ROAD - Earnings call transcript Q2 2020 | Construction Partners, Inc.

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Operator

Greetings, and welcome the Construction Partners, Inc.

Second Quarter Earnings Fiscal 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure your my of Rick now Relations. Investor is to host, introduce Black It you. Thank

begin. may You

Rick Black

link May through speaks Information and recorded Thank good call this the operator, call Presentations call for quarter you, X, and fiscal section is page the joining can be appreciate on of and Relations Construction us also you being Partners results. conference constructionpartners.net. accessed XXXX of to webcast second as on today, morning, review of This everyone. only XXXX. the audio Events the Investor on We

So, statements may that the you please accurate also be date advised future of longer events of Reform of statements remind that that including future XXXX. provision safe to forward-looking considered the any statements would Litigation facts, time-sensitive as financial are I like no information made pursuant the or of or to made the Act of in replay. any harbor discussion be today's expectations historical not Securities performance Private are

will to update call Reconciliation adjusted Ned? release. today's the nature, or with was are at Construction publicly Exchange Executive the discussion statements. as Securities the in refer the and risks including of described differ that, part press no filings the press results materially. our for non-GAAP GAAP to that today EBITDA. would of uncertainties be now, on earnings disclosure Chairman, I earnings These forward-looking assumes our statements. any factors to Construction of obligation Please to the and also measures may release company's Commission. their and Management Fleming. outside refer uncertain statements issued by making like forward-looking and And the be We end control. will turn company's Actual nearest revise forward-looking measures, other Partners' detail over in Partners Ned can to found to

Ned Fleming

Charles me today Owens, Officer Executive everyone. Chief the and and President Thank our on Alan to are Chief you, good morning Palmer, call With Rick, and Officer. Financial

address of times. a our take want affected First, I to perspective to to like crisis. current to unprecedented moment COVID-XX prayers and the view most our and those thoughts would by Most importantly, extend we these

doing employees everything safety people grateful hard for to the the recovery assist While support especially our the been health responders an this are workers. us. we inspiration and can These of of we crisis, to to work truly and healthcare all and are of first communities during our we all have with of

it halt and we countless and current employees and recent essential effectiveness the brought weeks, this the in the resiliency remain the this industry companies infrastructure a due to has As businesses. expect pandemic, pandemic our in safety in crisis. minor industries put of of deemed to have businesses the our Therefore, place to we only experienced through disruptions, resilient counter has company protocols to are

our expectations. Charles economic Before second quarter it quarter was that I responded downturns. how XXXX on provide business This a to met historically has and like perspective results. a would first and during the good Alan discuss

outlook two historically the key company differentiated the the year-over-year provides the of decades CPI into over the driven nature to spoken we of about in of will confident half business XX% We for our have operating, continued the current we company's more CPI reflect CPI we the XXXX The of factors have In year expand. and outlook remain the time. its and fundamental aspects for move our we that revised model. continue XXXX As the fiscal strength several business be the ability past, and the of year, year strategic in second visibility reflected business. fiscal our of the business later. have growth revenue new than will have The margins discuss generates to

for road maintenance funding and in First, demand place mechanisms in footprint with projects our infrastructure. repair for

of Second, nature repair maintenance the recurring and road projects.

asphalt Third, the shorter vertical manufacturing the business. duration and projects, the mix integration hot of services mega projects. sides not Fourth, on

benefiting in Lastly, to and and scale, expertise, advantage flexibility XX from our distinct technology, integration markets equipment. crews vertical move

of to consistent have and All which profitable led growth.

the under is an and these economic All and organization and the stable an competitive of of consistent resilient all this The confidence in and experienced together direction talented, the factors team to executive management our across workforce. hard-working with working combination whole business of that model different environments. leaders contribute extremely

that country. this uncertainty certainly, However, pandemic like is our none experienced anything the across ever and of economic unfolding have us

are While path we and compelling forward. think proven crisis, believe strategy our do do we not us current a provides we certainly immune this from differentiates

Charles? will to discuss our continue second to we would the dynamic With as forward economic I these will we your be Alan to navigate answer through that, turn over We prudent times. to results, Charles questions. call like and then and quarter

Charles Owens

the Ned, remain communities serve work. and welfare our on and and the live, you, customers and morning, safety our people everyone. We we the good focused Thank employees, and where of

with pleased We our quarter results. are second

quarter, acquired From private locations, these Department the of mix expect two variety second hot we panhandle. we the and two to pursue public, Florida During in asphalt Defense of a plants projects.

to City, plants. will Panama in these terminal asphalt our of supply asphalt Florida both addition, In liquid

in process plans to to aggregate sufficient customers. demonstrates manufacture a facility to of of In sand of facility the used of This to manufacturing construct be mine new one solutions from The glass. a to sand material adjacent pursue in new the quality satisfy team's the quarter, ability announced creative during to our the our furnished-ready produce facility needs addition, Georgia. facilities our we glass will

we work from markets. multiple local perform Our operate in XX model in we distinct benefit project states geographic construction the diversity and business as

to Our business us model gives and by public private market flexibility the pursue projects. both

opportunities. we primary current growth, plan greenfield profitable work three doing through acquisitions continue to our As strategic and expanding we progress markets, more pursue in fiscal to through utilizing XXXX, levers, control our making

of both future to conversations represents with continue our outside potential have footprint We acquisitions. inside that and companies current

currently in states need of that is national infrastructure gas have pleased in and are to need demonstrated there adequately our public federal about number discussion tax Recent road of fund funding a the awareness an country. projects. for repair maintenance ongoing we Lastly, the increases

one FAST supporting this benefits the most for With later and public projects, that long-term safety our and our to and valuable we year repair, find year, infrastructure of funding maintenance of economic assets, lawmakers Act confident believe this they the we expiring a country's the solution routes. improvements federal recognize prior the will end of of are that

enables Palmer. our strategy challenging than leaders their work our to the times. turn with call the that, turning during to over more Before I'd and X,XXX call I'd commitment, us for And execute to these CFO, like to Alan? and hard thank that employees to Alan our Alan, like over dedication

Alan Palmer

profit non-cash share $X.X Thank year the in acquisitions increase to the quarter Charles, by XXXX up March the I was of costs, $XXX.X of $XX.X everyone. losses ago was to versus $X.X in million, Revenue management completed changes included $X.XX attributable $X.X quarter and million performance of compared last the over The and XXXX per compared primarily metrics a you, million moment due quarter. and the $X.XX start our XX, earnings in in highlighting morning, second subsequent March stock was to same $X.X increase to increased $X.X want markets. revenue XXXX, year. in attributable to to expenses. and for Net administrative of good to million compared million key and increase the benefit a which $XX.X second revenues XX, last administrative and increase to million. higher General general to year. periods to million a increased quarter of are $XXX,XXX in period gross in last payroll explained arrangements. expenses made primarily unrealized a was due The costs, were profit up existing million offset acquisitions to year, that million, same result by $XX quarter on last $XX.X quarter $X.X over margin. revenue swap and $X.X Gross the and income were higher million same two approximately $XXX,XXX million, second decrease in recorded the for primarily $XXX,XXX million subsequent compensation to our The

We due we instruments two value prior-year fair margin macroeconomic related derivative and charge $XXX,XXX entered volatility COVID-XX $XX.X prices. EBITDA expense into quarter. from at quarter EBITDA $XX charge fuel by swap fair as related of Adjusted their record the recorded to to March quarter derivative debt and second an non-cash to earlier. up impacted these value million in and low increased financial outstanding the historically factors. Regarding X.X% administrative was during these adjusted impacted charges to interest million in diesel earnings. increases and the our take XXXX general million, swap on fuel advantage interest The $X.X our expense fuel non-cash our other non-cash arrangements, a compared this was discussed X.X% These were in year to to hedge for we expenses year, significantly in an instruments to swaps it and quarter, to the last changes in and by other reflect that current

under after credit. deducting now and million of Turning credit of of balance million million $XX.X facility availability $X to the cash outstanding XXXX, our XX, sheet. March we At $XX had revolving letters

million existing As we of EBITDA credit the months our XX, to ratio April XX was facility. our debt trailing of quarter, On the end $XX X.XX. borrowed under

the million and a ended was and March compared sheet March for Cash XX, was to remain year. from growth strong CAPEX as will operations million on months ongoing the arise. enable quarter $XX.X they six same in We second ended an the by liquidity to months the opportunities balance increase $XX.X $XX.X XX, six last $XX.X to to maintaining sufficient our us operating of million XXXX. execute activities XXXX, quarter on for focused million support provided

these $XX March. our amount previously be and to and of March was XXXX, $XXX.X million to December range closed XX, compared Charles mentioned manufacturing XXXX $XX.X to six these $XXX.X of each expenditures to we nine million upgrades distinct purchase XX, strive primarily for facility we the equipment the Florida XXXX, maintenance-related million approximately reduced is our recurring typically backlog backlog, equipment sand at to Of and year. completed construction $XX million projects also backlog to of prefer, $XXX.X at opportunities of million $XXX fiscal to months focus $X.X operating $XXX.X have in That to the or by during we does markets, markets. and markets. our XXXX. on in for This remainder backlog and bid million we see that acquisition XX, types expected the a at to include we leases. March glass We XX% For that Keep million related we in excludes maintain have our subject months plant on continue backlog capital our in mind projects in million the million be in Project of fiscal current of to of XX $X.X million. composed

approach disciplined backlog a projects these maintain quarters and as through we are as also builds and led February on strategically Historically, of We second during May. our typically projects. in recurring focus more third repair maintenance

the maintenance the year fiscal and XXXX, account $XX maintenance slow backlog, $XXX additional less there Looking delays conditions Operator? market million due longer-term EBITDA million of to our adjusted and the to potentially operations now our second income in in forward, into compared repair clear. And summary, XXXX and road up be year a this tax on quarter as are to million Taking pick project a in repair and impact revising and across $XX to second and our trends adjusted COVID-XX, This Due these XXXX. quarter in projects is unaffected and private down ability completed in million current to while municipal and and gas on the and $XX.X $XX compared of our questions. half to income to $XX.X fiscal continue EBITDA to demand projects In which our are are with largely on $XX state regard project fiscal negatively follows. we well to to XXXX, Revenues we With revenue, to year results, net fiscal as time. take demand markets. net by clear for million public the factors economic gasoline, impacts less uncertain fiscal compared side, current at we'll lower could our year. as construction million $XXX work were that, our with typically projects started receipts, effect fiscal private in million positive of year of million million outlook see XXXX. second pleased we could $XXX

Operator

from ahead. Please Wittmann of Our Baird. coming go [Operator Andrew is Instructions] first question

Andrew Wittmann

Great. Good morning.

Alan Palmer

Good morning, Andy.

Andrew Wittmann

of guys top just think a of mind on and talked what kind everybody's just about economy I maybe the here. slowing you

been but has years for time. all XX So, public the company around hasn't been that

was maybe talk know to did organic the that about talk guys I revenues of could frame and on the about big your I during you you XXXX and time downturn, So, public advantage really downturn, last basis. fared some kind the us took hoping time M&A. an of how

company, So think, but most wanting growth I to are the in what was. the I people grew understand total, think organic

maybe So, more one stable at looking if your you operating in, of could couch that subsidiaries.

can that quantify operating your maybe an or think of operating wiregrass on that hoping context fared. unit you I unit during organic some I just was give kind time. was how

Alan Palmer

Alan. is this Andy, Yes,

certainly the that, -- gas more an taxes work in most budgets that of additional and In amount also ways. of downturn to because looking that there's private going developed to plans, in money generally work public actually, cases, public, which where long those and there that being we mostly the about for the being of pick we're often, was is some is of were and side on money would area other large collected, we terms plans, right obtaining seen have is a the affects contraction cuts we we seen mentioned is in economic more some the saw side what facing but You in up work DOT that we've times, saw that's periods can they in stable. projects we've now, maintenance-type something of to the saw repair you projects. planning, spent where things period back where that that an cut the at so were the And one

saw of a And this and work 'XX our certainly there's there's lot could expectation itself doing 'XX. And that an typically, those time. during out a in again and slowdown, repair what So keeping if emphasis maintenance-type and on we working. employees construction that, is 'XX, play pandemic

Andrew Wittmann

move you slowing thanks. forward you've to from rapidly, customers What's Is Are are realize talk those I your been so have customers down guess I May -- submitted desire your heard and what and it, seeing responding RFPs Got local their really slower, you things about to you but today, there changing state you as ability from with through RFPs that them maybe behavior that projects seen far? to here? expected? maybe the X customers

Charles Owens

seeing bit is standpoint, we've the doing this little and in stand had of when DOT seeing that, on couple a private work kind still but slowdown. a From coming of with having I projects they hold Hey, put put Andy, we're be we the and Charles. a from three two that standpoint, seeing and fuel, and work. we're reserve from phases, approach, first ahead. taken on like it up everyone's this the in speed a county. We're on money and stuff standpoint, still place, projects weeks, commercial where some down turned about were full bidding and that in of to we're think obviously, a revenue but in taxes And lettings weeks were occurred, has been lasted then would lack like city And slowdown some for of of tax still

their don't And have projects so, projects. we've on. postpone those I good can recall stock we work And are that any our to feeling had about people right that now,

Andrew Wittmann

of understand question liquid then is diesel side a and And just you trying on your decline prices you well. thanks. positive and that, consume affect asphalt crude to how might lot obviously, as the last in fuels in just Great, my

fuels can understand can the asphalt percentage more Alan, help little we is what in you're us asphalt So of what those seeing and maybe you revenue representing, see Obviously, prices, but bit liquid diesel represented a opaque. that marketplaces?

impacting or do than you savings Just words, on that? your to your up it's the talk if positively how impact keep could more positively In other wind that customers margins. you? able benefiting about Or are

Alan Palmer

Yes.

people that's very the diesel, because On you apparent look said, can for published at prices the that. as

at mentioned we that I gave swaps kind XX% So of using and and dropping unprecedented diesel a paid. even the and lot year a what oil, with book of buy from I -- but a long-term portion impact purchase fuel one The and our hedge on comments benefit we that we negative we to our things the XXXX. much had XX% our reduced we kept through of longer at saw drop what through in we'll the will in diesel non-cash of we that will is going did, of the contracts price. negatively went that normally, the just of $XXX,XXX in actually about a our we buying got price impacted because that before, to then bids there that is have quarter, March, to contracts going which was some short-term usage, impact much XXXX on short-term into and fiscal very be charge, diesel fuel locked The the in well we've that in be on long-term future able reduced historically this

fairly So obvious. one that is

not put lower in months, drop cement Normally, during related said asphalt we've utilization, some directly more the cost is as while terminal, oil, price where year, I've saw jobs. that in one before, the is reasons we we continued because have most it cement price a since the kind correlated in drop that's saw But then. of oil, that and see pass-through price the as said and the asphalt before, We go our will on asphalt March. of of the the of ends to the with happening with side, it liquid you On the happening, and winter the to is January, normally, diesel. this we've but down December, it of that February, of

go we of first the As to able savings. on are reflected drop that, operations, retain some was most in little in our April in our a it six we've didn't seen see drop. non-indexed into that And drops, now but be of March, we would when to even projects really extent, months again going up and and it it and actually it late March, happened normally up,

dropped in down, expect So, the have margin not should of the to, are that able we little that some And because which hedged, about the bit material XX% on stays gain going it we to our XX the I of but second be index. a if states days. indexes in last generally is in be to half, mean, the by it contracts or amount so a

but we've a there'll anticipated be reduced -- reduction. price million million will revenue $X in from standpoint, $X a million to about that $X So financial $X anticipated six about we've million, last to our months be this

one that's got asphalt the price, reasons the states. is effects to cement our down, is we've back So, of to where of of that factoring part revenue in give estimate the

Andrew Wittmann

Got Thank you. it. Cool.

Alan Palmer

Thank you.

Operator

coming question America. Michael Our go is Feniger from next ahead. of Bank of Please

Michael Feniger

you because no and been We're have highway relatively road that there's okay Hey, out traffic everyone. questions. my there. Thank hearing for taking work

have in project letting. I'm some delayed if some area that's you're going So DOTs some forward that on of of the comments really about curious your with. based seeing the been

on that issue down even concern projects you're of Or were an quarter able working be it delayed? quarter is with So, stressing receipts? what being through tax seeing and you and build this being right that of gasoline maybe could to backlog and before the the because cautious current next you now are more

Alan Palmer

no in DOT been have There projects. the Yes. delays

the number which matter work. of we in a As can a fact, states escalated period have the time of

primarily XX allowed cities do eight they've be you on to contracts around of and on on daytime, hours done states night about nine us hours. air where those or to actually we're only the is XX hours hours, them the may at be to of night, be able work. Some you move we several on our when or interstates can project And in And large daytime. in,

less can ability is do out accelerate the goal and So, we've of mentioned, actually work better less of projects. our there's maintenance-type projects that on of And as these we course, an to on so traffic the can there. seen in some acceleration get the of shape that state's they a you because roads the traffic, lot there's

a So positive we're seeing very that actually as thing.

the comment later about on, that year. Carolina, other there's we lettings, North delay actually into calendar our Charles's happen that, more but would anticipate could which DOT in we've there year and the think of a than seen fiscal out this I next information lot other lettings, states not

that also call time we've We we are book let what this that -- burn. got is normally projects and during

projects out something we and And what's that going projects do to on work year, through that drawback ability we're so but the fiscal factored guidance any on. not September was with we book in get gave, the able is there, the to into our XX, that our end that and many of burn anticipate

Michael Feniger

exposed DC direct in be terms stimulus Are have bail seeing monitoring out would our we would for I'm there a how Act you're -- impact guys. for that the comes you conversations to But potentially eyes and should should Act we that on X to CARES it of more in and X terms or anything infrastructure obviously, or you're positive when you exposed you? states? monitor a specifically be that that a the CARES of curious to, keep what is out budget would anything with

Charles Owens

This Michael. Hey, Charles. is

done, our a the of about in to one would for about shore -- of place lot a in shortfall go from Part that the receipts $XX go look go revenue. obviously, just for would it there's mechanism it DOT XXXX, for called billion call think work. will we've to reduction we're which anticipating gas shortfall. if and majority XX% let's up you need XXXX, at a backstop that less that a the you into And in at I tax, in that's research the type need is to seeing thing of been is, look come funding

the So, end coming of end FAST is, have that's going an that we two the Number is Act number to to at one. be September.

they but look have times, us a and completely roads at it is from And a everything, there bill. to realize to is from that long-term been the see around don't very D at end so, favorable valuable in deteriorate. asset, up. safety roads some at thing and move and people make place, routes I our for of when funding that we standpoint a that think going continue have of on we and that place parties these that's very highway tear going moving is we in and very we they're our day highway these our about when hard the Right because feel Both something our for these to need really bills, just and our valuable the it And most products grade very, the legislators look children, factor we to confident to to be a routes. keep these even sure will place, a that huge now,

Alan Palmer

legislation for. would Yes, we -- to two upcoming add Michael, that. that be things would The about would talked you Charles be just looking

the The going several been allocated other of substantial the in of of CARES their shortfall. kind to into states part states used would, done is been the that's be and shore not in the is money on part that billion up money that's of that shore even taking what's it been DOT, Act to we would already looking thing hope amounts are of potentially which put operations the and some $XX to up their have if passed of at allocated that states

So items. two national of them are kind of

to that's of one allocated money projects the those run, much that let. already But the income contract, using are are in is. for let some that and pretty what the possibly are DOTs been is short projects The been funded under before already those their shortfall other with maintain have

any projects that being stop not So, that is the place. we already public in do funding because like type anticipate

Michael Feniger

to XXXX. company than was helpful. you I gave different context Andrew's was about just That great this question guys curious, And XXXX. Okay. is

You guys asphalt plant. are operating liquid

this bringing you a operating operational new mentioned type this little that of more and wondering facility. foray now us new is You can hoping manufacturing the just should glass I'm be Was you're color. bit for road we if other of aware this these that challenges give facilities? expansion

Alan Palmer

No. more only Florida. that really, diversity and just in the 'XX, I thing think the a we doing locations. geographic Alabama XXXX were changed I now, mean, thing that mean, same is only we we has did we're and really positive I in have then that's just and the because in

Now we're North Georgia in and Carolina.

what slightly of all discussed that think, I aggregate that same. can exactly plant, we will it glass XX% industry. The the sand we is, produce do in merely we So, is and modify before, as specialty our so taking used it that already is plant a product it facility, be in a

a making substantial business. modification. already It's our a and a product just we be to taking have portion really going not it's of So slight

a would small we that or we part So, of that's product customer before have produced. different than a had have now just

Michael Feniger

Thank you.

Operator

you. Thank

ahead. from of Adam Thalhimer Thompson question next go coming Our is Please Davis.

Adam Thalhimer

Hey, good morning, Congrats guys. on a...

Alan Palmer

Adam. morning, Good

Adam Thalhimer

It wanted solid annual to of? here. be we continuing else the back point into start kind to of margins I the and on need there a thanks for range like for half. Congrats conservatism guiding on Or the for in looks aware down to guidance something to both baked XXX give basis some that? first quarters. QX, Is you're

Alan Palmer

we this clear Well, have what you that a year, typically, We Adam, the more of picture I'll for and would it consider primary now reason chuckle book but under the September of a backlog got we we between can about on see, is little the the that it, work time telling we've XX contract that of XX% disclosed, and we to have would amount burn we because as bit. contract. complete

into it we year get We've portion that we're number it $XX the there's that a and little be We larger to that is, in a as in that -- with What is done. So got unbooked it. same going built backside assumed but at we've at that is that's that. than current substantial there's that that's being drop we time have not complete contract have complete. million backlog backlog, can that done, revenue. that on And we've looked bid we've obtain current that and backlog of that have this to get of got same where margin margin bit really about normally that, the our going because said, and the not we to to it, is to able revenue will and all our the got

will Another six part we've acquisition that that of we made work months on get that that last that in that is, the that book. includes part we revenue the and of margin

a substantial also lower and comparable those backlog be our we out is, to amount of is what of we backlog, book margin, not about it's which a are frankly at burn will what of the half assuming While that backlog. plants

is acquisition that little in a So, having drag it.

projection than on progress. the as it we given And ability but what burn our currently current we our or know have same up I and the that being backlog in uncertainty to see. based ends on more jobs mean, environment is book at better bit we what hope can and so, I a conservative, little there's margins

Adam Thalhimer

terms pretty mentioned seeing are guys you side in May. private and of now? terms is should makes be terms I think of a the public That because sense. potential QX, of what get uncertainty, we that build in lot but -- I April and you Okay. then, in build in bidding there's And thinking but normally, clear, of right what your you And would backlog in

Charles Owens

Adam, this is Charles.

moving in still we're and down read reports people on I On move type that's our commercial. forward the residential and could the markets. be seeing saying that forward still some and commercial the continue private we're in. to markets the seeing everyone want where is construction, still we're be in just else, [indiscernible] pretty people on side, They market down, good like people to

to stronger southeast reason -- So, in areas everyone's but states. where like are That's the these going we're here, the we have on markets these other some kind of be fortunate our growth little immune of to no up than stayed and of a because bit kind what's we one places. one's

Adam Thalhimer

one me...Go last ahead. for then And Okay. Good.

Alan Palmer

-- while year's in to got have I completed just year it the years. to last next we've is has two backlog was higher lot get been be a was going to XX, yes, ironically, actually we next March backlog, to I say, just at in of still say than our going

we in not next at we're And third our the to that, future are behind a that burn. for quarter, backlog that fourth lot the of book So, addition starting typically, years. in we ball we'll X least and add year -- backlog is we quarter, this and

So...

Adam Thalhimer

in on [indiscernible] pretty of one in ugly really color. And concerned fiscal thoughts? up private good holds be DOT. should for That's but on well, North 'XX men, are guys? we What the about Okay. Some situation North said, could you me How Carolina. look, then fiscal be North our have last hey, that for Carolina 'XX, your contacts

Charles Owens

one why that's of the direction far then been a We a think, it end period with where all things of in think, of a because there, shortage we've a we coming going about attention of the in dealing we revenue the system, something that making tunnel the leaders in We bit light going as old several routes. now, great time, done, going good that know kind Carolina, of is thrown North share process. in act. and North lot talking looking be Carolina, little quarters an as at bit place. there. of like with something some things I and Carolina that's overspend news and a North contacts Washington But safety good a started we than saw to have Everything's kind and feel a basically in there's has kind from be be they to we for, had little and issue kind lot and like shortage turning. this is XXXX, of into COVID-XX, other taxes. that of and order But paying to don't that, we in Obviously, of of then to were lack to really our And they feel we're have thought they is of maintain coming and a XXXX.

Carolina. early moved and last for going we've still going to is going funding issue. mix we're Carolina on the be bullish very get what doing one to on round of process, areas, North just have swinging the product to different them, we like not do been to we what we -- and saw months. economy of this work of on and We're we just our So into but six kind what was that any through of got just some once have there's then doing. everything And were going We to say, North just we XX back

Alan Palmer

we Yes. with percentage already -- Carolina's by our we Carolina six dropped mean, had DOT a third. point, I our to Adam, Charles' last months, moved from was away North that North Great. about about pre-COVID And actually, DOT, had

well So they've definitely of impact mechanism, we a large going there, be of long got the said they they've very some they short-term fewer, we that's and a have resolved. strong bode as get funding there, said, while roads doing projects once Charles up but this mega they COVID they've their short-term like, to issues of publicly, and is will maintain feel to and for kind us funding think got term,

Adam Thalhimer

turn Thanks, I over. Understood. guys. it will

Alan Palmer

Thank you.

Operator

Raymond from James. Wilson question Please next go coming is Josh of Our ahead.

Josh Wilson

hope morning. you Good and your are families I well.

Alan Palmer

you, Thank Josh.

too. You

Josh Wilson

have? plant, you spending it give as impacts of quantification glass the to timing the on First, color the any some on could financial might the us and

Alan Palmer

expect and produce able facility, to glass XX, $X.X October, November. is being but ready we're that XX% the currently September be construct the by to by complete then targeting Yes. sand budget to probably million that plant

estimate, year, year. only the than we which the that expenditure thing our built other will this that's happen into this capital So,

Josh Wilson

states, to remind exposed the your Okay. versus And of it your sources taxes then, funding revenue? relates how gas as other is of much to us,

Alan Palmer

for now not taxes battery-operated would in far than as you or account that the that. I the money license more would of Alabama don't states their cars but -- the federal think I they I those, the XX% as to for other mean gas those DOT taxes, and would an fees, between and XX% disperse that state the XX% but have imagine is budgets, total Different exact that percentage, more fees, I budget. don't burn know gas, the

truckers the is said traffic. they are down at drop. from that that's Feds primarily gas there's more 'XX, Charles and were out not get than the putting It's taxes probably the the were trucking those -- it's XX% because the So gasoline much and replace interestingly, because the down. can still there in diesel, they because backstop more about in I -- looking would the very But 'XX and 'XX that for that little think miles

at states, they're think estimating that I drop state about be federal average in and all both So, across would the gasoline the XX%. taxes level the

Josh Wilson

for And the mix is true local? also that

Alan Palmer

Most their Tax sales projects. is down, did, counties done coming from delayed because Very money are the that obviously have they taxes, their allocated gasoline it's little they seen sales cities be will of of far Act the most other if any be taxes. cities counties. of even of special but now taxes, taxes, from that counties in the and for that work get the but in and not may because we've to gasoline road than the part work with so taxes, that local But states, is those Alabama, cities recent and impacted

Josh Wilson

luck quarter. Got it. Good with the next

Alan Palmer

Thank you.

Operator

to Our Davidson. next D.A. of coming Brent go is Thielman ahead. Please question

Brent Thielman

you. thanks the Good thank taking morning and for Hey, questions.

Alan Palmer

You're welcome, Brent. Good morning.

Brent Thielman

Florida? Was the business question. from any Just acquired in backlog quick there

Alan Palmer

margins. smaller very was even It small and

million it, So I about mean backlog there's $X of acquired. only

Brent Thielman

it. Got

serve the you similar you is Perfect. of pretty those much between it private relative difference there how work across a do guys all to numbers markets? public And versus you the Okay. states is that terms today overall big Or provide? in

Alan Palmer

that's markets Well, XX so that it much it. it's how individual we look as by not really by the state at because is we're in

a markets more a we're not work or Birmingham even would a much -- have that because or we -- in of have private lower development have you in as just So rural Tallahasee there's percentage the a Raleigh as

Charles Owens

Huntsville.

Alan Palmer

by And that with, some so think fortunate really individual our in high-growth I much mentioned changing to varies earlier, in Hunstville, that at it markets be, with as state. Charles areas markets. of don't least really -- some we're from really is I not think COVID. much the the short-term demand in so And but And

strong a that good we're work. So, demand in still seeing private

Brent Thielman

is that better And difference Is any Or work too less it public? wishful? because margins there that the a competitive? attached to is versus private Okay. it's profit little in

Alan Palmer

qualifications we control inspections primarily and -- it stuff lot to really on quality from DOT smaller have sometimes and Again, cases, mean bid markets, competitors. eliminates competitors them FOB it's and you varies and in projects our quality the the not because bonding but use in private work market that to bidders subcontractors. to like might I market, some sell have requirements do some even work a more smaller of sometimes we But those as -- that of to and

impact other. we the margins we So it reasonable DOT, I between county, that there's do one margin what is have, able other, much to of and be the certain of the a the it a to in and markets maintain part for try in multiple one work, profile from types be doesn't private, difference we flexibility really the really whether do. city, to our mean, that to not shift significant margin to type that's or percentages

And so...

Brent Thielman

Okay.

you apologize on bit up Alan, picked And like touched looked the if I but DSOs it Okay. again. this, a

agencies some you think the I changes quarter about of that talked having in an last some maybe was there. processes and effect

Just pickup XQ? from wondering caused I the what think, again,

Alan Palmer

our Well, and for about actually, really the for a the before, is quarter. calculate, talked we revenue way I've the March was high this month average

XX the if you during based about calculating into so, down it break the actually went that month. we on quarter, days had the that down And it sales quarter

based a were different. sales an on receivables saw but were improvement sales the calculation December in March to just March our significantly total versus in we in our revenue because calculation that So, compared up,

to have you think that it I So, way. look at

XX delinquent. about and we're is days. have didn't the who done didn't when down well private get that, know for our one that us we make we behind efforts we part increased was did, always I about we get week make And of that of was COVID every so, sure and our And monitoring our of work needed sure customers, that came customers kind things have concern paid that to to

was we a had from we from and going thing the a have they So far, concern call DOTs those And with Concern discuss Presidents have cities, kind we've then that. some of commission to the have of they get more. that. of might things even some companies seen some receivables really so call and like flow out and that other opposite counties We the process were the meetings of But have because to wrote a cash in home have go standpoint they as whether and to especially one where a checks they counties about and they CFOs we've us. week, a side had mailed kind charged note, about county we out and it, so with that cities -- every concerned was working Georgia hand the and the aging. -- had by was to through, the stretched

their experiencing, have make like think, very negatively been happen. conscientious I with So a every that, them, monitor that call them disruption, that week to we're doesn't that sure sure has what that CPI found we customers so not about our with we from just but making far, impacted

Brent Thielman

appreciate the I Best luck stay safe. questions. guys Hey, Okay. and of you taking

Alan Palmer

you. Thank

too. You

Operator

Thank the this or At to turn I'd time, back over to management for closing floor you. like additional any comments.

Charles Owens

public to that I safe, to our we being and the COVID-XX, call. the precautions And make people our being and sure general everyone, you everyone, is all everyone working that like safe Thank for we And be said, I later. keep and we'll and the work on the on industry very call our talk that and customers around. we're our that hard thank seriously, and want Okay. just -- company make you, to taking sure

Operator

This and you concludes participation. teleconference. for thank your gentlemen, today’s Ladies

a And You may have day. wonderful time. after lines disconnect your

Rick Black	Investor Relations
Charles Owens	President and Chief Executive Officer
Ned Fleming	Executive Chairman
Alan Palmer	Chief Financial Officer
Adam Thalhimer	Thompson Davis
Michael Feniger	Bank of America Merrill Lynch
Andrew Wittmann	Robert W. Baird
Noah Merkousko	Stephens
Josh Wilson	Raymond James
Brent Thielman	D.A. Davidson

Construction Partners (ROAD) 10 May 202020 Q2 Earnings call transcript