Revenue Growth of 36% Compared to Second Quarter Last Year

Record Backlog of $1.28 Billion

DOTHAN, Ala., May 6, 2022 /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 second quarter ended March 31, 2022.

Fred J. (Jule) Smith, III, the Company's President and Chief Executive Officer, said, "Second quarter revenue increased approximately 36 percent compared to the same quarter last year. We are pleased with the mix of growth for the quarter, with organic revenue growth of approximately 19 percent and acquisitive growth of approximately 17 percent. This strong performance is evidence of the robust demand for infrastructure services throughout our end markets in both the public and private sectors. In addition, project backlog of $1.28 billion at March 31, 2022 was the largest in company history. More importantly, our backlog margins continue to grow, and we anticipate that this healthy backlog margin growth will mean higher future profit margins as backlog is converted.  Taken together, this strong top line performance, record backlog and expanding backlog margins position CPI for continued growth in the second half of our fiscal year with strong momentum moving into fiscal 2023."

Revenues for the second fiscal quarter of 2022 were $243.4 million, an increase of 35.9% compared to the second quarter of last year. Gross profit was $12.5 million in the second fiscal quarter of 2022, a decrease of 30.9% compared to the second fiscal quarter of last year.

General and administrative expenses for the second fiscal quarter of 2022 were $25.0 million, compared to general and administrative expenses of $24.5 million in the second fiscal quarter of 2021 and $25.0 million in the first fiscal quarter of 2022.

On a GAAP basis, the Company had a net loss of $9.4 million in the second fiscal quarter, compared to a net loss of $4.9 million in the second fiscal quarter of 2021. 

Adjusted EBITDA⁽¹⁾ for the second fiscal quarter of 2022 was $7.8 million, compared to $11.0 million for the second fiscal quarter of last year.

Project backlog was $1.28 billion at March 31, 2022 compared to $1.09 billion at December 31, 2021 and $773.3 million at March 31, 2021.

Smith continued, "During the quarter, we experienced an unprecedented inflationary cost environment that negatively impacted profitability, primarily due to the rapid increase in energy costs driven largely by the invasion of Ukraine. We have taken immediate action in response by raising equipment rates used in bids to cover the new market prices of diesel and other fuels, we are incorporating additional contingencies into project bids, and we have begun implementing diesel fuel index mechanisms with customers and suppliers where possible. While we experienced a significant impact in the quarter related to these cost increases, that impact will lessen in the second half of our fiscal year. CPI's business model of shorter duration projects creates higher turnover in backlog, and we have already converted nearly half of the $1 billion dollar backlog with which we began the fiscal year. New project backlog margins continue to increase, and we anticipate that profit margins will further improve as higher-margin backlog is converted.

"It is also important to recognize the more than 3,500 CPI employees throughout the Southeast for their continued focus on safety at our jobsites, managing record growth in operations, and perseverance in dealing with the continued supply and labor challenges of the U.S. economy. I am thankful for their hard work and operational excellence every day in pursuit of our strategic goals to enhance value for all of our stakeholders," added Smith. 

Fiscal Year 2022 Outlook

The Company has updated its full-year 2022 guidance to reflect the strong project demand environment and to reflect the continued inflation and elevated energy costs that it believes will persist during the fiscal year. The Company's outlook for fiscal year 2022 with regard to revenue, net income and Adjusted EBITDA is as follows:

• Revenue in the range of $1.15 billion to $1.20 billion

• Net income in the range of $14.5 million to $25.3 million

• Adjusted EBITDA⁽¹⁾ in the range of $105.0 million to $120.3 million

Ned N. Fleming, III, the Company's Executive Chairman, stated, "Despite unprecedented economic challenges impeding profitability in the first half of the year, CPI has achieved significant revenue growth, both organic and acquisitive. I am proud of the Company's leadership in an uncertain inflationary cost environment to manage through these short-term challenges and grow backlog with a higher margin profile. The opportunity for continued growth and expansion of the Company represents the best longer-term visibility we have seen in the Company's more than 20-year history. We believe Construction Partners is well positioned to capitalize on future infrastructure demand that the $1.2 trillion infrastructure bill will create over the next decade.  CPI will participate in many different types of projects to be funded under this bill, including roads, bridges, airports, ports, and railroad infrastructure investments. Continued organic growth, coupled with strategic acquisitions, will further expand CPI's relative market share and overall scale across our geographic footprint."

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, 2022. 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 13, 2022 by calling (201) 612-7415 and using passcode ID: 13727961#. 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 57 hot-mix asphalt plants, 14 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
ROAD@DennardLascar.com
(713) 529-6600

 ⁽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 press release.

- 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 tables present a reconciliation of net income (loss), the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA for the periods presented:

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SOURCE Construction Partners, Inc.