Construction Partners, Inc. (NASDAQ:ROAD) Q4 2023 Results Earnings Conference Call November 29, 2023 10:00 AM ET Company Participants Rick Black - Investor Relations, Dennard Lascar Investor Relations Fred Smith, III - Chief Executive Officer Greg Hoffman - Chief Financial Officer Ned Fleming, III - Executive Chairman of the Board Conference Call Participants Brian Biros - Thompson Research Group Michael Feniger - Bank of America Securities Adam Thalhimer - Thompson Davis & Co. Brian Russo - Sidoti & Compan ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K | (Mark One) | | | --- | --- | | ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | For the fiscal year ended September 30, 2023 | | | OR | | ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | For the transition period from to . | | | Commission file number: 001-38479 | CONSTRUCTION PARTNERS, INC. (Exact name of regist ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-38479 Construction Partners, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 26-0758017 (State or other jurisdiction of incor ...

Construction Partners, Inc. (NASDAQ:ROAD) Q3 2023 Earnings Conference Call August 2, 2023 10:00 AM ET Company Participants Rick Black - Investor Relations Jule Smith - Chief Executive Officer Greg Hoffman - Chief Financial Officer Ned Fleming - Executive Chairman Conference Call Participants Tyler Brown - Raymond James Brian Biros - Thompson Research Group Andy Wittmann - Robert W. Baird Adam Thalhimer - Thompson Davis & Co Stanley Elliott - Stifel Brian Russo - Sidoti & Company Operator Greetings and welco ...

2 Experienced Leaders LEADING INFRASTRUCTURE CONSTRUCTION SERVICES COMPANY 67 4,000+ ACQUISITIONS SINCE IPO IN 2018 $911mm $1.30bn $1.55bn FY21 FY22 FY23* $91mm $111mm $165mm FY21 FY22 FY23* Revenue Adjusted EBITDA** SUMMER 2023 INVESTOR PRESENTATION Construction Partners, Inc. (CPI) NASDAQ: ROAD | --- | --- | |----------------------------|-------| | | | | FORWARD-LOOKING STATEMENTS | | | --- | --- | |------------------------------|--------------------------------------| | | | | | | | | | | | | | Jule Smith ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38479 Construction Partners, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 26-0758017 (S ...

Construction Partners, Inc. (NASDAQ:ROAD) Q2 2023 Earnings Conference Call May 5, 2023 10:00 AM ET Company Participants Rick Black - Investor Relations Jule Smith - Chief Executive Officer Greg Hoffman - Chief Financial Officer Ned Fleming - Executive Chairman Conference Call Participants Andy Wittmann - Baird Adam Thalhimer - Thompson, Davis & Company Stanley Elliott - Stifel Brian Russo - Sidoti & Company Operator Greetings and welcome to the Construction Partners, Inc. Second Quarter Earnings Conference ...

Construction Partners, Inc. (NASDAQ:ROAD) Q1 2023 Results Conference Call February 10, 2023 10:00 AM ET Company Participants Rick Black - Investor Relations Jule Smith - CEO Alan Palmer - Chief Financial Officer Ned Fleming - Executive Chairman Conference Call Participants Stanley Elliott - Stifel Andy Wittmann - Baird Tyler Brown - Raymond James Michael Feniger - Bank of America Brian Russo - Sidoti & Company Brent Thielman - D.A. Davidson Kevin Gainey - Thompson Davis Operator Good morning. And welcome to ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarter ended December 31, 2022, detailing the company's financial position, performance, and cash flows [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$1.129 billion** driven by acquisitions, while total liabilities rose to **$670.1 million** due to increased long-term debt Consolidated Balance Sheet Summary (in thousands) | Account | Dec 31, 2022 (unaudited) | Sep 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $401,115 | $417,189 | | Property, plant and equipment, net | $498,293 | $481,412 | | Goodwill | $159,949 | $129,465 | | **Total Assets** | **$1,129,004** | **$1,095,521** | | **Total Current Liabilities** | $202,892 | $226,138 | | Long-term debt, net | $413,018 | $363,066 | | **Total Liabilities** | **$670,148** | **$639,642** | | **Total Stockholders' Equity** | **$458,856** | **$455,879** | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Revenues increased by **19.9%** to **$341.8 million**, but gross profit declined to **$30.5 million**, leading to a **65.7%** decrease in net income to **$1.9 million** Statement of Comprehensive Income Summary (in thousands, except per share data) | Metric | Q1 FY2023 (ended Dec 31, 2022) | Q1 FY2022 (ended Dec 31, 2021) | | :--- | :--- | :--- | | **Revenues** | $341,779 | $284,964 | | **Gross Profit** | $30,496 | $32,964 | | Operating Income | $6,328 | $8,459 | | **Net Income** | **$1,892** | **$5,511** | | Diluted EPS | $0.04 | $0.11 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly improved to **$28.9 million**, while investing activities used **$70.7 million** primarily for acquisitions, and financing provided **$49.7 million** Cash Flow Summary (in thousands) | Activity | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $28,884 | $(577) | | Net cash used in investing activities | $(70,670) | $(80,274) | | Net cash provided by financing activities | $49,736 | $67,461 | | **Net change in cash, cash equivalents and restricted cash** | **$7,950** | **$(13,390)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail significant accounting policies, recent business acquisitions, debt facilities, and an approximate **$1.2 billion** in performance obligations - The company's primary operations include manufacturing hot mix asphalt (HMA), paving, site development, mining aggregates, and distributing liquid asphalt cement across six southeastern states[18](index=18&type=chunk) - On November 18, 2022, the company acquired three HMA plants in Tennessee for **$8.4 million** and disposed of a quarry in North Carolina, resulting in a **$5.4 million** gain[60](index=60&type=chunk) - On December 1, 2022, the company acquired Ferebee Corporation in North Carolina for **$68.8 million**, adding three HMA plants[61](index=61&type=chunk) - As of December 31, 2022, the company had approximately **$1.2 billion** in unsatisfied or partially unsatisfied performance obligations under construction contracts[70](index=70&type=chunk) - Total long-term debt stood at **$426.9 million** as of December 31, 2022, consisting of a Term Loan and borrowings under a Revolving Credit Facility[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the quarter's financial performance, highlighting revenue growth driven by acquisitions, but noting declines in gross profit and net income due to cost inflation [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Revenues increased by **19.9%** to **$341.8 million**, but gross profit declined **7.5%** to **$30.5 million**, leading to a **65.7%** decrease in net income to **$1.9 million** Q1 FY2023 vs Q1 FY2022 Results (in thousands) | Metric | Q1 FY2023 | Q1 FY2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $341,779 | $284,964 | $56,815 | 19.9% | | **Gross Profit** | $30,496 | $32,964 | $(2,468) | (7.5)% | | Operating Income | $6,328 | $8,459 | $(2,131) | (25.2)% | | **Net Income** | **$1,892** | **$5,511** | **$(3,619)** | **(65.7)%** | - The decrease in gross profit was primarily attributed to rising costs of raw materials, fuel, labor, and trucking, along with supply chain disruptions[137](index=137&type=chunk) - General and administrative expenses increased by **19.2%** due to costs from acquired businesses, higher equity-based compensation, increased payroll, and professional fees[138](index=138&type=chunk) [Adjusted EBITDA](index=34&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA increased **4.7%** to **$27.6 million**, but the Adjusted EBITDA Margin decreased to **8.1%** due to lower gross profit margins Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 FY2023 | Q1 FY2022 | | :--- | :--- | :--- | | Net income | $1,892 | $5,511 | | Interest expense, net | $3,960 | $1,264 | | Provision for income taxes | $510 | $1,800 | | Depreciation, depletion, etc. | $18,375 | $15,903 | | Equity-based compensation | $2,480 | $1,504 | | Management fees | $367 | $375 | | **Adjusted EBITDA** | **$27,584** | **$26,357** | | **Adjusted EBITDA Margin** | **8.1%** | **9.2%** | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operating cash flow and credit facilities, with **$156.9 million** available under the Revolving Credit Facility and **$31.7 million** in capital expenditures for the quarter - Net cash from operating activities was **$28.9 million** for the quarter, a significant improvement from a **$0.6 million** use of cash in the prior-year period[145](index=145&type=chunk)[146](index=146&type=chunk) - At December 31, 2022, the company had **$268.8 million** outstanding on its Term Loan and **$158.1 million** on its Revolving Credit Facility, with **$156.9 million** of availability remaining on the revolver[151](index=151&type=chunk) - The company was in compliance with all financial covenants, with a fixed charge coverage ratio of **1.87-to-1.00** (minimum 1.20) and a consolidated leverage ratio of **2.96-to-1.00** (maximum 3.50)[77](index=77&type=chunk)[152](index=152&type=chunk) Contractual Obligations Summary (in thousands) | Obligation Type | Total | Remainder of 2023 | | :--- | :--- | :--- | | Debt obligations | $426,851 | $9,375 | | Operating leases | $21,475 | $2,130 | | Purchase commitments | $5,869 | $3,720 | | Royalty payments | $2,656 | $236 | | **Total** | **$459,223** | **$15,461** | [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity prices, interest rates, and inflation, mitigating these through contract provisions and derivative instruments like fuel and interest rate swaps - The company uses fuel and natural gas swap contracts to fix the price for a portion of its estimated usage for the remainder of fiscal 2023 and part of 2024[162](index=162&type=chunk) - The company has **$426.9 million** of variable rate debt outstanding. A hypothetical **1%** change in borrowing rates would result in a **$4.3 million** change in annual interest expense, absent hedging[165](index=165&type=chunk) - An interest rate swap contract with a notional amount of **$300.0 million** is in place to hedge against interest rate volatility, maturing on June 30, 2027[167](index=167&type=chunk) - The company continues to experience increased costs from inflation but seeks to recover these through higher prices and inclusion in new contract bids, though this is limited for projects already in backlog[169](index=169&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of December 31, 2022, the company's disclosure controls and procedures were effective[170](index=170&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, but management does not expect any pending claims to materially affect its financial condition or operations - The company is involved in routine litigation, but management does not expect any pending claims to have a material adverse effect on its financial condition[173](index=173&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section highlights significant risks from inflation and supply chain disruptions, leading to increased costs and potential harm to profit margins for projects in backlog - A key risk factor is the impact of inflation and supply chain disruptions, which have increased costs for wages, fuel, concrete, and steel[175](index=175&type=chunk) - The company's ability to pass on increased costs is limited for projects already in its backlog, which could lead to diminished profit margins[175](index=175&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell unregistered equity securities but repurchased **5,267** Class A common shares to satisfy employee tax withholding obligations for restricted stock awards - The company did not sell any unregistered equity securities during the period[176](index=176&type=chunk) - A total of **5,267** shares of Class A common stock were repurchased to satisfy employee tax withholding obligations upon the vesting of restricted stock[178](index=178&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, agreements, and required CEO and CFO certifications

Financial Data and Key Metrics Changes - Revenue for fiscal 2022 was $1.3 billion, up 43% compared to the prior year, with $170.4 million from acquisitions and $220.5 million from existing markets [20] - Adjusted EBITDA for fiscal 2022 was $111.2 million, an increase of 23% compared to last year [23] - Net income was $21.4 million, a 5.9% increase from $20.2 million in the prior year [22] - The company reported a record project backlog of $1.4 billion at September 30, 2022, compared to $966 million a year earlier [26] Business Line Data and Key Metrics Changes - The company achieved a double-digit adjusted EBITDA margin for the first time in five quarters, reflecting improved profitability [6] - More than $400 million of new work was added to the backlog in Q4, indicating strong project demand [9] Market Data and Key Metrics Changes - Demand remains strong in both public and commercial sectors, supported by healthy funding programs at state and federal levels [10] - The company anticipates revenue growth of approximately 13% and adjusted EBITDA growth of 33% for fiscal 2023 [11] Company Strategy and Development Direction - The company is focused on strategic acquisitions to expand its footprint and market share, with recent acquisitions including three hot mix asphalt plants in Tennessee [13][14] - A new liquid asphalt terminal is under construction in Northern Alabama to enhance vertical integration and capture margins [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal 2023, citing a resilient backlog and strong project demand despite economic uncertainties [18] - The company expects supply chain challenges to begin normalizing in 2023, which could positively impact productivity [11] Other Important Information - General and administrative expenses increased by 17% to $107.6 million, primarily due to expenses from acquired businesses [22] - Capital expenditures for fiscal 2022 were $68.9 million, with expectations for $75 million to $80 million in fiscal 2023 [25] Q&A Session Summary Question: Guidance and EBITDA Range - Management explained the wide EBITDA guidance range is due to uncertainties in the environment, with the low end reflecting potential supply chain issues and the high end assuming favorable conditions [31] Question: Labor Market Conditions - Management acknowledged a tight labor market but emphasized their success in attracting and retaining workers through various initiatives [38] Question: Free Cash Flow and Capital Expenditures - Management clarified that interest and tax figures in the EBITDA bridge reflect cash numbers, and significant capital expenditures are planned for growth initiatives [48] Question: IIJA Funding Timeline - Management indicated that IIJA funding is beginning to flow into project lettings, with expectations for healthy project investments over the next several years [75] Question: Competitor Behavior - Management noted that competitors are also experiencing strong demand and have become more efficient in passing through inflation in their bids [63]