struction Partners(ROAD) - 2022 Q4 - Earnings Call Transcript

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]