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struction Partners(ROAD) - 2024 Q4 - Earnings Call Transcript
ROADstruction Partners(ROAD)2024-11-21 23:39
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Financial Data and Key Metrics Changes - The company reported a revenue growth of 17% for fiscal year 2024, reaching 1.82billion,withnetincomeincreasingby411.82 billion, with net income increasing by 41% to 68.9 million [7][25][26] - Adjusted EBITDA grew by 28% to 220.6million,withanEBITDAmarginof12.1220.6 million, with an EBITDA margin of 12.1%, up from 11% in the previous year [7][26][27] - Cash flow from operations was 209 million, compared to 157millioninfiscal2023[9][31]BusinessLineDataandKeyMetricsChanges−Therevenuemixfortheyearincluded7157 million in fiscal 2023 [9][31] Business Line Data and Key Metrics Changes - The revenue mix for the year included 7% organic growth and 10% from recent acquisitions [25] - Gross profit increased by approximately 32% to 258.3 million, with a gross profit margin of 14.2%, up from 12.6% [25][26] Market Data and Key Metrics Changes - The company reported a record project backlog of 1.96billion,marking16consecutivequartersofbackloggrowth[17][27]−Thedemandenvironmentremainsrobustinbothcommercialandpublicmarkets,withongoinginfrastructurefundingfromtheIIJA[17][18][22]CompanyStrategyandDevelopmentDirection−Thecompanyaimstocontinuestrategicacquisitionstoexpandmarketshareandenhanceoperationalexcellence,withafocusonorganicgrowthfollowingacquisitions[15][23]−TheacquisitionofLoneStarPavingisexpectedtoaccelerateprogresstowardthecompany′sroadmap2027goalsbytwoyears,withafocusonmarginexpansion[11][14][30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceintheongoingdemandforinfrastructureprojects,particularlyinTexas,whichbenefitsfromsignificantfederalandstatefunding[19][21][49]−Thecompanyanticipatescontinuedgrowthinfiscal2025,withrevenueguidancebetween1.96 billion, marking 16 consecutive quarters of backlog growth [17][27] - The demand environment remains robust in both commercial and public markets, with ongoing infrastructure funding from the IIJA [17][18][22] Company Strategy and Development Direction - The company aims to continue strategic acquisitions to expand market share and enhance operational excellence, with a focus on organic growth following acquisitions [15][23] - The acquisition of Lone Star Paving is expected to accelerate progress toward the company's roadmap 2027 goals by two years, with a focus on margin expansion [11][14][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for infrastructure projects, particularly in Texas, which benefits from significant federal and state funding [19][21][49] - The company anticipates continued growth in fiscal 2025, with revenue guidance between 2.48 billion and 2.58billion,andnetincomeguidancebetween2.58 billion, and net income guidance between 97 million and 113million[32][33]OtherImportantInformation−Thecompanycompletedeightacquisitionsinfiscal2024,expandingitsgeographicfootprintandmarketshare[9]−Thecompanyhasaninterest−rateswapagreementthatfixesSOFRat1.85113 million [32][33] Other Important Information - The company completed eight acquisitions in fiscal 2024, expanding its geographic footprint and market share [9] - The company has an interest-rate swap agreement that fixes SOFR at 1.85%, resulting in a 3.1% interest rate on 300 million of term debt [30] Q&A Session Summary Question: Can you bridge the gap of how much of the margin progression is from Lone Star versus organic growth? - Management indicated that even without Lone Star, the company expected to achieve 50 to 60 basis points of margin expansion due to backlog and operational improvements [37][38] Question: Any thoughts on the perspective of TxDOT and visibility for revenues and top line growth? - Management highlighted that Texas receives a significant portion of federal funding and has created supplemental programs to enhance infrastructure spending, which will benefit growth opportunities [49][54] Question: Can you provide any EBITDA parameters for Q1? - Management noted that the guidance would reflect 11 months of EBITDA from Lone Star, with a typical seasonal distribution of 30% in the first half and 70% in the second half of the year [62] Question: Thoughts on cash from operations in '25 and proceeds from asset sales? - Management expects to convert EBITDA to cash flow from operations in the 85% to 90% range for 2025, with asset sales trending down due to improved supply chain conditions [65][66] Question: How much of the backlog is from Lone Star? - Management clarified that the reported backlog of $1.96 billion does not include Lone Star, as they joined on November 1, and their backlog will be included in the next quarter [73]