ROAD - Earnings call 3 2021 | Construction Partners, Inc.

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Operator

Greetings, and welcome to the Construction Partners, Inc.

Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Rick Black, Investor Relations.

Rick Black

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

So please as time-sensitive the of date any of no may be information advised any that accurate longer replay. be

historical forward-looking remind to discussion would that including statements made Private expectations like of Reform today's future safe financial not pursuant Securities I in or that are Act the the XXXX. or the you facts, provision of statements statements future also of to Litigation harbor's events performance, made are

described that, company's nature, factors of company's to statements. press We and risks Commission. and outside release Actual on by control. and Securities disclosure that the are forward-looking uncertain detail our Exchange will materially. making today's was their earnings statements today be other are Please and with the forward-looking for may the as in results in differ part These refer call issued of uncertainties filings the

Management will net Reconciliations loss can statements. obligation no adjusted or the any measures, also update non-GAAP revise EBITDA. our measures the adjusted forward-looking be Construction to nearest GAAP at end Partners assumes including to found and of income, release. refer earnings to publicly

CEO, Jule I to over Jule? And Construction turn Smith. like would Partners' call now the to

F. Smith

by the and the before Alabama Alan Executive Alan and financial quarter, us walk our Rick, talking through Carolina. then you, everyone. up Ned closing to call about We'll me Officer; results recently some North for Palmer, your today by are commentary a and provides third prior I'll Thank morning, Financial today about questions. opening announced begin comments in us followed the Chairman. our acquisitions With Ned Chief have the on good our call Fleming,

new growth revenue record top we of Across project and XX% the high to of our the work levels, this year-over-year. This quarter, performance for years federal technology win line us outlook combined infrastructure I'm to which our has in pleased and backlog at with footprint to and funding in multiple more grew compelled with Southeast, generated million. the in than to both $XXX bright continue our people a state support invest growth growth. over for year prepare future and backlog, a

the vital organization While investments for in short this these profitability the investment growth we for future ready. and prepared as creates see headwinds term, being

the and remained funding throughout project activity bidding quarter. strong demand, Customer

project our infrastructure to similar many and chain delays construction However, affecting we businesses, supply and subcontractors well operations CPI as as and experienced constraints vendors. due labor to

markets immune has supply current our reflect While believe as issues. coming experienced outlook a these financial our we quarters move company, strong XXXX disruptions chain we purchasing our to stable CPI across local We fiscal these power are we revised and to have and fiscal not XXXX. subside transitory Today, constraints. industry will in workforce the through in

intact. growth remains long-term our However, firmly strategy

beyond. and me Let XXXX bullish on very we are fiscal say,

geographic acquisitions. talent and X added X X only to did aggregate and asphalt added Not million we Carolina. totaled the earlier markets, assets also further These North transactions and critical growing acquire vertical facilities. we acquisitions $XXX to in our announced We CPI's in significant teams. approximately week, Alabama hot-mix our plants now in expanding Turning enhancing significant integration and footprint this Southeast

in acquired In related Good Alabama. all Alabama, entities, its Cullman, and we Contracting Hope headquartered

Alabama Platform operations will and the of the and and President, facilities, under our X asphalt the in and Vice leadership Wiregrass grow help support equipment. Northern hot-mix included Harper, Central construction the transaction trucks Company, plants to Construction. our In John X diverse fleet addition assets Senior a also aggregate of President These to of Alabama

The strengthens added resources. and transportation capabilities, Good acquisition logistics execution, sourcing project including aggregate with these Hope acquisition substantially our and

more talented, to to We than CPI the XXX welcome hard-working are team. employees excited

Carolina. our of facility's mined plants opportunities, we fall. and to In integration project located manufacturing the of facility support contribute expect believe this proximity North operations multiple North enhances Carolina, region North will aggregates facility we to This last to strategically this supply our transaction acquired uniquely future Sandhills asphalt located Carolina. operations. Daurity our the Springs The markets. to in acquired This strategy facility Quarry, and construction And stone materials a vertical growing use we we our and from current is to Goldston, near enhances crush asphalt rapidly aggregate in growth aggregates these bidding

the X employees. XXX asphalt a have nearly plants and we of months, acquired added hot-mix total In past XX

Looking acquisition in more markets, increased revised pipeline further Alan and reason our is is providing new will activity, This considerable. forward, the moments. few structure, the financial a which discuss opportunities the we've especially flexibility, in capital

future we the been have ahead. We organization in see we and have for structure, our investing the the growth opportunities, capital

Our to prepare well senior plans working identify companies for may as in engage growth future well continues that fit team organization growth our and leadership actively the as into advance.

industry, momentum through As quality a of and share continue assets to relative consolidator depth market CPI's acquiring service. companies, in to broaden gain we a and fragmented people

in infrastructure D.C., infrastructure are in the most prospect for about we we the following Washington, the Like support at a you, including Turning and legislation. now bill, federal are optimistic industry. remain of level bipartisan to our what we for closely process seeing funding significant

safety. in federal the for all for proposals that will as sizable focus economic the Regardless FAST critical both provide surface increases to We a continue are primary nation's to investing our Act. a driver of funding, for and pathway federal as over transportation funding confident be an our increase country, infrastructure component public

the FAST reauthorization in Act expiration In passed be expect we that its addition, before will September.

transportation over and X beyond. greater late while job reminder, bill infrastructure for current increase would this As XX% also XXXX legislation totals immediately to driving economic demand and growth stimulate proposal, years. project a funding a along creation the in bipartisan surface the than with the reauthorization, next Such meaningful

as we component stated the most before, critical success is of our our Lastly, people.

for our work deeply to and they team to CPI entire organization, thank our employees are hard committed near- themselves for that personally like our driver are for commitment key and long-term to maintaining are than work, teammates. meeting safe I'd crucial of their and We our goals. X,XXX sites dedication more the and

As year-over-year we federal head spending it's currently XX% XXXX potential We industry entry in begins XX by the a new next and months for that October, our in markets. into an toward states, our time of infrastructure for funding fiscal CPI. overall increase upside increases our for substantial expect exciting in

our to to discuss financial results. Alan now like I'd turn call the over to

R. Palmer

and everyone. good Jule, morning, you, Thank

X from our third comment both I contribute of acquisitions loan the performance price million, The on the in completed key week. highlight our future fiscal I which was opportunities. facility. metrics funded this strategic revolver expanding Before was to XXXX, capital customer which CPI remaining company acquisition completion and million acquired our term recently our of quarter with after approximately $XXX This earlier of vertical credit acquisitions, footprint efforts. and facility, these $XXX provides want businesses, for completed integration new combined acquisition of to

XX.X%. profit results X was markets. $XX.X Acquisitions XXXX. $XX.X revenue the to revenue, last year. fiscal the million of to and Turning up million was compared had of million, million million contributed quarter $XXX.X Revenue increase quarter in XXXX, June our Gross third $XX.X of we of existing XX, an completed of compared quarter subsequent in to $XX.X to third

stated initially have pressure we operating on before, As acquisitions put margins.

in the While first improvement contribution Carolina their only quarter this for X% acquisitions fiscal year the market North to was showed in quarter significant the completed the of second quarter, profit in X the revenue. this quarter of compared gross

subsequent expenses was increase general attributable primarily General and fees. quarter to due and were $X.X million administrative expenses personnel related June to technology XXXX, attributable XX, acquisition-related compared to initiatives, $XX.X in to to same $XX.X $X to administrative $X and the year. last increased and and million million attributable information The compensation increased in professional million million costs

Net for income the fiscal of the XXXX million of XXXX of net the million fiscal of $XX third for of third quarter million last to last fiscal fiscal the year. quarter year. to third compared quarter million income $XX was EBITDA Adjusted compared $XX.X $X.X in third was for quarter

EBITDA of find today's can release. measures reconciliations income net and to at of press financial end non-GAAP the adjusted You GAAP adjusted

fuel gross profit in overall during impacted most asphalt in markets. this prices liquid of and diesel quarter our our lower-than-expected revenue Increases existing as as well

Our gross prior jobs margin our to in on profit our markets exceed existing year continued margins.

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

to growth capacity EBITDA acquisitions, the for XX when of ratio the arise. end near-term they trailing to quarter, potential and provides to was our debt us respond allowing flexibility As capital months X.XX. This liquidity opportunities of

June year. Capital the Cash total ended million. was to $XX through $XX last XXXX, million XX, $X.X million. were compared for anticipate capital We provided million X million to by year $XX.X activities $XX.X period for months operating expenditures the X still of for same months the of first XXXX the expenditures

XX% expect We adjusted revenue of range months net the $XXX.X at March regard revising last XXXX. XXXX, million income million. And outlook range the as are million our completed to range net mentioned, in reporting a XXXX million of year. the the backlog with $XXX million of and our EBITDA to June to million of year last now of at million adjusted and adjusted XX, $XXX.X in Approximately to $XXX fiscal Jule for $XX.X million, million and the of X We $XXX in record year income revenue, $XXX backlog XX, $XXX project $XX.X June compared adjusted EBITDA. be fiscal in year to will of the at XX we're

results, pleased the third acquisitions with In our our we backlog. summary, project quarter and are recent

Ned? over turn Chairman, the call Fleming. Ned to now Executive our I'll

Ned Fleming

Thank you, Alan.

the Before I your well. call performing company we the want reiterate is that open to to questions,

integration both We existing in an while acquisitions organically, is pace is the of recent across organic increasing market acquisitive geographically. growth growth, further increased continue vertical company and organization. to relative share coupled result enhance our The is footprint, grow the with expanding

Board the prudently in invest processes in team conjunction disciplined robust leadership technology people, plan. to further growth yet our a strengthen The right with and and to support continues

long-term of future the of We margin realized a be years. which for benefits many more are focus from offerings, depth capturing will for and along scale very this continue to rock pleased announced gaining We're with with road. to earlier week, the service acquisitions

new offering which bring all acquisitions integration X aggregate and vertical enhance strategy. service our of the facilities, of addition These

industry, significant different there a economic is fragmented company. through highly just are cycles. a past the that companies people, provide and great years us many throughout for XX industry as quality in the and consolidator very important done headwinds, maintaining in momentum As positive we short-term momentum have through a we acquisitions Despite with strategic long-term the

our of our execution strategy successful a of company. with profitable on long-term carry to shareholder enhance to in disciplined value expect We growth

that, questions. With now we'll take Operator?

Operator

Your [Operator Baird. Instructions] Wittmann first question Andy from with comes

Andrew J. Wittmann

around I my question where in start. a the kind little want to here, of kind the guess I discussed, guess about bit you based labor how changes environment the a inflationary guess here market all around first the those factors questions series to some you particularly the in the is of are that the inflationary affecting model labor do maybe today just markets? are you of I you? address -- Could as and I is what And doing talk questions. -- of

you're follow-up with going a on see that why factors? follow-up going to all Are footing? you are competing prices Maybe include I'm a could there. you keep from your guess also But you those. what do adjusting same presumably their don't would start to competitors there. with these the maybe Jule, of kind can I they reacting so how to that

F. Smith

inflation a for a cost about CPI, thing dealing economy is Well, Okay. us. mainly the At inflation one is so of things you. economy, is we've the Thank with. the entire in real is talked pass-through

So as bids those immediately back are we into put putting that increase, the then out. we wages

duration, something so that And I would project that's project size, advantage, our our say. that's an

input as them costs us. our revised take and bids. business We put So into for the usual it's

CPI. challenge. would I our have they're to projects As fixed longer that are doing thing. but where not you price at our give becomes And more with competitors, as projects, a duration, inflation typical things projects that's projects of -- nature the those really larger a far for. say Those the of largely same a

And said, so that try effectively. inflation, just we pass to as very along we -- always we've

Andrew J. Wittmann

Okay.

saw quarter drill from So bit that just to cost the I little a more. into clearly, these here pressures mean, factors.

them You called out.

fourth of that exposure therefore, more is the quantify mean backlog, is is priced you or that the that duration? much how if in 'XX. going going you guess, again in risk prior the backlog, from And to sounds impact today? the into in So it the release, to that press I you're you -- seeing was cost to said that think maybe Sounded were I amount -- this you like, the affect I quarter? like inflation contracts could this

little catch So you're maybe when it's that out there effect. mean, up address to that you trying bit clearly, to of could more And today? I specifically. a the contracts just kind seeing just understand having Because dynamics the an

F. Smith

say, Andy, not let in cost addressed issues with labor constraints. It's me just prepared supply I my remarks, chain increases. really dealing and

few just see. to examples Let you me give help you a

sitting year, wide one still dump be have of open any in find of seeing issue recently we market that's getting out are those trucks utility labor of while trucks, in had the a crew steady right of pipe. we're may times, need X pipe, XX not PVC to on that's year. normal we supply the this This -- may normal to is to even the site and a So to an maybe tight just just had running PVC now, basis, subcontracted a where chain XX Those we week get Or any workforce, time at so one normally job time they're pipe. work drivers. because the that market a wait have

right us that The all I having have milling they just a last on we give we know, have crews look, X season. example crews count now. And would recently, you, we subcontractor let work X normally

need tell you to of job us gets which until can finished. one those wait crews so And

I example. say. an just that's would So

these open For us, hard backlog. as We're we we're example like room, ankle record it's with I market having running running like fast your can, running. -- ankles. used weights it's the labor these got we of and But as constraints, as weights. running got We've of a can. ankle plenty We've on constraints, supply as

quite We normalize markets been You're it a in have just We see couple states labor We're of fast. next does benefit the months. not headwind starting normalizing. already It's the unemployment as stopped. those a see while you're an of normalizing run running. going to over But the it X where see little has effect. of X our federal to bit

supply top and companies are you So that's suppliers with increases to it. cost that revenue and when not chain lot really much issues CPI it's things. It's ability line as are a -- generate know, as just vendors those dealing of the our our experiencing same

Andrew J. Wittmann

That's really helpful context.

labor bought I'll one legacy I acquisitions, having floor. last was wondering, one CPI managing know how the propensity Just legacy yield plants to on company -- more challenges quarters what this in was deal the one, said and of you the with full their so some you terms of any there ability are and recently just maybe differently few differences more if the last the challenges between Or would I I of you these with here, then But asphalt of wondering dealing as the significance them? or don't companies what business these and you're in done from just think staff well. Are is that acquired? relations I kind XX call recently the

F. Smith

And we've ability Yes, really would with when and seen that's helps say made. company, acquire is the benefits Andy, a and acquisitions our of I growth that advancement, we've offer we positive. that to things one that a

dealing I in helped markets, think same issues CPI new traditional markets. with that that acquire as new intact. force able we And those in so are the in labor our a sense, But the being markets and keep getting to has we're

It's of one It's same -- bit short to that that the it's and can any just And everywhere. we we pretty a know are the I see weights ankle that that going This normalize. -- just Southeast the lot dramatic. entire something little companies, having across to work It's not in the -- it's drag of term. We it's shut a through that's those are everywhere. look it's markets but that, the gets down. much And like board. thing is thing any just across one just market not

Operator

Your next of with Feniger question, America. Michael Bank

Michael Feniger

the You -- at down. to now, digits over growth weeks XX% your finish have range talking your the of I think right been EBITDA the we In low up about we're few When last on end has year. year-over-year, XX% been and sales have quarters, a EBITDA left growth revenue the and look still double given line. X

of level, weeks call, your going type gives some just ] to the next with tell So bottom seeing [ you that that to the help confidence you the kind in hit in Is on us revenue line. of that guide like that? of ability July few anything leverage we're acceleration your confidence on understand growth the us top quarter, type on that see fourth to even there in the can of

R. Palmer

Yes, we were had we a made Carolina no of large where where primarily North X all and good of and the a What Carolina in them. and DOT this confidence is acquisitions we in the some say improvement quarter DOT that market still I was a one when what what percentage was then was that year and us that left would in acquired X into take significant was did is North acquisitions in status public of year. They quarter in those question, Michael. And there just of a give backlog And know the that work, breather. the compression last here. virtually gives I'll Jule prior situation the first the margin causing and

a levels typical for So there the not an that there, acquisition early that acquired we backlog added for at and the market. was backlog we

dramatic and performed. acquisitions third in the quarter was been second a have -- the improvement there quarter there's how So those between

the improvement into that and And quarter. that fourth momentum see so flowing we

that where quarter, -- quarter, it's a in So the a but profit quickly revenue much about drag in was X% smaller our more mean on drag gross this was big normal. to I second that returning

see operations, to quarter shape. say -- the below we the takes X% we typically, third year our X% are in would from things year, diesel we've before. was that provided, existing that you things in that. XX because down get about well the the getting organic about, the would much the first kind acquisitions to Our talked is original in asphalt cost about margins going. say, that it and that our over say growth I line of to year-over-year. And I last what other it guidance of growth that And and liquid XX But times talked with with many work of the about very kind of fuel they've how months this months been And X them on

And getting on so to have them acquisition they date. we're typically back where been would

about got half getting X% remainder at of XX% is almost thought to XX% that year-over-year So And that of we the the over of a to is quarter, that little week. growth we've the then it bit X closer full hitting coming about, in to earlier half those percentage you announced organic from that the that, -- from and X% year, growth the acquisitions that we little this fourth that this while the of half talked organic year. beginning the a not XX%, to of growth. And the see we

us about So that's what's quarter. confidence fourth that given really

Michael Feniger

-- transitory quarters. goes this transitory, yet back I earlier. for Okay. could it's think, few And next I the the mean of it bleed to, some comments based and Andy's yet about questions on

into That's these down an well on you have that investors today to stock fine mean a is guys So your just put positioned ideal to are it, infrastructure. point XXXX. Everyone mix, for because understood. headwinds going geographic recognizes eat X% worrying are I

line into guess top Do line grow the able market XXXX? that, we is, you're expand XXXX to much frame be first the fast-forward I this is of to really and expect that? way Any you to much XX%, how should margins question XX%, off how in right if in help much of the bottom half growing would XXXX. expect the bleeds guys your investors to understand I to think, how transitory, now investors

R. Palmer

has answer, a Well, of year lot drag are a that the expectations that been labor those returning see and -- nothing acquisitions, so -- I'll year those a issues by do in facts we certainly the type with our to is with this XXXX. things, to more situation, lot normal the acquisitions the drag or revenue. of Nothing have this margin margin it

markets, margin able lot what a drag different you've our also again, asphalt been to acquired fixed compared up those added the lot in Our that we that didn't backlog up that just been, complete, We've XX a cost gotten of have margin of including and was. the very backlog we've we third lesser and it you up, in through those second recover jobs and lot the ones to on worked lower when through plants, in has of jobs. degree low a we've the a that is is volume our quarter the much volume because there's to quarter,

had going, performance some if our that carry to book backlog, existing job can our those operations again, work And into acquired job actually to we is the through compared say early -- year. performance over to once markets, one backlog our those that's profit that some the margin on you going of up to keep that pre-acquisition thing, of prior XXXX. in But not I

Michael Feniger

on package? and internally curious it. you're Is You through maybe did there are you a of digest lot strategy hold guys is feeling? -- guys We're guys infrastructure these working a little how lot on right of any right acquisitions acquisitions there back far Is as You these just so pause of done a view there far? any the And get now, M&A Okay. some hopefully, M&A these our there have any for ducks a in some view constraints. row acquisitions this to Is I'm to internally of pace the and so seeing of management? bit now. view

F. Smith

are acquisitions, inherit on I made, These markets. acquisitions be acquisitions we these Alan with long-term with little issues just we acquisitions all North a in clearly, knew backlog, different. say as say the very Carolina in would the we took But view. this, Michael, coming And That's said. But we would constant. we always are great Yes, acquisitions.

The part adding team record They now to of backlog. good them. are integrating markets North Carolina this We're backlog great job has a in adding these margins. done at

I So I -- would say just going we that are to around. to that take know get hands always would our time acquisitions

of But in with things bill, federal organization. this our funding the one that we are investing -- we're

be our investing to pace see technology to us prepare our in of and the that's you to We We of ahead grow. don't that lot one and We to are too trying our out to to But want get continue over the acquisitions much. prepared these We out to be a our get handle can so is skis we the we growth for integrate reasons see and clearly growth. want people future in. opportunity organization there. prudent able

R. Palmer

history Michael, let Gap] To of what and acquisitions. long Carolina not [Audio one me DOT. the in history Carolina North And challenges happened statement proven make being multiple had just got were We've there. a integrate North with to able

market our that that the working there acquired. team up the the -- because, do to there as So those North future and were to Carolina no done of abnormal when conditions has through job an concern about doing with integration integrating in with Jule said, do had is nothing acquisitions, here concern excellent had

Michael Feniger

it that been acquisitions Understood. I'll what's how the completed last So have incremental with is And -- question that incremental? about this but kind done XXXX and not much year? today, yield been on the for my on goes -- that is, that that guidance, asking number have much would of when acquisitions into just the next we Jule, of how think be now year, for, that obviously, through your of based XXXX, top XXXX Alan,

R. Palmer

that of in will made revenue North we XXXX. Carolina, months have X in the Well, worth were X

million between So those new incrementally most mean, talking we're the would $XX months revenue have year million I additional in. Because of first acquisitions, probably year. all portion acquisitions, those the though of for somewhere remaining and their revenue $XXX are this X and XX had probably they

Operator

Wilson with question, your next And Josh James. Raymond

Joshua Wilson

Just headwinds the and just pieces of would seen want what's are acquisition. lot the from margin moving a margins? So known presumably, little the clarify have more, a North you Carolina the to on

due the to broader can just that on you us in the labor a headwinds on any acquisitions little differences about was in give versus side? you to talked versus expectations the what market extent change guidance So more color the

R. Palmer

Yes, models Josh, -- expect times. synergies that. based do projections acquisitions, we these XXXX responsibility we and we together also history, take but make their the When them on for what I'll of to what we put or those see you which normal any of on if will, our whatever. were were added budget, modeling Because into timing of acquisitions, models, they based

in recognize not making were is those normal times. What what that acquisitions X to fail I we we --

the would we And we that the And backlog just the experienced. in impacted of those also did. lack of we that volume margin. optimism work DOT than Carolina, pick we've knew the was, we were North some in margin the so they had optimism then that but that had quicker the And up margins what -- assuming, the

So it do really would first was in the what not actual market. facts forecasting they existed more this of of basing in year a that it the and on

expected. Our close absent in come operations, we to have existing what very, that, very

F. Smith

of which Jule. way of that few we beginning, headwind. is working talked part just it. a is revised its about simply this issues see months. the is at main largely our guidance Josh, in the And say would And I the the dealing next through I with transitory that's large part But

some issues had say, months. acquisitions acquisitions, in where were just on we markets CPI in I our work XX the of best would first today through to

in had with this So long are X no deal right to markets some done in best the we've and now last Carolina a our than different we've North of what performing months. for time

Joshua Wilson

And growth how a can Carolina legacy much And that the in in of to backlog, regarding was us much due the North the was business? you the acquisitions? how give sense of

R. Palmer

the in since the Carolina backlog Well, North guess, been them. have acquired acquisitions, I we

any be -- normally, if started existing like to million factor this But comparing would mean we not said quarter -- we the our if months have that started backlog shoot year, in have probably that for. you're their took earlier, backlog then is this revenue, just to really So growth a have those, we backlog. not what you much. $XX $XX as And last I year adding backlog say Jule X be typically that markets. million would would would to of of range would we we we in

last in to quarter, last was quarter. it comparing you're If already

Joshua Wilson

And for Can out me. timing us and a to headwinds you had last one and from asphalt yours? costs sense called have Peers margin commodity on what as give diesel.

R. Palmer

Yes.

you very this year, The for in diesel, these increases asphalt first I'd to has really say go what original our we and expected is and that year. cost close anticipated out the that played if we back guidance to

you're us we really, year, This things comparing we us a they're have year. and year, been what had But this year, to tailwind. different were -- headwind. not If giving a than last last we this year, gave had they -- then significantly those dropping anticipated

we that little million it's million a compared But of somewhere probably from it So year. didn't impact $X between year -- what we and have really very margin year, last last from this but $X.X to standpoint is difference. anticipated,

Operator

Thompson The next with Davis. Thalhimer question, Adam

Adam Thalhimer

did for like feel in with does in it the On coming North Carolina? Good backlog from of, you momentum? Hope us like Or what characterize you it better acquisition, healthier and a they're does standpoint can that feel the

F. Smith

it's the about for Hope Adam. acquisition. looking company. a we've been Yes, It's excited We're a time. at long And one Good great

Huntsville, it's ability markets work to math, we're a X our X operations hot-mix the the us Birmingham It asphalt and areas support aggregate and and at look so almost about and gives you between those excited that. perfect for with it. existing fit in facilities that If do new

They came were with -- XXXX abnormal in There's was Carolina in there been North and like healthy no XXXX. in no a backlog. there issues

it. like large feels say the more So it history. in excited It's I a about normal CPI a one would acquisition. just We're largest It's acquisition.

those And forward. and areas them, so be work new with the we're integrating already assets. winning we'll in We're moving

Adam Thalhimer

I way was But seeing can tail comment. an industry through you you in guys weight thinking of ankle your demand? like its the were as I then off -- without going And Jule. industry, work can that out that, a right, as All

F. Smith

restaurants industries already or I service going see right construction pre-pandemic. than it, as -- workers normal. that's million And -- I impact the labor markets. to back there in to a we where X has those are you're Well, read just just And in but huge were an normalize or industry, I I We're really fewer on seeing impact. Adam, that now the there's And somewhere get that. think whether

bill, with to in that's I just the reauthorizing that we're mentioned states that and increase. has increases seeing lettings year-over-year the bill of our that will surface funding, going X going the think alone lot XX% get funds. budgets in in be don't transportation all. is have I years. you nice lot our bidding they're seeing and at economies. a this transportation last affect really So provide Washington for if We're demand opportunities. about when next bill the stability quarter, We're talk about to due talking of Even to don't the a project they it going for bipartisan surface the a bidding to industry lettings And infrastructure through, now expanding The what with then Southeast are COVID healthy relief

not that So to affect it's demand. really going I think

think ability get what is affect back is normal. I our and going it to generate to to us revenue

Operator

Wittmann, question, The next Andy Baird.

Andrew J. Wittmann

some more little bit hear investments, It Jule, making. a the would be you're good of that to about

You the about script. at it the of talked top

grown a Your some in the or project show kind of SG&A behind and Do What obviously you're up it. company they lot, level? resources resources? in putting has

some what's you, SG&A, a help run that our with for have there that front? good new Alan, recognizing things us maybe costs just for SG&A been rate on you maybe other historically? models deal So And and can in

F. Smith

adjacent as economies be not ready Andy, It states, chance at enter us the markets invest growth in right coming. prudent is the our we but I would would us spending, to look for for infrastructure that's healthy the increased to Southeastern it for in now. negligent and technology say, really people new and to just also get

investing ability workforce. an higher-level workforce, manage investing entire of in We're are our ERP our to system. infrastructure now middle a our we in technology a right the in new and So bigger in staff,

And So an the see We're we term, managing those is to we that. the quarter-to-quarter. that's the but now at don't and harvest type it long for time investment, for of come. this really planting look is things, now for that get to ready

prudent in to does do. right cost higher that's thing SG&A it so now, And up a the show but

we're what numbers, go the Alan that's doing. let but over really I'll

R. Palmer

and quarters. diligence of Yes, quarter not in would deal Andy, don't and brakes we're a as on cost this putting you in cost, third not acquisitions if future will, say, we deals heard that Jule make due the you've that. there's be on if the But lot

in be will those there. So

they fourth the As increase plenty I X the as to is out of for this quarter. third that but of there run quarter. fourth a rate change because quarter in bit There it quarter the of will be much model a be months. of pretty year, X out have think been those little X fourth They there the then, the acquisitions will far some, It adequate will made have since won't for won't significant. be be significant in

acquisitions to the those, it, percentage. So opportunities has a kind the continue will to impact at we of do in obviously lot But going G&A. that the we same of have will as surge into and happened future, you will, the if make

Andrew J. Wittmann

Yes.

here. question And final X then maybe just Okay.

business a talk actually are a the maybe flow, of some this you this of cash could sure. And is good Just -- last But capital ] first [ accounts lot mean a far I be to about on I was X the year CFO, lot use of working else year. terms certainly, But there as the back was the some these has got opportunity wondering business? about of out at growth look just good is of or and anything of capital thinking about characteristics. you there accounts working get should capital I cash you're in that to thinking be the we so months, your thought that year weaker.

R. Palmer

And said future. Those capital staying of purchase working in that of the that we've question. great purchases, need acquisitions going to does make, Andy, we the when with receivables -- we're our this are the and not sellers. include before, price those nature which payables asset because are Yes, for the

basically to acquisition. And so fund then have working capital that we post

that the made this year -- revenue, of we've got with part number you've there. the and So that is happening

it twice we The whether -- it's year, those but inventory. tanks it's other thing when we've got And cost, inventory asphalt, virtually liquid with be terminal. large facility this is, the the basically fill with the rock, specifically

So price, of we're there asphalt our worth the of just terminal, the was fuller. at over A to -- that are tanks sitting in is trying year. there's also but liquid prices because $X part more inventories rising, we're than million last there keep feeling large

as a basics that, and in say of days What driver big is not that payables, I'd far of the receivables can in changed. days as which be

any receivables Our aging. not are different or

Our are not payables really different.

that thing that a our fact from up those. retainage on impacts ago is that is private Another and we work, the work have year private

do the they a of you public And that's don't So it's the at payment. work contract when look if part just function of it up. is and bonded, you withhold retainage,

XX%, year point, that not those really some that you're XX-something or it's a are factors in if at stabilizes so. growing But driving percent So it.

Operator

Karimi, Zane question, Davidson. next The D.A.

Zane Karimi

know guys the and over the But labor the you touched I how the quarter. first play supply constraints? to and you degree quantify off, would upon dynamics and So what inflation delays at project

F. Smith

guidance quantify about a X% about we Yes, it that was about third and that, quarter. the I that, revenue about where and we saw other right. some Zane, exactly. That's thought and fourth somewhere And thought I sounds our companies headwind. about what I adjusted hard -- for said it's to

short ankle So the that weights it's to get term what -- that. hard about it is but like exact, the feels create in

have XX% But year-over-year. we just say, I would grown

growing hard. we're running we as ankle this It's have running we're so with these environment. weights, hard just in to. the opportunity not We're And as

backlog are faster to right now. Our ability run gives even us than we

of So to anywhere terms a in range, it, good X% between quantifying that's X%. probably

R. Palmer

we that's good and -- there of when was at year, of cancels this year profile said, those And we've of was if that either. do out when it of doesn't out is half go asphalt over the their the some And of and the impact it this of back went of our revenue. continues goes done, other just go equipment that we'll as point, fixed XX% the be went part that go But additional No That's we lost that other delays weather to delays, quarter, made an of Typically, Alan. the our backlog But work that amount of The because changing time work revenue. or be of contract in usage, Zane, we whether talked regain of another And work shortfall big our that that margin our away. or in completing only there. anything. in that the volume on about aren't that backlog, or last us we're was our backlog, types through increase through margin our plants that factor. some that would costs last the that down because is whatever, you one quarters. this the X completing thing is, year. acquisition XX% this than X XX years, if backlog in Part backlog

So...

Zane Karimi

of kind on that next right the backlog. into And leads question me

pushing million, standpoint a whatever a guys believe You maybe composition? a it I about with you find bit most all-time the from the are standpoint, of little either But margin current this more highs, was. geographic composition $XXX you can compelling talk backlog or backlog,

R. Palmer

XX state, now we look as I Yes. backlog not as in at we look The our good far of hot-mix that markets our in we're plants. our just a And as news growing but all, virtually is markets guess, all asphalt at is that markets.

of So demand we're strong across our -- those seeing footprint. where all in entire

we in in important in acquisitions factor recovery that's theirs. Carolina bid DOT because Certainly, the North places in us grow did North there than was XX it Carolina markets new why when And are in. of some stronger a been we it And made the gave it that to others. big that the has to able the Carolina North are being

of state strong indexed in have that across very because gas money have states or taxes, entire not DOT that and from their in the phased but that that's we're federal, they just budgets, it's been but -- pass in. -- those all coming some So really are kicking the footprint our

of strong across a So all it demand markets. our really is

and mentioned And completing as fortunately, months, because that we're margin a completed new is that begin any low-margin earlier, increases, as compression up Jule last we've also so improving bidding they're in of not table. but X on just some at their some. work are backlog, raising the in to because got come work cost, of percentage cost these not our margin kind that our seeing the seen the We've we're seeing that we're competitors they've bid

Operator

the floor I turn for remarks. closing over will management to now

F. Smith

operator. you, Thank Okay.

We to speaking for everybody about a opportunities thank growth we want for quarter. look forward forward next Just again. joining today's look We're to to future, the call. to the speaking excited Have good to you you day. and

Operator

This concludes today's teleconference.

time, You thank this at may participation. your disconnect and for lines your you

Construction Partners (ROAD) 6 Aug 212021 Q3 Earnings call transcript