ROAD - Earnings call transcript Q3 2024 | Construction Partners, Inc.

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Operator

Greetings. Welcome to Construction Partners' 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, with Investor Relations. Thank you.

begin. may You

Rick Black

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

any please time-sensitive as only may Information recorded transcript be today, X, accurate advised XXXX. call reading. that date replay be on longer of We the of information August no speaks of listening this as any or

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

statements by company's uncertain of be part today's making will Actual results that, control. outside forward-looking and may differ call We materially. are as of nature, their the

Please our earnings factors with disclosures These Securities filings statements. and the Commission. to other Exchange in for release and risks detail forward-looking are and on uncertainties the our company's described press in refer

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

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

F. Smith

everyone. Thank you, Rick, good morning, and

Executive Chief Fleming, the Greg our Officer; Financial and Chairman. today our are on me call Joining Ned Hoffman,

of family this companies women nights under the story plants, construction many operational and operating by this quarter. across quarter asphalt across on for more and their I the than X,XXX directly work hundreds start Southeast men the thanking and want excellence was projects quarries of days The terminals. hard and of CPI to

season work construction team talented, has hours, our And high gear and into CPI long professionals. by as shifted driven always this our been our dedicated quarter success delivered.

Compared CPI. increased a quarter, of grew XX.X% was XX% XX% represents X.X% XX%, for total QX note revenue was in our basis, important This of a is margins for the of for adjusted daily our organic the critical ago, growth our XX% half with growth. also revenue total growth. we strategy to revenue to of the consistent year in to our goals. outlook that the for and XX% Year-to-date, organic organic on strong a account EBITDA quarter. It's to quarter growth organic our our our component which XXXX focus and markets, on of year On is to growth growth. achieve adjacent current approximately a we ROAD-Map growth

at local railroads and throughout programs highways to from variety state, of a projects projects states. bridges and and ran the project the These our type for construction to the Public quarter, healthy the were continued stable and demand of During perform for high. strong public the be lettings funding include Southeastern airports, remains industry bases. economic investments our conditions military we infrastructure federal levels by supported

to residential. corporate continued steady strength of within drive see fast-growing the projects. for also the growth, again local and market We during our in projects many backlog sustained commercial which private In This to areas demand we to economic project demand for quarter. with see increased continue development, particular, economic markets. manufacturing, large development centers site continues

$X.XX backlog XX, As billion. of June our was

strategic model. Turning now to our growth

Sand Carolina. of were into last Two have reach year North beginning in Hudson in X of companies the our June, we acquisitions since our Hudson these earnings We Paving made In fiscal region North Carolina. acquired call. October. acquired this Hills extends Rockingham,

rapidly Rockingham, Fred of part allows pad growing construction and in plant Hurst new market serve operation platform, the area. this our and pounds Southern fully Company Smith as us Now to

last hot CPI both in area and Company X our existing asphalt Columbus, we Georgia operations This Georgia. location strategic construction Robinson and plants in expansion announced in new a to of Pavement surrounding of and mix positions the And adjacent week, operations acquisition the in Columbus, Alabama.

market as [ and this division been [ in of natural has contractor company, economic in in growing the will our Fort Company. for to state a supported of Robinson step and Georgia. next long As ] the market important Georgia, respected highly Skrunks by Georgia a a for an branded Moore growth continue represents operate us platform Paving Columbus, a our ]

reputations our services Acquisitions added have high-quality Robinson and to as enter teammates with expand new add want these part employees family always welcome we talented our and Paving share Hudson We and companies both CPI companies. our and a as model been into we growth capacity, within have are of organization, of areas, market new excited team the excellent members. to Paving

on us in and of our Importantly, to XX% growth and expanding are revenue our also to achieve the XXXX. of organic our the acquisition which organic and EBITDA half goals XXXX approximately a growth, XX% growth XX% XX% future to our strategy acquisitive ROAD-Map being with helping annual of path range keep half fuels by margins

is great building a Currently, transition acquiring and companies. business the we we're construction a believe held continue for privately in acquisition scalable going by leader active opportunities through to a see as environment we industry very our generational

outside of CPI to focused strategic that of to will best continue to have conversations us for our it's the operational we with states, potential on bring sellers, patient great remain excellence add important acquisitions family companies. both culture While of the current finding and and inside the and

outlook. quarter summary, fiscal a our are raising consequently third had XXXX record and In we

with backlog allows remainder and and us enter provides XXXX visibility fiscal the fiscal momentum XXXX to for Our growth. of record

and profitable local the numerous manage lead across to opportunities strategy, Finally, and into upon most development continue we and continued our talented importantly, on larger future. based execute available a remain to more our the future about optimistic the our healthy as Southeast, the of the workforce we markets growth CPI

the Greg. to like over now to call I'd turn

Gregory Hoffman

you, compared third increase fiscal everyone. morning, million to of up and $XX.X begin quarter review included the fiscal subsequent Revenue acquisitions June metrics revenue of in I'll XXXX. our good XXXX. an million, the performance ended with a increase to of XX.X%. $XX markets. XX, completed key Thank was third $XXX.X approximately for the Jule, from X months revenue of during in million and The We existing and quarter our

these X.X% quarters the of out year-to-date, and Jule growth organic is The approximately half, XX%. mix growth X of And revenue and our half for organic acquisitive XX% as was total total growth from mentioned, acquisitions. mix X.X% for approximately with our months of the to revenue organic recent of to X quarter

Gross pace or quarter X% We the profit last compared expenses XX% year. of revenue. same million, last General on million $XX.X at million an the was $XX.X of to fiscal $XX.X or administrative on the revenue of total year. expenses were X.X% increase end X.X% to same remain for total compared of in and to approximately G&A revenue quarter year

increase in margin was was Net of up XX.X%, Adjusted an Adjusted XX.X% same to and $XX.X for XX.X% million, the $XX.X year. for was income the million million, income net to EBITDA year. the compared XX.X%. $XX.X quarter the quarter quarter EBITDA quarter last of compared third in last

release. EBITDA to net of reconciliation income earnings a find can today's in adjusted You

XX% of We from In billion $X.XX next backlog, XX, XX% now of revenue time addition, to $X.XX year. to XX% last we contract quarter. XX have at that up backlog at XX% we which billion last the estimate to months grew booked project is at up in the end this June from

million had of We now $XX.X the cash balance to sheet. Turning cash equivalents. and

million $XXX into under it well credit $XXX converted revolving As to of the term for an million relates credit terms million facility availability, during credit our to our credit the accordion $XX of quarter, revolving as the debt. the additional availability, as converting we facility agreement,

a of a under $XXX.X we have As of credit. net outstanding facility, million reduction credit result, letters for now the available

high-value under We generation $XX.X opportunities. and the have principal outstanding continue and acquisitions revolving growth credit provide availability will for to loan potential allow additional million and and on $XXX.X facility credit under the near-term cash capacity term facility. outstanding our The flexibility million to of

our the EBITDA was trailing of end XX to the of X.XXx. debt As quarter, ratio months

of profitable add Our is maintain X.X leverage X.Xx will continuing expectation a sustained range to to the growth. ratio while

activities cash and XXXX operating $XXX.X $XX.X for was million million, XXXX and by by provided fiscal Cash respectively. operating activities Year-to-date provided million. $XX was

capital months return XX Trailing year-to-date were as Net million. of expenditures capital $XX.X on XX. June employed was XX.X%

remaining We to million amount capital growth be XXXX the expenditures to in $XX invested million. fiscal CapEx of $XX expect maintenance net range high-return for of initiatives. in with revenue of includes approximately X.XX% This the

to Based performance to our follows: of on $X.XXX the as of EBITDA through income year, XX.X% $X.XXX 'XX we ranges EBITDA XX.X%. the net adjusted $XXX remainder our million, outlook revenue 'XX range billion and million This raising date are million billion, in in for the FY visibility margin million. the range an indicates $XX to of range of $XX.X the the in adjusted $XXX range of to to fiscal in our

that, with we Operator? your to now take are And questions. ready

Operator

Instructions] first [Operator from question Thompson Research Thompson Our Kathryn is with Group.

Kathryn Thompson

of backlogs bit parsing little driving out is to and want I in focus detail a on what First, more terms this.

which and XX% percentage quarters that end versus still XX% more row margins, the in XX is sequential both ongoing a a included thing understanding bit seen hand-in-hand. that market, public to you have the and a has but new path EBITDA maintenance clarity more Could in on private being of construction? difficult a more do greater You've to backlog repair markets end to little on are to give of growth, private public the backlog

F. Smith

now abnormal. you. history down CPI said increasing summer It work Kathryn, has of the years the quarters to X I've and went that's now backlog season. been XX that its backlog sequentially. for or in X thank

our to to a say demand continuing it again, starting reflection So of really, I'm just but myself, as markets wonder strong. be I'll

be one, Let's market them each to continues private. take steady. private The just

IIJA in them in see to now of is our each We markets, the a states continue bid second And year getting using really public that of the then to lot our money, there. of money. opportunities

And of states X so to plenty we're our passed funding. And there. bid supplemental opportunities have of seeing

continued market And creating just that's a so bid in. good to

and both or our this Greg would backlog. seeing good quarter the went which backlog that our XX%, we're a is gear. on So of up in maybe IIJA expect you percent to from public now in work the to XX% backlog noticed as really XX% percent I full of couple added

come tick the XX next through see surprised up be But no it's on wouldn't just that a P&L in I -- change. months. It's the in it's big to not public. So slight

good us excited going gives the just gives a backlog into we're visibility we're And about to what be XXXX. you. backlog So continue the That's patient. going to

being be patient of You talked is about our able the XX% table. margins at to margins to bid getting part to XX% the

Kathryn Thompson

as change on the the years follow-up, market. projects seeing? what private particular the have Okay. seen a in you end of Like are market? And any with And end progressed just residential you types

F. Smith

said come that of more Yes. would it's Southeast. moving the -- we've remarks, which about, as the We in been a with you we the expect is to projects prepared talking really lot of reshoring to the of businesses just what

can to to operate. subdivision. So place any we've or industrial headquarters, give Residential seen haven't uptick been We has corporate steady facilities, in that developer really huge It's parks service seen manufacturing market. the shrinking build corporate steady. a businesses of pretty that for been

Kathryn Thompson

And just Because but It have we you sequential little little be any other what geographic your in from cadence? any a change a the is a with change markets. it clarification, residential? have focus, different heard -- just could than residential it's seen

F. Smith

pretty a I all. involved the big and haven't with Panhandle that we're But really really at we We in places change other mean, part residential do the not it, of steady. where do. developers, residential in Raleigh what Florida of much and places is been we they've seen

Operator

Tyler with Our next from Raymond Brown question is James.

Patrick Brown

I all guidance. appreciate the

you've the it been my in of at already should already guys done? of you the role have from You points the I I from into of is, maybe right how growth you as be benefit M&A quite that completed 'XX or active will here M&A. point growth here from much of bag now, in in the 'XX and appreciate do 'XX? X X acquisitions roll deals have that the But on half front, have kind already guess look you

F. Smith

now do. Yes, would rolling right range Tyler, estimate the in We to into that be XX 'XX. we to XXX

Patrick Brown

incremental an benefit in 'XX? Okay.

F. Smith

Right.

Patrick Brown

That's pretty Okay. good.

Okay.

how been you be a will some 'XX air to guidance? you you the do that fiscal lot think how to really want around this mechanics think think but really think important Should M&A we put your I about on about announced. guidance, to is as to given the you expect into unannounced this I split guide about Day. But has put M&A we Or And M&A Analyst going M&A? what So year, the into I your talk to quickly to around your we only because in guide guys start I think going philosophy unannounced is be mean this here of some about 'XX. include that your don't

F. Smith

question. Yes. Tyler, great

put we at envision so be As our don't guide. We back year our sense for we methodology just typically, it our getting unannounced in or you just acquisitions Day, but know, to putting what just did aspirational simply make we've -- to of Analyst to normal guidance last announced far. into

easier move forward to And 'XX. so it into should be

Patrick Brown

And helpful. X last me let Very just on X Excellent. squeeze margins.

pretty there. a here. simple guy So improvement obviously, great I'm

-- cost more expecting all helping. bidding than improvement, quarter? thoughts with think that I maybe But any picture got together, you maybe really are when margin So mix big of it missing about had maybe you just margin this you public better sophisticated tools? Or or been that seeing either a more to XX-plus I'm you disinflation function percent it's is

F. Smith

Yes. about margin talked on Tyler, being the building just be more X and we've being to put better bids. able levers to money expansion, able markets X of

that's certainly so And one.

The integration. vertical other is

little and our aggregate is X/X facilities and year, are more so contributing then each a And scale. terminals

like feel all so And contributing I working and are of X those together.

continues And be the margins. story really to that's so on the

Ned Fleming

productivity Ned. doing the continues leading in tender day people is laying that for hard hot that the would and Their look increase. Tyler, that you I asphalt, well a Their this we job. cold management -- one every as people in the tell working thing, are are area. the weather, orientation statistics increase. they're Jule to team weather fantastic to continues the and in at

and things them the Greg in got job doing would margin respect of fabulous really one watching single them, folks are telling this people them and that and go want just benefit and business, trust in the to I'm number going And this to huge down. people well work a treat way Jule is I whole you've margins with not to them absolutely and you're -- as think to team led forward. encourage I but work day those a that's to say an put all we hard So they is by the those it, we every you how move to then

Operator

Wittmann Andrew next question Our Baird. from is with

Andrew J. Wittmann

last ask markets is maybe a off I your how, allowing that, guess a of on Jule, at to still -- all, to Are Maybe compare year. about little bit growth? launch about series process bid first margin expand you've please. current seeing margins and Great. little as I'll and the with questions your you the your done you, thing there bit maybe the better last building over the bidding win you new backlog, what you comment can to if

F. Smith

eye question. take Yes. of. Andy, an It's off ever we it's good a can that X

Our and industry ever to not is going competitive change. that's

patient. but disciplined do good is patient we're -- low and to have work productive our and be bid trying what keep as we your and the But to cost on backlog as bid be in table gains margin also field, at we Ned down, the use that we said, continue be cost so and And well. be can the if to more to if

find field has be in one seeing is But that and CPI things we're production. always ways the the to return the and win of guys done, the to

not, we so we more at on finish in margin than higher And did. jobs than a

And that getting projects so the helped up ability of just as they're to this write built. quarter X things was that's really the

Andrew J. Wittmann

bit And We was then I a Yes. fiscal is season comment just through just unfolding. how little in quarter hurricane maybe normal today, the quarter. had your earlier than And start fourth wondering here. a guys. That's helpful. here,

it make around As down need with the comments are and you slowed end the you to back up quarter, weather? of you maybe it in some the where just

F. Smith

than out this so month over But have Raleigh then with how had this quarters communicate of hurricane states, now, and good is really through try better and is be the week We've that's out. where the than we normal. of balanced normal to March evens the time balanced been market morning. a far than rest quarter and goes. quarter we'll have where row what just weather a to July had X the of normal X really other in And August, month. Andy, left we've dry weather We has see to a our weather has a first And just rest August of fine. could just out September

we ahead of try ourselves So don't there. to get

Andrew J. Wittmann

quarter you so relates it quarter guidance, seen so as far discounted But the you've that through like what feel you've fourth to far?

F. Smith

Greg to in factored and he's the seat. to going Greg? what as hot put let I'm him answer on that

Gregory Hoffman

first Yes. to about that the We same a about tried just the half the anticipating of talk No, quarter. realized balances of this second half this always that within the the what kind we're oftentimes I quarter, think of to and we've think we've the happening year earlier way and of and year the out. quarter that's the kind lot quarter, occurs balance

Operator

Our Davis Thalhimer Adam & Company. with from is Thompson next question

Adam Thalhimer

the nice of acquired? I growth. organic on much to that how a backlog much that Congrats How beat. sequential wanted was about was and of ask

F. Smith

had in this we about acquisitions $XX Well, through quarter. come million

was impact over acquisitions about million, our year. different the as have this $XX quarter, the They was come but to rest So quarter so in the it organic.

Adam Thalhimer

to mix similar a like revenue? Sounds

F. Smith

right. That's

Adam Thalhimer

thoughts And some then what potential. your be would on

M&A, maybe a there? You growth asphalt the talked growth projects, thoughts but Any about on new CapEx terminal? side,

F. Smith

I CapEx invest our projects we evaluating our difference. growth and in all, you're going that and are always companies very the And brag in want a where to he to things that think make a really question think process growth the of a them where to with Greg There's most has good this growth I tell use the good really Adam, quarter invest this will I like of of to vertical most to money really operating you, CapEx it's and on impact. putting come seeing the going just integration and thinking the job make lot instituted this disciplined organic and investments can't through opportunities, on done we're he's all about I that. year.

Operator

question Stifel. is Stanley with next from Our Elliott

Stanley Elliott

is rock the about up guys. about a of are so much likely earnings how you are pretty the you numbers you on -- lot businesses the those to side, Could organic little XX% -- and through the flat that I supplying of talk bit on are than guys lot volume different mean, of you basis? Can season. organic on folks The a talk your you down were we're guys putting of some a disconnect other positive an kind to vastly

F. Smith

markets Stanley, speak on doing. greenfields. we're can environment. to the in and working only what demand we've a great share. We're got Yes, to in I grow And we're adjacent to work continuing market markets in

have able work. really our do we're and that's more to to organically adding opportunities, ability grow crews driving So where and the we

said ago, XXXX us I year and grow going as in and to in we the creating they're Paving did X.X organically. grow And give the Robinson years acquisitions opportunity years a us XXXX. to a or ago from I organically and X are now, think the And Hudson year to remarks, opportunities for

organic. We we're company really to what our half to about see of continuing execute see So been strategy. moving just And that's forward. continuing XX%. always XX% we a We've on that growth

Stanley Elliott

and nice you thought then work. function I have what you'll had it's And able a more be crews Do to productivity to more Yes, Jule, increasing. think hear. crude that's mentioned put of of to the people guys you to and kind

another locations, the or work have to or down. And people number is longer ability to or so to weather machines of lay flex various issue with you location the maybe to you an if even flex because hours if the can moved of help

a drive curious what of on side this little Just if growth? of out the you're you about to outsized kind could parse kind doing productivity bit

F. Smith

workforce is Personnel, development asked it last and years talked comes an great workforce just operating them, And machines. so on it training I'm worked you a our on the leadership retaining with attracting focusing important. great having question. about the X And Bono the organization. is, building the VP Stanley, isn't ], lot and said Ned that, glad really What [ function people, because people. it a has because we best and Great throughout Yes. of and of people really what down is just over Robert to companies more

all equipment through make the at The have, building all difference to at the people thousands a to X we the that's and we're projects It doesn't big results comes when see of in start down you business. team come greater time. our

more And people, so great often ways if to find you to not those on than projects. going have win they're

Operator

Thielman question final Our is from D.A. with Brent Davidson.

Brent Thielman

few I questions a had here.

those of I penetration that increase sorts some to large into those First, military initiatives may out not you areas. of expect My and get since of public Jule, any the you airports these is called to try non-DOT of have heard bases. be to into that facilities. sort and accretive can as many types people understanding opportunities

more thoughts got around I just are accretive those and on guess, margin if that, you? to you've So if initiatives

F. Smith

Brent, you're right. Yes, exactly

certainly lot and and to, said. Some bases are expertise very require on those just difficult, them. airports skill and to projects people you of like less have going are are prequalification military bidding a

where we And we projects, can work absolutely type so are. on those of

decades they Southeast. teammates Fort in working Moore, acquisition, one new from of in the Our largest Paving outside literally at They the are newest have gate right Moore. Robinson spent our the Fort Columbus bases

And addition team so and to very that's attractive universe. a our

Brent Thielman

shifted contractors then of and if it. expect funding Obviously, some great there's about is experiencing public landscape there. visibility but I just in slowing some you're work. the rates obviously these regional, degree And towards pretty that. of by I sectors some wondering private some in interest influenced little shift bit Got to with heard just has the this any competitive a

F. Smith

the projects, commercial see If it's few steady. reality just a for that private that. and to down. It's is year watch And in addressed don't and staying was the see of this something big last market commercial anything, both slowing our we've it's we closely. Brent, little we public a really quarters, keep we We're haven't if than is bidding better but looking we slowdown types year. seen private but a it opportunities,

slow crews switch simply more even did our doing But down, would if work. public it to

And lot. a amount just crews capacity asphalt, work We so lay it's jobs. public have or a either we private something certain not make of move that worry our on to about can and we asphalt, jobs down dirt

Brent Thielman

Jule, some piece there's to there. of Again, of seems a maybe a just of on it know of focus been you want maybe one more a like as try mean you and size more. subcontractor but me projects of general any the smaller things that more guys and larger that to some understand that there to seems to opportunity get try try on there's contractors those manage to is I I the work noticeable little getting you're one that there. been a shift And for has pie? propensity out a to stuff. I approaching, manage stuff released But the

just how that. So you're approaching curious

F. Smith

now No, Brent, projects with you're they're is JV markets, with a participating or active out we're very when those either IIJA, And subcontractor dedicated in is larger letting we're There those as a subcontractors. right. our and subcontractor coming partner. a are

us. resources we work that's where the that mega contractor, good as we participate build something the in risk can subcontractor, of and don't we for our very while take as not that's best want prime just a So projects see use the projects to as

Operator

to the for We of to our session. would end over have management it back question-and-answer turn like closing remarks. I reached

F. Smith

and We appreciate joining speaking today, we forward look with everyone again us soon. to you

Operator

conclude will This conference. today's you. Thank

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

Construction Partners (ROAD) 9 Aug 242024 Q3 Earnings call transcript