Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew by 23% year-over-year, with 13% of this growth being organic.
- Adjusted EBITDA increased by 31%, with margins improving to 14.1% for the quarter.
- Project backlog increased to $1.86 billion, providing strong visibility for future revenue.
- Acquired seven companies this fiscal year, expanding market reach and capacity.
- Strong demand for both public and private construction projects, supported by healthy funding programs.
Negative Points
- Weather conditions, including a recent hurricane, have impacted operations and could affect future performance.
- Increased competition in the public sector due to more contractors shifting from private to public projects.
- General and administrative expenses increased to $38.9 million, representing 7.5% of total revenue.
- Debt levels have increased, with $397.5 million of principal outstanding under the term loan and $81.9 million under the revolving credit facility.
- The company remains cautious about future acquisitions, emphasizing the need for strategic and culturally fitting additions.
Q & A Highlights
Q: Can you provide more clarity on the public versus private end market included in the backlog?
A: The private market continues to be steady with many opportunities to bid. In the public markets, each of our states is now getting the IIJA money, creating a strong market to bid in. Our backlog has seen a slight increase in the percentage of public projects, moving from 65% to around 67-68%. This visibility allows us to be patient at the bid table, which is crucial for achieving our margin goals. β Fred Smith, CEO
Q: Have you seen any changes in the residential end market as the year has progressed?
A: The residential market has been steady without significant changes. We continue to see demand from developers building subdivisions, particularly in areas like the panhandle of Florida and Raleigh. β Fred Smith, CEO
Q: How much of the growth from acquisitions completed in 2024 will roll into 2025?
A: We estimate that the acquisitions completed in 2024 will contribute an additional $90 to $110 million in revenue for 2025. β Gregory Hoffman, CFO
Q: What is your philosophy on including unannounced M&A in your fiscal 2025 guidance?
A: Typically, we do not include unannounced or aspirational acquisitions in our guidance. We plan to return to this methodology for fiscal 2025, including only the M&A that has been announced. β Fred Smith, CEO
Q: What factors contributed to the margin improvement to over 14% this quarter?
A: The margin improvement is due to three main factors: better bidding in strong markets, increased vertical integration, and scale. Additionally, our teams in the field have been highly productive, contributing to higher end margins than initially bid. β Fred Smith, CEO
Q: How has the weather impacted your fourth-quarter performance so far?
A: July has been wetter than normal, and we experienced a hurricane in early August. However, we anticipate that the weather will balance out over the quarter, similar to the previous two quarters. β Fred Smith, CEO and Gregory Hoffman, CFO
Q: How much of the sequential backlog growth was organic versus acquired?
A: Approximately $40 million of the backlog growth this quarter came from acquisitions, with the rest being organic. This mix is similar to our revenue growth. β Gregory Hoffman, CFO
Q: Are there any plans for growth CapEx projects, such as new asphalt terminals?
A: We are always considering vertical integration opportunities. Greg has implemented a disciplined growth CapEx process to ensure investments are made where they will have the most impact, contributing to our organic growth. β Fred Smith, CEO
Q: Why are your organic growth numbers significantly higher than those of your suppliers?
A: We continue to grow market share and work in adjacent markets with strong demand. Our acquisitions also create opportunities for future organic growth. β Fred Smith, CEO
Q: Are you seeing any shifts in the competitive landscape due to contractors moving towards public work?
A: We have not seen a significant slowdown in commercial opportunities. Our crews can switch between public and private jobs, so we are not overly concerned about shifts in the competitive landscape. β Fred Smith, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
