Revenue for the quarter was $227.3 million, up 16.5% compared to last year and led to strong growth and adjusted EBITDA, which grew to $31.3 million, up 37.9% from the same quarter last year. In the third quarter, our adjusted EBITDA margin increased to 13.8% compared to 11.6% in the third quarter last year.

Our growth in the quarter was fueled by strong operational performance and effective project execution by our workforce throughout all markets, consistent with our strong historical execution and with favorable working conditions. We effectively utilized hot mix asphalt plants and equipment, which attributed to higher profitability in the quarter. In addition, I am very pleased with our backlog at quarter end and with the opportunities available for bid in the remainder of the fiscal year and beyond.

As we have mentioned before, historically we have earned approximately 40% of our annual revenue during our first half of our fiscal year and 60% during the second half. We typically benefit in the second half of our fiscal year from more favorable working conditions due to normal weather patterns, longer working days and other factors. In line with our expectations, we benefited from these factors in the third quarter and were able to improve margins.

In mid-July, we announced our 19th acquisition since our founding with a hot mix asphalt manufacturing plant and paving company in Northeast Alabama. With this acquisition complete and fully integrated, we have now completed 4 successful acquisitions since our initial public offering in May of last year. Today, we operate 32 hot mix asphalt plants across the 5 Southeastern states in which we operate. Since the founding, we have maintained a consistent strategy of controlled profitable growth through 3 primary levers: by doing more work in our current markets; by making strategic acquisitions; and by expanding through greenfields where we established a new market and a hot mix asphalt plant. Currently, the pipeline of acquisition opportunities look robust and we will continue to evaluate the prospects that best fit the company and our strategy. We are patient with acquisition opportunities and place high importance on finding a good fit.

Before turning the call over to Ned, I would like to thank our senior management team for their leadership and I would also like to thank for -- the 2,200 employees for their dedication and hard work that enables us to execute our strategy. Now I'll turn the call over to Ned for a few additional comments. Ned?

--------------------------------------------------------------------------------

Ned Nelson Fleming, Construction Partners, Inc. - Executive Chairman of the Board [4]

--------------------------------------------------------------------------------

Thank you, Charles, and good morning to everyone. This was a very good quarter. The entire team continue to operate at a very high level throughout the organization and as I've seen for nearly 2 decades, they continued to deliver consistent results. Based on our proven strategy of sustainable growth, this team is enhancing the financial performance of the company and maintaining market share across our markets. In addition, they are doing this with the support of an incredible corporate culture that has fostered success at CPI since its inception. There is an important and deliberate focus on people. We provide continuous training and mentoring to support a growing and talented workforce. The company's emphasis on proper training coupled with consistent growth creates opportunities for mobility and advancement for the workforce. This quarter's success again marks a great point of differentiation for CPI compared to others in this sector. We primarily focus on recurring maintenance projects for public roadways. Two important elements set us apart with this model. We have smaller overall project sizes, as well as shorter project durations. Our model provides our crews and equipment with consistent work in our local markets and the company with more recurring revenue and consistent financial results. We do not bid mega-projects outside of our markets. The company is strategically positioned in all our markets to continue to deliver industry-leading top line growth and margins as well as strengthening its balance sheet. Our business is located in fast-growing Southeastern states with both demand for ongoing road repair projects and increasing public funding that will continue to fuel growth. This built-in demand, as well as the funding expansion, will continue to grow in our markets. As our team continues to consistently execute, we believe the market will understand that CPI represents a unique model for public infrastructure companies. We are confident that the business will continue to generate significant financial results and cash generation and maximize value for our shareholders. And with that, I'd like to turn the call over to our CFO, Alan Palmer. Alan?

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [5]

--------------------------------------------------------------------------------

Thank you, Ned, and good morning, everyone. I want to start by quickly highlighting our key performance metrics in the third quarter. From a financial standpoint, as Charles mentioned, favorable working conditions, strong operational performance, and effective project execution by our workforce throughout all markets led to year-over-year increases in the quarter. Revenue for the quarter, increased to $227.3 million, up $32.2 million over the June 30, 2018 quarter. Revenues in our existing markets increased approximately $21.3 million as a result of growing demand in both the private and public sector. The increase also includes approximately $10.9 million of revenue attributable to acquisitions that were completed during or subsequent to the quarter ended June 30, 2018. Gross profit increased to $38.1 million, up approximately $8.6 million over last year primarily due to the higher revenue. The higher gross profit percentage of revenue was the result of the strong operational performance and effective project execution by our workforce in addition to increased HMA production and equipment utilization during the quarter. Net income increased to $17.2 million, up from $13.4 million compared to the same period last year. Earnings per share were $0.33 compared to $0.29 in the same quarter last year. Adjusted EBITDA increased $8.6 million resulting in an adjusted EBITDA margin of 13.8% compared to 11.6% for the same period in the prior year. The higher adjusted EBITDA margin was a combination of a higher gross profit margin and also a lower general and administrative expense percentage. During the quarter we were able to increase our shipments from our newly acquired liquid asphalt terminal in Florida. This contributed to our margin improvement and we continue to believe that we can achieve between 20 and 30 basis points in overall margin improvements through the use of this terminal. General and administrative expenses were $15.9 million in the third quarter or approximately 7% of revenue compared to the same quarter last year of $14.8 million or 7.5% of revenue. As of June 30, our construction backlog -- project backlog was $581 million. Of this amount, approximately 38% or $221 million is expected to be completed during the fiscal 2019 year. The remainder representing approximately 62% of project backlog is expected to be completed in future years. This is consistent with our historical backlog for this quarter. Based on our strong backlog and continued operational performance, we're maintaining our outlook for fiscal year 2019 with regard to revenue, net income and adjusted EBITDA.

Turning now to the balance sheet. At June 30, we had $59.7 million of cash and $14.4 million of availability under our $30 million revolving credit facility after deducting outstanding letters of credit. Our debt to trailing 12 months EBITDA ratio was 0.74. We have a very strong balance sheet to support the growth opportunities we are seeing. Cash provided by operating activities was $17.9 million for the 9 months ended June 30 compared to $23.7 million for the 9 months ended June 30, 2018. The decrease is due to higher accounts receivable and work-in-progress balances on significantly higher quarterly revenue and an $8 million increase in inventory related to the operation of our new liquid asphalt terminal. CapEx in the third quarter was $11.9 million compared to $11.4 million in the same quarter last year. For fiscal 2019, we expect our capital expenditures to be in the range of $38 million to $42 million, which compares to $42.8 million in fiscal 2018.

Lastly, I'd like to echo Charles' comments that we had a very good third quarter. We're also pleased with our current backlog. As I've mentioned before, we will continue to be diligent to manage across our 32 local markets. We do this by understanding exactly what is occurring in each market and taking action. This is a highly competitive business that requires constant overview and internal communication, which is exactly what we discuss with our senior management team on a weekly basis. We continue to successfully maintain our market position in this competitive environment while also steering revenue to stronger markets as opportunities present themselves. Strategically, our organization maximizes efficiencies through scale and flexibility to move crews and equipment to take advantage of favorable margins and to maintain EBITDA. With that, we'll now take questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from the line of Andrew Wittmann with Robert W. Baird.

--------------------------------------------------------------------------------

Andrew John Wittmann, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [2]

--------------------------------------------------------------------------------

I guess the question I just had here is just you touched on this in some of your prepared remarks. It's just on the backlog. You've mentioned kind of seasonal trends in that and how the amount that you've got for this year and next year is not different from historical trends. But as you look at the backlog, Charles, can you just talk about how you evaluate it as you head into the next fiscal year? And do you believe that the backlog that you have in place together with the trends in your markets and the activity levels in your markets can continue to deliver another year of the types of organic growth that you guys have talked about since your IPO roadshow?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Yes. Thank you for the question, Andy. Yes, we think that we have a lot of opportunities in front of us to bid work and we're really satisfied with where we are on the backlog and as far as our growth, as we've stated before, we're going to be in high single digits, the double digits from the growth that -- we're not changing kind of our strategy in any way other than that.

--------------------------------------------------------------------------------

Andrew John Wittmann, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [4]

--------------------------------------------------------------------------------

Got it, great. And then I guess my second -- my follow-up question here is for Alan. It's kind of similar question is just kind of your evaluation here of the cash flow for the year-to-date so far. I've got free cash flow here being negative year-to-year and so I guess as we look at the fourth quarter, are you expecting some of the receivables or working capital come out of the business? I know it's another real busy quarter for revenue burn. So I just want to get a sense of kind of how you evaluate the year-to-date cash flow position that you're in, if there's a timing factor or other factors that are going into this that are maybe holding you back a little bit so far.

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [5]

--------------------------------------------------------------------------------

Yes. Andy. As I said in the comments, about $8 million of that is the result of inventory that we put in at the asphalt terminal that we did not have last year and then we made one other acquisition that increased the inventory some, and then of course, the volume of sales in this quarter compared to last year has added to the accounts receivable. But as a percentage of sales, there's really not any change in the receivables. But as we enter into the fourth quarter, we should see more cash generation because a lot of the growth, if you will, and the receivables should flatten out in that fourth quarter. So we expect -- and it just so happened on the inventory that we had 2 large shipments that came in at the very end of June and that, most all of that inventory, would be shipped out in the fourth quarter and it would most likely be October before we reload the terminal. So that should generate a substantial amount of change between June 30 and September 30.

--------------------------------------------------------------------------------

Andrew John Wittmann, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [6]

--------------------------------------------------------------------------------

Okay. That's helpful. Can you just -- sorry to jump in here -- can you -- are you able to quantify or willing to quantify those shipments just so we have a little context around those shipments that you cited there?

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [7]

--------------------------------------------------------------------------------

Yes. I mean, I...

--------------------------------------------------------------------------------

Andrew John Wittmann, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [8]

--------------------------------------------------------------------------------

In terms of the impact on inventory.

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [9]

--------------------------------------------------------------------------------

Yes. A single tow was about $3.5 million worth of inventory. So we got 2 tows in the last week of June and so that put our tanks at a pretty high capacity for this time of the year, but it's just the timing and the flow of when the material comes in and goes out. But I mean, that inventory was $8 million and typically, other than in the winter field, which we've talked about before, we would not have that much inventory at any one time.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

The next question comes from Trey Grooms with Stephens.

--------------------------------------------------------------------------------

Trey Grooms, Stephens Inc., Research Division - MD [11]

--------------------------------------------------------------------------------

On the -- I guess my first question is on the margins. Great performance there. Just, I know you mentioned the new terminal impacted but if you could maybe quantify that maybe how much of the terminal impacted margins in the quarter. And then thinking about other moving pieces there that, that may have -- you may have benefited from and kind of as we look into the little bit longer term here, I know from a top line perspective you guys are kind of looking still for that high-single digit to double-digit type top line growth. Kind of as a follow-on question on the margins, how are you thinking now with the terminal in play and kind of what your footprint looks like today? How you're thinking about longer-term EBITDA flow-through?

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [12]

--------------------------------------------------------------------------------

Yes. With regard to the terminal, we did have a positive impact from it. We were able to get our shipments up close to what we would want to be doing on a quarterly basis, and it made approximately a 20-basis-point impact on the quarter. So it was in service for the full quarter and we had good outflow from it. So I've said before, on an annual basis when we got a full year, we expect between 20 and 30 basis points' improvement in our overall margins so that quarter was right in line with that and our volume should increase in the future. As far as long-term expectations, we have said before we expect to be able to increase our overall margin, EBITDA margin. Part of that through some improvement in our gross profit but also part of it through an improvement in our lowering our overhead as a percentage of revenue because of the steep increases we had related to some of our growth and going public, and we saw that in this quarter. I think it was about 30 to 40 basis points lower than the same quarter last year. And of course as we get into the busy times, a big contributor to the increasing margin is the utilization of our equipment and the throughput that goes to the asphalt plants. So that certainly was a driver in this quarter. And a recovery of some of the lower-margin because of the offset of that in the previous quarters.

--------------------------------------------------------------------------------

Trey Grooms, Stephens Inc., Research Division - MD [13]

--------------------------------------------------------------------------------

Okay. So I guess kind of looking into '20 or even not just necessarily just next fiscal year, but just as a general rule, is there kind of a bogey now range of that you can give us on how the way to kind of think about it? I know it ebbs and flows from quarter-to-quarter given your ability to do more or less work given weather and other factors, but just didn't know if there was some kind of way we could be thinking about kind of that incremental margin flow-through as we look into next year. But sounds like it could be at least as good as what we've seen, if not a little better given the terminal.

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [14]

--------------------------------------------------------------------------------

Yes. I mean, when we have the terminal in there for the full year then your 9 months or your 12 months is going to be more in the 20 to 30 basis points. And so that will be there ongoing and then I think with no other changes other than just the revenue level we're at now, there's about 20 basis points probably on the G&A. And then if we make acquisitions or the organic growth stays up as high as it is -- has been this last year to then we could pick up a little bit more of the margin there just because that cost as a percentage of revenue is declining and we would expect that to continue as we grow.

--------------------------------------------------------------------------------

Trey Grooms, Stephens Inc., Research Division - MD [15]

--------------------------------------------------------------------------------

All right, that's helpful. And then last one for me is on M&A pipeline you said was robust. Are you guys seeing any opportunities out there for larger M&A and what is your appetite for doing something of size from an M&A standpoint? Or should we kind of expect continued kind of tuck-in-type acquisitions that you guys have done such a good job at executing on in the past?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [16]

--------------------------------------------------------------------------------

Yes, Trey. This is Charles. We're obviously, we'd like the bolt-on acquisitions but we also looked at some larger acquisitions that's out there that really just didn't fit our profile the way that we would really like for it to fit. But obviously, if an acquisition comes along that does fit the profile really we're not limited, our acquisition strategy to a certain level of revenue that we take in or anything like that. So we're open to anything that makes a strategic fit and fits our culture and we will contribute to bottom line immediately.

--------------------------------------------------------------------------------

Trey Grooms, Stephens Inc., Research Division - MD [17]

--------------------------------------------------------------------------------

Are you totally against -- because geographically you guys have kind of stuck to your wheelhouse. Would it be totally unreasonable to see you guys looking at something outside of the current footprint that you have now?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [18]

--------------------------------------------------------------------------------

We are always looking outside of the footprint and we're evaluating things. If we get outside of our footprint then you know we want to make sure we got the right acquisition that has the personnel and the ability to grow the company and expand and -- but right now, we have a lot of, as you know, privately-held companies in the markets that we're in but we're based -- we're looking in other areas also, but it's got to be a good fit for us to move into another platform situation.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

The next question comes from the line of Josh Wilson with Raymond James.

--------------------------------------------------------------------------------

Joshua Kenneth Wilson, Raymond James & Associates, Inc., Research Division - Senior Research Associate [20]

--------------------------------------------------------------------------------

Congrats on the quarter. I wanted to go back the lairs a little more on gross margin in the quarter. The utilization benefits that you've talked about, was that more of a comment seasonally? Or was that referring to unusually favorable weather that maybe is not sustainable or repeatable?

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [21]

--------------------------------------------------------------------------------

It was strictly the seasonality. When we do 40% in the first 6 months, both of those quarters are going to be negatively impacted margin-wise by the lower utilization of the equipment and the plants. And then in the higher-utilization quarters like the third and the fourth, that margin is going to expand and that's what we saw in this quarter and it was not really anything that's not unusual that occurred in the quarter. It's just the seasonality of the first 6 months compared to the second 6 months.

--------------------------------------------------------------------------------

Joshua Kenneth Wilson, Raymond James & Associates, Inc., Research Division - Senior Research Associate [22]

--------------------------------------------------------------------------------

Got it and as I look at the implication for margins in the September quarter, it looks like there -- they may step down some in your guidance. What would the drivers be there?

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [23]

--------------------------------------------------------------------------------

Well, I'm not sure in that there's not a substantial change in what -- I mean we do a quarterly update in our guidance or considering that guidance is based on that. So what I'm looking at that we put together is not -- is less than 0.5% difference, if you will, in the margin in the third quarter and the fourth quarter. So I'm not sure what implies that it would be down unless it's you are comparing maybe to the midpoint of the previous guidance, but there -- other than that, there is nothing in the -- our expectation for the fourth quarter that would have implicated a decline in the margin in that quarter compared to the current one.

--------------------------------------------------------------------------------

Joshua Kenneth Wilson, Raymond James & Associates, Inc., Research Division - Senior Research Associate [24]

--------------------------------------------------------------------------------

Okay. Got it and then last one for me. Your burn rate, the amount of sales you've had relative to the backlog going into the quarter has been running a little higher than last year. Should we expect that to continue going forward and what might some of the drivers of that be?

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [25]

--------------------------------------------------------------------------------

I'm not sure of the question. I mean our -- we expect our revenue to continue to grow as we said, as Charles said, both through acquisitions and organic with the high single, low double digits and we expect that to continue generally in the third and fourth quarter. The burn rate is -- sometimes can be 10% or 15% higher than what we replace just because of the timing of when the smaller or the recurring maintenance type contracts are less, so that's pretty common. And our backlog as a percent of what we expect to do next year with our existing operations is pretty much in line with what we've seen in the past year. So I don't know if that answer your question, but it will be something. But typically our burn rate in the third and fourth quarter is greater than what we had in the third and fourth quarter. That's been the historical norm, where in the first and second quarter, especially the second quarter. Our add is usually a good bit more than our burn rate because we're adding a lot of that work that will complete in the next -- within that same fiscal year.

--------------------------------------------------------------------------------

Operator [26]

--------------------------------------------------------------------------------

The next question is from Brent Thielman with D.A. Davidson.

--------------------------------------------------------------------------------

Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [27]

--------------------------------------------------------------------------------

Great quarter. Charles, if you look at the backlog or just kind of the run rate of business you're taking on today, are you seeing any shift towards more work where you are kind of more of the subcontractor versus the prime contractor? I'm thinking about some of these larger jobs that have been hitting the market. I think historically you've kind of been in that 70% prime range. Is that changing at all?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [28]

--------------------------------------------------------------------------------

No, we really haven't seen that much of a shift. A lot of the large projects are not really in all of our 32 different markets and we've been still pretty consistent as far as the prime versus the sub and we really haven't seen that big of a shift going in that direction.

--------------------------------------------------------------------------------

Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [29]

--------------------------------------------------------------------------------

Okay. Great. And this favorable legislation in Alabama, when do you think that start -- when do you think you start to see some opportunities materialize from that for you?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [30]

--------------------------------------------------------------------------------

I think we'll start seeing that in our fiscal of '20.

--------------------------------------------------------------------------------

R. Alan Palmer, Construction Partners, Inc. - Executive VP & CFO [31]

--------------------------------------------------------------------------------

Typically -- this is Alan. Typically, it's about 9 to 12 months before -- after that becomes effective before you really start working on some of those. But we expect -- because it goes in effect October 1, we expect some of the spring lettings to include projects that are funded with that, especially some of the county and city projects because part of that tax increase is going to the cities and counties and they have a strong appetite to get some of their roads done and those typically are not ones to have a long lead time.

--------------------------------------------------------------------------------

Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [32]

--------------------------------------------------------------------------------

Okay. And the private side of the business, if I could just sneak one more in. Any updates in terms of what you're seeing in there at least in your geographies?

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [33]

--------------------------------------------------------------------------------

In the areas that we operate, we really haven't seen very little slowdown in the commercial and the private sector. It still seems to be strong and we don't see anything out there in the future that's going to slow it down.

--------------------------------------------------------------------------------

Operator [34]

--------------------------------------------------------------------------------

Mr. Owens, there are no further questions at this time, so I'd like to pass the floor back over to you for any additional concluding comments.

--------------------------------------------------------------------------------

Charles E. Owens, Construction Partners, Inc. - President, CEO & Director [35]

--------------------------------------------------------------------------------

Okay. Well, I'd like to thank everyone for joining the call today and just wanted to let you know that we'll be focused on executing our strategy and we look forward to our next conversation at the next update. Thank you, everyone.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day.