Washington, D.C. 20549







Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 4, 2018




(Exact Name of Registrant as Specified in Charter)


Delaware   001-38479   26-0758017

(State or other jurisdiction of


  (Commission File Number)  

(I.R.S. Employer

Identification Number)

290 Healthwest Dr., Suite 2

Dothan, Alabama 36303

(Address of principal executive offices, including zip code)


(334) 673-9763

(Registrant’s telephone number, including area code)


Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act


Soliciting material pursuant to Rule 14a-12 under the Exchange Act


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒




Item 2.02. Results of Operations and Financial Condition.

On June 4, 2018, Construction Partners, Inc. (the “Company”) issued a press release announcing its second quarter 2018 financial results. A copy of the press release is furnished as Exhibit 99.1 hereto, and the information contained in Exhibit 99.1 is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.


Item 9.01. Financial Statements and Exhibits

(d) Exhibits.





99.1    Press Release, dated June 4, 2018.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: June 4, 2018     By:   /s/ R. Alan Palmer

R. Alan Palmer

Executive Vice President and Chief Financial Officer


Exhibit 99.1






NEWS RELEASE            

Construction Partners Announces FY2018 Six Month Results

Reports Record Revenue and Gross Profit for First Half Fiscal Year

Company Provides 2018 Outlook

DOTHAN, AL - June 4, 2018 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 its fiscal second quarter and six months ended March 31, 2018.

FY2018 Six Month Highlights


    Revenue was $269.3 million


    Gross Profit was $36.5 million


    Net Income(1) was $22.2 million


    Adjusted EBITDA(2) was $24.5 million


    Backlog totaled $563.8 million at March 31, 2018

Recent Growth Strategy Developments


    Completed one new greenfield expansion in fiscal 2018 (North Carolina)


    Completed Initial Public Offering (IPO) in May


    Completed $51.1 million acquisition of The Scruggs Company in May

“Our Company continues to execute as expected with a solid second quarter performance that led to record first half revenue and gross profit results,” stated Charles E. Owens, CPI’s President and Chief Executive Officer.

“We are also very pleased with the completion of our 16th acquisition, which we announced after the quarter ended, that complements our existing operations in the Southeastern U.S.,” added Owens. “This acquisition, along with our recent greenfield expansion in North Carolina, furthers our goal to expand our vertically integrated civil infrastructure operations. We will continue to execute on our controlled, profitable growth strategy through organic growth as well as growth from future acquisitions in the highly fragmented, high-growth markets where we compete. We will also continue to benefit from increased investment in transportation infrastructure by the public customers we serve.



(1)  Net income includes the positive after-tax impact of $10.6 million from a third-party settlement recorded in the second quarter.
(2)  Adjusted EBITDA is a non-GAAP measure. Please see a reconciliation to the nearest GAAP measures at the end of this news release.

Construction Partners, Inc. News Release

Page 2


“I want to thank all of our employees for their hard work and dedication in helping CPI become one of the fastest growing civil infrastructure companies in the U.S. We will remain focused on the key drivers of our businesses to achieve operational excellence and to efficiently manage costs to grow profitability and enhance shareholder value,” said Owens.

Ned Fleming, CPI’s Chairman, added, “We are excited to have completed our IPO in May and believe we are well positioned to continue our strong record of growth in the Southeastern U.S., which is one of the fastest growing areas in the country. With our unique business model and strategic growth plan, we are targeting revenue in excess of $1 billion by 2022 while maintaining annual double-digit adjusted EBITDA margins.”

Initial Public Offering

On May 8, the Company closed on its Initial Public Offering of 11,250,000 shares of its Class A common stock at $12.00 per share. CPI sold 9,000,000 shares, and certain selling stockholders sold 2,250,000 shares. Together with the sale of an additional 350,000 primary and 350,000 secondary shares issued and sold pursuant to the underwriters’ 30-day over-allotment option, the Company has sold a total of 11,950,000 common shares to date. Proceeds net to CPI after payment of underwriting expenses and prior to the additional total estimated expenses of approximately $5.8 million totaled $104.3 million. CPI intends to use the proceeds for growth capital, to fund acquisitions and for general corporate purposes, which may include the repayment of debt from time to time.

Acquisition of The Scruggs Company

CPI completed the acquisition of The Scruggs Company on May 15 for $51.1 million in cash, excluding certain working capital adjustments. This acquisition is accretive to earnings per share and is expected to contribute revenue of approximately $65-$75 million over the next 12 months.

The Scruggs Company is a vertically integrated civil infrastructure company serving public and private customers in southern Georgia and operates three hot mix asphalt plants, three aggregate mines and one industrial plant. This synergistic “platform” acquisition is a strategic complement to our existing operations in the Southeastern U.S.

Construction Partners, Inc. News Release

Page 3


Fiscal Year 2018 Outlook

Due to the favorable Southeastern U.S. climate, CPI is able to operate its business during all twelve months of the year, and while the business is not cyclical, the historic seasonality of the business has led to approximately 40 percent of revenue coming in the first half of the fiscal year with 60 percent occurring in the second half of our fiscal year.


    Revenue in the range of $690.0 million to $710.0 million compared to $568.2 million in FY2017


    Net Income(3) in the range of $47.0 million to $50.0 million compared to $26.0 million in FY2017


    Adjusted EBITDA in the range of $75.0 million to $80.0 million compared to $69.3million in FY2017


(3) Includes the positive after-tax impact of $10.6 million from a third-party settlement recorded in the second quarter.

Conference Call Today

CPI will conduct a conference call today at 10:00 a.m. Central Time, 11:00 a.m. Eastern Time, to discuss financial and operating results of the quarter ended March 31, 2018.

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 June 11th by calling (201) 612-7415 and using pass code 13680338#. A webcast of the call will also be available live and for later replay on CPI’s Investor Relations website at http://ir.constructionpartners.net.

About Construction Partners, Inc.

Construction Partners is a vertically integrated civil infrastructure company operating across five southeastern states, operating 30 Hot Mix Asphalt plants and nine aggregate facilities. 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 CPI’s public projects are maintenance related. Private sector projects include paving and sitework for residential subdivisions, office and industrial parks, shopping centers and local businesses. To learn more, visit www.constructionpartners.net.


Rick Black / Ken Dennard

Dennard Lascar Investor Relations


(713) 529-6600

Construction Partners, Inc. News Release

Page 4


Cautionary Note Regarding Forward-Looking Statements

Certain information 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,” “believe” and “plan.” The forward-looking statements contained in this press release include, without limitation, statements related to future events, business strategy, future performance, future operations, backlog, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management, the acquisition of The Scruggs Company and the expected benefits thereof. 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 the acquisition, 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 successfully identify, manage and integrate acquisitions; 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 remediate material weaknesses in internal control over financial reporting identified in preparing our financial statements and to subsequently maintain effective internal control over financial reporting; and the risks, uncertainties and factors set forth under “Risk Factors” in Construction Partners’ registration statement on Form S-1. Forward-looking statements speak only as of the date they are made. Construction Partners assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements expect to the extent required by applicable law.

- Financial Statements Follow -

Construction Partners, Inc. News Release

Page 5


Construction Partners, Inc.

Consolidated Statements of Income

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


     For the Three Months
March 31,
    For the Six Months
March 31,
     2018     2017     2018     2017  


   $ 118,899     $ 110,366     $ 269,320     $ 232,486  

Cost of revenues

     105,150       96,005       232,773       199,396  













Gross profit

     13,749       14,361       36,547       33,090  

General and administrative expenses

     (13,358     (10,965     (25,784     (21,528

Settlement income

     14,803       —         14,803       —    

Gain on sale of equipment, net

     886       2,183       1,031       2,437  













Operating income

     16,080       5,579       26,597       13,999  

Interest expense, net

     (253     (1,096     (550     (2,143

Other expense

     (39     (105     (60     (131













Income before provision for income taxes and earnings from investment in joint venture

     15,788       4,378       25,987       11,725  

Provision for income taxes

     4,770       1,578       3,973       4,364  

Earnings from investment in joint venture

     230       —         230       —    













Net income

   $ 11,248     $ 2,800     $ 22,244     $ 7,361  













Net income per share attributable to common stockholders:



   $ 0.27     $ 0.07     $ 0.53     $ 0.18  


   $ 0.27     $ 0.07     $ 0.53     $ 0.18  

Weighted average number of common shares outstanding:



     41,717,024       41,502,490       41,704,071       41,502,490  


     41,910,122       41,505,180       41,874,442       41,502,490  

Construction Partners, Inc. News Release

Page 6


Construction Partners, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)


     March 31, 2018     September 30, 2017  



Current assets:



   $ 25,797     $ 27,547  

Contracts receivable including retainage, net

     75,883       120,984  

Costs and estimated earnings in excess of billings on uncompleted contracts

     10,132       4,592  


     19,829       17,487  

Other current assets

     12,610       4,520  







Total current assets

     144,251       175,130  

Property, plant and equipment, net

     125,264       115,911  


     30,600       30,600  

Intangible assets, net

     2,400       2,550  

Investment in joint venture

     630       —    

Other assets

     14,442       2,483  

Deferred income taxes, net

     2,235       1,876  







Total assets

   $ 319,822     $ 328,550  









Current liabilities:


Accounts payable

   $ 37,324     $ 52,402  

Billings in excess of costs and estimated earnings on uncompleted contracts

     32,107       32,108  

Current maturities of debt

     10,000       10,000  

Accrued expenses and other current liabilities

     16,789       20,036  







Total current liabilities

     96,220       114,546  

Long-term liabilities:


Long-term debt, net of current maturities

     37,175       47,136  

Deferred income taxes, net

     6,556       9,667  

Other long-term liabilities

     4,837       5,020  







Total long-term liabilities

     48,568       61,823  







Total liabilities

     144,788       176,369  







Commitments and contingencies


Stockholders’ Equity


Preferred stock, par value $0.001; 1,000,000 shares authorized and no shares issued and outstanding

     —         —    

Common stock, $0.001 par value, 126,000,000 shares authorized, 44,987,574 issued and 41,817,541 and 41,691,541 outstanding at March 31, 2018 and December 31, 2017, respectively

     45       45  

Additional paid-in capital

     142,536       142,385  

Treasury stock, at cost

     (11,525     (11,983

Retained earnings

     43,978       21,734  







Total stockholders’ equity

     175,034       152,181  







Total liabilities and stockholders’ equity

   $ 319,822     $ 328,550  







Construction Partners, Inc. News Release

Page 7


NON-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents net income before interest expense, net, provision (benefit) for income taxes, depreciation, depletion and amortization, equity-based compensation expense, loss on extinguishment of debt and certain management fees and expenses, and excludes income recognized in connection with the Settlement. 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 should not be considered 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 as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

Our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly named measures reported by other companies. Potential differences between our measure of Adjusted EBITDA compared to other similar companies’ measures of Adjusted EBITDA may include differences in capital structures, tax positions and the age and book depreciation of intangible and tangible assets.

The following tables present 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 each of the periods presented (unaudited, in thousands):


     For the Three Months
Ended March 31,
    For the Six Months
Ended March 31,
     2018     2017     2018     2017  

Net income

   $ 11,248     $ 2,800     $ 22,244     $ 7,361  

Interest expense, net

     253       1,096       550       2,143  

Provision (benefit) for income taxes

     4,770       1,578       3,973       4,364  

Depreciation, depletion and amortization of long-lived assets

     5,633       5,279       11,308       10,501  

Equity-based compensation expense

     604       74       604       156  

Loss on extinguishment of debt

     —         —         —         —    

Settlement income (4)

     (14,803     —         (14,803     —    

Management fees and expenses (5)

     311       373       651       684  













Adjusted EBITDA

   $ 8,016     $ 11,200     $ 24,527     $ 25,209  














   $ 118,899     $ 110,366     $ 269,320     $ 232,486  

Adjusted EBITDA Margin

     6.7     10.1     9.1     10.8


(4)  Represents pre-tax income recognized in connection with the Settlement.
(5)  Reflects fees and reimbursement of certain out-of-pocket-expenses under a management services agreement with SunTx.

Construction Partners, Inc. News Release

Page 8


Construction Partners, Inc.

Fiscal Year 2018 Outlook


     For the Twelve Months
Ended September 30, 2018
    For the Twelve
Months Ended
September 30, 2017
     Low     High        
     (unaudited)     (unaudited)        

Net income

   $ 47,000     $ 50,000     $ 26,040  

Interest expense, net

     1,600       1,700       3,960  

Provision (benefit) for income taxes

     14,000       15,200       14,472  

Depreciation, depletion and amortization of long-lived assets

     25,000       25,600       21,072  

Equity-based compensation expense

     970       970       513  

Loss on extinguishment of debt

     —         —         1,638  

Settlement income (4)

     (14,803     (14,803     —    

Management fees and expenses (5)

     1,230       1,340       1,309  










Adjusted EBITDA

   $ 74,997     $ 80,007     $ 69,274  











   $ 690,000     $ 710,000     $ 568,212  

Adjusted EBITDA Margin

     10.9     11.3     12.2


(4)  Represents pre-tax income recognized in connection with the Settlement.
(5)  Reflects fees and reimbursement of certain out-of-pocket-expenses under a management services agreement with SunTx.