struction Partners(ROAD) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial information for the period, including statements and management's discussion and analysis Financial Statements This section presents the unaudited consolidated financial statements for the three months ended December 31, 2019, including balance sheets, income statements, equity, and cash flows, with explanatory notes Consolidated Balance Sheets This table provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of December 31, 2019, and September 30, 2019 | Balance Sheet Items (in thousands) | Dec 31, 2019 (unaudited) (in thousands) | Sep 30, 2019 (in thousands) | | :--- | :--- | :--- | | Total current assets | $234,501 | $279,966 | | Total assets | $524,548 | $531,769 | | Total current liabilities | $102,886 | $128,173 | | Total liabilities | $175,364 | $188,219 | | Total stockholders' equity | $349,184 | $343,550 | Consolidated Statements of Income This table presents the company's financial performance, including revenues, gross profit, operating income, net income, and diluted EPS for the three months ended December 31, 2019 and 2018 | Income Statement Items (in thousands) | Three Months Ended Dec 31, 2019 (in thousands) | Three Months Ended Dec 31, 2018 (in thousands) | | :--- | :--- | :--- | | Revenues | $175,314 | $154,327 | | Gross profit | $23,757 | $21,128 | | Operating income | $6,953 | $7,031 | | Net income | $5,461 | $5,154 | | Diluted EPS | $0.11 | $0.10 | Consolidated Statements of Stockholders' Equity This section details changes in stockholders' equity, primarily driven by net income for the quarter - Total stockholders' equity increased from $343.6 million at September 30, 2019, to $349.2 million at December 31, 2019, primarily driven by net income of $5.5 million for the quarter[14] Consolidated Statements of Cash Flows This table summarizes the cash inflows and outflows from operating, investing, and financing activities for the three months ended December 31, 2019 and 2018 | Cash Flow Items (in thousands) | Three Months Ended Dec 31, 2019 (in thousands) | Three Months Ended Dec 31, 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,547 | $1,211 | | Net cash used in investing activities | $(40,351) | $(5,070) | | Net cash provided by (used in) financing activities | $7,628 | $(3,711) | | Net change in cash and cash equivalents | $(31,176) | $(7,570) | | Cash and cash equivalents, end of period | $49,443 | $91,567 | Notes to Consolidated Financial Statements These notes provide detailed explanations of the company's accounting policies, significant transactions, and other financial information supporting the consolidated financial statements - The company operates as an infrastructure and road construction company across Alabama, Florida, Georgia, North Carolina, and South Carolina, with business typically seasonal, showing higher activity in the third and fourth fiscal quarters due to warmer and drier weather[17][19] - On October 1, 2019, the company acquired an HMA manufacturing plant and paving company in Palm City, Florida, for $17.7 million, paid from cash on hand, expecting geographic synergies with existing Florida operations[48] - As of December 31, 2019, the company reported approximately $456.5 million in backlog, with $327.2 million anticipated to be recognized as revenue during the remainder of fiscal year 2020[53] - The effective income tax rate for the three months ended December 31, 2019, was 19.5%, a decrease from 24.3% in the prior year, primarily due to a $0.4 million benefit from an amended state return and net operating loss carryforwards[62] - The company adopted ASC Topic 842 on October 1, 2019, recognizing operating lease right-of-use assets of $9.1 million and total operating lease liabilities of $9.3 million on the balance sheet[45] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the first quarter fiscal 2020 financial results, highlighting revenue growth, key performance indicators, liquidity, capital resources, and risk management Results of Operations This section analyzes the company's financial performance, detailing revenue growth, gross profit, net income, and Adjusted EBITDA for the quarter | Metric (in thousands) | Q1 2020 (3 mos ended 12/31/19) (in thousands) | Q1 2019 (3 mos ended 12/31/18) (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Revenues | $175,314 | $154,327 | 13.6% | | Gross Profit | $23,757 | $21,128 | 12.4% | | Net Income | $5,461 | $5,154 | 6.0% | | Adjusted EBITDA | $17,208 | $14,712 | 17.0% | - Revenue for Q1 2020 increased by $21.0 million (13.6%) year-over-year, comprising $13.1 million from acquisitions and $7.9 million from organic growth[86] - General and administrative expenses rose by 18.6% to $17.1 million, driven by increased payroll and benefits ($1.4 million), acquisition costs ($0.8 million), and higher stock compensation expense ($0.4 million)[88] - Adjusted EBITDA Margin improved to 9.8% from 9.5% in the prior-year quarter, primarily due to higher gross profit and increased depreciation, depletion, and amortization[94] Liquidity and Capital Resources This section discusses the company's cash flow, debt compliance, and future capital expenditure plans - Net cash used in investing activities significantly increased to $40.4 million from $5.1 million in the prior-year quarter, driven by a $17.7 million acquisition and $16.2 million in property, plant, and equipment purchases, including an $11.5 million equipment lease buyout[99] - The company complied with all BBVA Credit Agreement financial covenants as of December 31, 2019, maintaining a fixed charge ratio of 3.51-to-1.00 (minimum 1.20) and a consolidated leverage ratio of 0.73-to-1.00 (maximum 2.75)[103] - For fiscal year 2020, total capital expenditures are projected to be between $44.0 million and $47.0 million, excluding the $11.5 million spent on equipment lease buyouts in Q1[106] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Construction Partners, Inc. is not required to provide the information requested under this item - As a smaller reporting company under Rule 12b-2 of the Exchange Act, the company is exempt from providing quantitative and qualitative disclosures about market risk[114] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2019 - The CEO and CFO concluded that as of December 31, 2019, the company's disclosure controls and procedures were effective in ensuring timely recording, processing, and reporting of material information[115] - New controls were implemented during the quarter in relation to the adoption of the new lease accounting standard, ASC Topic 842[116] PART II. OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits Legal Proceedings The company is involved in routine litigation and government inquiries in the ordinary course of business, with management believing no pending matters will have a material adverse effect - Management, in consultation with legal counsel, believes no pending litigation, disputes, or claims would materially adversely affect the company's financial condition, cash flows, or results of operations if decided adversely[120] Risk Factors This section refers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2019, indicating no material changes - No material changes have occurred to the risk factors previously disclosed in the company's 2019 Form 10-K[121] Unregistered Sales of Equity Securities and Use of Proceeds During the reported quarter, the company did not sell any unregistered equity securities nor did it repurchase any of its own equity securities - The company did not sell any unregistered equity securities during the period[122] - The company did not purchase any of its equity securities during the quarter[123] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[124] Mine Safety Disclosures Information regarding mine safety violations and other regulatory matters as required by the Dodd-Frank Act is included in Exhibit 95.1 of this report - Information regarding mine safety violations is provided in Exhibit 95.1 to this Quarterly Report on Form 10-Q[125] Other Information There is no other information to report for this item - None[126] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, loan agreements, officer certifications, and XBRL data files - Exhibits filed with this report include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), Mine Safety Disclosures (Exhibit 95.1), and various XBRL files[127]