Construction Partners (ROAD) 21 Nov 242024 Q4 Earnings call transcript

Greetings, and welcome to the Construction Partners Fourth Quarter and Year-End Fiscal 2024 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, with Investor Relations. Thank you, sir.

You may begin.

good and operator, you, morning, everyone. Thank you call to appreciate fiscal joining year-end us conference Partners XXXX. Construction the review for for results We fourth and quarter the and is XX, page Presentations XXXX. today, call Investor constructionpartners.net. Information be being speaks call of the on webcast section on This accessed Events also of through November recorded audio Relations and only link the of can this as may listening no date be transcript longer accurate Please time-sensitive advised the replay any as of information any or that reading. of be I like made remind facts, of Act that in Private to or financial you today's of pursuant safe historical XXXX. made future future the statements the would Securities not performance, harbor to Litigation also statements of the are events or Reform discussion statements that including forward-looking expectations are provisions

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

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

our and Chairman. me this our Greg us everyone. appreciate joining With the good Executive Chief Ned on call Hoffman, morning, and today. is Rick, Fleming, We you, Financial Officer; Thank morning you

EBITDA compared XXXX, year of XX.X% to XX%, our an adjusted fiscal pleased margin revenue of income EBITDA to and XX%, growth a finish year. XX% to growth are of report strong net XX%, percentage We growth record of with a year last

from customers, repeat teams year local CPI ended for recurring cash flow, and operations strong $XXX model we generate of revenue continued million. the business cash to expert of addition, the flow management generate In with

acquisitions our the we hard across employees enhance expanded that more a X states. I to for at record congratulate relative than delivering footprint completed new Finally, markets CPI in X,XXX work and into XXXX and market want share now our growth fiscal Sunbelt geographic professionalism, year. their

values a companies, which day. As an striving of to family and are place live of respect, core our to out incredible family together we work creates each

providing growth build our pathways value and our strategy opportunity by their for careers addition, better of In lives. delivers core numerous to advance on teammates

strong obsessive team care both most but the cohesive only in customers excellence, dominant new Star our taking platform well, checks with sites. Fiscal is professionals do dynamic a of off other Wheeler remaining acquired markets, by boxes those of this challenge to their daily culturally things in strong and to built team our opportunities all great companies. Lone long at we year day the CPI growth that us month, earlier and value core has led Lone Jack infrastructure stay XXXX our out Paving, work incredibly has an people talented of well-funded started company in ordinary The every of key evaluated Texas final each a company employees. certainly into Paving extraordinarily its program. find each of vigilant not for in one to and enter talented of Texas. to and Texas family their platform to has their are safe Star as Our a companies watch Central was as also to dedication construction and while for that great management also fit state

XX% allowed and close year the XXXX professionalism over expected fiscal XXXX XX by concept Star proof due potential process the integration confirmed Lone our earlier the and margin of XXXX is our Star's to of guidance. X years. Essentially, transaction map plus last the this markets, Lone power goals into have better CPI's Our Star is months months include team expansion the Star to only And us diligence impactful Lone Lone than of in a accelerated our road X the as progress scale. EBITDA building toward and goals, levers and road of map X of margins vertical

in expansion strategy fiscal continue in will current we this on markets execute and We Sunbelt both new and throughout to line grow XXXX bottom the as beyond.

new team CPI members. and enter areas, continue as to expand moving strategic and occur forward, will capacity share acquisitions market we add services Our smart new talented

acquisitions in of part going years, acquisition environment subsequent a continue fuel we second which as is very organic future year our the transition. our one active made for is see Importantly, generational growth through strategy. Currently, opportunities to industry a growth in

relationships and of focused build to yet that our acquisitions culture family strategic the with potential great and companies. operational CPI and the remain we patient excellence continue will finding We on add inside the outside states, current bring of sellers, to best both of

to construction states. reporting backlog of record are of represents demand funding of consecutive a quarters billion, XX $X.XX and the growth. we environment an now Today, Turning overview backlog which Sunbelt across our

for finally known of the authorizations X-year declining this the with markets. And federal and in always highway is states have funding, has It In been the normal its X funding by at X the has to that we significant $XXX names transportation increasing and flowing generational program. the fourth road this project years, bill's impact after represented to authorization. many that the increase XXXX, in Of Previous ago, the stages the current in funding continued infrastructure. busy federal historical also serves primary by robust both for with highway XX% XX% in been annually X-year were a less the is annual XXXX new August stakeholders ways, of as projects. The be our the IIJA work that core program to fact began the highway this to infrastructure an Act of nation a IIJA, expansion investment early the as important norm lettings funds to passed committed this a While growing led years next the the environment, highway work historical for was federal quarter increase to and CPI's ago construction We while to the and continue program. dedicated are the commercial the during levels highlighted level incremental baseline still seeing an of will set in the states continue important maintenance reauthorization nation of evidence norm reimbursed amount billion to and the happen repairing high is summer payment backlog acute and years such that priority. to only fully reauthorization funding been for was years. need addressing and projects construction bill the expect is IIJA over on X we XXXX, actual infrastructure, X shrink maintaining to funding than in the FAST the the our season, as been funding demand and of mechanism state's XXXX now demand bipartisan repair, note as grew states to backlog have XX% down that levels a while at regarding place. It the to the public from and and SAFETEA-LU remind the in for an past for until

and passed to also North the funding In remain quality recently well on keep states, are growing, and as South mechanisms of the and addition, capacity handle pace the Tennessee, additional improving supplemental Sunbelt. top several on significant and their our states. Throughout existing plans try Carolina, states growth markets we migration Florida, their of with roads needs Carolina our of maintaining increasing operate to rapid in, have such the infrastructure funding and states to the focused as their Sunbelt as

As record organic opportunities we and focused is year, acquisitive evaluating new backlog the team and our Sunbelt. executing both begin this throughout fiscal growth on on our

the opportunities grow workforce business create on to over of the to providing culture, we now of call also Greg. remain a on to challenges and outstanding ahead company's family and them our like distinct retaining so best and deliver turn can long-term value. I'd focused shareholder the of us We attracting the

revenue and fiscal acquisitions. Gross year organic good the I'll metrics of begin mix discussing total year X% an last fiscal outlook you, increase before to morning, Jule, everyone. recent profit a $XXX.X compared XXXX from Thank with growth fiscal an for performance key XXXX. increase review of was and compared was year. year. of The last to for approximately our XX% $X.XX our for billion, of XX% was Revenue revenue XX% million, the our in

acquisition of revenue our percentage to income $XXX.X last the EBITDA XX.X% fiscal EBITDA compared Adjusted in was expenses an million, increase to was to revenues, last a $XX.X year. in percentage increased compared of last and million, a to XX.X% expenses our Star XX% X.X% slightly increase This As margin total Lone of was XX% General an year year. transaction XX% fiscal XXXX. as Paving. Net of compared X.X% administrative gross profit year. related compared Adjusted included to for was compared 'XX to increase total XX.X% to last year. of

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

at September are reporting backlog XX, project a as billion addition, In we XXXX. mentioned, $X.XX record of Jule

now to our credit senior and additional and pay to growth Lone Term credit. $XXX to credit available and agreement we near-term the an letters reduction continue allow potential, flexibility year-end, had of our acquisition million balance availability down on and credit balance to credit with provide acquisition for under the were the facility and of for for cash secured revolving Star at million generation net to of on Turning finance B capacity fiscal sheet. our and facility the $XX.X opportunities. notes proceeds into high-value November equivalents cash and to of will the X, of We a $XXX.X Loan million used facility. Subsequent connection the related facility. entered outstanding an In cash acquisitions expenses year-end, the This

The swap As XXXX. swap rate a an interest rate is SOFR an of June this interest has of on XX, X.X%. that at million agreement fixes results date maturity reminder, which in company term of X.XX%, debt $XXX the

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

in Xx to XXXX million. was in transformational forma EBITDA we pro leverage and the quarters, the acquisition for Lone Star XX-month to to next bring line $XXX Capital approximately clearly transaction compared $XXX X.Xx. Cash represents of by ratio to for fiscal million XXXX. $XX ratio X in of result will long-term X.Xx. debt our million expect were expect over provided that to target sustainable expenditures with ratio fiscal a We trailing X operating down activities CPI, a for

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

now to our outlook. Turning

range month, are range our the As net XXXX. we to of range will we the open here million $XXX EBITDA adjusted income to of of $X.XX million, reported million ranges this the the in earlier adjusted XX.X%. And margin to range $X.XX the $XX in the billion of in and fiscal call $XXX Operator? Revenue billion, $XXX that, XX% for EBITDA year to questions. to million in with

from Our Thompson with Group. [Operator line the Thompson Research comes question Kathryn Instructions] first of

much bridge guidance the You margin. Lone between versus are just have fiscal EBITDA 'XX, that have the of bogeys your margin growth 'XX you how is organic growth you very -- solid 'XX. and margin gap set progression of for from EBITDA Star for Could of with for

to points like Kathryn, doing same feel still our expected toward for we Lone XXXX after we of even -- we -- expansion the year. without continued from that we we basis our just of would make goals basis XX this the and have new Roadmap know XXX fiscal budgeting points to growing year, strides Star, XX

the Lone business continuing road that. and it then our our X there, like was So even all us Star integration and goals. clearly, to you toward when we feel those make of vertical add Lone Star, years that. going our progress without And But create moves in backlog to great down scale, we're

Okay.

internal versus So maybe be guesstimation. of thumbnail Just say to get would Star? the just you half that of of some Lone trying could expansion type

Kathryn? margins to of you the you're when XXXX. from think I asking, Is XXXX what expansion EBITDA that say

Yes, that's correct.

Yes.

another add. I we're building But a transformational Alabama, backlog what even margins those in line. look grow going XX%. as at was to people new to doing, we can We're are with to know adding continuing City this potential acquisition, think both X Huntsville, the I clearly, year, in you And terminals, before Lone think levers, our margins, business work and now we our markets, to better and Star, those just when Panama continue acquisitions. our just North then XX% add bottom grew incrementally what

just of the a I and of just to like scale. picture we get, Lone build just progress a Ned? Star business, of love from just business is. to big -- the to give means So to what you the you -- Ned, just a give would standpoint, continue Kathryn, where sense sense I'd

But It's integrated fully Star Kathryn, I things. anticipate an to we drive the as be. that philosophy I driving Obviously, speak. it, where to of current up for a margins been continue markets. can the think to margin up to business long don't vertically we've is Well, couple that's core part company a of we indication we your business percentages time. Lone On of question, a we margins that like have a put in consolidate also. so think

for as Lone And box. put As business. I checks that looking this and have that looked think big at and X of one Charles acquisition Jule at the people, were been there obviously, years. was of I it we far business Star, that place culture well things key And the it's his remarks, the opening the a in very

to We And have also of a really be to in needed the state to is it spending the big in the largest, not country. infrastructure enough needed Texas. if compete as largest it Texas to Star And one Texas, and vertically beautifully in being Lone does wanted the in markets. in to real a that that excellence operational benefit is we integrated piece, be and great that. And best in markets. we're

in an something only acquisition a a to thing that are well, looked cultural but And as so all fit pleasing And most fact think the great that time. I the boxes. This the business that Texas. continue at bringing for we've us not think Board is is the people that for I to and was the checks grow long this going fits

see to you'll and margins us platform, it a from help they'll and that learn them, improve drive as grow. So their margins things And up. result, we'll will continue

And but But about of that the it is there really we're and opportunities to people a have it's the thing dynamic it. result are. of So will they old-fashioned key people excited Texas. that lot as all growth an had we say, to how organization was in those a that

Star follow-on one thoughts color just your perspective may and for question. line opportunities be visibility that And top the on growth, Any not TxDOT or other in of Lone for revenues and but only Texas.

Just little and more terms seeing TxDOT color in budgeting. other words, just on their of you're so bit in a what

the flow lot Texas from to so also, as they the IIJA, by formula a Yes. know, Kathryn, has growth. of those funds you states. And

mechanisms And supercharge really their other infrastructure portion funding so then outsized just program. federal and in really to the But oil Texas gets and is an done funding. Texas incredible of create supplemental programs has is gas what just

just growth. And to to what a of you're happens see when And you're to I as grow share see going for lots going in and said, think, bolt-on to markets as CPI, you're new joins market acquisitions see platform Ned into normally and company move them to for opportunities going Texas. organic look so

Morrissey team to Spinn state presidents be the as need Dean and -- grow Texas. you Ben to incredible happen, they're to their in about division and and I that's just construction a and people. just like but for people, what the Lundquist and Steve in mean, And markets, Jack so their take when you And with built, Ned said, that it's Liggett Wheeler Greg able

of in the family we're excited companies. to very so have them And

things. I add Kathryn, two And if can

is is as team having well greenfields. lot allows of one take a and I that to one think of a is able of young number as That strength. people management and a acquisitively businesses with this other that lot to to be us bench capacity grow on things the

I to they one have think have reasons they much so buckets. the the money TxDOT number key is and is of different X

and goes actually that into and other does that. And and they the of take the state in business, really I'm gas infrastructure oil example, for it aware transportation. So country from money no

Texas be not one sources and are for what's to have the of grow and they revenue they to about dependent that's us is able do on So infrastructure, different dynamic of Washington things to build.

[Operator the Instructions] Our with question next from comes Adam Thompson, line Thalhimer Davis. of

for can Given sooner, just the ask, us to fact but parameters closed I any the you hate same EBITDA page? the you little acquisition we're a so all on and QX, give

give esteemed to to our Yes, turn that. Hoffman, to over Greg going Adam, Financial you I'm Officer, Chief it

you want whatever Greg. give take to I'll us,

Understood.

did earlier out that put we our X included first when we yes, now EBITDA. lot So only of close a guidance months

XX are we Now including months.

see half of will too you said what in I XX% Adam, more fall So is have of is that to think right year I half in we year, Lone the in And XX% reflect our Star. pretty think generally, But EBITDA much much second the from going would line. first guidance the the that.

from $XXX do interest reflected be we've that difference we revolver. because million the was talked the of to we pay only net standpoint, So have down expense a facility used the will the facility, $XXX in million about. that essentially income

XX/X right, starting well. up on as picks that So

expense XX but So of results. to also XX of facility months our going see from flowing certainly through interest you're EBITDA, that months

say, Yes, looks at year. to that seasonality look we Adam, and I and Alabama when Texas just as obviously, Carolina South look, you know Georgia. add be to like will this it to a a lot Central would from that, just getting But standpoint,

sort modeling our just legacy we month like cadence we're per percentage from using feel -- we a per our has. quarter, same the that just of and So business standpoint

Do you cash flow the QX, cash have And expected. strong then on sale proceeds than from then assets in from in also ops any stronger you thoughts was thoughts have really curious if And 'XX? we any on in Okay. 'XX? of

Yes.

about cash from to operations flow EBITDA range. typically in we talk So converting the XX%

would would I XX% that So to be XX%. think

So that of little flow I in XXXX, that's you're expect Yes, to year-over-year. the a that would get just But going how I would we we just Adam? be on out what in average, think issues. was think 'XX. than did probably bit see timing it's we question, sorry, more some I'm because what other it's

sale. Asset

Yes.

about chains we talked seen what to supply continue as So the trend the getting healed, as past to timely have disposals equipment were and years. probably more compared couple we Again, down. before, in we of have

down I come think numbers the will disposal as well.

next Our Jean Ramirez line Davidson. of question from D.A. comes the with

just from wanted is I is to much clarify. how -- just Lone from -- It's backlog, Star? it of the

Yes, XX. as to of September was reported backlog that the Jean, clarify, today of just we billion $X.XX

Star Lone So since quarter. will include that included backlog they X, of us is end joined this on November in at current their not the

Thank you.

I We would floor turn have end management of to over like for comments. closing reached now session. to question-and-answer the the the back

Thanks, today. have everyone, joining wonderful to look forward we families, for talking you and Thanksgiving soon. us with a We your hope

conclude Ladies and your Thank does for teleconference. participation. gentlemen, this today's you

lines your this disconnect may at You time.