Construction Partners, Inc. Q4 FY2024 earnings call

• Fiscal 2024 was a record year with revenue, net income, and adjusted EBITDA growth. - Ended fiscal 2024 with a record backlog of $1.96 billion, 16 consecutive quarters of backlog growth. - In fiscal 2025, started strong with the acquisition of Lone Star Paving, a platform company in Texas, which accelerates Road Map 2027 goals by two years. - Core values of family, opportunity, and excellence drive the company, creating a great work environment and safe worksites. - Continues strategy of strategic acquisitions to expand market share and capacity, leveraging generational transition in the industry.

In fiscal 2024, Construction Partners reported revenue of $1.82 billion, an increase of 17% compared to the previous year. Gross profit was $258.3 million, up 32%, representing 14.2% of revenue (compared to 12.6% last year). Net income grew by 41% to $68.9 million, and adjusted EBITDA increased 28% to $220.6 million, with an EBITDA margin of 12.1% (up from 11% the prior year). Cash flow from operations ended the year at $209 million. The company completed 8 acquisitions in fiscal 2024, expanding its geographic footprint and market share in Sunbelt states.

• For fiscal 2025, anticipates revenue in the range of $2.48 billion, net income between $97 and $113 million, and adjusted EBITDA between $347 and $377 million. - Anticipates 50–60 basis points of EBITDA margin expansion from legacy business even without Lone Star, with Lone Star accelerating progress. - Expects to convert 85–90% of EBITDA to cash flow from operations in 2025. - Previously included nine months of Lone Star EBITDA in guidance, now with 11 months inclusion, proportional increase in EBITDA.

No specific risks discussed in detail in the provided transcript

Q: Regarding fiscal 2025 guidance, how much of the margin progression is from Lone Star versus organic growth?

A: Even without Lone Star, anticipated 50–60 basis points of EBITDA margin expansion from backlog and vertical integration; Lone Star accelerates progress but not the sole driver.

Q: Given that you closed the Lone Star acquisition a little earlier, could you provide any EBITDA parameters for Q1?

A: Initially guidance included nine months of Lone Star EBITDA; now with 11 months inclusion, proportional increase; around 30% of EBITDA occurs in first half, 70% in second half.

Q: Cash flow was strong in Q4, stronger than expected. Any thoughts on cash from operations in 2025 and proceeds from the sale of assets?

A: Expect to convert EBITDA to cash flow from operations in the 85–90% range in 2025; proceeds from asset disposals likely trend down as supply chains stabilize.

Q: How much of the reported backlog is from Lone Star?

A: The $1.96 billion backlog reported as of September 30 does not include Lone Star, as the acquisition closed on November 1; their backlog will be included in the next quarter's report.