Construction Partners, Inc. Announces Fiscal 2019 First Quarter Results

Company Confirms Fiscal Year 2019 Growth Outlook

DOTHAN, Ala., Feb. 11, 2019 (GLOBE NEWSWIRE) -- 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 its first fiscal quarter ended December 31, 2018.

Key Metrics:  Fiscal 2019 First Quarter Compared to Fiscal 2018 First Quarter

• Revenue was $154.3 million, up 2.6%
  
  
• Gross profit was $21.1 million, down 7.3%
  
  
• Net income was $5.2 million, down 53.1%
  
  
• Earnings per share were $0.10, down from $0.26 
  
  
• Adjusted EBITDA⁽¹⁾ was $14.7 million, down 10.9%

Charles E. Owens, the Company’s President and Chief Executive Officer, stated, “During our fiscal first quarter, our construction projects generally met gross profit percentage expectations, despite delays related to Hurricane Michael in October and sustained rainfall experienced in many of our markets in November and December. Weather improved in January across our markets, allowing for increased productivity. We are confirming our growth outlook for 2019.”

“Historically, forty percent of our annual revenue comes in the first half of our fiscal year, which is seasonally slower than the second half of our fiscal year due to normal weather patterns, shorter workdays and other factors,” continued Owens. “We anticipate that our gross profit percentage will increase during future quarters as our fixed costs are allocated over a larger revenue base due to higher production at our hot mix asphalt plants and increased utilization of equipment.”

The Company maintains a strong construction project backlog that it will complete during the remaining three quarters of the fiscal year. At December 31, 2018, the Company’s backlog was $575.2 million. Of this amount, $459.0 million is expected to be completed during the 2019 fiscal year, which represents a higher percentage of revenue to be completed during the fiscal year than at the same time last year. In addition, opportunities for future projects in the Company’s markets remain favorable, as the Company will bid on a number of construction projects that it would expect to complete both during the current fiscal year and beyond.

“We are proud of our team, and they are focused on executing efficiently on the increased workload that we have in place for the remainder of this fiscal year while continuing to build backlog for future years,” said Owens.

⁽¹⁾ _{Adjusted EBITDA is a financial measure not presented in accordance with generally accepted accounting principles (“GAAP”).  Please see “Reconciliation of Non-GAAP Financial Measures” at the end of this news release.}

Fiscal Year 2019 Outlook

The Company confirms its outlook for fiscal year 2019 with regard to revenue, net income and Adjusted EBITDA, as follows:

• Revenue of $760.0 million to $810.0 million, compared to $680.1 million reported in FY 2018
  
  
• Net income of $38.0 million to $43.0 million, compared to $50.8 million reported in FY 2018 (inclusive of a non-recurring $10.6 million after-tax settlement during FY 2018)
  
  
• Adjusted EBITDA ⁽¹⁾ of $85.0 million to $91.5 million, compared to $75.5 million reported in FY 2018

The fiscal year 2019 outlook does not take into account any future acquisitions or greenfield expansions that may occur during the year. The outlook also does not include the potential impact of any new federal or state infrastructure or highway-related legislation that could be passed in 2019.

Ned N. Fleming, III, the Company’s Executive Chairman, stated, “The fundamentals of our model are strong and are supported by positive trends throughout our markets. Our outlook for fiscal year 2019 reflects our confidence in our proven strategy to generate annual revenue growth in single to low double digits, while delivering consistent double-digit adjusted EBITDA margins. We believe that the Company represents a compelling investment based on our solid track record of results and vertically integrated operations.”

Conference Call

The Company will conduct a conference call on Tuesday, February 12, 2019 at 10:00 a.m. Central Time to discuss financial and operating results for the fiscal first quarter ended December 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 February 19, 2019 by calling (201) 612-7415 and using passcode 13686668#. A webcast of the call will also be available live and for later replay on the Company’s Investor Relations website at http://ir.constructionpartners.net.

About Construction Partners, Inc.

Construction Partners, Inc. is a vertically integrated civil infrastructure company operating across five southeastern states, with 30 hot mix asphalt plants and nine aggregate facilities.  Publicly funded projects 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.

Contacts:

Rick Black / Ken Dennard
Dennard Lascar Investor Relations
ROAD@DennardLascar.com
(713) 529-6600

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 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 the Company’s most recent Annual Report on Form 10-K.  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.

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 and (v) certain management fees and expenses, and excludes income recognized in connection with a legal settlement between certain of the Company’s subsidiaries and a third party that did not directly relate to the Company’s business and that has not, and is not expected to, recur. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenues for each period. Adjusted EBITDA and Adjusted EBITDA Margin 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. Management uses Adjusted EBITDA and Adjusted EBITDA Margin 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 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:

1. Reflects fees and reimbursement of certain out-of-pocket expenses under a management services agreement with an affiliate of SunTx Capital Partners, the Company’s controlling stockholder.

The following table presents a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA, using the high and low ends of the Company’s Adjusted EBITDA range (unaudited, in thousands):

⁽¹⁾ Reflects fees and reimbursement of certain out-of-pocket expenses under a management services agreement with an affiliate of SunTx Capital Partners, the Company’s controlling stockholder.

Released February 11, 2019