Construction Partners, Inc.

Greetings. Welcome to Construction Partners' first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black with Investor Relations. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review first quarter results for fiscal 2025. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the investor relations section of constructionpartners.net. Information recorded on this call speaks only as of today, which is February 7, 2025. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations or future events or future performance, are forward-looking statements made pursuant with the safe harbors provision of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call that by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to our earnings press release for our disclosure on forward-looking statements. These factors, as well as other risks and uncertainties, are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted net income, adjusted EBITDA, and adjusted EBITDA margin. Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And now, I would like to turn this call over to Construction Partners CEO, Jewel Smith. Jewel?

Thank you, Rick, and good morning, everyone. We appreciate you joining us on the call today. With me this morning is Greg Hoffman, our Chief Financial Officer, and Ned Fleming, our Executive Chairman. We're pleased to report a strong start to our fiscal year 2025. with record revenue, strong year-over-year growth in margins, and another record quarter backlog built on continued strong demand for our infrastructure services. I'd like to begin by welcoming two new companies to our CPI family of companies. Overland Corporation joined us on January 2nd as our platform company in our eighth state as we entered Oklahoma. Headquartered in Ardmore, Overland has a strong presence in southern and western Oklahoma with eight hot mix asphalt plants creating a wide footprint from Durant all the way west to the Texas Panhandle. Oberlin also participates in the vibrant economic activity occurring in North Texas as Dallas-Fort Worth continues to expand northward along I-35 and I-75 toward the Oklahoma Line. Oberlin's president, Darren Ratosky, leads a strong team of managers that are ready to execute our proven strategy of establishing a platform company in each state with CPI providing resources and support for future growth opportunities. And just this week, on Monday, we acquired Mobile Asphalt Company in Mobile, Alabama. They have joined our Alabama platform company, Wiregrass Construction, as a branded division, retaining their brand and strong recognition built up over many decades. We welcome John Whitman and the talented managers of Mobile Asphalt as we add their large operation of five hot mix asphalt plants and 130 employees to substantially strengthen our market share and establish a much wider operational footprint in Southwest Alabama along the growing Gulf Coast. As our CPI family of companies grows, I want to thank all of our employees for their hard work and dedication to safety this past quarter. At CPI, our first core value is family. And that reminds us that while we are a family of companies, more importantly, we're a company of families. We want to make sure that all of our operations, our policies, and most importantly, our culture are supporting and strengthening the almost 6,000 families that count on CPI each day. Turning now to first quarter results, Favorable weather gave us a few more work days than normal due to dry conditions in October, and we were able to generate a record revenue quarter and grow year-over-year revenue by 42%. Transitioning this growth to profitability, our EBITDA margins grew year-over-year by almost 200 basis points, thanks to strong project execution by our construction teams. Our vertical integration strategy continues to enhance margins, through both construction services and manufacturing asphalt, as well as contribution at our liquid asphalt terminals both on rail in North Alabama and on water in Florida and Texas. Taking a closer look at market conditions throughout the Sun Belt within our geographic footprint, local markets are growing and our states remain focused on maintaining and improving the quality of their roads as well as increasing capacity to handle the significant migration to Sunbelt states. The evidence of this continued strong demand for our infrastructure services is represented by a project backlog that grew sequentially to a record $2.66 billion. We continue to have strong and steady bidding opportunities in the commercial and private markets, with industrial and corporate facilities throughout the Southeast continuing to be developed. In the public infrastructure market, total lettings for roads and bridges continue to increase year over year, approximately 16% on average, across our eight-state footprint. Last quarter, due to our entry into Texas, we focused on the immense infrastructure program in the Lone Star State. This quarter, we highlight Florida, where the Sunshine State's strong population growth led them to pass the Moving Florida Forward program in 2023 that provided approximately $4 billion in infrastructure supplemental funding, funding state, county, and provincial programs already in place. This has led contract awards from all public funding sources in Florida to grow by over 50% in the first half of the current state fiscal year. The IIJA continues to provide our eight states with healthy infrastructure funding. And I would highlight that as of the end of calendar year 2024, only about 40% of the designated IIJA funds have been spent in the field. So we are just getting to the middle innings. Turning now to our strategic growth model, our acquisition pipeline continues to remain active. with conversations ongoing both in our current eight states as well as potential new states. When we add a platform company in a new state, it widens the playing field for acquisitive growth to attract a bolt on opportunities, and we're already seeing that in both Texas and Oklahoma. We will continue to stay patient and focused on adding the best strategic acquisitions to our family of companies. The other half of our strategic growth model is organic growth, and our strong 11% organic growth this quarter demonstrates our continued focus on growing the business in our current markets and building shareholder value, whether it be from adding crews and capacity at our asphalt plants or strategic greenfield expansion. In conclusion, we are pleased to have begun our new fiscal year with a strong start. During this winter quarter, we're hard at work training our people and preparing our fleet and manufacturing facilities to deliver on the record backlog ahead of us during the spring and summer work season. And in the long term, we remain focused and committed to attracting and retaining the best workforce throughout the Sun Belt. At CPI, we know that investment in human capital is the key to building a durable competitive advantage and delivering to our shareholders years of strong growth that is profitable and sustainable. I'd now like to turn the call over to Greg. Thank you, Jewel.