PR Newswire | Feb 5, 2021 07:30AM EST

02/05 06:30 CST

Construction Partners, Inc. Announces Fiscal 2021 First Quarter ResultsCompany Maintains Fiscal 2021 Outlook DOTHAN, Ala., Feb. 5, 2021

DOTHAN, Ala., Feb. 5, 2021 /PRNewswire/ -- Construction Partners, Inc. (NASDAQ: ROAD) (the "Company"), a vertically integrated civil infrastructure company specializing in the construction and maintenance of roadways across five southeastern states, today reported financial and operating results for the quarter ended December 31, 2020.

Key Metrics: First Quarter of Fiscal 2021 Compared to First Quarter of Fiscal 2020

- Revenue was $190.9 million, up 8.9%

- Gross profit was $30.6 million, up 28.8%

- Net income was $7.9 million, up 44.1%

- Adjusted EBITDA(1) was $23.1 million, up 34.4%

- Adjusted EBITDA margin(1) was 12.1%, up 230 bps

Project backlog at December 31, 2020 was $655.6 million, compared to $608.1 million at September 30, 2020.

Charles E. Owens, the Company's President and Chief Executive Officer, said, "We are pleased with our performance in the first quarter of fiscal 2021, and we are maintaining our previously announced outlook for the year. Consistent demand in both private and public markets, coupled with our disciplined approach in bidding and project management, effective utilization of crews and equipment, and vertical integration synergies, drove strong financial performance in the first quarter."

Owens continued, "We see strength in the funding programs across the states in which we operate, where the demand for road repair and maintenance is ongoing. We also expanded our geographic footprint in the first quarter with four bolt-on acquisitions in North Carolina. We now operate 48 hot-mix asphalt plants, which represent distinct markets across the five southeastern states that we serve."

Ned N. Fleming, III, the Company's Executive Chairman, stated, "The entire organization continues to operate at a highly effective level, yielding solid financial results. Many of the macroeconomic dynamics and positive internal factors that we experienced in the fourth quarter have persisted into this year. In addition, we have significantly expanded the number of markets in which we operate through the acquisition of 13 hot-mix asphalt plants in the past four months. Under the leadership and direction of our experienced management team, the future of the company is bright."

^(1) Adjusted EBITDA and Adjusted EBITDA margin are financial measures notpresented in accordance with generally accepted accounting principles ("GAAP").Please see "Reconciliation of Non-GAAP Financial Measures" at the end of thispress release.

Conference Call

The Company will conduct a conference call today at 9:00 a.m. Central Time to discuss financial and operating results for the fiscal 2021 first quarter ended December 31, 2020. To access the call live by phone, dial (412) 902-0003 and ask for the Construction Partners call at least 10 minutes prior to the start time. A telephonic replay will be available through February 12, 2020 by calling (201) 612-7415 and using passcode 13714879#. A webcast of the call will also be available live and for later replay on the Company's Investor Relations website at www.constructionpartners.net.

About Construction Partners, Inc.

Construction Partners, Inc. is a vertically integrated civil infrastructure company operating across five southeastern states, with 48 hot-mix asphalt plants, nine aggregate facilities and one liquid asphalt terminal. Publicly funded projects make up the majority of its business and include local and state roadways, interstate highways, airport runways and bridges. The majority of the Company's public projects are maintenance-related. Private sector projects include paving and sitework for office and industrial parks, shopping centers, local businesses and residential developments. To learn more, visit www.constructionpartners.net.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained herein that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as "may," "will," "expect," "should," "anticipate," "intend," "project," "outlook," "believe" and "plan." The forward-looking statements contained in this press release include, without limitation, statements related to financial projections, future events, business strategy, future performance, future operations, backlog, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. These and other forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Important factors could cause actual results to differ materially from those expressed in the forward-looking statements, including, among others: our ability to successfully manage and integrate acquisitions; failure to realize the expected economic benefits of acquisitions, including future levels of revenues being lower than expected and costs being higher than expected; failure or inability to implement growth strategies in a timely manner; declines in public infrastructure construction and reductions in government funding, including the funding by transportation authorities and other state and local agencies; risks related to our operating strategy; competition for projects in our local markets; risks associated with our capital-intensive business; government requirements and initiatives, including those related to funding for public or infrastructure construction, land usage and environmental, health and safety matters; unfavorable economic conditions and restrictive financing markets; our ability to obtain sufficient bonding capacity to undertake certain projects; our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us; the cancellation of a significant number of contracts or our disqualification from bidding for new contracts; risks related to adverse weather conditions; our substantial indebtedness and the restrictions imposed on us by the terms thereof; our ability to maintain favorable relationships with third parties that supply us with equipment and essential supplies; our ability to retain key personnel and maintain satisfactory labor relations; property damage, results of litigation and other claims and insurance coverage issues; risks related to our information technology systems and infrastructure; our ability to maintain effective internal control over financial reporting; risks from the COVID-19 pandemic, and the risks, uncertainties and factors set forth under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and its subsequently filed Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable law.

Contacts:

Rick Black / Ken DennardDennard Lascar Investor RelationsROAD@DennardLascar.com(713) 529-6600

- Financial Statements Follow -

CONSTRUCTION PARTNERS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except share and per share data)

For the Three Months Ended December 31,

2020 2019

Revenues $ 190,929 $ 175,314

Cost of revenues 160,335 151,557

Gross profit 30,594 23,757

General and administrative expenses (20,084) (17,113)

Gain on sale of equipment, net 333 309

Operating income 10,843 6,953

Interest expense, net (468) (281)

Other income 165 65

Income before provision for income taxes and 10,540 6,737earnings from investment in joint venture

Provision for income taxes (2,680) (1,319)

Earnings from investment in joint venture 11 43

Net income $ 7,871 $ 5,461

Net income per share attributable to commonstockholders:

Basic $ 0.15 $ 0.11

Diluted $ 0.15 $ 0.11

Weighted average number of common sharesoutstanding:

Basic 51,489,211 51,489,211

Diluted 51,717,848 51,609,380

CONSTRUCTION PARTNERS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

December September 31, 30, 2020 2020

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents $ 51,719 $ 148,316

Contracts receivable including retainage, net 113,057 131,770

Costs and estimated earnings in excess of billings 12,148 7,873on uncompleted contracts

Inventories 41,719 38,561

Prepaid expenses and other current assets 9,980 5,041

Total current assets 228,623 331,561

Property, plant and equipment, net 285,235 237,230

Operating lease right-of-use assets 6,938 7,383

Goodwill 77,034 46,348

Intangible assets, net 3,172 3,224

Investment in joint venture 109 198

Other assets 2,730 1,784

Deferred income taxes 386 386

Total assets $ 604,227 $ 628,114

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 49,727 $ 64,732

Billings in excess of costs and estimated earnings 30,930 33,704on uncompleted contracts

Current portion of operating lease liabilities 1,712 2,046

Current maturities of long-term debt 13,000 13,000

Accrued expenses and other current liabilities 12,150 22,347

Total current liabilities 107,519 135,829

Long-term liabilities:

Long-term debt, net of current maturities and 75,867 79,053deferred debt issuance costs

Operating lease liabilities, net of current 5,422 5,554portion

Deferred income taxes 14,003 14,003

Other long-term liabilities 7,955 8,480

Total long-term liabilities 103,247 107,090

Total liabilities 210,766 242,919

Commitments and contingencies

Stockholders' Equity:

Preferred stock, par value $0.001; 10,000,000shares authorized at December 31, 2020 and September - -30, 2020 and no shares issued and outstanding

Class A common stock, par value $0.001;400,000,000 shares authorized, 33,875,884 shares 34 34issued and outstanding at December 31, 2020 andSeptember 30, 2020

Class B common stock, par value $0.001;100,000,000 shares authorized, 20,828,813 shares 21 21issued and 17,905,861 outstanding at December 31, 2020and September 30, 2020

Additional paid-in capital 245,417 245,022

Treasury stock, at cost, 2,922,952 shares of Class (15,603) (15,603)B common stock, par value $0.001

Retained earnings 163,592 155,721

Total stockholders' equity 393,461 385,195

Total liabilities and stockholders' equity $ 604,227 $ 628,114

CONSTRUCTION PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

For the Three Months Ended

December 31,

2020 2019

Cash flows from operating activities:

Net income $ 7,871 $ 5,461

Adjustments to reconcile net income to net cash provided by operatingactivities:

Depreciation, depletion and amortization of long-lived assets 11,094 9,438

Amortization of deferred debt issuance costs and debt discount 64 36

Unrealized gain on derivative instruments (1,165) (66)

Provision for bad debt 175 145

Gain on sale of equipment, net (333) (309)

Equity-based compensation expense 395 395

Earnings from investment in joint venture (11) (43)

Distribution of earnings from investment in joint venture 100 139

Other non-cash adjustments (21) (6)

Changes in operating assets and liabilities, net of acquisition:

Contracts receivable including retainage, net 18,538 21,981

Costs and estimated earnings in excess of billings on uncompleted contracts (4,275) (2,122)

Inventories 928 (1,535)

Prepaid expenses and other current assets (4,119) (2,943)

Other assets (946) 331

Accounts payable (15,255) (21,815)

Billings in excess of costs and estimated earnings on uncompleted contracts (2,774) 54

Accrued expenses and other current liabilities (9,427) (7,444)

Other long-term liabilities (130) (11)

Net cash provided by operating activities, net of acquisition 709 1,686

Cash flows from investing activities:

Purchases of property, plant and equipment (10,462) (23,595)

Proceeds from sale of equipment 492 492

Business acquisitions, net of cash acquired (84,086) (17,748)

Distributions received from investment in joint venture - 361

Net cash used in investing activities (94,056) (40,490)

Cash flows from financing activities:

Proceeds from issuance of long-term debt, net of debt issuance costs and - 9,777discount

Repayments of long-term debt (3,250) (2,149)

Net cash (used in) provided by financing activities (3,250) 7,628

Net change in cash and cash equivalents (96,597) (31,176)

Cash and cash equivalents:

Beginning of period 148,316 80,619

End of period $ 51,719 $ 49,443

Supplemental cash flow information:

Cash paid for interest $ 672 $ 496

Cash paid for income taxes $ - $ 300

Operating lease right-of-use assets obtained in exchange for operating lease $ 282 $ 217liabilities

Cash paid for operating lease liabilities $ 748 $ 870

Non-cash items:

Property, plant and equipment financed with accounts payable $ 1,549 $ 391

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion and amortization of long-lived assets, (iv) equity-based compensation expense, (v) loss on the extinguishment of debt and (vi) certain management fees and expenses. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenues for each period. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA and Adjusted EBITDA Margin because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. Our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly named measures reported by other companies. Potential differences may include differences in capital structures, tax positions and the age and book depreciation of intangible and tangible assets.

The following table presents a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin for the periods presented.

Construction Partners, Inc.

Net Income to Adjusted EBITDA Reconciliation

Fiscal Quarters Ended December 31, 2020 and 2019

(in thousands, except percentages)

For the Three Months Ended December 31,

2020 2019

Net income $ 7,871 $ 5,461

Interest expense, net 468 281

Provision for income taxes 2,680 1,319

Depreciation, depletion and amortization of long-lived assets 11,094 9,438

Equity-based compensation expense 395 395

Management fees and expenses^ (1) 617 314

Adjusted EBITDA $ 23,125 $ 17,208

Revenues $ 190,929 $ 175,314

Adjusted EBITDA Margin 12.1% 9.8%

^(1) Reflects fees and reimbursement of certain out-of-pocket expenses under amanagement services agreement with SunTx Capital Partners, the Company'scontrolling shareholder.

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SOURCE Construction Partners, Inc.