struction Partners(ROAD) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited consolidated financial statements show a decline in net income and operating cash flow, with details on ASC 606 adoption Consolidated Balance Sheets (in thousands) | | December 31, 2018 (unaudited) | September 30, 2018 | | :--- | :--- | :--- | | Total current assets | $240,683 | $267,455 | | Total assets | $467,812 | $496,310 | | Total current liabilities | $104,645 | $134,541 | | Total liabilities | $163,189 | $196,841 | | Total stockholders' equity | $304,623 | $299,469 | Consolidated Statements of Income (in thousands, except per share data) | | For the Three Months Ended December 31, | | :--- | :--- | :--- | | | 2018 | 2017 | | Revenues | $154,327 | $150,421 | | Gross profit | $21,128 | $22,798 | | Operating income | $7,031 | $10,517 | | Net income | $5,154 | $10,996 | | Basic and diluted EPS | $0.10 | $0.26 | Consolidated Statements of Cash Flows (in thousands) | | For the Three Months Ended December 31, | | :--- | :--- | :--- | | | 2018 | 2017 | | Net cash provided by operating activities | $1,211 | $19,490 | | Net cash used in investing activities | ($5,070) | ($9,318) | | Net cash used in financing activities | ($3,711) | ($7,500) | | Net change in cash and cash equivalents | ($7,570) | $2,672 | - The company adopted the new revenue recognition standard ASC 606 on October 1, 2018, with no material impact on opening retained earnings[48] - Unsatisfied performance obligations (backlog) totaled $505.0 million at December 31, 2018, with $391.5 million expected as revenue in fiscal year 2019[54] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports a 2.6% revenue increase from acquisition, but a 53.1% decline in net income due to lower gross profit and higher expenses Results of Operations Comparison (in thousands) | | Three Months Ended Dec 31, 2018 | Three Months Ended Dec 31, 2017 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $154,327 | $150,421 | $3,906 | 2.6% | | Gross profit | $21,128 | $22,798 | ($1,670) | (7.3)% | | Operating income | $7,031 | $10,517 | ($3,486) | (33.1)% | | Net income | $5,154 | $10,996 | ($5,842) | (53.1)% | | Adjusted EBITDA | $14,712 | $16,511 | ($1,799) | (10.9)% | - Revenue growth was driven by $16.3 million from the Scruggs acquisition, but organic revenue declined due to adverse weather conditions[86] - Gross profit decreased due to lower HMA production and equipment utilization, leading to under-absorption of fixed costs[87] - General and administrative expenses increased by 16.1% to $14.4 million, driven by the Scruggs acquisition and public company costs[88] - The effective tax rate was 24.3% compared to (7.8)% in the prior-year quarter, which included a $3.5 million tax benefit from the Tax Cuts and Jobs Act[90] - Total capital expenditures for fiscal year 2019 are projected to be approximately $39.0 million to $42.0 million[103] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative market risk disclosures - The company, as a smaller reporting entity, is exempt from providing quantitative and qualitative market risk disclosures[111] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to material weaknesses in IT general controls and financial reporting processes - Management concluded that disclosure controls and procedures were not effective at the reasonable assurance level[113] - Material weaknesses were identified in internal control over financial reporting, including IT general controls and financial reporting processes[114] - Remediation measures are underway, including hiring staff, engaging third-party assistance, and formalizing processes[115] PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine litigation, which management believes will not materially impact its financial condition or operations - The company is subject to routine litigation, disputes, and government inquiries related to its business activities[118] - Management believes no pending litigation will have a material adverse effect on the company's financial position[118] Risk Factors This section refers readers to the company's 2018 Form 10-K for a comprehensive discussion of risk factors affecting the business - Readers are referred to the company's 2018 Form 10-K for a comprehensive discussion of risk factors[119] Unregistered Sales of Equity Securities and Use of Proceeds The company made no unregistered equity sales or repurchases, and IPO proceeds use remains materially unchanged during the quarter - No unregistered sales of equity securities occurred during the reporting period[120] - The planned use of IPO proceeds remains materially unchanged[121] - The company did not repurchase any of its equity securities during the quarter[122] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[123] Mine Safety Disclosures Mine safety disclosures, as required by the Dodd-Frank Act, are included in Exhibit 95.1 of this quarterly report - Mine safety disclosures required by the Dodd-Frank Act are included in Exhibit 95.1[124] Other Information No other information is reported for this item - None[125] Exhibits This section lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and mine safety disclosures - The report lists all filed exhibits, including corporate governance documents and CEO/CFO certifications[126]