Construction Partners, Inc. Announces Fiscal 2021 Second Quarter Results

DOTHAN, Ala., May 7, 2021 /PRNewswire/ -- Construction Partners, Inc. (NASDAQ: ROAD) ("CPI" or 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 fiscal quarter ended March 31, 2021.

Fred J. (Jule) Smith, III, the Company's President and Chief Executive Officer, said, "In the second fiscal quarter, revenue grew 6.2% compared to the second fiscal quarter last year. While adverse weather caused significant project delays in the second quarter, we plan to make up that volume in the second half of our fiscal year. As we have stated before, historically we have generated approximately 40% of our annual revenue in the first half of the fiscal year and approximately 60% in the second half. Halfway through fiscal 2021, we are roughly in line with our historical pattern, even with the weather delays.

"More importantly, we are very pleased with our record high project backlog of $773.3 million at the end of the quarter. As we move into the seasonally stronger second half of our fiscal year, we continue to see strength in infrastructure funding programs and project lettings across our markets. In light of these positive conditions, we are maintaining our outlook for fiscal 2021."

Revenues for the second fiscal quarter of 2021 were $179.1 million, an increase of 6.2% compared to the second quarter of last year. Gross profit was $18.1 million in the second fiscal quarter of 2021, a decrease of 10.4% compared to the second fiscal quarter of last year.

General and administrative expenses were $24.5 million (consisting of a nonrecurring $3.2 million legal settlement unrelated to the Company's core operations, associated legal expenses of $0.7 million, and $20.6 million of other general and administrative expenses), compared to general and administrative expenses of $16.8 million in the second fiscal quarter of 2020 and $20.1 million in the first fiscal quarter of 2021. The settlement and associated legal expenses during the quarter related to claims arising out of a former stockholder's sale of shares of the Company's common stock in a private transaction prior to the Company's initial public offering. In addition to the legal and settlement expenses, the sequential increase in general and administrative expenses was primarily due to payroll increases related to acquisitions completed during the first fiscal quarter of 2021, new corporate positions and compensation initiatives.

On a GAAP basis, the Company had a net loss of $4.9 million in the second fiscal quarter, compared to net income of $1.5 million in the second fiscal quarter of 2020.  On a non-GAAP basis, adjusted net loss⁽¹⁾ was $2.0 million in the second fiscal quarter of 2021, compared to adjusted net income of $1.6 million in the second fiscal quarter of 2020.

Adjusted EBITDA⁽¹⁾ for the second fiscal quarter of 2021, which includes the nonrecurring legal and settlement expenses described above, was $11.0 million, compared to $14.3 million for the second fiscal quarter of last year.

Project backlog at March 31, 2021 was $773.3 million, compared to $665.6 at December 31, 2020 and $579.1 million at March 31, 2020.

Smith continued, "We extended our commitment to investing in our people during the quarter as we continue to prepare for future acquisition growth. The most critical component of our success has been, and will continue to be, our people. Acquiring, integrating and enhancing new construction operations, facilities and employees in new markets is essential to our growth strategy. In the past six months, we have added 13 hot-mix asphalt plants and more than 300 employees through acquisitions. Acquired operations frequently create near-term margin headwinds as legacy backlog projects are completed at lower margins. However, historically, within twelve to eighteen months post-acquisition, we have been able to raise project margins and expand market share. As a consolidator in our space, we continue to see tremendous growth opportunities."

Ned N. Fleming, III, the Company's Executive Chairman, stated, "CPI is well positioned for growth in a highly fragmented market with strong industry demand and growing infrastructure funding. Through our proven strategy, we expect to improve our relative market share in the rapidly growing southeastern United States. Today, we see more acquisition opportunities than at any point in the past. Our long-term strategy, we believe, will provide value to all of our stakeholders."

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 quarter ended March 31, 2021. 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 May 14, 2021 by calling (201) 612-7415 and using passcode 13717830#. 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 Dennard
Dennard Lascar Investor Relations
[email protected]
(713) 529-6600

- Financial Statements Follow –

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, (vi) certain management fees and expenses and (vii) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations. Adjusted net income (loss) represents net income (loss) before nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, net of tax impact. 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 (loss) or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA and Adjusted net income (loss) 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 these measures 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 (loss), the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA for the periods presented:

The following table presents a reconciliation of net income (loss), the most directly comparable measure calculated in accordance with GAAP, to adjusted net income (loss) for the periods presented:

SOURCE Construction Partners, Inc.